<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 000-22501
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SPECTRUMEDIX CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 25-1686354
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2124 Old Gatesburg Road, State College, Pennsylvania 16803
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(Address of principle executive offices)
(814) 867-8600
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 4,256,018 shares of Common
Stock, par value $.001 per share, outstanding as of August 4, 2000
<PAGE>
SPECTRUMEDIX CORPORATION
QUARTERLY REPORT
QUARTER ENDED JUNE 30, 2000
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed Balance Sheets - June 30, 2000 and March 31, 2000...................................... 1
Condensed Statements of Operations - Three Months Ended June 30, 2000 and June 30, 1999.......... 2
Condensed Statements of Cash Flows - Three Months Ended June 30, 2000 and June 30, 1999.......... 3
Notes to Condensed Financial Statements.......................................................... 4-6
Item 2 Management's Discussion and Analysis of Results of Operations and Financial Condition............ 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................................... 10
Item 2. Changes in Securities and Use of Proceeds............................................... 10
Item 3. Defaults Upon Senior Securities......................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders..................................... 10
Item 5. Other Information....................................................................... 10
Item 6. Exhibits and Reports on Form 8-K........................................................ 10
(a) Exhibits........................................................................... 10
(b) Reports on Form 8-K................................................................ 10
</TABLE>
<PAGE>
SPECTRUMEDIX CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
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(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,373,333 $ 2,183,458
Accounts receivable 21,411 181,137
Inventories 877,927 617,191
Prepaid expenses 30,285 14,642
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TOTAL CURRENT ASSETS 2,302,956 2,996,428
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Property and equipment, net 464,345 475,855
Patent fees 543,117 490,902
License and license options, net of accumulated 12,274 20,525
amortization of $129,926 and $121,675 respectively
Security deposit 8,479 8,479
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TOTAL ASSETS $ 3,331,171 $ 3,992,189
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,896,005 $ 1,719,278
Current portion of long-term capital lease obligations 37,347 37,915
Current portion of deferred revenue 809,525 1,238,096
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TOTAL CURRENT LIABILITIES 2,742,877 2,995,289
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Long-term capital lease obligations, net of current portion 74,055 83,222
Deferred revenue, net current portion 722,222 888,889
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.00115 par value, 2,000,000 shares
authorized at June 30, 2000 and March 31, 2000
Series A Preferred stock, 2,000 shares issued and outstanding in 2 2
June 30 and March 31, 2000, (liquidation preference of
$2,000,000)
Series B Preferred stock, 103.125 shares issued and outstanding - -
in June 30 and March 31, 2000, (liquidation preference of
$103,125)
Common stock, $.00115 par value, 23,000,000 shares 4,894 4,877
authorized 4,256,018 and 4,241,989 shares issued and
outstanding, respectively
Note receivable arising from issuance of common stock (37,500) (37,500)
Additional paid-in capital 12,573,279 12,498,434
Accumulated deficit (12,748,658) (12,441,024)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (207,983) 24,789
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 3,331,171 $ 3,992,189
============ ============
</TABLE>
See notes to condensed financial statements
1
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SPECTRUMEDIX CORPORATION
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30
2000 1999
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<S> <C> <C>
SALES $ 48,606 $ 50,367
SUBLICENSE AND CONSULTING REVENUE 595,238 -
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643,844 50,367
COST OF SALES 190,377 129,457
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GROSS PROFIT (LOSS) 453,467 (79,090)
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OPERATING EXPENSES:
Research and development costs, net 252,512 204,617
General and administrative expenses 533,499 246,486
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TOTAL OPERATING EXPENSES 786,011 451,103
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LOSS FROM OPERATIONS (332,544) (530,193)
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OTHER INCOME (EXPENSE):
Interest income 26,919 96
Interest expense (2,009) (12,282)
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TOTAL OTHER INCOME (EXPENSE) 24,910 (12,186)
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NET LOSS $ (307,634) $ (542,379)
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED FOR BASIC AND 4,242,667 3,622,534
DILUTED LOSS PER SHARE ========== ==========
BASIC AND DILUTED LOSS PER SHARE $(0.07) $(0.15)
========== ==========
</TABLE>
See notes to condensed financial statements
2
<PAGE>
SPECTRUMEDIX CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (307,634) $(542,379)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and Amortization 35,592 31,669
Non-cash compensation expense 73,546 41,808
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 159,726 19,659
(Increase) decrease in inventories (260,736) 13,089
(Increase) decrease in prepaid expenses (15,643) -
(Increase) in other assets - (3,992)
Increase in accounts payable and accrued expenses 176,727 270,958
Increase (decrease) in deferred revenue (595,238) -
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (733,660) (169,158)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (68,046) (4,695)
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NET CASH USED IN INVESTING ACTIVITIES (68,046) (4,695)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long term obligations (9,735) -
Proceeds from officer's notes - 171,922
Repayment of officer's notes - (7,777)
Stock options exercised 1,316 -
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NET CASH PROVIDED BY FINANCING ACTIVITIES (8,419) 164,145
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NET (DECREASE) IN CASH AND CASH EQUIVALENTS (810,125) (9,708)
CASH AND CASH EQUIVALENTS - beginning of period 2,183,458 20,318
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CASH AND CASH EQUIVALENTS - end of period $1,373,333 $ 10,610
========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Stock options exercised in lieu of payment on promissory note - 147
</TABLE>
See notes to condensed financial statements
3
<PAGE>
SPECTRUMEDIX CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
JUNE 30, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of SpectruMedix
Corporation (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-QSB. Accordingly, they do not contain all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly (a) the financial position as of June 30, 2000, (b) the
results of operations for the three months ended June 30, 2000 and 1999 and
(c) changes in cash flows for the three months ended June 30, 2000 and
1999. Financial results for the interim period ended June 30, 2000 may not
be indicative of the financial results for the fiscal year ending March 31,
2001.
The balance sheet at March 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
For more information, refer to the audited financial statements for the
fiscal year ended March 31, 2000, which were included in the Company's
Annual Report on Form 10-KSB.
NOTE 2 - GENERAL
The Company devotes substantially all of its resources to the development
of its high-speed DNA/gene sequencing instrumentation (the "DNA
Sequencer"), an instrument for the acquisition, analysis and management of
complex genetic information and its high throughput screening, massive
parallel capillary electrophoresis system ("HTS-MPCE system"), a high
throughput system based on the technologies developed for the DNA
Sequencer, used in the pharmaceutical industry for drug discovery. The DNA
Sequencer was developed in part from research efforts conducted at the
United States Department of Energy's Ames Laboratory, which is operated by
Iowa State University's Institute for Physical Research and Technology. The
Company believes DNA sequencing has significant implications for medical,
genetic and forensic science applications.
The Company has available carryforward losses applicable to the reduction
of future Federal income taxes aggregating approximately $12,300,000 at
March 31, 2000 and which expire at various dates through 2014.
NOTE 3 - ECONOMIC DEPENDENCY
Prior to the year ended March 31, 2000, substantially all of the Company's
revenues have been derived from sales of the Company's original product
lines, which included mass spectrometers, Luminoscopes, electronic
components and software. As noted above, currently, the Company is devoting
substantially all of its resources to the development, commercialization
and marketing of the DNA Sequencer and the HTS-MPCE system.
The Company achieved limited sales of its other product lines and such
sales were materially dependent on a limited number of customers. The
nature of the Company's business was such that during any individual
accounting period it sold its products to a limited number of significant
customers. The Company has only sold one HTS-MPCE system, and sales of the
DNA Sequencer and the HTS-MPCE system may also be characterized by sales to
a limited number of customers during any individual accounting period.
4
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The Company's DNA Sequencer and HTS-MPCE system require high quality raw
materials and components that the Company purchases from third-party
suppliers. Certain raw materials or components may, however, from time to
time, be difficult to obtain, which difficulties may result in production
delays or require the Company to find alternate means of production. In
particular, both the lasers and capillaries used in the DNA Sequencer and
HTS-MPCE system are each purchased from one manufacturer who only produces
a limited number of units. Such manufacturers may not be able to supply all
of the Company's needs. Thus, the Company's ability to manufacture its
products will depend on its ability to establish and maintain commercial
relationships with at least certain of such suppliers. The Company does not
currently maintain supply agreements with any of its suppliers. The Company
believes adequate sources of supply exist for all raw materials and
components it will need, and that such items are available on commercially
reasonable terms
NOTE 4 - LEGAL PROCEEDINGS
Rubin Matter
On April 21, 1997, a complaint was filed in the Supreme Court of the State
of New York alleging breach of contract. Specifically, the plaintiff
alleges that the Company defaulted under a promissory note issued to
plaintiff on May 16, 1996 in the amount of $175,000 (the "Rubin Note")
while such Note was outstanding and therefore that the Company is liable
and indebted to plaintiff in the principal amount of $175,000, together
with interest and expenses. The Company, on May 2, 1997, paid the
principal and interest due under the Rubin Note.
The main remaining issue asserted by the plaintiff is whether, pursuant to
an alleged related agreement, the plaintiff is entitled to 152,174 shares
(adjusted to reflect stock splits) of common stock of the Company (the
"Common Stock") or, alternatively, $875,000. Plaintiff alleges that the
Company undertook to enter into a securities purchase agreement pursuant to
which he should have received the aforementioned shares of Common Stock.
The Company contends that such securities purchase agreement was never
discussed and therefore that no agreement was reached with respect to the
terms thereof. Such securities purchase agreement was not signed by either
of the parties to the Rubin Note. The Company believes that it has
meritorious defenses to the above-described claims and it intends to defend
the litigation vigorously. However, due to the nature of litigation and
because the lawsuit is in the initial stages, the Company cannot determine
the total expense or possible loss, if any, that may ultimately be incurred
either in the context of a trial or as a result of a negotiated settlement.
While management believes that the resolution of this matter will not have
a material adverse effect on the Company's business, financial condition
and results of operations, the results of these proceedings are uncertain
and there can be no assurance to that effect.
NOTE 5 - STOCK OPTIONS
In May 2000, the Company granted options to purchase 85,000 shares of its
common stock to employees under the Company's Stock Incentive Plan (the
"Plan") at an exercise price of $1.1875 per share, the estimated fair value
of the common stock on the date of grant. The options vest in four
tranches, with the first tranche vesting in May 2001. The stock options are
exercisable for a period of ten years from the date of grant.
On March 22, 2000, Judy K. Mencher was appointed to the Board of Directors.
In connection with her appointment, on May 17, 2000, the Company granted
her immediately exercisable options to purchase 50,000 shares of Common
Stock at a price of $1.3125 per share, which options expire in May 2005.
During the three months ended June 30, 2000, options to purchase 14,029
shares of Common Stock under the Company's stock incentive plan were
exercised.
5
<PAGE>
NOTE 6 - LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>
Three months ended June 30,
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2000 1999
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<S> <C> <C>
Numerator:
Net loss $ (307,634) $ (542,379)
=======================================
Denominator:
Weighted-average shares 4,242,667 3,622,534
=======================================
Net loss per share, basic and diluted $ (0.07) $ (0.15)
=======================================
Antidilutive options, warrants, and convertible preferred stock
not included in loss per share calculation 4,642,584 2,695,408
=======================================
</TABLE>
NOTE 7 - SUBSEQUENT EVENTS
On August 11, 2000, the Company entered into two equipment capital leases
for equipment necessary for production of the DNA Sequencer and the HTS-
MPCE system. The leases have a term of five years each. Payments under
such leases total approximately $2,500 per month.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
SpectruMedix Corporation's (the "Company") Consolidated Financial Statements and
Notes thereto included elsewhere in this Quarterly Report on Form 10-QSB.
Except for the historical information contained herein, the discussion in this
Quarterly Report contains certain forward-looking statements, within the meaning
of Section 27A of the Securities Act and Section 27E of the Exchange Act, that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. Forward-looking statements are based
on management's current expectations and are subject to a number of risks and
uncertainties that could cause actual results to differ materially from expected
results. The cautionary statements made in this Quarterly Report should be read
as being applicable to all related forward-looking statements wherever they
appear in this Quarterly Report. Factors that could cause or contribute to such
differences include, the ability of the Company to commercialize and market the
DNA sequencer and the high throughput screening, massive parallel capillary
electrophoresis system, the availability of the necessary capital to fund the
Company's plans, and the availability of specialized components necessary to
manufacture the DNA Sequencer.
Overview
The Company devotes substantially all of its resources and efforts to the
commercialization, marketing and sale of its two principal products, its high-
speed DNA/gene sequencing instrumentation (the "DNA Sequencer"), an instrument
for the acquisition, analysis and management of complex genetic information, and
its high throughput screening, massive parallel capillary electrophoresis system
(the "HTS-MPCE system"), a high throughput system based on the technologies
developed for the DNA Sequencer, used in the pharmaceutical industry for drug
discovery. The DNA Sequencer was developed in part from research efforts
conducted at the United States Department of Energy's Ames Laboratory, which is
operated by Iowa State University's Institute for Physical Research and
Technology.
In the Fall of 1999, the Company completed the development and commercialization
of its DNA Sequencer and began a directed marketing effort, and the Company
developed and commercialized the HTS-MPCE system. On March 31, 2000, Procter &
Gamble Pharmaceuticals purchased an HTS-MPCE system for use in pharmaceutical
screening. This sale was the first, and to date, the only sale of the Company's
principal products.
History
In May 1995, the Company entered into an agreement with Iowa State University
Research Foundation ("ISURF"), an affiliate of Ames Laboratories. Under that
agreement the Company received an option to acquire an exclusive worldwide
license to technology for the commercial development of the DNA Sequencer
developed at ISURF. The Company believes its DNA Sequencer is capable of
substantially increasing the rate of sequencing over the other commercially
available sequencing instruments on the market today and providing reliable
results at a lower cost.
In June 1997, the Company exercised its option for the ISURF technology and
entered into an exclusive, worldwide licensing agreement. Due to the Company's
financial condition during the 1999 fiscal year and through the end of July
1999, however, the Company was not able to make certain required payments under
the licensing agreement. On July 30, 1999, the Company amended the license
agreement to require the Company to pay $500,000 to ISURF, in exchange for which
ISURF waived any defaults for the Company's past failure to make required
payments. The amended agreement also provided for a revised schedule of minimum
royalties. In addition, ISURF allowed the Company to grant a sublicense to The
Perkin-Elmer Corporation, now known as PE Biosystems, in exchange for a portion
of the royalties the Company receives from PE Biosystems and a phantom stock
award equal to 150,000 shares of the Company's common stock.
7
<PAGE>
Concurrently with the restructuring of the license agreement, the Company
granted PE Biosystems an exclusive sublicense to use certain patents for DNA
sequencing machines, with the sublicense limited to machines using 30 or fewer
capillaries and side entry illumination. The Company also granted PE Biosystems
a right of first refusal to sublicense this technology to develop DNA sequencing
machines using more than 30 capillaries. On July 30, 1999, PE Biosystems paid
the Company a non-refundable sublicense issue fee of $1,000,000, and agreed to
pay the Company certain minimum annual royalties commencing with the twelve-
month period beginning August 1, 2000. The minimum royalties are non-
refundable, but are credited against the earned royalties payable pursuant to
the sublicense agreement.
In connection with the sublicense agreement, PE Corporation, the parent company
of PE Biosystems, purchased 2,000 shares of the Company's Series A Preferred
Stock for $1,000 per share. The Company will pay dividends on the series A
preferred stock only if the Company pays dividends on its common stock. The
Series A Preferred Sock may be converted into shares of the Company's common
stock at a conversion price of $2.50 per share, subject to adjustment in the
event of a consolidation, merger, reorganization or sale of substantially all of
the Company's assets. In addition, the Company entered into a multi-year
consulting agreement with PE Biosystems pursuant to which the Company will
provide consulting services to PE Biosystems. Upon execution of the consulting
agreement, the Company received a lump sum consulting fee of $2,000,000.
Results of Operations - Three Months Ended June 30, 2000 and 1999
The Company had total sales of $48,606 and $50,367 for the three months ended
June 30, 2000 and 1999, respectively. Sales for both periods reflect sales of
products from product lines other than the DNA Sequencer and the HTS-MPCE
system, and the Company is no longer devoting its resources to the development
and marketing of such products. The decrease in sales of $1,761, or
approximately 3%, was due primarily to the increased focus of the Company on the
commercialization and marketing of the DNA Sequencer and the HTS-MPCE system.
In addition to its sales revenue, the Company recorded sublicense and consulting
revenue of $595,238 for the three months ending June 30, 2000 relating to the
sublicense and consulting agreements that the Company entered into in July 1999
with PE Biosystems. The Company did not have any such revenue for the three
months ended June 30, 1999.
Research and development expenses increased $47,895 or 23% in 2000 to $252,512
from $204,617 in 1999, due primarily to the lack of an offsetting Small Business
Innovative Research (SBIR) grant in 2000.
General and administrative expenses were $533,499 and $246,486 during the three
months ended June 30, 2000 and 1999, respectively, an increase of $287,013, or
approximately 116%. Approximately 61% and 63% of general and administrative
expenses for the three months ended June 30, 2000 and 1999, respectively, were
attributable to payroll, payroll taxes, employee benefits and professional and
consulting services. The increase was due primarily to the hiring of a national
sales director and an increase in legal and accounting expenses.
Interest expense of $2,009 and $12,282 for the three months ended June 30, 2000
and 1999, respectively, resulted from borrowings. Interest expense decreased
primarily as a result of repayment of the majority of such borrowings in
September 1999.
Interest income increased $26,823 to $26,919 in 2000 from $96 in 1999 as a
result of the increase in cash deposits primarily as a result of the proceeds
from the transactions with PE Biosystems.
Liquidity and Capital Resources
Historically, the Company has financed its operations primarily through the sale
of equity securities and loans, most of which loans were repaid with the
proceeds from the Company's initial public offering. All of such funds were
expended on the development and commercialization of the Company's products,
primarily its mass spectrometers and Luminoscopes. From January 1999 until July
1999, the Company had been dependent primarily on funds advanced by its chief
executive officer to meet payroll and expenses. During that period, the Company
failed to make payments under its license agreements.
8
<PAGE>
On July 30, 1999, the Company restructured its license agreement with ISURF for
technology used to develop the Company's DNA Sequencer and entered into a
sublicense agreement relating to certain of such technology with PE Biosystems.
In connection with the sublicense agreement, PE Biosystems made an investment in
the Company. PE Biosystems also retained the Company as a consultant.
The aggregate $5,000,000 in gross proceeds received July 30, 1999 from the
sublicense and sale of preferred stock with PE Biosystems, and other agreements,
as well as the revenues from its products, will provide the Company with
additional liquidity, allow it to pay amounts owing under its license agreement
with ISURF, begin marketing and production of the DNA Sequencer and the HTS-MPCE
system, and, the Company believes, meet all of its existing obligations over the
next twelve months.
In order to further develop and expand the business in accordance with its
plans, the Company anticipates that it will need significant additional capital
by the next fiscal year to greatly expand its manufacturing capabilities, launch
a substantial sales and marketing program, pay various required license and
milestone fees, establish third-party collaborations and pursue additional
research and development. If the Company is unable to generate significant sales
of its core products, it may need to obtain additional debt or equity financing.
There can be no assurance, however, that the Company will be able to obtain such
financing on terms acceptable to it.
The Company's capital requirements depend on many factors, including the status
of the development of its products, obtaining manufacturing capabilities to
produce its products in volume, prosecuting and enforcing its intellectual
property rights, completing technological and market developments, and the
ability of the Company to develop new collaborative and licensing arrangements.
9
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
Robert M. Rubin v. SpectruMedix Corporation et. al. On April 21, 1997, a
complaint was filed in the Supreme Court of the State of New York alleging
breach of contract. Specifically, the plaintiff alleges that the Company
defaulted under a promissory note issued to plaintiff on May 16, 1996 in the
amount of $175,000 (the "Rubin Note") while such Note was outstanding and
therefore that the Company is liable and indebted to plaintiff in the principal
amount of $175,000, together with interest and expenses. The Company, on May
2,1997, paid the principal and interest due under the Rubin Note. The main
remaining issue asserted by the plaintiff is whether, pursuant to an alleged
related agreement, the plaintiff is entitled to 152,174 shares (adjusted to
reflect stock splits) of Common Stock or, alternatively, $875,000. Plaintiff
alleges that the Company undertook to enter into a securities purchase agreement
pursuant to which he should have received the aforementioned shares of Common
Stock. The Company contends that such securities purchase agreement was never
discussed and therefore that no agreement was reached with respect to the terms
thereof. Such securities purchase agreement was not signed by either of the
parties to the Rubin Note. The Company believes that it has meritorious defenses
to the above-described claims and it intends to defend the litigation
vigorously. However, due to the nature of litigation and because the lawsuit is
in the initial stages, the Company cannot determine the total expense or
possible loss, if any, that may ultimately be incurred either in the context of
a trial or as a result of a negotiated settlement. While management believes
that the resolution of this matter will not have a material adverse effect on
the Company's business financial condition and results of operations, the
results of these proceedings are uncertain and there can be no assurance to that
effect. Regardless of the ultimate outcome of the litigation, it could result in
significant diversion of time by the Company's personnel.
Other than the foregoing, the Company is not a party to any other material
legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
On July 30, 1999, PE Bio, the Company's sublicensee for technology relating
to the DNA Sequencer, purchased 2,000 shares of the Company's Series A Preferred
Stock ("Series A Preferred") at $1,000 per share, providing gross proceeds of
$2,000,000 and net proceeds, after expenses paid by the Company, of $1,995,000.
The Company used a portion of the proceeds from the sale of the Series A
Preferred to pay amounts payable to ISURF pursuant to the amended license
agreement. The balance of the proceeds have and will be devoted to the
commercialization, marketing and manufacture of the DNA Sequencer.
Item 3. Defaults Upon Senior Securities. None.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. None.
---------------------------------------------------
Item 5. Other Information. None.
-----------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
--------
The following documents are referenced or included in this
report:
Exhibit No.
-----------
27 Financial Data Schedule.
(b) Reports on Form 8-K.
-------------------
No Current Reports on Form 8-K were filed with the Commission during
the quarter ended June 30, 2000.
10
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed in its
behalf by the undersigned thereunto duly authorized.
SPECTRUMEDIX CORPORATION
DATED: August 14, 2000 By: /s/ Joseph K. Adlerstein
-------------------------
Joseph K. Adlerstein
President, Chief Executive Officer and
Chairman of the Board (Principal Executive and
Accounting Officer)
11
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
27 Financial Data Schedule.
12
