EOS is a medical device company focused on designing and developing a non-invasive point-of-care instrument to assist in the early diagnosis of melanoma. MelaFind EOS's flagship product features a hand-held imaging device that emits light of multiple wavelengths to capture images of suspicious pigmented skin lesions and extract data. Using sophisticated algorithms the data are then analyzed against a proprietary database of melanomas and benign lesions in order to provide information to the physician and produce a recommendation of whether the lesion should be biopsied. ElectroOptical Sciences Inc has a market cap of $143.37 million; its shares were traded at around $8.1301 .
Highlight of Business Operations:On July 31, 2007, the Company entered into a securities purchase agreement and a registration rights agreement with certain accredited investors for the private placement of 2,000,178 shares of the Companys common stock and warrants to purchase up to 500,041 shares of the Companys common stock for aggregate gross proceeds of approximately $11.5 million and net proceeds of approximately $10.7 million. This transaction closed August 3, 2007.
On June 26, 2008, the Company filed a Form S-3 shelf registration statement for an indeterminate number of shares of common stock, warrants to purchase shares of common stock and units consisting of a combination thereof having an aggregate initial offering price not to exceed $40 million. The SEC declared the registration statement effective on July 7, 2008 (file# 333-151935). Management utilized this shelf registration statement to raise additional equity capital by completing a registered direct offering of 2,088,451 shares of the Companys common stock for aggregate gross proceeds of approximately $11.9 million ($11 million approximate net proceeds to the Company) at a per share offering price of $5.68. The offering closed August 8, 2008.
On May 7, 2009, the Company entered into a Committed Equity Financing Facility arrangement, or CEFF, with Kingsbridge Capital Limited (Kingsbridge) in which Kingsbridge has committed to purchase, subject to certain conditions and at the Companys sole discretion, up to the lesser of $45 million or 19.99 % of the Companys outstanding shares at the subscription date, through May 7, 2012. Under the terms of the CEFF, the Company is not obligated to utilize any of the $45 million available under the CEFF and there are no minimum commitments or minimum use penalties. The Company has access, at its discretion, to the funds through the sale of newly-issued restricted shares of the Companys common stock. The funds that can be raised under the CEFF over the three year term will depend on the then-current price for the Companys common stock and the number of shares actually sold. The Company may access capital under the CEFF by providing Kingsbridge with common stock at discounts ranging from 6 to 10 percent of the Volume Weighted Average Price (VWAP); the discount depending on the VWAP of the Companys common stock during the applicable pricing period. In connection with the CEFF, the Company issued a warrant to Kingsbridge to purchase 200,000 shares of the Companys common stock at an exercise price of $11.35 (150% of the 5-day average closing bid price preceding the subscription date) per share. The warrant will become exercisable on November 7, 2009, the six-month anniversary of the date of the Purchase Agreement (May 7, 2009), and will remain exercisable, subject to certain exceptions, for a period of five years thereafter. Pursuant to the CEFF and as a condition to the stock issuance, the Company is obligated to have effective a registration statement with respect to the resale of shares issued pursuant to the CEFF and underlying the warrant. Legal fees of up to $75 and broker fees of $75 will be paid under this agreement. In addition, the Company must pay Kingsbridge $12.5 per quarter for each quarter it does not make a drawdown of at least 2% of the Companys market capitalization.
Net cash used in operations was $3,818 for the three months ended March 31, 2009. For the corresponding period in 2008, net cash used in operations was $3,499. In both periods, cash used in operations was attributable to net losses after an adjustment for non-cash charges related to depreciation/amortization and share-based compensation, and other changes in operating assets and liabilities.
During the three month period ended March 31, 2009, the Companys other income included $34 from LOreal as an offset to expenses the Company incurred under our joint feasibility program, and $7 from KaVo for product support of the discontinued dental product line the Company sold to KaVo in 2006. There was $26 earned in other income, including $10 from LOreal as an offset to expenses and $10 from KaVo for Difoti product support during the three months ended March 31, 2008.
As of March 31, 2009, we had $11.2 million in cash and cash equivalents and $0.4 million in marketable securities. Our operations have consumed substantial amounts of cash for each of the last eight years. The Company will require additional funds to pursue regulatory approvals and to achieve significant commercialization of MelaFind®. However, there can be no assurances that the Company will be able to raise additional capital in the future. Additional funds may not become available on acceptable terms, and there can be no assurance that any additional funding that the Company does obtain will be sufficient to meet the Companys needs in the long term.
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