e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2010
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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 51481
MELA SCIENCES, INC.
(Exact name of Registrant as specified in its charter)
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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13-3986004
(I.R.S. Employer
Identification No.) |
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50 South Buckhout Street, Suite 1
Irvington, New York
(Address of Principal Executive offices)
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10533
(Zip Code) |
Registrants Telephone Number, including area code:
(914) 591-3783
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
þ Noo
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 definition of accelerated filer large
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company o |
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 during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
As of August 2 , 2010: 25,230,535 shares of the Registrants common stock were outstanding.
MELA Sciences, Inc.
Table of Contents
1
MELA SCIENCES, INC.
CONDENSED BALANCE SHEETS
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June 30, |
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December 31, |
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2010 |
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2009 |
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(unaudited) |
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* |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
25,314,521 |
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$ |
29,673,420 |
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Prepaid expenses and other current assets |
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342,277 |
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664,962 |
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Total Current Assets |
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25,656,798 |
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30,338,382 |
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Property and equipment, net |
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1,959,955 |
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1,571,956 |
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Patents and trademarks, net |
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77,058 |
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83,008 |
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Deferred financing costs |
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192,477 |
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85,570 |
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Other assets |
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321,220 |
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48,000 |
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Total Assets |
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$ |
28,207,508 |
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$ |
32,126,916 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current Liabilities: |
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Accounts payable (includes related parties of $0 as of June 30, 2010 and $6,921
as of December 31, 2009) |
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$ |
735,687 |
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$ |
1,187,201 |
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Accrued expenses (includes related parties of $41,500 as of June 30, 2010 and
$0 as of December 31, 2009) |
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917,445 |
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590,600 |
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Other current liabilities |
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24,801 |
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33,285 |
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Total Current Liabilities |
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1,677,933 |
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1,811,086 |
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Long Term Liabilities: |
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Deferred rent |
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52,152 |
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Total Long Term Liabilities |
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52,152 |
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Total Liabilities |
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1,730,085 |
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1,811,086 |
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COMMITMENTS AND CONTINGENCIES (Note 7) |
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Stockholders Equity |
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Preferred stock $.10 par value; authorized 10,000,000 shares; issued and
outstanding: none |
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Common stock $.001 par value; authorized 45,000,000 shares at June 30, 2010
and 30,000,000 at December 31, 2009; issued and outstanding 23,030,535 shares
at June 30, 2010 and 22,354,317 at December 31, 2009 |
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23,031 |
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22,354 |
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Additional paid-in capital |
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115,317,094 |
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109,513,582 |
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Accumulated deficit |
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(88,862,702 |
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(79,220,106 |
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Stockholders Equity |
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26,477,423 |
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30,315,830 |
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Total Liabilities and Stockholders Equity |
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$ |
28,207,508 |
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$ |
32,126,916 |
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* |
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Derived from the audited balance sheet as of December 31, 2009 |
See accompanying notes to the financial statements
2
MELA SCIENCES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
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Three months ended June 30, |
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Six months ended June 30, |
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2010 |
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2009 |
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2010 |
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2009 |
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Operating expenses: |
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Research and development |
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$ |
2,552,689 |
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$ |
2,300,602 |
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$ |
5,339,759 |
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$ |
4,835,016 |
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General and administrative |
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2,048,157 |
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1,571,812 |
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4,319,322 |
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3,098,552 |
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Operating loss |
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(4,600,846 |
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(3,872,414 |
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(9,659,081 |
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(7,933,568 |
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Interest income |
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3,009 |
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9,285 |
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3,961 |
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34,768 |
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Other income |
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4,999 |
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28,031 |
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12,497 |
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74,116 |
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Gain on sale of fixed assets |
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1,500 |
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27 |
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Net loss: |
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$ |
(4,591,338 |
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$ |
(3,835,098 |
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$ |
(9,642,596 |
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$ |
(7,824,684 |
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Basic and diluted net loss per common share |
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$ |
(0.20 |
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$ |
(0.22 |
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$ |
(0.42 |
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$ |
(0.44 |
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Basic and diluted weighted average number of
common shares outstanding |
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23,028,854 |
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17,656,686 |
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22,886,964 |
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17,646,067 |
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See accompanying notes to the financial statements
3
MELA SCIENCES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
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Six Months Ended June 30, |
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2010 |
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2009 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(9,642,596 |
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$ |
(7,824,684 |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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253,492 |
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163,338 |
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Noncash compensation |
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366,382 |
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225,844 |
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Changes in operating assets and liabilities: |
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Decrease in prepaid expenses and other current assets |
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322,685 |
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71,871 |
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Increase in deferred rent |
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52,152 |
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Decrease in accounts payable and accrued expenses |
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(124,669 |
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(153,069 |
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Decrease in deferred income |
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(36,085 |
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Decrease in other current liabilities |
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(8,484 |
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(6,675 |
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Increase in other assets |
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(273,220 |
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(1,063 |
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Net cash used in operating activities |
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(9,054,258 |
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(7,560,523 |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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(637,014 |
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(91,681 |
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Proceeds from sale of fixed assets |
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1,473 |
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Sale of marketable securities |
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397,380 |
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Net cash (used in) provided by investing activities |
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(635,541 |
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305,699 |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options and warrants |
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1,717,703 |
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131,207 |
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Expenses related to public offering |
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(130,086 |
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Proceeds from Committed Equity Financing Facility |
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3,750,000 |
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Expenses related to Committed Equity Financing Facility |
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(6,717 |
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(199,523 |
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Net cash provided by financing activities |
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5,330,900 |
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(68,316 |
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Net decrease in cash and cash equivalents |
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(4,358,899 |
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(7,323,140 |
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Cash and cash equivalents at beginning of period |
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29,673,420 |
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15,069,939 |
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Cash and cash equivalents at end of period |
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$ |
25,314,521 |
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$ |
7,746,799 |
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Supplemental Schedule of Non-cash Investing and Financing Activities |
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Unrealized loss on marketable securities |
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$ |
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$ |
6,868 |
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Deferred financing costs charged to additional paid-in capital |
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$ |
23,179 |
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$ |
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See accompanying notes to the financial statements
4
MELA SCIENCES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
MELA Sciences, Inc. (formerly Electro-Optical Sciences, Inc.) a Delaware corporation (the
Company) is a medical device company focused on the design, development and commercialization of
a non-invasive, point-of-care (in the doctors office)
instrument to assist in the detection of early melanoma. The Companys flagship product, MelaFind®, features a hand-held
imaging device that emits light of multiple wavelengths to capture images of suspicious pigmented
skin lesions and extract data. The data are then analyzed utilizing image processing classification
algorithms, trained on our proprietary database of melanomas and benign lesions, to provide
information to assist in the management of the patient, including information useful in the
decision of whether to biopsy the lesion.
The components of the MelaFind® system include:
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a hand-held imaging device, which employs high precision optics and multi-spectral illumination
(multiple colors of light including near infra-red); |
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a proprietary database of pigmented skin lesions, which we believe to be the largest in the U.S.; and |
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lesion classifiers, which are sophisticated mathematical algorithms that extract lesion feature
information and classify lesions. |
The MelaFind® pre-market approval (PMA) application was filed in June 2009
and is under review at the U.S. Food and Drug Administration (the FDA or the Agency). The
pivotal trial conducted to establish the safety and effectiveness of
MelaFind® was performed under the auspices of a Protocol Agreement. In
addition, the MelaFind® PMA has been granted Expedited Review by the FDA. On
March 19, 2010 the Company received a series of questions from the FDA and was notified that the
MelaFind® PMA was not approvable at this time. In addition, the Company was
advised that the review process had been extended by a period of up to 180 days following the
submission of our response to the FDA action letter. Since receiving the questions from the FDA on
March 19, the Company has had a series of interactions with the
Agency. A draft response was
submitted to the FDA in mid-April, an in-person meeting was held with the Agency to clarify
several questions and the final formal response to all questions provided by the FDA was submitted
to the Agency on May 7, 2010. The FDA has informed the Company that the date for the
Melafind®
Panel Meeting of the General and Plastic Surgery Devices Panel which
was originally scheduled for August 26, 2010 is now scheduled
for November 18, 2010.
Upon obtaining approval from the FDA, we plan to launch MelaFind®
commercially in the United States. The Company is also continuing its efforts with European
regulatory agencies to obtain a CE mark for MelaFind®. The Company is also
conducting market research activities that will facilitate commercialization in Europe and other
countries.
To date the Company has not generated any revenues from MelaFind®.
The Company anticipates that it will continue to incur net losses for the foreseeable future in the
development, obtaining of regulatory approval and commercialization of the Melafind® device. From inception,
the Company financed operations primarily through the sale of convertible preferred stock and
subsequently sold common stock as part of an initial public offering in October 2005, two private
placements (in November 2006 and August 2007), two registered direct offerings (in August 2008 and
July 2009), and pursuant to a Committed Equity Financing Facility (CEFF) with Kingsbridge Capital
Limited in the second half of 2009 and first quarter of 2010. In
addition, the Company completed a public sale of its common stock pursuant to a public
offering which closed July 6, 2010. (Refer to Note 12 for further details.)
Management
believes that the Company currently has sufficient capital to fund the
Companys anticipated level of operations for at least the next twelve months.
5
The Company faces certain risks and uncertainties which are present in many emerging medical device
companies regarding future profitability, ability to obtain future capital, protection of patents
and intellectual property rights, competition, rapid technological change, government regulations,
changing health care marketplace, recruiting and retaining key personnel, and reliance on third
party manufacturing organizations.
As of June 30, 2010, the Companys total of cash and cash equivalents was $25.3 million. On July
6, 2010 the Company received net proceeds of approximately $15.3 million through a public offering of
common stock. (Refer to Note 12 for further details). The Company may require additional funds to
achieve significant commercialization of MelaFind®. However, there can be no
assurances that the Company will be able to raise additional financing in the future. Additional
funds may not become available on acceptable terms, and there can be no assurance that any
additional funding that the Company does obtain will be sufficient to meet the Companys needs in
the long term. In the event that the Company is unable to raise additional funds, the Company has
the ability and intent to reduce certain discretionary expenditures.
The unaudited condensed financial statements included herein have been prepared from the books and
records of the Company pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) for reporting on Form 10-Q. The information and note disclosures normally
included in complete financial statements prepared in accordance with generally accepted accounting
principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and
regulations. The interim financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2009.
The Companys management is responsible for the financial statements included in this document. The
Companys interim financial statements are unaudited. Interim results may not be indicative of the
results that may be expected for the year. However, the Company believes all adjustments considered
necessary for a fair presentation of these interim financial statements have been included and are
of a normal and recurring nature.
2. COMPREHENSIVE LOSS
Comprehensive loss includes net loss and unrealized gains and losses on available-for-sale
marketable securities. Cumulative unrealized gains and losses on available-for-sale marketable
securities are reflected as accumulated other comprehensive gain or loss in stockholders equity on
the Companys balance sheet.
For the
three months ended June 30, 2010 both comprehensive loss and net loss were $4,591 as the
Company has not held any available-for-sale marketable securities in 2010. For the three months
ended June 30, 2009, comprehensive loss was $3,830 which included a net loss of $3,835 and an
unrealized gain on available-for-sale marketable securities of $5.
For the six months ended June 30, 2010 both comprehensive loss and net loss were $9,643 as the
Company has not held any available-for-sale marketable securities in 2010. For the six months
ended June 30, 2009, comprehensive loss was $7,818 which included a net loss of $7,825 and an
unrealized gain on available-for-sale marketable securities of $7.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires the use of estimates and assumptions by management that affect
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates relate to stock-based compensation arrangements
and accrued expenses. Actual results could differ from these estimates.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2010, the FASB issued ASU 2010-6, an update that improves the requirements related to
Fair Value Measurements and Disclosures Subtopic 820-10 of the FASB Accounting Standards
Codification originally issued as FASB Statement 157. This update requires enhanced disclosures
about significant transfers between Level 1and Level 2 assets and the disaggregated activity in the roll
forward for level 3 Fair Value measurements. Except for the detailed Level 3 roll-forward
disclosures, these new disclosures are effective for fiscal years beginning after December 15, 2009
and for interim periods within those fiscal years. The requirement to provide detailed disclosures
about purchases, sales, issuances, and settlements in the roll-forward activity for Level 3 Fair
Value measurements is effective for interim and annual reporting
6
periods beginning after December 31, 2010. The Company does not expect the adoption of ASU 2010-6 to have a material impact on the
Companys financial statements.
In February 2010, the FASB issued ASU 2010-09. This update amends the requirements of ASU 855-10
(subsequent events) by eliminating the need to disclose the date through which subsequent events
have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the
SECs requirements. This amendment is effective for interim or annual periods ending after June 15,
2010. The adoption of ASU 2010-09 did not have any impact on our financial statements.
In April 2010, the FASB issued ASU 2010-17. This Update provides guidance on defining a milestone
under Topic 605 and determining when it may be appropriate to apply the milestone method of revenue
recognition for research or development transactions. Consideration that is contingent on
achievement of a milestone in its entirety may be recognized as revenue in the period in which the
milestone is achieved only if the milestone is judged to meet certain criteria to be considered
substantive. Milestones should be considered substantive in their entirety and may not be
bifurcated. An arrangement may contain both substantive and non-substantive milestones that should
be evaluated individually. The amendments in this update are effective on a prospective basis for
milestones achieved in fiscal years, and interim periods within those years, beginning on or after
June 15, 2010. Early adoption is permitted. The adoption of ASU 2010-17 did not have any impact on
our financial statements.
5. NET LOSS PER COMMON SHARE
Basic EPS excludes dilution for potentially dilutive securities and is computed by dividing net
loss attributable to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted EPS gives effect to dilutive options, warrants and other
potential common shares outstanding during the period. Diluted net loss per common share is equal
to the basic net loss per common share since all potentially dilutive securities are anti-dilutive
for each of the periods presented. Potential common stock equivalents excluded consist of stock
options and warrants which are summarized as follows:
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June 30, |
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2010 |
|
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2009 |
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Common stock options |
|
|
2,164,598 |
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|
2,007,473 |
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Warrants |
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614,906 |
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1,307,669 |
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Total |
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2,779,504 |
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3,315,142 |
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6. STOCK-BASED COMPENSATION
The Company has one stock-based compensation plan under which the Board of Directors may currently
grant incentives to employees, consultants, directors, officers and collaborating scientists in the
form of incentive stock options, nonqualified stock options and restricted stock awards. The
Company also has two other stock-based compensation plans pursuant to which stock options are
outstanding but no new grants may be made.
Stock awards under the Companys stock option plans have been granted at prices which are no less
than the market value of the stock on the date of the grant. Options granted under the 2005 Stock
Incentive Plan (2005 Plan) are generally time-based or performance-based, and vesting varies
accordingly. Options under this plan expire in up to a maximum of ten years from the date of grant.
Since the Company adopted the 2005 Plan, awards may not be granted under the Companys previous
stock option plans.
The compensation expense recognized in the Statement of Operations in the second quarter of 2010
and 2009 for stock options amounted to $184 (of which $6 relates to performance milestones) and
$107 (of which $4 relates to performance milestones), respectively. For the six months ended June
2010 and 2009 compensation expense for stock options amounted to $366 (of which $11 relates to
performance milestones) and $226 (of which $13 relates to performance milestones), respectively.
Cash received from options and warrants exercised under all share-based payment arrangements for
the three months ended June 30, 2010 and 2009 were $20 and $129, respectively, and for the six
month periods ended June 30, 2010 and 2009 were $1,717 and $131 respectively.
The fair value of each option award granted is estimated on the date of grant using the
Black-Scholes option valuation model and assumptions as noted in the following table:
7
|
|
|
|
|
|
|
|
|
|
|
For the Six Months |
|
For the Six Months |
|
|
Ended June 30, 2010 |
|
Ended June 30, 2009 |
Expected life |
|
5-10 years |
|
5 years |
Expected volatility |
|
|
61 |
% |
|
|
60 |
% |
Risk-free interest rate |
|
|
2.26-3.56 |
% |
|
|
1.69 -2.54 |
% |
Dividend yield |
|
|
0 |
% |
|
|
0 |
% |
The expected life of the options is based on the observed and expected time to full-vesting,
forfeiture and exercise. Groups of employees that have similar historical exercise behavior are
considered separately for valuation purposes. Starting with the three month period ending September
30, 2009, the expected volatility percentage is stated as calculated rather than as implied. The
expected volatility assumptions were determined based upon the historical volatility of the
Companys daily closing stock price. The calculated expected volatility approximates implied
volatility from other publicly-traded stock that was established at the time of our IPO. The
risk-free interest rate is based on the continuous rates provided by the U.S. Treasury with a term
equal to the expected life of the option. The expected dividend yield is zero as the Company has
never paid dividends and does not currently anticipate paying any in the foreseeable future.
At June 30, 2010, stock options to purchase 2,164,598 shares of common stock at exercise prices
ranging from $1.00 to $11.11 per share are outstanding and exercisable at various dates through
2020.
During the three months and six months ended June 30, 2010, the weighted average fair value of
options granted, estimated as of the grant date using the Black-Scholes option valuation model, was
$4.61 and $4.68. For the three and six month period ended June 30, 2009, the weighted average fair
value of options granted was $3.58 and $3.20, respectively.
For the three and six months ended June 30, 2010, the total intrinsic value of options exercised
was $11, and $18, respectively. For the three and six months ended June 30, 2009, the total
intrinsic value of options exercised was $215, and $235, respectively.
The status of the Companys stock option plans at June 30, 2010 is summarized in the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
Exercise |
|
|
Contractual |
|
|
Aggregate |
|
|
|
Number of |
|
|
Price per |
|
|
Term in |
|
|
Intrinsic |
|
|
|
Shares |
|
|
Share |
|
|
Years |
|
|
Value |
|
Outstanding at December 31, 2009 |
|
|
2,031,023 |
|
|
$ |
5.09 |
|
|
|
5.2 |
|
|
|
|
|
Granted |
|
|
170,500 |
|
|
|
6.84 |
|
|
|
8.3 |
|
|
|
|
|
Exercised |
|
|
(5,925 |
) |
|
|
4.40 |
|
|
|
|
|
|
|
|
|
Forfeited or expired |
|
|
(31,000 |
) |
|
|
5.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2010 |
|
|
2,164,598 |
|
|
$ |
5.22 |
|
|
|
5.1 |
|
|
$ |
5,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and exercisable at June 30, 2010 |
|
|
906,285 |
|
|
$ |
5.15 |
|
|
|
3.1 |
|
|
$ |
2,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
Options Exercisable |
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Remaining |
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
Number |
|
|
Contractual |
|
|
Exercise |
|
|
Number |
|
|
Exercise |
|
Range of Exercise Prices |
|
Outstanding |
|
|
Life |
|
|
Price |
|
|
Exercisable |
|
|
Price |
|
$.01-$1.00 |
|
|
55,971 |
|
|
2.4 years |
|
$ |
1.00 |
|
|
|
55,971 |
|
|
$ |
1.00 |
|
$1.01-$4.50 |
|
|
1,104,652 |
|
|
7.2 years |
|
$ |
3.85 |
|
|
|
327,739 |
|
|
$ |
3.90 |
|
$4.51-$11.11 |
|
|
1,003,975 |
|
|
2.9 years |
|
$ |
6.97 |
|
|
|
522,575 |
|
|
$ |
6.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$.01-$11.11 |
|
|
2,164,598 |
|
|
5.1 years |
|
$ |
5.22 |
|
|
|
906,285 |
|
|
$ |
5.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2010, of the total 2,164,598 options outstanding, 1,258,313 have not vested. Of
this total unvested amount, 914,313 options will vest upon the attainment of certain milestones,
and the balance will vest over the requisite service period. The weighted average vesting period
for the non-milestone, non-vested awards not yet recognized is 1.9 years.
8
As of June 30, 2010, of the $3,609 of total unrecognized compensation cost related to unvested
options to be recognized, $2,917 is to be recognized over a period to be determined by
performance-based milestones, and $692 is to be recognized over the requisite service period
through 2014.
As of June 30, 2010, there were 1,104,751 shares available for future grants under the Companys
2005 Plan.
7. COMMITMENTS AND CONTINGENCIES
The Company is obligated under a seven year non-cancelable operating lease for office, lab, and
manufacturing space expiring December 2016. The lease is subject to escalations for increases in
operating expenses. The approximate aggregate minimum future payments due under this lease are as
follows:
|
|
|
|
|
Year ended December 31, |
|
|
|
|
2010 remaining six months |
|
$ |
177 |
|
2011 |
|
|
382 |
|
2012 |
|
|
410 |
|
2013 |
|
|
439 |
|
2014 |
|
|
455 |
|
2015 |
|
|
456 |
|
2016 |
|
|
456 |
|
|
|
|
|
|
|
$ |
2,775 |
|
|
|
|
|
Rental payments are recognized as rent expense on a straight-line basis over the term of the
lease. In addition to rents due under this lease agreement, the Company is obligated to pay
additional facility charges including utilities, taxes, and operating expenses. The Company also
leases certain office equipment under non-cancelable operating leases which expire at various times
through 2011.
Rental expense totaled approximately $130 and $82 for the three month periods ended June 30, 2010
and 2009 respectively and approximately $208 and $164 for the six month periods ended June 30, 2010
and 2009 respectively.
ASKION GmbH (ASKION), located in Gera Germany, which specializes in precision optics, is an
integral member of the MelaFind® development team and the Company expects to
continue to work with ASKION for the foreseeable future. ASKION produced the
MelaFind® hand-held imaging devices used in our pivotal clinical trials and
is currently building additional units and performing other additional developmental activities.
Beginning in August 2006, the Company, primarily through ASKION, engaged Carl Zeiss Jena GmbH
(Zeiss) to build the lenses and assemblies, as well as provide certain technical consulting, for
the MelaFind® units which have been used in the Companys pivotal clinical
trials. This work has been performed from 2007 through the present, and is expected to continue on
commercial MelaFind® units throughout 2010.
The Company has an employment agreement with its President and Chief Executive Officer, Dr. Gulfo,
which provides for an annual base salary, stock options and discretionary performance bonuses. The
agreement, which provides for automatic one-year renewal terms, currently runs through the end of
2010.
The Company is not currently subject to any material legal proceedings, nor to managements
knowledge is any material legal proceeding threatened against the Company.
8. STOCKHOLDERS EQUITY
On October 31, 2006, the Company entered into securities purchase agreements and a registration
rights agreement with certain accredited investors for the private placement of 2,312,384 shares of
the Companys common stock and warrants to purchase up to 346,857 shares of the Companys common
stock for aggregate gross proceeds of approximately $13.2 million and net proceeds of approximately
$12.5 million. Pursuant to the securities purchase agreements, for a purchase price of $5.70 each
investor received one share of the Companys common stock and a warrant to purchase 0.15 of a share
of the Companys common stock. The warrants are five-year warrants with an exercise price of $6.70
per share. In accordance with the terms of this warrant, on January 5, 2010 the Company required
the holders to exercise their warrants within 30 days. As a result, warrants to purchase 173,963
shares of the Companys common stock, representing all of the outstanding 2006 warrants, were
exercised resulting in gross proceeds to the Company of $1.165 million.
9
On July 31, 2007, the Company entered into a securities purchase agreement and a registration
rights agreement with certain accredited investors for the private placement of 2,000,178 shares of
the Companys common stock and warrants to purchase up to 500,041 shares of the Companys common
stock for aggregate gross proceeds of approximately $11.5 million and net proceeds of approximately
$10.7 million. The private placement closed August 3, 2007. Pursuant to the securities purchase
agreement, for a purchase price of $5.75 each investor received one share of the Companys common
stock and a warrant to purchase 0.25 of a share of common stock. The warrants are five-year
warrants with an exercise price of $8.00 per share.
Pursuant to the terms of the registration rights agreements, the Company filed resale registration
statements covering the shares in both private placements, including the shares issuable upon
exercise of the warrants, with the SEC. In the event that the Company fails to maintain the
effectiveness of these registration statements for the periods described in the registration rights
agreements, the holders would be entitled to certain monetary damages.
However, in no event is the Company obligated to make payments in excess of 10% of the aggregate
purchase price of the common shares. The Company has concluded that it is unlikely that the Company
would be required to remit any payments to its investors for failing to maintain its effectiveness.
The Companys resale registration statements on Forms S-3 were declared effective by the SEC (file
#333-139056 and file #333-145740) on February 12, 2007 and September 11, 2007, respectively.
In June 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.
Management utilized this shelf registration statement in August 2008 by completing a registered
direct offering of 2,088,451 shares of the Companys common stock for aggregate gross proceeds of
$11.9 million ($11 million approximate net proceeds to the Company). In addition, in July 2009,
management completed a registered direct offering of 2,400,000 shares of the Companys common stock
for aggregate gross proceeds of $15 million ($13.75 million approximate net proceeds to the
Company). Approximately $13.1 million remains available under the Companys 2008 shelf registration
statement as of June 30, 2010.
In May 2009, the Company entered into a committed equity financing facility (CEFF) with
Kingsbridge Capital Limited, pursuant to which Kingsbridge committed to purchase from time to time
at the Companys sole discretion, up to the lesser of $45 million or 3,327,000 shares of the
Companys common stock, prior to May 7, 2012 subject to various conditions for individual sales,
including dollar, timing, and trading volume limitations, a minimum market per share price, and
other contractual and regulatory requirements.
There is no assurance that the Company will satisfy all the various conditions for individual sales
enabling it to use all of the CEFF. In connection with this CEFF, the Company issued a 5 year
warrant, exercisable as of November 7, 2009, to Kingsbridge to purchase up to 200,000 shares of the
Companys common stock at an exercise price of $11.35 per share with a Black Scholes Fair Value of
$678. The issuance of this warrant was deemed to be a cost of the offering.
Under the CEFF, during 2009, the Company sold 1,824,941 shares of common stock to Kingsbridge
Capital Limited, at an average per share price of approximately $9.24, for gross proceeds of
approximately $16.9 million. Under the CEFF, during the three and six month periods ending June 30,
2010, the Company sold 406,744 shares of common stock to Kingsbridge Capital Limited, at an average
per share price of approximately $9.22, for gross proceeds of approximately $3.75 million. A
proportionate share of the CEFF originating expenses was allocated to these sales from deferred
offering costs. Net of expenses, proceeds from the 2010 sales were approximately $3.727 million.
There were no sales under the CEFF in the same period a year earlier.
As of June 30, 2010, 1,095,315 shares of common stock remain available for sale under the CEFF,
exclusive of the 200,000 outstanding warrants held by Kingsbridge. As of June 30, 2010, legal,
accounting, and other costs associated with this agreement approximating $62 have been deferred and
will be charged to equity as a reduction of future proceeds from the CEFF or operations should
management decide to abandon the CEFF.
In May 2010, 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 $75 million. The
registration statement was declared effective by the SEC on June 1, 2010 (File No. 333-167113).
Management utilized this shelf registration statement in July 2010 by completing a public offering
of 2,200,000 shares of the Companys common stock for aggregate gross proceeds of $16.5 million
($15.3 million approximate net proceeds to the Company) (refer to Note 12 for further details).
10
As of June 30, 2010, the Company had 45,000,000 shares of $0.001 par value common stock authorized
and 23,030,535 shares issued and outstanding; and 10,000,000 shares of $0.10 par value preferred
stock authorized with no preferred shares issued and outstanding. The authorized common stock was
increased to include the additional 15,000,000 shares of common stock that the stockholders voted
to authorize at the Companys 2010 Annual Meeting of Stockholders on April 30, 2010.
9. WARRANTS
In connection with the Companys initial public offering in October 2005, the Company issued
150,000 warrants to the underwriters to purchase shares of the Companys common stock at $6.25 per
share. These 5-year warrants became exercisable on October 28, 2006, and 68,125 remain outstanding
at June 30, 2010. During the six month period ending
June 30, 2010, a 75,000 share warrant was
exercised in accordance with the cashless exercise formula and provisions of
these underwriter warrants. 51,174 of the warrants were surrendered as part of the cashless
exercise which resulted in the issuance of 23,826 common shares.
As previously discussed in connection with the Companys private placements, in November 2006 and
August 2007 the Company issued warrants to purchase up to 346,857 and 500,041 shares of the
Companys common stock, respectively. At June 30, 2010, none of the 2006 warrants and 346,781 of
the 2007 warrants were outstanding. The 2007 outstanding warrants are exercisable for five years at
a price of $8.00 per share.
In addition, in connection with the May 7, 2009 CEFF with Kingsbridge Capital, the Company issued a
5 year warrant to Kingsbridge to purchase up to 200,000 shares of the Companys common stock at an
exercise price of $11.35 per share. These 200,000 warrants are outstanding at June 30, 2010.
Warrants exercised were 0 and 16,875 during the three month periods ended June 30, 2010 and June
30, 2009, respectively. 263,549 and 16,875 warrants were exercised during the six month periods
ended June 30, 2010 and June 30, 2009, respectively.
10. RELATED PARTY CONSULTING AGREEMENTS
The Company has in place the following consulting agreements with related parties:
Consulting Agreement with Breaux Castleman
In June 2003, the Company entered into a consulting agreement with Breaux Castleman, the Chairman
of the Companys Board of Directors, for consulting services related to the FDA approval of
MelaFind®, and the Companys business and financial strategy. Under this
agreement, Mr. Castleman receives compensation for each month of services rendered. The Company
incurred and paid, pursuant to this consulting agreement, $6 in each of the three month periods
ended June 30, 2010 and 2009 and $12 in each of the six month periods ended June 30, 2010 and 2009.
This consulting agreement is terminable by either party by providing thirty days prior written
notice.
Consulting Agreement with Marek Elbaum, Ph.D.
Effective as of May 31, 2005, the Company retained Marek Elbaum, Ph.D., the Companys founder and
former President and Chief Science and Technology Officer, as the Companys Chief Scientist. In
consideration of the services to be provided, the Company agreed to pay Dr. Elbaum a monthly fee of
$15.
In May of 2007 and effective June 1, 2007, Dr. Elbaum and the Company entered into an amended
agreement. Under the terms of the amended agreement, Dr. Elbaum was paid a monthly fee of $9
through January 2009 when the contract terminated.
Consulting Agreement with Robert Friedman, M.D.
The Company has retained the services of Robert Friedman, M.D. as a consultant, medical advisor to
the Companys Board of Directors, and in connection with the clinical testing of
MelaFind®. In consideration for these services, Dr. Friedman is being paid at
a rate of $5 per day.
11
This consulting agreement continues to automatically renew for successive one-year terms unless
either party terminates the agreement at least 30 days prior to its expiration. The Company made no
payments to Dr. Friedman for the six month period ended June 30, 2010, and paid $22.5 and $40 for
the three and six month periods ended June 30, 2009, respectively.
Consulting Agreement with Gerald Wagner, Ph.D
Effective April 1, 2006, the Company entered into an amended and restated consulting agreement with
Gerald Wagner, Ph.D., a member of the Companys Board of Directors and its former Acting Chief
Operating Officer.
With the start of the Companys pivotal clinical trial in January 2007, Dr. Wagner transitioned out
of his role as the Companys acting Chief Operating Officer and entered into an amended and
restated consulting contract with the Company. Under the terms of the amended contract, Dr. Wagner
is paid a monthly retainer of $2.5 and will be paid $2.5 for each additional consulting day. This
amended agreement will end at the option of Dr. Wagner or the Company at any time, by providing
fifteen days prior written notice, or immediately upon the mutual agreement of the Company and Dr.
Wagner. The Company incurred consulting costs pursuant to this agreement of $7.5 and $15 in each of
the three and six month periods ended June 30, 2010 and June 30, 2009, respectively.
Consulting Agreement with Anne Egger
In March 2009, the Company entered into a consulting agreement with Anne Egger for certain
consulting services primarily focusing on physician advocacy. The agreement was for an initial term
of three months, and has subsequently been extended to run through October 2010, and may be
terminated by either party with 30 days notice. Under the terms of the agreement, Ms. Egger is
entitled to receive a consulting fee of $1.6 per day. Ms. Egger was appointed to the Companys
Board of Directors as of June 10, 2009. The Company incurred consulting costs pursuant to this
agreement of $12 and $19 in the three month periods ended June 30, 2010 and June 30, 2009,
respectively. The Company incurred consulting costs pursuant to this agreement of $35 and $19 in
the six month periods ended June 30, 2010 and June 30, 2009, respectively
11. OTHER INCOME
During March 2007, the Company entered into an agreement with LOreal to study and assess the
feasibility of using MELA Sciences novel multi-spectral imaging technology for the evaluation and
differentiation of pigmented skin lesions of cosmetic importance. In December 2008, LOreal and the
Company agreed on a second amendment to the agreement, for a new three month study. The laboratory
and clinical research is being funded by LOreal. Pursuant to the agreement, LOreal is responsible
for all costs and expenses incurred in connection with the feasibility program, and will reimburse
Mela Sciences for expenses incurred by Mela Sciences with respect to the Feasibility Program.
At December 31, 2009, the work to be carried out under the agreement was complete and the
Feasibility Program concluded. Therefore, no income was earned from the Feasibility Program in the
six months ended June 30, 2010. During the three and six month periods ended June 30, 2009, the
Company earned $0 and $34 respectively from LOreal as other income under the Feasibility Program.
During April 2005, the Company discontinued all operations associated with its
DIFOTI® product in order to focus its resources and attention on the
development and commercialization of MelaFind®. During December 2006, the
Company entered into a sale and exclusive licensing agreement with KaVo Dental GmbH (KaVo), a
leading dental equipment manufacturer, which provides for KaVo to further develop and commercialize
DIFOTI®. Beginning in July 2008, KaVo is required to pay to the Company a
royalty stream based upon the worldwide aggregate net sales of the licensed product, as defined in
the license agreement, or a set minimum. For the three and six months ended June 30, 2010, the
Company earned royalty income of $5 and $10, respectively. For the three and six months ended June
30, 2009, the Company was paid royalty income of $5 and $10, respectively.
12. SUBSEQUENT EVENTS
On June 30, 2010, the Company entered into an underwriting agreement, relating to the public
offering of 2,200,000 shares of the Companys common stock, at a price to the public of $7.50 per
share less underwriting discounts and commissions. Under the terms of the Underwriting Agreement,
the Company has also granted the Underwriters a 30-day option to purchase up to an additional 15%
of the shares of Common Stock offered in the Offering to cover over-allotments, if any, at the
Offering Price. The underwriters did not exercise this option. The gross
12
proceeds to the Company
from the sale of the Common Stock totaled $16.5 million. After deducting the Underwriters
discounts and commissions and other estimated offering expenses payable by the Company, net
proceeds were approximately $15.3 million. The Offering closed on July 6, 2010. The Common Stock
was offered and sold pursuant to the Companys Prospectus dated June 1, 2010 and the Companys
Prospectus Supplement filed with the Securities and Exchange Commission (the SEC) on June 30,
2010, in connection with a takedown from the Companys effective shelf registration statement on
Form S-3 (File No. 333-167113) declared effective by the SEC on June 1, 2010.
The FDA has informed the Company that the date for the Melafind® Panel
Meeting of the General and Plastic Surgery Devices Panel which was
originally scheduled for August 26, 2010 is now scheduled for
November 18, 2010.
13
ITEM 2.
MELA SCIENCES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This managements discussion and analysis of financial condition and results of operations is
intended to provide information to help you better understand and evaluate our financial condition
and results of operations. We recommend that you read this section in conjunction with our
unaudited condensed financial statements and accompanying notes included under Part I, Item 1 of
this Quarterly Report and our financial statements and accompanying notes in our Annual Report on
Form 10-K for the year ended December 31, 2009.
This quarterly report on Form 10-Q, including the following discussion and analysis of financial
condition and results of operations, contains forward-looking statements that you should read in
conjunction with the financial statements and notes to financial statements that we have included
elsewhere in this report. These statements are based on our current expectations, assumptions,
estimates and projections about our business and our industry, and involve known and unknown risks,
uncertainties, and other factors that may cause our or our industrys results, levels of activity,
performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied in, or contemplated by, the forward-looking
statements. Words such as believe, anticipate, expect, intend, plan, will, may,
should, estimate, predict, potential, continue, or the negative of such terms or other
similar expressions, identify forward-looking statements. Our actual results and the timing of
events may differ significantly from the results discussed in the forward-looking statements, and
you should not place undue reliance on these statements. Factors that might cause such a difference
include those discussed below under the heading Risk Factors, as well as those discussed
elsewhere in this quarterly report on Form 10-Q. We disclaim any intent or obligation to update any
forward-looking statements as a result of developments occurring after the period covered by this
report or otherwise.
Overview
We are a medical device company focused on the design and development of a non-invasive,
point-of-care instrument to assist in the detection of early melanoma. Our flagship product,
MelaFind®, features a hand-held imaging device that emits light of multiple
wavelengths to capture images of suspicious pigmented skin lesions and extract data. We currently
do not have any commercialized products or any significant source of revenue.
We commenced operations in December 1989 as a New York corporation, re-incorporated as a Delaware
corporation in September 1997, and changed our name from Electro-Optical Sciences, Inc. to MELA
Sciences, Inc. on April 30, 2010. Since our inception, we have generated significant losses. As of
June 30, 2010, we had an accumulated deficit of $88.9 million. We expect to continue to spend
significant amounts on the development of MelaFind®.
The MelaFind® pre-market approval (PMA) application was filed in June 2009
and is under review at the U.S. Food and Drug Administration (the FDA or the Agency). The
pivotal trial conducted to establish the safety and effectiveness of
MelaFind® was performed under the auspices of a Protocol Agreement. In
addition, the MelaFind® PMA has been granted Expedited Review by the FDA. On
March 19, 2010 the Company received a series of questions from the FDA and was notified that the
MelaFind® PMA was not approvable at this time. In addition, the Company was
advised that the review process had been extended by a period of up to 180 days following the
submission of our response to the FDA action letter. Since receiving the questions from the FDA on
March 19, the Company has had a series of interactions with the Agency. A draft response was
submitted to the FDA in mid-April, an in-person meeting was held with the Agency to clarify
several questions and the final formal response to all questions provided by the FDA was submitted
to the Agency on May 7, 2010. The FDA has informed the Company that the date for the
Melafind® Panel Meeting of
the General and Plastic Surgery Devices Panel which was originally scheduled for August 26, 2010 is now scheduled for November 18, 2010.
Upon obtaining approval from the FDA, we plan to launch MelaFind®
commercially in the United States. The Company is also continuing its efforts with European
regulatory agencies to obtain a CE mark for MelaFind®. The Company is also
conducting market research activities that will facilitate commercialization in Europe and other
countries.
14
Our revenue for the foreseeable future will depend on the approval by the FDA of
MelaFind® and the commercialization of MelaFind®, and
may vary substantially from year to year and quarter to quarter. We
believe that period-to-period comparisons of our results of operations may not be meaningful and should not be relied on as
indicative of our future performance.
Liquidity and Capital Resources
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.
Management utilized this shelf registration statement in August 2008 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), and
in July 2009 by completing a registered direct offering of 2,400,000 shares of the Companys common
stock for aggregate gross proceeds of $15 million ($13.75 million approximate net proceeds to the
Company). Approximately $13.1 million remains available under the Companys shelf registration
statement as of June 30, 2010.
In May 2009, the Company entered into a committed equity financing facility (CEFF) with
Kingsbridge Capital Limited, pursuant to which Kingsbridge committed to purchase from time to time
at the Companys sole discretion, up to the lesser of $45 million or 3,327,000 shares of the
Companys common stock, prior to May 7, 2012 subject to various conditions for individual sales,
including dollar, timing, and trading volume limitations, a minimum market per share price, and
other contractual and regulatory requirements. There is no assurance that the Company will satisfy
all the various conditions for individual sales enabling it to use all of the CEFF. In connection
with this CEFF, the Company issued a 5 year warrant, exercisable as of November 7, 2009, to
Kingsbridge to purchase up to 200,000 shares of the Companys common stock at an exercise price of
$11.35 per share with a Black Scholes Fair Value of $678. The issuance of this warrant was deemed
to be a cost of the offering.
Under the CEFF, during 2009, the Company sold 1,824,941 shares of common stock to Kingsbridge
Capital Limited, at an average per share price of approximately $9.24, for gross proceeds of
approximately $16.9 million. Under the CEFF, during the three month period ended June 30, 2010, the
Company sold 406,744 shares of common stock to Kingsbridge Capital Limited, at an average per share
price of approximately $9.22, for gross proceeds of approximately $3.75 million. A proportionate
share of the CEFF originating expenses was allocated to these sales from deferred offering costs.
Net of expenses, proceeds from these sales were approximately $16.8 million and $3.727 million for
2009 and 2010, respectively.
Most of our expenditures to date have been for research and development activities and general and
administrative expenses. Research and development expenses represent costs incurred for product
development, clinical trials, activities related to regulatory filings, and manufacturing
development efforts. We expense all of our research and development costs as they are incurred.
To date, we have not borrowed (other than by issuing convertible notes, all of which have been
converted into equity) or financed our operations through equipment leases, financing loans or
other debt instruments.
As of June 30, 2010, the Companys total of cash and cash equivalents was $25.3 million. The
Company may require additional funds to achieve significant commercialization of
MelaFind®.
However, there can be no assurances that the Company will be able
to raise additional financing in the future. Additional funds may not become available on
acceptable terms, and there can be no assurance that any additional funding that the Company does
obtain will be sufficient to meet the Companys needs in the long term. In the event that the
Company is unable to raise additional funds, the Company has the ability and intent to reduce
certain discretionary expenditures.
In May 2010, 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 $75 million. The
registration statement was declared effective by the SEC on June 1, 2010 (File No. 333-167113).
Management utilized this shelf registration statement in July 2010 by completing a public offering
of 2,200,000 shares of the Companys common stock for aggregate gross proceeds of $16.5 million
($15.3 million approximate net proceeds to the Company) (Refer to Note 12 for further details).
Our cash and cash equivalents at June 30, 2010 are liquid investments in money market accounts and
deposits with commercial banks, which are held in amounts that substantially exceed FDIC limits.
15
Cash Flows from Operating Activities (in thousands)
Net cash used in operations was $9,054 for the six months ended June 30, 2010. For the
corresponding period in 2009, net cash used in operations was $7,561. In both periods, cash used in
operations was attributable to net losses after an adjustment for non-cash charges related to
depreciation/amortization and share-based compensation, and other changes in operating assets and
liabilities.
Cash Flows from Investing Activities (in thousands)
For the six months ended June 30, 2010, there was $636 net cash used in our investing activities,
principally for the purchase of leasehold improvements and fixed assets. For the corresponding
period in 2009, $306 net cash provided by our investing activities principally related to the
redemption of marketable securities.
Cash Flows from Financing Activities (in thousands)
For the six months ended June 30, 2010, net cash provided by financing activities was $5,331,
representing net proceeds of $3,743 from the Committed Equity Financing Facility and $1,718 from
the exercise of warrants and options less $130 of expenses relating to the July public offering
(See Note 12). For the six months ended June 30, 2009, net cash used in financing activities was $68, representing cash
received from the exercise of options and warrants of $131 offset by $199 of deferred
offering costs related to the May 7, 2009 CEFF transaction.
Operating Capital and Capital Expenditure Requirements
We face certain risks and uncertainties, which are present in many emerging medical device
companies. At June 30, 2010, we had an accumulated deficit of $88.9 million. We have not
commercialized our principal product, MelaFind®. We anticipate that we will
continue to incur net losses for the foreseeable future as we pursue the regulatory approvals for
MelaFind®, continue to develop the MelaFind®
system, expand our corporate infrastructure, and prepare for the potential commercial
launch of MelaFind®. We do not expect to generate significant product revenue
until we successfully obtain PMA approval for and begin selling MelaFind®.
If additional funds are raised through the issuance of debt securities, these securities could have
rights senior to those associated with our common stock and could contain covenants that would
restrict our operations. If we are unable to obtain additional financing, we may be required to
reduce the scope of, delay or eliminate some or all of planned product research and development and
commercialization activities, which could harm our business.
Because of the numerous risks and uncertainties associated with the development of medical devices
such as MelaFind®, we are unable to estimate the exact amounts of capital
outlays and operating expenditures associated with our current and anticipated clinical trials. Our
future funding requirements will depend on many factors, including, but not limited to:
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The schedule, costs, and results of our clinical trials; |
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The success of our research and development efforts; |
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The costs and timing of regulatory approval; |
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Reimbursement amounts for the use of MelaFind® that we are able to obtain from
Medicare and third party payers, or the amount of direct payments we are able to obtain from patients and/or
physicians utilizing MelaFind®; |
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The cost of commercialization activities, including product marketing and building a domestic direct sales force; |
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The emergence of competing or complementary technological developments; |
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The costs of filing, prosecuting, defending and enforcing any patent claims and other rights, including
litigation costs and the results of such litigation; |
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The costs involved in defending any patent infringement actions brought against us by third parties; and |
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Our ability to establish and maintain any collaborative, licensing or other arrangements, and the terms and
timing of any such arrangements. |
16
Contractual Obligations (in thousands)
The following table summarizes our outstanding contractual obligations as of June 30, 2010, and the
effect those obligations are expected to have on our liquidity and cash flows in future periods:
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Less than |
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More than |
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Total |
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1 year |
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1-3 years |
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4-5 years |
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5 years |
Operating leases |
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$ |
2,775 |
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|
$ |
368 |
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$ |
1,268 |
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$ |
911 |
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$ |
228 |
|
Our long-term obligations represent a non-cancelable operating lease for our laboratory, assembly,
and office space. The lease on approximately 20,000 square feet of office space expires in December
2016.
Results of Operations (in thousands)
Through the first six months of 2010, the Company actively supported the FDAs PMA review process,
continued to develop procedures and equipment to allow for the efficient manufacture of
MelaFind®, and intensified pre-commercialization activities in preparation
for product launch. The Companys move into a larger, renovated facility in Irvington N.Y., which
began in late 2009, was completed in the three months ending March 31, 2010.
Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
Research and Development Expense
Research and development (R&D) expenses experienced an overall increase of $252 or 11% in the
three months ended June 30, 2010 above the comparable period a year earlier. Performance bonuses
of $88 were incurred and paid during the second quarter in 2010. In 2009, the performance
bonuses were paid in the third quarter. The balance of the increase was primarily in
Regulatory where software validation consulting services for FDA review increased $135. Research
and development activities are currently concentrated on addressing the requirements of the FDA
review process and addressing the needs for product launch after FDA approval. In general, the Company
continues to refine the MelaFind® hand held unit. While R & D costs
have risen as compared to 2009 they have fallen approximately 30% in comparison to 2008 when our MelaFind®
clinical trial was fully underway. We anticipate a continual rise from current levels in R & D expenses to support
product upgrades and enhancements and further regulatory requirements.
General and Administrative Expense
General and Administrative (G&A) expenses experienced an overall increase of $476 or 30% for the
three months ended June 30, 2010 above the comparable period a year earlier. Information
Technology increased $180 with the expansion of the information processing capabilities of the
Company, Corporate expenditures on professional and legal fees increased $93, Marketing services
increased $93, and Finance department costs increased $73.
Interest Income
Interest income for the three months ended June 30, 2010 decreased to $3 from $9 in the comparable
period of 2009. Interest income fell as a reflection of the deterioration of interest rates
available on our cash balances.
Other Income
Other income decreased by $23 in 2010 from a year earlier primarily due to the LOreal feasibility
study no longer being active or providing income for the Company in the second quarter of 2010.
Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
Research and Development Expense
Research and development (R&D) expenses experienced an overall increase of $505 or 10% in the six
months ended June 30, 2010 above the comparable period a year earlier. This increase was primarily
in R&D labor of $326 at ASKION in Germany where added emphasis was placed on parts qualification
and testing regimens for the MelaFind® hand-held devices, and performance
bonuses of $88 that were incurred and paid during the first six months, as well as product
improvement costs which increased $76. In general, the Company continues to refine
the MelaFind® hand held unit and establish process and procedures necessary for serial
production. While R & D costs have risen as compared to 2009 they have fallen approximately 20% in comparison to 2008
when our MelaFind® clinical trial was fully underway.
As noted above we anticipate a continual rise from current levels in R & D expenses to support
product upgrades and enhancements and further regulatory requirements.
17
General and Administrative Expense
General and Administrative (G&A) expenses experienced an overall increase of $1,221 or 39% for
the six months ended June 30, 2010 above the comparable period a year earlier. Within G&A,
marketing costs represented $413 of the total increase. Significant to the increase in marketing
costs was the addition of sales management and administrative personnel of $185, contracting of
marketing consulting expertise of $116, and production of a physician educational seminar of $88.
The Information Technology function added two employees in 2010 over 2009 related to implementing
significant upgrades in the IT processing capabilities of the Company. Increases in information
technology costs include compensation costs of $90, computer supplies and maintenance costs of $77,
and training costs of $30.
Other year-to-year increases in general and administrative costs for the six months ended June 30,
2010 include depreciation/amortization of $90 associated with the new location build out and
computer infrastructure acquisitions, professional fees of $127, office supplies of $62, Board of
Directors fees of $29, taxes and stock fees of $42, and share based compensation of $90.
Interest Income
Interest income for the six months ended June 30, 2010 decreased to $4 from $35 in the comparable
period of 2009. Interest income fell as a reflection of the deterioration of interest rates
available on our cash balances.
Other Income
Other income decreased by $62 in 2010 from a year earlier primarily due to the LOreal feasibility
study no longer being active or providing income for the Company in the first six months of 2010.
Critical Accounting Policies and Significant Judgments and Estimates
Our managements discussion and analysis of our financial condition and results of operations is
based on our financial statements, which have been prepared in accordance with generally accepted
accounting principles (GAAP). The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements as well as
the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate
our judgments related to accounting estimates. We base our estimates on historical experience and
on various other factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
We believe that the following accounting policies and significant judgments and estimates relating
to revenue recognition, stock-based compensation charges, and accrued expenses are most critical to
aid you in fully understanding and evaluating our reported financial results.
Revenue Recognition
We currently do not have any commercialized products or any source of revenue.
Stock-Based Compensation
We record compensation expense associated with stock options and other forms of equity compensation
in accordance with FASB ASC 718, Stock Compensation (FAS ASC 718) as interpreted by SEC Staff
Accounting Bulletins No. 107 and No.110. A compensation charge is recorded when it is probable that
performance conditions will be satisfied. The probability of vesting is updated at each reporting
period and compensation is adjusted prospectively.
We have also granted to certain employees stock options that vest with the attainment of
development milestones not under the Companys control. Upon the attainment of the relevant
development milestones, there will be a significant compensation charge based on the fair value of
such options on the date granted.
Options or warrants issued to non-employees for goods or services are recorded at fair value and
accounted for in accordance with FASB ASC 505, Equity-based Payments to Non-employees.
18
Accrued Expenses
As part of the process of preparing financial statements, we are required to estimate accrued
expenses. This process involves identifying services that have been performed on our behalf and
estimating the level of service performed and the associated cost incurred for such service where
we have not been invoiced or otherwise notified of the actual cost. Examples of estimated accrued
expenses include:
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professional service fees; |
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contract clinical service fees; |
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fees paid to contract manufacturers in conjunction with the production of clinical components or materials; and |
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fees paid to third party data collection organizations and investigators in conjunction with the clinical trials. |
In connection with such service fees, our estimates are most affected by our projections of the
timing of services provided relative to the actual level of services incurred by such service
providers. The majority of our service providers invoice us monthly in arrears for services
performed. In the event that we do not identify certain costs that have begun to be incurred or we
are under or over our estimate of the level of services performed or the costs of such services,
our actual expenses could differ from such estimates. The date on which certain services commence,
the level of services performed on or before a given date, and the cost of such services are often
subjective determinations. We make these judgments based upon the facts and circumstances known to
us in accordance with GAAP. This is done as of each balance sheet date in our financial statements.
Off-Balance Sheet Arrangements
We do not currently have, nor have we ever had, any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance or special purpose
entities, which would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. In addition, we do not engage in
trading activities involving non-exchange traded contracts. As such, we are not materially exposed
to any financing, liquidity, market or credit risk that could arise if we had engaged in these
relationships.
Recent Accounting Pronouncements
In January 2010, the FASB issued ASU 2010-6, an update that improves the requirements related to
Fair Value Measurements and Disclosures Subtopic 820-10 of the FASB Accounting Standards
Codification originally issued as FASB Statement 157. This update requires enhanced disclosures
about significant transfers between Level 1and Level 2 assets and the disaggregated activity in the roll
forward for level 3 Fair Value measurements. Except for the detailed Level 3 roll-forward
disclosures, these new disclosures are effective for fiscal years beginning after December 15, 2009
and for interim periods within those fiscal years. The requirement to provide detailed disclosures
about purchases, sales, issuances, and settlements in the roll-forward activity for Level 3 Fair
Value measurements is effective for interim and annual reporting periods beginning after December
31, 2010. The Company does not expect the adoption of ASU 2010-6 to have a material impact on the
Companys financial statements.
In February 2010, the FASB issued ASU 2010-09. This update amends the requirements of ASU 855-10
(subsequent events) by eliminating the need to disclose the date through which subsequent events
have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the
SECs requirements. This amendment is effective for interim or annual periods ending after June 15,
2010. The adoption of ASU 2010-09 did not have any impact on our financial statements.
In April 2010, the FASB issued ASU 2010-17. This Update provides guidance on defining a milestone
under Topic 605 and determining when it may be appropriate to apply the milestone method of revenue
recognition for research or development transactions. Consideration that is contingent on
achievement of a milestone in its entirety may be recognized as revenue in the period in which the
milestone is achieved only if the milestone is judged to meet certain criteria to be considered
substantive. Milestones should be considered substantive in their entirety and may not be
bifurcated. An arrangement may contain both substantive and non-substantive milestones that should
be evaluated individually. The amendments in this update are effective on a prospective basis for
milestones achieved in fiscal years, and interim periods within those years, beginning on or after
June 15, 2010. Early adoption is permitted. The adoption of ASU 2010-17 did not have any impact on
our financial statements.
19
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
Our exposure to market risk is confined to our cash, cash equivalents, and short-term investments.
We invest in high-quality financial instruments, primarily money market funds, with the average
effective duration of the portfolio within one year which we believe are subject to limited credit
risk. We currently do not hedge interest rate exposure. Due to the short-term nature of our
investments, we do not believe that we have any material exposure to interest rate risk arising
from our investments. The Company is exposed to credit risks in the event of default by the
financial institutions or issuers of investments in excess of FDIC insured limits. The Company
performs periodic evaluations of the relative credit standing of these financial institutions and
limits the amount of credit exposure with any institution.
ITEM 4.
Controls and Procedures
Evaluation of disclosure controls and procedures
Based on their evaluation as of June 30, 2010, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended, were effective to ensure that the
information required to be disclosed by us in this Quarterly Report on Form 10-Q was recorded,
processed, summarized and reported within the time periods specified in the SECs rules and Form
l0-Q, and that such information was accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
Change in internal control over financial reporting
There were no changes in our internal control over financial reporting during the quarter ended
June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
Limitations on the effectiveness of controls
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance
that the objectives of our disclosure control system are met. Because of inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance that all control
issues, if any, within a company have been detected.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any
material legal proceeding threatened against us. From time to time, we may be a party to certain
legal proceedings, incidental to the normal course of our business.
Item 1A. Risk Factors
Our business and operations entail a variety of serious risks and uncertainties, including those
described in Item 1A of our Form 10-K for the year ended December 31, 2009. In addition, the
following risk factors have changed during the six months ended June 30, 2010:
We have incurred losses for a number of years, and anticipate that we will incur continued losses
for the foreseeable future.
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
months and six months ended June 30, 2010 was approximately $4.6 million and $9.6 million,
respectively, and as of June 30, 2010, we had an accumulated deficit of approximately $88.9
million. Our research and development expenses may continue to increase in connection with our
clinical trials and other development
20
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.
We may be unable to complete the development and commence commercialization of
MelaFind® or other products without additional funding, and we will not be
able to achieve significant commercialization without additional funding.
Our operations have
consumed substantial amounts of cash for each of the last eight years. The Company may require
additional funds to pursue regulatory approvals and to achieve significant commercialization of
MelaFind®. However, there can be no assurances that the Company will be able
to raise additional capital in the future. Additional funds may not become available on acceptable
terms, and there can be no assurance that any additional funding that the Company does obtain will
be sufficient to meet the Companys needs in the long term.
Any additional financing may be dilutive to stockholders, or may require us to grant a lender a
security interest in our assets. The amount of funding we will need will depend on many factors,
including:
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the schedule, costs, and results of our clinical trials; |
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the success of our research and development efforts; |
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the costs and timing of regulatory approval; |
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reimbursement amounts for the use of MelaFind® that we are able to obtain from Medicare
and third-party payers, or the amount of direct payments we are able to obtain from patients and/or physicians
utilizing MelaFind®; |
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the cost of commercialization activities, including product marketing and building a domestic direct sales force; |
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the emergence of competing or complementary technological developments; |
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the costs of filing, prosecuting, defending and enforcing any patent claims and other rights, including
litigation costs and the results of such litigation; |
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the costs involved in defending any patent infringement actions brought against us by third parties; and |
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our ability to establish and maintain any collaborative, licensing or other arrangements, and the terms and
timing of any such arrangements. |
If we are unable to obtain adequate financing on a timely basis, we may be required to
significantly curtail or cease one or more of our development and marketing programs. We could be
required to seek funds through arrangements with collaborators or others that may require us to
relinquish rights to some of our technologies, product candidates or products that we would
otherwise pursue on our own. We also may have to reduce marketing, customer support and other
resources devoted to our products. If we raise additional funds by issuing equity securities, our
then-existing stockholders will experience ownership dilution, could experience declines in our
share price and the terms of any new equity securities may have preferences over our common stock.
Our stock price is likely to be volatile, meaning purchasers of our common stock could incur
substantial losses.
Our stock price is likely to be volatile. Between October 28, 2005 (the date of our initial public
offering) and June 30, 2010, our stock price has ranged from $2.29 to $12.24 per share. The stock
market in general and the market for medical technology companies in particular have experienced
extreme volatility that has often been unrelated to the operating performance of particular
companies. The following factors, in addition to other risk factors described in this section and
general market and economic conditions, may have a significant impact on the market price of our
common stock:
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results of our research and development efforts and our clinical trials; |
21
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the timing of regulatory approval for our products; |
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failure of any of our products, if approved, to achieve commercial success; |
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the announcement of new products or product enhancements by us or our competitors; |
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regulatory developments in the US and foreign countries; |
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ability to manufacture our products to commercial standards; |
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developments concerning our clinical collaborators, suppliers or marketing partners; |
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changes in financial estimates or recommendations by securities analysts; |
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public concern over our products; |
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developments or disputes concerning patents or other intellectual property rights; |
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product liability claims and litigation against us or our competitors; |
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the departure of key personnel; |
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the strength of our balance sheet; |
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variations in our financial results or those of companies that are perceived to be similar to us; |
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changes in the structure of and third-party reimbursement in the US and other countries; |
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changes in accounting principles or practices; |
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general economic, industry and market conditions; and |
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future sales of our common stock. |
A decline in the market price of our common stock could cause you to lose some or all of your
investment and may adversely impact our ability to attract and retain employees and raise capital.
In addition, stockholders may initiate securities class action lawsuits if the market price of our
stock drops significantly. Whether or not meritorious, litigation brought against us could result
in substantial costs and could divert the time and attention of our management. Our insurance to
cover claims of this sort, if brought, may not be adequate, or in certain circumstances, not
provide coverage.
Climate control policy changes, including legislation pending in the U.S. Congress and negotiated
international treaties, could have an impact on our Company.
We cannot predict whether climate control legislation will be enacted and treaties ratified, the
final form any legislation or treaties might take, or the effects of such legislation or treaties.
If climate control legislation is enacted or treaties ratified, our operations or the operations of
our suppliers could be adversely impacted affecting our ability to successfully launch
MelaFind® in the U.S. marketplace.
Results could be impacted by the effects of, and changes in, world-wide economic and capital market
conditions
The Companys business may be adversely affected by factors in the United States and other
countries that are beyond its control, such as disruptions in the financial markets or downturns in
economic activity. The current world-wide economic conditions could have an adverse impact on the
availability and cost of capital, interest rates, tax rates, or regulations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
22
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Reserved
Item 5. Other Information
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Not applicable |
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(b) |
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Not applicable |
Item 6. Exhibits
23
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Exhibit |
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Number |
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Exhibit Title |
31.1#
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Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended. |
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31.2#
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Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended. |
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32.1#
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Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
24
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.
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MELA SCIENCES, INC.
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By: |
/s/ Richard I. Steinhart
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Richard I. Steinhart |
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Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer) |
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Date: August 6, 2010
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EXHIBIT INDEX
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Exhibit No. |
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Description |
31.1
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Certification by the Chief Executive Officer pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended. |
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31.2
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Certification by the Chief Financial Officer pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended. |
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32.1
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Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. |
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exv31w1
Exhibit 31.1
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) or RULE 15D-
14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Joseph V. Gulfo, certify that:
1. |
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I have reviewed this report on Form 10-Q of MELA Sciences, Inc.; |
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2. |
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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; |
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3. |
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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; |
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4. |
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The registrants other certifying officer and I are 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: |
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a) |
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designed such disclosure
controls and procedures, or
caused such disclosure controls
and procedures to be designed
under our supervision, to
ensure that material
information relating to the
registrant, including its
consolidated subsidiaries, is
made known to us by others
within those entities,
particularly during the period
in which this report is being
prepared; |
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b) |
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designed such internal control
over financial reporting, or
caused such internal control
over financial reporting to be
designed under our supervision,
to provide reasonable assurance
regarding the reliability of
financial reporting and the
preparation of the financial
statements for external
purposes in accordance with
generally accepted accounting
principles; |
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c) |
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evaluated the effectiveness of
the registrants disclosure
controls and procedures and
presented in this report our
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 |
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d) |
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disclosed in this report any
change in the registrants
internal control over financial
reporting that occurred during
the registrants most recent
fiscal quarter that has
materially affected, or is
reasonably likely to materially
affect, the registrants
internal control over financial
reporting; and |
5. |
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The registrants other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of
the registrants Board of Directors (or persons performing the
equivalent functions): |
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a) |
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all significant deficiencies
and material weaknesses in the
design or operations of
internal control over financial
reporting which are reasonably
likely to adversely affect the
registrants ability to record,
process, summarize and report
financial information; and |
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b) |
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any fraud whether or not
material, that involves
management or other employees
who have a significant role in
the registrants internal
control over financial
reporting. |
Date: August 6, 2010
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/s/ Joseph V. Gulfo, M.D.
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Joseph V. Gulfo, M.D. |
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President and Chief Executive Officer
(Principal Executive Officer) |
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exv31w2
Exhibit 31.2
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) or RULE 15D-14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Richard I. Steinhart, certify that:
1. |
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I have reviewed this report on Form 10-Q of MELA Sciences, Inc.; |
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2. |
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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; |
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3. |
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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; |
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4. |
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The registrants other certifying officer and I are 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: |
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a) |
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designed such disclosure controls and procedures,
or caused such disclosure controls and procedures
to be designed under our supervision, to ensure
that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others
within those entities, particularly during the
period in which this report is being prepared; |
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b) |
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designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting
and the preparation of the financial statements
for external purposes in accordance with
generally accepted accounting principles; |
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c) |
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evaluated the effectiveness of the registrants
disclosure controls and procedures and presented
in this report our 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 |
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d) |
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disclosed in this report any change in the
registrants internal control over financial
reporting that occurred during the registrants
most recent fiscal quarter that has materially
affected, or is reasonably likely to materially
affect, the registrants internal control over
financial reporting; and |
5. |
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The registrants other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants Board of
Directors (or persons performing the equivalent functions): |
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a) |
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all significant deficiencies and material
weaknesses in the design or operations of
internal control over financial reporting which
are reasonably likely to adversely affect the
registrants ability to record, process,
summarize and report financial information; and |
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b) |
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any fraud whether or not material, that involves
management or other employees who have a
significant role in the registrants internal
control over financial reporting. |
Date: August 6, 2010
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/s/ Richard I. Steinhart
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Richard I. Steinhart |
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Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer) |
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exv32w1
Exhibit 32.1
MELA SCIENCES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned officers of MELA Sciences, Inc. (the Company) hereby certifies to
his knowledge that the Companys quarterly report on Form 10-Q for the period ended June 30, 2010
(the Report), as filed with the Securities and Exchange Commission on the date hereof, fully
complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange
Act of 1934, as amended, and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the Company.
/s/ Joseph
V.
Gulfo
Joseph V. Gulfo
President and Chief Executive Officer
(Principal Executive Officer)
August 6, 2010
/s/ Richard I. Steinhart
Richard I. Steinhart
Vice President & Chief Financial Officer
(Principal Accounting and Financial Officer)
August 6, 2010
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* |
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A signed original of this written statement required by Section 906 of the Sarbanes-Oxley
Act of 2002 has been provided to MELA Sciences, Inc. and will be retained by MELA Sciences,
Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This
written statement accompanies the Form 10-Q to which it relates, is not deemed filed with the
Securities and Exchange Commission, and will not be incorporated by reference into any filing
of MELA Sciences, Inc. under the Securities Act of 1933 or the Securities Exchange Act of
1934, irrespective of any general incorporation language contained in such filing. |