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, 2016

Commission file number 0-13092

SPECTRASCIENCE, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1448837
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	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 8, 2016 was 752,171,222.

SPECTRASCIENCE, INC.

FORM 10-Q

For the Nine Months Ended September 30, 2016

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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
SIGNATURES		30

 2

PART I FINANCIAL INFORMATION:

Item 1. Financial Statements

SpectraScience, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash	$	1,927		$	127,493
Accounts receivable, net		950			7,061
Inventory, current portion		157,631			111,887
Prepaid expenses and other current assets		318,475			284,305
Total current assets		478,983			530,746
Fixed assets, net		—			316
Long-term inventory		150,000			150,000
Patents, net		1,064,761			1,185,472
	$	1,693,744		$	1,866,534
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	1,165,255		$	941,106
Secured convertible notes payable		850,000			—
Note payable		137,982			137,982
Notes payable- related parties		35,000			—
Convertible debt, net of discounts and costs of $188,070 as of September 30, 2016 and $430,156 as of December 31, 2015		6,241,726			5,744,604
Derivative liability		584,274			620,321
Accrued expenses		1,968,516			1,411,333
Total current liabilities		10,982,753			8,855,346
COMMITMENTS AND CONTINGENCIES
Mezzanine equity
Series B Convertible Preferred Stock, $.01 par value; 2,585,000 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015; liquidation value of $517,000 plus accumulated and and unpaid dividends of $106,931 as of September 30, 2016 and December 31, 2015, respectively		25,850			25,850
Series C Convertible Preferred Stock, $.01 par value; 500,000 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015; liquidation value of $100,000 as of September 30, 2016 and December 31, 2015, respectively		5,000			5,000
Total mezzanine equity		30,850			30,850
Shareholders’ deficit
Series A Convertible Preferred Stock, $.01 par value;  0 shares authorized, issued and outstanding as of September 30, 2016 and  December 31, 2015		—			—
Series AA Super Voting Preferred Stock, $.001 par value;   3,000 and 0 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		3			—
Common stock, $.01 par value;1,246,912,000 and 746,915,000 shares authorized; 736,525,000 and 431,247,207 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		7,365,250			4,312,472
Additional paid in capital		35,735,456			38,166,818
Accumulated deficit		(52,420,568	)		(49,498,952	)
Total shareholders' deficit		(9,319,859	)		(7,019,662	)
	$	1,693,744		$	1,866,534

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

 3

SpectraScience, Inc. and Subsidiaries

 Condensed Consolidated Statements of Operation

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenue	$	4,200		$	-		$	5,150		$	-
Cost of revenue		2,100			-			2,968			(12,000)
Gross profit		2,100			-			2,182			12,000
Operating expenses:
Research and development		127,428			172,405			515,590			504,415
General and administrative		281,993			284,724			896,047			1,010,989
Sales and marketing		90,303			50,700			270,930			184,660
		499,724			507,829			1,682,567			1,700,064
Loss from operations		(497,624	)		(507,829	)		(1,680,385	)		(1,688,064	)
Other income (expense)
Interest expense		(169,743	)		(183,184	)		(749,042	)		(474,727	)
Change in fair value of derivative and warrant liabilities		(156,769	)		753,538			(419,390	)		353,315
Amortization of derivative and warrant liabilities discount		(115,027	)		(176,661	)		(351,323	)		(699,957	)
Amortization of deferred debt issuance costs and original issue discount		(43,481	)		(90,130	)		(168,931	)		(262,520	)
Gain on extinguishment of debt		213,584			-			460,658			119,369
Income on foreign exchange transactions		(6,079	)		-			(1,388	)		-
Other expense, net		(1,961	)		(4,893	)		(11,815	)		(9,527	)
		(279,476	)		298,670			(1,241,231	)		(974,047	)
Net loss	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Basic and diluted loss per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average common shares outstanding:
Basic and diluted		712,309,055			198,039,192			664,896,833			196,519,704

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

 4

SpectraScience, Inc. and Subsidiaries

Condensed Consolidated Statement of Shareholders' Deficit

For the nine months ended September 30, 2016

(unaudited)

									Additional						Total
	Series AA Super Voting Preferred				Common Stock				Paid-In			Accumulated			Shareholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance December 31, 2015		-	$	-		431,247,207	$	4,312,472	$	38,166,818		$	(49,498,952	)	$	(7,019,662	)
Conversion of convertible debt		-		-		305,277,793		3,052,778		(2,553,014	)		-			499,764
Non cash stock option expense		-		-		-		-		120,003			-			120,003
Non cash issuance of warrant for consulting services		-		-		-		-		1,652			-			1,652
Issuance of Series AA Super Voting Preferred Stock		3,000		3		-		-		24,997			-			25,000
Special dividend related to Series AA Super
Voting Preferred Stock		-		-		-		-		(25,000	)		-			(25,000	)
Net loss		-		-		-		-		-			(2,921,616	)		(2,921,616	)
Balance September 30, 2016		3,000	$	3		736,525,000	$	7,365,250	$	35,735,456		$	(52,420,568	)	$	(9,319,859	)

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

 5

SpectraScience, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
Operating activities:
Net loss	$	(2,921,616	)	$	(2,662,111	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation		121,026			124,329
Non-cash interest		31,364			-
Non-cash issuance of stock options and warrants		120,004			140,370
Non-cash expense related to commitment of common stock in excess of authorized shares		107,107			-
Loss on issuance of variable rate notes		84,584			-
Amortization of derivative and warrant liabilities discount		351,323			699,957
Amortization of deferred debt issuance costs and original issue discount		168,931			262,520
Issuance of common stock for services		700			-
Change in fair value of derivative and warrant liabilities		419,390			(353,315	)
Gain on extinguishment of debt		(460,658	)		(119,369	)
Changes in assets and liabilities:
Accounts receivable		6,111			-
Inventory		(45,744	)		(20,224	)
Prepaid expense and other assets		(34,170	)		(64,146	)
Accounts payable		244,149			(43,245	)
Accrued expenses		580,645			481,516
Net cash used in operating activities		(1,246,854	)		(1,553,718	)
Investing activities:
Net cash used in investing activities		-			-
Financing activities:
Proceeds from issuance of convertible notes payable		300,000			1,520,250
Proceeds from issuance of notes payable to related parties		35,000			-
Proceeds from issuance of secured notes payable		850,000			-
Proceeds from exercise of stock options		-			4,500
Debt issuance costs		(63,712	)		(139,500	)
Net cash provided by financing activities		1,121,288			1,385,250
Net decrease in cash		(125,566	)		(168,468	)
Cash, beginning of year		127,493			223,529
Cash, end of period	$	1,927		$	55,061
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	8,000
Income taxes	$	-		$	-
Non Cash Investing and Financing Activities:
Conversion of convertible notes and accrued interest to common stock	$	499,763		$	157,839
Exchange of convertible notes and accrued interest to new notes	$	103,551		$	-
Warrant valuation on issuance of convertible debentures	$	-		$	225,700
Valuation of Series AA Super Voting Preferred Stock	$	25,000			-
Conversion of accrued interest to note payable	$	-		$	15,000

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 clinical trials related to colon cancer detection. In June 2012, the Company entered into a distribution agreement with PENTAX Europe, GmbH.

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 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, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. 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, 2015.

 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 sale of equity securities and 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 2016, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 System 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, 2016, the Company had a working capital deficit of $10,503,770 and cash of $1,927, compared to a working capital deficit of $8,324,600 and cash of $127,493 as of December 31, 2015. 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 March 31, 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, 2016, the Company raised $1,185,000, net of transaction costs of $34,000, 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, 2016, Convertible Debentures with a face value of $5,473,032 held by 75 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.

 9

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

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.

Variable Conversion Rate Debentures

Starting in 2015, the Company entered into convertible debentures with floating exercise prices discounted to market prices. As a result, a significant number of shares were either issued or may be issued at deeply discounted variable conversion prices. The downward pressure placed on the Company’s stock as a result of these conversions can be classified as “death spirals” since the investors have no incentive to maintain a stable stock price. The Company accounts for these debentures as derivative liabilities which means the debentures are revalued at the end of each period and gains and losses are recognized at the issuance of the debentures and on the conversion of the debentures.

Over Commitment of Shares

Since the number of shares issuable under convertible debentures with floating exercise prices is undeterminable, the Company may be required to issue shares in excess of the number of shares authorized by its shareholders. As a result, when the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised debentures, warrants and options, the derivatives must be valued using the Black Scholes Option Pricing method and a liability is recorded as though the obligations would be settled using some means other than stock.

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 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

 10

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

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, 2016, 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 40,000,000 shares of common stock. At September 30, 2016, the Company had options outstanding exercisable into up to 34,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 24,059,921 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, 2016 and 2015:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Expected term		None		None		None		5 years
Exercise price		None		None		None	$	0.01
Expected volatility		None		None		None		210	%
Expected dividends		None		None		None		None
Risk-free interest rate		None		None		None		1.48	%
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 nine month periods ended September 30, 2016 and 2015, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

 11

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

	September 30, 2016		September 30, 2015
Preferred Stock		3,088,000		3,085,000
Convertible debentures		111,110,776		117,229,747
Options		34,168,800		38,064,635
Warrants		131,389,332		108,251,866
Total		279,756,908		266,631,248

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2016 and 2015:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Numerator:
Net income (loss) for basic earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Net income (loss) for diluted earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Denominator:
Weighted average basic shares outstanding		712,309,055			198,039,192			664,896,833			196,519,704
Denominator for diluted earnings per share-
Adjusted weighted average shares		712,309,055			198,039,192			664,896,833			196,519,704
Income (loss) per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Inventory

Inventory consisted of the following at September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
Raw materials	$	255,014	$	216,704
Finished goods		52,617		45,183
		307,631		261,887
Reserve for obsolescence		-		-
		307,631		261,887
Less long-term portion		150,000		150,000
	$	157,631	$	111,887

 12

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

During the nine months ended September 30, 2016, the Company purchased the inventory of Oncoscope, Inc. from the Trustee of Ondoscope’s bankruptcy proceeding for a total of $40,000. This amount, net of amounts sold of $2,100, has been included in raw materials.

Recently Adopted and Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amended Interest – Imputation of Interest of the Accounting Standards Codification. The amended guidance requires that debt issuance costs related to a recognized debt liability, which were presented as deferred charges (assets), be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

Reclassifications

Certain reclassifications have been made to the 2015 financial statements in order for them to conform to the 2016 presentation. Such reclassifications have no impact on the Company’s financial position or results of operations.

3. Liabilities

Note Payable

In November 2014, the Company issued for cash of $100,000 an unsecured note payable and a five-year warrant with an exercise price of $0.09 per share for the purchase of up to 50,000 shares of common stock. The terms of the note were a repayment of $115,000 if paid by February 18, 2015 and, if paid thereafter, the principal balance of the note was to be increased to $137,982 as of October 1, 2015 and interest accrues at 20% from October 1, 2015 until paid. The note remained outstanding at September 30, 2016 and is accruing interest at 20%. The warrant was valued at $1,659 using the Black-Scholes Pricing Model and was recorded as additional paid-in capital and expensed to non-cash interest in 2014.

Notes Payable- Related Parties

During the nine months ended September 30, 2016, two affiliates of the Company advanced to the Company cash in an accumulated amount of $35,000 in exchange for six-month 10% promissory notes. The balance of the notes remains $35,000 at September 30, 2016.

Convertible Debentures

As of September 30, 2016, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of three 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

 13

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

into common stock at initial conversion prices ranging from $0.01 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 $0.02 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 exercise prices ranging from $0.0745 to $0.1287 per share. For debentures issued through March 31, 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 March 31, 2013 do not contain such an exchange clause. The gross amount of Debentures outstanding is $6,232,345 as of September 30, 2016.

During the nine months ended September 30, 2016, the Company has issued and outstanding Convertible Debentures (“Variable Debentures”) with original terms of 9 months to one year, interest rates ranging from 0-10% per year and original issue discounts ranging from 0-10% which contain variable conversion rates ranging from discounts of 40-50% of the Company’s common stock based on the Company’s common stock trading prices ranging from 10-25 days previous to conversion. The Variable Debentures contain prepayment options which enable the Company to prepay the notes for periods of 0-180 days subsequent to issuance at premiums ranging from 0-50%. The gross amount of Variable Debentures outstanding is $197,451 as of September 30, 2016.

As of September 30, 2016 and December 31, 2015, the balances of the Debentures are as follows:

	September 30, 2016			December 31,   2015
Balance at beginning of period	$	6,174,760		$	4,496,602
Issuance of debentures for cash		300,000			1,970,250
Original issue discount		-			145,263
Issuance of debentures for forbearance		29,712			-
Debentures converted to common stock		(196,944	)		(437,355	)
Debentures exchanged for new debentures		122,268			-
Convertible debt		6,429,796			6,174,760
Less unamortized costs of financing		188,070			430,156
Convertible debt, net of unamortized costs	$	6,241,726		$	5,744,604
Convertible debt in default	$	5,473,032		$	4,313,199

Secured Convertible Note

During the nine months ended September 30, 2016, the Company issued for cash of $850,000 Secured Convertible Debentures (the “Debentures”) to two accredited investors. The terms of the Debentures are for three years, a conversion price of $0.01 per share and an annual interest rate of 8%. The secured interest is on all of the assets of the Company.

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

 14

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

fair value. In addition, outstanding Variable Debentures contain variable conversion rates based on unknown future prices of the Company’s common stock resulting in a conversion feature. The Company measures these warrants and conversion features using a Black-Scholes option valuation model using similar assumptions to those described under “Stock-Based Compensation.” The period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the period over which the Company will be required to evaluate the fair value of the conversion features are 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 the Company’s control. Therefore, the resulting effect on net loss is 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.

In addition, since the number of shares issuable under the Variable Debentures are undeterminable, the Company may be required to issue shares in excess of the number of shares authorized by its shareholders. As a result, when the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised debentures, warrants and options, the derivatives must be valued using the Black Scholes Option Pricing method and a liability is recorded as though the obligations would be settled using some means other than stock. For the nine months ended September 30, 2016, the Company determined that it was over committed to the number of shares issuable on the exercise of outstanding debentures, stock options and warrants for approximately 266,000,000 shares. On October 23, 2016, there was an increase in authorized shares that was reflected on the September 30, 2016 Balance Sheet but was not used in the calculation to determine the over commitment of shares as of September 30, 2016.

As of September 30, 2016 and December 31, 2015, the balances of the Derivative Liability are as follows:

 15

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

							Commitment
				Conversion			In Excess of
	Warrants			Feature			Authorized Stock		Total
Balance at January 1, 2015	$	764,958		$	296,881		$	-	$	1,061,839
Liability on issuance of debt and warrants		-			1,306,372			-		1,306,372
Change in fair value at year end		(704,538	)		(469,906	)		-		(1,174,444	)
Elimination of liability on conversion		-			(637,874	)		-		(637,874	)
Over commitment of stock		-			-			64,428		64,428
Balance at December 31, 2015		60,420			495,473			64,428		620,321
Liability on issuance of debt and warrants		44,394			407,209			-		451,603
Change in fair value at period end		80,395			80,495			-		160,890
Elimination of liability on conversion		-			(755,647	)		-		(755,647	)
Over commitment of stock		-			-			107,107		107,107
Balance at September 30, 2016	$	185,209		$	227,530		$	171,535	$	584,274

Debentures with warrants attached issued subsequent to March 31, 2013 did not contain an exchange provision and were accounted for using the equity method of valuing the note and warrant.

4. Shareholders’ Deficit

Common Stock

During the nine months ended September 30, 2016, holders of Convertible Debentures with a face value of $196,944 and accrued interest of $4,745 converted their debentures into 305,277,793 shares of common stock. In addition, associated with these debentures, the Company recorded a gain on extinguishment of debt of $53,038.

Warrants

During the nine months ended September 30, 2016, in conjunction with the sale of Convertible Debentures, the Company issued five-year common stock purchase warrants to acquire up to 15,000,000 shares to holders of the Debentures. These warrants have an exercise price of $0.02 per share.

In March 2016, the Company issued a warrant exercisable into up to 1,000,000 shares of common stock in exchange for services provided by a consultant. The value of these warrants, $1,652, was determined using the Black-Scholes Option pricing model and was included as non-cash expenses and additional paid-in capital during the nine months ended September 30, 2016.

 16

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The balance of all warrants outstanding as of September 30, 2016 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2016		116,875,170		$	0.08
Granted		16,000,000		$	0.02
Cancelled		(1,485,838	)	$	0.08
Exercised		-		$	-
Outstanding at September 30, 2016		131,389,332		$	0.08
Exercisable at September 30, 2016		131,389,332		$	0.08

Stock Options

Options outstanding as of September 30, 2016 are as follows:

			Weighted		Weighted Average
			Average Exercise Price		Remaining Contractual		Aggregate Intrinsic
	Options		Per Share		Term (years)		Value (1)
Outstanding at January 1, 2016		34,168,800	$	0.02		8.03
Granted		-	$	-		-
Cancelled		-	$	-		-
Exercised		-	$	-		-
Outstanding at September 30, 2016		34,168,800	$	0.02		7.28	$	-
Exercisable at September 30, 2016		24,059,921	$	0.02		7.29	$	-
Weighted average fair value of options
granted during the period		-	$	-

(1) These amounts represent the excess, if any, between the exercise price and $0.0035, the closing market price of the Company’s common stock on September 30, 2016 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

At September 30, 2016, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $213,325, which we expect to be recognized over the next four years.

Series AA Preferred Shares

On April 15, 2016, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance of up to three thousand (3,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.

 17

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Each holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one million (1,000,000) votes for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company. The holders are restricted from voting the preferred shares for any proposal on the election of directors. The Company recorded a special dividend and valued the Series AA Super Voting Preferred Stock at $25,000 as of September 30, 2016.

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. The Black-Scholes 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.

 18

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The following table presents the balances of derivative liabilities which are measured at fair value on a recurring basis by level as of September 30, 2016:

	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, 2016
Derivative liability	$	-	$	-	$	227,530	$	227,530
Warrant liability		-		-		185,209		185,209
Commitment in excess of authorized stock		-		-		171,535		171,535
Total	$	-	$	-	$	584,274	$	584,274

The following table presents changes in the derivative liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2016:

						Commitment
	Warrant		Derivative			In Excess of		Total
	Liability		Liability			Authorized Stock		Liability
Balance December 31, 2015	$	60,420	$	495,473		$	64,428	$	620,321
Liability on issuance of debt and warrants		44,394		407,209			-		451,603
Elimination of liability on conversion		-		(755,647	)		-		(755,647	)
Change in estimated fair value (1)		80,395		80,495			-		160,890
Commitment in excess of authorized stock		-		-			107,107		107,107
Balance September 30, 2016	$	185,209	$	227,530		$	171,535	$	584,274

(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, 2016:

	Derivative Liability	Warrant Liability
Expected term	6 months to 2 years	5 years
Exercise price	$0.00025 - $0.099	$0.02 - $0.1287
Expected volatility	272% to 334%	247% to 283%
Expected dividends	None	None
Risk-free interest rate	0.37% to 1.05%	1.14% to 1.49%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at September 30, 2016, management estimated a 60% probability of a down round financing event at a price of $0.025 and a 9% to 34% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

 19

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

6. Contingencies

None

7. Subsequent Events

Variable Rate Convertible Debentures

In October and November 2016, a holder of Variable Rate Convertible Debentures with principal of $13,772 and accrued interest of $498 converted a portion of their debentures into 15,646,222 shares of common stock.

Secured Convertible Debenture

In October 2016, the Company issued for cash of $150,000 a Secured Convertible Debenture (the “Debenture”) to an accredited investor. The terms of the Debenture are for three years, a conversion price of $0.01 per share and an annual interest rate of 8%. The secured interest is on all of the assets of the Company and is shared equally with a previous secured party.

Increase in Authorized Shares

On October 23, 2016, the increase in authorized capital stock from 750,000,000 shares to 1,250,000,000 shares became effective. The increase in authorized shares has been reflected on the Company’s Balance Sheet as of September 30, 2016.

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

 20

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, 2015. 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, 2015.

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 nine month period ended September 30, 2016, SpectraScience carried forward on the improvements made to the WavSTAT4 in fiscal 2011 and continued working with PENTAX Europe, GmbH (“PENTAX”) and other distributors, for distribution of its products in Europe, the Middle East and Africa.

 21

Over the next 12 months, SpectraScience intends to:

Market and sell the WavSTAT4 Optical Biopsy System colon cancer diagnostic application through PENTAX and other distribution channels 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 China, Saudi Arabia and India;

Begin meeting with the FDA towards the preparation and submission of a Supplemental PMA filing  with the FDA and plan for additional clinical trials to support eventual approval for sale in the  nited 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.

Continue to expand and refine our intellectual property portfolio.

Results of Operations

Comparison of the Three Months Ended September 30, 2016 and 2015

	Three Months Ended September 30,						Favorable
	2016			2015			(Unfavorable)			%
Revenue	$	4,200		$	-		$	4,200			NM
Cost of revenue		2,100			-			(2,100	)		NM
Gross profit		2,100			-			2,100			NM
Operating expenses:
Research and development		127,428			172,405			44,977			26.1	%
General and administrative		281,993			284,724			2,731			-1.0	%
Sales and marketing		90,303			50,700			(39,603	)		-78.1	%
		499,724			507,829			8,105			1.6	%
Loss from operations		(497,624	)		(507,829	)		10,205			2.0	%
Other income (expense)		(279,476	)		298,670			(578,146	)		193.6	%
Net loss	$	(777,100	)	$	(209,159	)	$	(567,941	)		-271.5	%

Revenues

There was minimal revenue during the three months ended September 30, 2016 and no revenue during the three months ended September 30, 2015. 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.

 22

Cost of Revenue

There was minimal cost of revenue during the three months ended September 30, 2016 and no cost of sales during the three months ended September 30, 2015. We anticipate that as revenue increases 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, that associated costs will also increase.

Research and Development Expenses

Research and development expenses decreased by $44,977, 26.1%, to $127,428 for the quarter ended September 30, 2016 from $172,405 for the three months ended September 30, 2015. This decrease was due to a decrease in clinical costs. 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 remained stable at $281,993 compared to $284,724 for the quarter ended September 30, 2015. 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 $39,603, 78.1%, to $90,303 for the quarter ended September 30, 2016 from $54,700 for the quarter ended September 30, 2015. The primary reason for the increase was an increase in payroll costs related to the change in foreign currency values. 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, 2016 was expense of $279,476 compared to income of $298,670 for the quarter ended September 30, 2015. This change was due primarily to a 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.

 23

Comparison of the Nine Months Ended September 30, 2016 and 2015

	Nine Months Ended September 30,						Favorable
	2016			2015			(Unfavorable)			%
Revenue	$	5,150		$	-		$	5,150			NM
Cost of revenue		2,968			(12,000	)		(14,968	)		-124.7	%
Gross profit		2,182			12,000			(9,818	)		-81.8	%
Operating expenses:
Research and development		515,590			504,415			(11,175	)		-2.2	%
General and administrative		896,047			1,010,989			114,942			11.4	%
Sales and marketing		270,930			184,660			(86,270	)		-46.7	%
		1,682,567			1,700,064			17,497			1.0	%
Loss from operations		(1,680,385	)		(1,688,064	)		7,679			0.5	%
Other income (expense)		(1,241,231	)		(974,047	)		(267,184	)		-27.4	%
Net loss	$	(2,921,616	)	$	(2,662,111	)	$	(259,505	)		-9.7	%

Revenues

There was minimal revenue during the nine months ended September 30, 2016 and no revenue during the nine months ended September 30, 2015. 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 minimal cost of revenue during the nine months ended September 30, 2016 compared to a negative cost of sales of $12,000 during the nine months ended September 30, 2015. The negative amount was the result of four systems coming off warranty with no associated costs. We anticipate that as revenue increases 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, that associated costs will also increase. The following table reflects the status of the warranty reserve as of September 30, 2016 and 2015:

	Three months ended September 30,
		2016		2015
Balance at the beginning of the period	$	-	$	-
Increase in warranty expense		-		-
Systems coming off warranty		-		-
Balance at the end of the period	$	-	$	-

 24

Research and Development Expenses

Research and development expenses increased by $11,175, 2.2%, to $515,590 for the nine months ended September 30, 2016 from $504,415 for the nine months ended September 30, 2015. This increase was due to an increase in consulting costs. 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 $114,942, 11.4%, to $896,047 for the nine months ended September 30, 2016 compared to $1,010,989 for the nine months ended September 30, 2015. This decrease was due primarily to a reduction in costs associated with the issuance of stock options in an amount of approximately $55,000, a reduction in legal and professional fees of approximately $45,000 and a reduction in travel and related expenses of approximately $5,000. 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 $86,270, 46.7%, to $270,930 for the nine months ended September 30, 2016 from $184,660 for the nine months ended September 30, 2015. The primary reason for the increase was an increase in stock option expense of approximately $19,000 and an increase in payroll costs of approximately $59,000. We anticipate that sales and marketing expenses will increase as we increase our activity in Europe.

Other Income (Expense)

Other income (expense) for the nine months ended September 30, 2016 was expense of $1,241,231 compared to expense of $974,047 for the nine months ended September 30, 2015. This change was due primarily to a 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.

 25

Liquidity and Capital Resources

	As of						Increase
	September 30, 2016			December 31, 2015			(Decrease)
Working Capital
Current assets	$	478,983		$	530,746		$	(51,763	)
Current liabilities		10,982,753			8,855,346			2,127,407
Working capital deficit	$	(10,503,770	)	$	(8,324,600	)	$	2,179,170
Long-term debt	$	-		$	-		$	-
Stockholders' deficit	$	(9,319,859	)	$	(7,019,662	)	$	2,300,197

	Nine Months Ended September 30,						Increase
	2016			2015			(Decrease)
Statements of Cash Flows Select Information
Net cash provided (used) by:
Operating activities	$	(1,246,854	)	$	(1,553,718	)	$	(306,864	)
Investing activities	$	-		$	-		$	-
Financing activities	$	1,121,288		$	1,385,250		$	(263,962	)

	As of				Increase
	September 30, 2016		December 31, 2015		(Decrease)
Balance Sheet Select Information
Cash	$	1,927	$	127,493	$	(125,566	)
Accounts receivable	$	950	$	7,061	$	(6,111	)
Inventory	$	307,631	$	261,887	$	45,744
Accounts payable and accrued expenses	$	3,133,771	$	2,352,439	$	781,332

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and 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 2016, 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.

 26

As of September 30, 2016, the Company had a working capital deficit of $10,503,770 and cash of $1,927, compared to a working capital deficit of $8,324,600 and cash of $127,493 as of December 31, 2015. 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 March 31, 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, 2016, the Company raised $1,185,000, net of transaction costs of $34,000, 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, 2015.

 27

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

	Date of		Common Shares		Source of
Common Stock	Issuance		Issued		Payment		Amount
		7/6/2016		3,400,000		Conversion of debt	$	13,600
		7/13/2016		4,626,797		Conversion of debt	$	18,507
		7/20/2016		5,700,000		Conversion of debt	$	21,090
		7/27/2016		3,000,000		Conversion of debt	$	9,300
		7/29/2016		5,838,957		Conversion of debt	$	22,188
		8/4/2016		8,000,000		Conversion of debt	$	25,600
		8/10/2016		12,000,000		Conversion of debt	$	42,000
		8/15/2016		15,782,365		Conversion of debt	$	47,347
		8/26/2016		5,000,000		Conversion of debt	$	17,500

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 14, 2016, there are Unsecured Convertible Debentures with a face value of $5,473,032 held by 75 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 14, 2016, 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

 28

Item 6.	Exhibits
3.1	Amended and Restated Articles of Incorporation dated August 2, 2004
3.2	Certificate of Amendment to Articles of Incorporation dated September 21, 2009
3.3	Amendment to Amended and Restated Articles of Incorporation dated July 13, 2012
3.4	Amendment to Amended and Restated Articles of Incorporation dated August 21, 2014
3.5	Amendment to Amended and Restated Articles of Incorporation dated August 8, 2016
3.6	Amended Bylaws dated November 15, 2012
3.7	Certificate of Designations Series A dated June 12, 2007
3.8	Certificate of Designaitons Series B dated June 22, 2009
3.9	Certificate of Designations Serices C dated April 9, 2010
3.10	Certificate of Designations Series AA Super Voting dated April 15, 2016
3.11	Certificate of Designatins Series A, Series B, Series C, Series AA dated June 28, 2016
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.
101.0	Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2016, 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.

 29

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 14, 2016	/s/ Michael P. Oliver
	Michael P. Oliver
	President and Chief Executive Officer
	(Principal executive officer)
Date: November 14, 2016	/s/ Lowell W. Giffhorn
	Lowell W. Giffhorn
	Chief Financial Officer
	(Principal financial officer and principal accounting officer)

 30

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

SPECTRASCIENCE, INC.

The Articles of Incorporation of SpectraScience, Inc., as amended, are hereby amended and restated in their entirety to read as follows:

ARTICLE I. NAME AND REGISTERED OFFICE

1.1 Name. The name of this Corporation is SpectraScience, Inc.

1.2 Registered Office. The location and post office address of the registered office of this Corporation in the State of Minnesota is 4800 Wells Fargo Ctr, MPLS 55402

ARTICLE II. SHARES AND SHAREHOLDERS

2.1 Numbers and Classes of Shares. This Corporation shall have the authority to issue an aggregate of 125,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, $.01 par value per share (the ‘‘Common Stock’’), and 25,000,000 undesignated shares of capital stock, undesignated par value per share (the ‘‘Undesignated Stock’’). The Undesignated Stock may be issued in one or more series as determined from time to time by the Board of Directors.

Any series authorized for issuance by the Board of Directors may be senior to the Common Stock with respect to any distribution (as such term is defined in Section 302A.011, Subd. 10, Minnesota Statutes) if so designated by the Board of Directors upon issuance of the shares of that series. The Board of Directors is hereby granted the express authority to fix by resolution any other designations, powers, preferences, rights (including voting rights), qualifications, limitations or restrictions with respect to any particular series created from the Undesignated Stock prior to issuance thereof.

2.2 Issuance of Shares. The Board of Directors shall have the authority to issue shares of a class or series to holders of shares of another class or series to effectuate share dividends, splits, or conversion of its outstanding shares.

2.3 Preemptive Rights. No shareholder of the Corporation shall have any preemptive rights to subscribe for or purchase his, her or its proportionate share of any stock of the Corporation, now or hereafter authorized or issued.

2.4 Cumulative Voting. No shareholder shall have the right to cumulate his, her or its votes in the election of directors or for any other purpose whatsoever.

2.5 Shares Outstanding as of the Date of this Restatement. Effective with the filing of these Amended and Restated Articles of Incorporation, the par value of all outstanding Common Stock shall be reduced from $.25 to $.01 per share and all such shares shall be ‘‘Common Stock’’ as described in Section 2.01 above.

ARTICLE III. WRITTEN ACTION

Any action, other than an action requiring shareholder approval, required or permitted to be taken at a meeting of the Board of Directors of this Corporation may be taken by written action signed by the number of directors required to take the same action at a meeting of the Board of Directors at which all directors were present. Any action requiring shareholder approval required or permitted to be taken at a meeting of the Board of Directors of this Corporation may be taken by written action signed by all of the directors.

ARTICLE IV. LIMITATION ON DIRECTORS LIABILITY

A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for

(i) liability based on a breach of the duty of loyalty to the Corporation or the shareholders;

(ii) liability for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (iii) liability based on the payment of an improper dividend or an improper repurchase of the Corporation’s stock under Minnesota Statutes Section 302A.559 or on violations of Minnesota state securities laws (Minnesota Statutes, Section 80A.23);

(iv) liability for any transaction from which the director derived an improper personal benefit; or

(v) liability for any act or omission occurring prior to the date this Article IV becomes effective. If the Minnesota Business Corporation Act is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Minnesota Business Corporation Act. Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. The provisions of this Article IV shall not be deemed to limit or preclude indemnification of a director by this Corporation for any liability of a director which has not been eliminated by the provisions of this Article IV.

The foregoing restated Articles of Incorporation supersede the original Articles of Incorporation and all amendments to them.

I swear that the foregoing is true and accurate and that I have authority to sign these Articles of Amendment on behalf of the Corporation.

SPECTRASCIENCE , INC.

/s/ James Hitchim

CEO and President

Dated: August 2, 2004

EX-3.2

Exhibit 3.2

CERTIFICATE OF AMENDMENT TO

ARTICLES OF INCORPORATION OF

SPECTRASCIENCE, INC.

The undersigned, being the Chief Executive Officer of SpectraScience, Inc., a Minnesota corporation (the “Corporation”), in accordance with the Minnesota Business Corporation Act, does hereby certify that the Board of Directors adopted the following resolutions effective as of September 21, 2009:

AMENDMENT TO ARTICLES OF INCORPORATION

RESOLVED, that Article I of the Articles of Incorporation of the Corporation be, and the same hereby is, amended at Section 1.02 to read as follows:

“1.02 Registered Office and Agent. The location and post office address of the registered office of this Corporation -in the ·State of Minnesota is 1400 Fifth Street Towers, 100 South Fifth Street, Minneapolis, Minnesota 55402. The registered agent of the Corporation at that address is Janna R. Severance.

RESOLVED FURTHER, that Article II of the Articles of Incorporation of the Corporation be, and the same hereby is, amended at Section 2.01 to read as fo1lows:

“2.01 Numbers and Classes of Shares. This Corporation shall have the authority to issue an aggregate of 225,000,000 shares of capital stock, consisting of 160,000,000 shares of common stock, $.01 par value per share (the “Common Stock”), 50,000,000 shares of undesignated shares of capital stock, undesignated· par value per share (the “Undesignated Stock”), and 15,000,000 shares of Series B Preferred Stock. The Undesignated Stock may be issued in one or more series as determined from time to time by the Board of1 Directors. Any, series authorized for issuance by the Board of Directors may be senior to the Common Stock with respect to any distribution (as such term is defined in Section 302A.01 l, Subd. 10, Minnesota Statutes) if so designated by the Board of Directors upon issuance of the shares of that series. The Board of Directors is hereby granted the express authority to fix by resolution any other designations, powers, preferences, rights (including voting rights), qualifications, limitations or restrictions with respect to any particular series created from the Undesignated Stock prior to issuance thereof.”

IN WITNESS WHEREOF, the undersigned has hereunto affixed his signature.

/s/ Jim Hitchum

Chief Executive Officer

EX-3.3

Exhibit 3.3

AMENDMENT TO

AMENDED AND RESTATED ARTICLES OF

INCORPORATION OF SPECTRASCIENCE, INC.

SpectraScience, Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), hereby certifies as follows:

The members of the Board of Directors have adopted a resolution amending Section 2.01 of the Amended and Restated Articles of Incorporation of the Company, and the Shareholders of the Company have voted to approve such amendment, such that Section 2.01 of the Amended and Restated Articles of Incorporation now reads in its entirety as follows:

“2.01) Numbers and Classes of Shares. This Corporation shall have the authority to issue an aggregate of 325,000,000 shares of capital stock, consisting of 275,000,000 shares of common stock, $.01 par value per share (the “Common Stock”), and 50,000,000 undesignated shares of capital stock, undesignated par value per share (the “Undesignated Stock”). The undesignated Stock may be issued in one or more series as determined from time to time by the Board of Directors. Any series authorized for issuance by the Board of Directors may be senior to the Common Stock with respect to any distribution (as such term is defined in Section 302A.O l 1, Subd. 10, Minnesota Statutes) if so designated by the Board of Directors upon issuance of the shares of that series. The Board of Directors is hereby granted the express authority to fix by resolution any other designations, powers, preferences, rights (including voting rights), qualifications, limitations or restrictions with respect to any particular series created from the Undesignated Stock prior to issuance thereof.”

This amendment has been approved pursuant to Minnesota Statutes, Chapter 302A. I certify that I am authorized to execute this amendment and I further certify that I understand that by signing this amendment, I am subject to the penalties of perjury as set forth in Section 609.48 as if I had signed this amendment under oath.

Dated: July 13, 2012

SPECTRASCIENCE, INC.

/S/ Michael P. Oliver

President and Chief Executive Officer

EX-3.4

Exhibit 3.4

AMENDMENT TO

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

SPECTRASCIENCE, INC.

SpectraScience, Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), hereby certifies as follows:

The members of the Board of Directors have adopted a resolution amending Section 2.01 of the Amended and Restated Articles of Incorporation of the Company, and the Shareholders of the Company have voted to approve such amendment, such that Section 2.01 of the Amended and Restated Articles of Incorporation now reads in its entirety as follows:

“2.01) Numbers and Classes of Shares. This Corporation shall have the authority to issue an aggregate of 750,000,000 shares of capital stock, consisting of 700,000,000 shares of common stock, $.01 par value per share (the “Common Stock”), and 50,000,000 undesignated shares of capital stock, undesignated par value per share (the “Undesignated Stock”). The undesignated Stock may be issued in one or more series as determined from time to time by the Board of Directors. Any series authorized for issuance by the Board of Directors may be senior to the Common Stock with respect to any distribution (as such term is defined in Section 302A.011, Subd. 10, Minnesota Statutes) if so designated by the Board of Directors upon issuance of the shares of that series. The Board of Directors is hereby granted the express authority to fix by resolution any other designations, powers, preferences, rights (including voting rights), qualifications, limitations or restrictions with respect to any particular series created from the Undesignated Stock prior to issuance thereof.”

This amendment has been approved pursuant to Minnesota Statutes, Chapter 302A. I certify that I am authorized to execute this amendment and I further certify that I understand that by signing this amendment, I am subject to the penalties of perjury as set forth in Section 609.48 as if I had signed this amendment under oath.

Dated: August 21, 2014

SPECTRASCIENCE, INC.

/S/ LOWELL W. GIFFHORN

Lowell W. Giffhorn, Secretary and Chief Financial Officer

EX-3.5

Exhibit 3.5

AMENDMENT TO

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

SPECTRASCIENCE, INC.

SpectraScience, Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), hereby certifies as follows:

The members of the Board of Directors have adopted a resolution amending Section 2.01 of the Amended and Restated Articles of Incorporation of the Company, and the Shareholders of the Company, via a written consent of the shareholders, have voted to approve such amendment, such that Section 2.01 of the Amended and Restated Articles of Incorporation now reads in its entirety as follows:

“2.01) Numbers and Classes of Shares. This Corporation shall have the authority to issue an aggregate of 1,250,000,000 shares of capital stock, consisting of 1,246,000 [sic] (corrected to) 1,246,000,000 shares of common stock, $.01 par value per share (the “Common Stock”); 2,585,000 shares of Series B Preferred Stock, $.01 par value per share (the “Series B Preferred Stock”; 500,000 shares of Series C Preferred Stock, $.01 par value per share (the “Series C Preferred Stock”); 3,000 shares of Series AA Super Voting Stock, $.01 [sic] (corrected to) $0.001 par value per share (the Series AA Super Voting Stock”); and 912,000 undesignated shares of capital stock, undesignated par value per share (the “Undesignated Stock”). The undesignated Stock may be issued in one or more series as determined from time to time by the Board of Directors. Any series authorized for issuance by the Board of Directors may be senior to the Common Stock with respect to any distribution (as such term is defined in Section 302A.011, Subd. 10, Minnesota Statutes) if so designated by the Board of Directors upon issuance of the shares of that series. The Board of Directors is hereby granted the express authority to fix by resolution any other designations, powers, preferences, rights (including voting rights), qualifications, limitations or restrictions with respect to any particular series created from the Undesignated Stock prior to issuance thereof.”

This amendment has been approved pursuant to Minnesota Statutes, Chapter 302A. I certify that I am authorized to execute this amendment and I further certify that I understand that by signing this amendment, I am subject to the penalties of perjury as set forth in Section 609.48 as if I had signed this amendment under oath.

Dated: August 6, 2016

SPECTRASCIENCE, INC.

 /s/ Lowell W. Giffhorn

Lowell W. Giffhorn, Secretary and Chief Financial Officer

EX-3.6

Exhibit 3.6

SPECTRASCIENCE, INC

AMENDED BYLAWS

ARTICLE I
OFFICERS, CORPORATE SEAL

AND SHAREHOLDER CONTROL AGREEMENT

SECTION 1.01. REGISTERED AND OTHER OFFICES. The registered office of the corporation in Minnesota shall be that set forth in the Articles of Incorporation or statement of the Board of Directors filed with the Secretary of State of Minnesota changing the registered office in the manner prescribed by law. The corporation may have such other offices, within or without the State of Minnesota, as the Board of Directors shall, from time to time, determine.

SECTION 1.02. CORPORATE SEAL. If so directed by the Board of Directors, the corporation may use a corporate seal. The failure to use such seal, however, shall not affect the validity of any documents executed on behalf of the corporation. The seal need only include the word “seal”, but it may also include, at the discretion of the Board, such additional wording as is permitted by law.

SECTION 1.03. SHAREHOLDER CONTROL AGREEMENT. In the event of any conflict or inconsistency between these Bylaws, or any amendment thereto, and any shareholder control agreement or any stock repurchase or redemption agreement, whenever adopted, such shareholder control agreement shall govern.

ARTICLE II
MEETINGS OF SHAREHOLDERS

SECTION 2.01. TIME AND PLACE OF MEETINGS. Regular or special meetings of the shareholders, if any, shall be held on the date and at the time and place fixed by the President in the absence of Board of Director action, except that a special meeting called by, or at the demand of a shareholder or shareholders, pursuant to Minnesota Statutes, Section 302A.43 l, Subd. 2, shall be held in the county where the principal executive office is located.

SECTION 2.02. REGULAR MEETING. At any regular meeting of the shareholders there shall be an election of qualified successors for directors who serve for an indefinite term or whose terms have expired or are due to expire within six (6) months after the date of the meeting. Any business appropriate for action by the shareholders may be transacted at a regular meeting. No meeting shall be considered a regular meeting unless specifically designated as such in the notice of meeting unless all the shareholders are present in person or by proxy and none of them objects to such designation. Regular meetings may be held no more frequently than once per year.

SECTION 2.03. DEMAND BY SHAREHOLDERS. Regular or special meetings may be demanded by a shareholder or shareholders, pursuant to the provisions of Minnesota Statutes, Section 302A.43 l, Subd. 2, and 302A.433, Subd. 2, respectively.

SECTION 2.04. QUORUM; ADJOURNED MEETINGS. The holders of a majority of the voting power of the shares entitled to vote at a meeting constitute a quorum for the transaction of business; said holders may be present at the meeting either in person or by proxy. If a quorum is present when a duly called or held meeting is convened, the shareholders present may continue to transact business until adjournment, even though withdrawal of shareholders originally present leaves less than the proportion or number otherwise required for a quorum.

A meeting of the shareholders at which there is a quorum may be adjourned as to all or part of the matters to be considered at the meeting upon motion by the person presiding at such meeting and by a majority vote of shares represented in person or by proxy at such meeting. Such adjournment shall be until a specific time and place, and the time and place for the reconvened meeting shall be announced at the meeting and reflected in the minutes thereof.

SECTION 2.05. VOTING. At each meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote either in person or by proxy. Unless otherwise provided by the Articles of Incorporation or a resolution of the Board of Directors filed with the Secretary of State, each shareholder shall have one vote for each share held. Upon demand of any shareholder, the vote upon any question before the meeting shall be by ballot.

SECTION 2.06. CLOSING OF BOOKS. The Board of Directors may fix a time, not exceeding sixty (60) days preceding the date of any meeting of shareholders, as a record date for the determination of the shareholders entitled to notice of, and to vote at, such meeting, notwithstanding any transfer of shares on the books of the corporation after any record date so fixed. The Board of Directors may close the books of the corporation against the transfer of shares during the whole or any part of such period. If the Board of Directors fail to fix a record date for determination of the shareholders entitled to notice of, and to vote at, any meeting of shareholders, the record date shall be the sixtieth (60th) day preceding the date of such meeting.

SECTION 2.07. NOTICE OF MEETINGS. Notice of all meetings of shareholders shall be given to every holder of voting shares, except where the meeting is an adjourned meeting and the date, time and place of the meeting was announced at the time of adjournment. The notice shall be given at least ten (10) days, but not more than sixty (60) days, before the date of the meeting, except that written notice of a meeting at which an agreement of merger is to be considered shall be given to all shareholders, whether entitled to vote or not, at least fourteen (14) days prior thereto. Every notice of any special meeting shall state the purpose or purposes for which the meeting has been called, and the business transacted at all special meetings shall be confined to the purpose stated in the call, unless all of the shareholders are present in person or by proxy and none of them object to consideration of a particular item of business.

SECTION 2.08. WAIYER OF NOTICE. A shareholder may waive notice of any meeting of shareholders. A waiver of notice by a shareholder entitled to notice is effective whether given before, at or after the meeting and whether given in writing, orally or by attendance.

SECTION 2.09. AUTHORIZATION WITHOUT A MEETING. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting as authorized by law.

ARTICLE III
DIRECTORS

SECTION 3.01. GENERAL PURPOSES. Except as authorized by the shareholders pursuant to a shareholder control agreement or unanimous affirmative vote, the business and affairs of the corporation shall be managed by or shall be under the direction of the Board of Directors.

SECTION 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of Directors shall consist of five Directors, which number may be increased by the Board of Directors and additional Directors elected by the existing Board of Directors, without approval of the shareholders; but this number shall only be decreased in accordance with Section 302A.223 of the Minnesota Business Corporation Act. Directors need not be shareholders. The Board of Directors, in its discretion, may elect a Chairman of the Board of Directors, who, when present, shall preside at all meetings of the Board of Directors, and who shall have such powers as the Board shall prescribe. Each of the directors shall hold office until the regular meeting of the shareholders next held after his election, until his successor shall have been elected and shall qualify, or until he shall resign or shall have been removed as provided by law.

Notwithstanding the provisions of Section 3.02 of the Amended and Restated Bylaws, until the first meeting of shareholders after December 31, 2006 (the “2007 Meeting”), the Board of Directors shall consist of not less than four persons, and all such persons elected or appointed to the Board on and after July 7, 2004 shall serve for a term ending with the election of directors at the 2007 Meeting.

SECTION 3.03. BOARD MEETINGS; PLACE AND NOTICE. Meetings of the Board of Directors may be held from time to time at any place within or without the State of Minnesota that the Board of Directors may designate. In the absence of designation by the Board of Directors, Board meetings shall be held at the principal executive office of the corporation, except as may be otherwise unanimously agreed orally or in writing or by attendance. Any director may call a Board meeting by giving twenty-four (24) hours notice to all directors of the date and time of the meeting. The notice need not state the purpose of the meeting. Notice may be given by mail, telephone, telegram, or in person. If a meeting schedule is adopted by the Board of Directors, or if the date and time of a Board meeting has been announced at a previous meeting, no notice is required.

SECTION 3.04. WAIYER OF NOTICE. A director may waive notice of a meeting of the Board of Directors. A waiver of notice by a director is effective, whether given before, at or after the meeting and whether given in writing, orally or by attendance.

SECTION 3.05. QUORUM. A majority of the whole Board is a quorum for the transaction of business, except that when a vacancy or vacancies exist, a majority of the remaining directors shall constitute a quorum.

SECTION 3.06. VACANCIES. Vacancies on the Board of Directors resulting from the death, resignation or removal of a director may be filled by the affirmative voting of a majority of the remaining directors, even though less than a quorum. Each director elected under this Section to fill a vacancy holds office until a qualified successor is elected by the shareholders at their next regular meeting or at any meeting duly called for that purpose.

SECTION 3.07. COMMITTEES. The Board may, by resolution, establish committees in the manner provided by law. Committee members need not be directors.

SECTION 3.08. COMPENSATION. Directors shall not receive any stated salary for their services in such capacity, but by resolution of the Board may receive a fixed fee and expenses of attending meetings. Nothing herein precludes any director from serving in another capacity and receiving compensation for such other capacity.

SECTION 3.09. ABSENT DIRECTORS. A director may give advance written consent or opposition to a proposal to be acted on at a Board of Directors meeting.

SECTION 3.10. AUTHORIZATION WITHOUT A MEETING. Any action required or permitted to be taken at a meeting of the Board or any committee may be taken without a meeting as authorized by law.

ARTICLE IV
OFFICERS

SECTION 4.0 I . NUMBER. The officers of the corporation shall consist of a President and may also consist of one or more Vice Presidents, a Secretary and a Treasurer. The Board may elect or appoint any other officers it deems necessary for the operation and management of the corporation, each of whom shall have the powers, rights, duties, responsibilities and terms of office determined by the Board from time to time. Any number of offices or functions of those offices may be held or exercised by the same person.

SECTION 4.02. ELECTION AND TERM OF OFFICE. The Board of Directors shall from time to time elect a President and may elect one or more Vice Presidents, a Secretary and a Treasurer and any other officers or agents the Board deems necessary. Such officers shall hold their offices until their successors are elected and qualified.

SECTION 4.03. PRESIDENT. Unless otherwise stipulated, the President shall be the chief executive officer and the chief financial officer of the corporation and shall have responsibility for the general active management of the corporation. When present, he shall preside at all meetings of the shareholders and, unless a Chairman of the Board of Directors has been elected and is present, shall preside at meetings of the Board of Directors and see that all orders and resolutions of the Board of Directors are carried into effect. The President, unless some other person is specifically authorized by vote of the Board of Directors, shall sign all certificates of stock, bonds, deeds, mortgages, agreements, modification of mortgage agreements, leases, and contracts of the corporation. The President, if no Secretary has been elected, shall maintain records of and, whenever necessary, certify all proceedings of the Board of Directors and the shareholders. As chief financial officer, the President shall keep accurate financial records of the corporation; deposit all money, drafts and checks in the name of and to the credit of the corporation in the banks and depositories designated by the Board of Directors; endorse for deposit all notes, checks, and drafts received by the corporation as ordered by the Board of Directors, making proper vouchers therefore; and disburse corporate funds and issue checks and drafts in the name of the corporation, as ordered by the Board of Directors. The President shall perform such other duties as the Board of Directors shall designate.

SECTION 4.04. VICE PRESIDENT. If a Vice President or Vice Presidents have been elected, they shall have such powers and perform such duties as may be prescribed by the Board of Directors or by the President. In the event of absence or disability of the President, Vice Presidents shall succeed to the President’s power and duties in the order designated by the Board of Directors.

SECTION 4.05. SECRETARY. If a Secretary has been elected, the Secretary shall keep accurate minutes of all meetings of the shareholders and the Board of Directors, shall give proper notice of meetings of shareholders and directors, shall certify all proceedings of the Board of Directors and the shareholders, and shall perform such other duties and have such other powers as the Board of Directors or the President may from time to time prescribe. In the Secretary’s absence at any meeting an Assistant Secretary or a Secretary Pro Tempore shall perform the Secretary’s duties.

SECTION 4.06. TREASURER. If a Treasurer has been elected, the Treasurer shall assist the President in carrying out the President’s duties as chief financial officer and perform such other duties and have such other powers as the Board of Directors or the President may from time to time prescribe.

SECTION 4.07. REMOVAL AND VACANCIES. Any officer may be removed from his office by a majority of the whole Board of Directors, with or without cause. Such removal, however, shall be without prejudice to the contract rights of the person so removed. If there be a vacancy among the officers of the corporation by reason of death, resignation or otherwise, such vacancy may be filled for the unexpired term by the Board of Directors.

SECTION 4.08. DELEGATION OF AUTHORITY. An officer elected or appointed by the Board may delegate some or all of the duties or powers of his office to other persons, provided that such delegation is in writing.

ARTICLE V
SHARES AND THEIR TRANSFER

SECTION 5.01. Certificate and Uncertificated Shares. Shares of the capital stock of this Corporation may be certificated or uncertificated, as determined by the Board of Directors. If certificated, the certificates shall be in such form or forms as may be determined by the Board of Directors or those actually used in the event the Board fails to act. Certificates shall be signed by the President, Vice President, the Treasurer, or the Secretary or an Assistant Secretary. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences, and relative, participating, optional, or other special rights of the various classes of stock or series thereof and the qualifications, limitations, or restrictions of such rights, together with a statement of the authority of the Board of Directors to determine the relative rights and preferences of subsequent classes or series, shall be set forth in full on the face or back of the certificate (if any) which the Corporation shall issue to represent such stock, or, in lieu thereof, such certificate (if any) shall contain a statement that the stock is, or may be, subject to certain rights, preferences, or restrictions and that a statement of the same will be furnished without charge by the Corporation upon request by a shareholder. Certificates representing the shares of the capital stock of the Corporation shall be in such form not inconsistent with law or the Articles of Incorporation or these Bylaws, as shall be determined by the Board of Directors.

SECTION 5.02. ISSUANCE OF SHARES. The Board of Directors is authorized to cause to be issued shares of the corporation up to the full amount authorized by the Articles of Incorporation in such amounts as may be determined by the Board of Directors and as may be permitted by applicable law. Shares shall be allotted only in exchange for consideration in such forms as may be permitted by applicable law. At the time of any such allotment of shares, the Board of Directors making such allotment shall state, by resolution, their determination of the fair value of the corporation in monetary terms of any consideration other than cash for which shares are allotted. The amount of consideration to be received in cash or otherwise shall not be less than the par value of the shares so allotted.

SECTION 5.03. TRANSFER OF STOCK. The shares of stock of the corporation shall be transferable upon its books only by the record holder of such stock or by attorney lawfully constituted in writing, and, in the case of certificated shares, upon surrender to the Corporation of the old stock certificates, properly endorsed, to the person in charge of the stock and transfer books, by whom they shall be cancelled. A record shall be made of each transfer, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. The Board of Directors may, by resolution duly adopted, establish conditions upon the transfer of shares of stock to be issued by the Corporation and the purchasers of such shares shall deem to have accepted such conditions on transfer upon the receipt of the certificate representing such shares, provided that the restrictions shall be referred to on the certificates or the purchaser shall have otherwise been notified thereof.

SECTION 5.04. LOST CERTIFICATES. Any shareholder claiming that a certificate for shares has been lost, destroyed or stolen shall make an affidavit of the fact in such form as the Board of Directors shall require and shall, if the Board of Directors so requires, give the corporation a sufficient indemnity bond, in form, in an amount, and with one or more sureties satisfactory to the Board of Directors, to indemnify the corporation against any claims which may be made against it on account of the reissue of such certificates. A new certificate shall then be issued to said shareholder for the same number of shares as the one alleged to have been destroyed, lost or stolen.

ARTICLE VI
DISTRIBUTIONS

SECTION 6.01. DISTRIBUTIONS. Subject to the provisions of the Articles of Incorporation, the Board of Directors may cause the corporation to make distributions pursuant to the provisions of the Minnesota Statutes, Section 302A.55l .

SECTION 6.02. RECORD DATE. Subject to any provisions of the Articles of Incorporation, the Board of Directors may fix a date preceding the date fixed for the payment of any distribution or allotment of other rights as the record date for the determination of the shareholders entitled to receive payment of such distribution or allotment of such rights; and in such case only shareholders of record on the date so fixed shall be entitled to receive payment or allotment notwithstanding any transfer of shares on the books of the corporation after such record date. The Board of Directors may close the books of the corporation against the transfer of shares during the whole or any part of such period.

ARTICLE VII
BOOKS AND RECORDS; FISCAL YEAR

SECTION 7.01. BOOKS AND RECORDS. The Board of Directors of the corporation shall cause to be kept in such place as it may designate:

(a) a share register, giving the names and addresses of the shareholders, the number and classes of shares held by each, and the dates on which the certificates therefore were issued;

(b) records of all proceedings of shareholders and directors;

(c) such other records and books of account as shall be necessary and appropriate to the conduct of corporate business; and

(d) Bylaws of the corporation and all amendments thereto.

SECTION 7.02. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.

ARTICLE VIII INSPECTION
OF BOOKS

SECTION 8.01. EXAMINATION BY SHAREHOLDERS. Every shareholder of the corporation and every holder of a voting trust certificate shall have the right to examine, in person or by agent or attorney authorized in writing to represent the shareholder, at any reasonable time or times, for any proper purpose, and at the place or places where usually kept, the share register, books of account and records of the proceedings of the shareholders and directors and to make extracts therefrom.

SECTION 8.02. INFORMATION TO SHAREHOLDERS. Upon written request by a shareholder of the corporation, the Board of Directors shall furnish to him a statement of profit and loss for the last fiscal year and a balance sheet containing a summary of the assets and liabilities as of the close of such fiscal year.

ARTICLE IX
INDEMNIFICATION

Any person who at any time shall serve or shall have served as a director, officer, or employee of the corporation, or of any other enterprise at the request of the corporation, and the heirs, executors and administrators of such person shall be indemnified by the corporation in accordance with, and to the fullest extent permitted by, the provisions of the Minnesota Business Corporation Act, as it may be amended from time to time.

ARTICLE IX (AMENDED)
INDEMNIFICATION

SECTION 9.01. DEFINITIONS.

(a) For purposes of this Article, the terms defined in this Section have the meanings given them.

(b) “CORPORATION” includes a domestic or foreign corporation that was the predecessor of the corporation referred to in this section in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

(c) “OFFICIAL CAPACITY” means (1) with respect to a director, the position of director in the corporation, (2) with respect to a person other than a director, the elective or appointive office or position held by an officer, member of a committee of the Board, or the employment relationship undertaken by an employee of the corporation, (3) with respect to a director, officer or employee of the corporation who is or was serving at the request of the corporation or whose duties in. that position involve or involved service as a director, officer, partner, trustee, or agent of another organization or employee benefit plan, the position of that person as director, officer, partner, trustee, employee or agent, as the case may be, of the other organization or employee benefit plan.

(d) “PROCEEDING” means a threatened, pending or completed civil, criminal, administrative, arbitration or investigative proceeding, including a proceeding by or in the right of the corporation.

(e) “SPECIAL LEGAL COUNSEL” means counsel who has not represented the corporation or a related corporation, or a director, officer, member of a committee of the Board or employee whose indemnification is in issue.

SECTION 9.02. INDEMNIFICATION MANDATORY; STANDARD.

(a) Subject to the provisions of Section 4, a corporation shall indemnify a person made or threatened to be made a party to a proceeding by reason of the former or present official capacity of the person against judgments, penalties, fines, including without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements and reasonable expenses, including attorneys’ fees and disbursements, incurred by the person in connection with the proceeding if, with respect to the acts or omissions of the person complained of in the proceeding, the person:

(1) as not been indemnified by another organization or employee benefit plan for the same judgments, penalties, fines, including without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements and reasonable expenses, including attorneys’ fees and disbursements incurred by the person in connection with the proceeding with respect to the same acts or omissions;

(2) acted in good faith;

(3) received no improper personal benefit and Section 302A.255, if applicable, has been satisfied;

(4) in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and

(5) in the case of acts or omissions occurring in the official capacity described in Section 1, paragraph (c), clause ( I ) or (2), reasonably believed that the conduct was in the best interests of the corporation, or in the case of acts or omissions occurring in the official capacity described in Section 1, paragraph (c), clause (3), reasonable believed that the conduct was not opposed to the best interests of the corporation. If the person’s acts or omissions complained of in the proceeding relate to conduct as a director, officer, trustee, employee, or agent of an employee benefit plan, the conduct is not considered to be opposed to the best interests of the corporation if the person reasonably believed that the conduct was in the best interests of the participants or beneficiaries of the employee benefit plan.

(b) The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent does not, of itself, establish that the person did not meet the criteria set forth in this Section 2.

SECTION 9.03. ADVANCES. Subject to the provisions of Section 4, if a person is made or threatened to be made a party to a proceeding, the person is entitled, upon written request to the corporation, to payment or reimbursement by the corporation of reasonable expenses, including attorneys’ fees and disbursements, incurred by the person in advance of the final disposition of the proceeding, (a) upon receipt by the corporation of a written affirmation by the person of a good faith belief that the criteria for indemnification set forth in Section 2 have been satisfied and a written undertaking by the person to repay all amounts so paid or reimbursed by the corporation, if it is ultimately determined that the criteria for indemnification have not been satisfied, and

(b) after a determination that the facts then known to those making the determination would not preclude indemnification under this Article. The written undertaking required by clause (a) is an unlimited general obligation of the person making it, but need not be secured and shall be accepted without reference to financial ability to make the repayment.

SECTION 9.04. PROHIBITION OR LIMIT ON INDEMNIFICATION OR ADVANCES. The Articles or Bylaws

either may prohibit indemnification or advances of expenses otherwise required by this Article or may impose conditions on indemnification or advances of expenses in addition to the conditions contained in Sections 2 and 3 including, without limitation, monetary limits on indemnification or advances of expenses, if the conditions apply equally to all persons or to all persons within a given class. A prohibition or limit on indemnification or advances may not apply to or affect the right of a person to indemnification or advances of expenses with respect to any acts or omissions of the person occurring prior to the effective date of a provision in the Articles or the date of adoption of a provision in the Bylaws establishing the prohibition or limit on indemnification or advances.

SECTION 9.05. REIMBURSEMENT TO WITNESS. This section does not require or limit the ability of a corporation to reimburse expenses, including attorneys’ fees and disbursements, incurred by a person in connection with an appearance as a witness in a proceeding at a time when the person has not been made or threatened to be made a party to a proceeding.

SECTION 9.06. DETERMINATION OF ELIGIBILITY.

(a) All determinations whether indemnification of a person is required because the criteria set forth in Section 2 have been satisfied and whether a person is entitled to payment or reimbursement of expenses in advance of the final disposition of a proceeding as provided in Section 3 shall be made:

(l) by the Board by a majority of a quorum. Directors who are at the time parties to the proceeding shall not be counted for determining either a majority or the presence of a quorum;

(2) if a quorum under clause ( I ) cannot be obtained by a majority of a committee of the Board, consisting solely of two or more directors not at the time parties to the proceeding, duly designated to act in the matter by a majority of the full Board, including directors who are parties;

(3) if a determination is not made under clause (1) or (2) by special legal counsel, selected either by a majority of the Board or a committee by vote pursuant to clause ( I ) or (2) or, if the requisite quorum of the full Board cannot be obtained and the committee cannot be established, by a majority of the full Board including directors who are parties;

(4) if a determination is not made under clauses (1) to (3) by the shareholders, excluding the votes of shares held by parties to the proceeding; or

(5) if an adverse determination is made under clauses (l ) to (4) or under paragraph (b), or if no determination is made under clauses (I) to (4) or under paragraph (b) within 60 days after the termination of a proceeding or after a request for an advance of expenses by a court in this state, which may be the same court in which the proceeding involving the person’s liability took place, upon application of the person and any notice the court requires.

(b) With respect to a person who is not, and was not at the time of the acts or omissions complained of in the proceedings, a director, officer or person possessing, directly or indirectly, the power to direct or cause the direction of the management or policies of the corporation, the determination whether indemnification of this person is required because the criteria set forth in Section 2 have been satisfied and whether this person is entitled to payment or reimbursement of expenses in advance of the final disposition of a proceeding as provided in Section 3 may be made by an annually appointed committee of the Board, having at least one member who is a director. The committee shall report at least annually to the Board concerning its actions.

SECTION 9.07. INSURANCE. A corporation may purchase and maintain insurance on behalf of a person in that person’s official capacity against any liability asserted against and incurred by the person in or arising from that capacity, whether or not the corporation would have been required to indemnify the person against the liability under the provisions of this section.

SECTION 9.08. DISCLOSURE. A corporation that indemnifies or advances expenses to a person in accordance with this section in connection with a proceeding by or on behalf of the corporation shall report to the shareholders in writing.

SECTION 9.09. INDEMNIFICATION OF OTHER PERSONS. Nothing in this section shall be construed to limit the power of the corporation to indemnify other persons by contract or otherwise.

ARTICLE X
AMENDMENTS

SECTION 10.01. Subject to Section 10.02, these Bylaws may be amended by a vote of the majority of the whole Board of Directors at any meeting, provided that notice of such proposed amendment shall have been included in the notice of such meeting given to the directors. The Board of Directors shall not adopt, amend or repeal any Bylaw fixing a quorum for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in the Board of Directors, or fixing their qualification, classification, term of office or number; except that the Board may adopt or amend any Bylaw to increase its number.

SECTION 10.02. Notwithstanding the provisions of Section 10.01, the shareholders may amend or repeal any Bylaw by a majority vote of the shareholders present or represented at any regular meeting or at any special meeting of shareholders called for such purpose.

EX-3.7

Exhibit 3.7

CERTIFICATE OF CREATION OF

SERIES A PREFERRED STOCK

OF

SPECTRASCIENCE, INC.

I, James Hitchin, Chief Executive Officer of SpectraScience, Inc. a Minnesota corporation (the “Company”), do hereby certify that on June 12, 2007, under the authority of Article II, Section 2.01 of the Company’s Amended and Restated Articles of Incorporation, the Board of Directors of the Company unanimously adopted a resolution fixing the rights and preferences of 2,250,000 of the Company’s undesignated shares of capital stock as Series A Preferred Stock, $.01 par value, with the preferences, rights and limitations set forth on Exhibit A which is attached hereto and hereby incorporated herein.

IN WITNESS WHEREOF, I have hereunto subscribed my name as Chief Executive Officer of the Company this twelfth day of June, 2007.

/s/ James Hitchin

James Hitchin

Chief Executive Officer

EXHIBIT A

DESIGNATION OF THE RELATIVE RIGHTS

AND PREFERENCES OF THE SERIES A PREFERRED STOCK.

DESIGNATION AND RANK

SpectraScience, Inc. a Minnesota corporation (the “Company”), hereby designates out of its authorized, but unissued, shares of preferred stock, a new series of preferred stock entitled Series A Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”). The maximum number of shares of Series A Preferred Stock shall be two million two hundred and fifty thousand (2,250,000) shares. The Series A Preferred Stock shall rank, with respect to dividends and rights upon liquidation, winding up and dissolution, senior to the Common Stock of the Company.

DIVIDENDS

Dividends are payable on the Series A Preferred Stock only if, when and in the amount declared by the Board of Directors in its sole discretion. If the Company declares a dividend or a distribution on any Common Stock of the Company, the Company shall pay a dividend or make a distribution on all outstanding shares of Series A Preferred Stock in an amount per share equal to the maximum amount paid or set aside for all shares of Common Stock into which each such share of Series A Preferred Stock could then be converted (the “Preferred Dividend”). The Company shall pay the Preferred Dividend prior to paying a dividend or distribution to the holders of Common Stock.

LIQUIDATION PREFERENCE

VOTING RIGHTS

Each holder of Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Series A Preferred Stock are then convertible and shall have voting rights and powers equal to the voting rights and powers of the Common Stock, except as otherwise required by Minnesota law or as set forth in this Designation, voting together with the Common Stock as a single class. Fractional votes shall not be permitted and any fractional voting rights resulting from the conversion of Series A Preferred Stock into Common Stock (in the case of each holder, after aggregating all fractional shares held by such holder into the maximum number of whole shares) shall be rounded to the nearest whole number (with one-half being rounded upward). Each holder of Common Stock shall be entitled to one (1) vote for each share of Common Stock held. Notwithstanding the foregoing, the holders of the Series A Preferred Stock shall vote as a single class to elect one director of the Company if on the record date for such election at least five hundred thousand (500,000) shares of Series A Preferred Stock are outstanding.

CONVERSION

The holders of Series A Preferred Stock shall have the following conversion rights (the “Conversion Rights”) as defined below:

ANTI-DILUTION ADJUSTMENTS

The Conversion Price is subject to adjustment as provided in this Section 6.

Adjustments for Subdivision or Combination of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided by stock split, stock dividend or otherwise into a greater number of shares of Common Stock, the Conversion Price shall, concurrently within the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined or consolidated into a lesser number of shares of Common Stock, the Conversion Price shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

Stock Dividends and Other Distributions. In the event the Company makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, any distribution payable in property, in securities of other persons or of the Company or evidences of indebtedness of other persons or of the Company, unless otherwise adjusted for in this Section 6 or as provided for in Section 2 in connection with a Preferred Dividend, then, and in each such event, the holders of Class A Preferred Stock shall receive, at the time of such distribution, the amount of any such distribution that they would have received had their Class A Preferred Stock been converted into Common Stock immediately prior to the date of such event.

Adjustments for Reorganization, Reclassification or Similar Events. If the Common Stock shall be changed into the same or a different number of shares of any other class or classes of stock or other securities or property, whether by capital reorganization, reclassification or otherwise, then each share of Class A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Company deliverable upon conversion of such shares of Class A Preferred Stock shall have been entitled upon such reorganization, reclassification or other event.

Adjustments for Diluting Issues. In addition to the adjustments to the Conversion Price provided above, the Conversion Price shall be further adjusted from time to time as follows (the main operative provision hereof is in Section 6(d)(iii) below):

Special Definitions:

“Options” shall mean rights, options or warrants (other than as excluded by Section 6(d)(i)(D) below) to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined herein).

“Original Issue Date” shall mean the date of the Closing of a transaction or series of transactions in which the Company issues shares of Series A Preferred Stock for an aggregate consideration of at least $1,000,000.

“Convertible Securities” shall mean securities (other than as excluded by Section 6(d)(i)(D) below) convertible, either directly or indirectly, into or exchangeable for Common Stock.

“Additional Shares of Common Stock” shall mean all shares of Common Stock, for which an adjustment under section 6(a) has already been made, issued (or deemed to be issued) by the Company after the Original Issue Date other than the following:

Shares of Common Stock issued (or deemed to be issued) upon the conversion of any of the Series A Preferred Stock, or as a dividend or distribution on the Series A Preferred Stock;

Shares of Common Stock issued (or deemed to be issued) upon the conversion of any debenture, warrant, option or other convertible security that is outstanding as of the Original Issue Date or issued in connection with the issuance of the Series A Preferred Stock, unless such exercise or conversion price was adjusted downward after the issuance of the Series A Preferred Stock;

Shares of Common Stock issued (or deemed to be issued) upon a stock split, stock dividend or other subdivision of shares of Common Stock;

Shares of Common Stock (or options to purchase such shares) issued (or deemed to be issued) to employees, consultants or directors pursuant to stock option, stock grant, stock purchase or similar plans or arrangements approved by the Company’s Board of Directors, including the Series A Director;

Deemed Issue of Additional Shares of Common Stock. Except as otherwise provided in Section 6(d), if the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of any holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefore, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

No further adjustment in the Conversion Price shall be made upon the subsequent issue of such Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities at the same exercise, conversion or exchange price or ratio in effect upon the adoption of the applicable plan or grant of such Option or Convertible Securities;

If such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof or upon the occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease;

Upon the expiration or termination of any such Option or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof or upon occurrence of a record date with respect thereto, and any subsequent adjustments based thereon, shall, upon such expiration:

In the case of Convertible Securities or Options for Common Stock, be recomputed as though the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities, and the consideration received therefore was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities, whether or not converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and;

In the case of Options for Convertible Securities, be recomputed as though only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options and the consideration received by the Company for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company upon the issue of the Convertible Securities with respect to which such Options were actually exercised.

No readjustment pursuant to Section 6(d) shall have the effect of increasing the Conversion Price to an amount which exceeds the Conversion Price existing immediately prior to the original adjustment with respect to the issuance of such Options or Convertible Securities, as adjusted for any Additional Shares of Common Stock issued (or deemed to be issued) between such original adjustment date and such readjustment date; and in the case of any Option or Convertible Security with respect to which the maximum number of shares of Common Stock issuable upon exercise or conversion or exchange thereof is not determinable, no adjustment to the Conversion Price shall be made until such number becomes determinable.

Adjustments for Issuance of Additional Shares of Common Stock. If the Company, at any time after the Original Issue Date, shall issue any Additional Shares of Common Stock (otherwise than provided in sections 6(a), 6(b) or 6(c) above) at a price per share less than the applicable Conversion Price then in effect or without consideration, then the applicable Conversion Price upon each such issuance shall be adjusted to the consideration per share paid for the Additional Common Stock.

The provisions of Section 6(d)(iii) shall not apply under any of the circumstances for which an adjustment is provided in Sections 6(a), 6(b) or 6(c) above. No adjustment of the applicable Conversion Price shall be made under this Section 6(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to any Options or Convertible Securities if upon the issuance of such Options or Convertible Securities (x) any adjustment shall have been made pursuant to Section 6(d)(ii) above or (y) no adjustment was required pursuant to this Section 6(d)(iii). No adjustment of the applicable Conversion Price shall be made under this Section 6(d)(iii) in an amount less than $.01 per share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment, if any, which together with any adjustments so carried forward shall amount to $.01 per share or more; provided, however, that upon any adjustment of the applicable Conversion Price as a result of any dividend or distribution payable in Common Stock or Convertible Securities or the reclassification, subdivision or combination of Common Stock into a greater or smaller number of shares, the foregoing figure of $.01 per share (or such figure as last adjusted) shall be adjusted (to the nearest one-half cent) in proportion to the adjustment in the applicable Conversion Price.

Determination of Consideration. For purposes of this Section 6(d), the consideration received by the Company for any Additional Shares of Common Stock issued (or deemed to be issued) shall be computed as follows:

Cash and Property. Such consideration shall:

Insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company;

Insofar as it consists of securities and the value of such securities is not determinable by reference to a separate agreement, (A) if the securities are then traded on a national securities exchange or the Nasdaq Stock Market (or a similar national quotation system), then the value shall be computed based on the average of the closing prices of the securities on such exchange or system over the thirty (30)-day period ending on the date of receipt by the Company, (B) if the securities are actively traded over-the-counter, then the value shall be computed based on the average of the closing bid prices over the thirty (30) day ending on the date of receipt by the Company, and (C) if there is no active public market, then the value shall be computed based on the fair market value thereof on the date of receipt by the Company, as determined in good faith by the Board of Directors;

Insofar as it consists of property other than cash and securities, be computed at the fair market value thereof at the time of such issuance, as determined in good faith by the Board of Directors; and if Additional Shares of Common Stock are issued (or deemed to be issued) together with other shares or securities or other assets of the Company for consideration which cover both, by the proportion of such consideration so received, computed as provided in the immediately preceding Sections 6(d)(iv)(A)(1), 6(d)(iv)(A)(2) and 6(d)(iv)(A)(3), as determined in good faith by the Board of Directors.

Options and Convertible Securities. The consideration received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 6(d) relating to Option and Convertible Securities, shall be the sum of (x) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus (y) the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

The Conversion Price shall also be subject to adjustment on the date of issuance of the audited financial statements of the Company for the fiscal year ending December 31, 2007, in the event that the gross revenues of the Company for the fiscal year ended December 31, 2007, excluding grants and other development funds, interest income, and other non-operating income, and excluding revenues from acquired companies or products, is less than the target revenues set forth below:

Target Revenue	Adjusted Conversion Price
$6 million or more	$	.50
At least $5 million, but less than $6 million	$	.37
At least $4 million, but less than $5 million	$	.25
Less than $4 million	$	.125

Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to the holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon conversion of the Series A Preferred Stock.

OTHER PROVISIONS

The consent of the holders of 67% of the Series A Preferred Stock voting as a separate class shall be required for the Company to take any action that (i) alters or changes the rights, preferences or privileges of the Series A Preferred Stock, (ii) increases or decreases the authorized number of shares of capital stock, (iii) creates (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges senior to or in parity with the Series A Preferred Stock, (iv) results in the redemption of any shares of Common Stock (other than pursuant to equity incentive agreements giving the Company the right to repurchase shares upon the termination of services), (v) results in a Change of Control (as defined herein), (vi) amends or waives any provisions of the Company’s Articles of Incorporation or Bylaws relative to the Series A Preferred Stock, or (vii) results in the payment or declaration of any dividend on any shares of equity securities. A “Change in Control” shall mean the acquisition of the Company by another entity by means of any transaction or series of related transactions including, without limitation, any reorganization, merger or consolidation or sale of all or substantially all of the assets or shares of stock of the Company (each a “Change of Control”); provided, however, that, in each such case, the applicable transaction shall not be deemed a Change of Control unless the Company’s shareholders of record as constituted immediately prior to such transaction (by virtue of shares of the Company owned by such shareholders or securities issued solely with respect thereto as consideration for the Company’s acquisition or sale or otherwise) hold less than 50% of the voting power of the surviving or acquiring entity.

No shares of Series A Preferred Stock acquired by the Company by reason of redemption, repurchase, conversion or otherwise shall be reissued as Series A Preferred Stock. All such shares shall be cancelled, retired and eliminated from the shares of Series A Preferred Stock which the Company shall be authorized to issue and shall once again become undesignated shares of the Company’s preferred stock under Section 2.1 of the Company’s amended and Restated Articles of Incorporation.

Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificates representing shares of Series A Preferred Stock, and, in the case of loss, theft or destruction, of a satisfactory indemnification undertaking by the holder to the Company and, in the case of mutilation, upon surrender and cancellation of the Series A Preferred Stock certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, that the Company shall not be obligated to re-issue preferred stock certificates if the holder contemporaneously requests the Company to convert such shares of Series A Preferred Stock into Common Stock.

NO CUMULATIVE VOTING RIGHTS

No holder of the Series A Preferred Stock shall have any cumulative voting rights.

NO PREEMPTIVE RIGHTS

No holder of the Series A Preferred Stock shall have any preemptive rights by virtue of Section 302A.413 of the Minnesota Statutes (or any amendment or restatement thereof) to subscribe for, purchase or otherwise acquire any shares of the Company of any class, whether unissued or not or hereafter authorized, or any obligations or other securities convertible into or exchangeable for any such shares.

EX-3.8

Exhibit 3.8

CERTIFICATE OF DESIGNATION

OF RIGHTS AND PREFERENCES OF

SERIES B PREFERRED STOCK

OF SPECTRASCIENCE, INC.

(PURSUANT TO MINNESOTA STATUTES, SECTION 302A.401, SUBD. 3(B))

The undersigned, being the Secretary of SpectraScience, Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), in accordance with the provisions of Minnesota Statutes, Section 302A.401, Subd. 3(b), does hereby certify that pursuant to the authority vested in the Company’s Board of Directors by the Company’s Amended and Restated Articles of Incorporation (the “Articles”), the Board of Directors on June 22, 2009, in accordance with Minnesota Statutes, Section 302A.401, Subd. 3 and Section 2.01 of the Articles duly adopted the following resolution establishing the Series B Preferred Stock of the Company:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Company by the Articles, the Board of Directors hereby establishes a class of preferred stock entitled the Series B Preferred Stock, and hereby states the designation and number of shares, and fixes the relative rights and preferences, of the Series B Preferred Stock as follows:

Designation and Rank.

Fifteen Million (15,000,000) shares of the Company’s undesignated stock authorized by Article 2.01 of the Articles are designated as Series B Preferred Stock, par value $0.1 per share, (the “Series B Stock”). The Series B Stock shall rank, with respect to dividends and rights upon liquidation, winding up and dissolution, senior to the Common Stock of the Company.

Definitions.

For purposes of this Certificate of Designation (“Certificate”) the following definitions shall apply and shall be equally applicable to both the singular and plural forms of the defined terms:

“Conversion Shares” shall mean the securities issued or issuable upon conversion of the Series B Stock.

2.2 “Free Trading” shall mean that (i) Conversion Shares consist of Common Stock and are freely tradable by non-affiliates of the Company (subject only to the volume limitations imposed by Rule 144 under the Securities Act of 1933) and (ii) over a period of ten consecutive trading days immediately prior to the Mandatory Conversion Date (as defined in Section 5.2 hereof) the Common Stock has had (A) an average closing price not less than the Conversion Price then in effect and (B) average daily trading volume of not less than 50,000 shares.

2.3 “Original Issue Price” shall mean $.20 per share of Series B Stock (subject to appropriate adjustments for stock splits and other combinations of the Series B Stock in the same manner as set forth in Section 5.6).

2.4 “Person” shall include all natural persons, corporations, business trusts, associations, limited liability companies, partnerships, joint ventures and other entities, governments, agencies and political subdivisions.

2.5 “Qualified Public Offering” shall mean the closing of the first underwritten public offering pursuant to an effective registration statement filed under the Securities Act after June 1, 2009 covering the offering and sale of Common Stock for the account of the Company on a firm commitment basis in which (i) the aggregate gross proceeds to the Company arising from the sale of securities solely for cash is at least $10,000,000 before deduction of underwriters’ commissions and expenses and (ii) prior to or as a result of such offering, the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, or any other “exchange” recognized by rule of the Securities and Exchange Commission.

2.6 “Series B Stock” shall mean Series B Preferred Stock of the Company.

2. Voting Rights.

2.1 General. At all meetings of the shareholders of the Company and in the case of any actions of shareholders in lieu of a meeting, each holder of the Series B Stock shall have that number of votes on all matters submitted to the shareholders that is equal to the number of whole shares of Common Stock into which such holder’s shares of Series B Stock are then convertible, as provided in Section 5 hereof, at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of such shareholders is affected. Except as may be otherwise provided in this Certificate, by agreement, or by law, the holders of the Common Stock and the holders of the Series B Stock shall vote together as a single class on all actions to be taken by the shareholders of the Company.

2.2 Additional Class Votes by the Series B Stock. For so long as at least 35% of the shares of Series B Stock originally issued remain outstanding, the Company shall not, without the affirmative vote of at least 67% of the then outstanding shares of the Series B Stock, with each share of the Series B Preferred entitled to one vote in each instance:

(i) take any action, including, without limitation, any action that constitutes or results in an amendment or waiver of any provision of the Company’s Articles of Incorporation or Bylaws, if such action in any way affects, alters or changes any existing rights, preferences, privileges or provisions relating to the Series B Stock or the holders thereof, or results in any increase or decrease in the authorized number of shares of the Series B Stock;

(ii) authorize, issue or otherwise create (by reclassification or otherwise) any new class of additional shares of capital stock of the Company having rights, preferences or privileges that are senior to or on priority with the Series B Stock (including any additional shares of the Series B Stock).

3. Dividends.

3.1 Dividends. No dividend or other distribution shall accrue or be paid with respect to any shares of capital stock of the Company for any period, whether before or after the effective date of this Certificate, unless and until all accrued dividends on the Series B Stock are paid in full. The Series B Stock shall be entitled to receive cumulative dividends in preference to any dividend which may be declared on the Common Stock at the rate of 8% of the Original Issue Price (subject to any adjustment for stock splits, stock dividends or other recapitalizations). Dividends on shares of capital stock of the Company shall be payable only out of funds legally available therefore. Dividends on the Series B Stock shall be due and payable annually on the last business day of December and shall be payable in cash, or at the option of the Company, in shares of Common Stock.

3.2 Non-Cash Dividends. Whenever a dividend provided for in this Section 3 shall be payable in property other than cash (including without limitation Common Stock), the value of such dividend shall be deemed to be the fair market value of such property as determined in good faith by the Board.

3.3 Payments on Conversion. If the Company shall have accrued but unpaid cash dividends with respect to any of the Series B Stock upon its conversion as provided in Section 5 hereof, then all such accrued but unpaid dividends on such converted shares shall be canceled.

4. Liquidation Rights.

4.1 Preference of the Series B Stock. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the Series B Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock or any other class or series of shares ranking junior to the Series B Stock, an amount equal to (a) the Original Issue Price (subject to appropriate adjustments for stock splits, stock dividends, recapitalizations and other combinations in the same manner as set forth in Section 5) plus (b) declared but unpaid dividends to and including the date full payment shall be tendered to the holders of the Series B Stock (the “Liquidation Price”) with respect to such liquidation, dissolution or winding up. If, upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of the Series B Stock shall be insufficient to permit the payment to such shareholders of the full preferential amounts aforesaid, then all of the assets of the Company shall be distributed ratably to the holders of the Series B Stock based upon the full Liquidation Price payable with respect to such shares of the Series B Stock if such liquidation preference was paid in full.

4.2 Reorganization; Sale of Assets. The merger, acquisition or consolidation of the Company into or with any other entity or entities which results in the exchange of outstanding shares of the Company for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof pursuant to which the shareholders of the Company immediately prior to the transaction do not own a majority of the outstanding shares of the surviving corporation immediately after the transaction, or any sale, lease, license (on an exclusive basis) or transfer by the Company of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of the provisions of this Section 5 unless this provision is waived by the affirmative vote of the holders of at least 50% of the Series B Stock then outstanding.

4.3 Notice. Written notice of such liquidation, dissolution or winding up, stating a payment date and the place where said payments shall be made, shall be given by mail, postage prepaid, or by telephone facsimile to non-U.S. residents, not less than 20 days prior to the earlier of (i) the shareholders’ meeting called to approve such transaction or (ii) the closing of such transaction, to the holders of record of the Series B Stock, such notice to be addressed to each such holder at its address as shown by the records of the Company. The first of such notices shall describe all material terms and conditions of the transaction and of Section 4.2 hereof (including, without limiting the generality of the foregoing, a description of the value of the consideration, if any, being offered to the holders of the Series B Stock in the transaction and the amount to which such holders would be entitled if such transaction were (as described in Section 4.2 hereof) to be deemed a liquidation, dissolution or winding up of the Company) and the Company shall thereafter give such holders prompt notice of any material changes to such terms and conditions. The transaction shall in no event take place sooner than 20 days after the mailing by the Company of the first notice provided for herein or sooner than 10 days after the mailing by the Company of any notice of material changes as provided for herein; provided that such periods may be reduced upon the written consent of the holders of a majority in interest of the Series B Stock then outstanding, voting together as a single class on an as-if-converted basis.

5. Conversion. The holders of the Series B Stock shall have the following conversion rights (the “Conversion Rights”):

Optional Conversion of the Series B Stock. The Series B Stock shall be convertible, in whole or in part, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of this Certificate at the office of the Company into that number of shares of Common Stock as is determined by dividing $.20 by the Conversion Price (as defined below) in effect at the time of conversion and then multiplying such quotient by each share of the Series B Stock to be converted. The price at which the shares of Common Stock shall be deliverable upon conversion without payment of any additional consideration by the holder thereof shall be initially $.20 per share (the “Conversion Price”). The Conversion Price shall be subject to adjustment, in order to adjust the number of shares of the Common Stock into which the Series B Stock is convertible, as hereinafter provided.

Automatic Conversion of the Series B Stock. If at any time (a) the Company shall complete a Qualified Public Offering, or (b) the holders of at least 67% of the outstanding Series B Stock shall consent in writing to the conversion of the Series B Stock into shares of the Common Stock, or (c) the Conversion Shares upon issuance will be Free Trading, then effective upon (i) the closing of the sale of such shares by the Company pursuant to such Qualified Public Offering, (ii) such consent of the holders of the Series B Stock, or (iii) notice by the Company to the holders of the Series B Stock that the Conversion Shares are Free Trading, as the case may be, all outstanding shares of Series B Stock shall automatically convert into shares of the Common Stock at the Conversion Price as of a date specified by the Company (the “Mandatory Conversion Date”).

Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series B Stock. In lieu of any fractional share to which any holder would otherwise be entitled upon conversion of some or all of the Series B Stock owned by such holder, the Company shall, at the discretion of the Board, pay cash equal to such fraction multiplied by the then effective Conversion Price or round up to the nearest whole share.

Mechanics of Optional Conversion. Before any holder of the Series B Stock shall be entitled to convert the same into full shares of Common Stock, such holder shall surrender the certificate or certificates therefore, endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by such holder’s attorney duly authorized in writing, at the office of the Company and shall give written notice to the Company at such office that such holder elects to convert the same and shall state therein such holder’s name or the name of the nominees in which such holder wishes the certificate or certificates for shares of the Common Stock to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of the Series B Stock, or to such holder’s nominee or nominees, a certificate or certificates for the number of shares of the Common Stock to which such holder shall be entitled as aforesaid, together with cash if any, to be delivered in lieu of any fraction of a share. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of the Series B Stock to be converted, and the person or persons entitled to receive the shares of the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of the Common Stock on such date. From and after such date, all rights of the holder with respect to the Series B Stock so converted shall terminate, except only the right of such holder, upon the surrender of his, her or its certificate or certificates therefore, to receive certificates for the number of shares of the Common Stock issuable upon conversion thereof, certificates for the number of shares of the Series B Stock remaining and cash for fractional shares.

Mechanics of Automatic Conversion. All holders of record of shares of the Series B Stock will be given at written notice of the date of any automatic conversion pursuant to Section 5.2 hereof not later than three business days’ following the actual date of such automatic conversion. Each such notice shall designate a place for exchange of all of the shares of such Series B Stock. Such notices will be sent by mail, first class, postage prepaid to each record holder of the Series B Stock at such holder’s address appearing on the Company’s stock register, or by overnight courier service in the case of the notice prior to the actual date of conversion. Each holder of shares of the Series B Stock shall surrender such holder’s certificate or certificates for all such shares to the Company at the place designated in such notice, and shall thereafter receive certificates for the number of shares of the Common Stock or other securities to which such holder is entitled. Failure to provide such notice or untimely notice shall not affect the validity of automatic conversion hereunder. On the date fixed for conversion, all rights with respect to the Series B Stock will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates therefore, to receive certificates for the number of shares of the Common Stock or other securities into which such Series B Stock has been converted and cash for fractional shares. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by her, his or its attorney duly authorized in writing. All certificates evidencing shares of the Series B Stock which are required to be surrendered for conversion in accordance with the provisions hereof shall, from and after the date such certificates are so required to be surrendered, be deemed to have been retired and canceled and the shares of the Series B Stock represented thereby converted into the Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date; provided that the Company may require the holder to provide adequate protection to the Company for the loss of such certificate(s) prior to issuing certificates for shares of Common Stock to such holder. As soon as practicable after the date of such automatic conversion and the surrender of the certificate or certificates for the Series B Stock as aforesaid, the Company shall cause to be issued and delivered to such holder, or to her, his or its written order, a certificate or certificates for the number of full shares of the Common Stock or other securities issuable on such conversion in accordance with the provisions hereof and cash as provided in Section 5.3 hereof in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion.

Certain Adjustments to Conversion Price for Stock Splits, Dividends, Mergers, Reorganizations, Etc.

Adjustment for Stock Splits, Stock Dividends and Combinations of Common Stock. In the event the outstanding shares of Common Stock shall, after the filing of this Certificate, be further subdivided (split), or combined (reverse split), by reclassification or otherwise, or in the event of any dividend or other distribution payable on the Common Stock in shares of Common Stock, the applicable Conversion Price in effect immediately prior to such subdivision, combination, dividend or other distribution shall, concurrently with the effectiveness of such subdivision, combination, dividend or other distribution, be proportionately adjusted.

Adjustment for Merger or Reorganization, Etc. In the event of a reclassification, reorganization or exchange (other than described in Section 5.6(a) above) or any merger, acquisition, consolidation or reorganization of the Company with another company or entity (other than a merger, acquisition or other consolidation or reorganization as defined in Section 4.2 hereof, which is considered a liquidation pursuant to Section 4 above), each share of the Series B Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of the Common Stock of the Company deliverable upon conversion of the Series B Stock would have been entitled upon such reclassification, reorganization, exchange, consolidation, merger or conveyance had the conversion occurred immediately prior to the event; and, in any such case, appropriate adjustment (as determined by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series B Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series B Stock.

Duration of Adjusted Conversion Price. Following each computation or readjustment of an adjusted Conversion Price as provided above in this Section 5, the new adjusted Conversion Price shall remain in effect until a further computation or readjustment thereof is required by this Section 5.

Other Action Affecting the Common Stock. In case, after the filing of this Certificate, the Company shall take any action affecting the Common Stock, other than an action described above in this Section 5, which in the good faith opinion of the Board would have a materially adverse effect upon the Conversion Rights of the Series B Stock granted herein, the Conversion Price shall be adjusted in such manner and at such time as the Board may in good faith determine to be equitable in the circumstances.

Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the applicable Series B Stock a certificate setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any holder of the Series B Stock, furnish or cause to be furnished to such holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the applicable Conversion Price at the time in effect; and (iii) the number of shares of the Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such Series B Stock.

Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, any capital reorganization of the Company, any reclassification or recapitalization of the Company’s capital stock, any consolidation or merger with or into another Company, any transfer of all or substantially all of the assets of the Company or any dissolution, liquidation or winding up of the Company, the Company shall mail to each holder of the Series B Stock at least 10 days prior to the date specified for the taking of a record, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

Common Stock Reserved. The Company shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of the Common Stock as shall from time to time be sufficient to effect conversion of the Series B Stock.

Payment of Taxes. The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of shares of the Common Stock upon conversion of shares of the Series B Stock, other than any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of the Common Stock in a name other than that in which the shares of the Series B Stock so converted were registered.

No Impairment. The Company will not through any reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series B Stock against impairment. Notwithstanding the foregoing, nothing in this Section 5.10 shall prohibit the Company from amending its Articles with the requisite consent of its shareholders and the Board of Directors.

Status of Series B Stock Upon Retirement.

Shares of Series B Stock which are acquired or redeemed by the Company or converted pursuant to Section 5 shall become authorized undesignated shares and may be redesignated and reissued by the Board of Directors as provided in the Articles.

IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by Jim Hitchin, its Secretary, this 23rd day of July, 2009.

SPECTRASCIENCE, INC.
By:	/s/ Jim Hitchin
Name:	Jim Hitchin
Its:	Secretary

EX-3.9

Exhibit 3.9

CERTIFICATE OF DESIGNATION

OF RIGHTS AND PREFERENCES OF

SERIES C PREFERRED STOCK

OF SPECTRASCIENCE, INC.

(PURSUANT TO MINNESOTA STATUTES, SECTION 302A.401, SUBD. 3(B))

The undersigned, being the Secretary of SpectraScience, Inc., a corporation organized and existing under the laws of the State of Minnesota (the “Company”), in accordance with the provisions of Minnesota Statutes, Section 302A.401, Subd. 3(b), does hereby certify that pursuant to the authority vested in the Company’s Board of Directors by the Company’s Amended and Restated Articles of Incorporation (the “Articles”), the Board of Directors on April 9, 2010, in accordance with Minnesota Statutes, Section 302A.401, Subd. 3 and Section 2.01 of the Articles duly adopted the following resolution establishing the Series C Preferred Stock of the Company:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Company by the Articles, the Board of Directors hereby establishes a class of preferred stock entitled the Series C Preferred Stock, and hereby states the designation and number of shares, and fixes the relative rights and preferences, of the Series C Preferred Stock as follows:

Designation and Rank.

Twenty-Five Million (25,000,000) shares of the Company’s undesignated stock authorized by Article 2.01 of the Articles are designated as Series C Preferred Stock, par value $0.01 per share, (the “Series C Stock”). The Series C Stock shall rank, with respect to dividends and rights upon liquidation, winding up and dissolution, senior to the Common Stock of the Company.

1. Definitions

For purposes of this Certificate of Designation (“Certificate”) the following definitions shall apply and shall be equally applicable to both the singular and plural forms of the defined terms:

1.1 “Conversion Shares” shall mean the securities issued or issuable upon conversion of the Series C Stock.

1.2 “Free Trading” shall mean that (i) Conversion Shares consist of Common Stock and are freely tradable by non-affiliates of the Company (subject only to the volume limitations imposed by Rule 144 under the Securities Act of 1933) and (ii) over a period of ten consecutive trading days immediately prior to the Mandatory Conversion Date (as defined in Section 5.2 hereof) the Common Stock has had (A) an average closing price not less than the Conversion Price then in effect and (B) average daily trading volume of not less than 50,000 shares.

1.3 “Original Issue Price” shall mean $.20 per share of Series C Stock (subject to appropriate adjustments for stock splits and other combinations of the Series C Stock in the same manner as set forth in Section 5.6).

1.4 “Person” shall include all natural persons, corporations, business trusts, associations, limited liability companies, partnerships, joint ventures and other entities, governments, agencies and political subdivisions.

1.5 “Qualified Public Offering” shall mean the closing of the first underwritten public offering pursuant to an effective registration statement filed under the Securities Act after April 10, 2010 covering the offering and sale of Common Stock for the account of the Company on a firm commitment basis in which (i) the aggregate gross proceeds to the Company arising from the sale of securities solely for cash is at least $10,000,000 before deduction of underwriters’ commissions and expenses and (ii) prior to or as a result of such offering, the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, or any other “exchange” recognized by rule of the Securities and Exchange Commission.

1.6 “Series C Stock” shall mean Series C Preferred Stock of the Company.

2. Voting Rights.

2.1 General. At all meetings of the shareholders of the Company and in the case of any actions of shareholders in lieu of a meeting, each holder of the Series C Stock shall have that number of votes on all matters submitted to the shareholders that is equal to the number of whole shares of Common Stock into which such holder’s shares of Series C Stock are then convertible, as provided in Section 5 hereof, at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of such shareholders is affected. Except as may be otherwise provided in this Certificate, by agreement, or by law, the holders of the Common Stock and the holders of the Series C Stock shall vote together as a single class on all actions to be taken by the shareholders of the Company.

2.2 Additional Class Votes by the Series C Stock. For so long as at least 35% of the shares of Series C Stock originally issued remain outstanding, the Company shall not, without the affirmative vote of at least 67% of the then outstanding shares of the Series C Stock, with each share of the Series C Stock entitled to one vote in each instance:

(i) Take any action, including, without limitation, any action that constitutes or results in an amendment or waiver of any provision of the Company’s Articles of Incorporation or Bylaws, if such action in any way affects, alters or changes any existing rights, preferences, privileges or provisions relating to the Series C Stock or the holders thereof, or results in any increase or decrease in the authorized number of shares of the Series C Stock;

(ii) Authorize, issue or otherwise create (by reclassification or otherwise) any new class of additional shares of capital stock of the Company having rights, preferences or privileges that are senior to or on priority with the Series C Stock (including any additional shares of the Series C Stock).

3. Dividends.

3.1 Dividends. Holders of Series C Stock shall not be entitled to the payment of dividends, except at the discretion of the Company’s Board.

3.2 Non-Cash Dividends. Whenever a dividend provided for in this Section 3 shall be payable in property other than cash (including without limitation Common Stock), the value of such dividend shall be deemed to be the fair market value of such property as determined in good faith by the Board.

3.3 Payments on Conversion. If the Company shall have accrued but unpaid cash dividends with respect to any of the Series C Stock upon its conversion as provided in Section 5 hereof, then all such accrued but unpaid dividends on such converted shares shall be canceled.

4. Liquidation Rights.

4.1 Preference of the Series C Stock. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the Series C Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock or any other class or series of shares ranking junior to the Series C Stock, an amount equal to (a) the Original Issue Price (subject to appropriate adjustments for stock splits, stock dividends, recapitalizations and other combinations in the same manner as set forth in Section 5) plus (b) declared but unpaid dividends to and including the date full payment shall be tendered to the holders of the Series C Stock (the “Liquidation Price”) with respect to such liquidation, dissolution or winding up. If, upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of the Series C Stock shall be insufficient to permit the payment to such shareholders of the full preferential amounts aforesaid, then all of the assets of the Company shall be distributed ratably to the holders of the Series C Stock based upon the full Liquidation Price payable with respect to such shares of the Series C Stock if such liquidation preference was paid in full.

4.2 Reorganization; Sale of Assets. The merger, acquisition or consolidation of the Company into or with any other entity or entities which results in the exchange of outstanding shares of the Company for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof pursuant to which the shareholders of the Company immediately prior to the transaction do not own a majority of the outstanding shares of the surviving corporation immediately after the transaction, or any sale, lease, license (on an exclusive basis) or transfer by the Company of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of the provisions of this Section 5 unless this provision is waived by the affirmative vote of the holders of at least 50% of the Series C Stock then outstanding.

4.3 Notice. Written notice of such liquidation, dissolution or winding up, stating a payment date and the place where said payments shall be made, shall be given by mail, postage prepaid, or by telephone facsimile to non-U.S. residents, not less than 20 days prior to the earlier of (i) the shareholders’ meeting called to approve such transaction or (ii) the closing of such transaction, to the holders of record of the Series C Stock, such notice to be addressed to each such holder at its address as shown by the records of the Company. The first of such notices shall describe all material terms and conditions of the transaction and of Section 4.2 hereof (including, without limiting the generality of the foregoing, a description of the value of the consideration, if any, being offered to the holders of the Series C Stock in the transaction and the amount to which such holders would be entitled if such transaction were (as described in Section 4.2 hereof) to be deemed a liquidation, dissolution or winding up of the Company) and the Company shall thereafter give such holders prompt notice of any material changes to such terms and conditions. The transaction shall in no event take place sooner than 20 days after the mailing by the Company of the first notice provided for herein or sooner than 10 days after the mailing by the Company of any notice of material changes as provided for herein; provided that such periods may be reduced upon the written consent of the holders of a majority in interest of the Series C Stock then outstanding, voting together as a single class on an as-if-converted basis.

5. Conversion. The holders of the Series C Stock shall have the following conversion rights (the “Conversion Rights”):

5.1 Optional Conversion of the Series C Stock. The Series C Stock shall be convertible, in whole or in part, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of this Certificate at the office of the Company into that number of shares of Common Stock as is determined by dividing $.20 by the Conversion Price (as defined below) in effect at the time of conversion and then multiplying such quotient by each share of the Series C Stock to be converted. The price at which the shares of Common Stock shall be deliverable upon conversion without payment of any additional consideration by the holder thereof shall be initially $.20 per share (the “Conversion Price”). The Conversion Price shall be subject to adjustment, in order to adjust the number of shares of the Common Stock into which the Series C Stock is convertible, as hereinafter provided.

5.2 Automatic Conversion of the Series C Stock. If at any time (a) the Company shall complete a Qualified Public Offering, or (b) the holders of at least 67% of the outstanding Series C Stock shall consent in writing to the conversion of the Series C Stock into shares of the Common Stock, or (c) the Conversion Shares upon issuance will be Free Trading, then effective upon (i) the closing of the sale of such shares by the Company pursuant to such Qualified Public Offering, (ii) such consent of the holders of the Series C Stock, or (iii) notice by the Company to the holders of the Series C Stock that the Conversion Shares are Free Trading, as the case may be, all outstanding shares of Series C Stock shall automatically convert into shares of the Common Stock at the Conversion Price as of a date specified by the Company (the “Mandatory Conversion Date”).

5.3 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series C Stock. In lieu of any fractional share to which any holder would otherwise be entitled upon conversion of some or all of the Series C Stock owned by such holder, the Company shall, at the discretion of the Board, pay cash equal to such fraction multiplied by the then effective Conversion Price or round up to the nearest whole share.

5.4 Mechanics of Optional Conversion. Before any holder of the Series C Stock shall be entitled to convert the same into full shares of Common Stock, such holder shall surrender the certificate or certificates therefore, endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by such holder’s attorney duly authorized in writing, at the office of the Company and shall give written notice to the Company at such office that such holder elects to convert the same and shall state therein such holder’s name or the name of the nominees in which such holder wishes the certificate or certificates for shares of the Common Stock to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of the Series C Stock, or to such holder’s nominee or nominees, a certificate or certificates for the number of shares of the Common Stock to which such holder shall be entitled as aforesaid, together with cash if any, to be delivered in lieu of any fraction of a share. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of the Series C Stock to be converted, and the person or persons entitled to receive the shares of the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of the Common Stock on such date. From and after such date, all rights of the holder with respect to the Series C Stock so converted shall terminate, except only the right of such holder, upon the surrender of his, her or its certificate or certificates therefore, to receive certificates for the number of shares of the Common Stock issuable upon conversion thereof, certificates for the number of shares of the Series C Stock remaining and cash for fractional shares.

5.5 Mechanics of Automatic Conversion. All holders of record of shares of the Series C Stock will be given at written notice of the date of any automatic conversion pursuant to Section 5.2 hereof not later than three business days’ following the actual date of such automatic conversion. Each such notice shall designate a place for exchange of all of the shares of such Series C Stock. Such notices will be sent by mail, first class, postage prepaid to each record holder of the Series C Stock at such holder’s address appearing on the Company’s stock register, or by overnight courier service in the case of the notice prior to the actual date of conversion. Each holder of shares of the Series C Stock shall surrender such holder’s certificate or certificates for all such shares to the Company at the place designated in such notice, and shall thereafter receive certificates for the number of shares of the Common Stock or other securities to which such holder is entitled. Failure to provide such notice or untimely notice shall not affect the validity of automatic conversion hereunder. On the date fixed for conversion, all rights with respect to the Series C Stock will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates therefore, to receive certificates for the number of shares of the Common Stock or other securities into which such Series C Stock has been converted and cash for fractional shares. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by her, his or its attorney duly authorized in writing. All certificates evidencing shares of the Series C Stock which are required to be surrendered for conversion in accordance with the provisions hereof shall, from and after the date such certificates are so required to be surrendered, be deemed to have been retired and canceled and the shares of the Series C Stock represented thereby converted into the Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date; provided that the Company may require the holder to provide adequate protection to the Company for the loss of such certificate(s) prior to issuing certificates for shares of Common Stock to such holder. As soon as practicable after the date of such automatic conversion and the surrender of the certificate or certificates for the Series C Stock as aforesaid, the Company shall cause to be issued and delivered to such holder, or to her, his or its written order, a certificate or certificates for the number of full shares of the Common Stock or other securities issuable on such conversion in accordance with the provisions hereof and cash as provided in Section 5.3 hereof in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion.

5.6 Certain Adjustments to Conversion Price for Stock Splits, Dividends, Mergers, Reorganizations, Etc.

(a) Adjustment for Stock Splits, Stock Dividends and Combinations of Common Stock. In the event the outstanding shares of Common Stock shall, after the filing of this Certificate, be further subdivided (split), or combined (reverse split), by reclassification or otherwise, or in the event of any dividend or other distribution payable on the Common Stock in shares of Common Stock, the applicable Conversion Price in effect immediately prior to such subdivision, combination, dividend or other distribution shall, concurrently with the effectiveness of such subdivision, combination, dividend or other distribution, be proportionately adjusted.

(b) Adjustment for Merger or Reorganization, etc. In the event of a reclassification, reorganization or exchange (other than described in Section 5.6(a) above) or any merger, acquisition, consolidation or reorganization of the Company with another company or entity (other than a merger, acquisition or other consolidation or reorganization as defined in Section 4.2 hereof, which is considered a liquidation pursuant to Section 4 above), each share of the Series C Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of the Common Stock of the Company deliverable upon conversion of the Series C Stock would have been entitled upon such reclassification, reorganization, exchange, consolidation, merger or conveyance had the conversion occurred immediately prior to the event; and, in any such case, appropriate adjustment (as determined by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series C Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series C Stock.

(c) Duration of Adjusted Conversion Price. Following each computation or readjustment of an adjusted Conversion Price as provided above in this Section 5, the new adjusted Conversion Price shall remain in effect until a further computation or readjustment thereof is required by this Section 5.

(d) Other Action Affecting the Common Stock. In case, after the filing of this Certificate, the Company shall take any action affecting the Common Stock, other than an action described above in this Section 5, which in the good faith opinion of the Board would have a materially adverse effect upon the Conversion Rights of the Series C Stock granted herein, the Conversion Price shall be adjusted in such manner and at such time as the Board may in good faith determine to be equitable in the circumstances.

(e) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the applicable Series C Stock a certificate setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any holder of the Series C Stock, furnish or cause to be furnished to such holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the applicable Conversion Price at the time in effect; and (iii) the number of shares of the Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such Series C Stock.

5.7 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, any capital reorganization of the Company, any reclassification or recapitalization of the Company’s capital stock, any consolidation or merger with or into another Company, any transfer of all or substantially all of the assets of the Company or any dissolution, liquidation or winding up of the Company, the Company shall mail to each holder of the Series C Stock at least 10 days prior to the date specified for the taking of a record, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

5.8 Common Stock Reserved. The Company shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of the Common Stock as shall from time to time be sufficient to effect conversion of the Series C Stock.

5.9 Payment of Taxes. The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of shares of the Common Stock upon conversion of shares of the Series C Stock, other than any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of the Common Stock in a name other than that in which the shares of the Series C Stock so converted were registered.

5.10 No Impairment. The Company will not through any reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series C Stock against impairment. Notwithstanding the foregoing, nothing in this Section 5.10 shall prohibit the Company from amending its Articles with the requisite consent of its shareholders and the Board of Directors.

6. Status of Series C Stock Upon Retirement.

Shares of Series C Stock which are acquired or redeemed by the Company or converted pursuant to Section 5 shall become authorized undesignated shares and may be redesignated and reissued by the Board of Directors as provided in the Articles.

IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by Jim Hitchin, its Secretary, this 29 day of April, 2010.

SPECTRASCIENCE, INC.
By:	/s/ Jim Hitchin
Name:	Jim Hitchin
Its:	Secretary

EX-3.10

Exhibit 3.10

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF

SERIES AA, NON-TRANSFERRABLE, SUPER VOTING, PREFERRED

STOCK OF SPECTRASCIENCE, INC.

SpectraScience, Inc., a Minnesota corporation (the “Corporation”), DOES HEREBY CERTIFY:

Pursuant to the authority expressly granted and vested in the Board of Directors of the Corporation the following resolutions were adopted on April 15, 2016:

WHEREAS, the Corporation has 50,000,000 authorized, but undesignated, shares of capital stock of the Corporation, and

WHEREAS, the Amended and Restated Articles of Incorporation, dated August 25, 2014, grants to the Board of Directors of the Corporation the authority to designate new series of capital stock, and

WHEREAS, the Corporation has an estimated 3,500 shareholders, many of whom hold shares in street names, and

WHEREAS, the Corporation has found it extremely difficult, time consuming and costly to obtain sufficient shareholder votes to conduct the business of the Corporation,

NOW THEREFORE IT IS RESOLVED:

A new series of super preferred voting stock of the Corporation be, and it hereby is, created out of the undesignated shares to be designated Series AA Super Voting Preferred Stock (the “Series AA Super Voting Preferred Stock”), to consist of 3,000 shares, which shall have the following preferences, powers, designations and other special rights:

1. Voting.

Holders of the Series AA Super Voting Preferred Stock shall have One Million (1,000,000) times that number of votes on all matters submitted to the shareholders that is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of such shareholders is affected. A holder of the Series AA Super Voting Preferred Stock shall vote together with the holders of Common Stock as a single class upon all matters submitted to the Common Stock shareholders, with the exception of election of members of the Board of Directors.

2. Dividends.

The holders of Series AA Super Voting Preferred Stock of the Corporation shall not be entitled to receive dividends paid on the Corporation’s Common Stock.

3. No Liquidation Preference.

Upon liquidation, dissolution and winding up of the Corporation, whether voluntary or involuntary, the holders of the Series AA Super Voting Preferred Stock then outstanding shall not be entitled to receive out of the assets of the Corporation, whether from capital or earnings available for distribution, any amounts which will be otherwise available to and distributed to the Common Stockholders.

4. No Conversion.

The shares of Series AA Super Voting Preferred Stock will not be convertible into the shares of the Corporation’s Common Stock.

5. Vote to Change the Terms of or Issuance of Series AA Super Voting Preferred Stock. The affirmative vote at a meeting duly called for such purpose, or written consent without a meeting, of the holders of not less than fifty-one (51%) of the then outstanding shares of Series AA Super Voting Preferred Stock shall be required for (i) any change to the Corporation’s Articles of Incorporation that would amend, alter, change or repeal any of the voting powers, preferences, limitations or relative rights of the Series AA Super Voting Preferred Stock, or (ii) any issuance of additional shares of Series AA Super Voting Preferred Stock.

6. Notices.

In case at any time:

(a) the Corporation shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or

(b) there shall be any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation’s assets to another Person or other transaction in each case, which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, referred to herein as an “Organic Change”;

then, in any one or more of such cases, the Corporation shall give, by first class mail, postage prepaid, or by facsimile or by recognized overnight delivery service to non-U.S. residents, addressed to the Registered Holders of the Series AA Super Voting Preferred Stock at the address of each such Holder as shown on the books of the Corporation, (i) at least twenty (20) Trading Days prior written notice of the date on which the books of the Corporation shall close or a record shall be taken for such subscription rights or for determining rights to vote in respect of any such Organic Change and (ii) in the case of any such Organic Change, at least twenty (20) Trading Days’ prior written notice of the date when the same shall take place.

7. Record Owner.

The Corporation may deem the person(s) in whose name shares of Series AA Super Voting Preferred Stock shall be registered upon the registry books of the Corporation to be, and may treat them as, the absolute owners of the Series AA Super Voting Preferred Stock for all purposes, and the Corporation shall not be affected by any notice to the contrary. There is no right of transfer.

8. Repurchase by the Corporation.

The Corporation shall repurchase at par value all the Series AA Super Voting Preferred Stock from any holder or group of holders upon a vote by the majority of the Board of Directors.

IT WAS FURTHER RESOLVED, that

WHEREAS, the common stock of the Corporation has been recently trading at an average price of $0.004 per share,

WHEREAS, the AA Super Voting Preferred Stock has limitations compared to Common Stock of the Corporation in that it is not transferrable, not convertible into Common Stock, and may be repurchased by the Corporation, and

WHEREAS, the AA Super Voting Preferred Stock would have a much lower value than the Common Stock due to its limitations

THEREFORE, IT WAS RESOLVED,

The Purchase Price of the AA Super Voting Preferred Stock be set at a fair market value of $0.001, and

That the Par Value of the AA Super Voting Preferred Stock be established at $0.001 per share.

IN WITNESS WHEREOF, the undersigned Chairman and Chief Executive Officer on behalf of the Corporation do hereby declare and certify that this is the act and deed of the Corporation and accordingly have signed this Certificate of Designations as of April 15, 2016.

By:	/s/ Mark M. McWilliams
Name:	Mark M. McWilliams
Title:	Chairman
By:	/s/ Michael P. Oliver
Name:	Michael P. Oliver
Title:	Chief Executive Officer

EX-3.11

Exhibit 3.11

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF

SERIES A PREFERRED STOCK; SERIES B PREFERRED STOCK; SERIES C PREFERRED STOCK; SERIES AA, NON-TRANSFERRABLE, SUPER VOTING, PREFERRED STOCK; AND UNDESIGNATED STOCK OF SPECTRASCIENCE, INC.

SpectraScience, Inc., a Minnesota corporation (the “Corporation”), DOES HEREBY CERTIFY:

Pursuant to the authority expressly granted and vested in the Board of Directors of the Corporation the following resolutions were adopted on May 16, 2016:

WHEREAS, the Corporation has had authorized, but undesignated, 50,000,000 shares of capital stock of the Corporation, and

WHEREAS, the Amended and Restated Articles of Incorporation, dated August 25, 2014, grants to the Board of Directors of the Corporation the authority to designate new series of capital stock, and

WHEREAS, the Corporation has created from the authorized, but undesignated, shares of capital stock the following designations of capital stock on the dates so indicated (other than common stock, of which 700,000,000 shares are authorized):

Series A Preferred Stock- 2,250,000 shares on June 12, 2007

Series B Preferred Stock- 15,000,000 shares on June 22, 2009

Series C Preferred Stock- 25,000,000 shares on April 9, 2010

Series AA Super Voting Stock- 3,000 shares on April 15, 2016, and

WHEREAS, from the above listed authorizations, the Corporation has retired or the holders of the capital stock have converted their stock into Common Stock in the following amounts:

Series A Preferred Stock- 2,250,000 shares

Series B Preferred Stock- 12,415,000 shares

Series C Preferred Stock- 24,500,000 shares

WHEREAS, as a result of the authorizations, retirements and conversions, the authorized share structure of the Corporation as of May 16, 2016 is as follows:

Common Stock- 700,000,000 shares

Series B Preferred Stock- 2,585,000 shares

Series C Preferred Stock- 500,000 shares

Series AA Super Voting Stock- 3,000 shares

Undesignated- 46,912,000 shares, and

WHEREAS, the Corporation is desirous to designate a portion of the Undesignated capital stock to Common Stock.

NOW THEREFORE IT IS RESOLVED:

46,000,000 shares of the Undesignated capital stock are hereby designated as Common Stock resulting in Authorized Common Stock of 746,000,000 shares and Undesignated capital stock of 912,000 shares. The newly designated Common Stock shall have the same preferences and rights as the existing Common Stock.

IN WITNESS WHEREOF, the undersigned Chairman and Chief Executive Officer on behalf of the Corporation do hereby declare and certify that this is the act and deed of the Corporation and accordingly have signed this Certificate of Designations as of June 28, 2016.

By:	/s/ Mark M. McWilliams
Name:	Mark M. McWilliams
Title:	Chairman
By:	/s/ Michael P. Oliver
Name:	Michael P. Oliver
Title:	Chief Executive Officer

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.

By:	/s/ Michael P. Oliver
Name:	Michael P. Oliver
Title:	Chief Executive Officer
Date:	November 14, 2016

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.

By:	/s/ Lowell W. Giffhorn
Name:	Lowell W. Giffhorn
Title:	Chief Financial Officer
Date:	November 14, 2016

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, 2016 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 14, 2016

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, 2016 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 14, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 08, 2016
Document And Entity Information
Entity Registrant Name	SPECTRASCIENCE INC
Entity Central Index Key	0000727672
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		752,171,222
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 1,927	$ 127,493
Accounts receivable, net	950	7,061
Inventory, current portion	157,631	111,887
Prepaid expenses and other current assets	318,475	284,305
Total current assets	478,983	530,746
Fixed assets, net		316
Long-term inventory	150,000	150,000
Patents, net	1,064,761	1,185,472
Total assets	1,693,744	1,866,534
Current liabilities:
Accounts payable	1,165,255	941,106
Secured convertible notes payable	850,000
Note payable	137,982	137,982
Notes payable- related parties	35,000
Convertible debt, net of discounts and costs of $188,070 as of September 30, 2016 and $430,156 as of December 31, 2015	6,241,726	5,744,604
Derivative liability	584,274	620,321
Accrued expenses	1,968,516	1,411,333
Total current liabilities	10,982,753	8,855,346
COMMITMENTS AND CONTINGENCIES
Total mezzanine equity	30,850	30,850
Shareholders’ deficit
Common stock, $.01 par value;1,246,912,000 and 746,915,000 shares authorized; 736,525,000 and 431,247,207 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	7,365,250	4,312,472
Additional paid in capital	35,735,456	38,166,818
Accumulated deficit	(52,420,568)	(49,498,952)
Total shareholders' deficit	(9,319,859)	(7,019,662)
Total shareholders' deficit	1,693,744	1,866,534
Series B Preferred Stock [Member]
Current liabilities:
Convertible Preferred Stock	25,850	25,850
Series C Preferred Stock [Member]
Current liabilities:
Convertible Preferred Stock	5,000	5,000
Series A Preferred Stock [Member]
Shareholders’ deficit
Convertible Preferred Stock, value
Series AA Super Voting Preferred Stock [Member]
Shareholders’ deficit
Convertible Preferred Stock, value	$ 3

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Discounts on convertible debt	$ 188,070	$ 430,156
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	1,246,912,000	746,915,000
Common stock, issued	736,525,000	431,247,207
Common stock, outstanding	736,525,000	431,247,207
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	2,585,000	2,585,000
Preferred stock, issued	2,585,000	2,585,000
Preferred stock, outstanding	2,585,000	2,585,000
Preferred stock, liquidation value	$ 517,000	$ 517,000
Preferred stock, accumulated and unpaid dividends	$ 106,931	$ 106,931
Series C Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	500,000	500,000
Preferred stock, issued	500,000	500,000
Preferred stock, outstanding	500,000	500,000
Preferred stock, liquidation value	$ 100,000	$ 100,000
Series A Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	0	0
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Series AA Super Voting Preferred Stock [Member]
Preferred stock, par value	$ .001	$ .001
Preferred stock, authorized	3,000	3,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0

XML

Condensed Consolidated Statements of Operation (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue	$ 4,200		$ 5,150
Cost of revenue	2,100		2,968	(12,000)
Gross profit	2,100		2,182	12,000
Operating expenses:
Research and development	127,428	172,405	515,590	504,415
General and administrative	281,993	284,724	896,047	1,010,989
Sales and marketing	90,303	50,700	270,930	184,660
Total operating expenses	499,724	507,829	1,682,567	1,700,064
Loss from operations	(497,624)	(507,829)	(1,680,385)	(1,688,064)
Other income (expense)
Interest expense	(169,743)	(183,184)	(749,042)	(474,727)
Change in fair value of derivative and warrant liabilities	(156,769)	753,538	(419,390)	353,315
Amortization of derivative and warrant liabilities discount	(115,027)	(176,661)	(351,323)	(699,957)
Amortization of deferred debt issuance costs and original issue discount	(43,481)	(90,130)	(168,931)	(262,520)
Gain on extinguishment of debt	213,584		460,658	119,369
Income on foreign exchange transactions	(6,079)		(1,388)
Other expense, net	(1,961)	(4,893)	(11,815)	(9,527)
Total non operating expenses	(279,476)	298,670	(1,241,231)	(974,047)
Net loss	$ (777,100)	$ (209,159)	$ (2,921,616)	$ (2,662,111)
Basic and diluted loss per share	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)
Weighted average common shares outstanding:
Basic and diluted	712,309,055	198,039,192	664,896,833	196,519,704

XML

Condensed Consolidated Statement of Shareholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($)	Series AA Super Voting Preferred [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance, beginning at Dec. 31, 2015		$ 4,312,472	$ 38,166,818	$ (49,498,952)	$ (7,019,662)
Balance, beginning, shares at Dec. 31, 2015		431,247,207
Conversion of convertible debt		$ 3,052,778	(2,553,014)		499,764
Conversion of convertible debt, shares		305,277,793
Non cash stock option expense			120,003		120,003
Non cash issuance of warrant for consulting services			1,652		1,652
Issuance of Series AA Super Voting Preferred Stock	$ 3		24,997		25,000
Issuance of Series AA Super Voting Preferred Stock, shares	3,000
Special dividend related to Series AA Super Voting Preferred Stock			(25,000)		(25,000)
Net loss				(2,921,616)	(2,921,616)
Balance, ending at Sep. 30, 2016	$ 3	$ 736,525,000	$ 35,735,456	$ (52,420,568)	$ (9,319,859)
Balance, ending, shares at Sep. 30, 2016	3,000	7,365,250

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities:
Net loss	$ (2,921,616)	$ (2,662,111)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation	121,026	124,329
Non-cash interest	31,364
Non-cash issuance of stock options and warrants	120,004	140,370
Non-cash expense related to commitment of common stock in excess of authorized shares	107,107
Loss on issuance of variable rate notes	84,584
Amortization of derivative and warrant liabilities discount	351,323	699,957
Amortization of deferred debt issuance costs and original issue discount	168,931	262,520
Issuance of common stock for services	700
Change in fair value of derivative and warrant liabilities	419,390	(353,315)
Gain on extinguishment of debt	(460,658)	(119,369)
Changes in assets and liabilities:
Accounts receivable	6,111
Inventory	(45,744)	(20,224)
Prepaid expense and other assets	(34,170)	(64,146)
Accounts payable	244,149	(43,245)
Accrued expenses	580,645	481,516
Net cash used in operating activities	(1,246,854)	(1,553,718)
Investing activities:
Net cash used in investing activities
Financing activities:
Proceeds from issuance of convertible notes payable	300,000	1,520,250
Proceeds from issuance of notes payable to related parties	35,000
Proceeds from issuance of secured notes payable	850,000
Proceeds from exercise of stock options		4,500
Debt issuance costs	(63,712)	(139,500)
Net cash provided by financing activities	1,121,288	1,385,250
Net decrease in cash	(125,566)	(168,468)
Cash, beginning of year	127,493	223,529
Cash, end of period	1,927	55,061
Cash paid during the period for:
Interest		8,000
Income taxes
Non Cash Investing and Financing Activities:
Conversion of convertible notes and accrued interest to common stock	499,763	157,839
Exchange of convertible notes and accrued interest to new notes	103,551
Warrant valuation on issuance of convertible debentures		225,700
Valuation of Series AA Super Voting Preferred Stock	25,000
Conversion of accrued interest to note payable		$ 15,000

XML

Nature of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2016

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 clinical trials related to colon cancer detection. In June 2012, the Company entered into a distribution agreement with PENTAX Europe, GmbH.

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 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, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. 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, 2015.

Going Concern

Historically, the Company’s sources of cash have come from the issuance and sale of equity securities and 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 2016, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 System 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, 2016, the Company had a working capital deficit of $10,503,770 and cash of $1,927, compared to a working capital deficit of $8,324,600 and cash of $127,493 as of December 31, 2015. 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 March 31, 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, 2016, the Company raised $1,185,000, net of transaction costs of $34,000, 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, 2016, Convertible Debentures with a face value of $5,473,032 held by 75 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.

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

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.

Variable Conversion Rate Debentures

Starting in 2015, the Company entered into convertible debentures with floating exercise prices discounted to market prices. As a result, a significant number of shares were either issued or may be issued at deeply discounted variable conversion prices. The downward pressure placed on the Company’s stock as a result of these conversions can be classified as “death spirals” since the investors have no incentive to maintain a stable stock price. The Company accounts for these debentures as derivative liabilities which means the debentures are revalued at the end of each period and gains and losses are recognized at the issuance of the debentures and on the conversion of the debentures.

Over Commitment of Shares

Since the number of shares issuable under convertible debentures with floating exercise prices is undeterminable, the Company may be required to issue shares in excess of the number of shares authorized by its shareholders. As a result, when the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised debentures, warrants and options, the derivatives must be valued using the Black Scholes Option Pricing method and a liability is recorded as though the obligations would be settled using some means other than stock.

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 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, 2016, 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 40,000,000 shares of common stock. At September 30, 2016, the Company had options outstanding exercisable into up to 34,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 24,059,921 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, 2016 and 2015:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Expected term		None		None		None		5 years
Exercise price		None		None		None	$	0.01
Expected volatility		None		None		None		210	%
Expected dividends		None		None		None		None
Risk-free interest rate		None		None		None		1.48	%
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 nine month periods ended September 30, 2016 and 2015, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	September 30, 2016		September 30, 2015
Preferred Stock		3,088,000		3,085,000
Convertible debentures		111,110,776		117,229,747
Options		34,168,800		38,064,635
Warrants		131,389,332		108,251,866
Total		279,756,908		266,631,248

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2016 and 2015:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Numerator:
Net income (loss) for basic earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Net income (loss) for diluted earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Denominator:
Weighted average basic shares outstanding		712,309,055			198,039,192			664,896,833			196,519,704
Denominator for diluted earnings per share-
Adjusted weighted average shares		712,309,055			198,039,192			664,896,833			196,519,704
Income (loss) per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Inventory

Inventory consisted of the following at September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
Raw materials	$	255,014	$	216,704
Finished goods		52,617		45,183
		307,631		261,887
Reserve for obsolescence		-		-
		307,631		261,887
Less long-term portion		150,000		150,000
	$	157,631	$	111,887

During the nine months ended September 30, 2016, the Company purchased the inventory of Oncoscope, Inc. from the Trustee of Ondoscope’s bankruptcy proceeding for a total of $40,000. This amount, net of amounts sold of $2,100, has been included in raw materials.

Recently Adopted and Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amended Interest – Imputation of Interest of the Accounting Standards Codification. The amended guidance requires that debt issuance costs related to a recognized debt liability, which were presented as deferred charges (assets), be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

Reclassifications

Certain reclassifications have been made to the 2015 financial statements in order for them to conform to the 2016 presentation. Such reclassifications have no impact on the Company’s financial position or results of operations.

XML

Liabilities

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Liabilities

3. Liabilities

Note Payable

In November 2014, the Company issued for cash of $100,000 an unsecured note payable and a five-year warrant with an exercise price of $0.09 per share for the purchase of up to 50,000 shares of common stock. The terms of the note were a repayment of $115,000 if paid by February 18, 2015 and, if paid thereafter, the principal balance of the note was to be increased to $137,982 as of October 1, 2015 and interest accrues at 20% from October 1, 2015 until paid. The note remained outstanding at September 30, 2016 and is accruing interest at 20%. The warrant was valued at $1,659 using the Black-Scholes Pricing Model and was recorded as additional paid-in capital and expensed to non-cash interest in 2014.

Notes Payable- Related Parties

During the nine months ended September 30, 2016, two affiliates of the Company advanced to the Company cash in an accumulated amount of $35,000 in exchange for six-month 10% promissory notes. The balance of the notes remains $35,000 at September 30, 2016.

Convertible Debentures

As of September 30, 2016, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of three 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 initial conversion prices ranging from $0.01 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 $0.02 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 exercise prices ranging from $0.0745 to $0.1287 per share. For debentures issued through March 31, 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 March 31, 2013 do not contain such an exchange clause. The gross amount of Debentures outstanding is $6,232,345 as of September 30, 2016.

During the nine months ended September 30, 2016, the Company has issued and outstanding Convertible Debentures (“Variable Debentures”) with original terms of 9 months to one year, interest rates ranging from 0-10% per year and original issue discounts ranging from 0-10% which contain variable conversion rates ranging from discounts of 40-50% of the Company’s common stock based on the Company’s common stock trading prices ranging from 10-25 days previous to conversion. The Variable Debentures contain prepayment options which enable the Company to prepay the notes for periods of 0-180 days subsequent to issuance at premiums ranging from 0-50%. The gross amount of Variable Debentures outstanding is $197,451 as of September 30, 2016.

As of September 30, 2016 and December 31, 2015, the balances of the Debentures are as follows:

	September 30, 2016			December 31,   2015
Balance at beginning of period	$	6,174,760		$	4,496,602
Issuance of debentures for cash		300,000			1,970,250
Original issue discount		-			145,263
Issuance of debentures for forbearance		29,712			-
Debentures converted to common stock		(196,944	)		(437,355	)
Debentures exchanged for new debentures		122,268			-
Convertible debt		6,429,796			6,174,760
Less unamortized costs of financing		188,070			430,156
Convertible debt, net of unamortized costs	$	6,241,726		$	5,744,604
Convertible debt in default	$	5,473,032		$	4,313,199

Secured Convertible Note

During the nine months ended September 30, 2016, the Company issued for cash of $850,000 Secured Convertible Debentures (the “Debentures”) to two accredited investors. The terms of the Debentures are for three years, a conversion price of $0.01 per share and an annual interest rate of 8%. The secured interest is on all of the assets of the Company.

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. In addition, outstanding Variable Debentures contain variable conversion rates based on unknown future prices of the Company’s common stock resulting in a conversion feature. The Company measures these warrants and conversion features using a Black-Scholes option valuation model using similar assumptions to those described under “Stock-Based Compensation.” The period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the period over which the Company will be required to evaluate the fair value of the conversion features are 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 the Company’s control. Therefore, the resulting effect on net loss is 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.

In addition, since the number of shares issuable under the Variable Debentures are undeterminable, the Company may be required to issue shares in excess of the number of shares authorized by its shareholders. As a result, when the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised debentures, warrants and options, the derivatives must be valued using the Black Scholes Option Pricing method and a liability is recorded as though the obligations would be settled using some means other than stock. For the nine months ended September 30, 2016, the Company determined that it was over committed to the number of shares issuable on the exercise of outstanding debentures, stock options and warrants for approximately 266,000,000 shares. On October 23, 2016, there was an increase in authorized shares that was reflected on the September 30, 2016 Balance Sheet but was not used in the calculation to determine the over commitment of shares as of September 30, 2016.

As of September 30, 2016 and December 31, 2015, the balances of the Derivative Liability are as follows:

							Commitment
				Conversion			In Excess of
	Warrants			Feature			Authorized Stock		Total
Balance at January 1, 2015	$	764,958		$	296,881		$	-	$	1,061,839
Liability on issuance of debt and warrants		-			1,306,372			-		1,306,372
Change in fair value at year end		(704,538	)		(469,906	)		-		(1,174,444	)
Elimination of liability on conversion		-			(637,874	)		-		(637,874	)
Over commitment of stock		-			-			64,428		64,428
Balance at December 31, 2015		60,420			495,473			64,428		620,321
Liability on issuance of debt and warrants		44,394			407,209			-		451,603
Change in fair value at period end		80,395			80,495			-		160,890
Elimination of liability on conversion		-			(755,647	)		-		(755,647	)
Over commitment of stock		-			-			107,107		107,107
Balance at September 30, 2016	$	185,209		$	227,530		$	171,535	$	584,274

Debentures with warrants attached issued subsequent to March 31, 2013 did not contain an exchange provision and were accounted for using the equity method of valuing the note and warrant.

XML

Shareholders' Deficit

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Shareholders' Deficit

4. Shareholders’ Deficit

Common Stock

During the nine months ended September 30, 2016, holders of Convertible Debentures with a face value of $196,944 and accrued interest of $4,745 converted their debentures into 305,277,793 shares of common stock. In addition, associated with these debentures, the Company recorded a gain on extinguishment of debt of $53,038.

Warrants

During the nine months ended September 30, 2016, in conjunction with the sale of Convertible Debentures, the Company issued five-year common stock purchase warrants to acquire up to 15,000,000 shares to holders of the Debentures. These warrants have an exercise price of $0.02 per share.

In March 2016, the Company issued a warrant exercisable into up to 1,000,000 shares of common stock in exchange for services provided by a consultant. The value of these warrants, $1,652, was determined using the Black-Scholes Option pricing model and was included as non-cash expenses and additional paid-in capital during the nine months ended September 30, 2016.

The balance of all warrants outstanding as of September 30, 2016 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2016		116,875,170		$	0.08
Granted		16,000,000		$	0.02
Cancelled		(1,485,838	)	$	0.08
Exercised		-		$	-
Outstanding at September 30, 2016		131,389,332		$	0.08
Exercisable at September 30, 2016		131,389,332		$	0.08

Stock Options

Options outstanding as of September 30, 2016 are as follows:

			Weighted		Weighted Average
			Average Exercise Price		Remaining Contractual		Aggregate Intrinsic
	Options		Per Share		Term (years)		Value (1)
Outstanding at January 1, 2016		34,168,800	$	0.02		8.03
Granted		-	$	-		-
Cancelled		-	$	-		-
Exercised		-	$	-		-
Outstanding at September 30, 2016		34,168,800	$	0.02		7.28	$	-
Exercisable at September 30, 2016		24,059,921	$	0.02		7.29	$	-
Weighted average fair value of options
granted during the period		-	$	-

(1) These amounts represent the excess, if any, between the exercise price and $0.0035, the closing market price of the Company’s common stock on September 30, 2016 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

At September 30, 2016, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $213,325, which we expect to be recognized over the next four years.

Series AA Preferred Shares

On April 15, 2016, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance of up to three thousand (3,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.

Each holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one million (1,000,000) votes for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company. The holders are restricted from voting the preferred shares for any proposal on the election of directors. The Company recorded a special dividend and valued the Series AA Super Voting Preferred Stock at $25,000 as of September 30, 2016.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2016

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. The Black-Scholes 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 derivative liabilities which are measured at fair value on a recurring basis by level as of September 30, 2016:

	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, 2016
Derivative liability	$	-	$	-	$	227,530	$	227,530
Warrant liability		-		-		185,209		185,209
Commitment in excess of authorized stock		-		-		171,535		171,535
Total	$	-	$	-	$	584,274	$	584,274

The following table presents changes in the derivative liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2016:

						Commitment
	Warrant		Derivative			In Excess of		Total
	Liability		Liability			Authorized Stock		Liability
Balance December 31, 2015	$	60,420	$	495,473		$	64,428	$	620,321
Liability on issuance of debt and warrants		44,394		407,209			-		451,603
Elimination of liability on conversion		-		(755,647	)		-		(755,647	)
Change in estimated fair value (1)		80,395		80,495			-		160,890
Commitment in excess of authorized stock		-		-			107,107		107,107
Balance September 30, 2016	$	185,209	$	227,530		$	171,535	$	584,274

(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, 2016:

	Derivative Liability	Warrant Liability
Expected term	6 months to 2 years	5 years
Exercise price	$0.00025 - $0.099	$0.02 - $0.1287
Expected volatility	272% to 334%	247% to 283%
Expected dividends	None	None
Risk-free interest rate	0.37% to 1.05%	1.14% to 1.49%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at September 30, 2016, management estimated a 60% probability of a down round financing event at a price of $0.025 and a 9% to 34% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

XML

Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies

6. Contingencies

None

XML

Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

7. Subsequent Events

Variable Rate Convertible Debentures

In October and November 2016, a holder of Variable Rate Convertible Debentures with principal of $13,772 and accrued interest of $498 converted a portion of their debentures into 15,646,222 shares of common stock.

Secured Convertible Debenture

In October 2016, the Company issued for cash of $150,000 a Secured Convertible Debenture (the “Debenture”) to an accredited investor. The terms of the Debenture are for three years, a conversion price of $0.01 per share and an annual interest rate of 8%. The secured interest is on all of the assets of the Company and is shared equally with a previous secured party.

Increase in Authorized Shares

On October 23, 2016, the increase in authorized capital stock from 750,000,000 shares to 1,250,000,000 shares became effective. The increase in authorized shares has been reflected on the Company’s Balance Sheet as of September 30, 2016.

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

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

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.

Variable Conversion Rate Debentures

Variable Conversion Rate Debentures

Starting in 2015, the Company entered into convertible debentures with floating exercise prices discounted to market prices. As a result, a significant number of shares were either issued or may be issued at deeply discounted variable conversion prices. The downward pressure placed on the Company’s stock as a result of these conversions can be classified as “death spirals” since the investors have no incentive to maintain a stable stock price. The Company accounts for these debentures as derivative liabilities which means the debentures are revalued at the end of each period and gains and losses are recognized at the issuance of the debentures and on the conversion of the debentures.

Over Commitment of Shares

Over Commitment of Shares

Since the number of shares issuable under convertible debentures with floating exercise prices is undeterminable, the Company may be required to issue shares in excess of the number of shares authorized by its shareholders. As a result, when the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised debentures, warrants and options, the derivatives must be valued using the Black Scholes Option Pricing method and a liability is recorded as though the obligations would be settled using some means other than stock.

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 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, 2016, 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 40,000,000 shares of common stock. At September 30, 2016, the Company had options outstanding exercisable into up to 34,168,800 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 24,059,921 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, 2016 and 2015:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Expected term		None		None		None		5 years
Exercise price		None		None		None	$	0.01
Expected volatility		None		None		None		210	%
Expected dividends		None		None		None		None
Risk-free interest rate		None		None		None		1.48	%
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 nine month periods ended September 30, 2016 and 2015, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive. 

	September 30, 2016		September 30, 2015
Preferred Stock		3,088,000		3,085,000
Convertible debentures		111,110,776		117,229,747
Options		34,168,800		38,064,635
Warrants		131,389,332		108,251,866
Total		279,756,908		266,631,248

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2016 and 2015:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Numerator:
Net income (loss) for basic earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Net income (loss) for diluted earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Denominator:
Weighted average basic shares outstanding		712,309,055			198,039,192			664,896,833			196,519,704
Denominator for diluted earnings per share-
Adjusted weighted average shares		712,309,055			198,039,192			664,896,833			196,519,704
Income (loss) per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Inventory

Inventory

Inventory consisted of the following at September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
Raw materials	$	255,014	$	216,704
Finished goods		52,617		45,183
		307,631		261,887
Reserve for obsolescence		-		-
		307,631		261,887
Less long-term portion		150,000		150,000
	$	157,631	$	111,887

During the nine months ended September 30, 2016, the Company purchased the inventory of Oncoscope, Inc. from the Trustee of Ondoscope’s bankruptcy proceeding for a total of $40,000. This amount, net of amounts sold of $2,100, has been included in raw materials.

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted and Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amended Interest – Imputation of Interest of the Accounting Standards Codification. The amended guidance requires that debt issuance costs related to a recognized debt liability, which were presented as deferred charges (assets), be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

Reclassifications

Reclassifications

Certain reclassifications have been made to the 2015 financial statements in order for them to conform to the 2016 presentation. Such reclassifications have no impact on the Company’s financial position or results of operations.

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Schedule 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, 2016 and 2015:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Expected term		None		None		None		5 years
Exercise price		None		None		None	$	0.01
Expected volatility		None		None		None		210	%
Expected dividends		None		None		None		None
Risk-free interest rate		None		None		None		1.48	%
Forfeitures		None		None		None		None

Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share

For the nine month periods ended September 30, 2016 and 2015, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive. 

	September 30, 2016		September 30, 2015
Preferred Stock		3,088,000		3,085,000
Convertible debentures		111,110,776		117,229,747
Options		34,168,800		38,064,635
Warrants		131,389,332		108,251,866
Total		279,756,908		266,631,248

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, 2016 and 2015:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Numerator:
Net income (loss) for basic earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Net income (loss) for diluted earnings per share	$	(777,100	)	$	(209,159	)	$	(2,921,616	)	$	(2,662,111	)
Denominator:
Weighted average basic shares outstanding		712,309,055			198,039,192			664,896,833			196,519,704
Denominator for diluted earnings per share-
Adjusted weighted average shares		712,309,055			198,039,192			664,896,833			196,519,704
Income (loss) per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Schedule of Inventory

Inventory consisted of the following at September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
Raw materials	$	255,014	$	216,704
Finished goods		52,617		45,183
		307,631		261,887
Reserve for obsolescence		-		-
		307,631		261,887
Less long-term portion		150,000		150,000
	$	157,631	$	111,887

XML

Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Liabilities [Abstract]

Schedule of Balance of Debentures

As of September 30, 2016 and December 31, 2015, the balances of the Debentures are as follows:

	September 30, 2016			December 31,   2015
Balance at beginning of period	$	6,174,760		$	4,496,602
Issuance of debentures for cash		300,000			1,970,250
Original issue discount		-			145,263
Issuance of debentures for forbearance		29,712			-
Debentures converted to common stock		(196,944	)		(437,355	)
Debentures exchanged for new debentures		122,268			-
Convertible debt		6,429,796			6,174,760
Less unamortized costs of financing		188,070			430,156
Convertible debt, net of unamortized costs	$	6,241,726		$	5,744,604
Convertible debt in default	$	5,473,032		$	4,313,199

Schedule of Balances of Derivative Liability

As of September 30, 2016 and December 31, 2015, the balances of the Derivative Liability are as follows:

							Commitment
				Conversion			In Excess of
	Warrants			Feature			Authorized Stock		Total
Balance at January 1, 2015	$	764,958		$	296,881		$	-	$	1,061,839
Liability on issuance of debt and warrants		-			1,306,372			-		1,306,372
Change in fair value at year end		(704,538	)		(469,906	)		-		(1,174,444	)
Elimination of liability on conversion		-			(637,874	)		-		(637,874	)
Over commitment of stock		-			-			64,428		64,428
Balance at December 31, 2015		60,420			495,473			64,428		620,321
Liability on issuance of debt and warrants		44,394			407,209			-		451,603
Change in fair value at period end		80,395			80,495			-		160,890
Elimination of liability on conversion		-			(755,647	)		-		(755,647	)
Over commitment of stock		-			-			107,107		107,107
Balance at September 30, 2016	$	185,209		$	227,530		$	171,535	$	584,274

XML

Shareholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Schedule of Warrants Outstanding

The balance of all warrants outstanding as of September 30, 2016 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2016		116,875,170		$	0.08
Granted		16,000,000		$	0.02
Cancelled		(1,485,838	)	$	0.08
Exercised		-		$	-
Outstanding at September 30, 2016		131,389,332		$	0.08
Exercisable at September 30, 2016		131,389,332		$	0.08

Schedule of Stock Options Outstanding

Options outstanding as of September 30, 2016 are as follows:

			Weighted		Weighted Average
			Average Exercise Price		Remaining Contractual		Aggregate Intrinsic
	Options		Per Share		Term (years)		Value (1)
Outstanding at January 1, 2016		34,168,800	$	0.02		8.03
Granted		-	$	-		-
Cancelled		-	$	-		-
Exercised		-	$	-		-
Outstanding at September 30, 2016		34,168,800	$	0.02		7.28	$	-
Exercisable at September 30, 2016		24,059,921	$	0.02		7.29	$	-
Weighted average fair value of options
granted during the period		-	$	-

(1) These amounts represent the excess, if any, between the exercise price and $0.0035, the closing market price of the Company’s common stock on September 30, 2016 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Balances of Liabilities Measured at Fair Value on Recurring Basis

The following table presents the balances of derivative liabilities which are measured at fair value on a recurring basis by level as of September 30, 2016:

	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, 2016
Derivative liability	$	-	$	-	$	227,530	$	227,530
Warrant liability		-		-		185,209		185,209
Commitment in excess of authorized stock		-		-		171,535		171,535
Total	$	-	$	-	$	584,274	$	584,274

Schedule Changes in Liabilities with Significant Unobservable Inputs

The following table presents changes in the derivative liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2016:

						Commitment
	Warrant		Derivative			In Excess of		Total
	Liability		Liability			Authorized Stock		Liability
Balance December 31, 2015	$	60,420	$	495,473		$	64,428	$	620,321
Liability on issuance of debt and warrants		44,394		407,209			-		451,603
Elimination of liability on conversion		-		(755,647	)		-		(755,647	)
Change in estimated fair value (1)		80,395		80,495			-		160,890
Commitment in excess of authorized stock		-		-			107,107		107,107
Balance September 30, 2016	$	185,209	$	227,530		$	171,535	$	584,274

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

Schedule of Derivative and Warrant Liabilities

Management used the following inputs to value the Derivative and Warrant Liabilities for the nine months ended September 30, 2016:

	Derivative Liability	Warrant Liability
Expected term	6 months to 2 years	5 years
Exercise price	$0.00025 - $0.099	$0.02 - $0.1287
Expected volatility	272% to 334%	247% to 283%
Expected dividends	None	None
Risk-free interest rate	0.37% to 1.05%	1.14% to 1.49%
Forfeitures	None	None

XML

Nature of Business and Basis of Presentation (Details Narrative)	1 Months Ended	9 Months Ended
	Jul. 31, 2012 USD ($)	Sep. 30, 2016 USD ($) IndividualInvestors IntellectualProperty	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Number of U.S. patents | IntellectualProperty		34
Number of additional patent issued | IntellectualProperty		28
Working capital deficit		$ 10,503,770	$ 8,324,600
Cash and cash equivalents		1,927	127,493	$ 55,061	$ 223,529
Debt face amount		5,473,032	$ 4,313,199
Convertible Debentures [Member]
Debt face amount		$ 5,473,032
Number of individual default | IndividualInvestors		75
Laidlaw & Company (UK) Ltd [Member] | Engagement Agreement [Member]
Maximum capital raising	$ 20,000,000	$ 1,185,000
Agreement period	2 years
Payments of transaction costs		$ 34,000

XML

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Options outstanding exercisable	34,168,800	34,168,800
Inventory raw materials	$ 255,014	$ 216,704
Raw Materials [Member]
Sale of stock consideration received on transaction	2,100
Oncoscope, Inc [Member]
Inventory raw materials	$ 40,000
2011 Equity Incentive Plan [Member]
Number of shares reserved	40,000,000
Options outstanding exercisable	34,168,800
Vesting period	4 years
2011 Equity Incentive Plan [Member] | Incentive Stock Options [Member]
Vesting period	10 years
Amended 2001 Equity Incentive Plan [Member]
Options outstanding exercisable	24,059,921
Equipment [Member] | Minimum [Member]
Useful life	2 years
Equipment [Member] | Maximum [Member]
Useful life	3 years

XML

Summary of Significant Accounting Policies - Schedule of Weighted Average Assumptions to Value Stock Options Granted (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Expected term	0 years	0 years	0 years	5 years
Exercise price		$ 0.01		$ 0.01
Expected volatility				210.00%
Expected dividends
Risk-free interest rate				1.48%
Forfeitures

XML

Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Antidilutive securities excluded from computation of earnings per share, amount	279,756,908	266,631,248
Preferred Stock [Member]
Antidilutive securities excluded from computation of earnings per share, amount	3,088,000	3,085,000
Convertible Debentures [Member]
Antidilutive securities excluded from computation of earnings per share, amount	111,110,776	117,229,747
Options [Member]
Antidilutive securities excluded from computation of earnings per share, amount	34,168,800	38,064,635
Warrants [Member]
Antidilutive securities excluded from computation of earnings per share, amount	131,389,332	108,251,866

XML

Summary of Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Net income (loss) for basic earnings per share	$ (777,100)	$ (209,159)	$ (2,921,616)	$ (2,662,111)
Net income (loss) for diluted earnings per share	$ (777,100)	$ (209,159)	$ (2,921,616)	$ (2,662,111)
Weighted average basic shares outstanding	712,309,055	198,039,192	664,896,833	196,519,704
Denominator for diluted earnings per share - Adjusted weighted average shares	712,309,055	198,039,192	664,896,833	196,519,704
Income (loss) per share Basic	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Income (loss) per share Diluted	$ 0.00	$ 0.00	$ 0.00	$ (0.01)

XML

Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Raw materials	$ 255,014	$ 216,704
Finished goods	52,617	45,183
Inventory, gross	307,631	261,887
Reserve for obsolescence
Inventories, net	307,631	261,887
Less long-term portion	150,000	150,000
Inventories, current	$ 157,631	$ 111,887

XML

Liabilities (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Nov. 30, 2014	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Debt instrument, face amount			$ 145,263
Accrued interest rate		10.00%
Notes payable- related parties		$ 35,000
Unsecured Note Payable [Member]
Debt Instrument [Line Items]
Debt instrument, face amount	$ 100,000
Warrant term	5 years
Exercise price per share	$ 0.09
Number of stock issued during period for debt offering costs	50,000
Remaining balance of notes payable	$ 115,000
Increased principal balance note payable	$ 137,982
Accrued interest rate	20.00%
Warrants valued	$ 1,659
10% promissory notes [Member] | Two Affiliates [Member]
Debt Instrument [Line Items]
Notes payable- related parties		35,000
ConvertibleDebenturesMember
Debt Instrument [Line Items]
Debt instrument, face amount		$ 196,944
Warrant term		5 years
Debentures outstanding		$ 6,232,345
ConvertibleDebenturesMember | Minimum [Member]
Debt Instrument [Line Items]
Exercise price per share		$ 0.0745
Accrued interest rate		10.00%
Percent original issue discount		5.00%
Conversion price per share		$ 0.01
Convertible debentures exercise price		0.02
ConvertibleDebenturesMember | Maximum [Member]
Debt Instrument [Line Items]
Exercise price per share		$ 0.1287
Accrued interest rate		20.00%
Percent original issue discount		10.00%
Conversion price per share		$ 0.099
Convertible debentures exercise price		$ 0.1287
Variable Debentures [Member]
Debt Instrument [Line Items]
Debentures outstanding		$ 197,451
Variable Debentures [Member] | Minimum [Member]
Debt Instrument [Line Items]
Accrued interest rate		0.00%
Percent original issue discount		0.00%
Variable issue discount rate		40.00%
Debt payment term		9 months
Debt subsequent issuance premiums		0.00%
Variable Debentures [Member] | Maximum [Member]
Debt Instrument [Line Items]
Accrued interest rate		10.00%
Percent original issue discount		10.00%
Variable issue discount rate		50.00%
Debt payment term		1 year
Debt subsequent issuance premiums		50.00%
Secured Convertible Debenture [Member]
Debt Instrument [Line Items]
Exercise price per share		$ 0.01
Accrued interest rate		8.00%
Amount of principal		$ 850,000
Derivative Financial Instruments, Liabilities [Member]
Debt Instrument [Line Items]
Number of shares issued upon conversion		266,000,000

XML

Liabilities - Schedule of Balance of Debentures (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Liabilities [Abstract]
Balance at beginning of period	$ 6,174,760	$ 4,496,602
Issuance of debentures for cash	300,000	1,970,250
Original issue discount		145,263
Issuance of debentures for forbearance	29,712
Debentures converted to common stock	(196,944)	(437,355)
Debenture exchanged for new debentures	122,268
Convertible debt	6,429,796	6,174,760
Less unamortized costs of financing	188,070	430,156
Convertible debt, net of unamortized costs	6,241,726	5,744,604
Convertible debt in default	$ 5,473,032	$ 4,313,199

XML

Liabilities - Schedule of Balances of Derivative Liability (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Balance at beginning	$ 620,321	$ 1,061,839
Liability on issuance of debt and warrants	451,603	1,306,372
Change in fair value at year end	160,890	(1,174,444)
Elimination of liability on conversion	(755,647)	(637,874)
Over commitment of stock	107,107	64,428
Balance at ending	584,274	620,321
Warrants [Member]
Debt Instrument [Line Items]
Balance at beginning	60,420	764,958
Liability on issuance of debt and warrants	44,394
Change in fair value at year end	80,395	(704,538)
Elimination of liability on conversion
Over commitment of stock
Balance at ending	185,209	60,420
Conversion Feature [Member]
Debt Instrument [Line Items]
Balance at beginning	495,473	296,881
Liability on issuance of debt and warrants	407,209	1,306,372
Change in fair value at year end	80,495	(469,906)
Elimination of liability on conversion	(755,647)	(637,874)
Over commitment of stock
Balance at ending	227,530	495,473
Commitment In Excess of Authorized Stock [Member]
Debt Instrument [Line Items]
Balance at beginning	64,428
Liability on issuance of debt and warrants
Change in fair value at year end
Elimination of liability on conversion
Over commitment of stock	107,107	64,428
Balance at ending	$ 171,535	$ 64,428

XML

Shareholders' Deficit (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016	Apr. 15, 2016	Dec. 31, 2015
Face amount							$ 145,263
Gain on extinguishment of debt	213,584		460,658	$ 119,369
Total unrecognized estimated employee compensation cost	$ 213,325		$ 213,325
Series AA Super Voting Preferred Stock [Member]
Preferred stock, authorized	3,000		3,000			3,000	3,000
Preferred stock, par value	$ .001		$ .001			$ 0.001	$ .001
Preferred stock, outstanding	0		0			0	0
Preferred stock special dividend			$ 25,000
Convertible Debentures [Member]
Face amount	$ 196,944		196,944
Accrued interest			$ 4,745
Warrant term			5 years
Convertible Debentures [Member] | Common Stock [Member]
Number of common stock converted into shares of common stock			305,277,793
Gain on extinguishment of debt			$ 53,038
Warrants [Member] | Consultant [Member]
Number of warrant issued					1,000,000
Value of warrants	$ 1,652		$ 1,652
Warrants [Member] | Convertible Debentures [Member]
Number of warrant issued	15,000,000		15,000,000
Warrant term			5 years
Warrants exercise price			$ 0.02

XML

Shareholders' Deficit - Schedule of Warrants Outstanding (Details) - Warrants [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Outstanding at beginning | shares	116,875,170
Granted | shares	16,000,000
Cancelled | shares	(1,485,838)
Exercised | shares
Outstanding at ending | shares	131,389,332
Exercisable at ending | shares	131,389,332
Outstanding at beginning | $ / shares	$ 0.08
Granted | $ / shares	0.02
Cancelled | $ / shares	0.08
Exercised | $ / shares
Outstanding at ending | $ / shares	0.08
Exercisable at ending | $ / shares	$ 0.08

XML

Shareholders' Deficit - Schedule of Stock Options Outstanding (Details)	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Stockholders' Equity Note [Abstract]
Outstanding at beginning | shares	34,168,800
Granted | shares
Cancelled | shares
Exercised | shares
Outstanding at ending | shares	34,168,800
Exercisable at ending | shares	24,059,921
Outstanding at beginning | $ / shares	$ 0.02
Granted | $ / shares
Cancelled | $ / shares
Exercised | $ / shares
Outstanding at ending | $ / shares	0.02
Exercisable at ending | $ / shares	$ 0.02
Outstanding at beginning	8 years 11 days
Outstanding at ending	7 years 3 months 11 days
Exercisable at ending	7 years 3 months 15 days
Outstanding at ending | $		[1]
Exercisable at ending | $		[1]

[1] These amounts represent the excess, if any, between the exercise price and $0.0035, the closing market price of the Company’s common stock on September 30, 2016 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

XML

Shareholders' Deficit - Schedule of Stock Options Outstanding (Details) (Parenthetical)	Sep. 30, 2016 $ / shares
Stock option exercise price	$ 0.02
Stock Options [Member]
Stock option exercise price	$ 0.0035

XML

Fair Value Measurements (Details Narartive)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Description of valuation of derivative and warrant liability	In computing the fair value of the derivative and warrant liability at September 30, 2016, management estimated a 60% probability of a down round financing event at a price of $0.025 and a 9% to 34% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

XML

Fair Value Measurements - Schedule of Balances of Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring [Member]	Sep. 30, 2016 USD ($)
Total Liability	$ 584,274
Fair Value, Inputs, Level 1 [Member]
Total Liability
Fair Value, Inputs, Level 2 [Member]
Total Liability
Fair Value, Inputs, Level 3 [Member]
Total Liability	584,274
Derivative Financial Instruments, Liabilities [Member]
Total Liability	227,530
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Inputs, Level 1 [Member]
Total Liability
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Inputs, Level 2 [Member]
Total Liability
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Inputs, Level 3 [Member]
Total Liability	227,530
Warrant liability [Member]
Total Liability	185,209
Warrant liability [Member] | Fair Value, Inputs, Level 1 [Member]
Total Liability
Warrant liability [Member] | Fair Value, Inputs, Level 2 [Member]
Total Liability
Warrant liability [Member] | Fair Value, Inputs, Level 3 [Member]
Total Liability	185,209
Commitment In Excess of Authorized Stock [Member]
Total Liability	171,535
Commitment In Excess of Authorized Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Total Liability
Commitment In Excess of Authorized Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Total Liability
Commitment In Excess of Authorized Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Total Liability	$ 171,535

XML

Fair Value Measurements - Schedule Changes in Liabilities with Significant Unobservable Inputs (Details) - USD ($)		9 Months Ended	12 Months Ended
		Sep. 30, 2016	Dec. 31, 2015
Balance at beginning		$ 620,321	$ 1,061,839
Change in estimated fair value (1)		(160,890)	1,174,444
Balance at ending		584,274	620,321
Fair Value, Inputs, Level 3 [Member]
Balance at beginning		620,321
Liability on issuance of debt and warrants		451,603
Elimination of liability on conversion		(755,647)
Change in estimated fair value (1)	[1]	160,890
Commitment in excess of authorized stock		107,107
Balance at ending		584,274	620,321
Warrant liability [Member] | Fair Value, Inputs, Level 3 [Member]
Balance at beginning		60,420
Liability on issuance of debt and warrants		44,394
Elimination of liability on conversion
Change in estimated fair value (1)	[1]	80,395
Commitment in excess of authorized stock
Balance at ending		185,209	60,420
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Inputs, Level 3 [Member]
Balance at beginning		495,473
Liability on issuance of debt and warrants		407,209
Elimination of liability on conversion		(755,647)
Change in estimated fair value (1)	[1]	80,495
Commitment in excess of authorized stock
Balance at ending		227,530	495,473
Commitment In Excess of Authorized Stock [Member]
Balance at beginning		64,428
Change in estimated fair value (1)
Balance at ending		171,535	64,428
Commitment In Excess of Authorized Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Balance at beginning		64,428
Liability on issuance of debt and warrants
Elimination of liability on conversion
Change in estimated fair value (1)	[1]
Commitment in excess of authorized stock		107,107
Balance at ending		$ 171,535	$ 64,428

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

XML

Fair Value Measurements - Schedule of Derivative and Warrant Liabilities (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares
Derivative Financial Instruments, Liabilities [Member]
Expected dividends	0.00%
Forfeitures	0.00%
Derivative Financial Instruments, Liabilities [Member] | Minimum [Member]
Expected term	6 months
Exercise price	$ 0.00025
Expected volatility	272.00%
Risk-free interest rate	0.37%
Derivative Financial Instruments, Liabilities [Member] | Maximum [Member]
Expected term	2 years
Exercise price	$ 0.099
Expected volatility	334.00%
Risk-free interest rate	1.05%
Warrant liability [Member]
Expected term	5 years
Expected dividends	0.00%
Forfeitures	0.00%
Warrant liability [Member] | Minimum [Member]
Exercise price	$ 0.02
Expected volatility	247.00%
Risk-free interest rate	1.14%
Warrant liability [Member] | Maximum [Member]
Exercise price	$ 0.1287
Expected volatility	283.00%
Risk-free interest rate	1.49%

XML

Subsequent Events (Details Narrative) - USD ($)	1 Months Ended	2 Months Ended	9 Months Ended
	Oct. 31, 2016	Nov. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Oct. 23, 2016	Dec. 31, 2015
Face amount						$ 145,263
Net cash proceeds of debentures			$ 300,000	$ 1,520,250
Common stock, shares authorized			1,246,912,000			746,915,000
Subsequent Event [Member]
Common stock, shares authorized					750,000,000
Subsequent Event [Member] | Maximum [Member]
Common stock, shares authorized					1,250,000,000
Subsequent Event [Member] | 8% Secured Convertible Debentures [Member]
Net cash proceeds of debentures	$ 150,000
Conversion price per share	$ 0.01
Interest rate	8.00%
Subsequent Event [Member] | Variable Rate Convertible Debentures [Member]
Face amount		$ 13,772
Accrued interest		$ 498
Number of common shares issued		15,646,222