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ElectroOptical Sciences Inc Reports Operating Results (10-Q)

November 09, 2009 | About:
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10qk

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ElectroOptical Sciences Inc (MELA) filed Quarterly Report for the period ended 2009-09-30.

EOS is a medical device company focused on designing and developing a non-invasivepoint-of-care instrument to assist in the early diagnosis of melanoma. MelaFindEOS's flagship productfeatures a hand-held imaging device that emits light of multiple wavelengths to capture images of suspicious pigmented skin lesions and extract data. Using sophisticated algorithmsthe 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 $192.83 million; its shares were traded at around $9.6 .

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 (approximately $11 million 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 were $15 million (with net proceeds of approximately $13.75 million). The offering closed on July 22, 2009 for a purchase price of $6.25 per share of the Companys common stock. Approximately $13.1 million remains available for sale under the Companys shelf registration statement as of September 30, 2009.

Under the CEFF, during August and September of 2009, the Company sold 862,201 shares of common stock to Kingsbridge Capital Limited, at an average per share price of approximately $9.25, for gross proceeds of $7.977 million. A proportionate share of the CEFF originating expenses was allocated to this sale from deferred offering costs. Net of expenses, proceeds from this sale were approximately $7.928 million.

Subsequent to September 30, 2009 and through November 5, 2009, also under the CEFF, the Company sold 962,740 shares of common stock to Kingsbridge Capital Limited, at an average per share price of approximately $9.23, for gross proceeds of $8.886 million. A proportionate share of the CEFF originating expenses was allocated to this sale from deferred offering costs. Net of expenses, proceeds from this sale were approximately $8.831 million (see also Note 14).

For the nine months ended September 30, 2009, net cash provided by financing activities was $21,827. Cash was provided by net proceeds received from the sale of common stock under the Companys July 2009 registered direct offering ($13.75 million), from the exercise of options and warrants ($289), and from the sale of common stock under the CEFF with Kingsbridge Capital ($7.977 million) offset by $190 of deferred offering costs related to the CEFF transaction. For the nine months ended September 30, 2008, net cash provided by financing activities was $11,013, representing the exercise of options and warrants ($45) and the net proceeds of the June 2008 registered direct offering ($10,968).

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 nine months ended September 30, 2009 was approximately $5 million and $12.9 million, respectively, and as of September 30, 2009, we had an accumulated deficit of approximately $73.6 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. 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.

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