U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 33-93132
NATUREWELL, INC (Formerly La Jolla Diagnostics, Inc.)
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(Exact name of small business issuer as specified in its charter)
California 94-2901715
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(State or other jurisdiction (IRS Employer
of incorporation or organization) identification No.)
7855 Ivanhoe Avenue, Suite 322, La Jolla, California 92037
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(Address of principal executive offices and zip code)
(800) 454-6790
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(Issuer's telephone number)
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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: as of September 30, 2000
La Jolla Diagnostics, Inc. had 25,616,475 shares outstanding of the
registrant's common stock, no par value.
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED MARCH 31, 2000
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of
September 30, 2000 (unaudited) and June 30, 2000 3
Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 2000
and 1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended September 30, 2000
and 1999 (unaudited) 5
Notes to Condensed Consolidated
Financial Statements (unaudited) 6 - 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 11
SIGNATURES 12
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 -
None
Item 5 Other Information - None
Item 6 (a) Exhibits - None
(b) Reports on Form 8-K - None
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND JUNE 30, 2000
(A Development Stage Company)
<CAPTION>
September 30, June 30,
2000 2000
(unaudited)
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<S> <C> <C>
CURRENT ASSETS:
Cash $ 35 $ 28,765
Accounts receivable 31,605 31,106
Advances to officer 6,797 6,428
Inventory - current portion 798,336 800,447
Prepaid expenses 6,663 6,663
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TOTAL CURRENT ASSETS 843,436 873,409
Property and equipment, net 12,242 15,345
Scientific technology 471,231 476,431
Other assets 4,186 3,771
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$ 1,331,095 $ 1,368,956
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 235,173 $ 199,994
Accrued expenses 101,831 88,850
Customer deposits 707 663
Lease obligations,
current portion 0 734
Loans payable 151,016 116,016
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TOTAL CURRENT LIABILITIES 488,727 406,257
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LONG-TERM LIABILITIES:
Convertible debentures 571,000 571,000
Minority interest 304,288 321,348
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TOTAL LONG-TERM LIABILITIES 875,288 892,348
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STOCKHOLDERS' EQUITY:
Common stock, no par value
(50,000,000 shares authorized,
25,616,475 and 23,983,069 shares
issued & outstanding, respectively) 14,396,210 14,233,321
Less stock subscriptions receivable (95,000) (95,000)
Additional paid-in capital 869,247 869,247
Preferred stock, no par value (5,000,000
shares authorized, no shares issued) - -
Retained deficit $8,792,860 and
$8,526,698 deficit accumulated during
development stage begun December 3, 1993,
respectively) (15,203,377) (14,937,217)
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TOTAL STOCKHOLDERS' EQUITY (32,920) 70,351
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$ 1,331,095 $ 1,368,956
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<FN>
See Accountants' report and notes to consolidated financial statements.
</TABLE>
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(A Development Stage Company)
<CAPTION>
For The Three Months Ended
September 30,
2000 1999
(unaudited) (unaudited)
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<S> <C> <C>
NET SALES $ 21,612 $ 9,483
OPERATING EXPENSES
Cost of products sold 10,233 18,525
Selling and administrative expenses 252,927 201,380
Research and development 394 945
Consulting services 21,891 52,559
Depreciation and amortization 5,302 16,808
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TOTAL OPERATING EXPENSES 290,747 290,217
LOSS FROM OPERATIONS (269,135) (280,734)
OTHER INCOME (EXPENSES)
Interest expense (11,086) (8,198)
Minority interest 17,059 85,362
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TOTAL OTHER INCOME (EXPENSES) 5,973 77,164
LOSS BEFORE INCOME TAXES (263,162) (203,570)
PROVISION FOR INCOME TAXES 3,200 -
NET LOSS $ (266,162) $ (203,570)
NET LOSS PER COMMON SHARE $ (0.01) $ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,668,882 20,378,219
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(A Development Stage Company)
<CAPTION>
For The Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (266,162) $ (203,570)
Adjustments to reconcile loss to net
cash used in operating activities
Depreciation and amortization 8,302 16,808
Minority interest (17,059) (85,362)
Issuance of stock for services 96,890 39,360
Changes in assets and liabilities
(Increase) decrease in inventories 2,111 715
(Increase) decrease in accounts receivable (22,498) 208
(Increase) decrease in other assets 29,911 4,945
Increase (decrease) in liabilities 38,774 (69,189)
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NET CASH USED IN OPERATING ACTIVITIES (129,731) (296,085)
CASH FLOWS USED IN INVESTING ACTIVITIES
Advances (to)/from shareholder, net - -
Capital expenditures for property and
equipment - (1,589)
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NET CASH USED FOR INVESTING ACTIVITIES - (1,589)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 66,000 289,345
Proceeds from notes payable, net 35,000 -
Payments on capital lease obligations - (304)
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NET CASH PROVIDED BY FINANCING ACTIVITIES: 101,000 289,041
NET INCREASE (DECREASE) IN CASH (28,731) (8,633)
CASH AT BEGINNING OF PERIOD 28,766 208,555
CASH AT END OF PERIOD $ 35 $ 199,922
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A Development Stage Company)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed 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 are 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, 2000. The results of operations for
the three month period ended September 30, 2000 are not necessarily indicative
of the operating results for the year ended June 30, 2000. 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, 2000.
B. INVENTORIES:
<TABLE>
Inventories as of September 30, 2000 and June 30, 2000 are comprised
of the following:
<CAPTION>
September 30, 2000 June 30, 2000
unaudited
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<S> <C> <C>
Antisera at original value $ 4,150,579 $ 4,150,579
Less Valuation reserve (3,375,579) (3,375,579)
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Antisera products,
net of reserve 775,000 775,000
Diagnostic test products - -
Healthcare products 23,336 25,447
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$ 798,336 $ 800,447
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</TABLE>
C. NET 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, 2000 and 1999, the Company's common stock
equivalents were antidilutive and, therefore, were not included in the
computation of net loss per common share.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per Share," (SFAS 128) which is currently being used to
compute earnings per share in compliance with SFAS No. 128. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of SFAS No. 128 has not resulted in
any change to primary earnings per share for the three month period ended
September 30, 2000 and 1999. The impact of SFAS No. 128 on the calculation of
fully diluted earnings per share for these periods is immaterial.
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D. RELATED PARTY TRANSACTIONS:
During the three months ended September 30, 2000 and 1999, various shareholders
and directors of the Company provided consulting and research and development
activities related to the business activities and products of the company.
In connection with these services, during the three months ended
September 30, 2000 and 1999, the Company recognized research and development of
$394 and $945 and consulting expenses of $21,891 and $52,559, 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, 2000 and 1999 (unaudited) were as follows:
September 30, 2000 September 30, 1999
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Interest $ 11,086 $ 8,198
Income taxes $ - $ -
F. USE OF ESTIMATES:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimated and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENT THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FORWARD-LOOKING INFORMATION - GENERAL
This report contains a number of forward-looking statements, which reflect the
Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. In this report, the words
"anticipates", "believes", "expects", "intends", "plans", "may", "future", and
similar expressions identify forward-looking statements. Readers are cautioned
to consider the risk factors described above and in the Company's Annual Report
on Form 10-KSB for the year ended June 30, 2000, and not to place undue
reliance on the forward-looking statements contained herein, which speak only
as of the date hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements, to reflect events or circumstances that may
arise after the date hereof.
Additionally, these statements are based on certain assumptions that may prove
to be erroneous and are subject to certain risks including, but not limited to,
the Company's ability to introduce new products, the concentration of the
Company's current products, technological change and increased competition in
the industry, the Company's ability to manage its growth, its limited
protection of technology and trademarks, the Company's dependence on limited
suppliers, representatives, distributors, and its dependence on certain key
personnel within the Company. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.
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LIQUIDITY AND CAPITAL RESOURCES
The Company, in the past, has financed operations primarily through the private
placement of common stock, issuance of convertible debt, warrant conversions,
issuing warrants to acquire stock in exchange for services rendered and to a
lesser degree from product sales. Based on its current operating plans, cash
generated from projected sales may not generate the necessary capital to fully
support development of the Company's products through June of 2001 and the
Company will continue to employ use of equity financing to allow the Company to
continue its operations. The Company anticipates that the proceeds from
conventional private placements of stock, issuance of convertible debt and
exercise of warrants and options will continue to enhance working capital.
RESULTS OF OPERATIONS.
To reflect a shift of focus, the Company has changed its name from La Jolla
Diagnostics, Inc. to NatureWell, Inc. NatureWell, Inc. is now concentrating on
the health care segment of its business, having successfully completed work on
the most promising of its diagnostic products. The trading symbol of the
Company remains the same (OTC-BB:LAJD).
Recently the Company has achieved a significant reorganization in its
operations.
MITCHELL HEALTH TECHNOLOGIES
On November 6, 2000, the NatureWell, Inc. announced the signing of a Marketing
Agreement with Mitchell Health Technologies for the marketing of the Company's
MigraSpray(tm) and the AllerSpray(tm) through the food, drug, and mass channels
of distributions.
MigraSpray is a homeopathic solution containing the herb feverfew that has a
history of relieving migraines and headaches. AllerSpray is a homeopathic
solution containing the herbs and amino acids known for relieving allergy
symptoms. Both products are used as sublingual (under the tongue) sprays.
Mitchell Health Technologies distributes unique health and medical products to
approximately 48,000 food, drug and discount stores across the continental
United States.
NatureWell, Inc. believes this alliance with Mitchell Health Technologies has
fundamentally changed the growth potential of the Company, by greatly
accelerating the introduction of the Company's products to the market place.
This marketing breakthrough changes the Company from the research and
development stage to a revenue generating stage.
TEST FOR ACTIVE TB
In March 2000 the Company, through its subsidiary DiagnosTech, Inc., signed an
agreement with Meridian Diagnostics, Inc. Cincinnati, Ohio, (Nasdaq:KITS) for a
cash payment and future royalties on sales of a unique rapid blood test for
active tuberculosis disease from the DiagnosTech subsidiary of La Jolla
Diagnostics. The test utilizes a combination of three highly specialized
Mycobacterium tuberculosis antigens that react with serum from persons having
active TB, in just three minutes. This ability of the test to distinguish TB
infection from "active" disease makes it ideal for helping medical
professionals select the appropriate therapy, making it an ideal aid in
controlling the current world-wide TB pandemic.
Meridian is currently distributing the test international. NatureWell is
hopeful that its subsidiary will begin to receive royalty revenue in the first
calendar quarter of 2001.
NATUREWELL CONTACT LENSES(tm)
The Company is currently introducing its NatureWell Contact Lens, a new FDA
approved soft disposable lens. The Company feels that the product offers
certain advantages over other materials presently used.
In addition, the Company is beginning to revamp the marketing of its Living
Water Eye Lotion(tm) and plans to finish the development of other eye solutions
and certain nutraceutical products.
OTHER
The Company intends to continue the use of its proprietary technologies to
develop future products.
WEBSITE
NatureWell, Inc. has changed its URL: to LAJD.com and is concentrating the
information on the site to subjects such as Alternative and Complimentary
medicine. The Company intends to use the site to introduce the new products it
is developing.
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FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
For The Three Months Ended
September 30, 2000 September 30, 1999
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Revenues $ 21,612 $ 9,483
Cost of products sold (10,233) (18,525)
Other operating expenses (280,514) (271,692)
Loss from operations (269,135) (280,734)
Net loss $ (266,162) $ (203,570)
The Company experienced a net loss of $266,162 for the three month period
ending September 30, 2000, compared with a net loss of $203,570 for the same
period ending September 30, 1999. On a consolidated basis, the Company had
sales totaling $21,612 for the three months ended September 30, 2000, compared
with $9,483 in sales for the Company for the same period ending
September 30, 1999. Cost of product sales and operating expenses for the three
months ended September 30, 2000 were $290,747, compared to $290,217 for the
three months ended September 30, 1999.
FINANCIAL RESOURCES
At September 30, 2000, the Company had current assets of $843,436 which
includes inventory of $23,336 healthcare products, $775,000 in antisera
inventory and $6,663 in prepaid expenses.
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PRODUCTS NOW BEING MARKETED
MIGRASPRAY(TM)
MigraSpray(TM) is a homeopathic, containing the herb feverfew, designed
to be strayed under the tongue before being swallowed. This sublingual method
of administration promotes excellent absorption. Feverfew is the common name
for Tanacetum Parthenium, a flowering plant related to the chrysanthemum, whose
leaves have been used for centuries in herbal remedies for the treatment of
various conditions including migraine and other headaches. The product has
been processed by a proprietary technology to enhance the bio-effectiveness of
the solution. The shelf life of MigraSpray is 2 years. A bottle will last the
average user 3 months.
ALLERSPRAY(TM)
AllerSpray(TM) is a homepathic containing various herbs and amino
acids. The exact formulation, created by NatureWell.com, is unique and
proprietary. In addition, NatureWell.com uses a proprietary process that
enhances both the bio-effectiveness and the bio-availability of the solution in
ALLERSPRAY(TM).
Several of the herbs and amino acids used in ALLERSPRAY(TM), such as Dandelion
and Histidine, have a long history of use for relieving symptoms associated
with allergies.
ALLERSPRAY(TM) is designed to be sprayed under the tongue before being
swallowed. The sublingual method of administration promotes excellent and
rapid absorption. Most individuals find that twice daily use is sufficient.
LIVING WATER EYE LOTION(TM)
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 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," that 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 generally exceeded the expectations of those who have tried it.
OPTOPET EYE WASH(TM)
OptoPet Eye Wash(TM) is for cleansing the eyes of dogs and cats, removing
mucous which causes fur stains beneath the eyes (a major problem in certain
breeds).
NATUREWELL CONTACT LENSES
The NatureWell soft contact lens is a disposable lens, made of a new FDA
approved, non-ionic material, designed for ease of handling and enhanced on-eye
comfort. With minimal care the lens will last up to twice as long conventional
disposable lenses, and are projected to be no more expensive than the two week
lenses.
Consumer who are prescribed the NatureWell Lens will have the added benefit of
using two contact lens solutions and ancillary products now being developed.
OTHER PRODUCTS
The Company plans to be introducing several additional products with a wide
range of diet supplement uses in the near future.
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Diagnostic Products
La Jolla Diagnostics' subsidiary, DiagnosTech, Inc. was organized to develop
and market clinical diagnostic products using immunologic and molecular
biologic technologies.
RAPID DIAGNOSTIC TEST FOR TB
The Company and Meridian Diagnostics, Inc. Cincinnati, Ohio, (Nasdaq:KITS)
signed an agreement for a cash payment and future royalties for a unique rapid
blood test for active tuberculosis disease from the DiagnosTech subsidiary of
La Jolla Diagnostics. The test utilizes a combination of three highly
specialized Mycobacterium tuberculosis antigens that react with serum from
persons having active TB, in just three minutes. This ability of the test to
distinguish TB infection from "active" disease makes it ideal for helping
medical professionals select the appropriate therapy. Meridian and La Jolla
have further agreed to cooperate in defining future product improvements and
opportunities.
Tuberculosis is the most common infectious disease in the world, affecting more
than 2 billion people. TB is responsible for 3 million deaths per year and is
the number one cause of death from infectious disease. Exposure to TB usually
comes through the inhalation of droplets from an infected person. The global
migration of infected persons, and the prevalence of people whose immune
systems have been weakened, have contributed to a sharp rise in infected
populations and a more rapid and serious progression to the active disease
state. Once diagnosed, persons with active TB can be contained and treated
using pharmaceutical compounds.
ANTISERA
DiagnosTech also has a large inventory of anti-sera. This inventory consists
of high quality, purified antibodies, which are needed for basic research and
clinical immunological assays. The primary users of these antisera products
include universities and other research facilities, clinical diagnostic
laboratories, hospitals and clinics, where certain antibody reagents are used
in large volumes.
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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 14, 2000 LA JOLLA DIAGNOSTICS, INC.
By: /s/ Don Brucker
Don Brucker
Chief Executive Officer
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