ElectroOptical Sciences Inc Reports Operating Results (10-Q)
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 $125.1 million; its shares were traded at around $7.09 . Highlight of Business Operations: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. 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 July 16, 2009, the Company completed, pursuant to the Companys shelf registration statement on form S-3, a registered direct offering of 2,400,000 shares of the Companys common stock, with a select group of institutional investors. The aggregate gross proceeds from the offering was $15 million (net proceeds of approximately $13.7 million). The offering closed July 22, 2009 for a purchase price of $6.25 per share of the Companys common stock.
For the six months ended June 30, 2009, there was $306 net cash provided by our investing activities, principally related to the redemption of marketable securities. For the corresponding period in 2008, net cash provided by our investing activities was $556 and was principally related to the redemption of marketable securities offset by the purchase of information technology and manufacturing related equipment in support of MelaFind®.
For the six months ended June 30, 2009, net cash used in financing activities was $68. Cash received from the exercise of options and warrants of $131 was offset by $199 of deferred offering costs related to the May 7, 2009 CEFF transaction. For the six months ended June 30, 2008 net cash provided by financing activities was $25, representing the exercise of options and warrants
We began operations in December 1989. At that time, we provided research services, mostly to US government agencies, on classified projects. We have financed our operations since 1999 primarily through the sale of our equity securities and have devoted substantially all of our resources to research and development relating to MelaFind®. Our net loss for the three and six months ended June 30, 2009 was approximately $3.8 million and $7.8 million, respectively, and as of June 30, 2009, we had an accumulated deficit of approximately $68.6 million. Our research and development expenses may increase in connection with our clinical trials and other development activities related to MelaFind®. If we receive PMA approval for MelaFind® from the FDA, we expect to incur significant sales and marketing expenses, which will require additional funding, and manufacturing expenses. Additionally, our general and administrative expenses have also increased due to the additional operational and regulatory responsibilities applicable to public companies. As a result, we expect to continue to incur significant and increasing operating losses for the foreseeable future. These losses, among other things, have had and will continue to have an adverse effect on our stockholders equity.
As of June 30, 2009, we had $7.7 million in cash and cash equivalents. On July 22, 2009, we closed a registered direct offering with aggregate gross proceeds of $15 million and net proceeds to the Company of approximately $13.7 million. 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®. There can be no assurances that the Company will be able to raise financing as needed from time to time, whether under the Kingsbridge Capital Limited CEFF or by other types of securities offerings.
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