<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to ______
Commission file number 33-93132
La Jolla Diagnostics, Inc.
(Exact name of small business registrant as specified in its character)
California 94-2901715
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7777 Fay Avenue, Suite 160, La Jolla, California 92037
(Address of principal executive offices)
(619) 454-6790
(Registrant's telephone number)
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
As of November 12,1996, La Jolla Diagnostics, Inc. had 7,702,509 shares
outstanding of the registrant's common stock, no par value.
1
<PAGE> 2
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):
Consolidated Balance Sheets at September 30, 1996 3
(unaudited) and June 30, 1996
Statements of Operations for the Three Months Ended 4
September 30, 1996 and 1995 (unaudited)
Statements of Cash Flows for the Three Months Ended 5
September 30, 1996 and 1995 (unaudited)
Notes to Consolidated Financial Statements (unaudited) 6 - 7
Item 2 Managements' Discussion and Analysis of Financial 8 - 14
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings - None
Item 2 Changes in Securities - None
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Security Holders - By
Reference Proxy Statement
Item 5 Other Information - None
Item 6 Exhibits and Reports on Form 8-K - None
SIGNATURES 15
</TABLE>
2
<PAGE> 3
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1996 JUNE 30, 1996
(UNAUDITED)
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 7,847 $ 28,083
Accounts receivable 967 1,729
Advances to officer 757 1,156
Interest receivable 118,159 100,648
----------- ------------
TOTAL CURRENT ASSETS 127,730 131,616
INVENTORY 4,150,373 4,151,885
PROPERTY & EQUIPMENT, NET 40,674 43,248
NOTE RECEIVABLE 900,000 900,000
OTHER ASSETS 11,545 13,819
----------- ------------
$ 5,230,322 $ 5,240,568
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 203,282 $ 178,528
Accrued expenses 32,845 37,385
Lease obligations, current portion 2,974 2,836
Loans payable 92,341 99,279
----------- ------------
TOTAL CURRENT LIABILITIES 331,442 318,028
LEASE OBLIGATIONS, NON CURRENT PORTION 8,093 8,928
MINORITY INTEREST 789,138 791,992
SHAREHOLDERS' EQUITY
Common stock, no par value (10,000,000 shares authorized; 11,358,465 11,304,740
7,702,509 and 7,576,175 shares issued and outstanding,
respectively)
Additional paid-in capital 831,247 831,247
Preferred stock, no par value (5,000,000 shares authorized, -- --
no shares issued)
Retained deficit (8,088,063) (8,014,367)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 4,898,880 4,121,620
----------- ------------
$ 5,230,322 $ 5,240,568
----------- ------------
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
FOR THE 3 MONTHS
ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------------------
<S> <C> <C>
NET SALES $ 33,167 $ 20,948
COSTS AND EXPENSES
Cost of products sold 27,727 18,099
Selling and administrative expenses 58,282 101,646
Research and development 19,680 23,387
Consulting services 14,852 20,195
Depreciation and amortization 2,739 911
---------- ----------
TOTAL COSTS AND EXPENSES 123,280 164,238
---------- ----------
LOSS FROM OPERATIONS (90,113) (143,290)
OTHER INCOME (EXPENSES)
Interest income 17,511 16,643
Interest expense (1,548) (514)
Minority interest 2,854 3,313
---------- ----------
TOTAL OTHER INCOME (EXPENSES) 18,817 19,442
---------- ----------
LOSS BEFORE INCOME TAXES (71,296) (123,848)
PROVISION FOR INCOME TAXES 2,400 2,400
---------- ----------
NET LOSS $ (73,696) $ (126,248)
---------- ----------
NET LOSS PER COMMON SHARE $ (0.01) $ (0.02)
---------- ----------
AVERAGE COMMON SHARES OUTSTANDING 7,639,342 6,121,932
---------- ----------
</TABLE>
4
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOWS (UNAUDITED)
(DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
FOR THE 3 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(73,696) $(126,248)
Adjustments to reconcile loss to net cash used in
operating activities
Depreciation and amortization 2,739 911
Minority interest (2,854) (3,313)
Changes in assets and liabilities
(Increase) decrease in inventories 1,512 (2,656)
(Increase) decrease in accounts receivable 762 20,463
(Increase) decrease in other assets 2,109 (5,082)
(Increase) decrease in interest receivable (17,511) (15,750)
Increase (decrease) in accounts payable and
accrued expenses 20,214 11,801
--------- ----------
NET CASH USED IN OPERATING ACTIVITIES (66,725) (119,874)
CASH FLOWS USED IN INVESTING ACTIVITIES
Advances from shareholder, net 399 --
Capital expenditures for property and equipment -- (9,760)
--------- ----------
NET CASH USED FOR INVESTING ACTIVITIES 399 (9,760)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 53,725 125,000
Payments on debt (6,938) --
Payments on capital lease obligations (697) (1,027)
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 46,090 123,973
--------- ----------
NET INCREASE (DECREASE) IN CASH (20,236) (5,661)
CASH AT BEGINNING OF PERIOD 28,083 20,358
--------- ----------
CASH AT END OF PERIOD $ 7,847 $ 14,697
--------- ----------
</TABLE>
See accompanying notes to financial statement
5
<PAGE> 6
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DEVELOPMENT STAGE ENTERPRISE)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements and
related notes have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission for Form 10-QSB. 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, consisting
of a normal recurring nature considered necessary for a fair
presentation, have been included. It is suggested that these financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's annual report on Form 10-KSB
for the year ended June 30, 1996. The results of operations for the
three month period ended September 30, 1996 are not necessarily
indicative of the operating results for the year ended June 30, 1997.
For further information, refer to the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year June 30, 1996.
Reclassifications
Certain September 30, 1995 balances have been reclassified to conform
to the September 30, 1996 consolidated financial statement
presentation.
B. INVENTORIES:
Inventory as of September 30, 1996 and June 30, 1996 is comprised of
the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 JUNE 30, 1996
---------- ----------
Unaudited
<S> <C> <C>
Antisera products $4,140,579 $4,140,579
Healthcare products 9,794 11,306
---------- ----------
$4,150,373 $4,151,885
---------- ----------
</TABLE>
C. LOSS PER COMMON SHARE:
Net loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period.
For the three month period ended September 30, 1996 and 1995, the
Company's common stock equivalents were antidilutive and, therefore,
were not included in the computation of net loss per common share.
6
<PAGE> 7
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DEVELOPMENT STAGE COMPANY)
D. RELATED PARTY TRANSACTIONS:
During the three months ended September 30, 1996 and 1995, various
shareholders and directors of the Company provided consulting and
research and development activities related to the formation and
recommencement of business activities.
In connection with these services, during the three months ended
September 30, 1996 the Company recognized research and development and
consulting expenses of $19,680 and $14,852, respectively.
E. SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Cash paid for interest and income taxes for the three months ended
September 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C> <C>
Interest $606 $ 514
--- -----
Income taxes $800 $2,400
--- -----
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through private placements of
common stock, issuing warrants to acquire stock in exchange for services
rendered for the benefit of the Company, and to a lesser degree sales. Based on
its current operating plans, capital expenditures necessary to support the
further development and marketing of the Company's products through July of 1997
are expected to exceed cash generated from operations. The Company anticipates,
however, that the proceeds from conventional private placements of stock and the
exercise of warrants and options (of which $53,725 of common stock warrants were
converted into common stock during the three months ended September 30, 1996),
together with existing capital and revenues from product sales will be
sufficient to finance its operations and working capital requirements for at
least twelve months.
RESULTS OF OPERATIONS.
GENERALLY. Management believes that its business plan objectives were fully
implemented during fiscal year 1996. The Company further believes with its
business objectives in place and proper funding, the Company will meet its
future expansion plans. Management has also implemented a variety of procedures
which will enhance revenues and reduce costs.
The Company has not engaged in any significant business prior to April 17, 1995.
On that day, the Company acquired Unified, a small development stage business.
COMPARISON OF RESULTS
<TABLE>
<CAPTION>
Three Months Ended
September 30, 1996 September 30, 1995
<S> <C> <C>
Revenues $ 33,167 $ 20,948
Cost of sales 27,727 18,099
Operating expenses 95,553 146,139
Loss from operations (90,113) (143,290)
Net loss $(73,696) $(126,248)
</TABLE>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995.
On a consolidated basis, the Company had sales totaling $33,167 for the three
months ended September 30, 1996, compared with $20,948 in sales for the Company
(including the results of Unified) for the same period ending September 30,
1995. The increase in sales for the three months ended September 30, 1996
resulted from the increase in general operations and sales of eyecare products
and other healthcare related products. The Company believes over the next nine
months the number of sales of products will increase substantially.
8
<PAGE> 9
The Company experienced a net loss of $73,696 for the period ending September
30, 1996, compared with a net loss of $126,248 for the same period ending
September 30, 1995. The decrease in loss is attributable to expenditures for
general operations being held constant, which includes research and development
costs of $19,680, consulting fees of $14,852, and salaries of $22,386 for the
three month period ending September 30, 1996, versus the $23,387, $20,195 and
$25,672 that were incurred for the three months ended September 30, 1995,
respectively. The Company, during fiscal year 1995, incurred substantial
expenditures related to research and development and formation of the Company.
Operating expenses for the three months ended September 30, 1996 were $95,553
resulting in a loss from operations for the period of $90,113 compared to costs
and expenses for the three months ended September 30, 1995 of $146,139. Costs
and expenses included consulting fees of $14,852 and research and development
expense of $19,680, substantially most of which was for services performed by
the directors, officers and advisors. The decrease in selling and administrative
expenses for the three months ended September 30, 1996 are due to the Company's
efforts to ramp up sales without excessive expenditures related to marketing.
Selling and administrative expenses included approximately $12,500 in rent
expense, and $2,000 in legal and accounting fees. The Company is aggressively
marketing its health care products.
FINANCIAL RESOURCES
At September 30, 1996, the Company had current assets of $127,730 (including
cash of $7,847) and inventory of $4,150,373 ($4,140,579 of which constituted the
inventory of antisera). The antisera inventory was the result of 15 years of
work by the late Dr. James Plummer , a well-known San Diego immunologist. On
June 8, 1994, Unified acquired the inventory from the Plummer Family Trust in
exchange for 1,065,940 shares of Unified common stock along with warrants to
purchase an additional 120,000 shares of Unified stock at $0.10 per share
(532,970 shares of the Company's common stock along with warrants to purchase an
additional 60,000 shares at $0.20 per share, after giving effect for the
subsequent 1 for 2 shares of Unified stock exchanged in the merger). The
purchase was recorded at Unified's cost, the fair value of the inventory
received for the stock of $4,142,784 based on the valuation of the antisera as
of June 8, 1994 equivalent to $7.77 per share for the common stock received by
the Plummer Family Trust (not considering the value of the warrants also given
to the Trust). As a result of the issuance of Common Stock at $.40 per share in
private placements, the merger, losses, and shares issued to other founders for
product rights, services and know-how, the book value per share at September 30,
1996 was $.68 per share representing considerable dilution compared to the $7.77
per share value paid by the Plummer Family Trust. The inventory was transferred
at historical cost to La Jolla Diagnostics, Inc. on April 17, 1995, the date of
the acquisition of Unified, as the business combination was recorded under the
pooling of interest method.
The antisera inventory consists of antibody reagents used in clinical diagnostic
laboratories that analyze serum for immunoglobulin profiles. In addition, the
Company has antigen samples which can be used for the continued production of
antisera once the existing antisera reagent inventory is sold. The Company
intends to purify and package the antisera in individual commercial quantities
and offer it for sale to the medical and scientific communities.
In addition, from time-to-time, the Company may use its Antisera in producing
certain diagnostic tests, which it intends to market.
9
<PAGE> 10
The antisera and antigen samples are kept frozen and have a shelf life in excess
of twenty years. Since the Company intends to market and sell the antisera
reagents over the next four years, there is not expected to be any obsolescence
or deterioration of the inventory.
There might be a modest change in titre (concentration) over a prolonged period
of time. During May and June 1995, the Company began to advertise the antisera
for sale in a variety of trade magazines. Through September 30, 1996, antisera
sales were approximately $4,000. The net (decrease)/increase in inventory of
$1,500 at September 30, 1996 and 1995, respectively, relates to the Company's
inventory levels of its Electronica-2 muscle relaxer and Living Water(TM) and
Ophthalmic Solutions, which are maintained at a fairly constant inventory level
of approximately $10,000 to $15,000.
Management has carefully considered whether inventory is stated above market, as
defined in ARB 43, and whether a loss would need to be recognized. The Company
has concluded that no such loss has been necessary because the market as defined
in ARB 43, Chapter 4, Statement 6, has not dropped below cost.
The Company subsequent to the quarter ended September 30, 1996 received debt
financing and equity infusion in the amount of $200,000 from an unrelated party.
The Company issued restricted stock of 200,000 shares in exchange for the
receipt of $100,000. These shares are not freely trading and are not subject to
registration rights. Furthermore, the Company issued an 8% convertible debt in
exchange for the receipt of $100,000. This debt is convertible into shares of
common stock at $1.00 per share. These shares subject to the convertible debt
are restricted and are not subject to registration rights.
RESEARCH AND DEVELOPMENT.
The Company is conducting research and development in four areas over the next
twelve months. Expenditures on research and development will depend upon the
financial resources of the Company. Research and development expense recorded
for the three month period ended September 30, 1996 was approximately $20,000.
The Company is maintaining an active research and development program in the
areas of ophthalmic products and immuno/molecular diagnostics using a network of
prominent consultants as an addition to its internal staff and facilities.
The research and development activities being performed by the Company are
designed to discover and screen potential consumer health care and diagnostic
products. Activities underway at the present time include the following for the
Ophthalmic and Diagnostic Division.
OPHTHALMIC DIVISION PRODUCTS
OPHTHALMIC SOLUTIONS
One of the Company's founders, Don Brucker, was a pioneer in the development of
soft contact lenses and other ophthalmic products, and using his know-how and
reputation, the Company has negotiated for exclusive access to a proprietary
technology for the special preparation of ophthalmic solutions. These solutions
have certain properties which give them competitive advantages over existing
solutions. These solutions include:
10
<PAGE> 11
LIVING WATER EYE LOTION(TM) (currently being marketed)
LIVING WATER EYE LOTION(TM) is an eye wash or irrigating solution, used in
cleansing the eye to help relieve irritation, burning, stinging, and itching due
to loose foreign material, air pollutants (smog or pollen), or chlorinated
water. The solution is a specially borate buffered, sterile isotonic aqueous
solution containing sodium chloride. It is preserved with a mild preservative,
0.1% sorbic acid and disodium EDTA (ingredients commonly used in solutions for
sensitive eyes). In contrast with:
- - "Eye lubricants," "Artificial Tears," and "Lens Lubricants," which contain
ingredients which increase fluid viscosity in an attempt to relieve eye
dryness or re-wet contact lenses.
- - "Eye redness relievers," which contain vasoconstrictors which can cause eye
problems when used too frequently.
- - Eye drops, which contain antihistamines to treat allergy symptoms.
LIVING WATER EYE LOTION(TM) is specially formulated to enhance eye comfort by
irrigating, flushing and cleansing without interfering with natural functions.
The product has been test marketed for several months and has generally exceeded
the expectations of those who have tried it.
PILOCARPINE LW(TM) (future marketing effort and product)
PILOCARPINE LW(TM) is a prescription drug used in the treatment of glaucoma, a
condition of the eye in which there is usually an elevation of the intraocular
pressure which may lead to deterioration of the visual fields and ultimately to
blindness. The condition, more prevalent after the age of forty, is frequently
symptomless in its early stages unless it is diagnosed during an eye
examination.
The active ingredient in the product, pilocarpine (one of the oldest methods of
glaucoma treatment), is in a solution similar to the Company's LIVING WATER EYE
LOTION(TM). The properties of LIVING WATER EYE LOTION(TM) make it an exceptional
vehicle for the introduction of the pilocarpine to the eye. Presently, the use
of pilocarpine (a miotic, i.e., makes the pupil smaller) is limited, because it
is uncomfortable to use and is frequently only partially effective. Its use in a
LIVING WATER EYE LOTION(TM) type of solution may allow the use of a smaller
concentration of pilocarpine, and deminish side effects.
HYPERTONIC LW(TM) (future marketing effort and product)
HYPERTONIC LW(TM) is a hypertonic saline (2%) agent (eye drop) which may be used
to reduce corneal edema (swelling) of various etiologies, including the
overwearing of contact lenses, and healing after photorefractive keratectomy
(PRK) surgery.
A hypertonic solution exerts an osmotic gradient greater than that present in
body tissues and fluids, so that water is drawn from the body tissue across
semi-permeable membranes. Applied topically to the eye, it draws fluid out of
the cornea.
Most hypertonic saline agents may cause temporary burning and irritation on
instillation. The HYPERTONIC LW(TM) formulation is similar that of LIVING WATER
EYE LOTION(TM), and is designed to enhance eye comfort.
11
<PAGE> 12
VETERINARY EYE DROP
An eye drop based on the LIVING WATER EYE LOTION(TM) technology helps in
cleansing the eyes of dogs and cats (a major problem in certain breeds).
OTHER OPHTHALMIC SOLUTIONS
Several compounds, such as steroids, antibiotics and antioxidants using LIVING
WATER EYE LOTION(TM) type of solution as a vehicle are being studied by the
Company. As with PILOCARPINE LW(TM), the use of a LIVING WATER EYE LOTION(TM)
type solution may offer certain advantages to the user.
MISCELLANEOUS PRODUCTS
The Company has arranged to have contact lenses privately labeled by a large
manufacturer under the name of the BRUCKER THIN PROFILE(TM) Soft Contact Lens.
This lens is designed to allow the efficient fitting of an exceptionally
versatile contact lens which enables the fitter to stock a small inventory of
lenses, and is especially suited for export. Several orders have been shipped to
Russia during the past year.
The Company is also working on certain other product related projects, and is
test marketing a muscle relaxing device called Electronic-2.
A nasal spray solution using LIVING WATER EYE LOTION(TM) technologies is also
being developed, which the Company feels will be a major product.
DIAGNOSTIC DIVISION PRODUCTS
The Diagnostic Division is developing and marketing clinical diagnostic products
using immunologic and molecular biologic technologies. These products include:
ANTISERA
All clinical diagnostic laboratories that analyze serum for immunoglobulin
profiles require at least five antibody reagents: anti-IgG, anti-IgM, anti-IgA,
anti-lambda chain and anti-kappa chain for routine clinical analysis of patient
serum by immunoelectrophoresis and nephelometry.
The Company is now marketing an inventory of such antisera reagents. The entire
inventory was valued by unrelated parties (brokers) as of June 1994 in excess of
$4.1 million on a bulk sale basis. These valuations have been substantiated by
an independent research scientist as of June 1995 and again as of June 1996. The
cost of marketing and processing the antisera for sale has been factored in
arriving at the $4.1 million valuation.
In addition to the antisera in inventory, the Company has a large supply of
antigen samples which can be used for the continued production of antisera if
the company makes the decision to produce additional antisera.
The Company has added three anti-opioid receptor antibodies to its line of
Antisera Products, making them available commercially for the first time.
12
<PAGE> 13
There is good evidence that these anti-bodies, Polyclonal anti-kappa receptor
antibodies, Ployclonal anti-mu receptor antibodies and Polyclonal anti-delta
receptor antibodies, will prove useful as research immuno-reagents for studies
in: 1) AIDS and generalized immunosuppression; 2) autoimmune diseases; 3)
habitual drug use; and 4) neuropharmacology.
In addition the Company is adding two new anti-human cytokine antibodies to its
research product line. Neutralizing Polyclonal antibodies specific for human
Interleukin-6 and Interleukin-8 will now be offered. These cytokines are known
to be involved in: 1) the regulation of normal antibody synthesis; 2) autoimmune
diseases; and 3) inflammatory responses.
MOLECULAR DIAGNOSTICS (BREAST CANCER TEST)
The Company is expanding its current technology to develop tests for the DNA
fingerprinting by use of gene amplification of certain proteins specifically
associated with both primary and metastatic breast cancer tumors.
Potential molecular diagnostic tests include the DNA fingerprinting of tumor
biopsies. Breast cancer has been targeted as the first tumor for diagnostic
development. This molecular diagnostic method of breast cancer detection has the
potential to be intrinsically superior to the present method of identification
by histological examination.
The Company's method of finding cancerous tissue may be so sensitive that it can
identify small numbers of malignant cells, which could prove critically
important in the search for both primary and metastatic tumors which may spread
to the lymph system and beyond.
Tissue samples have been tested using the Company's Breast Cancer DNA
fingerprinting, and preliminary results of a blinded study confirm the
specificity and sensitivity of the technology.
The Company anticipates beginning clinical trials of its breast cancer markers
soon, with the objective of receiving clearance from the FDA to market the
product in a diagnostic test.
Ultimately this DNA fingerprint technology could be developed for many other
tumor types.
IMMUNODIAGNOSTICS (COLON CANCER TEST)
Immunodiagnostic tests are frequently used by clinical diagnostic laboratories
for the diagnosis of cancer, autoimmune and infectious diseases. A list of
potential tests have been identified by the Company and several have been
selected for possible development. The serologic diagnostic test for colon
cancer will be the first in the lit to be developed.
The test uses Enzyme-Linked Immunosorbent Assay (ELISA) technology, and appears
to have a specificity for colon cancer.
The Company has access to clinical serum samples recruited from patients to
validate the test in cooperation with clinicians at Sharp Rees-Stealy Medical
Center in San Diego (which has a Certificate of Approval from the Western
International Review Board to collect samples).
13
<PAGE> 14
Preliminary results from a small number of samples are encouraging, and the
Company has made the decision to expand the study. If the results continue to be
positive, the Company plans to proceed with clinical trials leading towards FDA
clearance to market the product as an immunodiagnostic test.
MYOCARDIAL INFARCTION PREDICTOR
The Company is filing for patent application on a novel method of identifying
risk factors for myocardial infarction among a certain subset of mature people.
The company intends to market an inexpensive test which would be used for
screening purposes. Those with this risk factor are several times more likely to
experience morbidity or mortality from a condition which may be ameliorated by
changes in living conditions and life style.
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 13, 1996 LA JOLLA DIAGNOSTICS, INC.
By: /s/ Don Brucker
---------------------------------
Don Brucker
President, Chief Executive Officer
and Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,847
<SECURITIES> 0
<RECEIVABLES> 967
<ALLOWANCES> 0
<INVENTORY> 4,150,373
<CURRENT-ASSETS> 127,730
<PP&E> 40,674
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,230,322
<CURRENT-LIABILITIES> 331,442
<BONDS> 0
0
0
<COMMON> 11,358,465
<OTHER-SE> (8,088,063)
<TOTAL-LIABILITY-AND-EQUITY> 5,230,322
<SALES> 33,167
<TOTAL-REVENUES> 33,167
<CGS> 27,727
<TOTAL-COSTS> 123,280
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,548)
<INCOME-PRETAX> 7
<INCOME-TAX> 2,400
<INCOME-CONTINUING> (73,969)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (73,696)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
