U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under section 13 or 15(d) of the Securities Exchange Act of
1934 For the period ended MARCH 31, 1995
or
[ ] Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Transition period from __________ to __________
Commission file number O-13092
SPECTRASCIENCE, INC. (FORMERLY GV MEDICAL, INC.)
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-1448837
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5909 BAKER ROAD, SUITE 580
MINNEAPOLIS, MINNESOTA 55345
(Address of principal executive offices) (Zip Code)
(612) 931-9000
(Issuer's telephone number)
(Formerly GV Medical, Inc., 3750 Annapolis Lane, Minneapolis, MN 55447)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES _X_ NO
There were 2,863,348 shares outstanding of the issuer's $.25 par value common
stock, as of May 12, 1995.
This Form 10-QSB consists of 9 pages (including exhibits).
BALANCE SHEETS
(UNAUDITED)
SPECTRASCIENCE, INC.
(FORMERLY GV MEDICAL, INC.)
ASSETS
MARCH 31, DECEMBER 31,
1995 1994
CURRENT ASSETS
Cash and short-term investments $ 29,441 $ 58,298
Accounts receivable - net 161,196 781
Inventory 163,981 200,468
Other current assets 60,737 78,245
Total current assets 415,355 337,792
EQUIPMENT 577,430 973,781
Less accumulated depreciation (485,856) (870,328)
91,574 103,453
OTHER ASSETS -- 37,444
$ 506,929 $ 478,689
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 92,510 $ 139,890
Accrued compensation & taxes 36,641 29,337
Accrued expenses 85,208 122,836
Deferred income -- 26,000
Notes payable -- 300,000
Total current liabilities 214,359 618,063
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $1.00 par value --
authorized 20,000,000 shares;
shares issued and outstanding --
March 31, 1995 -- 175,000 175,000
December 31, 1994 -- none --
Common Stock, $.25 par value --
authorized 4,000,000 shares;
shares issued and outstanding --
March 31, 1995 -- 2,825,348
December 31, 1994 -- 2,785,348 706,337 696,337
Additional paid-in capital 39,209,157 38,765,897
Accumulated deficit (39,797,924) (39,601,608)
Total stockholders' equity (deficit) 292,570 (139,374)
$506,929 $478,689
See accompanying notes to the financial statements
STATEMENTS OF OPERATIONS
(UNAUDITED)
SPECTRASCIENCE, INC.
(FORMERLY GV MEDICAL, INC.)
THREE MONTHS ENDED
MARCH 31
1995 1994
Revenue $ 166,088 $ -0-
Cost of products sold 108,144 -0-
Gross Profit 57,944 -0-
Operating expenses
Research and dev. 121,951 365,060
Selling, general and
administrative 122,817 197,317
Less interest and other
expense (income) 9,490 (55,443)
Total operating expenses 254,258 506,934
Net loss ($196,314) ($506,934)
Net loss per share ($ 0.07) ($ 0.18)
Weighted average
common shares 2,790,681 2,750,348
See accompanying notes to the financial statements
STATEMENTS OF CASH FLOW
(UNAUDITED)
SPECTRASCIENCE, INC.
(FORMERLY GV MEDICAL, INC.)
THREE MONTHS ENDED
MARCH 31
1995 1994
OPERATING ACTIVITIES
Net loss ($196,314) ($ 506,934)
Adjustments to reconcile net cash
used in operating activities:
Depreciation 13,050 21,350
Recognition of deferred income 26,000 --
Non-cash interest expense 3260 --
Disposal of other assets 37,444 --
Changes in operating assets and liabilities:
(Increase) in accounts receivable (160,415) (12,637)
(Increase) decrease in inventories 36,487 --
(Increase) decrease in other current assets 17,508 15,520
Increase (decrease) in current liabilities (77,706) (49,932)
Net cash used in operating activities (352,686) (532,633)
INVESTING ACTIVITIES
Purchase of fixed assets (1171) (6908)
Net cash used in
investing activities (1171) (6,908)
FINANCING ACTIVITIES
Proceeds from issuance of notes payable 225,000 --
Proceeds from issuance of common stock 100,000 --
Net cash provided by financing activities 325,000 --
Net decrease in cash and
short term investments (28,857) (539,541)
CASH AND SHORT-TERM
INVESTMENTS AT BEGINNING OF
PERIOD 58,298 1,250,686
CASH AND SHORT-TERM
INVESTMENTS AT END OF
PERIOD $ 29,441 $ 711,145
See accompanying notes to the financial statements
NOTES TO FINANCIAL STATEMENTS
SpectraScience, Inc.
(formerly GV Medical, Inc.)
NOTE A - BASIS OF PRESENTATION
The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, which consist of normal recurring
items, considered necessary for a fair presentation of results have been
included. For further information refer to the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994.
ITEM 2.
Management's Discussion and Analysis
Financial Conditions and Results of Operations
The Company is a publicly-held company headquartered in Minnetonka, Minnesota.
From its inception on May 4, 1983 until mid 1993, the Company, then named GV
Medical, Inc., was engaged in the laser angioplasty business. In May, 1993, the
Company's name was changed to SpectraScience, Inc. to reflect the Company's new
focus on design, development, manufacturing and marketing of laser enhanced
spectroscopic diagnostic systems for the detection of atherosclerosis, thrombus
and normal healthy tissue. The Company has 7 full-time employees. Its executive
offices are located at 5909 Baker Road, Suite 580, Minnetonka, Minnesota 55345.
Its telephone number is (612) 931-9000 and its fax number is (612) 933-9090.
On March 31,1995 the Company recognized the sale of its first two Spectroscopic
Guidewire(TM) Systems for delivery to key European medical centers. The Company
earlier reported that SCIMED Life Systems, Inc. will market the SpectraScience
Spectroscopic Guidewire(TM) System outside the United States under the terms of
a three (3) year exclusive international distribution agreement.
During the Quarter ended March 31, 1995, the Company executed agreements
arranged through Perkins Capital Management, with six (6) private lenders which
provided an additional $225,000 of bridge financing to the Company.
On March 31, 1995, the six private, along with lenders who had previously
provided $300,000 of bridge financing to the Company, elected to convert the
face amount of the notes held by them into 175,000 shares of the Company's
Preferred Stock, pursuant to the terms of the Company's ongoing Private
Placement of 1,000,000 shares of preferred stock. The lenders and other
subscribers to the Private Placement paid or will pay $3.00 in exchange for each
share of Preferred Stock plus a warrant to purchase one share of the Company's
Common Stock (at a purchase price of $5.00 per share) for each 3 shares of
Preferred Stock purchased.
Results of Operations
THREE MONTHS ENDED
MARCH 31
1995 1994
Revenue $166,088 $-0-
% Change 100%
Cost of products sold $108,144 -0-
% Change 100%
Revenues for the first quarter ended March 31, 1995, were $166,088 compared to
$-0- for the comparable quarter of 1994. Revenues in the current year reflect
the first international sales of the Company's Spectroscopic Guidewire(TM)
Systems and disposable products.
Cost of products sold during the first quarter of 1995 were $108,144 compared to
zero in the comparable quarter of 1994. As a result, the Company reported a
Gross Profit of $57,944 for the quarter ended March 31, 1995.
THREE MONTHS ENDED
MARCH 31
1995 1994
Research/development $121,951 $365,060
% Change -67%
Selling, General and
Administrative 122,817 197,317
% Change -38%
Total expenses 244,768 562,377
% Change -56%
Research and Development Expenses in the quarter ended March 31, 1995 of
$121,951 represents a decrease of 67% from those expenses incurred in the
quarter ended March 31, 1994. The decrease is due to the Company incurring fewer
expenses in development of the Spectroscopic Guidewire(TM) System.
Selling, General and Administrative expenses of $122,817 for the quarter ended
March 31, 1995 declined 38% from those expenses incurred in the quarter ended
March 31, 1994. Reductions occurred in depreciation, salary, and travel expenses
as a result of a lower asset base following the sale of unneeded assets, and a
decrease in the number of employees in 1995 compared to 1994.
THREE MONTHS ENDED
MARCH 31
1995 1994
Interest and other expense $9,490 ($55,443)
(income)
% Change -117%
Interest and other expense (income) of $9,490 were 117% lower in the quarter
ended March 31, 1995 than in the quarter ended March 31, 1994, due to lower
interest income and fewer gains on the sale of assets in 1995 compared to 1994.
THREE MONTHS ENDED
MARCH 31
1995 1994
Net loss ($196,314) ($506,934)
% Change -61%
As a result of all the above factors, the Company reported a net loss for the
quarter ended March 31, 1995, of $196,314, which is a 61% decrease from the
$506,934 loss reported for the quarter ended March 31, 1994. The loss per share
declined to $0.07 per share in 1995 from $0.18 per share in 1994, principally as
a result of lower operating expenses and the increase in revenue.
Financial Condition
Cash and short-term investments decreased $28,857 during the first quarter to a
balance of $29,441 at March 31, 1995. This decrease can be attributed primarily
to the Company's expenses continuing to exceed its revenue. The cash and
short-term financing is believed to be sufficient to sustain the Company's cash
requirements through the completion of the Company's Private Placement, which is
expected to occur in second or third quarter 1995.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS ON THIS FORM 10-QSB
No exhibits are filed with this report
B) REPORTS ON FORM 8-K
A Form 8-K was filed by the Company on January 12, 1995
relating to the shipment of its first clinical Spectroscopic
Guidewire(TM)Systems for delivery to key European medical
centers.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: MAY 12, 1995 SPECTRASCIENCE, INC.
(Registrant)
/s/ Brian T. McMahon
BRIAN T. MCMAHON
President and Chief Executive Officer
(Principal Executive Officer)
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