UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
(Mark One)
x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended
June 30, 2015 |
|
|
|
|
¨ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from
to
. |
Commission File
number 000-00935
MEDITE CANCER
DIAGNOSTICS, INC.
(Exact name of
registrant as specified in its charter)
Delaware |
36-4296006 |
(State or other
jurisdiction of |
(I.R.S. Employer |
incorporation
or organization) |
Identification
No.) |
|
|
4203 SW 34
th Street, Orlando, FL |
32811 |
(Address of
principal executive offices) |
(Zip Code) |
(407) 996-9630
(Registrant’s
telephone number, including area code)
Securities registered
pursuant to Section 12(b) of the Act:
Title
of each class |
|
Name
of each exchange on which registered |
None |
|
Not Applicable |
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 ¨
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes
x No ¨
(not required) ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rue 12b-2
of the Exchange Act. (Check one):
Large Accelerated Filer
¨ |
Accelerated Filer
¨ |
|
|
Non-Accelerated Filer ¨ |
Smaller Reporting Company x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
No x
The number of shares outstanding of each
of the issuer’s classes of common equity, as of the latest practicable date:
COMMON STOCK, $0.001 PAR VALUE, AT August 13, 2015:
20,391,206
MEDITE Cancer
Diagnostics, Inc.
Form 10-Q
For the Quarterly
Period Ended June 30, 2015
TABLE OF CONTENTS
PART I. — FINANCIAL INFORMATION
MEDITE
CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except
shares and per share amounts)
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
| |
Assets | |
| | | |
| | |
| |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 247 | | |
$ | 230 | |
Accounts receivable, net | |
| 1,643 | | |
| 1,991 | |
Inventories | |
| 3,655 | | |
| 3,415 | |
Prepaid
expenses and other current assets | |
| 82 | | |
| 154 | |
Total current assets | |
| 5,627 | | |
| 5,790 | |
| |
| | | |
| | |
Property and equipment, net | |
| 1,964 | | |
| 2,091 | |
In-process research and development | |
| 4,620 | | |
| 4,620 | |
Trademarks, trade names | |
| 1,240 | | |
| 1,240 | |
Goodwill | |
| 2,453 | | |
| 2,453 | |
Other assets | |
| 384 | | |
| 245 | |
Total
assets | |
$ | 16,288 | | |
$ | 16,439 | |
| |
| | | |
| | |
Liabilities and Stockholders’
Equity | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Secured lines of credit and
current portion of long-term debt | |
$ | 1,905 | | |
$ | 2,555 | |
Account payable and accrued
expenses | |
| 3,995 | | |
| 4,134 | |
Advances
– related parties | |
| 95 | | |
| 110 | |
Total current liabilities | |
| 5,995 | | |
| 6,799 | |
Long-term debt, net of current
portion | |
| 853 | | |
| 1,209 | |
Total liabilities | |
| 6,848 | | |
| 8,008 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ equity : | |
| | | |
| | |
Preferred stock, $0.001
par value; 10,000,000 shares authorized; 198,355 and 373,355 shares issued and outstanding as of June 30, 2015 and December
31, 2014, respectively (liquidation value of all classes of preferred stock $1,121 and $2,871 as of June 30, 2015 and December
31, 2014, respectively) | |
| 962 | | |
| 1,487 | |
Common
stock, $0.001 par value; 3.5 billion shares authorized, 20,391,206 and 19,427,331 issued and outstanding as of June
30, 2015 and December 31, 2014, respectively | |
| 20 | | |
| 19 | |
Additional paid-in capital | |
| 7,784 | | |
| 5,763 | |
Treasury stock | |
| (327 | ) | |
| (327 | ) |
Accumulated other comprehensive
loss | |
| (309 | ) | |
| (149 | ) |
Retained
earnings | |
| 1,310 | | |
| 1,638 | |
Total stockholders’
equity | |
| 9,440 | | |
| 8,431 | |
| |
| | | |
| | |
Total
liabilities and stockholders’ equity | |
$ | 16,288 | | |
$ | 16,439 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
MEDITE
CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Dollars in thousands, except
shares and per share amounts)
| |
Three
Months Ended June 30, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
(unaudited) | |
| |
| | |
| |
Net sales | |
$ | 2,132 | | |
$ | 3,175 | |
Cost of revenues | |
| 1,166 | | |
| 1,441 | |
Gross profit | |
| 966 | | |
| 1,734 | |
| |
| | | |
| | |
Operating expenses | |
| | | |
| | |
Depreciation and amortization
expense | |
| 31 | | |
| 39 | |
Research and development | |
| 341 | | |
| 246 | |
Selling,
general and administrative | |
| 600 | | |
| 1,333 | |
| |
| 972 | | |
| 1,618 | |
Total operating
expenses | |
| | | |
| | |
Operating
income (loss) | |
| (6 | ) | |
| 116 | |
| |
| | | |
| | |
Other expenses | |
| | | |
| | |
Interest expense | |
| 54 | | |
| 75 | |
Other expenses | |
| - | | |
| 122 | |
Total other
expenses | |
| 54 | | |
| 197 | |
| |
| | | |
| | |
Loss before income taxes | |
| (60 | ) | |
| (81 | ) |
| |
| | | |
| | |
Income tax expense (benefit) | |
| 13 | | |
| (31 | ) |
Net loss | |
| (73 | ) | |
| (50 | ) |
| |
| | | |
| | |
Preferred dividend | |
| (23 | ) | |
| (36 | ) |
| |
| | | |
| | |
Net loss to common
stockholders | |
$ | (96 | ) | |
$ | (86 | ) |
| |
| | | |
| | |
Condensed statements of
comprehensive income (loss) | |
| | | |
| | |
Net loss | |
| (73 | ) | |
| (50 | ) |
Other comprehensive loss | |
| | | |
| | |
Foreign
currency translation adjustments | |
| 87 | | |
| (4 | ) |
| |
| | | |
| | |
Comprehensive income (loss) | |
$ | 14 | | |
$ | (54 | ) |
| |
| | | |
| | |
Earnings per share | |
| | | |
| | |
Net loss to common stockholders | |
| (96 | ) | |
| (86 | ) |
Basic and diluted earnings (loss) per share | |
| - | | |
| - | |
Weighted average basic and diluted shares outstanding | |
| 20,328,495 | | |
| 16,349,483 | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
MEDITE
CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Dollars in thousands,
except shares and per share amounts)
| |
Six
Months Ended June 30, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
(unaudited) | |
| |
| | |
| |
Net sales | |
$ | 4,419 | | |
$ | 5,909 | |
Cost of revenues | |
| 2,535 | | |
| 2,938 | |
Gross profit | |
| 1,884 | | |
| 2,971 | |
| |
| | | |
| | |
Operating expenses | |
| | | |
| | |
Depreciation and amortization
expense | |
| 65 | | |
| 78 | |
Research and development | |
| 603 | | |
| 445 | |
Selling,
general and administrative | |
| 1,407 | | |
| 1,962 | |
| |
| | | |
| | |
Total operating
expenses | |
| 2,075 | | |
| 2,485 | |
Operating
income (loss) | |
| (191 | ) | |
| 486 | |
| |
| | | |
| | |
Other expenses | |
| | | |
| | |
Interest expense | |
| 111 | | |
| 150 | |
Other expenses | |
| 50 | | |
| 151 | |
Total other
expenses | |
| 161 | | |
| 301 | |
| |
| | | |
| | |
Income (loss) before income taxes | |
| (352 | ) | |
| 185 | |
| |
| | | |
| | |
Income tax expense (benefit) | |
| (25 | ) | |
| 16 | |
Net income (loss) | |
| (327 | ) | |
| 169 | |
| |
| | | |
| | |
Preferred dividend | |
| (46 | ) | |
| (36 | ) |
| |
| | | |
| | |
Net income (loss) to common
stockholders | |
$ | (373 | ) | |
$ | 133 | |
| |
| | | |
| | |
Condensed statements of
comprehensive income (loss) | |
| | | |
| | |
Net income (loss) | |
| (327 | ) | |
| 169 | |
Other comprehensive loss | |
| | | |
| | |
Foreign
currency translation adjustments | |
| (160 | ) | |
| (4 | ) |
| |
| | | |
| | |
Comprehensive income (loss) | |
$ | (487 | ) | |
$ | 165 | |
| |
| | | |
| | |
Earnings (loss) per share | |
| | | |
| | |
Net income (loss) to common stockholders | |
| (373 | ) | |
| 133 | |
Basic and diluted earnings (loss) per share | |
| (.02 | ) | |
| - | |
Weighted average basic and diluted shares outstanding | |
| 20,018,269 | | |
| 15,527,624 | |
The accompanying
notes are an integral part of these condensed consolidated financial statements.
MEDITE
CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| |
Six Months
Ended June 30, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
(unaudited) | |
Cash flows from operating activities: | |
| | | |
| | |
Net income (loss) | |
$ | (327 | ) | |
$ | 169 | |
Adjustments to reconcile net
income (loss) to net cash used in operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 65 | | |
| 78 | |
Non cash interest | |
| - | | |
| 2 | |
Deferred income taxes | |
| (139 | ) | |
| - | |
Changes in assets and liabilities: | |
| | | |
| | |
Accounts receivable, net | |
| 348 | | |
| (247 | ) |
Inventories | |
| (240 | ) | |
| (827 | ) |
Prepaid expenses and other current
assets | |
| 71 | | |
| (78 | ) |
Accounts
payable and accrued liabilities | |
| (139 | ) | |
| (279 | ) |
Net cash used in operating activities | |
| (360 | ) | |
| (1,182 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Purchases of equipment | |
| (6 | ) | |
| (269 | ) |
Increase in other assets | |
| - | | |
| 1 | |
Net cash used in
investing activities | |
| (6 | ) | |
| (268 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Net advances (repayments) on lines of credit and long-term
debt | |
| (1,008 | ) | |
| 142 | |
Term note repayment | |
| - | | |
| (104 | ) |
Proceeds from sale of common
stock, net issuance costs of $28 | |
| 1,496 | | |
| 1,724 | |
Net
advances (repayments) from related parties | |
| (15 | ) | |
| 21 | |
Net cash provided by financing
activities | |
| 473 | | |
| 1,783 | |
| |
| | | |
| | |
Effect of exchange rates on cash
and cash equivalents | |
| (90 | ) | |
| (94 | ) |
Net increase (decrease) in cash and cash
equivalents | |
| 17 | | |
| (239 | ) |
Cash and cash equivalents at beginning
of year | |
| 230 | | |
| 75 | |
| |
| | | |
| | |
Cash and cash equivalents at
end of the period | |
$ | 247 | | |
$ | 314 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash paid for interest | |
$ | 102 | | |
$ | 149 | |
Cash paid for income taxes | |
$ | 52 | | |
$ | 16 | |
| |
| | | |
| | |
Supplemental schedule of non-cash financing activity: | |
| | | |
| | |
Conversion of preferred stock to common stock | |
$ | 525 | | |
$ | - | |
The accompanying notes are an integral
part of these condensed consolidated financial statements.
MEDITE CANCER
DIAGNOSTICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Tabular data in thousands, except
shares and per share amounts)
Note 1. |
Organization and Summary
of Significant Accounting Policies |
MEDITE Cancer Diagnostics, Inc., (“MDIT”,
“MEDITE” or the “Company”) was incorporated in Delaware in December 1998.
These statements include the accounts of
MEDITE Cancer Diagnostics, Inc., (former CytoCore, Inc., the “Company”, “we” and “us”) and
its wholly owned subsidiaries, which consists of MEDITE Enterprise, Inc., MEDITE GmbH, Burgdorf, Germany, MEDITE GmbH, Salzburg,
Austria, MEDITE Lab Solutions, Inc. (formerly MEDITE Inc.), Orlando, USA, MEDITE sp. z o.o., Zilona-Gora, Poland and CytoGlobe,
GmbH, Burgdorf, Germany.
In April 2014, the shareholders of the
Company consummated a transaction in which 100% of the issued and outstanding shares of MEDITE Enterprise, Inc., were acquired
by CytoCore, Inc. in exchange for the issuance by CytoCore, Inc., of 14,687,500 shares of its common stock to the shareholders
of the Company. The result of this transaction was for the Company and its wholly owned subsidiaries to become wholly owned subsidiaries
of CytoCore, Inc., a US public company. In addition, the shareholders of the Company became the majority owners of CytoCore, Inc.,
which resulted in the transaction being accounted for as a reverse merger, in which the financial statements of MEDITE Enterprise,
Inc. and its subsidiaries became those of CytoCore, Inc., now MEDITE Cancer Diagnostics, Inc.
MEDITE is a medical technology company
specializing in the development, engineering, manufacturing and marketing of premium medical devices and consumables for detection,
risk assessment and diagnosis of cancer and related diseases. By acquiring MEDITE the company changed from solely research
operations to an operating company with 76 employees in four countries, a distribution network to about 70 countries worldwide,
a well-known and established brand name, a wide range of selling products and the established infrastructure necessary for a company
acting in the medical industry.
Consolidation, Basis of Presentation
and Significant Estimates
The accompanying condensed
consolidated financial statements for the periods ended June 30, 2015 and 2014 included herein are unaudited and have been
prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Such consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal
recurring nature. These interim results are not necessarily indicative of the results to be expected for the fiscal year
ending December 31, 2015 or for any other period. Certain information and footnote disclosures normally included in the
consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company
believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated
financial statements should be read in conjunction with the Company’s audited consolidated financial statements
disclosed in the Report on Form 10-K/A for the year ended December 31, 2014 and other filings with the Securities and
Exchange Commission.
The accompanying condensed consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances
and transactions have been eliminated in consolidation. In preparing the accompanying financial statements, management has made
certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Changes
in facts and circumstances may result in revised estimates and actual results may differ from these estimates.
Revenue Recognition
The Company derives its revenue primarily
from the sale of medical products and supplies for the diagnosis and prevention of cancer. Product revenue is recognized when
all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the
products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability is reasonably
assured. The Company generates the majority of its revenue from the sale of inventory. The Company recognizes revenue when title
and risk of loss transfer to the customer and all other revenue recognition criteria have been met. For a small subset of sales,
the Company and its customers agree in the sales contract that risk of loss and title transfer upon the Company packing the items
for shipment, segregating the items packaged and notifying the Customer that their items are ready for pickup. The Company records
such sales at time of completed packaging and segregation of the items from general inventory and notification has been confirmed
by the customer.
Cash and Cash Equivalents
The Company considers all cash on deposit
and highly-liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents.
Property and Equipment
Property and equipment are stated at cost,
less accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the
estimated useful lives of the assets as follows:
Buildings |
33
yrs |
Machinery and equipment |
3-10 yrs |
Office furniture and equipment |
2-10 yrs |
Vehicles |
5 yrs |
Computer equipment |
3-5 yrs |
Normal maintenance and repairs for equipment
are charged to expense as incurred, while significant improvements are capitalized.
Research and Development
All research and development costs are
expensed as incurred. Research and development costs consist of engineering, product development, testing, developing and validating
the manufacturing process, and regulatory related costs.
Acquired In-Process Research and Development
Acquired in-process research and development
(“IPR&D”) that the Company acquires through business combinations represents the fair value assigned to incomplete
research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and
are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the
projects. Upon successful completion of each project, MEDITE will make a determination as to the then useful life of the intangible
asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and
begin amortization. The Company tests IPR&D for impairment at least annually, or more frequently if impairment indicators
exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the IPR&D
intangible asset is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is
less than the carrying amount, a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying
value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.
Impairment or Disposal of Long-Lived
Assets Including Finite Lived Intangibles
At each balance sheet date or whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company
evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less
than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured
by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate
with the risks involved. Unless events or circumstances have changed significantly, we generally do not re-test at year end assets
acquired from a business combination in the year of acquisition.
Impairment of Indefinite Lived Intangible
Assets Other Than Goodwill
The Company has the option first to assess
qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that
the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes
that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to
take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived
intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance
with Financial Accounting Standards Board Codification Subtopic 350-30.
Goodwill
The Company allocates goodwill to reporting
units based on the reporting unit expected to benefit from the business combination. The Company evaluates our reporting units
on an annual basis. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating
segment) on an annual basis (December 31) and between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include
a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition
of a significant portion of a reporting unit. Unless events or circumstances have changed significantly, we generally do not re-test
at year end assets acquired from a business combination in the year of acquisition.
Application of the goodwill impairment
test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units,
assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each
reporting unit is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including
estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our
business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
Impairment Policy and Procedures for
In Process Research and Development, Trademarks, Trade Names and Goodwill
The estimates used to calculate the fair
value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in
these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting
unit.
These assets were independently
valued at April 3, 2014, the date of the MEDITE Enterprise, Inc. purchase by CytoCore, Inc., based upon valuation assumptions
such as projected discounted cash-flow amongst others and updated through June 30, 2015. In the future, the Company plans to
review the assumptions annually to determine if any impairment allowances are necessary until the underlying products under
development and long-lived assets have been commercialized.
Recent Accounting Pronouncements
In 2015, the FASB issued ASU 2015-11,
Inventory (Topic 330): “Simplifying the Measurement of Inventory”. The amendments require an entity to measure in
scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the
ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent
measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to
inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other
inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The Company does not
expect this amendments to have a material impact on its consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02,
Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of the consolidation
guidance for legal entities such as limited partnerships, limited liability corporations and securitization structures. The amendments
in the ASU affect the consolidation evaluation for reporting organizations and simplifies the current US GAAP requirements by reducing
the number of consolidation models. The guidance is effective for fiscal years and interim reporting periods beginning on or after
December 15, 2015. The Company does not expect this standard to have a material impact on its statements of operations, statements
of cash flows or financial position.
In May 2014, the FASB issued ASU 2014-09, “Revenue with
Contracts from Customers.” ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance.
The ASU introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods and services. The updated guidance is effective for public entities for interim and annual periods beginning after
December 15, 2016 and early adoption is not permitted. The Company is currently evaluating the impact of the updated guidance,
but the Company does not believe that the adoption of ASU 2014-09 will have a significant impact on its consolidated financial
statements.
In January 2014, the Company and the previous
owners of MEDITE Enterprise, Inc. entered into an agreement to merge with the former CytoCore, Inc. The merger required as a pre-requisite
that among other items CytoCore settle certain outstanding payroll amounts in stock and that CytoCore complete a private placement
with gross proceeds of a minimum of $2 million, which was later amended to $1.5 million. On April 3, 2014 CytoCore issued 697,234
shares of its common stock in satisfaction of approximately $1.6 million in outstanding accrued payroll. On April 4, 2014 the
Company closed on a private placement in which it received gross proceeds of $1.5 million and issued 955,875 shares of its common
stock. The merger closed on April 4, 2014 with the previous owners of MEDITE Enterprise, Inc. receiving 14,687,500 shares of the
Company’s common stock. An additional 312,500 shares remain to be issued because certain conditions have been fulfilled
in accordance with the agreement to complete the exchange for 100% of the issued and outstanding stock of MEDITE Enterprise, Inc.
The consideration paid was determined based upon the number of shares outstanding from the former CytoCore, Inc. of approximately
3,502,700 common shares outstanding before the merger at $1.60 per share (the same price per share in the concurrent private placement
noted above).
Because the owners of MEDITE
Enterprise, Inc. received approximately 81.1% of the then issued and outstanding stock of the Company, the merger was treated
as a reverse acquisition, in which for accounting purposes MEDITE Enterprise, Inc. acquired CytoCore, Inc. Therefore, the
consolidated statements of operations and comprehensive income (loss) for the three months and six month ended June 30, 2015
represents the financial results of MEDITE Enterprise, Inc. and subsidiaries only as the transaction did not occur
until April 4, 2014.
Under the purchase method of accounting,
the assets acquired and liabilities assumed are recorded at their respective fair values as of the transaction date. In connection
with the merger, the consideration paid, the assets acquired and liabilities assumed, recorded at fair value on the date of acquisition,
are summarized in the following table:
| |
In thousands | |
Assets acquired | |
| |
Cash | |
$ | 1 | |
Other current assets | |
| 12 | |
Property and equipment | |
| 81 | |
Trade names /trademarks | |
| 1,240 | |
In-Process research and development | |
| 4,620 | |
Goodwill | |
| 2,453 | |
| |
| 8,407 | |
| |
| | |
Liabilities assumed | |
| | |
Accounts payable & accrued expenses | |
| 3,220 | |
Related party advances | |
| 102 | |
Loans payable | |
| 21 | |
| |
| 3,343 | |
| |
| | |
Consideration paid in the form
of common stock | |
$ | 5,064 | |
The Company is treating the fair value
assigned to trade names/trademarks as indefinite lived intangibles. The in process research and development covers four separate
areas (a) breast pap device and related consumables (b) new biomarkers (c) a new stain and (d) the SoftKit. Until the Company
either completes development or abandons such development, the in-process research and development costs are treated as indefinite
lived intangible assets. If the Company is successful in these development projects, it expects the in-process research and development
will be amortized over an approximate 15 year life.
The following is a summary of the components
of inventories (in thousands):
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
| |
Raw materials | |
$ | 1,515 | | |
$ | 1,229 | |
Work in progress | |
| 165 | | |
| 33 | |
Finished Goods | |
| 1,975 | | |
| 2,153 | |
| |
| | | |
| | |
| |
$ | 3,655 | | |
$ | 3,415 | |
No amounts were reserved for obsolete inventory
as of June 30, 2015 and December 31, 2014.
Note 4. |
Property and Equipment |
The following is a summary of the components
of property and equipment (in thousands):
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
| |
Land | |
$ | 212 | | |
$ | 233 | |
Buildings | |
| 1180 | | |
| 1,291 | |
Machinery and equipment | |
| 540 | | |
| 529 | |
Office furniture and equipment | |
| 286 | | |
| 265 | |
Vehicles | |
| 31 | | |
| 103 | |
Computer equipment | |
| 105 | | |
| 110 | |
Construction in progress | |
| 510 | | |
| 559 | |
Less: Accumulated depreciation | |
| (900 | ) | |
| (999 | ) |
| |
$ | 1,964 | | |
$ | 2,091 | |
Depreciation expense amounted to approximately
$65,000 and $78,000 for the six months ended June 30, 2015 and 2014, respectively.
Note 5. |
Long-term Debts and
Lines of Credit |
The Company’s outstanding note payable
indebtedness was as follows as of (in thousands):
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
| |
Hannoversche Volksbank
credit line #1 | |
$ | 1,163 | | |
$ | 1,880 | |
Hannoversche Volksbank credit line #2 | |
| 384 | | |
| 465 | |
Hannoversche Volksbank term loan #1 | |
| 93 | | |
| 135 | |
Hannoversche Volksbank term loan #2 | |
| 49 | | |
| 81 | |
Hannoversche Volksbank term loan #3 | |
| 216 | | |
| 270 | |
Ventana Medical Systems, Inc. Promissory Note | |
| 21 | | |
| 21 | |
Denture DZ Equity Partners Participation
right | |
| 832 | | |
| 912 | |
| |
$ | 2,758 | | |
$ | 3,764 | |
In July 2006, MEDITE GmbH,
Burgdorf, entered into a master line of credit agreement #1 with Hannoversche Volksbank. The line of credit was amended in
2012 and was later amended to increase the credit limit to Euro 1.8 million ($2.0 million as of June 30, 2015). In January
2015, the master credit line was reduced to Euro 1.6 million ($1.8 million as of June 30, 2015) and further reduced to the
original Euro 500,000 ($554,720 as of June 30, 2015) to Euro 1.1 million ($1.2 million as of June 30, 2015) effective July 1,
2015. Borrowings on the master line of credit agreement #1 bears interest at a variable rate based on Euribor (Euro
Interbank Offered Rate) depending on the type of advance elected by the company and defined in the agreement. Interest rates
depending on the type of advance elected range from 3.77 – 8.00 % during the period ended June 30, 2015. The line of
credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of MEDITE
GmbH, Burgdorf, a mortgage on the buildings owned by the Company and is guaranteed by Michaela Ott and Michael Ott, the
former sole shareholders of the Company.
In June 2012, CytoGlobe, GmbH, Burgdorf,
entered into a line of credit agreement #2 with Hannoversche Volksbank. The line of credit granted a maximum borrowing authority
of Euro 400,000 ($443,776 as of June 30, 2015). Borrowings on the master line of credit agreement #2 bears interest at a variable
rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the
agreement. Interest rates depending on the type of advance elected range from 3.77 – 8.00 % during the period ended June
30, 2015. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory
of CytoGlobe GmbH, Burgdorf and is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company and
the state of Lower Saxony (Germany) to support high-tech companies in the area.
In December 2006, MEDITE GmbH, Burgdorf,
entered into a Euro 500,000 ($554,720 as of June 30, 2015) term loan agreement #1 with Hannoversche Volksbank with an interest
rate of 3.4% per annum. The term loan has a maturity of September 2016 and requires semi-annual principal payments of approximately
Euro 27,780 ($30,820 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders
of the Company and also a mortgage on the property of the Company.
In June 2006, MEDITE GmbH, Burgdorf,
entered into a Euro 400,000 ($443,776 as of June 30, 2015) term loan #2 with Hannoversche Volksbank with an interest rate of
3.6 % per annum. The term loan has a maturity of June 2016, requires 18 semi-annual principal repayments of approximately
Euro 22,220 ($24,652 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former
sole shareholders of the Company and is collateralized by subordinated assignments of all of the receivables and inventories
of MEDITE GmbH, Burgdorf and also has a subordinated pledge of share term life insurance policies.
In November 2008, MEDITE GmbH, Burgdorf, entered into a Euro
400,000 ($443,776 as of June 30, 2015) term loan #3 with Hannoversche Volksbank with a variable interest rate of approximately
4.7% per annum as of December 31, 2014. The term loan has a maturity of December 31, 2018, and requires quarterly principal repayments
of Euro 13,890 ($15,410 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former sole
shareholders of the Company, and is collateralized by a partial subordinated pledge of the receivables and inventory of MEDITE
GmbH, Burgdorf.
In March 2009, the Company
entered into a participation rights agreement in the form of a debenture with a mezzanine lender who advanced the Company up
to Euro 1.5 million, ($1.7 million as of June 30, 2015) in two tranches of Euro 750,000 each, ($832,000 as of June 30, 2015). The first tranche was paid to the Company at closing with the second tranche being conditioned on MEDITE GmbH, Burgdorf
and its subsidiaries hitting certain performance targets. Those targets were not met and the second tranche was never
called. The debenture pays interest at the rate of 12.15% per annum and matures at December 31, 2016.
As of the date of filing, the
remaining balance of approximately $21,000 on the note payable to Ventana Medical Systems, Inc. was in default. However, on
February 23, 2015, the Company reached an agreement with Ventana Medical Systems, Inc. whereby both parties have agreed that
Ventana Medical Systems, Inc. will accept $38,281 as payment in full for all outstanding principal and accrued interest. The
$38,281 has been included in current portion of long-term debt on the consolidated balance sheet. As part of this agreement,
Ventana Medical Systems, Inc. has agreed to convert $1.75 million stated value of Series D Preferred stock and all
outstanding accrued dividends of $656,250 for 12,000 shares of the Company’s common stock. Prior to the execution of
this agreement, the Company had failed to make principal and interest payments when due and is in breach of certain
warranties and representations under the notes included above.
During 2015 the Company reduced their working
line and term loans with Hannoversche Volksbank by $1,006 net of currency fluctuations, $666 and $340 in the second and
first quarters of 2015, respectively. (See the “liquidity” comment on page 19.)
Note 6. |
Related Party Advances |
At June 30, 2015 and December
31, 2014, the Company owed its then CFO and Chairman of the Board for prior advances of approximately $95,000 and $110,000 respectively.
The CEO Michaela Ott together with the COO Michael Ott provided an additional non interest bearing short term advance of
$950,000 at the end of the first quarter ended March 31, 2015 until equity funds were received. As of the date of the filing,
the Company has no balances outstanding due to Michaela and Michael Ott.
During the first quarter ended March
31, 2015, the Company issued 240,625 shares of unregistered stock to qualified individuals pursuant to exemptions from
registration under Regulation D and Section 4(2) of the Securities Act of 1933 at 1.60 for proceeds of $357,000, net of
$28,000 of issuance costs. Further, the Company issued 12,000 shares of common stock in a Series D Preferred Stock conversion
as further discussed in Note 8. During the second quarter ended June 30, 2015 the Company issued 711,250 shares at $1.60 for
proceeds of $1,138,000 to the President of UNIC Medical of China. UNIC is the Company’s distributor in China and other
Asian countries.
Note 8. |
Preferred Stock and
Warrants |
A summary of the Company’s preferred
stock as of June 30, 2015 and December 31, 2014 is as follows.
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
| |
| |
Shares Issued & | | |
Shares Issued & | |
Offering | |
Outstanding | | |
Outstanding | |
Series A convertible | |
| 47,250 | | |
| 47,250 | |
Series B convertible, 10% cumulative dividend | |
| 93,750 | | |
| 93,750 | |
Series C convertible, 10% cumulative dividend | |
| 38,333 | | |
| 38,333 | |
Series D convertible, 10% cumulative dividend | |
| - | | |
| 175,000 | |
Series E convertible, 10% cumulative
dividend | |
| 19,022 | | |
| 19,022 | |
Total Preferred Stock | |
| 198,355 | | |
| 373,355 | |
As of June 30, 2015 and December 31, 2014, the Company
had cumulative preferred undeclared and unpaid dividends. In accordance with the Financial Accounting Standard Board’s Accounting
Standards Codification 260-10-45-11, “Earnings per Share”, these dividends were added to the net loss in the
net loss per share calculation for the six months ended June 30, 2015.
On February 23, 2015, the Company
reached an agreement with Ventana Medical Systems, Inc. to convert $1.75 million stated value of Series D Preferred Stock and
all outstanding accrued dividends of $656,250 for 12,000 shares of the Company’s common stock, which was issued in the
second quarter ended June 30, 2015.
Summary of Preferred Stock Terms
Series A Convertible Preferred Stock
Liquidation
Value: |
$4.50
per share, $212,625 |
Conversion Price: |
$10,303 per share |
Conversion Rate: |
0.00044—Liquidation
Value divided by Conversion Price ($4.50/$10,303) |
Voting Rights: |
None |
Dividends: |
None |
Conversion Period: |
Any time |
Series B Convertible Preferred Stock
Liquidation
Value: |
$4.00
per share, $375,000 |
Conversion Price: |
$1,000 per share |
Conversion Rate: |
0.0040—Liquidation
Value divided by Conversion Price ($4.00/$1,000) |
Voting Rights: |
None |
Dividends: |
10%—Quarterly—Commencing
March 31, 2001 |
Conversion Period: |
Any time |
Cumulative dividends in arrears at June
30, 2015 and December 31, 2014 were $539,413 and $520,665, respectively.
Series C Convertible Preferred Stock
Liquidation
Value: |
$3.00
per share, $115,000 |
Conversion Price: |
$600 per share |
Conversion Rate: |
0.0050—Liquidation
Value divided by Conversion Price ($3.00/$600) |
Voting Rights: |
None |
Dividends: |
10%—Quarterly—Commencing
March 31, 2002 |
Conversion Period: |
Any time |
Cumulative dividends in arrears at June
30, 2015 and December 31, 2014 were $157,163 and $151,413, respectively.
Series D Convertible Preferred Stock
Liquidation Value: |
$1,000 per share, $ 525,000 |
Conversion Price: |
$1,000 per share |
Conversion Rate: |
.01—Liquidation Value divided by Conversion Price ($10.00/$1,000) |
Voting Rights: |
None |
Dividends: |
10%—Quarterly—Commencing April 30, 2002 |
Conversion Period: |
Any time |
Cumulative dividends in arrears at June 30, 2015 and December
31, 2014 were $0 and $660,000, respectively.
Series E Convertible Preferred Stock
Liquidation
Value: |
$22.00
per share, $418,488 |
Conversion Price: |
$800.00 per share |
Conversion Rate: |
.0275—Liquidation
Value divided by Conversion Price ($22.00/$800) |
Voting Rights: |
Equal in all
respects to holders of common shares |
Dividends: |
10%—Quarterly—Commencing
May 31, 2002 |
Conversion Period: |
Any time |
Cumulative dividends in arrears at June
30, 2015 and December 31, 2014 were $578,639 and $558,173 respectively.
Warrants outstanding
| |
| | |
| | |
| | |
Weighted | |
| |
| | |
Weighted | | |
| | |
Average | |
| |
| | |
Average | | |
Aggregate | | |
Remaining | |
| |
| | |
Exercise | | |
Intrinsic | | |
Contractual | |
| |
Warrants | | |
Price | | |
Value | | |
Life (Years) | |
Outstanding at December 31, 2014 | |
| 143,308 | | |
$ | 2.64 | | |
| — | | |
| 6.46 | |
Granted | |
| — | | |
| — | | |
| — | | |
| — | |
Exercised | |
| — | | |
| — | | |
| — | | |
| — | |
Expired | |
| — | | |
| — | | |
| — | | |
| — | |
Outstanding at June 30, 2015 | |
| 143.308 | | |
$ | 2.64 | | |
| — | | |
| 6.46 | |
Note 9. |
Commitments and Contingencies |
The Company currently leases 19 vehicles
for sales and service employees, delivery and other purposes with expirations ranging from July 2015 through June 2018. The
current minimum monthly payment for these vehicle leases is approximately $6,214.
The Company has several operation
leases for office, laboratory and manufacturing space. The Company’s operating lease for one of its German facilities
can be cancelled by either party with a 3 months’ notice, its Poland facility can be terminated by either party with a
six month notice. Monthly rent payments for the German and Poland facilities are Euro 4,000 ($4,465 as of June 30, 2015) and
PLN 6,240 ($1,662 as of June 30, 2015) respectively. The Company’s laboratory facility in Chicago, IL terminates June
30, 2016 and requires monthly payments of $1,070. The Company also subleases its former Chicago laboratory facility for
$3,948 per month. The lease for this facility terminates October 30, 2016 and requires monthly rent payments of $4,594. The
Company’s Orlando facility has escalating rents ranging from $2,345 to $2,563 per month and terminates July 31, 2018.
The total aggregate monthly lease payments (net of the sublease) required on these leases is approximately $9,400.
The Company also leases IT Hardware
and Software for 3-D Design and incurs a monthly lease rate of $1,646.
In 2014, the Company became subject to
a lawsuit brought by D&D Technologies, Inc. (“D&D”) in the state of New Jersey for breach of contract and
breach of implied covenant of good faith that occurred in 2013 and prior by the former CytoCore for failure to pay for past contractual
services. The original complaint was dismissed and then refiled by D&D. D&D is seeking damages over $86,000 plus equitable
relief. In the second quarter of 2015, the Company and D&D reached a settlement agreement with D&D Technologies, Inc for
$15,000. This settlement has been accrued as of June 30, 2015 and included in account payable and accrued expenses on the accompanying
condensed consolidated balance sheet. The balance was paid to D&D Technologies by the date of the filling.
The Company’s former auditor L.J. Soldinger and Associates filed a claim against the Company in
Illinois’ Lake County Superior Court. The Company believes the claims are without merit and is adequately reserved for costs associated
with the claim.
Note 10. |
Segment Information |
The Company operates in one operating
segment. However, the Company has assets and operations in the United States, Germany and Poland. The first quarter numbers
included in the six month period ended June 30, 2014 represent Medite as a private company before the reverse merger with the
former CytoCore Inc. After April 3, 2014, results reflect the combination of both companies. . The influence by the
significant change of the currency exchange rate between USD and EURO since June 30, 2014 compared to June 30, 2015 is
approximately $1.1 million. The following tables show the breakdown of the Company’s operations and assets by region
(in thousands):
| |
United States | | |
Germany | | |
Poland | | |
Total | |
| |
June 30, 2015 | | |
December 31, 2014 | | |
June 30, 2015 | | |
December 31, 2014 | | |
June 30, 2015 | | |
December 31, 2014 | | |
June 30, 2015 | | |
December 31, 2014 | |
Assets | |
$ | 9,122 | | |
$ | 9,387 | | |
$ | 6,839 | | |
$ | 6,989 | | |
$ | 302 | | |
$ | 63 | | |
$ | 16,263 | | |
$ | 16,439 | |
Property & equipment, net | |
| 92 | | |
| 98 | | |
| 1,866 | | |
| 1,985 | | |
| 6 | | |
| 8 | | |
| 1,964 | | |
| 2,091 | |
Intangible assets | |
| 8,315 | | |
| 8,313 | | |
| 47 | | |
| - | | |
| 7 | | |
| - | | |
| 8,369 | | |
| 8,313 | |
| |
United States | | |
Germany | | |
Poland | | |
Total | |
| |
June 30, 2015 | | |
June 30, 2014 | | |
June 30, 2015 | | |
June 30, 2014 | | |
June 30, 2015 | | |
June 30, 2014 | | |
June 30, 2015 | | |
June 30, 2014 | |
Revenues | |
$ | 645 | | |
$ | 955 | | |
$ | 3,774 | | |
$ | 4,954 | | |
$ | 0 | | |
$ | 0 | | |
$ | 4,419 | | |
$ | 5,909 | |
Net income (loss) | |
| (444 | ) | |
| (31 | ) | |
| 116 | | |
| 200 | | |
| 0 | | |
| - | | |
| (327 | ) | |
| 169 | |
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations
Caution Regarding Forward-Looking Statements
This report contains “forward-looking
statements” – that is, statements related to future, not past, events. In this context, forward-looking statements
often address our expected future business and financial performance and financial condition, and often contain words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“see,” or “will.” These forward-looking statements are not guarantees and are subject to known and unknown
risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such
forward-looking statements. For us, particular uncertainties that could cause our actual results to be materially different than
those expressed in our forward-looking statements include: our ability to raise capital; our ability to retain key employees;
our ability to engage third party distributors to sell our products; economic conditions; technological advances in the medical
field; demand and market acceptance risks for new and existing products, technologies, and healthcare services; the impact of
competitive products and pricing; U.S. and international regulatory, trade, and tax policies; product development risks, including
technological difficulties; ability to enforce patents; and foreseeable and unforeseeable foreign regulatory and commercialization
factors, our ability to develop new products and respond to technological changes in the markets in which we compete, our ability
to obtain government approvals of our products, our ability to market our products, changes in third-party reimbursement procedures,
and such other factors that may be identified from time to time in our Securities and Exchange Commission ("SEC") filings
and other public announcements including those set forth under the caption “Risk Factors” in Part 1, Item 1A of our
Annual Report on Form 10-K/A for the year ended December 31, 2014. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Readers are cautioned
not to place undue reliance on our forward-looking statements, as they speak only as of the date made. Except as required by law,
we assume no duty to update or revise our forward-looking statements.
Overview of MEDITE Cancer Diagnostics, Inc.
MEDITE Cancer Diagnostics, Inc. (the “Company”,
“we”, or “us”), formerly CytoCore, Inc., is a medical technology company specializing in the development,
engineering, manufacturing and marketing of premium medical devices and consumables for detection, risk assessment and diagnosis
of cancer and related diseases. Depending upon the type of cancer, segments within the current target market of approximately
$5.8 billion are growing at annual rates between 10 and 30%.
By acquiring MEDITE in 2014, the Company
changed from just research operations to an operating company with 76 employees in four countries, a distribution network to about
70 countries worldwide, a well-known and established brand name, a wide range of selling products and the established infrastructure
necessary for a company acting in the medical industry. Both company structures and cultures were successfully merged to one new
company organization.
Several synergies were realized with this
strategy, for example cost reduction of the former CytoCore research segment by about 50 %, complementary products in the cytology
product segment which is now addressing all components from cell collection through cell processing to diagnostic tools like cancer
markers and screening systems. Some of them are already selling and some are in a late stage of development expecting to sell
within one or two years.
The cancer markers developed by the former
CytoCore over the last three years are showing excellent results in internal studies but have not yet been tested in formal clinical
trials. In our opinion, one of the tests based upon these biomarkers has the potential for displacing the current expensive Human
Papilloma Virus (HPV) testing methods in both initial and follow up testing, resulting in less costs for the patient, laboratory
and payer. The test may identify cancerous and precancerous cells regardless of the presence of HPV. The Company hopes to market
the test globally outside the United States in 2015, and in the United States by 2017.
Another major business focus for
2015 is the Chinese market, which the Company entered in 2014. It is the fastest growing, and by 2016 management expect it
will be the largest, market for the Company’s products. This is due to our Chinese distributor UNIC Medical who was
successful in receiving the Chinese Food & Drug Administration (“CFDA”) approval for all MEDITE histrology
laboratory devices. The UNIC sales team now can sell MEDITE products in China, and currently successfully is doing so. During
the second quarter ended June 30, 2015, the Company trained 50 UNIC sales employees and representatives to sell MEDITE
equipment. Also, together with UNIC, the Company is part of a government supported project to standardize the histology
laboratory process there using MEDITE equipment and consumables for the processing part of the process, MEDITE immuno-assays,
and the UNIC technology for digitalization and computer aided diagnostics utilizing the latest cloud technology.
Several other innovative product developments
are in the marketing pipeline for this fiscal year of 2015. In the first quarter, the Company’s important German priority
patent for the fully automated histology lab, a Lab-In-One unit, has been granted. This technology is demanded by the market,
following the trend toward higher automation in the industry and has the ability change the competition in histology.
To sell the Company’s complete cytology
product line set “SureThin” also in the US, a US Food and Drug Administration (“FDA”) application is required
to be submitted and approved, which currently is under preparation and is expected to be submitted soon. The use with the currently
highest market volume for products is in cervical cancer screening, but increasingly also in non-gynecology applications such
as lung cancer screening.
The Company operates in one industry segment
for cancer diagnostics instruments and consumables for histology and cytology laboratories.
Definition: |
Histology
- Cancer diagnostics based on the structures of cells in tissues |
|
Cytology - Cancer
diagnostics based on the structures of individual cells |
Cancers and precancerous conditions are
defined in terms of structural abnormalities in cells. For this reason, cytology is widely used for the detection of such conditions,
while histology is typically used for the confirmation, identification and characterization of the cellular abnormalities detected
by cytology. Other diagnostics methods, such as marker-based assays, provide additional information that can supplement, but which
cannot replace cytology and histology. The trend towards more personalized treatment of cancer increases the need for cytology,
histology and assays for identifying and testing the best treatment alternatives. We believe that this segment will therefore
be increasingly important for future development of strategies to fight the “cancer epidemic” (World Health Organization:
World Cancer Report 2014) which expects approximately a 50 % increase in cancer cases worldwide within the next 20 years.
This segment sees a trend toward, and demand
for, higher automation for more throughput in bigger laboratories, process standardization, digitalization of cell and tissue
slides and computer aided diagnostic systems, while also looking for cost effective solutions. In the US, the Patient Protection
and Affordable Care Act is a national example for the industry. More people have health insurance, and therefore can afford early
cancer screening, while at the same time the payers for health care continue looking for cost reductions.
MEDITE acts as a one-stop-shop for histology
(also known as anatomic pathology) laboratories either as part of a hospital, as part of a chain of laboratories or individually.
It is one out of only four companies offering all equipment and consumables for these type of laboratories worldwide. The MEDITE
Brand stands for innovative and high quality products – most equipment made in Germany – and competitive pricing.
For the cytology market, MEDITE offers
a wide range of consumable products and equipment; in particular for liquid-based-cytology, which is an important tool in cancer
screening and detection in the field of cervical, bladder, breast, lung and other cancer types. We also developed an innovative
new type of easy to use standardized staining solutions, and a very innovative and effective early cancer detection marker-based
assay. These new developments are cost effective solutions able to replace more expensive competitive products, and therefore
are also becoming the first choice for the growing demand in emerging countries.
All of the Company’s operations during
the reporting period were conducted and managed within this segment, with management teams reporting directly to our Chief Executive
and Operating Officers. For information on revenues, profit or loss and total assets, among other financial data, attributable
to our operations, see the unaudited condensed consolidated financial statements included herein.
Outlook
Due to promising new products and distributions
contracts executed in the last two years, management believes the profitability and cash-flow of the business will grow and improve.
However, significant on-going operating expenditures may be necessary to manufacture and market new and existing products to achieve
the accelerated sales growth targets outlined in the Company’s business plan. To realize the planned growth potential, management
will focus its efforts on 1.) Finishing and gaining approval for the products currently under development and 2.) Increase direct
sales in the USA and continue to expand Chinese market sales by broadening the Company’s collaborations with the local distributor
UNIC. We also will work on continuously optimizing manufacturing cost to increase our gross margin. Implementation of our plans
will be contingent upon securing substantial additional debt and/or equity financing. If we are unable to obtain additional capital
or generate profitable sales revenues, we may be required to curtail product development and other activities.
Currently, approximately 90 % of
the Company’s sales are generated in Euro currency. During the previous year second quarter ended June 30, 2014,
on average, $1.3702 was received for every Euro. During the first half of 2015, the average exchange rate of Euro for
dollars dropped to $1.1170 which had an influence of 18.5% on the revenues. Therefore, the Company’s revenues
translated from Euro into dollars may be down year over year if the exchange rate remains at that level or lower during the
remainder of 2015. The Company is working to lessen the impact of the Euro’s decline versus the dollar by increasing
the percentage of overall product sales in the United States and other countries such as China whose currency is not pegged
to the Euro.
The Company believes the combination of
MEDITE Enterprise, Inc. with CytoCore, Inc. will expedite the development and marketability of CytoCore’s cytology products
which include collection devices, image analysis software, special stains and immuno-assays. Currently, the recent launch of new
products, the positive impact from several new initiatives, and some recently executed distribution contracts in the United States,
Europe and China are some primary positive factors assisting growth.
Results of Operations
The following discussion and analysis should
be read in conjunction with the Company’s unaudited condensed consolidated financial statements presented in Part I, Item
1 of this Quarterly Report and the notes thereto, and our audited consolidated financial statements and notes thereto, as well
as our Management’s Discussion and Analysis contained in our Annual Report on Form 10-K/A for the year ended December 31,
2014 filed with the SEC on May 8, 2015.
The results of the Company for the six
months ended June 30, 2015, include the results of the entire MEDITE Cancer Diagnostics, Inc. group (consolidated former CytoCore,
Inc. with MEDITE Enterprise, Inc.) while the results for the six months periods ended June 30, 2014, reflect operations for MEDITE Enterprise, Inc. only from January 1 through April 4, 2014 and the combined companies of CytoCore, Inc and Medite Enterprise,
Inc. for the period of April 5 through June 30, 2014.
Three months ended June 30, 2015
as compared to the three months ended June 30, 2014 (in thousand USD)
Revenue
Revenue for the three months ended June
30, 2015, was $2,132 as compared to $3,175 for the three months ended June 30, 2014. Due to the fact that approximately 90% of all
sales are invoiced in Euro currency, the recent fluctuation of the USD/EURO exchange rate had a major impact of approximately
$600 on the revenue decrease compared to last year’s exchange rate. On a comparable exchange rate, the revenue of the second
quarter 2015 would have been approximately the same as the June 2014 quarter.
Costs of Revenue
Cost of revenues were $1,166, or 54.69% of the revenues
for the three months ended June 30, 2015 as compared to $1,441 or 45.38% of the revenues for the three months ended June 30, 2014.
More sales through international distributors as compared to higher margin direct sales is the major reason for the decreased
gross margin.
Research and Development
Research and development expenses are an
important part of our business to keep our existing products competitive, and to develop new innovative solutions with interesting
market potential that will help us grow future revenues. These expenses include research work for cancer marker consumables and
developing work, including engineering and industrial design, for histology and cytology laboratories worldwide. Major parts of
these expenses are payroll-related costs for in-house scientific research, mechanical and electrical engineering, instrument related
software development staff, prototype expenses and material purchased for R&D.
For the second quarter 2015, research and
development expenses increased to $341 compared to $246 for the second quarter 2014. This increase of $95 or 38% is the result of
the inclusion of the former CytoCore, Inc. and MEDITE Poland expenses for the entire period of second quarter 2015. We expect
to continue to expend considerable effort and resources to continue to grow our product offerings.
Selling, General and Administrative
For the second quarter ended June
30, 2015, SG&A expenses were $600 as compared to $ 1,333 for the second quarter ended June 30, 2014. The second quarter
ended June 30, 2014 compared to the second quarter ended June 30, 2015 expense reflects increased legal, accounting and other
merger related expenses of approximately $200 expenses associated with the combination of Medite Enterprises and CytoCore
Inc. as public companies. In addition, SG&A for the second quarter ended June 30, 2015 was credited for recovery of bad debts of $101 and correction of an inventory pricing error for $43.
Operating Income (Loss)
The operating loss of $6 for
the second quarter of ended June 30, 2015 compared to an operating income of $116 for the second quarter of June 30, 2014
is due primarily to the decrease of gross profit and an increase of R&D expenses.
Interest Expense
Interest expenses decreased by 28% to $54 in
the six months ended June 30, 2015 compared to $75 for the six months ended June 30, 2014, due to the decreased use of lines
of credit and repayment of term loans, both used for working capital financing of the European entities.
Net Income (Loss)
The net loss for the quarter
ended June 30, 2015, totaled $73 as compared to net loss of $50 for the quarter ended June, 2014. As noted above the primary
reason for the loss in the second quarter of 2015 was a decrease in gross profit and additional
expenses in R&D.
Six months ended June 30, 2015 as
compared to the six months ended June 30, 2014 (in thousand USD)
Revenue
Revenue for the six months ended June
30, 2015, was $4,419 as compared to $5,909 for the six months ended June 30, 2014. Due to the fact that approximately 90% of
all sales are invoiced in Euro currency, the recent fluctuation of the USD/EURO exchange rate had a major impact of
approximately $.75 million on the revenue decrease compared to last year’s exchange rate. On a comparable
exchange rate, the revenue of the second quarter 2015 would have been increased by approximately 5-8%.
Costs of Revenue
Cost of revenues were $2,535, or 57%
of the revenues for the six months ended June 30, 2015 as compared to $2.938 or 49% of the revenues for the six
months ended June 30, 2014. More sales through international distributors as compared to higher margin direct sales is the
major reason for the decreased gross margin.
Research and Development
Research and development expenses are an
important part of our business to keep our existing products competitive, and to develop new innovative solutions with interesting
market potential that will help us grow future revenues. These expenses include research work for cancer marker consumables and
developing work, including engineering and industrial design, for histology and cytology laboratories worldwide. Major parts of
these expenses are payroll-related costs for in-house scientific research, mechanical and electrical engineering, instrument related
software development staff, prototype expenses and material purchased for R&D.
For the first half of 2015, research
and development expenses increased to $603 compared to $445 for the first half 2014. This increase of $158 or
36% is the result of the inclusion of MEDITE Poland and the CytoCore expenses for the entire period of first half
2015. The Polish operations were not started until 3rd quarter 2014 and CytoCore’s expenses for 2014 did not
include expenses prior to April 3, 2014, the effective merger date. We expect to continue to expend considerable effort and
resources to continue to grow our product offerings.
Selling, General and Administrative
For the six months ended June 30,
2015, SG&A expenses were $1,407 as compared to $ 1,962 for the first six months ended June 30, 2014. The first half of
2014 compared to the first half of 2015 reflects increased legal, accounting and other expenses associated with the
combination of Medite Enterprises and CytoCore Inc. as public companies which became effective April 3, 2014.
Operating Income (Loss)
The operating loss of $191 for
the first half of 2015 compares to an operating profit of $486 for the first half of 2014 is due primarily by the decrease in
sales of $1,487 offset by the decrease in administrative expenses of $555 along with higher product gross margin and
increased R&D expenses. The CytoCore, Inc. pre-merger expenses for the first quarter ended March 31, 2014 were not
included in the company expenses ended June 30, 2014.
Interest Expense
Interest expenses decreased by 26% to
$111 in the six months ended June 30, 2015 compared to $150 for the first half ended June 30, 2014 due to
the decreased use of lines of credit and repayment of term loans, both used for working capital financing of the European
entities.
Net Income (Loss)
The net income (loss) for the
six month ended June 30, 2015, totaled $(327) as compared to net income of $169 for the six month ended June 30, 2014 is due
primary to a decrease in sales and the additional expenses in R&D. The CytoCore, Inc, pre-merger expenses for the first
quarter ended March 31, 2014 were not included in the company expenses ended June 30, 2014.
Liquidity and Capital Resources
In the first quarter of 2015, the Company
issued 240,625 shares of unregistered stock to qualified individuals under SEC Rule 144 at $1.60 for proceeds of $357, net of
issuance costs of $28. Also, in the second quarter, the CEO of UNIC China, a foreign national purchased 711,250 shares of stock
from the Company at $1.60 per share for net proceeds of $1,138 as part of a $3.5 million private placement. The Company expects
he will complete his investment during 2015.
During 2014, in conjunction and subsequent
to the April 4, 2014 merger of CytoCore, Inc. and Medite Enterprises, the Company has raised $1,979 million in funds for 1,237,125
common shares through various private placements and plans on raising additional equity through other private placements that
have yet to close. The Company reduced debt by $1,006 net of currency during the first half of 2015.
Due to promising new products and distributions
contracts executed in the last two years, management believes the profitability and cash flow of the business will grow and improve.
However, significant on-going operating expenditures may be necessary to manufacture and market new and existing products to achieve
the accelerated sales growth targets outlined in the Company’s business plan. To realize the planned growth potential management
will focus its efforts on 1.) Finishing and gaining approval for the products currently under development and 2.) Increase direct
sales in the USA and continue to expand Chinese market sales by broadening the Company’s collaborations with the local distributor
UNIC. We also will work on continuously optimizing manufacturing cost to increase our gross margin. Implementation of our plans
will be contingent upon securing substantial additional debt and/or equity financing. If we are unable to obtain additional capital
or generate profitable sales revenues, we may be required to curtail product development and other activities. Approximately,
$1.9 million of accrued liabilities represents unpaid wages and vacation benefits. We believe subject to employee approval at
least 75% of this liability will be converted into equity. In summary, management believes current working capital is sufficient
to fund current operations.
A part of the Company’s outstanding
indebtedness under its master credit line #1 with Hannoversche Volksbank availability was reduced by Euro 500 ($543 as of June
30, 2015) effective July 1, 2015. The bank has agreed to work with the Company as we raise additional equity and maintain the
current level of funding. Should the bank demand additional reductions in the line of credit, the Company is confident additional
financing can be obtained through completion of the private placement still outstanding or obtain bank funding elsewhere at equivalent
terms, or if necessary or raise the funds needed through operations.
The $950 short term advance provided
financing before the planned investment of the CEO of UNIC, China, (see above) by Michaela Ott and Michael Ott during the
first quarter ended March 31, 2015, which is no longer an obligation of the Company.
Off-Balance Sheet Arrangements
As of June 30, 2015, we did not have any
relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or
special purpose entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow
or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise
if we had engaged in such relationships.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our chief executive officer and our
chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, the “Exchange Act”) as of the
end of the period covered by this report. Based on that evaluation, our chief executive and chief financial officers have
concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that the information
we are required to disclose in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to our
management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.
Part II. Other Information
Item 1. Legal
Proceedings.
During the second quarter ended June
30, 2015, the Company settled a litigation case with D&D Technology, Inc. Union NJ, involving third party
development costs with payment of $15,000 by MEDITE to D&D Technology. This amount had been previously expensed and
recognized as an accrued liability in 2014.
On August 2013, the German local state
court ruled the Company was not in breach of claims pursued by plantiff, Hologic Deutschland GmbH, Germany. However, the court
ruled the Company must clearly differentiate their products in the German market from those offered by Hologic or be subject to
court imposed penalties with a limit of Euro 250,000 ($277,360 as of June 30, 2015). Hologic has appealed the verdict and in
addition the Company has appealed the provision of the verdict which applies to the possible penalty as described.
The
Company’s former auditor L.J. Soldinger and Associates filed a claim against the Company in Illinois’ Lake
County Superior Court. The case was later transferred to Federal District Court in Chicago, Illinois. The Company believes the
claims are without merit and is adequately reserved for costs associated with the claim.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
During the quarter
ended June 30, 2015 the Company sold 711,250 shares of common stock to the President of UNIC Medical, a distributor-customer of
the Company, at a per share price of $1.60, pursuant to Regulation S of the Securities Act of 1933. This person is a foreign national.
We issued the foregoing securities in reliance on the safe harbor
and exemptions from registration provided by Regulation S of the Securities Act of 1933, as amended. No investor who participated
in the offering was a U.S. citizen, and the offering was conducted by the officers and directors of the Company without the participation
of any underwriters, and no commissions were paid to any person.
Item 3. Defaults upon Senior
Securities.
As of the end of the second quarter,
the remaining balance of approximately $21,000 on the note payable to Ventana Medical Systems, Inc. was in default. However,
on February 23, 2015, the Company reached an agreement with Ventana Medical Systems, Inc. whereby both parties have agreed
that Ventana Medical Systems, Inc. will accept $38,281 as payment in full for all outstanding principal and accrued interest.
The $38,281 has been included in current portion of long-term debt on the consolidated balance sheet. As part of this
agreement, Ventana Medical Systems, Inc. has agreed to convert $1.75 million stated value of Series D Preferred stock and
all outstanding accrued dividends of $656,250 for 12,000 shares of the Company’s common stock. Prior to the execution
of this agreement, the Company had failed to make principal and interest payments when due and is in breach of
certain warranties and representations under the notes included above.
Item 6. Exhibits
Exhibit | |
|
Number | |
Description |
| |
|
31.1 | |
Section 302 certification by the principal executive officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| |
|
31.2 | |
Section 302 certification by the chief financial officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| |
|
32.1 | |
Section 906 certification by the principal executive pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
| |
|
32.2 | |
Section 906 certification by the chief financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
| |
|
101.INS | |
XBRL Instance |
| |
|
101.SCH | |
XBRL Taxonomy Extension Schema |
| |
|
101.CAL | |
XBRL Taxonomy Extension Calculation |
| |
|
101.DEF | |
XBRL Taxonomy Extension Definition |
| |
|
101.LAB | |
XBRL Taxonomy Extension Labels |
| |
|
101.PRE | |
XBRL Taxonomy Extension Presentation |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
MEDITE Cancer Diagnostics,
Inc. |
|
|
Date: August 13,
2015 |
/s/
Michaela Ott |
|
Michaela
Ott |
|
Chief
Executive Officer |
|
|
Date: August 13, 2015 |
/s/
Robert F. McCullough, Jr. |
|
Robert
F. McCullough, Jr. |
|
Chief
Financial Officer |
Exhibit 31.1
CERTIFICATION
I, Michaela Ott, certify that:
(1) |
I
have reviewed this quarterly report on Form 10-Q of MEDITE Cancer Diagnostics, Inc.; |
(2) |
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
(3) |
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
(4) |
I am responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have: |
a. |
Designed such
disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
me by others within those entities, particularly during the period in which this report is being prepared; |
b. |
Designed such
internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under
my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
c. |
Evaluated the
effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
d. |
Disclosed in
this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
(5) |
I have disclosed,
based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and |
b. |
Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting. |
|
|
/s/
Michaela Ott |
|
|
Michaela Ott |
|
|
Chief Executive
Officer |
|
|
Dated:
August 13, 2015 |
Exhibit 31.2
CERTIFICATION
I, Robert F. McCullough Jr., certify that:
(1) |
I
have reviewed this quarterly report on Form 10-Q of MEDITE Cancer Diagnostics, Inc.; |
(2) |
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
(3) |
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
(4) |
I am responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have: |
a. |
Designed such
disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
me by others within those entities, particularly during the period in which this report is being prepared; |
b. |
Designed such
internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under
my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
c. |
Evaluated the
effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
d. |
Disclosed in
this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
(5) |
I have disclosed,
based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
All significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and |
b. |
Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting. |
|
|
/s/
Robert F. McCullough Jr. |
|
|
Robert F. McCullough
Jr. |
|
|
Chief Financial
Officer |
|
|
Dated: August
13, 2015 |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with
the Quarterly Report of MEDITE Cancer Diagnostics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30,
2015, filed with the Securities and Exchange Commission (the “Report”), I, Michaela Ott, Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
that, to my knowledge:
1. The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report
fairly presents, in all material respects, the financial condition as of the dates presented and the results of operations of
the Company for the periods presented.
|
|
/s/
Michaela Ott |
|
|
Michaela Ott |
|
|
Chief Executive
Officer |
|
|
Dated: August 13, 2015 |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with
the Quarterly Report of MEDITE Cancer Diagnostics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30,
2015, filed with the Securities and Exchange Commission (the “Report”), I, Robert McCullough, Jr., Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 that, to my knowledge:
1. The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report
fairly presents, in all material respects, the financial condition as of the dates presented and the results of operations of
the Company for the periods presented.
|
|
/s/
Robert F. McCullough, Jr. |
|
|
Robert F. McCullough,
Jr. |
|
|
Chief Financial
Officer |
|
|
Dated: August 13, 2015 |
Medite Cancer Diagnostics (CE) (USOTC:MDIT)
Historical Stock Chart
From Sep 2024 to Oct 2024
Medite Cancer Diagnostics (CE) (USOTC:MDIT)
Historical Stock Chart
From Oct 2023 to Oct 2024