Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2017
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from
to
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Commission File number 000-00935
(Exact name of registrant as specified in its charter)
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Delaware
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36-4296006
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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4203 SW 34 th Street, Orlando, FL
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32811
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(Address of principal executive offices)
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(Zip Code)
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(407) 996-9630
(Registrant’s telephone number, including area code
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Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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None
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Not Applicable
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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 ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).
Yes ☒
No ☐ (not required) ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or
a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rue 12b-2 of the
Exchange Act. (Check one):
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Large Accelerated Filer ☐
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Accelerated Filer ☐
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Non-Accelerated Filer ☐
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Smaller Reporting Company ☒
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the
Registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No ☒
The number of shares outstanding of each of the issuer’s
classes of common equity, as of the latest practicable
date:
COMMON STOCK, $0.001 PAR VALUE, AT May 15, 2017: 25,881,987
shares
MEDITE Cancer Diagnostics, Inc.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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F-3
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9
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PART I. — FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDITE CANCER DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
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March
31, 2017
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December
31,
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(unaudited)
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2016
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Assets
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Current
Assets:
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Cash
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$269
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$108
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Accounts
receivable, net of allowance for doubtful accounts of $124 and
$123
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1,331
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1,346
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Inventories
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3,679
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3,811
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Prepaid
expenses and other current assets
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111
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79
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Total
current assets
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5,390
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5,344
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Property
and equipment, net
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1,547
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1,557
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In-process
research and development
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4,620
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4,620
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Trademarks,
trade names
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1,240
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1,240
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Goodwill
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4,658
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4,658
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Other
assets
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354
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351
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Total
assets
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$17,809
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$17,770
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Liabilities
and Stockholders’ Equity
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Current
Liabilities:
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Accounts
payable and accrued expenses
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$3,109
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$3,306
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Secured
lines of credit and current portion of long-term debt
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3,096
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3,214
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Notes
due to employees, current portion
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448
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681
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Advances
– related party
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147
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146
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Total
current liabilities
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6,800
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7,347
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Long-term
debt, net of current portion
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60
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60
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Notes
due to employees, net of current portion
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113
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135
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Deferred
tax liability
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2,205
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2,205
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Total
liabilities
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9,178
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9,747
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Commitments
and contingencies
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Stockholders’
equity :
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Preferred
stock, $0.001 par value; 10,000,000 shares authorized; 198,355
shares issued and outstanding (liquidation value of all classes of
preferred stock $2,556 and $2,533 as of March 31, 2017 and December
31, 2016, respectively)
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962
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962
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Common
stock, $0.001 par value; 35,000,000 shares authorized, 24,831,987
and 22,421,987 shares issued and outstanding as of March 31, 2017
and December 31, 2016, respectively
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25
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23
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Additional
paid-in capital
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11,005
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9,366
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Stock
subscription
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-
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25
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Treasury
stock
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(327)
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(327)
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Accumulated
other comprehensive loss
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(695)
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(642)
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Accumulated
deficit
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(2,339)
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(1,384)
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Total
stockholders’ equity
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8,631
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8,023
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Total
liabilities and stockholders’ equity
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$17,809
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$17,770
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The accompanying notes are an integral part of these condensed
consolidated financial statements.
MEDITE CANCER DIAGNOSTICS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
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Three Months Ended March 31,
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2017
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2016
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Net
sales
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$1,891
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$2,131
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Cost
of revenues
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1,211
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1,213
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Gross
profit
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680
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918
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Operating
expenses
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Depreciation
and amortization expense
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49
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51
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Research
and development
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425
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360
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Selling,
general and administrative
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782
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857
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Total
operating expenses
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1,256
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1,268
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Operating
loss
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(576)
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(350)
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Other
expenses
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Interest
expense, net
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193
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261
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Loss
on extinguishment of notes due to employees
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158
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-
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Other expense
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28
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11
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Total
other expense, net
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379
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272
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Loss
before income taxes
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(955)
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(622)
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Provision
for income taxes
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-
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-
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Net
loss
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(955)
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(622)
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Preferred
dividend
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(23)
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(23)
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Net
loss available to common stockholders
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$(978)
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$(645)
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Condensed
consolidated statements of comprehensive loss
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Net
loss
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$(955)
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$(622)
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Other
comprehensive income (loss)
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Foreign
currency translation adjustments
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(53)
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191
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Comprehensive
loss
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$(1,008)
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$(431)
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Loss
per share
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Net
loss available to common stockholders
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$(978)
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$(645)
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Basic
and diluted loss per share
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$(0.04)
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$(0.03)
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Weighted
average basic and diluted shares outstanding
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22,940,543
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21,055,990
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The accompanying notes are an integral part of these condensed
consolidated financial statements.
MEDITE CANCER DIAGNOSTICS, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
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Three Months Ended March 31,
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2017
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2016
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Cash
flows from operating activities:
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Net
loss
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$(955)
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$(622)
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Adjustments
to reconcile net loss to cash used in operating
activities
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Depreciation
and amortization
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49
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51
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Deferred
income taxes
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-
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-
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Amortization
of debt discount and debt issuance costs
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-
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200
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Stock-based
compensation
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10
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-
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Estimated
fair value of warrants issued in connection with secured promissory
notes
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121
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-
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Loss
on extinguishment of notes due to employees
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158
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-
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Changes
in assets and liabilities:
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Accounts
receivable
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33
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33
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Inventories
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183
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(526)
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Prepaid
expenses and other assets
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(20)
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17
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Accounts
payable and accrued expenses
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(224)
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288
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Net
cash used in operating activities
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(645)
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(559)
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Cash
flows from investing activities:
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Purchases
of equipment
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(16)
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(15)
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Increase
in other assets
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-
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(79)
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Net
cash used in investing activities
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(16)
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(94)
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Cash
flows from financing activities:
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Net
borrowings on lines of credit
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8
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(12)
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Repayment
of secured promissory notes
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(167)
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-
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Repayment
of notes due to employees
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(24)
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(27)
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Proceeds
(repayments) from related party advances, net
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-
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(20)
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Proceeds
from sale of common stock, net of issuance costs
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1,097
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-
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Net
cash provided by (used in) financing activities
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914
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(59)
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Effect
of exchange rates on cash
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(92)
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225
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Net
change in cash
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161
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(487)
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Cash
at beginning of period
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108
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587
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Cash
at end of the period
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$269
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$100
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Supplemental
disclosure of cash flow information:
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Cash
paid for interest
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$41
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$46
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Cash
paid for income taxes
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$13
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$8
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Supplemental
schedule of non-cash investing and financing
activities:
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Reclassification
of warrant liability to additional paid in capital
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$-
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$90
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The accompanying notes are an integral part of these condensed
consolidated financial statements.
MEDITE CANCER DIAGNOSTICS, INC. AND
SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Tabular data in thousands, except share and per share
amounts)
Note 1.
Organization
The Company
MEDITE
Cancer Diagnostics, Inc. (“MDIT”, “MEDITE”,
“we”, “us” or the “Company”)
was incorporated in Delaware in December 1998.
These
statements include the accounts of MEDITE Cancer Diagnostics, Inc.
and its wholly owned subsidiaries, which consists of MEDITE
Enterprise, Inc., MEDITE GmbH, Burgdorf, Germany, MEDITE GmbH,
Salzburg, Austria, MEDITE Lab Solutions Inc., Orlando, USA, MEDITE
sp. z o.o., Zilona-Gora, Poland and CytoGlobe, GmbH, Burgdorf,
Germany.
MEDITE
is a medical technology company specialized in the development,
manufacturing, and marketing of molecular biomarkers, premium
medical devices and consumables for detection, risk assessment and
diagnosis of cancerous and precancerous conditions and related
diseases. The Company has 75 employees in four countries, a
distribution network to about 80 countries and a wide range of
products for anatomic pathology, histology and cytology
laboratories is available for sale.
Note 2.
Summary of Significant Accounting Policies
Consolidation, Basis of Presentation and Significant
Estimates
The
accompanying condensed consolidated financial statements for the
periods ended March 31, 2017 and 2016 included herein are unaudited
and have been prepared in accordance with accounting principles
generally accepted in the United States of America
(“GAAP”) and include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation. Such
consolidated financial statements reflect, in the opinion of
management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the
periods indicated. All such adjustments are of a normal recurring
nature. These interim results are not necessarily indicative of the
results to be expected for the fiscal year ending December 31, 2017
or for any other period. Certain information and footnote
disclosures normally included in the consolidated financial
statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or
omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The Company believes that the disclosures are
adequate to make the interim information presented not misleading.
These condensed consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial
statements disclosed in the Report on Form 10-K for the year ended
December 31, 2016 filed on April 14, 2017 and other filings with
the Securities and Exchange Commission.
In
preparing the accompanying condensed consolidated accompanying
financial statements, management has made certain estimates and
assumptions that affect reported amounts in the condensed
consolidated financial statements and disclosures of contingencies.
Changes in facts and circumstances may result in revised estimates
and actual results may differ from these estimates.
Going Concern
The accompanying condensed consolidated financial
statements have been prepared in conformity with GAAP, which
contemplate continuation of the Company as a going
concern. This contemplates the realization of assets and
the liquidation of liabilities in the normal course of
business. At March 31, 2017, the Company’s cash
balance was $269,000 and its operating losses for the year ended
December 31, 2016 and for the three months March 31, 2017 have used
most of the Company’s liquid assets. These factors
raise substantial doubt about the Company’s ability to
continue as a going concern. However,
the negative working capital has declined by approximately $600,000
from December 31, 2016 to March 31, 2017.
The Company raised additional cash of $1.1 million net of offering
costs. from the sale of shares of common stock subsequent to
December 31, 2016 through March 31, 2017 and an additional $250,000
from April 1, 2017 through the date of this filing.
The
Company has settled three of the five employee notes for $330,000
and warrants and paid the first installment of $94,000 in April
2017. The Company has extended the term of the secured promissory
notes and has paid $167,000 of the balance outstanding as of the
date of this filing and received notice that one noteholder will
convert $50,000 into 100,000 shares of common stock at $0.50.
Management believes that the remainder of the balance will be
settled in some combination of cash and stock.
Management is
actively seeking additional equity financing contemplated in the
$4.25 million stock purchase agreement. The Company has
negotiated with certain parties whose obligations are due in the
next twelve months to extend payment terms beyond one year. One
lender with an outstanding balance of $801,000 has stated that they
will not be able to refinance the debt. The default rate of
interest will increase three percent.
Accrued
salaries, vacation and related expenses at March 31, 2017, includes
amounts owed the former CFO of approximately $1.1 million and
amounts owed to both Michaela and Michael Ott totaling
approximately $152,000. Included in advances – related
parties are amounts owed to the Company’s former CFO of
$50,000 at March 31, 2017. The Company owes Ms. Ott 91,136 Euros,
($97,351 as March 31, 2017). The Company has made arrangements to
repay these obligations evenly over a 24 month period, starting on
October 31, 2017. The Company settled the $152,000 obligation
through an upfront payment each of $6,750 and a payment plan which
settled the amounts owed and established a payment schedule for a
period of 18 months starting in October 2017. See Note 8 for
further discussion regarding the legal proceedings with the
Company’s former CFO.
The
Company’s security agreement with its lender has provided
borrowings of 35% of our collateralized assets. The
Company continues to refinance this debt to provide additional
liquidity.
Management
continues to expand its product offerings and has also expanded its
sales and distribution channels during 2017.
If
management is unsuccessful in completing its equity financing,
management will begin negotiating with some of the Company's major
vendors and lenders to extend the terms of their debt and also
evaluate certain expenses that have been implemented for the
Company’s growth strategy. However, there
can be no assurance that the Company will be successful in these
efforts. The condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Revenue Recognition
The
Company derives its revenue primarily from the sale of medical
products and supplies for the diagnosis and prevention of cancer.
Product revenue is recognized when all four of the following
criteria are met: (1) persuasive evidence that an arrangement
exists; (2) delivery of the products has occurred or risk of
loss transfers to the customer; (3) the selling price of the
product is fixed or determinable; and (4) collectability is
reasonably assured. The Company generates the majority of its
revenue from the sale of inventory. For certain sales, the Company
and its customers agree in the sales contract that risk of loss and
title transfer upon the Company packing the items for shipment,
segregating the items packaged and notifying the customer that
their items are ready for pickup. The Company records such sales at
time of completed packaging and segregation of the items from
general inventory and notification has been confirmed by the
customer.
Shipping
and handling costs are included in cost of goods sold and charged
to the customers based on the contractual terms.
F-5
Inventories
Inventories
are stated at the lower of cost or market. Cost is determined using
the first in first out method (FIFO) and market is based generally
on net realizable value.
Inventories
consists of parts inventory purchased from outside vendors, raw
materials used in the manufacturing of equipment; work in process
and finished goods. Management reviews inventory on a regular basis
and determines if inventory is still useable. A reserve is
established for the estimated decrease in carrying value for
obsolete or excess inventory. Once a reserve is established, it is
considered a permanent adjustment to the cost basis of the obsolete
or excess inventory.
Foreign Currency Translation
The
accounts of the U.S. parent company are maintained in United States
Dollar (“USD”). The functional currency of the
Company’s German subsidiaries is the EURO
(“EURO”). The accounts of the German subsidiaries were
translated into USD in accordance with relevant accounting
guidance. All assets and liabilities are translated at the exchange
rate on the balance sheet dates, stockholders’ equity was
translated at the historical rates and statements of operations
transactions are translated at the average exchange rate for each
period. The resulting translation gains and losses are recorded in
accumulated other comprehensive loss as a component of
stockholders’ equity.
Research and Development
All
research and development costs are expensed as incurred. Research
and development costs consist of engineering, product development,
testing, developing and validating the manufacturing process, and
regulatory related costs.
Acquired In-Process Research and Development
Acquired
in-process research and development (“IPR&D”) that
the Company acquires through business combinations represents the
fair value assigned to incomplete research projects which, at the
time of acquisition, have not reached technological feasibility.
The amounts are capitalized and are accounted for as
indefinite-lived intangible assets, subject to impairment testing
until completion or abandonment of the projects. Upon successful
completion of each project, MEDITE will make a determination as to
the then useful life of the intangible asset, generally determined
by the period in which the substantial majority of the cash flows
are expected to be generated, and begin amortization. The Company
tests IPR&D for impairment at least annually, or more
frequently if impairment indicators exist, by first assessing
qualitative factors to determine whether it is more likely than not
that the fair value of the IPR&D intangible asset is less than
its carrying amount. If the Company concludes it is more likely
than not that the fair value is less than the carrying amount, a
quantitative test that compares the fair value of the IPR&D
intangible asset with its carrying value is performed. If the fair
value is less than the carrying amount, an impairment loss is
recognized in operating results.
Impairment of Indefinite Lived Intangible Assets Other Than
Goodwill
The
Company has the option first to assess qualitative factors to
determine whether the existence of events and circumstances
indicates that it is more likely than not that the indefinite-lived
intangible asset is impaired. If, after assessing the totality of
events and circumstances, the Company concludes that it is not more
likely than not that the indefinite-lived intangible asset is
impaired, then the entity is not required to take further action.
However, if the Company concludes otherwise, then it is required to
determine the fair value of the indefinite-lived intangible asset
and perform the quantitative impairment test by comparing the fair
value with the carrying amount in accordance with relevant
accounting guidance.
Goodwill
Goodwill
is recognized for the excess of cost of an acquired entity over the
amounts assigned to assets acquired and liabilities assumed in a
business combination. Goodwill is tested for impairment at
the reporting unit level (operating segment or one level below an
operating segment) on an annual basis (December 31 for us) and
between annual tests if an event occurs or circumstances change
that would more likely than not reduce the fair value of a
reporting unit below its carrying value. These events or
circumstances could include a significant change in the business
climate, legal factors, operating performance indicators,
competition, or sale or disposition of a significant portion of a
reporting unit.
Application
of the goodwill impairment test requires judgment, including the
identification of reporting units, assignment of assets and
liabilities to reporting units, assignment of goodwill to reporting
units, and determination of the fair value of each reporting unit
using a discounted cash flow methodology. This analysis requires
significant judgments, including estimation of future cash flows,
which is dependent on internal forecasts, estimation of the
long-term rate of growth for our business, estimation of the useful
life over which cash flows will occur, and determination of our
weighted average cost of capital.
The
estimates used to calculate the fair value of a reporting unit
change from year to year based on operating results, market
conditions, and other factors. Changes in these estimates and
assumptions could materially affect the determination of fair value
and goodwill impairment for each reporting unit.
Net Loss Per Share
Basic
loss per share is calculated based on the weighted-average number
of outstanding common shares. Diluted loss per share is calculated
based on the weighted-average number of outstanding common shares
plus the effect of dilutive potential common shares, using the
treasury stock method and the if-converted method. MEDITE’s
calculation of diluted net loss per share excludes potential common
shares as of March 31, 2017 and 2016 as the effect would be
anti-dilutive (i.e. would reduce the loss per share).
The
Company computes its loss applicable to common stock holders by
subtracting dividends on preferred stock, including undeclared or
unpaid dividends if cumulative, from its reported net loss and
reports the same on the face of the condensed consolidated
statement of operations.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2014-09,
“Revenue with Contracts from Customers.” ASU 2014-09
supersedes the current revenue recognition guidance, including
industry-specific guidance. The ASU introduces a five-step model to
achieve its core principal of the entity recognizing revenue to
depict the transfer of goods or services to customers at an amount
that reflects the consideration to which the entity expects to be
entitled in exchange for those goods and services. The updated
guidance is effective for public entities for interim and annual
periods beginning after December 15, 2017 with early adoption
permitted for annual reporting periods beginning after December 15,
2016. The Company has not yet selected a transition method and is
currently evaluating the impact of the updated guidance for the
Company’s consolidated financial statements.
In
March 2016, the FASB issued ASU 2016-09, “Compensation
– Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting.” The areas for
simplification in this Update involve several aspects of the
accounting for share-based payment transactions, including the
income tax consequences, classification of awards as either equity
or liabilities, and classification on the statement of cash flows.
The updated guidance is effective for public entities for fiscal
years beginning after December 15, 2016. The Company has adopted
ASU 2016-09 and it did not impact its consolidated financial
statements.
In
February 2016, the FASB issued ASU No. 2016-02,
“Leases” (“ASU 2016-02”). The core
principle of ASU 2016-02 is that an entity should recognize on its
balance sheet assets and liabilities arising from a lease. In
accordance with that principle, ASU 2016-02 requires that a lessee
recognize a liability to make lease payments (the lease liability)
and a right-of-use asset representing its right to use the
underlying leased asset for the lease term. The recognition,
measurement, and presentation of expenses and cash flows arising
from a lease by a lessee will depend on the lease classification as
a finance or operating lease. This new accounting guidance is
effective for public companies for fiscal years beginning after
December 15, 2018 (i.e., calendar years beginning on January 1,
2019), including interim periods within those fiscal years. Early
adoption is permitted. The Company is currently evaluating the
impact the adoption of ASU 2016-02 will have on the Company’s
consolidated financial statements.
In July
2015, the FASB issued ASU 2015-11, Inventory (Topic 330):
“Simplifying the Measurement of Inventory”. The
amendments require an entity to measure in scope inventory at the
lower of cost and net realizable value. Net realizable value is the
estimated selling prices in the ordinary course of business, less
reasonably predictable costs of completion, disposal, and
transportation. Subsequent measurement is unchanged for inventory
measured using LIFO or the retail inventory method. The amendments
do not apply to inventory that is measured using last-in, first-out
(LIFO) or the retail inventory method. The amendments apply to all
other inventory, which includes inventory that is measured using
first-in, first-out (FIFO) or average cost. ASU 2015-11 is
effective for annual and interim periods beginning after December
31, 2016. The Company adopted this accounting pronouncement during
the three months ended March 31, 2017 with no material impact on
its consolidated financial statements.
In
January 2017, the FASB issued ASU 2017-01, Business Combinations
(Topic 805): Clarifying the definition of a business. The amendments in this Update clarify
the definition of a business with the objective of adding guidance
to assist entities with evaluating whether transactions should be
accounted for as acquisitions (or disposals) of businesses. The
guidance in this update is effective for fiscal years beginning
after December 15, 2017, and interim periods within those
years.
In
January 2017, the FASB also issued ASU 2017-04, Intangibles -
Goodwill and other (Topic 350): Simplifying the test for goodwill
impairment. The amendments in this Update remove the second step of
the current goodwill impairment test. An entity will apply a
one-step quantitative test and record the amount of goodwill
impairment as the excess of a reporting unit's carrying amount over
its fair value, not to exceed the total amount of goodwill
allocated to the reporting unit. The new guidance does not amend
the optional qualitative assessment of goodwill impairment. This
guidance is effective for impairment tests in fiscal years
beginning after December 15, 2019.
Note 3.
Inventories
The
following is a summary of the components of inventories (in
thousands):
|
|
March 31,
2017 (Unaudited)
|
December 31,
2016
|
|
Raw
materials
|
$1,252
|
$1,309
|
|
Work
in process
|
154
|
203
|
|
Finished
goods
|
2,273
|
2,299
|
|
|
$3,679
|
$3,811
|
Note 4.
Secured Lines of Credit, Long-term Debt, and Notes Due to
Employees
The
Company’s outstanding note payable indebtedness was as
follows as of (in thousands):
|
|
March 31,
2017 (Unaudited)
|
December 31,
2016
|
|
Hannoversche
Volksbank credit line #1
|
$1,354
|
$1,321
|
|
Hannoversche
Volksbank credit line #2
|
414
|
397
|
|
Hannoversche
Volksbank term loan #3
|
104
|
117
|
|
Secured
Promissory Note
|
483
|
650
|
|
DZ
Equity Partners Participation rights
|
801
|
789
|
|
Total
|
3,156
|
3,274
|
|
Less
current portion of long-term debt
|
(3,096)
|
(3,214)
|
|
Long-term
debt
|
$60
|
$60
|
In July
2006, MEDITE GmbH, Burgdorf, entered into a master credit line #1
with Hannoversche Volksbank. The line of credit was amended in
2012, 2015 and again in 2016, in which the credit line availability
is Euro 1.3 million ($1.39 million as of March 31, 2017).
Borrowings on the master line of credit agreement #1 bears interest
at a variable rate based on Euribor (Euro Interbank Offered Rate)
depending on the type of advance elected by the Company and defined
in the agreement. Interest rates depending on the type of advance
elected ranged from 3.75 – 8.00% during the three months
ended March 31, 2017. The line of credit has no stated maturity
date. The line of credit is collateralized by the accounts
receivable and inventory of MEDITE GmbH, Burgdorf, and a mortgage
on the building owned by the Company and is guaranteed by Michaela
Ott and Michael Ott, stockholders of the Company.
In June
2012, CytoGlobe, GmbH, Burgdorf, entered into a credit line #2 with
Hannoversche Volksbank. The line of credit granted a maximum
borrowing authority of Euro 400,000 ($427,280 as of March 31,
2017). Borrowings on the master line of credit agreement #2 bears
interest at a variable rate based on Euribor (Euro Interbank
Offered Rate) depending on the type of advance elected by the
Company and defined in the agreement. Interest rates ranged from
3.90 – 8.00% during the period ended March 31, 2017. The line
of credit has no stated maturity date. The line of credit is
collateralized by the accounts receivable and inventory of
CytoGlobe GmbH, Burgdorf and is guaranteed by Michaela Ott and
Michael Ott, stockholders of the Company, and the state of Lower
Saxony (Germany) to support high-tech companies in the
area.
In
November 2008, MEDITE GmbH, Burgdorf, entered into a Euro 400,000
($427,280 as of March 31, 2017) term loan #3 with Hannoversche
Volksbank with an interest rate of 4.7% per annum. The term loan
has a maturity of December 31, 2018, and requires quarterly
principal repayments of Euro 13,890 ($14,517 as of March 31, 2017).
The term loan is guaranteed by Michaela Ott and Michael Ott,
stockholders of the Company, and is collateralized by a partial
subordinated pledge of the receivables and inventory of MEDITE
GmbH, Burgdorf.
In
March 2009, the Company entered into a participation rights
agreement with DZ Equity Partners (“DZ”) in the form of
a debenture with a mezzanine lender who advanced the Company up to
Euro 1.5 million, ($1.6 million as of March 31, 2017) in two
tranches of Euro 750,000 each ($801,150 as of March 31, 2017). The
first tranche was paid to the Company at closing with the second
tranche being conditioned on MEDITE GmbH, Burgdorf and its
subsidiaries hitting certain performance targets. Those targets
were not met and the second tranche was never called. The debenture
pays interest at the rate of 12.15% per annum and matured on
December 31, 2016, however the Notes are not considered in default
until June 1, 2017, when the German financial statements are due to
be filed. The Company has initiated discussions with DZ to
renegotiate the terms of the agreement or to convert any part of
the balance into stock. DZ has stated that they will not be able to
refinance the debt. The default rate of interest will increase
three percent.
On
December 31, 2015, the Company entered into a Securities Purchase
Agreement (the “2015 Purchase Agreement”) with seven
individual accredited investors (collectively the
“Purchasers”), pursuant to which the Company agreed to
issue to the Purchasers secured promissory notes in the aggregate
principal amount of $500,000 with interest accruing at an annual
rate of 15% (the “Note(s)”) and warrants to purchase up
to an aggregate amount of 250,000 shares of the common stock, par
value $0.001) per share, of the Company (the
“Warrant(s)”) with an initial exercise price of $1.60
per share, subject to adjustment and are exerciseable for a period
of five years. On March 15, 2016, the Board of Directors
approved renegotiated terms to increase the warrants issued to the
Purchasers from a total of 250,000 warrants to 500,000 and fixed
the exercise price of the warrants to $0.80. The Notes mature on
the earlier of the third month anniversary date following the
Closing Date, as defined in the Note, or the third business day
following the Company’s receipt of funds exceeding one
million dollars from an equity or debt financing, not including the
financing contemplated under the 2015 Purchase Agreement. The Notes
are secured by the Company’s accounts receivable and
inventories held in the United States. If the Notes are not
redeemed by the Company on maturity, the Purchasers are entitled to
receive 10% of the principal balance of the Notes outstanding in
warrants for every month that the Notes are not
redeemed. On March 31, 2016, these Notes matured and
were not repaid. Therefore the Notes were in default on
April 1, 2016. The Company agreed to pay the Purchasers
10% of the principal balance of the Notes in warrants until the
Notes are repaid. During the three months ended March
31, 2017, the Company issued 50,000 warrants in connection with the
default provision and 100,000 warrants in connection with the
January 2017 extension provision (see below), which were valued at
$11,443 and $28,167, respectively and recorded it as interest
expense in the condensed consolidated statement of operations. The
Notes are secured by the Company’s accounts receivable and
inventories held in the United States. In January 2017, the Company
extended the term of the Notes in default on April 1, 2016 to June
30, 2017 and reduced the price on the warrants issued from $0.80 to
$0.50. The Company recorded $64,405 attributed to the repricing of
the warrants.
On
December 31, 2015, the Company recorded a discount related to the
issuance of warrants attributed to the Notes of approximately
$90,000. The discount was amortized to interest expense
during the three months ended March 31, 2016. We did not have any
discount amortization for the period ended March 31,
2017.
On May
25, 2016, the Company entered into a Securities Purchase Agreement
(the “May Purchase Agreement”) with two individual
accredited investors, one of which who serves on the
Company’s Board of Directors (collectively
the “May Purchasers”), pursuant to which the Company
agreed to issue to the May Purchasers secured promissory notes in
the aggregate principal amount of $150,000 (the “May
Note(s)”) with an interest rate of 15% and warrants to
purchase up to an aggregate amount of 150,000 shares of common
stock, of the Company (the “May Warrant(s)”). The
May Notes may be converted into Units issued pursuant to the
Company’s private financing of up to $5,000,000 (the
“Follow On Offering”) Units at a price of $0.80/Unit
(the “Units”) consisting of: (i) a 2 year
unsecured convertible note, which converts into shares of common
stock at an initial conversion price of $0.80 per share and (ii) a
warrant to purchase one half additional share of common stock, with
an initial exercise price equal to $0.80 per share (the
“Follow On Warrant”). The May Notes are secured by the
Company’s accounts receivable and inventories held in the
United States. The Company recorded a debt discount of $51,000
related to the relative fair value of the warrants on the date of
the May Purchase Agreement, which was amortized to interest expense
in the consolidated statement of operations during the year ended
December 31, 2016. If the May Notes are not redeemed by the Company
on maturity, the Purchasers are entitled to receive 10% of the
principal balance of the Notes outstanding in warrants for every
month that the Notes are not redeemed. In January 2017 the Company
extended the term of the Notes in default on April 1, 2016 to June
30, 2017 and reduced the price on the warrants issued from $0.80 to
$0.50. On August 25, 2016, these Notes matured and were not
repaid. Therefore the Notes were in default on August
26, 2016. The Company agreed to pay the Purchasers 10% of the
principal balance of the May Notes in warrants until the May Notes
are repaid. During the three months ended March 31, 2017, the
Company issued 45,000 warrants in connection with the January 2017
extension provision, which were valued at $17,110 and recorded it
as interest expense in the consolidated statement of
operations.
In
November 2015 and February 2016, the Company entered into
promissory notes totaling $927,000 with certain employees to repay
wages earned prior to December 31, 2014 not paid (“Notes Due
to Employees"). The Notes Due to Employees are to be
paid monthly through September 2019, with no interest due on the
outstanding balances. The monthly amounts increase over
the payment term. The amounts due become immediately due and
payable if payments are more than ten days late either one or two
consecutive months as defined in the agreement with the
employee.
On March 30, 2017, the Company negotiated a settlement with three current employees that hold notes, in the amount of $580,000 plus accrued vacation. The agreement supersedes all prior agreements with group and was effective December 31, 2016. The Company is to pay these employees approximately $330,000, the first payment of $94,000 was paid in April 2017, the second payment of $94,000 30 days from signing the agreement and the final payment of $142,000 60 days from signing the agreement. The employees are working with the Company, regarding the timing of the payments discussed above. The Company issued 1,029,734 warrants to purchase common stock at $0.50 a share with a term of 5 years. The fair value of the warrants issued of $389,000 for the three months ended March 31, 2017, was valued based on the Black Scholes model based on a stock price of $0.70, an interest free rate of 1.33% and volatility of 50%. The settlement was accounted for as an extinguishment under the applicable accounting guidance. The Company recorded a loss on extinguishment on notes due to employees of $158,000.
Note 5.
Related Party Transactions
Included in
advances – related parties are amounts owed to the
Company’s former CFO and Chairman of the Board of
$50,000 at March 31, 2017 and December 31, 2016. Also included
in advances – related parties are amounts owed to Ms. Ott of
20,000 Euros, ($21,364 as March 31, 2017) and $75,000 related to
two short term bridge loans. The Company has made arrangements to
settle these obligations evenly over a 24 month period, starting on
October 31, 2017. In addition, the Company settled obligations
related to accrued salaries, vacation and related expenses totaling
$152,000 owed to Mr. and Ms. Ott. The Company will make an upfront
payment to each Mr. and Ms. Ott of $6,750 and will pay the
remaining amount owed over a period of 18 months starting in
October 2017 The loans noted above are interest-free
loans.
Accrued
salaries, vacation and related expenses at March 31, 2017 and
December 31, 2016, includes amounts owed to the former CFO of
approximately $1.1 million, which is included in accounts payable
and accrued expenses in the accompanying condensed consolidated
balance sheets. See Note 8 for further discussion regarding the
legal proceedings with the Company’s former CFO.
Note
6.
Common Stock
During
the three months ended March 31, 2017, the Company issued 2,360,000
shares of common stock for $1,180,000, less $83,400 of issuance
costs. In connection with the issuance of common stock, the Company
issued 1,180,000 warrants to purchase shares of common stock at
$0.50, for a term of 5 years. We also issued 50,000 shares from
stock subscriptions of $25,000 at December 31, 2016 and issued
25,000 warrants on the same terms and conditions. During the
quarter ended March 31, 2016, the Company did not issue any shares
of common stock.
Note 7.
Preferred Stock and Warrants
A
summary of the Company’s preferred stock as of March 31,
2017 and December 31, 2016 is as follows.
|
|
March 31,
2017
(unaudited)
|
December 31,
2016
|
|
|
Shares
Issued &
|
Shares
Issued &
|
|
Offering
|
Outstanding
|
Outstanding
|
|
Series
A convertible
|
47,250
|
47,250
|
|
Series
B convertible, 10% cumulative dividend
|
93,750
|
93,750
|
|
Series
C convertible, 10% cumulative dividend
|
38,333
|
38,333
|
|
Series
E convertible, 10% cumulative dividend
|
19,022
|
19,022
|
|
Total
Preferred Stock
|
198,355
|
198,355
|
As
of March 31, 2017 and December 31, 2016, the Company had cumulative
preferred undeclared and unpaid dividends. In accordance with the
relevant accounting guidance, these dividends were added to the net
loss in the net loss per share calculation.
Warrants outstanding
|
|
Warrants
|
Weighted Average Exercise Price
|
Aggregate Intrinsic Value
|
Weighted Average Remaining Contractual Life (Years)
|
|
Outstanding
at December 31, 2016
|
1,396,161
|
$1.08
|
—
|
4.11
|
|
Granted
|
2,932,024
|
0.50
|
—
|
5.00
|
|
Exercised
|
—
|
—
|
—
|
—
|
|
Expired
|
—
|
—
|
—
|
—
|
|
Outstanding
at March 31, 2017
|
4,328,184
|
$0.60
|
—
|
4.60
|
During
the three month period ended March 31, 2017, the Company issued
195,000 warrants in connection with the default provisions of the
Notes and the May Notes, which were valued at $56,720. The
value of the warrants were determined using the Black-Scholes
model, at an interest free rate of 1.33%, volatility of 50% and a
remaining term of 5 years and a market price of between $0.50 to
$0.80 during the three months ended March 31, 2017.
During
January 2017, the Company reached an agreement with all secured
promissory noteholders, to extend the maturity of the secured
promissory notes to June 30, 2017, whereby the warrants were
repriced from $0.80 a share to $0.50 a share. The notes continue to
bear interest at 15% and the secured promissory noteholders
continue to receive warrants amounting to 10% of the principal
balance, as long as the notes remain outstanding. The Company
repriced all warrants issued totaling 1.2 million warrants
amounting to a $64,405 incremental value using the Black-Scholes
model on January 16, 2017, the date of the amendments at a current
market price of $0.36 a share, at an interest free rate of 1.33%
and a remaining terms ranging from 4 years to 4 years and 11.5
months.
During
the three months ended March 31, 2017, the Company issued 2,360,000
shares of common stock for $1,180,000, less $83,400 of issuance
costs. In connection with the issuance of common stock, the Company
issued 1,180,000 warrants to purchase shares of common stock at
$0.50, for a term of 5 years. We also issued 50,000 shares from
stock subscriptions of $25,000 at December 31, 2016 and issued
25,000 warrants on the same terms and conditions. On January 16,
2017 the Company also amended the original equity raise closed on
December 7, 2016 and issued an additional 411,915 warrants to
purchase shares of common stock at an exercise price of $0.50, for
a term of 5 years.
Note 8.
Commitments and Contingencies
Legal
Proceedings
On
November 13, 2016, the Company’s former CFO filed a complaint
against the Company and certain officers and directors of the
Company in the United States District Court for the Northern
District of Illinois, Eastern Division, Case No. 1:16-cv-10554,
whereby he is alleging (i) breach of the Illinois Wage and
Protection Act, (ii) breach of employment contract and (iii) breach
of loan agreement. He is seeking monetary damages up to
approximately $1,665,972. The Company has denied the substantive
allegations in the complaint and is vigorously defending the suit.
Management believes that the claims set forth in the complaint
against the Company are without merit. The Company has accrued
wages and vacation of approximately $1.1 million and a $50,000 note
payable to the former CFO at March 31, 2017 and December 31, 2016.
The Company believes that $836,000 was to be converted into common
stock as a condition of the merger agreement at $2.00 a share. The
presiding Federal Judge has referred the lawsuit to mediation. No
settlement was reach during April 2017 meditation. The magistrate
judge highly recommended that both parties work towards a
settlement and scheduled an update meeting in September
2017.
Note 9.
Segment Information
The
Company operates in one operating segment. However, the Company has
assets and operations in the United States, Germany and Poland. The
following tables show the breakdown of the Company’s
operations and assets by region (in thousands):
|
|
United States
|
Germany
|
Poland
|
Total
|
||||
|
|
March 31,
2017
|
December
31, 2016
|
March 31,
2017
|
December
31, 2016
|
March 31,
2017
|
December
31, 2016
|
March 31,
2017
|
December
31, 2016
|
|
Assets
|
$11,637
|
$11,268
|
$6,072
|
$6,264
|
$99
|
$238
|
$17,809
|
$17,770
|
|
Property
& equipment, net
|
65
|
68
|
1,478
|
1,487
|
4
|
2
|
1,547
|
1,557
|
|
Intangible
assets
|
10,518
|
10,518
|
-
|
-
|
-
|
-
|
10,518
|
10,518
|
|
|
United States
|
Germany
|
Poland
|
Total
|
||||
|
|
March 31, 2017
|
March
31, 2016
|
March
31, 2017
|
March
31, 2016
|
March
31, 2017
|
March
31, 2016
|
March
31, 2017
|
March
31, 2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Histology
Equipment
|
$146
|
$87
|
$760
|
$1,106
|
$8
|
$15
|
$914
|
$1,208
|
|
Histology
Consumables
|
104
|
47
|
573
|
417
|
-
|
-
|
677
|
464
|
|
Cytology
Consumables
|
-
|
140
|
300
|
319
|
-
|
-
|
300
|
459
|
|
Total
Revenues
|
$250
|
$274
|
$1,633
|
$1,842
|
$8
|
$15
|
$1,891
|
$2,131
|
|
Net
loss
|
$(570)
|
$(490)
|
$(216)
|
$(89)
|
$(169)
|
$(43)
|
$(955)
|
$(622)
|
Note 10.
Subsequent Events
On May
4, 2017, the Board of Directors (the “Board”) of MEDITE
Cancer Diagnostics, Inc. (the “Company”) accepted the
resignation of Michaela Ott as Chief Operating Officer of the
Company, effective immediately. Further, the Board accepted Ms.
Ott’s resignation from her position as Managing Director of
the Company’s wholly-owned subsidiary, Medite GmbH, as well
as managing director of CytoGlobe GmbH, Burgdorf, a wholly owned
subsidiary of Medite GmbH, effective immediately. Ms. Ott shall
further resign from her position as Managing Director of Medite
GmbH, Austria, also a wholly-owned subsidiary of Medite GmbH,
effective no later than September 30, 2017. Ms. Ott shall remain on
the Board of Directors of the Company. Ms. Ott’s resignations
do not arise from any disagreement on any matter relating to the
Company’s operations, policies or practices, or regarding the
general direction of the Company or any of its subsidiaries. Ms.
Ott shall take all her remaining holiday leave with no further
obligation to render services to the Company or its subsidiaries
and shall receive her monthly remuneration of EUR 10,000 ($10,682
at March 31, 2017) through September 30, 2017. The Company agrees
to pay to Ms. Ott outstanding accrued compensation due to her in
the amount of EUR 75,098, to be paid in eighteen monthly
installments of EUR 4,172 commencing October 31, 2017, and at the
end of each subsequent month thereafter until paid in full.
Further, the Company agrees that upon achieving annual revenue of
EUR 15 million (16.0 million at March 31, 2017) by no later than
December 31, 2020, the Company shall make a one- time payment to
Ms. Ott of EUR 30,000 ($32,046 at March 31, 2017). The payment will
be due one month after the adoption of the annual financial
statement for the year in which the revenue threshold is exceeded.
The Company shall repay to Ms. Ott a loan provided by her to the
Company with a current loan value of EUR 91,136 ($97,351 at March
31, 2017). Repayment of the loan shall be made in twenty-four equal
monthly installments of EUR 3,797 ($4,056 at March 31, 2017),
commencing on October 31, 2017, and on the last day of each month
thereafter until the loan is repaid in full. Ms. Ott agrees to
maintain her personal guarantee to various financial institutions
with respect to certain financial obligations of the Company until
September 30, 2017. The Company shall undertake to provide
sufficient security to these financial institutions commencing
October 1, 2017, whereby the Company shall secure the release of
Ms. Ott’s personal guarantee. The Company shall further
transfer to Ms. Ott the direct life insurance policy currently
maintained by the Company for the benefit of Ms. Ott.
Further, on May 4,
2017, the Board also accepted the resignation of Michael Ott as
Chairman of the Board, effective immediately. Mr. Ott shall remain
on the Board of Directors of the Company. Mr. Ott further resigned
as Managing Director of the Company’s wholly-owned German
subsidiary, Medite GmbH, as well as from his position as Managing
Director of CytoGlobe GmbH, Burgdorf, a wholly-owned subsidiary of
Medite GmbH, effective immediately. Mr. Ott shall resign from his
position as Managing Director of Medite sp. z. o.o., Poland, also a
wholly-owned subsidiary of Medite GmbH, effective no later than
September 30, 2017. Mr. Ott’s resignations do not arise from
any disagreement on any matter relating to the Company’s
operations, policies or practices, or regarding the general
direction of the Company or its subsidiaries. Mr. Ott shall take
all his remaining holiday leave and shall receive his monthly
remuneration of EUR 10,000 ($10,682 at March 31, 2017) through
September 30, 2017. The Company agrees to pay to Mr. Ott
outstanding accrued compensation due to him in the amount of EUR
52,473 ($56,052 at March 31, 2017), to be paid in eighteen monthly
installments of EUR 2,915 ($3,114 at March 31, 2017) commencing
October 31, 2017, and at the end of each subsequent month
thereafter until paid in full. Further, the Company agrees that
upon achieving annual revenue of EUR 15 million ($16 million at
March 31, 2017) by no later than December 31, 2020, the Company
shall make a one- time payment to Mr. Ott of EUR 30,000 ($32,046 at
March 31, 2017). The payment will be due one month after the
adoption of the annual financial statement for the year in which
the revenue threshold is exceeded. Mr. Ott agrees to maintain his
personal guarantee to various financial institutions with respect
to certain financial obligations of the Company until September 30,
2017. The Company shall undertake to provide sufficient security to
these financial institutions commencing October 1, 2017 whereby the
Company shall secure the release of Mr. Ott’s personal
guarantee. The Company shall further transfer to Mr. Ott the direct
life insurance policy currently maintained by the Company for the
benefit of Mr. Ott.
On May
4, 2017, the Board unanimously elected David E. Patterson, the
Company’s Chief Executive Officer and Director, to the
position of Chairman of the Board of Directors of the Company, to
serve until his resignation or removal.
Effective April 28,
2017, the Company increased the authorized shares from 35,000,000
to 50,000,000.
The
Board appointed two officers on May 4, 2017 who will receive
350,000 shares of restricted common stock with a three year vesting
schedule and on April 26, 2017 appointed an officer who will
receive 200,000 shares of restricted common stock with a three year
vesting schedule.
Item
2.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
Caution Regarding Forward-Looking Statements
This
report contains “forward-looking statements” –
that is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance and financial condition,
and often contain words such as “expect,”
“anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” or
“will.” These forward-looking statements are not
guarantees and are subject to known and unknown risks,
uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity,
performance or achievements expressed or implied by such
forward-looking statements. For us, particular uncertainties that
could cause our actual results to be materially different than
those expressed in our forward-looking statements include: our
ability to raise capital; our ability to retain key employees; our
ability to engage third party distributors to sell our products;
economic conditions; technological advances in the medical field;
demand and market acceptance risks for new and existing products,
technologies, and healthcare services; the impact of competitive
products and pricing; U.S. and international regulatory, trade, and
tax policies; product development risks, including technological
difficulties; ability to enforce patents; and foreseeable and
unforeseeable foreign regulatory and commercialization factors, our
ability to develop new products and respond to technological
changes in the markets in which we compete, our ability to obtain
government approvals of our products, our ability to market our
products, changes in third-party reimbursement procedures, and such
other factors that may be identified from time to time in our
Securities and Exchange Commission ("SEC") filings and other public
announcements including those set forth under the caption
“Risk Factors” in Part 1, Item 1A of our Annual Report
on Form 10-K for the year ended December 31, 2015. All subsequent
written and oral forward-looking statements attributable to us, or
persons acting on our behalf, are expressly qualified in their
entirety by the foregoing. Readers are cautioned not to place undue
reliance on our forward-looking statements, as they speak only as
of the date made. Except as required by law, we assume no duty to
update or revise our forward-looking statements.
Overview of MEDITE Cancer Diagnostics, Inc.
MEDITE
Cancer Diagnostics, Inc. (the “Company”,
“it”, “we”, or “us”), formerly
CytoCore, Inc., specializes
in the marketing and selling of MEDITE core products (instruments
and consumables), manufacturing, development of new solutions in
histology and cytology and marketing of molecular biomarkers. These
premium medical devices and consumables are for detection, risk
assessment and diagnosis of cancerous and precancerous conditions
and related diseases. Depending upon the type of cancer, segments
within the current target market of approximately $5.8 billion are
growing at annual rates between 10% and 30%. The well-established
brand of MEDITE Cancer Diagnostics is well received and remains a
professional description of the Company’s business. The
Company’s trading symbol is “MDIT”.
In 2016
and 2017 we focused on implementation of several growth
opportunities including enhanced distribution of core products
through focused sales and distribution channel(s), newly developed
and patent pending assays, new laboratory devices and several
marketing projects like the Chinese standardization projects for
histology and cytology. The Company is optimistic about
recent marketing efforts focusing on larger laboratory chains and
other important strategic relationships. The Company has
approximately 80 employees in four countries, a distribution
network to about 70 countries and a wide range of products for
anatomic pathology, histology and cytology laboratories available
for sale.
After
the successful market entrance into China in 2014, the
Company’s revenues in this market are approximately $65,000
for the three months ended March 31, 2017 compared to $185,000 for
the three months ended March 31, 2016. The Company has received
$240,000 in orders for China which they believe they can complete
partially in the second quarter and partially in the third quarter.
The Company’s delayed financing during 2015 and 2016 and into
2017 has impacted the delivery of sales due to availability of raw
materials, parts, and work in progress inventory and the needed
investment in that inventory. The Company originally anticipated
sales in 2016 of approximately $2 million with the assumption that
the timing of the scheduled capital raise would happen earlier in
the year. Due to the delay in the capital raise, the Company
revised its target to $1.3 million. Total sales for the year ended
December 31, 2016 were approximately $1 million compared to
$897,000 for the same period in 2015. The Chinese market
is growing quickly, and the Company expects it will be one of two
largest markets for its products. By working with its Chinese
distributor, UNIC Medical, the Company has successfully received
China Food and Drug Administration (“CFDA”) approval
for all MEDITE histology laboratory devices at the end of 2014, and
for the Cytology device in 2015. The Company is working with UNIC
and are anticipating increased sales in China in the third and
fourth quarter of 2017. Also, together with UNIC, we are
part of a government supported project to standardize the histology
laboratory process in China. UNIC Medical is using MEDITE equipment
and consumables for processing, and launching new assays. UNIC has
taken an active role in branding MEDITE Cancer Diagnostics in
China. Medite is working through certain product rollout issues
which have impacted its anticipated increase in sales.
On May
31, 2016, UNIC received CFDA approval as a Class I in vitro
diagnostic reagent for MEDITE's "SureThin" cell preservation
solution. As China adopts Cytopathology standards across
the country, the Company expects 'Liquid Based Cytology Tests
(LBC)' will be used for the majority of Pap collections for
cervical cancer screening. We are prepared to sell the complete
SureThin product line, including the already approved Processor to
this potential market of 485 million women between the ages of 16
and 64 years of age. Management anticipates launching the product
in China by the third quarter of 2017 and in the U.S. by the fourth
quarter of 2017.
The
Company’s cytology product line revenue remained at about the
same levels in Europe (non-Gyn and Gyn applications) during 2016
and 2017 related to a competitive threat that management believes
has been alleviated. The Company is in the process of moving
forward the submission of an application to the U.S. Food and Drug
Administration (“FDA”) for SureThin Gyn applications.
Once approved we can compete with some of the dominant suppliers in
this $600 million market and target major strategic lab partners.
The impact of the gynecology segment SureThin solution in the US
and China market will drive significant new revenue and gross
margin improvement opportunities in the later part of
2017.
MEDITE
is clearing certain hurdles in obtaining FDA clearance of its
SureThin product offering for gyn use in the US. The product is
attracting the interest in larger labs that will use both the
SureThin non-gyn and gyn applications. The gyn clearance with the
sale of the SureThin processor will encourage market growth the
Management believes will provide sources for improved sales
channels.
The
developed and U.S. patented self-collection device SoftKit is
targeting the growing POC & POP (point of care or point of
people care) market. Growth in this area is due to consumer driven
health care requirements and the necessity to support and address
incremental patient population needs for screening and on-going
diagnostic tests. SoftKit serves as just such a product, addressing
this market requirement. SoftKit is planned to be sold through
various marketing channels that serve the gynecology physician
consumer health and emerging post-acute care as the influence of
clinical labs are expanded. Initially the SoftKit is targeted at
the uterine cancer/HPV screening market. The next phase of testing
will include cervical screening.
Management believes
that 2017 developments, allows us to more fully leverage the
products and biomarker solutions from CytoCore component of MEDITE.
The first entry will be the introduction of SureCyte+ (fluorogenic)
instant staining, offering tremendous lab efficiencies and enhanced
patient care through the use of SureCyte+. SureCyte+ is the first
of many new offering under the SureCyte brand.
MEDITE’s
Breast Cancer Risk Assessment Product is non-invasive, easy,
gentle, and highly sensitive, enabling young women between 20 and
45 years of age to obtain their individual breast cancer risk
assessment. An automatic and gentle collection device for breast
cells together with a newly developed assay is used to determine a
woman’s risk to develop breast cancer. Knowing the
individual breast cancer risk will provide relief to a majority of
young women who have no elevated risk of developing breast cancer.
For those who have a higher risk, it enables them to monitor that
risk closer for earlier treatment, if needed. The earlier a
precancerous or cancerous situation is detected, the greater the
chance for reducing the fatality rate for these
conditions. Product development of BreastPap continued
in 2016, reflecting feedback from doctors’ test use of
prototype units’ and doctor’s office feedback to
continuously improve the product prior to launching. During the
third quarter, the Company initiated a co-operation with Leibnitz
University of Hannover, Germany, on the final design and usability
of the BreastPap. The project is scheduled to begin on February 15,
2017. The delay in market introduction by management is due to
additional quality assurance measures being performed by the
Company as well as insuring that US feedback from providers are
considered. The Company’s BreastPap product is a risk
assessment tool planned to evaluate the breast cancer risk on
certain results based on the treatment.
Upon
receiving the results, women, based upon their physicians’
advice may be candidates for further diagnostic testing. The
BreatPap will undergo further customer testing in the US and EU
markets. This product has been placed on hold and will be evaluated
by Management, so they can focus their attention, and resources on
their other product rollouts. Management plans on revisiting this
Product by the end of 2017.
The Company brought several other innovative
products closer to marketability during 2015, and continued during
2016 as listed above. Also, in early 2015, the German
priority patent for a fully automated system used in the histology
lab, a “Lab-In-One” unit, was granted. This technology,
if successfully accepted by the market, has the ability to change
the competitive landscape within the
industry.
During
the first quarter of 2016, the Company opened a second German
manufacturing facility with approximately 4,000 square
feet in Nussloch. This facility is utilizing the local
workforce and their experience for the specialized skills required
for manufacturing of the newly developed and updated Microtome
product line and the newly developed Cryostat (instruments used for
sectioning tissue biopsies). The Company began manufacturing
the new Cryostat line during the first quarter of 2017 and
anticipates the first pre serial series to be available before the
end of the second quarter. This enhanced microtome and cryostat
production facility will allow MEDITE to meet the anticipated
demand for these instruments as well as enhance its worldwide
distribution channel through its suppliers including
China.
The
Company operates in one industry segment for cancer diagnostics
instruments and consumables for histology and cytology
laboratories.
|
Definition:
|
Histology - Cancer diagnostics based on the structures of cells in
tissues
|
|
|
Cytology - Cancer diagnostics based on the structures of individual
cells
|
Cancers
and precancerous conditions are defined in terms of structural
abnormalities in cells. For this reason cytology is widely used for
the detection of such conditions while histology is typically used
for the confirmation, identification and characterization of the
cellular abnormalities detected by cytology. Other diagnostics
methods such as marker-based assays provide additional information
that can supplement, but which cannot replace cytology and
histology. The trend towards more personalized treatment of cancer
increases the need for cytology, histology and assays for
identifying and testing the best treatment alternatives. We believe
that this segment will therefore be increasingly important for
future development of strategies to fight the “cancer
epidemic” (World Health Organization: World Cancer Report
2014) which expects about a 50 % increase in cancer cases worldwide
within the next 20 years.
This
segment sees a trend toward, and demand for, higher automation for
more throughput in bigger laboratories, process standardization,
digitalization of cell and tissue slides and computer aided
diagnostic systems, while also looking for cost effective
solutions. In the US the Patient Protection and Affordable Care Act
is a national example for the industry. More people have health
insurance and therefore can afford early cancer screening, while at
the same time the payers for health care continue looking for cost
reductions.
MEDITE
acts as a one-stop-shop for histology (also known as anatomic
pathology) laboratories either as part of a hospital, as part of a
chain of laboratories or individually. It is one out of only four
companies offering all equipment and consumables for these
laboratories worldwide. The MEDITE brand stands for innovative and
high quality products – most equipment made in Germany
– and competitive pricing.
For the
cytology market, MEDITE offers a wide range of consumable products
and equipment; in particular for liquid-based-cytology which is an
important tool in cancer screening and detection in the field of
cervical, bladder, breast, lung and other cancer types. It also
developed an innovative, easy to use standardized staining
solutions, and a very innovative and effective early cancer
detection marker-based assays. These new developments are cost
effective solutions able to replace more expensive competitive
products, and therefore are also becoming the first choice for the
growing demand in emerging countries.
All of
the Company’s operations during the reporting period were
conducted and managed within this segment, with management teams
reporting directly to our Chief Executive Office. For information
on revenues, profit or loss and total assets, among other financial
data, attributable to our operations, see the consolidated
financial statements included herein. Further during these 2016 and
2017 periods we added key personnel with excellent historical
performance in new product commercialization, sales development and
internal operations improvement.
Outlook
Due to
promising innovative new products for cancer risk assessment and an
increasing number of distributions contracts executed in the last
years, management believes the profitability and cash-flow of the
business will grow and improve. However, significant on-going
operating expenditures may be necessary to manufacture and market
new and existing products to achieve the accelerated sales growth
targets outlined in the Company’s business plan. To realize
the planned growth potential, management will focus its efforts on
1.) Finishing and gaining approval for the products currently under
development and 2.) Increase direct sales in the U.S. and continue
to expand Chinese market sales by broadening the Company’s
collaborations with the local distributor UNIC. We also will work
on continuously optimizing manufacturing capacity to increase our
gross margin. Implementation of our plans will be contingent upon
securing substantial additional debt and/or equity financing. If
the Company is unable to obtain additional capital or generate
profitable sales revenues, we may be required to curtail product
development and other activities. The condensed consolidated
financial statements presented herein do not include any
adjustments that might result from the outcome of this
uncertainty.
Currently, the
Company’s sales primarily are generated in Euro currency.
While in 2016 the average USD/Euro exchange rate was 1.10682 for
the three months ended March 31, 2016, compared to 1.0655 in and
March 31, 2017 a decrease of 0.04132, however the conversion rate
at December 31, 2016 was 1.05204 and 1.0682 at March 31, 2017.
MEDITE’s sales in USD were lower on a year over year basis as
approximately 80% of our sales currently occurs in Euros. The
Company is working to lessen the impact of the Euro’s decline
versus the dollar by increasing the percentage of overall product
sales in the U.S. and other countries such as China whose currency
is not pegged to the Euro.
The
Company believes the combination of MEDITE Enterprise, Inc. with
CytoCore, Inc. will expedite the development and marketability of
CytoCore’s cytology products which include collection
devices, image analysis software, special stains and immuno-assays.
Currently, the recent launch of new products, the positive impact
from several new initiatives, and some recently executed
distribution contracts in the U.S., Europe and China are some
primary positive factors assisting growth.
A major
market movement for MEDITE is its recent acceptability into several
US key opinion leader clinical sites as well a strategic sales,
distribution and launch partners that will create immediate use and
purchasing sites, whitepapers and recognition required for MEDITE
to reach its next level of growth in its new product introductions.
Similar approaches are in place in China and scheduled for the
EU.
Results of Operations
The
following discussion and analysis should be read in conjunction
with the Company’s unaudited condensed consolidated financial
statements presented in Part I, Item 1 of this Quarterly Report and
the notes thereto, and our audited consolidated financial
statements and notes thereto, as well as our Management’s
Discussion and Analysis contained in our Annual Report on Form 10-K
for the year ended December 31, 2016 filed with the SEC on April
14, 2017.
Three months ended March 31, 2017 as compared to the three months
ended March 31, 2016 (in thousand USD)
Revenue
Revenue
for the three months ended March 31, 2017, was $1,891 as compared
to $2,131 for the three months ended March 31, 2016. Due to some
seasonality in the industry, usually the first quarter of the year
is weak because many public customers buy during the last 4 to 5
months of the year. Revenues were nominally impacted by
the conversion rate between the USD/Euro, or $63 for the three
months ended March 31, 2017, compared to the same period in
2016. The Company increased sales in the cytology
product during 2016 period , partially through the US sales
doubling during the 2016 period however due to cash constraints
during the end of 2016 and early 2017, cytology products were not
available for sale. MEDITE manufactured lab equipment
decreased during 2017, compared to the same period in 2016, offset
by higher histology consumables sold during 2017.
Costs of Revenue
Cost
of revenues were $1,211, or 64% of the revenues for the three
months ended March 31, 2017, as compared to $1,213, or 57% of the
revenues for the three months ended March 31, 2016. The cost of
revenue consisted of higher manufacturing and fixed costs during
2017 due delays in sourcing parts and some installation
issues.
Research and Development
Research
and development expenses are an important part of our business to
keep our existing products competitive, and to develop new
innovative solutions with interesting market potential that will
help us grow future revenues. These expenses include research work
for cancer marker consumables and developing work, including
engineering and industrial design, for histology and cytology
laboratories worldwide. The major components consist of
payroll-related costs for in-house scientific research, mechanical
and electrical engineering, instrument related software development
staff, prototype expenses and material purchased for
R&D.
For
the first quarter 2017, research and development expenses increased
to $425 compared to $360 for the first quarter 2016. The
Company expensed approximately $138 of development expense for the
three months ended March 31, 2017.
Selling, General and Administrative
For
the first quarter 2017, SG&A expenses were $782 as compared to
$857 for the first quarter 2016. The first quarter 2016 included
approximately $45 of professional fees attributed to the
restatement of the intangible assets and deferred income tax
liability in the financial statements for the year ended December
31, 2015. Professional fees were lower for the quarter ended
March 31, 2017 specifically related to lower audit fees for the
2016 audit and timing of the completion of the audit through April
2017.
Operating Loss
The
operating loss of $576 for the first quarter of 2017, compares to
MEDITE’s operating loss of $350 for the first quarter of
2016, and is directly related to lower sales for the period and
research and development costs discussed above.
Interest Expense
Interest
expenses decreased by 26% to $193 in the three months ended March
31, 2017, compared to $261 for the three months ended March 31,
2016, due to the amortization of the debt issuance costs and the
amortization of the debt discount attributed to the secured
promissory notes issued at December 31, 2015, which matured on
March 31, 2016. These notes bear interest at 15%, or $24
for the 2017 period compared to $19 for the 2016 period and the
amortization of the debt issuance costs and debt discount totaled
$200 for the three months ended March 31, 2016. The 2017
period did not have any amortization of the debt issuance costs.
During the three months ended March 31, 2017 the Company recorded
$64 and $57 to interest expense related to repricing of the
warrants related to the secured promissory notes and the fair value
of 195,000 warrants issued related to the penalty feature in
secured promissory notes issued on December 31, 2015 and May 25,
2016. The effect of the interest, debt issuance costs and
debt discount, repricing and the penalty warrants on the secured
promissory notes was an effective yield of 89% and 175% for the
three months ended March 31, 2017 and 2016,
respectively.
Net Loss
The
net loss for the quarter ended March 31, 2017, totaled $955, as
compared to net loss of $622 for the quarter ended March 31, 2016.
The loss for 2016 directly related to lower sales for the period
and higher research and development costs discussed above.
Decreased interest costs discussed above, resulted from the
amortization of the debt issuance cost and debt discount with the
secured promissory notes of $200 in 2016 offset by repricing and
warrant issuances discussed above.
Liquidity and Capital Resources
Due
to promising new products and distributions contracts executed in
the last two years and management changes with increased focus on
the various sales channels and manufacturing and quality systems,
management anticipates the profitability and cash flow of the
business will improve. However, significant on-going operating
expenditures may be necessary to manufacture and market new and
existing products to achieve the accelerated sales growth targets
outlined in the Company’s business plan. To realize the
planned growth potential management will focus its efforts on 1.)
finishing and gaining approval for the products currently under
development and 2.) increase direct sales in the USA and continue
to expand Chinese market sales by broadening the Company’s
collaborations with the local distributor UNIC. We also will work
on continuously optimizing manufacturing cost to increase our gross
margin.
For the
three months ended March 31, 2017, we used net cash in operations
of approximately $645 compared to $559 for the same period in 2016.
During 2017, cash used in operations consisted of loss from
operations, offset by non-cash transactions for warrants issued
related to secured promissory notes. During 2016, cash used in
operations consisted of loss from operations, offset by non-cash
transactions for warrants issued related to secured promissory
notes.
For the
three months ended March 31, 2017, net cash used in investing
activities were $16 compared to $94 for the same period in
2016. The improvement in this activity relates to lower
purchases of equipment in 2017 compared to 2016.
For the
three months ended March 31, 2017, financing activities provided
$914 compared $59 used in financing activities for the same period
in 2016. The Company sold 2.4 million shares of common stock for
$1.1 million during the first quarter of 2017, net of $83 of
issuance costs.
The
Company must contemplate continuation as a going concern. This
contemplates the realization of assets and the liquidation of
liabilities in the normal course of business. At March
31, 2017, the Company’s cash balance was $269 and its
operating losses for the three months ended March 31, 2017 and the
year ended December 31, 2016, have used most of the Company’s
liquid assets. These factors raise substantial doubt about the
Company’s ability to continue as a going concern. However
working capital has improved by approximately $600 from December
31, 2016. The Company raised additional cash of $250 from the sale
of equity subsequent to April 1, 2017 through the date of this
filing.
The
Company has settled three of the five employee notes for $330 and
warrants. In April 2017 the Company paid $94 for the first
installment and issued warrants to purchase 1,029,734 shares of
common stock at $0.50, for a period of 5 years.
During
the three months ended March 31, 2017, the Company paid $167 of
secured promissory notes, reducing the balance to $483. The Company
received notice that one noteholder will convert $50 into 100,000
shares of common stock at $0.50. Management believes that the
remainder of the balance will be settled in some combination of
cash and stock.
Management is actively seeking additional equity financing
contemplated in the $4.25 million stock purchase
agreement. The Company has negotiated with certain parties
whose obligations are due in the next twelve months to extend
payment terms beyond one year. One lender with an outstanding
balance of $801 has stated that they will not be able to refinance
the debt. The default rate of interest will increase three
percent.
Accrued salaries, vacation and related expenses at March 31, 2017,
includes amounts owed to the former CFO of approximately $1.1
million. See further discussion regarding the legal proceedings
with the Company’s former Chief Financial Officer. Also
included in accrued salaries, vacation and related expenses are
amounts owed to both the Michaela and Michael Ott totaling
approximately $152. Included in advances – related
parties are amounts owed to the Company’s former CFO $50
at March 31, 2017.
The
Company owes Ms. Ott, 91 Euros, ($97 as March 31, 2017). The
Company has established a payment plan whereby the balances owed
will be repaid beginning on October 31, 2017, extending between 18
and 24 months.
The
Company’s security agreement with its lender has provided
borrowings of 35% of our collateralized assets. The
Company continues to seek to refinance this debt to provide
additional liquidity.
Management
continues to expand its product offerings and has also expanded its
sales and distribution channels during 2017.
If
management is unsuccessful in completing its equity financing, they
will begin negotiating with some of their major vendors and lenders
to extend the terms of their debt and also evaluate certain
expenses that have been implemented for the Company’s growth
strategy. However, there can be no assurance that
the Company will be successful in these efforts. The condensed
consolidated financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
In
summary, management believes current working capital is sufficient
to fund current operations. The Company intends to continue growing
using current working capital, however the growth of the Company
could be slowed down if we are unable to obtain debt and/or equity
financing. Consequently, there is substantial doubt
about our ability to continue as a going concern.
Off-Balance Sheet Arrangements
As
of March 31, 2017, we did not have any relationships with
unconsolidated entities or financial partners, such as entities
often referred to as structured finance or special purpose entities
established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. As
such, we are not materially exposed to any financing, liquidity,
market or credit risk that could arise if we had engaged in such
relationships.
Item 4.
Controls and
Procedures
Evaluation of Disclosure Controls and Procedures
Our
Chief Executive Officer and our Chief Financial Officer, evaluated
the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended, the “Exchange
Act”) as of the end of the period covered by this report.
Based on that evaluation, our Chief Executive and Chief Financial
Officers have concluded that our disclosure controls and procedures
were not effective to provide reasonable assurance that the
information we are required to disclose in the reports filed or
submitted by us under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms, and accumulated and communicated to
our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Part II. Other Information
Item
1.
Legal
Proceedings.
On
November 13, 2016, the Company’s former CFO filed a complaint
against the Company and certain officers and directors of the
Company in the United States District Court for the Northern
District of Illinois, Eastern Division, Case No. 1:16-cv-10554,
whereby he is alleging (i) breach of the Illinois Wage and
Protection Act, (ii) breach of employment contract and (iii) breach
of loan agreement. He is seeking monetary damages up to
approximately $1,665,972. The Company has denied the substantive
allegations in the complaint and is vigorously defending the suit.
Management believes that the claims set forth in the complaint
against the Company are without merit. The Company has accrued
wages and vacation of approximately $1.1 million and a $50,000 note
payable to the former CFO at March 31, 2017. The Company believes
that $836,000 was to be converted into common stock as a condition
of the merger agreement at $2.00 a share.
On
April 26, 2017 mediation with a court appointed Magistrate Judge
occurred. The mediation ended with detail of settlement parameters.
The Magistrate dismissed the meeting with specific instructions to
both sides to settle the lawsuit. If needed a September 7, 2017
update meeting with the Magistrate Judge is scheduled. Both sides
will continue to work towards an equitable settlement prior to
September 7,
2017.
Item
2.
Unregistered Sales
of Equity Securities and Use of Proceeds.
On
March 7, 2017 the Company filed a $4,250,000 Form D to issue up to
8.5 million shares of common stock and approximately 2.2 million
warrants to issue common stock at $0.50 a share. From January
through March 31, 2017 the Company received $1.2 million proceeds
for the sale of 2.4 million shares of common stock at a purchase
price of $0.50, with 50% of the shares issued, or 1.2 million
warrants to purchase common shares at $0.50, with a term of 5
years. The Company incurred $83,400 of cash commissions and will
issue 90,375 warrants associated with the sale of these
securities.
Item
3.
Defaults upon
Senior Securities.
On
January 10, 2017, the Board of Directors agreed to renegotiate the
terms of the 2015 Notes and 2016 Notes (collectively the
“Notes”) with the consent of the 2015 Purchasers and
2016 Purchasers (collectively the “Note Holders”),
which was obtained on January 16, 2017, as follows:
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●
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The Note Holders agreed to waive the defaults and extend the Notes
for the earlier of six months or the receipt of a $3,000,000
investment into the Company pursuant to a future private equity
offering, whichever occurs first (the
“Extension”).
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|
●
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Upon the Company’s receipt of the first $1,000,000 invested
(including the capital raised to date in a prior private equity
offering), the Note Holders will be repaid one third of their
principal investment. On March 31, 2017, the Company paid
approximately $167,000 of the outstanding Notes.
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|
●
|
Upon the Company’s receipt of the second and
third $1,000,000, respectively, the Note Holders will be
repaid one third of their principal investment on each $1,000,000
raised.
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|
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●
|
The exercise price on the Warrants were adjusted from $0.80 to
$0.50.
|
|
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●
|
If the Notes are not paid back in full on the six month extension
date, the Note Holders will each receive additional warrants equal
to 50% of their respective investments, exercisable at $0.50, as a
penalty.
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|
●
|
The interest payments on the Notes will continue to accrue on the
remaining balance of the unpaid Notes, and the additional warrants
of 10% of the amount of Notes outstanding, previously penalty
warrants, shall continue to accrue pursuant to the
Notes.
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|
●
|
The Note Holders will have the option to convert their Notes to
equity either before or at the six month extension end date into
units offered in any future private equity offering of the
Company.
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Item
6. Exhibits
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
|
|
|
| 10.1 |
|
Form of First Amendment to Amended and Restated Securities Purchase Agreement |
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|
|
|
|
31.1
|
|
Section 302 certification by the principal executive officer
pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes
Oxley Act of 2002.
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|
|
|
|
|
31.2
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|
Section 302 certification by the chief financial officer pursuant
to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934, as adopted pursuant to Section 302 of the Sarbanes Oxley Act
of 2002.
|
|
|
|
|
|
32.1
|
|
Section 906 certification by the principal executive pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes Oxley Act of 2002.
|
|
|
|
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|
32.2
|
|
Section 906 certification by the chief financial officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes Oxley Act of 2002.
|
|
|
|
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|
101.INS
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|
XBRL Instance
|
|
|
|
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|
101.SCH
|
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XBRL Taxonomy Extension Schema
|
|
|
|
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|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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|
MEDITE Cancer Diagnostics, Inc.
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|
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Date: May 15, 2017
|
/s/ David Patterson
|
|
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David Patterson
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Chief Executive Officer
|
|
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Date: May 15, 2017
|
/s/ Susan Weisman
|
|
|
Susan Weisman
|
|
|
Chief Financial Officer
|
-9-