-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LRoLg37/3Dv0r/3Tu1NdgosaYctnMH1r6hkcSUDdHb5InkX91BMsOCGQzCRn08b5 MvmvjogivaXG6y9lYPKnkw== 0000914317-02-000018.txt : 20020413 0000914317-02-000018.hdr.sgml : 20020413 ACCESSION NUMBER: 0000914317-02-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDISCIENCE TECHNOLOGY CORP CENTRAL INDEX KEY: 0000064647 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 221937826 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-07405 FILM NUMBER: 2507588 BUSINESS ADDRESS: STREET 1: 1235 FOLKESTONE WY CITY: CHERRY HILL STATE: NJ ZIP: 08034 BUSINESS PHONE: 6094287952 MAIL ADDRESS: STREET 1: 1235 FOLKESTONE WAY CITY: CHERRY HILL STATE: NJ ZIP: 08034 FORMER COMPANY: FORMER CONFORMED NAME: CARDIAC TECHNIQUES INC DATE OF NAME CHANGE: 19730920 10QSB 1 form10qsb-42401.txt FORM 10-QSB 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, 2001 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, 2001. Title of Class Number of Shares Outstanding -------------- ---------------------------- Common Stock, par value 36,926,870 $.01 per share MEDISCIENCE TECHNOLOGY CORP. NOVEMBER 30, 2001 INDEX ----- PAGE ---- PART I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets as at November 30, 2001 (Unaudited) and February 28, 2001 (Audited) 1 Consolidated Statement of Operations for the Nine and Three Months Ended November 30, 2001 (Unaudited) and November 30, 2000 (Unaudited) 2 Consolidated Statement of Cash Flows for the Nine Months Ended November 30 , 2001 (Unaudited) and November 30, 2000 (Unaudited) 3 Consolidated Statement of Stockholders' Deficiency for the Nine Months Ended November 30, 2001 (Unaudited) 4 Consolidated Statement of Stockholders' Deficiency for the Nine Months Ended November 30, 2000 (Unaudited) 5 Exhibit to Statements of Operations 6 Notes to Financial Statements 7 Item 2. Management's Plan of Operation 8 - 9 PART II. Other Information 10 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. CONSOLIDATED BALANCE SHEETS
ASSETS ------ November 30, 2001 February 28, 2001 (Unaudited) (Audited) ------------ ------------ CURRENT ASSETS - -------------- Cash and Cash Equivalents -- $ 7,120 Other Assets -- -- ------------ ------------ Total Current Assets -- 7,120 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT ------------ Net of Accumulated Depreciation $201,811 - November 30, 2001; $199,178 - February 28, 2001 2,167 4,800 ------------ ------------ TOTAL ASSETS $ 2,167 $ 11,920 ------------ ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY ---------------------------------------- CURRENT LIABILITIES Accounts Payable $ 12,171 $ 14,943 Other Accrued Liabilities 2,392,414 2,127,028 Officer and Other Loans 167,729 152,229 ------------ ------------ Total Current Liabilities 2,572,314 2,294,200 ------------ ------------ STOCKHOLDERS' DEFICIENCY Preferred Stock - $.01 Par Value; Authorized 50,000 Shrs; Outstanding 2,074 Shrs; (Preference on Liquidation $20,740) -- 21 Common Stock $.01 Par Value, Authorized 39,950,000 Shares; Outstanding 36,926,870 Shares 369,269 362,761 Additional Paid-in Capital 18,385,990 18,274,977 Accumulated Deficit (21,325,406) (20,920,039) ------------ ------------ Total Stockholders' Deficiency (2,570,147) (2,282,280) ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' DEFICIENCY $ 2,167 $ 11,920 - -------------------------------------------- ============ ============
"See Accompanying Notes to Financial Statements." 1 MEDISCIENCE TECHNOLOGY CORP. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2001 AND 2000 (UNAUDITED)
NINE MONTHS THREE MONTHS ------------------------------- ------------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Net Sales $ -- $ -- $ -- $ -- Cost of Sales -- -- -- -- ------------ ------------ ------------ ------------ Gross Profit -- -- General and Administrative Expense 362,964 535,567 75,741 173,343 Product Development Expense -- -- -- -- Advertising, Travel and Marketing 42,570 37,997 8,565 2,456 ------------ ------------ ------------ ------------ Total Expenses 405,534 573,564 84,306 175,799 ------------ ------------ ------------ ------------ Other Income 167 434 42 46 ------------ ------------ ------------ ------------ Net Loss $ (405,367) $ (573,130) $ (84,264) $ (175,753) ============ ============ ============ ============ Net Loss Per Common Share, Basic and Diluted $ (.01) $ (.02) $- $ (0.01) ============ ============ ============ ============ Weighted Average Number of Shares of Common Stock Outstanding 36,606,212 36,181,686 36,879,710 36,226,130 ============ ============ ============ ============
Supplemental Disclosure In November 2001, Preferred Shareholders converted 1 share of Preferred for 10 shares of Common "See Accompanying Notes to Financial Statements." 2 MEDISCIENCE TECHNOLOGY CORP. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2000 AND 2001 (UNAUDITED)
2001 2000 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(405,367) $(573,130) Adjustment for Item Not Requiring Cash Outlay Depreciation 2,633 2,842 Stock Issued for Services 72,500 65,000 --------- --------- Subtotal (330,234) (505,288) Changes in Assets and Liabilities: Decrease (Increase) in Other Assets -- 20,191 Increase (Decrease) in Accounts Payable (2,772) (5,334) Increase (Decrease) in Other Accrued Liabilities 265,386 428,578 Increase (Decrease) In Officer and Other Loans 15,500 7,856 --------- --------- Net Cash Flows Provided by (Used for) Operating Activities (52,120) (53,997) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES -- -- - ------------------------------------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ Proceeds from Issuance of Common Stock 45,000 37,500 --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,120) (16,497) - ------------------------------------------------ CASH AND CASH EQUIVALENTS Beginning Balance 7,120 17,066 --------- --------- Ending Balance $ -- $ 569 ========= =========
"See Accompanying Notes to Financial Statements." 3 MEDISCIENCE TECHNOLOGY CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY FOR THE NINE MONTHS ENDED NOVEMBER 30, 2001 (UNAUDITED)
Preferred Stock Common Stock Number of Preferred Number of Common Additional Paid Accumulated Shares Stock Shares Stock in Capital Deficit ------------ ------------ ------------ ------------ ------------ ------------ Balance February 28, 2001 2,074 $ 21 36,276,130 $ 362,761 $ 18,274,977 $(20,920,039) Conversion of Preferred Stock into Common (2,074) (21) 20,740 208 (187) -- Issuance of Stock for Services -- -- 50,000 500 12,000 -- Issuance of Stock for Cash and Services -- -- 580,000 5,800 99,200 -- Net Loss for the Nine Months Ended November 30, 2001 -- -- -- -- -- (405,367) ------------ ------------ ------------ ------------ ------------ ------------ Balance November 30, 2001 -- $ -- 36,926,870 $ 369,269 $ 18,385,990 $(21,325,406) ============ ============ ============ ============ ============ ============
"See Accompanying Notes to Financial Statements." 4 MEDISCIENCE TECHNOLOGY CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY 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) ============ ============ ============ ============ ============ ============
"See Accompanying Notes to Financial Statements." 5 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 2001 36,276,130 - 36,276,130 April 2001 36,276,130 - 36,276,130 May 2001 36,276,130 - 36,276,130 June 2001 36,276,130 - 36,276,130 July 2001 36,856,130 - 36,856,130 August 2001 36,856,130 - 36,856,130 September 2001 36,856,130 - 36,856,130 October 2001 36,856,130 - 36,856,130 November 2001 36,926,870 - 36,926,870 36,606,212
6 MEDISCIENCE TECHNOLOGY CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 2001 (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. These financial statements should be read in conjunction with the Company's most recent audited financial statements dated February 28, 2001. NOTE 2 OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: November 30, 2001 February 28, 2001 ----------------- ----------------- Legal and Professional Fees $ 258,850 $ 180,100 Research and Development 1,084,898 962,399 Salaries and Wages 1,011,333 943,833 Other 37,333 40,696 ---------- ---------- Total $2,392,414 $2,127,028 ========== ========== 7 MANAGEMENT'S PLAN OF OPERATION The Company is engaged in the design and development of diagnostic medical devices that detect cancer using light induced native tissue fluorescence spectroscopy to distinguish between pre-malignant, malignant, and normal or benign tissue. Both pre-clinical and clinical study results support the Company's belief that its proprietary technology, when fully developed, will be a useful and commercially viable adjunct to the physician for screening and diagnosis of cancer. 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 prior written notice. The contract with CUNY 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, Frank S. Castellana, M.D., Eng. Sc. D. joined its executive team as President and Chief Executive Officer, effective February 1, 2000. The Company 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. Effective June 1, 2001 with notice to the Board of Directors Dr. Castellana voluntarily terminated his employment agreement and additionally waived all salary to that date. He felt that he could not satisfy the Company's needs and choose to step aside. Dr. Castellana now has a full time consulting business and the Company expects to use his consulting services in the future. Effective July 9th 2001 Peter Katevatis, Esq. Chairman CEO on behalf of the Company entered into a three year employment relationship with Mr. Sidney Braginsky as the new President and COO. Mr. Braginsky was formerly with OLYMPUS OPTICAL LTD for 27 years most recently as President CEO of OLYMPUS AMERICA, Inc., the Olympus US subsidiary. OLYMPUS LTD. is a multi-national corporation headquartered in Tokyo Japan and a world leader in microscopes, endoscopes, automatic blood and fluid chemistry analyzers measuring research, industrial and consumer products. The Company will seek investment and/or corporate 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. Mr. Braginsky is a present board member of, NOVEN Pharmaceuticals, REDOX Pharmaceuticals, ELECTRO-OPTICAL SYSTEMS, Inc., ESTEK CARDIOLOGY, Chairman of Double D Venture Funds LLC and Chairman of the Board of City College of New York's Robert Chambers Laboratory. Pursuant to the terms of such agreement, Mr. Braginsky is to be paid $100,000 per annum. In addition, on the date of this Agreement, MDSC will grant to Employee an incentive stock option / Warrant pursuant to the 1999 Plan (the "Option") to purchase a total of 2,000,000 shares of MDSC common stock. (i) 1,850,000 shares of MDSC Common Stock at option price of $.1.00 per share, and (ii) 150,000 shares at $.25 per share. Sidney Braginsky's ability to exercise these options and remaining shares under the warrant is subject to a series of milestones described in his employment agreement. The Company may have to recognize compensation expense in the future on these options and warrants calculated as the difference between the option and warrant prices and the fair market value of the Company's common stock on the date the milestones are achieved. This option shall be effected as to any adjustment in the event of first round funding, stock splits, reverse stock splits, warrants, etc., excepting however contract rights, agreements anti-dilution rights, etc. (reflected in corporate SEC filings) in Peter Katevatis and Dr. Robert Alfano founders. The five critical milestones (each, a "Critical Milestone") described in the Business Plan for Sidney Braginsky to accomplish with appropriate funding to the Company are: (i) preclinical toxicity studies within 9 months of the initial funding contemplated by the Business Plan (the "Initial Funding Date"), (ii) device development and preclinical validation within 15 months of the Initial Funding Date, (iii) phase I clinical trials within 24 months of the Initial Funding Date, (iv) phase 111 clinical trials and PMA submission to the FDA within 34-1/2 months of the Initial Funding Date and (v) PMA approval within 36 months of the Initial Funding Date. On June 14, 2001 Peter Katevatis, Esq. Chairman CEO entered into an agreement with Drexel University, a Pennsylvania non-profit institution of higher education wherein the parties agreed to explore a mutually satisfactory arrangement or collaboration to develop uses for Mediscience's technology in the field of fluorescence medical imaging. Drexel's successful efforts leading to such funding would provide Drexel with compensation and/or equity interest from Mediscience. This contract matter is in continued negotiations with outside counsel acting for Drexel. The principal issue currently facing 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 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. While we are actively working to negotiate additional time extensions there is no guarantee that we will be successful, and if so, that any subsequent agreements will be on terms favorable to the Company. In addition, according to the terms of our research and licensing agreement with the University, the Company must negotiate a minimum royalty Agreement within 5 years of the date of filing for all licensed patents for which product commercialization has not yet occurred. As of the date of this filing, nine patents for which the Company has an exclusive license from the Research Foundation have passed the five-year commercialization window. The Company has negotiated with the Research Foundation and extended the period of exclusivity for this intellectual property. If the Company is unsuccessful in future negotiations, it could lose rights to several of its key patents. The Company holds and totally owns certain patents independent of CUNY that are not so affected which are seminal to its basic technology. The Company has entered into a three-year agreement on very favorable terms (83.3%) with a New Jersey corporate taxpayer, Public Service Electric and Gas Co. of New Jersey to purchase the NOL. The Company applied again as of June 25, 2001 (second of three year Agreement). On September 27, 2001 Peter Katevatis, Esq. successfully re-negotiated this percentage increasing it from 83.3% to 87.0%. On November 16, 2001 the New Jersey Economic Development Authority advised that our (2nd) application for State fiscal year 2002 (July 1, 2001 to June 30, 2002) was approved with authority to transfer $278,008 from present total tax benefits of $513,070 based on our total State audited NOL as of 2001 of $5,700,779. Under the negotiated terms of our agreement with PSE&G the Company expects to receive $241,867 in proceeds in January 2002. PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- As of November 30, 2001 Preferred Stock Shareholders converted Series A Preferred at the rate of ten (10) shares of Mediscience Common for each share of Preferred with a total issuance of 20,740 shares. 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 -------------------------------- 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: January 11, 2002 By: /s/ Peter Katevatis ---------------- ------------------------- PETER KATEVATIS Chairman/CEO By: /s/ John M. Kennedy ------------------------- JOHN M. KENNEDY Treasurer Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----