10QSB/A 1 form10qa-39381.txt FORM 10-QSB/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended November 30, 2000 Commission File Number 0-7405 MEDISCIENCE TECHNOLOGY CORP. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Certificate of Incorporation) New Jersey ---------------------------------------------------------------- (State or other jurisdiction on incorporation or organization) 22-1937826 --------------------------------------- (I.R.S. Employer Identification Number) 1235 Folkestone Way, Cherry Hill, New Jersey 08034 --------------------------------------------------- (Address of principal executive offices) (Registrant's telephone number, including area code) 609-428-7952 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 [ ] Registrant has not been involved in bankruptcy proceedings during the preceding five years. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 30, 2000. Title of Class Number of Shares Outstanding -------------- ---------------------------- Common Stock, par value $.01 per share 36,226,130 Preferred Stock, par value $.01 per share 2,074 MEDISCIENCE TECHNOLOGY CORP. NOVEMBER 30, 2000 INDEX PAGE PART I. Financial Information Item 1. Financial Statements Balance Sheets as at November 30, 2000 (Unaudited) and February 29, 2000 1 Statement of Operations for the Nine and Three Months Ended November 30, 2000 (Unaudited) and November 30, 1999 (Unaudited) 2 Statement of Cash Flows for the Nine Months Ended November 30, 2000 (Unaudited) and November 30, 1999 (Unaudited) 3 Statement of Stockholders' Equity for the Nine Months Ended November 30, 2000 (Unaudited) 4 Exhibit to Statements of Operations 5 Notes to Financial Statements 6 Item 2. Management's Plan of Operation 7 - 8 PART II. Other Information 9 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K MEDISCIENCE TECHNOLOGY CORP. BALANCE SHEETS ASSETS
November 30, February 29, 2000 (Unaudited) 2000 ---------------------- -------------------- CURRENT ASSETS Cash and Cash Equivalents $ 569 $ 17,066 Other Assets - 20,191 ---------------------- -------------------- Total Current Assets 569 37,257 ---------------------- -------------------- PROPERTY, PLANT AND EQUIPMENT Net of Accumulated Depreciation $198,231 November 30, 2000; $195,390 - February 29, 2000 5,746 8,588 ---------------------- -------------------- TOTAL ASSETS $ 6,315 $ 45,845 ====================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY ====================== ==================== CURRENT LIABILITIES Accounts Payable $ 34,062 $ 39,396 Other Accrued Liabilities 2,306,034 1,877,456 Officer and Other Loans 149,811 141,955 ---------------------- -------------------- Total Current Liabilities 2,489,907 2,058,807 ---------------------- -------------------- STOCKHOLDERS' EQUITY Preferred Stock - $.01 Par Value; Authorized 50,000 Shrs; Outstanding 2,074 Shrs; (Preference on Liquidation $20,740) 21 21 Common Stock $.01 Par Value, Authorized 39,950,000 Shares; Outstanding 36,226,130 Shares 362,261 359,761 Additional Paid-in Capital 18,315,977 18,215,977 Accumulated Deficit (21,161,851) (20,588,721) ---------------------- -------------------- Total Stockholders' Equity (Deficiency) (2,483,592) (2,012,962) ---------------------- -------------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 6,315 $ 45,845 ====================== ====================
1 MEDISCIENCE TECHNOLOGY CORP. STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2000 AND 1999 (UNAUDITED)
NINE MONTHS THREE MONTHS ----------- ------------ 2000 1999 2000 1999 ---- ---- ---- ---- Net Sales $ -- $ -- $ -- $ -- Cost of Sales -- -- -- -- ------------ ------------ ------------ ------------ Gross Profit -- -- -- -- General and Administrative Expense 535,567 589,278 173,343 142,850 Product Development Expense -- 5,000 -- -- Advertising, Travel and Marketing 37,997 27,451 2,456 6,850 ------------ ------------ ------------ ------------ Total Expenses 573,564 621,729 175,799 149,700 ------------ ------------ ------------ ------------ Other Income 434 150 46 18 ------------ ------------ ------------ ------------ Net Loss $ (573,130) $ (621,579) $ (175,753) $ (149,682) ============ ============ ============ ============ Net Loss Per Common Share $ (0.02) $ (0.02) $ (0.01) $ (0.01) ============ ============ ============ ============ Weighted Average Number of Shares 36,181,686 35,498,352 36,226,130 35,576,130 ============ ============ ============ ============ of Common Stock Outstanding
2 MEDISCIENCE TECHNOLOGY CORP. STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2000 AND 1999 (UNAUDITED)
2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(573,130) $(621,579) Adjustment for Item Not Requiring Cash Outlay Depreciation 2,842 4,366 Stock Issued for Services 65,000 53,075 Issuance of Warrants -- 164,031 --------- --------- Subtotal (505,288) (400,107) Changes in Assets and Liabilities: Decrease (Increase) in Other Assets 20,191 -- Increase (Decrease) in Accounts Payable (5,334) 2,333 Increase (Decrease) in Other Accrued Liabilities 428,578 328,914 Increase (Decrease) In Officer and Other Loans 7,856 32,927 --------- --------- Net Cash Flows Provided by (Used for) Operating Activities (53,997) (35,933) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES -- -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issuance of Common Stock 37,500 11,000 --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16,497) (24,933) CASH AND CASH EQUIVALENTS Beginning Balance 17,066 24,940 --------- --------- Ending Balance $ 569 $ 7 ========= =========
3 MEDISCIENCE TECHNOLOGY CORP. STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED NOVEMBER 30, 2000 (UNAUDITED)
Preferred Stock Common Stock Number of Preferred Number of Common Additional Paid Accumulated Shares Stock Shares Stock in Capital Deficit ---------- ------------ ------------ -------------- ------------- ------------- Balance February 29, 2000 2,074 $ 21 35,976,130 $ 359,761 $ 18,215,977 $(20,588,721) Issuance of Stock for Cash -- -- 150,000 1,500 36,000 -- Issuance of Stock for Services -- -- 100,000 1,000 64,000 -- Net Loss for the Nine Months Ended November 30, 2000 -- -- -- -- -- (573,130) ---------- ------------ ------------ ------------ ------------ ------------ Balance November 30, 2000 2,074 $ 21 36,226,130 $ 362,261 $ 18,315,977 $(21,161,851) ========== ============ ============ ============ ============ ============
4 EXHIBIT TO STATEMENTS OF OPERATIONS WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING Weighted Common Stock Average $.01 Par Value Common Number of Number of Issued and Stock Shares Shares Outstanding Equivalents Outstanding Outstanding -------------- ------------ ------------ ------------ March 2000 35,976,130 - 35,976,130 April 2000 36,076,130 - 36,076,130 May 2000 36,226,130 - 36,226,130 June 2000 36,226,130 - 36,226,130 July 2000 36,226,130 - 36,226,130 August 2000 36,226,130 - 36,226,130 September 2000 36,226,130 - 36,226,130 October 2000 36,226,130 - 36,226,130 November 2000 36,226,130 - 36,226,130 36,181,686 5 MEDISCIENCE TECHNOLOGY CORP. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 2000 (UNAUDITED) NOTE 1 RESULTS OF OPERATIONS The financial statements, in the opinion of management, include all adjustments and accruals necessary for a fair presentation. The results of operations for each interim period are not necessarily indicative of results to be expected for the year due to the unpredictability of market factors, product development, competition and sales in general. NOTE 2 OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: Legal and Professional Fees $ 312,350 Research & Development 458,484 Salaries, Consulting and Other 1,535,200 --------------------- $ 2,306,034 ===================== 6 MANAGEMENT'S PLAN OF OPERATION The Company is engaged in the design, development and commercialization of medical devices for early cancer detection based on the use of light induced native tissue fluorescence spectroscopy to distinguish between pre-malignant, malignant, and normal or benign tissue. Pre-clinical and clinical study results support the Company's belief that its proprietary technology, when fully developed, will be a useful and cost effect adjunct to the physician for cancer screening and diagnosis. While we believe that our diagnostic technology will be broadly useful in multiple organ systems, each approved indication will require a separate, costly and time-consuming pre-marketing approval (PMA). We plan to carefully select and prioritize our targeted indications to maximize the return on development and clinical investments. We regard our seminal U.S. "516" and other related patents (such as 5, 131, 398) as pioneering, blocking and dominant in the area of cancer diagnosis using fluorescence spectroscopy both in- vivo and in-vitro. Until July, 1998, the Company provided annual funding grants to the Mediphotonics Laboratory of the City University of New York in accordance with a budget of activities and expenditures negotiated between the Company and the University. The arrangement was renewable annually and could be terminated without cause by either party upon 90 days notice prior to June 1st of each year. The contract with the City University was extended by agreement at no cost until October 1, 1998. Because of funding limitations, the Company was unable to renew its contract following expiration of the October, 1998 extension. The Company plans to resume its support of relevant programs when, and if, current fund raising efforts are successful. In April, 1999, the Company and the City University initiated a joint effort with Sarnoff Corporation of Princeton NJ for the purpose of developing a commercial imaging system based on the Company's technology, and on the engineering background and expertise, and certain proprietary technology of Sarnoff. In November, 1999, the Company announced that Frank S. Castellana, M.D., Eng. Sc. D. would join its executive team as President and Chief Executive Officer, effective February 1, 2000. It also announced that it was seeking investment partners to support the funding of a joint effort between itself, Sarnoff Corporation, and the Mediphotonics Laboratory of the City University of New York to develop and commercialize an advanced, second generation version of its proprietary two-dimensional fluorescence imaging system for early cancer detection. In August 2000, the Company and Sarnoff Corporation agreed in principle to form a Joint Venture to develop optical diagnostic products based on the Company's proprietary technology and using key enabling technologies and know-how proprietary to Sarnoff. Under terms of the Agreement, and predicated on achieving targeted levels of initial capitalization, Sarnoff will provide royalty free access to its technology, and agree to work exclusively with the Joint Venture in the defined Field of Use, in return for an equity interest in the Joint Venture. The principal issue which continues to face the Company is a lack of the financial resources and liquidity required to maintain business momentum and to properly leverage intellectual property assets; the resolution of this issue is the principal focus and the highest priority of management. In the absence of the availability of such financing on a timely basis, the Company may be forced to materially curtail or cease its operations. Two important derivative issues relate to the Company's research and licensing agreements with the City University of New York. The Company has an outstanding financial obligation to the University for work conducted during the period August 1997 through July 1998. In 1999, an agreement was reached to extend the time for payment until June 30, 2000. In October 2000, the Company and the City University entered into a second agreement, which further extended the time for payment until October 31, 2001. The time period for negotiating a minimum royalty agreement on certain patents, which have or will pass the five-year period for commercialization, was also extended until October 31, 2001. On June 28, 2000, the Company submitted an application for benefits under the State of New Jersey Technology Business Tax Certificate Program (which allows emerging technology and biotechnology businesses to sell their unused Net Operating Loss (NOL) carryover to any corporate taxpayer in the state for at least 75% of the tax benefits). The application was approved by the State, and the Company sold the fraction of its tax benefit approved for sale in FY 2000 for net proceeds of $237,556. The Company has completed the development of a new web site which it anticipates will be operational during the 1st quarter of 2001. 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. Exhibits and Reports on Form 8-K None SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. MEDISCIENCE TECHNOLOGY CORP. (REGISTRANT) DATE: By: /s/ Peter Katevatis ------------------------ -------------------------------- PETER KATEVATIS Chairman/CEO By: /s/ John M. Kennedy -------------------------------- JOHN M. KENNEDY Treasurer Chief Accounting Officer