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 June 30, 2015

Commission file number 0-13092

SPECTRASCIENCE, INC.

(Exact name of registrant

as specified in its charter)

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

11568 Sorrento Valley Rd., Suite 11

San Diego, California 92121

(Address of principal executive offices, including zip code)

(858) 847-0200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES ☒     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  ☒    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        ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐  NO ☒

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding on August 14, 2015 was 198,039,192.

1

SPECTRASCIENCE, INC.

FORM 10-Q

For the Six Months Ended June 30, 2015

TABLE OF CONTENTS

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

2

PART I     FINANCIAL INFORMATION:

Item 1. Financial Statements

SpectraScience, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets 

	June 30,			December 31,
	2015			2014
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash	$	42,235		$	223,529
Inventory		289,223			283,624
Deferred debt issuance costs		84,315			107,636
Prepaid expenses and other current assets		203,597			244,173
Total current assets		619,370			858,962
Fixed assets, net		1,990			3,665
Patents, net		1,266,682			1,347,894
	$	1,888,042		$	2,210,521
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	944,889		$	836,136
Note payable		115,000			100,000
Convertible debt, net of discounts of $534,726 as of June 30, 2015 and $576,502 as of December 31, 2014		4,705,738			3,920,100
Derivative liability		1,786,154			1,061,839
Accrued expenses		850,611			673,012
Total current liabilities		8,402,392			6,591,087
COMMITMENTS AND CONTINGENCIES
Stockholders’ deficit
Series A Convertible Preferred Stock, $.01 par value; 0 shares authorized, issued and outstanding as of June 30, 2015 and December 31, 2014		—			—
Series B Convertible Preferred Stock, $.01 par value; 2,585,000 shares authorized, issued and outstanding as of June 30, 2015 and December 31, 2014; liquidation value of $517,000 plus accumulated and unpaid dividends of $106,931 as of June 30, 2015 and December 31, 2014		25,850			25,850
Series C Convertible Preferred Stock, $.01 par value; 1,000,000 shares authorized; 500,000 shares issued and outstanding as of June 30, 2015 and December 31, 2014; liquidation value of $100,000 as of June 30, 2015 and December 31, 2014		5,000			5,000
Common stock, $.01 par value; 746,915,000 shares authorized; 198,039,192 and 194,355,277 shares issued and outstanding as of June 30, 2015 and December 31, 2014		1,980,392			1,943,553
Additional paid in capital		39,791,443			39,509,115
Accumulated deficit		(48,317,035	)		(45,864,084	)
Total stockholders’ deficit		(6,514,350	)		(4,380,566	)
	$	1,888,042		$	2,210,521

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						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenue	$	—		$	—		$	—		$	—
Cost of revenue		(6,000	)		—			(12,000	)		(6,000	)
Gross profit		6,000			—			12,000			6,000
Operating expenses:
Research and development		157,329			276,188			332,009			534,368
General and administrative		344,811			292,858			726,265			812,689
Sales and marketing		94,098			140,791			133,960			230,351
		596,238			709,837			1,192,234			1,577,408
Loss from operations		(590,238	)		(709,837	)		(1,180,234	)		(1,571,408	)
Other income (expense)
Interest expense		(147,041	)		(116,770	)		(291,543	)		(215,741	)
Change in fair value of derivative and warrant liabilities		277,361			30,880			(400,223	)		(2,051,760	)
Amortization of derivative and warrant liabilities discount		(233,187	)		(303,105	)		(523,296	)		(453,838	)
Amortization of deferred debt issuance costs and original issue discount		(84,576	)		(65,450	)		(172,390	)		(112,574	)
Gain on extinguishment of debt		36,641			—			119,369			—
Other income (expense), net		(2,221	)		(6,061	)		(4,634	)		(15,179	)
		(153,023	)		(460,506	)		(1,272,717	)		(2,849,092	)
Net loss	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Basic and diluted loss per share	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Weighted average common shares outstanding:
Basic and diluted		197,124,162			167,953,254			195,747,368			167,583,031

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

4

SpectraScience, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Deficit

For the six months ended June 30, 2015

(unaudited)

													Additional					Total
	Series B Preferred Stock				Series C Preferred Stock				Common Stock				Paid-In		Accumulated			Shareholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance December 31, 2014		2,585,000	$	25,850		500,000	$	5,000		194,355,277	$	1,943,553	$	39,509,115	$	(45,864,084	)	$	(4,380,566	)
Conversion of convertible debt		—		—		—		—		3,233,915		32,339		63,863		—			96,202
Exercise of stock options		—		—		—		—		450,000		4,500		—					4,500
Non cash issuance of stock options		—		—		—		—		—		—		97,521		—			97,521
Non cash issuance of warrant for consulting services		—		—		—		—		—		—		2,848		—			2,848
Warrant valuation on issuance of convertible debt		—		—		—		—		—		—		118,096		—			118,096
Net loss		—		—		—		—		—		—		—		(2,452,951	)		(2,452,951	)
Balance June 30, 2015		2,585,000	$	25,850		500,000	$	5,000		198,039,192	$	1,980,392	$	39,791,443	$	(48,317,035	)	$	(6,514,350	)

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) 

	Six Months Ended June 30,
	2015			2014
Operating activities:
Net loss	$	(2,452,951	)	$	(4,420,500	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation		82,887			97,699
Non-cash issuance of stock options and warrants		100,369			308,095
Amortization of derivative and warrant liabilities discount		523,296			453,838
Amortization of deferred debt issuance costs and original issue discount		172,390			112,574
Change in fair value of derivative and warrant liabilities		400,223			2,051,760
Gain on extinguishment of debt		(119,369	)		—
Fair market value of common stock issued for services		—			50,000
Changes in assets and liabilities:
Accounts receivable		—			60,000
Inventory		(5,599	)		(68,729	)
Prepaid expense and other assets		40,576			39,211
Accounts payable		108,753			(31,894	)
Accrued expenses		219,661			196,412
Net cash used in operating activities		(929,764	)		(1,151,534	)
Investing activities:
Purchases of fixed assets		—			(6,275	)
Net cash used in investing activities		—			(6,275	)
Financing activities:
Proceeds from issuance of convertible notes payable		820,750			1,506,376
Payments against note payable to affiliate		—			(30,000	)
Proceeds from exercise of stock options		4,500			18,624
Debt issuance costs		(76,780	)		(130,000	)
Net cash provided by financing activities		748,470			1,365,000
Net increase (decrease) in cash		(181,294	)		207,191
Cash, beginning of year		223,529			236,597
Cash, end of period	$	42,235		$	443,788
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	—		$	—
Income taxes	$	—		$	—
Non Cash Investing and Financing Activities:
Conversion of convertible notes and accrued interest to common stock	$	157,839		$	—
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 colon cancer detection. In June 2012, the Company entered into a distribution agreement with PENTAX Europe, GmbH, for the sale of its systems internationally.

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

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

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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, 2014.

7

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Going Concern

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2015, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

As of June 30, 2015, the Company had a working capital deficit of $7,783,022 and cash of $42,235, compared to a working capital deficit of $5,732,125 and cash of $223,529 as of December 31, 2014. 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 six months ended June 30, 2015, the Company raised $743,970, net of transaction costs of $76,780, 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 June 30, 2015, Convertible Debentures with a face value of $3,282,497 held by 55 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.

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.

8

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Consolidation

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

Risks and Uncertainties

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

Use of Estimates

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

Inventory Valuation

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

Valuation of Long-lived Assets

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

9

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Stock-Based Compensation

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

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

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

As of June 30, 2015, 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 June 30, 2015, the Company had options outstanding exercisable into up to 39,718,802 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 18,454,489 shares were exercisable. Awards under the Company’s EIP generally vest over four years.

10

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The fair value of options granted are estimated at the date of grant using a Black-Scholes Model which includes several variables including expected life, risk free interest rate, expected stock price volatility, stock option exercise patterns and expected dividend yield. The Company also must estimate forfeitures for employee stock options. Management used the following weighted average assumptions to value stock options granted during the three and six month periods ended June 30, 2015 and 2014: 

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Expected term	None	None	5 years	5 years
Exercise price	None	None	$0.01	$0.02
Expected volatility	None	None	210%	187%
Expected dividends	None	None	None	None
Risk-free interest rate	None	None	1.48%	1.64%
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 six month periods ended June 30, 2015 and 2014, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	June 30,		June 30,
	2015		2014
Preferred Stock		3,085,000		3,085,000
Convertible debentures		101,009,574		90,505,370
Options		39,718,802		35,468,800
Warrants		99,995,693		105,719,939
Total		243,809,069		234,779,109

11

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The following table sets forth the computation of basic and diluted loss per share for the three and six month periods ended June 30, 2015 and 2014:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Numerator:
Net loss for basic earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Net loss for diluted earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Denominator:
Weighted average basic shares outstanding		197,124,162			167,953,254			195,747,368			167,583,031
Denominator for diluted earnings per share- Adjusted weighted average shares		197,124,162			167,953,254			195,747,368			167,583,031
Income (loss) per share
Basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

Inventory

Inventory consisted of the following at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
Raw materials	$	238,959	$	238,441
Finished goods		50,264		45,183
		289,223		283,624
Reserve for obsolescence		—		—
	$	289,223	$	283,624

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 $115,000 and interest will accrue at 20% from February 18, 2015 until paid. The note remained outstanding at June 30, 2015 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.

12

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

Convertible Debentures

As of June 30, 2015, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of six months to one year, an interest rate ranging from 10-20% per year and an original issue discount ranging from 5% to 10% which, at the option of the holder, may convert into common stock at an initial conversion price ranging from $0.03 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 $0.06 to $0.1287 per share. In addition, the Company issued five year cashless Agent Warrants equal to 10% of the total number of shares issuable under the Debentures and Holders Warrants at an exercise price ranging from $0.0745 to $0.1287 per share. For debentures issued through 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 $4,818,603 as of June 30, 2015.

During the three months ended June 30, 2015, the Company has issued and outstanding Convertible Debentures (“Variable Debentures”) with original terms of 9 months to one year, an interest rate ranging from 0-10% per year and original issue discount rate ranging from 0-10% which contain variable conversion rates ranging from discounts of 40-50% of the Company’s common stock based on the lowest 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 $421,861 as of June 30, 2015.

As of June 30, 2015 and December 31, 2014, the balances of the Debentures are as follows:

	June 30,			December 31,
	2015			2014
Balance at beginning of period	$	4,496,602		$	2,951,629
Issuance of debentures for cash		820,750			2,506,376
Original issue discount		53,889			128,071
Debentures surrendered in exchange transactions		—			—
Debentures issued in exchange transactions		—			—
Debentures converted to common stock		(130,777	)		(1,089,474	)
Convertible debt		5,240,464			4,496,602
Less unamortized costs of financing		534,726			576,502
Convertible debt, net of unamortized costs	$	4,705,738		$	3,920,100
Convertible debt in default	$	3,282,497		$	1,862,160

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, Variable Debentures issued during the three months ended June 30, 2015, contained 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 combination of Black-Scholes option valuation models and Binomial Lattice option valuation models using similar assumptions to those described under “Stock-Based Compensation.” The time period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the time period over which the Company will be required to evaluate the fair value of the conversion features are six to twelve months or conversion.

13

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

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

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

As of June 30, 2015 and December 31, 2014, the balances of the Derivative Liability are as follows:

				Conversion
	Warrants			Feature			Total
Balance at December 31, 2013	$	803,484		$	300,939		$	1,104,423
Elimination on extinguishment of debt		—			(197,482	)		(197,482	)
Change in fair value at year end		(38,526	)		193,424			154,898
Balance at December 31, 2014		764,958			296,881			1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in fair value at period end		(3,567	)		403,790			400,223
Balance at June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

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. For the six months ended June 30, 2015, $118,096 was recorded as additional paid-in capital.

4.      Shareholders’ Deficit

Common Stock

During the six months ended June 30, 2015, holders of Convertible Debentures with a face value of $130,777 converted their debentures into 2,705,306 shares of restricted common stock. In addition, associated with these debentures, the Company paid $27,062 in accrued interest by issuing 528,609 shares of restricted common stock and recorded a gain on extinguishment of debt of $119,369.

Warrants

During the six months ended June 30, 2015, in conjunction with the sale of Convertible Debentures, the Company issued five year common stock purchase warrants to acquire up to 5,725,312 shares to holders of the Debentures. These warrants have exercise prices ranging from $0.06 to $0.09 per share.

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SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

In January 2015, the Company issued a warrant exercisable into up to 300,000 shares of common stock in exchange for services provided by a consultant. The value of these warrants, $2,848, was determined using the Black-Sholes Option pricing model and was included as non-cash expenses and additional paid-in capital during the six months ended June 30, 2015.

The balance of all warrants outstanding as of June 30, 2015 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2015		103,430,075		$	0.11
Granted		6,025,312		$	0.08
Exchanged cancelled		—		$	—
Exchanged issued		—		$	—
Cancelled		(9,459,694	)	$	0.31
Exercised		—		$	—
Outstanding at June 30, 2015		99,995,693		$	0.08
Exercisable at June 30, 2015		99,995,693		$	0.08

Stock Options

Options outstanding as of June 30, 2015 are as follows:

				Weighted Average		Weighted Average		Aggregate
				Exercise Price		Remaining Contractual		Intrinsic
	Options			Per Share		Term (years)		Value (1)
Outstanding at January 1, 2015		34,293,800		$	0.02		8.74
Granted		5,900,002		$	0.01		9.61
Cancelled		(25,000	)	$	0.90		—
Exercised		(450,000	)	$	0.01		—
Outstanding at June 30, 2015		39,718,802		$	0.02		8.66	$	54,500
Exercisable at June 30, 2015		18,454,489		$	0.02		8.56	$	12,000
Weighted average fair value of options granted during the period		5,900,002		$	0.01

(1) These amounts represent the excess, if any, between the exercise price and $0.01, the closing market price of the Company’s common stock on June 30, 2015 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

In February 2015, the Company’s Board of Directors authorized the issuance of stock options exercisable into up to 5,900,002 shares of common stock at an exercise price of $0.01 per share to a group of employees, directors and consultants. A portion of the options contained vesting criteria conditioned on certain milestones being achieved by the Company. If the milestones are not achieved, the options are subject to being cancelled. During the three months ended June 30, 2015, two directors exercised stock options into 450,000 shares of common stock at an exercise price of $0.01 per share

15

SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

At June 30, 2015, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $458,722, which we expect to be recognized over the next four years.

5.      Fair Value Measurements

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

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

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

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

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

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

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of June 30, 2015:

	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 June 30, 2015
Derivative liability	$	—	$	—	$	1,024,763	$	1,024,763
Warrant liability		—		—		761,391		761,391
Total	$	—	$	—	$	1,786,154	$	1,786,154

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SpectraScience, Inc.

Notes to Unaudited Condensed Financial Statements (continued)

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

	Warrant			Derivative			Total
	Liability			Liability			Liability
Balance December 31, 2014	$	764,958		$	296,881		$	1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in estimated fair value (1)		(3,567	)		403,790			400,223
Balance June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

(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 six months ended June 30, 2015:

	Derivative Liability	Warrant Liability
Expected term	1 year	5 years
Exercise price	$0.01 - $0.099	$0.075 - $0.1287
Expected volatility	286% to 294%	219% to 221%
Expected dividends	None	None
Risk-free interest rate	0.22% to 0.28%	1.32% to 1.63%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at June 30, 2015 for instruments under the Binomial Lattice option-pricing model, management estimated a 40% probability of a down round financing event at a price of $0.025 and a 20% to 75% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

6.      Contingencies

None

7.      Subsequent Events

Convertible Debentures and Warrants

During July and August 2015, the Company sold $277,778 of Unsecured Convertible Debentures (the “Debentures”) to an accredited investor for aggregate consideration of $250,000. The Debentures mature in twelve months, carry a fixed conversion price of $.045, an annual interest rate of 10% and are convertible into 6,172,840 shares of common stock at maturity. The Company received net cash proceeds of approximately $230,000 after payment of fees and expenses of $20,000. In addition, the Company issued the holder of the Debentures detachable five-year warrants to purchase 3,086,420 additional shares of common stock at an exercise price of $0.090 per share.

Variable Debentures

In July 2015, the Company entered into two notes accumulating $74,500 that can be repaid for $85,675 to $104,300 if paid within 90-180 days. If paid subsequent to 180 days, the notes are convertible into common stock at a discount to the market price. Management estimates that the notes will be paid within the 90-180 days.

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

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

Forward-Looking Statements

This quarterly report on Form 10-Q (the “Report”) contains forward-looking statements that are not related to historical results, including, without limitation, statements regarding our business strategy and objectives, our anticipated duration of periods of net loss, our near term operating goals, our expectations regarding the market for our products, the introduction of our products in new international markets and our beliefs with respect to opportunities and industry conditions in those markets, our beliefs about our products, product development, acquisition or licensing of complementary technologies and expectations with respect to our products’ performance and acceptance, the results of and our intentions with respect to our distribution agreement with PENTAX Europe GmbH, our beliefs about the strengths of our intellectual property portfolio, our regulatory goals and developments, anticipated clinical trials and research, our agreements with Laidlaw and other agents and their effect on our future capital resources and future financial position, our expectations with respect to stock option expense recognition, our future cash needs, the sufficiency of our working capital and our operating losses for the remainder of the current fiscal year. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, there can be no assurance that such assumptions will prove to be accurate and actual results could differ materially from those discussed in the forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause or contribute to such differences, including, but not limited to, changes in law or regulatory policies, unanticipated competition from other similar businesses, adverse outcomes from litigation, unexpected employee departures or disruptions, adverse market and general economic factors and other factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. 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, 2014.

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 six month period ended June 30, 2015, SpectraScience carried forward on the improvements made to the WavSTAT4 in fiscal 2011 and continued working with PENTAX Europe, GmbH (“PENTAX”), for distribution of its products in Europe, the Middle East and Africa.

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Over the next 12 months, SpectraScience intends to:

Market and sell the WavSTAT4 Optical Biopsy System colon cancer diagnostic application through PENTAX 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 United States;

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

Continue to expand and refine our intellectual property portfolio.

Results of Operations

Comparison of the Three Months Ended June 30, 2015 and 2014

	Three Months Ended June 30,						Favorable
	2015			2014			(Unfavorable)			%
Revenue	$	—		$	—		$	—		NM
Cost of revenue		(6,000	)		—			6,000		NM
Gross profit		6,000			—			6,000		NM
Operating expenses:
Research and development		157,329			276,188			118,859			43.0	%
General and administrative		344,811			292,858			(51,953	)		17.7	%
Sales and marketing		94,098			140,791			46,693			33.2	%
		596,238			709,837			113,599			16.0	%
Loss from operations		(590,238	)		(709,837	)		119,599			16.8	%
Other income (expense)		(153,023	)		(460,506	)		307,483			66.8	%
Net loss	$	(743,261	)	$	(1,170,343	)	$	427,082			36.5	%

Revenues

There was no revenue during the three months ended June 30, 2015 or June 30, 2014. We anticipate that revenue will resume as a result of our distribution agreement with PENTAX and continuing direct sales efforts in certain locations once sufficient information has been accumulated from our MORDIS trials in Europe.

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Cost of Revenue

Cost of revenue for the quarter ended June 30, 2015 was a negative $6,000 compared to no cost of revenue for the quarter ended June 30, 2014. The reason for the negative cost of revenue was the result of two systems installed in 2013 came off of warranty with no associated costs.

Research and Development Expenses

Research and development expenses decreased by $118,859, 43.0%, to $157,329 for the quarter ended June 30, 2015 from $276,188 for the quarter ended June 30, 2014. This decrease was due to a decrease in consulting costs over the previous year’s quarter of approximately $10,000, a decrease of clinical trial costs of approximately $82,000 coupled with a decrease in non-cash stock option expense of approximately $24,000. We anticipate that clinical costs will increase as we proceed with our introduction of the WaveSTAT4 in Europe.

General and Administrative Expenses

General and administrative expenses increased by $51,953, 17.7%, to $344,811 for the quarter ended June 30, 2015 from $292,858 for the quarter ended June 30, 2014. The primary reason for the increase was an increase during the current quarter compared to the same quarter of the previous year in payroll of approximately $51,000. We anticipate that general and administrative expenses will increase as we increase our activity in Europe.

Sales and Marketing Expenses

Sales and marketing expenses decreased by $46,693, 33.2%, to $94,098 for the quarter ended June 30, 2015 from $140,791 for the quarter ended June 30, 2014. The primary reason for the decrease was a decrease in travel costs of approximately $21,000, a decrease in payroll costs of approximately $7,000 and a decrease in advertising expense of approximately $17,000. We anticipate that sales and marketing expenses will increase as we increase our activity in Europe.

Other Income (Expense)

Other income (expense) for the quarter ended June 30, 2015 was expense of $153,023 compared to expense of $460,506 for the quarter ended June 30, 2014. This change was due primarily to a gain on the extinguishment of convertible debentures for approximately $37,000 offset by 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.

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Comparison of the Six Months Ended June 30, 2015 and 2014

	Six Months Ended June 30,						Favorable
	2015			2014			(Unfavorable)		%
Revenue	$	—		$	—		$	—	NM
Cost of revenue		(12,000	)		(6,000	)		6,000		100.0	%
Gross profit		12,000			6,000			6,000		100.0	%
Operating expenses:
Research and development		332,009			534,368			202,359		37.9	%
General and administrative		726,265			812,689			86,424		10.6	%
Sales and marketing		133,960			230,351			96,391		41.8	%
		1,192,234			1,577,408			385,174		24.4	%
Loss from operations		(1,180,234	)		(1,571,408	)		391,174		24.9	%
Other income (expense)		(1,272,717	)		(2,849,092	)		1,576,375		55.3	%
Net loss	$	(2,452,951	)	$	(4,420,500	)	$	1,967,549		44.5	%

Revenues

There was no revenue during the three months ended June 30, 2015 or June 30, 2014. We anticipate that revenue will resume 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

Cost of revenue for the six months ended June 30, 2015 was a negative $12,000 compared to a negative $6,000 for the six months ended June 30, 2014. The reason for the negative cost of revenue in each of the two periods was a result of four systems installed in 2013 and two systems installed in 2012 came off of warranty with no associated costs.

Research and Development Expenses

Research and development expenses decreased by $202,359, 37.9%, to $332,009 for the six months ended June 30, 2015 from $534,368 for the six months ended June 30, 2014. This decrease was due to a decrease in clinical trial costs over the previous year’s period of approximately $88,000, a decrease in payroll over the previous year’s period of approximately $53,000 coupled with a decrease in non-cash stock option expense of approximately $51,000. We anticipate that clinical costs will increase as we proceed with our introduction of the WaveSTAT4 in Europe.

General and Administrative Expenses

General and administrative expenses decreased by $86,424, 10.6%, to $726,265 for the six months ended June 30, 2015 from $812,689 for the six months ended June 30, 2014. The primary reasons for the decrease was a decrease during the current period compared to the same period of the previous year in non-cash stock option expense of $154,000 offset in part by an increase in payroll costs of approximately $79,000. We anticipate that general and administrative expenses will increase as we increase our activity in Europe.

21

Sales and Marketing Expenses

Sales and marketing expenses decreased by $96,391, 41.8%, to $133,960 for the six months ended June 30, 2015 from $230,351 for the six months ended June 30, 2014. The primary reason for the decrease was a decrease in travel costs of approximately $21,000, a decrease in payroll costs of approximately $49,000 and a decrease in advertising expense of approximately $19,000. We anticipate that sales and marketing expenses will increase as we increase our activity in Europe.

Other Income (Expense)

Other income (expense) for the six months ended June 30, 2015 was expense of $1,272,717 compared to expense of $2,849,092 for the six months ended June 30, 2014. This change was due primarily to a gain on the extinguishment of convertible debentures for approximately $119,000 coupled with the change in valuation of our derivative liabilities. We anticipate continued large fluctuations in other income (expense) as a result of quarterly re-evaluating these obligations.

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Liquidity and Capital Resources

	As of						Increase
	June 30, 2015			December 31, 2014			(Decrease)
Working Capital
Current assets	$	619,370		$	858,962		$	(239,592	)
Current liabilities		8,402,392			6,591,087			1,811,305
Working capital deficit	$	(7,783,022	)	$	(5,732,125	)	$	2,050,897
Long-term debt	$	—		$	—		$	—
Stockholders’ deficit	$	(6,514,350	)	$	(4,380,566	)	$	2,133,784

	Six Months Ended June 30,						Increase
	2015			2014			(Decrease)
Statements of Cash Flows Select Information
Net cash provided (used) by:
Operating activities	$	(929,764	)	$	(1,151,534	)	$	(221,770	)
Investing activities	$	—		$	(6,275	)	$	(6,275	)
Financing activities	$	748,470		$	1,365,000		$	(616,530	)

	As of				Increase
	June 30, 2015		December 31, 2014		(Decrease)
Balance Sheet Select Information
Cash	$	42,235	$	223,529	$	(181,294	)
Inventory	$	289,223	$	283,624	$	5,599
Accounts payable and accrued expenses	$	1,795,500	$	1,509,148	$	286,352

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2015, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

23

As of June 30, 2015, the Company had a working capital deficit of $7,783,022 and cash of $42,235, compared to a working capital deficit of $5,732,125 and cash of $223,529 as of December 31, 2014. 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 six months ended June 30, 2015, The Company raised $743,970, net of transaction costs of $76,780, 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, 2014.

24

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

During the quarter ended June 30, 2015 we issued the following equity securities: 

			Number of
	Date of		Common Shares		Source of
Common Stock	Issuance		Issued		Payment		Amount
		5/29/2015		754,538		Conversion of debt	$	15,091
		6/19/2015		200,000		Exercise of stock options	$	2,000
		6/30/2015		250,000		Exercise of stock options	$	2,500

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 August 14, 2015 there are Unsecured Convertible Debentures with a face value of $3,282,497 held by 55 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 August 14, 2015, none of the Holders of these Debentures have elected to provide notice of default. 

Item 4. Mine Safety Disclosures

None 

Item 5. Other Information

None

25

Item 6.	Exhibits
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2015, formatted in XBRL; (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.

* Furnished herewith

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: August 14, 2015		/s/ Michael P. Oliver
		Michael P. Oliver
		President and Chief Executive Officer
		(Principal executive officer)
Date: August 14, 2015		/s/ Lowell W. Giffhorn
		Lowell W. Giffhorn
		Chief Financial Officer
		(Principal financial officer and principal accounting officer)

26

EX-31.1

 Exhibit 31.1

CERTIFICATION PURSUANT TO

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

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Oliver, certify that:

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

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

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

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

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

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

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

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

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

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

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

/s/ Michael P. Oliver

Name:  Michael P. Oliver

Title:   Chief Executive Officer

Date:   August 14, 2015

27

EX-31.2

  Exhibit 31.2

CERTIFICATION PURSUANT TO

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

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lowell W. Giffhorn, certify that:

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

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

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

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

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

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

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

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

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

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

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

/s/ Lowell W. Giffhorn

Name:  Lowell W. Giffhorn

Title:   Chief Financial Officer

Date:    August 14, 2015

28

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 June 30, 2015 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: August 14, 2015

29

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 June 30, 2015 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: August 14, 2015

30

XML

Liabilities (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Nov. 30, 2014	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Debt instrument, face amount		$ 53,889	$ 53,889	$ 128,071
Adjustments to additional paid in capital, other			$ 118,096
Convertible Debentures [Member]
Debt Instrument [Line Items]
Warrant term			5 years
Debentures outstanding			$ 4,818,603
Convertible Debentures [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debentures payment term			6 months
Accrued interest rate per year		10.00%	10.00%
Original issue discount, percent		5.00%	5.00%
Convertible debentures exercise price			$ 0.06
Common stock conversion price per share		$ 0.03	0.03
Warrant exercise price			$ 0.0745
Convertible Debentures [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debentures payment term			1 year
Accrued interest rate per year		20.00%	20.00%
Original issue discount, percent		10.00%	10.00%
Convertible debentures exercise price			$ 0.1287
Common stock conversion price per share		$ 0.099	0.099
Warrant exercise price			$ 0.1287
Variable Debentures [Member]
Debt Instrument [Line Items]
Debentures outstanding			$ 421,861
Variable Debentures [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debentures payment term		9 months
Accrued interest rate per year		0.00%	0.00%
Original issue discount, percent		0.00%	0.00%
Convertible debentures exercise price		$ 0.40
Variable issue discount, percent		0.00%	0.00%
Variable Debentures [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debentures payment term		1 year
Accrued interest rate per year		10.00%	10.00%
Original issue discount, percent		10.00%	10.00%
Convertible debentures exercise price		$ 0.50
Variable issue discount, percent		10.00%	10.00%
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Accrued interest rate per year	20.00%
Debt instrument, face amount	$ 100,000
Stock Issued curing period shares for debt offering costs	50,000
Warrant exercise price	$ 0.09
Remaining balance of notes payable	$ 115,000
Increased principal balance note payable	115,000
Warrants valued	$ 1,659
Warrant term	5 years

XML

Liabilities

6 Months Ended

Jun. 30, 2015

Liabilities [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 $115,000 and interest will accrue at 20% from February 18, 2015 until paid. The note remained outstanding at June 30, 2015 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.

Convertible Debentures

As of June 30, 2015, the Company has issued and outstanding Convertible Debentures (“Debentures”) with original terms of six months to one year, an interest rate ranging from 10-20% per year and an original issue discount ranging from 5% to 10% which, at the option of the holder, may convert into common stock at an initial conversion price ranging from $0.03 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 $0.06 to $0.1287 per share. In addition, the Company issued five year cashless Agent Warrants equal to 10% of the total number of shares issuable under the Debentures and Holders Warrants at an exercise price ranging from $0.0745 to $0.1287 per share. For debentures issued through 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 $4,818,603 as of June 30, 2015.

During the three months ended June 30, 2015, the Company has issued and outstanding Convertible Debentures (“Variable Debentures”) with original terms of 9 months to one year, an interest rate ranging from 0-10% per year and original issue discount rate ranging from 0-10% which contain variable conversion rates ranging from discounts of 40-50% of the Company’s common stock based on the lowest 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 $421,861 as of June 30, 2015.

As of June 30, 2015 and December 31, 2014, the balances of the Debentures are as follows:

	June 30,			December 31,
	2015			2014
Balance at beginning of period	$	4,496,602		$	2,951,629
Issuance of debentures for cash		820,750			2,506,376
Original issue discount		53,889			128,071
Debentures surrendered in exchange transactions		—			—
Debentures issued in exchange transactions		—			—
Debentures converted to common stock		(130,777	)		(1,089,474	)
Convertible debt		5,240,464			4,496,602
Less unamortized costs of financing		534,726			576,502
Convertible debt, net of unamortized costs	$	4,705,738		$	3,920,100
Convertible debt in default	$	3,282,497		$	1,862,160

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, Variable Debentures issued during the three months ended June 30, 2015, contained 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 combination of Black-Scholes option valuation models and Binomial Lattice option valuation models using similar assumptions to those described under “Stock-Based Compensation.” The time period over which the Company will be required to evaluate the fair value of the warrants is approximately five years and the time period over which the Company will be required to evaluate the fair value of the conversion 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 its control. The resulting effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s Debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

As of June 30, 2015 and December 31, 2014, the balances of the Derivative Liability are as follows:

				Conversion
	Warrants			Feature			Total
Balance at December 31, 2013	$	803,484		$	300,939		$	1,104,423
Elimination on extinguishment of debt		—			(197,482	)		(197,482	)
Change in fair value at year end		(38,526	)		193,424			154,898
Balance at December 31, 2014		764,958			296,881			1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in fair value at period end		(3,567	)		403,790			400,223
Balance at June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

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. For the six months ended June 30, 2015, $118,096 was recorded as additional paid-in capital.

XML

Shareholders' Deficit (Details) - Jun. 30, 2015 - Warrant [Member] - $ / shares	Total
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at January 1, 2015	103,430,075
Granted	6,025,312
Exchanged cancelled	0
Exchanged issued	0
Cancelled	(9,459,694)
Exercised	0
Outstanding at June 30, 2015	99,995,693
Exercisable at June 30, 2015	99,995,693
Share Based Compensation Arrangement by Share Based Payment Award Equity Instruments Other Than Options Nonvested Weighted Average Exercise Price [Roll Forward]
Outstanding at January 1, 2015	$ 0.11
Granted	0.08
Exchanged cancelled	0.00
Exchanged issued	0.00
Cancelled	0.31
Exercised	0.00
Outstanding at June 30, 2015	0.08
Exercisable at June 30, 2015	$ 0.08

XML

Shareholders' Deficit (Details Narrative)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2015 USD ($) shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) N $ / shares shares	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Debt instrument, face amount		$ 53,889		$ 53,889		$ 128,071
Gain on extinguishment of debt		36,641		$ 119,369
Exercised | shares				(450,000)
Exercised (in dollars per share) | $ / shares				$ 0.01
Total unrecognized estimated employee compensation cost		$ 458,722		$ 458,722
Recognized period				4 years
Two Directors [Member]
Exercised | shares		450,000
Exercised (in dollars per share) | $ / shares		$ 0.01
Warrant [Member]
Warrant term				5 years
Value of shares issued for consultant service	$ 2,848
Warrant [Member] | Maximum [Member]
Number of shares called | shares		5,725,312		5,725,312
Warrants exercise price | $ / shares				$ 0.09
Number of shares issued for consultant service | shares	300,000
Warrant [Member] | Minimum [Member]
Warrants exercise price | $ / shares				$ 0.06
Convertible Debentures [Member]
Debt instrument, face amount		$ 130,777		$ 130,777
Number of common stock converted | N				2,705,306
Accrued interest paid				$ 27,062
Number of common stock converted for accrued interest | shares				528,609
Gain on extinguishment of debt				$ 119,369

XML

Shareholders' Deficit (Details 1) - Jun. 30, 2015 - USD ($)		Total
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at January 1, 2015		34,293,800
Granted		5,900,002
Cancelled		(25,000)
Exercised		(450,000)
Outstanding at June 30, 2015		39,718,802
Exercisable at June 30, 2015		18,454,489
Weighted average fair value of options granted during the period		5,900,002
Weighted Average Exercise Price Per Share
Outstanding at January 1, 2015		$ 0.02
Granted		0.01
Cancelled		0.90
Exercised		0.01
Outstanding at June 30, 2015		0.02
Exercisable at June 30, 2015		0.02
Weighted average fair value of options granted during the period		$ 0.01
Weighted Average Remaining Contractual Term (years)
Outstanding at January 1, 2015		8 years 8 months 26 days
Granted		9 years 7 months 9 days
Outstanding at June 30, 2015		8 years 7 months 27 days
Exercisable at June 30, 2015		8 years 6 months 21 days
Aggregate Intrinsic Value
Outstanding at June 30, 2015	[1]	$ 54,500
Exercisable at June 30, 2015	[1]	$ 12,000

[1] These amounts represent the excess, if any, between the exercise price and $0.01, the closing market price of the Company's common stock on June 30, 2015 as quoted on the Over-the-Counter Bulletin Board under the symbol "SCIE".

XML

Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member]	Jun. 30, 2015 USD ($)
Total Liability	$ 1,786,154
Derivative liability [Member]
Total Liability	1,024,763
Warrant liability [Member]
Total Liability	761,391
Quoted Prices in Active Markets for Identical Assets (Level 1)[Member]
Total Liability	0
Quoted Prices in Active Markets for Identical Assets (Level 1)[Member] | Derivative liability [Member]
Total Liability	0
Quoted Prices in Active Markets for Identical Assets (Level 1)[Member] | Warrant liability [Member]
Total Liability	0
Significant Other Observable Inputs (Level 2) [Member]
Total Liability	0
Significant Other Observable Inputs (Level 2) [Member] | Derivative liability [Member]
Total Liability	0
Significant Other Observable Inputs (Level 2) [Member] | Warrant liability [Member]
Total Liability	0
Significant Unobservable Inputs (Level 3) [Member]
Total Liability	1,786,154
Significant Unobservable Inputs (Level 3) [Member] | Derivative liability [Member]
Total Liability	1,024,763
Significant Unobservable Inputs (Level 3) [Member] | Warrant liability [Member]
Total Liability	$ 761,391

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.      Summary of Significant Accounting Policies

Revenue recognition

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

Consolidation

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

Risks and Uncertainties

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

Use of Estimates

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

Inventory Valuation

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

Valuation of Long-lived Assets

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

Stock-Based Compensation

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

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

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

As of June 30, 2015, 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 June 30, 2015, the Company had options outstanding exercisable into up to 39,718,802 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 18,454,489 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 six month periods ended June 30, 2015 and 2014: 

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Expected term	None	None	5 years	5 years
Exercise price	None	None	$0.01	$0.02
Expected volatility	None	None	210%	187%
Expected dividends	None	None	None	None
Risk-free interest rate	None	None	1.48%	1.64%
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 six month periods ended June 30, 2015 and 2014, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	June 30,		June 30,
	2015		2014
Preferred Stock		3,085,000		3,085,000
Convertible debentures		101,009,574		90,505,370
Options		39,718,802		35,468,800
Warrants		99,995,693		105,719,939
Total		243,809,069		234,779,109

The following table sets forth the computation of basic and diluted loss per share for the three and six month periods ended June 30, 2015 and 2014:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Numerator:
Net loss for basic earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Net loss for diluted earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Denominator:
Weighted average basic shares outstanding		197,124,162			167,953,254			195,747,368			167,583,031
Denominator for diluted earnings per share- Adjusted weighted average shares		197,124,162			167,953,254			195,747,368			167,583,031
Income (loss) per share
Basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

Inventory

Inventory consisted of the following at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
Raw materials	$	238,959	$	238,441
Finished goods		50,264		45,183
		289,223		283,624
Reserve for obsolescence		—		—
	$	289,223	$	283,624

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Fair Value Measurements (Details 1) - USD ($)		6 Months Ended	12 Months Ended
		Jun. 30, 2015	Dec. 31, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		$ 1,061,839	$ 1,104,423
Initial value on issuance of debt		381,824
Change in estimated fair value		(400,223)	(154,898)
Balance		1,786,154	1,061,839
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		1,061,839
Elimination on extinguishment of debt		(57,732)
Initial value on issuance of debt		381,824
Change in estimated fair value	[1]	400,223
Balance		1,786,154	1,061,839
Significant Unobservable Inputs (Level 3) [Member] | Warrant liability [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		$ 764,958
Elimination on extinguishment of debt
Initial value on issuance of debt
Change in estimated fair value	[1]	$ (3,567)
Balance		761,391	764,958
Significant Unobservable Inputs (Level 3) [Member] | Derivative liability [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		296,881
Elimination on extinguishment of debt		(57,732)
Initial value on issuance of debt		381,824
Change in estimated fair value	[1]	403,790
Balance		$ 1,024,763	$ 296,881

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

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash	$ 42,235	$ 223,529
Inventory	289,223	283,624
Deferred debt issuance costs	84,315	107,636
Prepaid expenses and other current assets	203,597	244,173
Total current assets	619,370	858,962
Fixed assets, net	1,990	3,665
Patents, net	1,266,682	1,347,894
TOTAL ASSETS	1,888,042	2,210,521
Current liabilities:
Accounts payable	944,889	836,136
Note payable	115,000	100,000
Convertible debt, net of discounts of $534,726 as of June 30, 2015 and $576,502 as of December 31, 2014	4,705,738	3,920,100
Derivative liability	1,786,154	1,061,839
Accrued expenses	850,611	673,012
Total current liabilities	$ 8,402,392	$ 6,591,087
COMMITMENTS AND CONTINGENCIES
Stockholders' deficit
Common stock, $.01 par value; 746,915,000 shares authorized; 198,039,192 and 194,355,277 shares issued and outstanding as of June 30, 2015 and December 31, 2014	$ 1,980,392	$ 1,943,553
Additional paid in capital	39,791,443	39,509,115
Accumulated deficit	(48,317,035)	(45,864,084)
Total stockholders' deficit	(6,514,350)	(4,380,566)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$ 1,888,042	$ 2,210,521
Series A Convertible Preferred Stock [Member]
Stockholders' deficit
Convertible Preferred Stock, value
Series B Convertible Preferred Stock [Member]
Stockholders' deficit
Convertible Preferred Stock, value	$ 25,850	$ 25,850
Series C Convertible Preferred Stock [Member]
Stockholders' deficit
Convertible Preferred Stock, value	$ 5,000	$ 5,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities:
Net loss	$ (2,452,951)	$ (4,420,500)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation	82,887	97,699
Non-cash issuance of stock options and warrants	100,369	308,095
Amortization of derivative and warrant liabilities discount	523,296	453,838
Amortization of deferred debt issuance costs and original issue discount	172,390	112,574
Change in fair value of derivative and warrant liabilities	400,223	$ 2,051,760
Gain on extinguishment of debt	$ (119,369)
Fair market value of common stock issued for services		$ 50,000
Changes in assets and liabilities:
Accounts receivable		60,000
Inventory	$ (5,599)	(68,729)
Prepaid expense and other assets	40,576	39,211
Accounts payable	108,753	(31,894)
Accrued expenses	219,661	196,412
Net cash used in operating activities	$ (929,764)	(1,151,534)
Investing activities:
Purchases of fixed assets		(6,275)
Net cash used in investing activities		(6,275)
Financing activities:
Proceeds from issuance of convertible notes payable	$ 820,750	1,506,376
Payments against note payable to affiliate		(30,000)
Proceeds from exercise of stock options	$ 4,500	18,624
Debt issuance costs	(76,780)	(130,000)
Net cash provided by financing activities	748,470	1,365,000
Net increase (decrease) in cash	(181,294)	207,191
Cash, beginning of year	223,529	236,597
Cash, end of period	$ 42,235	$ 443,788
Cash paid during the period for:
Interest
Income taxes
Non Cash Investing and Financing Activities:
Conversion of convertible notes and accrued interest to common stock	$ 157,839
Conversion of accrued interest to note payable	$ 15,000

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Summary of Significant Accounting Policies (Details 1) - shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	243,809,069	234,779,109
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,085,000	3,085,000
Convertible Debentures [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	101,009,574	90,505,370
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	39,718,802	35,468,800
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	99,995,693	105,719,939

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Summary of Significant Accounting Policies (Details 3) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Raw materials	$ 238,959	$ 238,441
Finished goods	50,264	45,183
Inventory, gross	$ 289,223	$ 283,624
Reserve for obsolescence
Inventories, net	$ 289,223	$ 283,624

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Nature of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business and Basis of Presentation

1.      Nature of Business and Basis of Presentation

Description of Business

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

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

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

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

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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, 2014.

Going Concern

Historically, the Company’s sources of cash have come from the issuance and sales of equity securities and convertible debentures. The Company’s historical cash outflows have been primarily used for operating activities including research, development, administrative and sales activities. Fluctuations in the Company’s working capital due to timing differences of its cash receipts and cash disbursements also impact its cash flow. The Company expects to incur significant additional operating losses through at least the end of 2015, as it completes proof-of-concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations.

As of June 30, 2015, the Company had a working capital deficit of $7,783,022 and cash of $42,235, compared to a working capital deficit of $5,732,125 and cash of $223,529 as of December 31, 2014. 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 six months ended June 30, 2015, the Company raised $743,970, net of transaction costs of $76,780, 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 June 30, 2015, Convertible Debentures with a face value of $3,282,497 held by 55 individual investors are in default. None of these investors have served notice of default on the Convertible Debentures held by them.

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

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Convertible debt, net of discounts	$ 534,726	$ 576,502
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	746,915,000	746,915,000
Common stock, shares issued (in shares)	198,039,192	194,355,277
Common stock, shares outstanding (in shares)	198,039,192	194,355,277
Series A Convertible Preferred Stock [Member]
Convertible Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized (in shares)
Convertible Preferred Stock, shares issued (in shares)
Convertible Preferred Stock, shares outstanding (in shares)
Convertible Preferred Stock, liquidation value
Convertible Preferred Stock, accumulated and unpaid dividends
Series B Convertible Preferred Stock [Member]
Convertible Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized (in shares)	2,585,000	2,585,000
Convertible Preferred Stock, shares issued (in shares)	2,585,000	2,585,000
Convertible Preferred Stock, shares outstanding (in shares)	2,585,000	2,585,000
Convertible Preferred Stock, liquidation value	$ 517,000	$ 517,000
Convertible Preferred Stock, accumulated and unpaid dividends	$ 106,931	$ 106,931
Series C Convertible Preferred Stock [Member]
Convertible Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible Preferred Stock, authorized (in shares)	1,000,000	1,000,000
Convertible Preferred Stock, shares issued (in shares)	500,000	500,000
Convertible Preferred Stock, shares outstanding (in shares)	500,000	500,000
Convertible Preferred Stock, liquidation value	$ 100,000	$ 100,000

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Shareholders' Deficit (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Schedule of balance of all warrants outstanding

The balance of all warrants outstanding as of June 30, 2015 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2015		103,430,075		$	0.11
Granted		6,025,312		$	0.08
Exchanged cancelled		-		$	-
Exchanged issued		-		$	-
Cancelled		(9,459,694	)	$	0.31
Exercised		-		$	-
Outstanding at June 30, 2015		99,995,693		$	0.08
Exercisable at June 30, 2015		99,995,693		$	0.08

Schedule of stock options outstanding

Options outstanding as of June 30, 2015 are as follows:

				Weighted Average		Weighted Average		Aggregate
				Exercise Price		Remaining Contractual		Intrinsic
	Options			Per Share		Term (years)		Value (1)
Outstanding at January 1, 2015		34,293,800		$	0.02		8.74
Granted		5,900,002		$	0.01		9.61
Cancelled		(25,000	)	$	0.90		-
Exercised		(450,000	)	$	0.01		-
Outstanding at June 30, 2015		39,718,802		$	0.02		8.66	$	54,500
Exercisable at June 30, 2015		18,454,489		$	0.02		8.56	$	12,000
Weighted average fair value of options granted during the period		5,900,002		$	0.01

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document And Entity Information
Entity Registrant Name	SPECTRASCIENCE INC
Entity Central Index Key	0000727672
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		198,039,192
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Measurements [Abstract]

Schedule of balances of liabilities measured at fair value on recurring basis

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of June 30, 2015:

	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 June 30, 2015
Derivative liability	$	—	$	—	$	1,024,763	$	1,024,763
Warrant liability		—		—		761,391		761,391
Total	$	—	$	—	$	1,786,154	$	1,786,154

Schedule changes in liabilities with significant unobservable inputs

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

	Warrant			Derivative			Total
	Liability			Liability			Liability
Balance December 31, 2014	$	764,958		$	296,881		$	1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in estimated fair value (1)		(3,567	)		403,790			400,223
Balance June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

(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 six months ended June 30, 2015:

	Derivative Liability	Warrant Liability
Expected term	1 year	5 years
Exercise price	$0.01 - $0.099	$0.075 - $0.1287
Expected volatility	286% to 294%	219% to 221%
Expected dividends	None	None
Risk-free interest rate	0.22% to 0.28%	1.32% to 1.63%
Forfeitures	None	None

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Condensed Consolidated Statements of Operation (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Revenue
Cost of revenue	$ (6,000)		$ (12,000)	$ (6,000)
Gross profit	6,000		12,000	6,000
Operating expenses:
Research and development	157,329	$ 276,188	332,009	534,368
General and administrative	344,811	292,858	726,265	812,689
Sales and marketing	94,098	140,791	133,960	230,351
Total operating expenses	596,238	709,837	1,192,234	1,577,408
Loss from operations	(590,238)	(709,837)	(1,180,234)	(1,571,408)
Other income (expense)
Interest expense	(147,041)	(116,770)	(291,543)	(215,741)
Change in fair value of derivative and warrant liabilities	277,361	30,880	(400,223)	(2,051,760)
Amortization of derivative and warrant liabilities discount	(233,187)	(303,105)	(523,296)	(453,838)
Amortization of deferred debt issuance costs and original issue discount	(84,576)	$ (65,450)	(172,390)	$ (112,574)
Gain on extinguishment of debt	36,641		119,369
Other income (expense), net	(2,221)	$ (6,061)	(4,634)	$ (15,179)
Total Other income (expense)	(153,023)	(460,506)	(1,272,717)	(2,849,092)
Net loss	$ (743,261)	$ (1,170,343)	$ (2,452,951)	$ (4,420,500)
Basic and diluted loss per share (in dollars per share)	$ 0.00	$ (0.01)	$ (0.01)	$ (0.03)
Weighted average common shares outstanding: Basic and diluted (in shares)	197,124,162	167,953,254	195,747,368	167,583,031

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Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

6. Contingencies

None

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Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

5.      Fair Value Measurements

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

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

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

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

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

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

The following table presents the balances of liabilities measured at fair value on a recurring basis by level as of June 30, 2015:

	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 June 30, 2015
Derivative liability	$	—	$	—	$	1,024,763	$	1,024,763
Warrant liability		—		—		761,391		761,391
Total	$	—	$	—	$	1,786,154	$	1,786,154

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

	Warrant			Derivative			Total
	Liability			Liability			Liability
Balance December 31, 2014	$	764,958		$	296,881		$	1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in estimated fair value (1)		(3,567	)		403,790			400,223
Balance June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

(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 six months ended June 30, 2015:

	Derivative Liability	Warrant Liability
Expected term	1 year	5 years
Exercise price	$0.01 - $0.099	$0.075 - $0.1287
Expected volatility	286% to 294%	219% to 221%
Expected dividends	None	None
Risk-free interest rate	0.22% to 0.28%	1.32% to 1.63%
Forfeitures	None	None

In computing the fair value of the derivative and warrant liability at June 30, 2015 for instruments under the Binomial Lattice option-pricing model, management estimated a 40% probability of a down round financing event at a price of $0.025 and a 20% to 75% probability that existing note holders with exchange privileges would exchange their existing debentures and warrants for new debentures and warrants.

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Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Numerator:
Net loss for basic earnings per share	$ (743,261)	$ (1,170,343)	$ (2,452,951)	$ (4,420,500)
Net loss for diluted earnings per share	$ (743,261)	$ (1,170,343)	$ (2,452,951)	$ (4,420,500)
Denominator:
Weighted average basic shares outstanding	197,124,162	167,953,254	195,747,368	167,583,031
Denominator for diluted earnings per share - Adjusted weighted average shares	197,124,162	167,953,254	195,747,368	167,583,031
Income (loss) per share
Basic	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.03)
Diluted	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.03)

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Nature of Business and Basis of Presentation (Details Narrative)		6 Months Ended	12 Months Ended
	Jul. 12, 2012 USD ($)	Jun. 30, 2015 USD ($) N	Dec. 31, 2014 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2013 USD ($)
Working capital deficit		$ 7,783,022	$ 5,732,125
Cash and cash equivalents		42,235	223,529	$ 443,788	$ 236,597
Debt face amount		3,282,497	$ 1,862,160
Laidlaw & Company (UK) Ltd [Member]
Maximum capital raising	$ 20,000,000	743,970
Agreement period	2 years
Payments of transaction costs		76,780
Convertible Debentures [Member]
Debt face amount		$ 3,282,497
Number of individual default | N		55

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Summary Of Significant Accounting Policies Tables

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 six month periods ended June 30, 2015 and 2014:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Expected term	None	None	5 years	5 years
Exercise price	None	None	$0.01	$0.02
Expected volatility	None	None	210%	187%
Expected dividends	None	None	None	None
Risk-free interest rate	None	None	1.48%	1.64%
Forfeitures	None	None	None	None

Schedule of antidilutive securities excluded from computation of earnings per share

For the six month periods ended June 30, 2015 and 2014, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	June 30,		June 30,
	2015		2014
Preferred Stock		3,085,000		3,085,000
Convertible debentures		101,009,574		90,505,370
Options		39,718,802		35,468,800
Warrants		99,995,693		105,719,939
Total		243,809,069		234,779,109

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 six month periods ended June 30, 2015 and 2014:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Numerator:
Net loss for basic earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Net loss for diluted earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Denominator:
Weighted average basic shares outstanding		197,124,162			167,953,254			195,747,368			167,583,031
Denominator for diluted earnings per share- Adjusted weighted average shares		197,124,162			167,953,254			195,747,368			167,583,031
Income (loss) per share
Basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

Schedule of inventory

Inventory

Inventory consisted of the following at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
Raw materials	$	238,959	$	238,441
Finished goods		50,264		45,183
		289,223		283,624
Reserve for obsolescence		-		-
	$	289,223	$	283,624

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Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

7.      Subsequent Events

Convertible Debentures and Warrants

During July and August 2015, the Company sold $277,778 of Unsecured Convertible Debentures (the “Debentures”) to an accredited investor for aggregate consideration of $250,000. The Debentures mature in twelve months, carry a fixed conversion price of $.045, an annual interest rate of 10% and are convertible into 6,172,840 shares of common stock at maturity. The Company received net cash proceeds of approximately $230,000 after payment of fees and expenses of $20,000. In addition, the Company issued the holder of the Debentures detachable five-year warrants to purchase 3,086,420 additional shares of common stock at an exercise price of $0.090 per share.

Variable Debentures

In July 2015, the Company entered into two notes accumulating $74,500 that can be repaid for $85,675 to $104,300 if paid within 90-180 days. If paid subsequent to 180 days, the notes are convertible into common stock at a discount to the market price. Management estimates that the notes will be paid within the 90-180 days.

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

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Revenue recognition

Revenue recognition

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

Consolidation

Consolidation

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

Risks and Uncertainties

Risks and Uncertainties

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

Use of Estimates

Use of Estimates

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

Inventory Valuation

Inventory Valuation

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

Valuation of Long-lived Assets

Valuation of Long-lived Assets

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

Stock-Based Compensation

Stock-Based Compensation

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

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

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

As of June 30, 2015, 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 June 30, 2015, the Company had options outstanding exercisable into up to 39,718,802 shares of stock under the EIP and the Company’s prior Amended 2001 Stock Plan of which up to 18,454,489 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 six month periods ended June 30, 2015 and 2014:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Expected term	None	None	5 years	5 years
Exercise price	None	None	$0.01	$0.02
Expected volatility	None	None	210%	187%
Expected dividends	None	None	None	None
Risk-free interest rate	None	None	1.48%	1.64%
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 six month periods ended June 30, 2015 and 2014, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	June 30,		June 30,
	2015		2014
Preferred Stock		3,085,000		3,085,000
Convertible debentures		101,009,574		90,505,370
Options		39,718,802		35,468,800
Warrants		99,995,693		105,719,939
Total		243,809,069		234,779,109

The following table sets forth the computation of basic and diluted loss per share for the three and six month periods ended June 30, 2015 and 2014:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Numerator:
Net loss for basic earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Net loss for diluted earnings per share	$	(743,261	)	$	(1,170,343	)	$	(2,452,951	)	$	(4,420,500	)
Denominator:
Weighted average basic shares outstanding		197,124,162			167,953,254			195,747,368			167,583,031
Denominator for diluted earnings per share- Adjusted weighted average shares		197,124,162			167,953,254			195,747,368			167,583,031
Income (loss) per share
Basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)
Diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

Inventory

Inventory

Inventory consisted of the following at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
Raw materials	$	238,959	$	238,441
Finished goods		50,264		45,183
		289,223		283,624
Reserve for obsolescence		-		-
	$	289,223	$	283,624

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Liabilities (Tables)

6 Months Ended

Jun. 30, 2015

Liabilities [Abstract]

Schedule of balance of debentures

As of June 30, 2015 and December 31, 2014, the balances of the Debentures are as follows:

	June 30,			December 31,
	2015			2014
Balance at beginning of period	$	4,496,602		$	2,951,629
Issuance of debentures for cash		820,750			2,506,376
Original issue discount		53,889			128,071
Debentures surrendered in exchange transactions		—			—
Debentures issued in exchange transactions		—			—
Debentures converted to common stock		(130,777	)		(1,089,474	)
Convertible debt		5,240,464			4,496,602
Less unamortized costs of financing		534,726			576,502
Convertible debt, net of unamortized costs	$	4,705,738		$	3,920,100
Convertible debt in default	$	3,282,497		$	1,862,160

Schedule of balances of derivative liability

As of June 30, 2015 and December 31, 2014, the balances of the Derivative Liability are as follows:

				Conversion
	Warrants			Feature			Total
Balance at December 31, 2013	$	803,484		$	300,939		$	1,104,423
Elimination on extinguishment of debt		—			(197,482	)		(197,482	)
Change in fair value at year end		(38,526	)		193,424			154,898
Balance at December 31, 2014		764,958			296,881			1,061,839
Elimination on extinguishment of debt		—			(57,732	)		(57,732	)
Initial value on issuance of debt		—			381,824			381,824
Change in fair value at period end		(3,567	)		403,790			400,223
Balance at June 30, 2015	$	761,391		$	1,024,763		$	1,786,154

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Subsequent Events (Details Narrative)

1 Months Ended

2 Months Ended

Jul. 31, 2015

USD ($)

N

Aug. 31, 2015

USD ($)

N

$ / shares

shares

Jun. 30, 2015

USD ($)

Dec. 31, 2014

USD ($)

Debt face amount

$ 53,889

$ 128,071

Subsequent Event [Member] | 10% Unsecured Convertible Debentures [Member] | Accredited Investor [Member]

Debt face amount

$ 277,778

Aggregate consideration

$ 250,000

Maturity period

12 months

Conversion price (in dollars per share) | $ / shares

$ .045

Number of shares converted | N

6,172,840

Net cash proceeds

$ 230,000

Fees and expenses

$ 20,000

Warrant term

5 years

Number of shares called | shares

3,086,420

Exercise price (in dollars per share) | $ / shares

$ 0.090

Subsequent Event [Member] | Variable Debentures [Member]

Debt face amount

$ 74,500

Number of notes | N

2

Description of repayment terms

Repaid for $85,675 to $104,300 if paid within 90-180 days. If paid subsequent to 180 days, the notes are convertible into common stock at a discount to the market price. Management estimates that the notes will be paid within the 90-180 days.

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Summary of Significant Accounting Policies (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accounting Policies [Abstract]
Expected term			5 years	5 years
Exercise price	$ 0.01	$ 0.02	$ 0.01	$ 0.02
Expected volatility			210.00%	187.00%
Expected dividends
Risk-free interest rate			0.48%	1.64%
Forfeitures

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Liabilities (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Liabilities [Abstract]
Balance at beginning of period	$ 4,496,602	$ 2,951,629
Issuance of debentures for cash	820,750	2,506,376
Original issue discount	$ 53,889	$ 128,071
Debentures surrendered in exchange transactions
Debentures issued in exchange transactions
Debentures converted to common stock	$ (130,777)	$ (1,089,474)
Convertible debt	5,240,464	4,496,602
Less unamortized costs of financing	534,726	576,502
Convertible debt, net of unamortized costs	4,705,738	3,920,100
Convertible debt in default	$ 3,282,497	$ 1,862,160

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Condensed Consolidated Statement of Stockholders' Deficit (unaudited) - 6 months ended Jun. 30, 2015 - USD ($)	Series B Preferred Stock [Member]	Series C Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at beginning at Dec. 31, 2014	$ 25,850	$ 5,000	$ 1,943,553	$ 39,509,115	$ (45,864,084)	$ (4,380,566)
Balance at beginning (in shares) at Dec. 31, 2014	2,585,000	500,000	194,355,277
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of convertible debt			$ 32,339	$ 63,863		96,202
Conversion of convertible debt (in shares)			3,233,915
Exercise of stock options			$ 4,500			$ 4,500
Exercise of stock options (in shares)			450,000			(450,000)
Non cash issuance of stock options				$ 97,521		$ 97,521
Non cash issuance of warrant for consulting services				2,848		2,848
Warrant valuation on issuance of convertible debt				$ 118,096		118,096
Net loss					$ (2,452,951)	(2,452,951)
Balance at end at Jun. 30, 2015	$ 25,850	$ 5,000	$ 1,980,392	$ 39,791,443	$ (48,317,035)	$ (6,514,350)
Balance at end (in shares) at Jun. 30, 2015	2,585,000	500,000	198,039,192

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Shareholders' Deficit

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Shareholders' Deficit

4. Shareholders’ Deficit

Common Stock

During the six months ended June 30, 2015, holders of Convertible Debentures with a face value of $130,777 converted their debentures into 2,705,306 shares of restricted common stock. In addition, associated with these debentures, the Company paid $27,062 in accrued interest by issuing 528,609 shares of restricted common stock and recorded a gain on extinguishment of debt of $119,369.

Warrants

During the six months ended June 30, 2015, in conjunction with the sale of Convertible Debentures, the Company issued five year common stock purchase warrants to acquire up to 5,725,312 shares to holders of the Debentures. These warrants have exercise prices ranging from $0.06 to $0.09 per share.

In January 2015, the Company issued a warrant exercisable into up to 300,000 shares of common stock in exchange for services provided by a consultant. The value of these warrants, $2,848, was determined using the Black-Sholes Option pricing model and was included as non-cash expenses and additional paid-in capital during the six months ended June 30, 2015.

The balance of all warrants outstanding as of June 30, 2015 is as follows:

				Weighted
				Average
				Exercise
	Warrants			Price
Outstanding at January 1, 2015		103,430,075		$	0.11
Granted		6,025,312		$	0.08
Exchanged cancelled		-		$	-
Exchanged issued		-		$	-
Cancelled		(9,459,694	)	$	0.31
Exercised		-		$	-
Outstanding at June 30, 2015		99,995,693		$	0.08
Exercisable at June 30, 2015		99,995,693		$	0.08

Stock Options

Options outstanding as of June 30, 2015 are as follows:

				Weighted Average		Weighted Average		Aggregate
				Exercise Price		Remaining Contractual		Intrinsic
	Options			Per Share		Term (years)		Value (1)
Outstanding at January 1, 2015		34,293,800		$	0.02		8.74
Granted		5,900,002		$	0.01		9.61
Cancelled		(25,000	)	$	0.90		-
Exercised		(450,000	)	$	0.01		-
Outstanding at June 30, 2015		39,718,802		$	0.02		8.66	$	54,500
Exercisable at June 30, 2015		18,454,489		$	0.02		8.56	$	12,000
Weighted average fair value of options granted during the period		5,900,002		$	0.01

(1) These amounts represent the excess, if any, between the exercise price and $0.01, the closing market price of the Company’s common stock on June 30, 2015 as quoted on the Over-the-Counter Bulletin Board under the symbol “SCIE”.

In February 2015, the Company’s Board of Directors authorized the issuance of stock options exercisable into up to 5,900,002 shares of common stock at an exercise price of $0.01 per share to a group of employees, directors and consultants. A portion of the options contained vesting criteria conditioned on certain milestones being achieved by the Company. If the milestones are not achieved, the options are subject to being cancelled. During the three months ended June 30, 2015, two directors exercised stock options into 450,000 shares of common stock at an exercise price of $0.01 per share

At June 30, 2015, total unrecognized estimated employee compensation cost related to non-vested stock options granted prior to that date is $458,722, which we expect to be recognized over the next four years.

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Liability (Details 1) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Balance	$ 1,061,839	$ 1,104,423
Elimination on extinguishment of debt	(57,732)	(197,482)
Initial value on issuance of debt	381,824
Change in fair value at year end	400,223	154,898
Balance	1,786,154	1,061,839
Warrants [Member]
Debt Instrument [Line Items]
Balance	$ 764,958	$ 803,484
Elimination on extinguishment of debt
Initial value on issuance of debt
Change in fair value at year end	$ (3,567)	$ (38,526)
Balance	761,391	764,958
Conversion Feature [Member]
Debt Instrument [Line Items]
Balance	296,881	300,939
Elimination on extinguishment of debt	(57,732)	(197,482)
Initial value on issuance of debt	381,824
Change in fair value at year end	403,790	193,424
Balance	$ 1,024,763	$ 296,881

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Summary of Significant Accounting Policies (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Options outstanding exercisable	39,718,802	34,293,800
2011 Equity Incentive Plan [Member]
Options outstanding exercisable	39,718,802
Vesting period	4 years
Amended 2001 Equity Incentive Plan [Member]
Number of shraes reserved	40,000,000
Options outstanding exercisable	18,454,489