As filed with the Securities and Exchange Commission on October
31, 1997.
Registration No. 333-
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________________
LCA-VISION INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2882328
(State or other 7840 Montgomery Road (I.R.S. Employer
jurisdiction of Cincinnati, Ohio 45236 Identification No.)
incorporation or (513) 792-9292
organization)
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
________________
Charles F. Hertlein, Jr., Esq.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
(513) 977-8200
Fax: (513) 977-8141
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. ____
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than the securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. X
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ___
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following
box. ___
CALCULATION OF REGISTRATION FEE
Title of Each Amount to be Proposed Proposed Amount of
Class of Registered Maximum Maximum Registration
Securities to be Offering Aggregate Fee
Registered Price Per Offering
Share Price
Common Stock, 9,901,218 $ 2.75 (1) $27,228,349 $ 8,251.01(1)
$.001 par value
Estimated as of October 29, 1997 solely for the purpose of
calculating the amount of the registration fee.
_______________
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
_________________________________________________________________
PROSPECTUS
9,901,218 Shares
LCA-VISION INC.
Common Stock
_______________
This Prospectus relates to 9,901,218 shares (the "Shares") of the
common stock, $.001 par value per share ("Company Common Stock")
of LCA-Vision Inc. (the "Company"). The Shares were issued by the
Company to Summit Technology, Inc. ("Summit") and other
individuals (the "Selling Stockholders") pursuant to the Company's
August 18, 1997 acquisition of all of the issued and outstanding
shares of common stock of Summit's subsidiary, Refractive Centers
International, Inc. ("RCII"). Of the Shares included in this
Prospectus, 9,000,000 are to be distributed by Summit as a pro
rata dividend (the "Dividend") to the holders of Summit common
stock (the "Summit Stockholders"), and 901,218 are to be offered
by the Selling Stockholders. See "Acquisition of RCII," "Plan of
Distribution" and "Principal and Selling Stockholders."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has
agreed to bear all expenses of Summit and the Selling Stockholders
in connection with the registration, distribution and sale, as
applicable, of the Shares included in this Prospectus. The fees
of counsel to Summit will be borne by Summit.
The Common Stock is traded and quoted on the Nasdaq SmallCap
Market under the symbol "LCAV." On October 29, 1997, the closing
price of the Company Common Stock was $2.75 per share.
Summit Stockholders and purchasers of Shares offered by the
Selling Stockholders should consider the matters set forth herein
under "Risk Factors."
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
____________
The date of this Prospectus is October __, 1997
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and
in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information filed with the Commission by the Company can be
inspected and copied at the Public Reference Room of the
Commission, Room 1024, 450 Fifth Street, NW, Washington, D.C. and
at the Commission's regional offices at 500 West Madison Street,
14th Floor, Chicago, Illinois 60661 and 14th Floor, 75 Park Place,
New York, New York. Copies of this material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street,
NW, Washington, D.C. 20549, at prescribed rates. Copies of
documents electronically filed with the Commission also may be
obtained at "http://www.sec.gov." The Company Common Stock trades
on the Nasdaq SmallCap Market, and reports and other information
regarding the Company can be inspected at such market.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act, with respect to the Shares offered by
this Prospectus. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information
set forth in the Registration Statement and the exhibits thereto.
For further information with respect to the Company and the
Shares, reference is made to the Registration Statement and the
exhibits incorporated therein by reference or filed as a part
thereof. Statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract,
agreement or other document filed or incorporated by reference as
an exhibit to the Registration Statement, reference is made to the
exhibit for a complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by
such reference. Information contained in this Prospectus with
respect to the Company and its affiliates has been supplied by the
Company. Information contained in this Prospectus with respect to
RCII, the Selling Stockholders and Summit and their affiliates has
been supplied by Summit.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
are hereby incorporated by reference: (i) Annual Report on Form
10-KSB for the year ended December 31, 1996; (ii) Quarterly
Reports on Form 10-QSB for the quarters ended March 31 and June
30, 1997; (iii) Proxy Statement dated June 9, 1997; (iv) Current
Report on Form 8-K filed August 28, 1997, as amended by a Form 8-K/A filed on
October 27, 1997; and (v) a separate Current Report
on Form 8-K filed August 28, 1997.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of
the Shares covered by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including
any beneficial owner, to whom a Prospectus is delivered upon
written or oral request of such person, a copy of any or all
documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated
by reference into such documents). Requests for copies should be
directed to Larry P. Rapp, Chief Financial Officer, LCA-Vision
Inc., 7840 Montgomery Road, Cincinnati, Ohio 45236, telephone
(513) 792-9292.
TABLE OF CONTENTS
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 2
THE COMPANY 4
RISK FACTORS 4
FORWARD-LOOKING STATEMENTS 9
UNAUDITED PRO FORMA FINANCIAL INFORMATION 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PRO FORMA FINANCIAL
INFORMATION 16
ACQUISITION OF RCII 19
BUSINESS 22
BOARD OF DIRECTORS 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 26
PRINCIPAL AND SELLING STOCKHOLDERS 27
PLAN OF DISTRIBUTION 29
DESCRIPTION OF SECURITIES 30
SHARES OF COMPANY COMMON STOCK ELIGIBLE FOR FUTURE SALE;
POTENTIAL FOR DILUTION 30
TAX MATTERS 31
LEGAL MATTERS 32
EXPERTS 32
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS 32
No person is authorized to give any information or make any
representations other than those contained or incorporated by
reference in this Prospectus, in connection with the offering
referred to herein and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company or the Selling Stockholders. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to
buy the securities registered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation
in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained or
incorporated by reference herein is correct as of any time
subsequent to its date.
THE COMPANY
LCA-Vision Inc. (the "Company") is a leading developer and
operator of free-standing laser refractive eye surgery centers in
the U.S. The Company's centers (the "Centers") offer laser
refractive eye surgery procedures for treatment of nearsightedness
and other eye conditions. They include photorefractive
keratectomy ("PRK") and laser in situ keratomileusis ("LASIK")
(PRK and LASIK are referred to collectively as "Laser Refractive
Surgery"). In August 1997, the Company acquired RCII, also an
operator of Laser Refractive Surgery centers, from Summit and the
Selling Stockholders. RCII now operates as a wholly-owned
subsidiary of the Company. Unless otherwise indicated, references
to the Company include RCII.
RISK FACTORS
The following factors, any of which could have a material adverse
effect on the Company, should be carefully considered in
evaluating the Company and its business:
Lack of Operating Profit From Laser Refractive Surgery Operations
In October 1995, the United States Food and Drug Administration
(the "FDA") first approved the use of the excimer laser for
treatment of nearsightedness in the U.S. Consequently, neither
the Company nor any other entity has more than two years'
experience in the operation and management of Laser Refractive
Surgery centers or in the marketing of Laser Refractive Surgery
procedures to the general public in the U.S. The Company and RCII
first opened Laser Refractive Surgery Centers in the U.S. in 1996,
and since that time, neither the Company's nor RCII's Laser
Refractive Surgery operations have been profitable. There can be
no assurance that the addition of RCII, related management changes
or the market for the Company's services will cause the Company to
become profitable overall, or that, if achieved, profitability
will be sustained. To the extent the Company cannot achieve
profitable operations of its Centers, and to the extent the
Company's leveraged financial condition does not improve, the
Company could fail to timely meet its obligations when they come
due. In such event, if the Company's creditors sought to satisfy
amounts owed them, these actions could have a material adverse
effect on the Company's business, financial condition and results
of operations.
No Assurance of Consumer Acceptance
The commercial market for Laser Refractive Surgery in the United
States is relatively new, and there can be no assurance that the
populations, in the various geographical sites where the Company
operates or may in the future operate Laser Refractive Surgery
Centers, will choose to undergo such procedures in sufficient
quantities to ensure the profitability or long-term viability of
the Company. The cost of the procedures, effectiveness of
conventional eye correction methods such as eyeglasses and contact
lenses, general resistance to surgery, availability of other
surgical techniques, the relatively short history of Laser
Refractive Surgery in the U.S. and any possible unknown long-term
side effects, the resistance by the general population to accept
laser ophthalmic procedures and a low level of third-party payor
reimbursement for elective Laser Refractive Surgery may all
contribute to Laser Refractive Surgery not achieving broad market
acceptance which would have a material adverse effect on the
Company's business, financial condition and results of operations.
Substantial Indebtedness and Risk of Leverage
The Company owes substantial debt to The Fifth Third Bank,
Cincinnati, Ohio ("Fifth Third") and $1.5 million to Dr. and Mrs.
Joffe. See "Acquisition of RCII - Financing Agreement with Fifth
Third" and "- Restrictions on the Payment of Company Debt to
Stephen N. Joffe, M.D. and Sandra F.W. Joffe." The Fifth Third
debt facility ("Facility") expires on September 30, 1998 and the
debt to Dr. and Mrs. Joffe is payable in full on September 26,
2005. Moreover, the terms of the Facility require that the
Company maintain at least $4 million of cash collateral with Fifth
Third. Such cash collateral is therefore not available to the
Company to support its operations.
There can be no assurance that the Company will be able to obtain
replacement financing upon expiration of the Facility, from a
financial institution, entity or individual, at the time needed,
on commercially-reasonable, or any, terms. Future financings also
may result in the issuance of senior securities or in dilution to
the holders of Company Common Stock. Failure to refinance the
Facility upon maturity or to achieve adequate funds from
operations could result in the inability of the Company to pay its
debts as they mature.
The Facility provides for an amount of interest over Fifth Third's
prime rate that increases over time. Consequently, the Company
expects the Facility's interest rate to increase and, as a result,
further increase the Company's required debt service obligations.
Principal and interest payments on Company debt, however, must be
made when due and payable regardless of whether there is
sufficient cash flow or income from the Company's operations. If
such payments are not made when due, and if creditor(s) acted
against the Company, these actions could have a material adverse
effect on the Company's business, financial condition or results
of operations. The Facility restricts the payment of dividends,
capital outlays and other acts the Company's management may deem
advantageous. Consequently, the Company's ability to respond to
changing market conditions and to expand has been weakened. See
"Acquisition of RCII - Financing Agreement with The Fifth Third
Bank."
Control
Summit and Stephen N. Joffe, M.D. beneficially own, or control in
the aggregate, shares of Company Common Stock representing
approximately 88.98% of such shares currently issued and
outstanding. After the Dividend, these parties will control in
the aggregate shares of Company Common Stock representing
approximately 64.42% of such shares. Such holdings include
8,527,358 shares owned outright by Stephen N. Joffe, M.D., the
President and a Director of the Company, and an additional
7,922,377 shares of which Stephen N. Joffe, M.D. could be deemed
to have beneficial ownership. Pursuant to the Shareholders'
Agreement, as defined and described in "Acquisition of RCII - The
Shareholders' Agreement," Summit and the Major Stockholders (as
such term is defined below) placed certain individuals on the
Board and agreed in the future to vote for certain designated
nominees as Directors of the Company and to a procedure for
selecting alternate nominees if any of the designated nominees are
unable or unwilling to serve as Director.
Volatility of Stock Price
The market price of the Company Common Stock historically has been
subject to substantial price volatility. Such volatility may
recur in the future due to overall market conditions or business-specific
factors such as the Company's ability to effectively
penetrate the market, new technological innovations and products,
changes in government regulations, public concerns with regard to
safety and efficacy of various medical procedures, the issuance of
new or changed stock market analyst reports and recommendations,
the Company's ability to meet analysts' projections, fluctuations
in the Company's financial results or other unforeseen factors.
In addition, the Company Common Stock could experience extreme
fluctuations in market price that are wholly unrelated to the
operating performance of the Company. Furthermore, because a
significant portion of the Company Common Stock will be held
initially by Summit Stockholders as a result of the Dividend, it
is unclear what impact the actions of such holders will have on
the market for the Company Common Stock.
Sale of Company Common Stock by Summit and Major Stockholders
Summit and the Company have entered into a Registration Rights
Agreement (further described in "Acquisition of RCII - The
Registration Rights Agreement") pursuant to which Summit has the
right, to demand that the Company register under the Securities
Act of 1933 the remaining 7,164,361 shares of Company Common Stock
owned by Summit, to enable Summit to sell such shares on any date
after May 17, 1998. Summit's sale of all or part of these shares,
and the timing and amount of such sale(s), may negatively affect
the trading price of the Company Common Stock. Further, the
Company intends to register up to 17,729,570 additional shares of
Company Common Stock for resale by Stephen N. Joffe, M.D., his
wife, Sandra F.W. Joffe, and his son, Craig P.R. Joffe (such three
family members collectively, the "Major Stockholders"). There is
no restriction on the timing of the disposition, or the amount of
sales, of these shares once the shares are registered.
Consequently, sales of Company Common Stock by Summit and the
Major Stockholders may have a similar negative effect. See
"Acquisition of RCII - The Registration Rights Agreement" and
"Shares of Company Common Stock Eligible for Future Sale;
Potential for Dilution."
Potential Side Effects and Long-Term Results of Laser Refractive
Surgery
Concerns with respect to the safety and efficacy of the
performance of refractive procedures with excimer lasers include
predictability and stability of results and potential
complications or side effects including the following: post-operative pain;
corneal haze during healing (an increase in light
scattering properties of the cornea); glare/halos (undesirable
visual sensations produced by bright lights); decrease in contrast
sensitivity (diminished vision in low light); temporary increases
in intraocular pressure in reaction to post-procedure medication;
modest fluctuations in astigmatism and modest decreases in best
corrected vision (i.e. with eyeglasses); loss of fixation during
the procedure; unintended over- or under-corrections; instability,
reversion or regression of effect; corneal scars (blemishing marks
left on the cornea); corneal ulcers (inflammatory lesions
resulting in loss of corneal tissue); and corneal healing
disorders (compromised or weakened immune system or connective
tissue disease which causes poor healing). There can be no
assurance that additional complications will not hereafter be
identified which may materially and adversely affect the safety
and efficacy of excimer laser systems for performing refractive
procedures, which may negatively affect the FDA approval of the
excimer laser, the market acceptance of such procedures and/or
lead to product liability or other claims against the Company.
Technological Change
Newer technologies, techniques or products for the treatment of
refractive vision disorders could be developed with better
performance than the excimer lasers used by the Company. The
availability of new and better ophthalmic laser technology or
other surgical or non-surgical methods for correcting refractive
vision disorders could have a materially adverse impact on the
business of the Company's Laser Refractive Surgery centers that
utilize the excimer laser. If the Company wishes to utilize such
new ophthalmic laser or other technology in its Laser Refractive
Surgery centers, the Company may not have access to sufficient
funds to make the capital expenditures required to acquire such
technology.
Dependence on Key Personnel
The departure of any of the members of senior management,
especially Stephen N. Joffe, M.D., could materially adversely
affect the Company's ability to meet its strategic and financial
objectives. None of the Company's employees, except Dr. Ronald
Herskowitz, the former Chief Operating Officer and a former
Director of the Company, who resigned as an employee, officer and
Director effective October 22, 1997, has an employment contract.
Competition
Laser Refractive Surgery competes with other surgical and non-surgical
treatments for refractive disorders, including
eyeglasses, contact lenses, other types of refractive surgery
(such as radial keratotomy) and other technologies currently under
development. Among providers of Laser Refractive Surgery,
competition will come from entities similar to the Company and
from hospitals, hospital-affiliated group entities, physician
group practices and private ophthalmologists that, in order to
offer Laser Refractive Surgery to patients, purchase or rent
excimer lasers. Suppliers of conventional vision correction
alternatives (eyeglasses and contact lenses), such as optometry
chains, also may compete with the Company by purchasing laser
systems and offering Laser Refractive Surgery to their customers.
There can be no assurance that the Company's management, operation
and marketing plans are or will be successful in meeting this
variety of competition. If more providers offer Laser Refractive
Surgery in a given geographic market, the price the Company can
charge for procedures may decrease. There can be no assurance
that any reduction in per procedure fees that may result from
increased competition will be compensated for by an increase in
procedure volume. Further, there can be no assurance that the
Company's competitors' access to capital and/or financing will not
give these competitors an advantage against the Company. See
"Business - Competition."
Reliance on Suppliers of Laser Equipment
The Company is not directly involved in the research, development
or manufacture of ophthalmic laser systems, and is dependent on
unrelated manufacturers for its supply of ophthalmic lasers.
There are two companies, Summit and VISX, Inc. ("VISX") whose
excimer laser systems have been approved by the FDA for commercial
sale in the U.S. If Summit and/or VISX were for any reason to
discontinue commercial sale of ophthalmic lasers in the U.S., the
Company would be limited in its ability to operate new and
existing Laser Refractive Surgery centers.
Government Regulation
The Company and its operations are subject to extensive federal,
state and local laws, rules and regulations affecting the health
care industry and the delivery of heath care. These include laws
and regulations, which vary significantly from state to state,
prohibiting the practice of medicine and optometry by persons not
licensed to practice medicine and optometry, prohibiting unlawful
rebates and division of fees, and limiting the manner in which
prospective patients may be solicited. Further, contractual
arrangements with hospitals, surgery centers, ophthalmologists and
optometrists, among others, are extensively regulated by state and
federal law. See "Risk Factors - Dependence on Health Care
Providers."
Failure to comply with applicable FDA requirements could subject
excimer laser manufacturers and the Company to enforcement action,
including product seizures, recalls, withdrawal of approvals and
civil and criminal penalties, any one or more of which could have
a material adverse effect on the Company's business, financial
condition and results of operations. In addition, clearances or
approvals could be withdrawn in appropriate circumstances.
Failure of the Company or its principal suppliers to comply with
regulatory requirements, or any adverse regulatory action, could
result in a limitation on or prohibition of the Company's use of
excimer lasers which in turn would have a material adverse effect
on the Company's business, financial condition and results of
operations. Discovery of problems, violations of current laws or
future legislative or administrative action in the United States
or elsewhere may adversely affect the manufacturers' ability to
obtain regulatory approval of laser equipment. Furthermore, the
failure of VISX, Summit or any other manufacturers that supply or
may supply excimer lasers to the Company to comply with applicable
federal, state, or foreign regulatory requirements, or any adverse
regulatory action against such manufacturers, could limit the
supply of lasers or limit the ability of the Company to use the
lasers.
Litigation
The Company is a defendant in a case entitled Cabrini Development
Council, et al. v. LCA-Vision Inc., et al., Supreme Court of New
York, County of New York. Various employees, officers, directors
and former directors of the Company are co-defendants. The case
was filed in October 1997 and arises out of the closure of the
Company's Manhattan center, which had been operated as a joint
venture between the Company and the Cabrini Medical Center
("Cabrini"). As originally conceived, the joint venture was to
have been conducted through a limited liability company jointly
owned by the Company, Cabrini and a New York professional
corporation (the "PC") owned by certain unaffiliated physicians.
The Company and Cabrini both made certain cash capital
contributions to the LLC. In addition, as in-kind contributions,
Cabrini was to have assigned a lease for the center's premises to
the LLC and the Company was to have assigned a laser lease to the
LLC. The PC was to have made a cash investment. Although the
Center commenced operations in late 1995, the various in-kind
capital contributions of Cabrini and the Company and the PC's cash
contribution were never actually effected. After the LLC's
resources were exhausted, the Company in effect underwrote the
operating costs for a period of time. In August 1997 the Company
ceased paying such costs and removed its laser from the premises
after the various parties were unable to come to a final
understanding as to their respective rights and obligations.
Also in the summer of 1997, the Company acquired outright
ownership of another New York Center (the "Mt. Kisko Center")
which had been operated as a joint venture with another group of
physicians. The Mt. Kisko Center continues to operate.
In its complaint against the Company, Cabrini alleges breaches of
various agreements, as well as fraud and the usurpation of a
business opportunity due to the Mt. Kisko Center transaction.
Cabrini has demanded not less than $4.5 million of compensatory
damages and not less than $2 million of punitive damages as well
as the creation of a constructive trust for the Mt. Kisco
operation. The Company, which has not yet filed an answer,
believes Cabrini's claims are without merit and intends to
vigorously defend this suit.
Also, the Company's wholly-owned subsidiary Toronto Laservision
Centre (1992) Inc. ("Centre") is a named party in a claim filed by
Jolanda Witvliet filed March 27, 1997 in the Ontario Court
(General Division). The plaintiff is seeking CN $5 million plus
attorney fees for damages to her right eye resulting from a LASIK
procedure performed at the Centre in March 1996. The Company has
filed a Statement of Defense and a Third Party Claim against
Chiron Vision Canada, Inc., the manufacturer or distributor of the
LASIK machinery utilized during the procedure. The Company
intends to vigorously defend this suit.
Good Relations with Physicians
The Company relies on good relationships with physicians who
perform Laser Refractive Surgery procedures at its Centers. The
inability of the Company to continue its relationships with these
physicians, or to find comparable replacements in the event of a
termination of any significant number of such relationships, could
have a material adverse effect on the Company's business,
financial condition and results of operation.
Legislative Change for the Health Care Industry
Numerous legislative proposals have been introduced in Congress
and in various state legislatures over the past several years that
would, if enacted, effect major reforms of the U.S. health care
system. The Company cannot predict whether any of these proposals
will be adopted and, if adopted, what impact such legislation
would have on the Company's business.
Liability and Possible Insufficiency of Insurance
While the Company has secured medical malpractice insurance and
requires physicians using its facilities to provide evidence of
insurance, there can be no assurance that the amounts of such
coverage will be sufficient to satisfy claims against the Company
or that liability insurance will continue to be available to the
Company or practitioners performing procedures at the Company's
Laser Refractive Surgery centers. Performance of Laser Refractive
Surgery procedures could expose the Company to claims of
negligence, malpractice or other forms of liability. Further, use
of laser systems in the Company's Laser Refractive Surgery centers
may give rise to claims against the Company resulting from laser-related
injury. While the Company believes that any claims
alleging defects in the laser systems it purchases from its
suppliers would be covered by such suppliers' product liability
insurance there can be no assurance that the Company's laser
suppliers will continue to carry product liability insurance or
that any such insurance will be adequate to protect the Company.
Renewal of Contracts
There can be no assurance that any of the Company's contracts for
the management of multi-specialty surgery programs that expire in
the future will be renewed or, if they are renewed, that the terms
will be as favorable to the Company as the existing contracts.
The Company no longer actively seeks contracts for this declining
line of business. See "Business - Multi-Specialty Surgery
Program."
Dependence on Health Care Providers
Certain states including New York and California prohibit the
Company from practicing medicine, employing physicians to practice
medicine on the Company's behalf or employing optometrists to
render optometry services on the Company's behalf. Since the
Company does not intend to practice medicine or optometry, its
activities will be limited to establishing Laser Refractive
Surgery centers and other affiliations with health care providers
at which professionals may render eye care services, including
Laser Refractive Surgery. Accordingly, the success of the
Company's operations as an eye care provider in such states
depends upon its ability to enter into agreements with health care
providers, including institutions, independent physicians and
optometrists, to render surgical and other professional services
at facilities owned or managed by the Company. There can be no
assurance that the Company will be able to enter into such
agreements with health care providers on satisfactory terms or
that such agreements will be profitable to the Company. See "Risk
Factors - Government Regulation" and "Business - Government
Regulation."
FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking statements" that include
statements regarding the intent, belief or current expectations of
the Company, its directors or its executive officers with respect
to, among other things: (i) trends affecting the Company's
financial condition or results of operations; (ii) the Company's
business and growth potential; (iii) various risk factors; and
(iv) pro forma financial data. Prospective investors and Summit
Stockholders are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements
as a result of various factors. Important factors that could
cause such differences are identified under "Risk Factors" above.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the
"Unaudited Pro Forma Financial Information") is based on the
historical financial statements of LCA-Vision and RCII and has
been prepared to illustrate the effects of the acquisition of RCII
and the related financing transactions.
The unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1996 and the six months
ended June 30, 1997 give effect to the acquisition of RCII as if
such transaction had been completed on January 1, 1996. The pro
forma condensed consolidated balance sheet as of June 30, 1997 has
been prepared as if the acquisition had occurred on such date.
The acquisition will be accounted for using the purchase method of
accounting in accordance with Accounting Principles Board Opinion
No. 16. The total purchase costs will be allocated to the tangible
and intangible assets based upon their respective fair values. The
allocation of the purchase price reflected in the unaudited pro
forma financial information is preliminary. The pro forma
adjustments are based on available information and certain
assumptions that management believes are reasonable in the
circumstances. The unaudited pro forma financial information is
not necessarily indicative of either future results of operations
or the results that might have occurred if the foregoing
transaction had been consummated on the indicated dates.
The unaudited pro forma financial information should be read in
conjunction with the Company's and RCII's financial statements and
notes thereto incorporated by reference in this Prospectus.
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
Six Months Ended June 30, 1997
(in thousands, except per share data)
<CAPTION>
Historical Historical Pro Forma LCA-Vision
LCA-Vision RCII Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Net revenue $ 6,602 $ 3,452 $ 10,054 A
Direct operating expenses 4,412 5,071 9,483 A
Depreciation and
amortization 832 1,100 $ 300 B 2,232
Corporate general and
administrative expenses 3,408 1,902 (1,077) C 4,233
Center pre-opening costs 163 163
------ ----- -------- -------
Operating income (loss) (2,213) (4,621) 777 (6,057)
Equity in (loss) from
unconsolidated affiliates (31) (31)
Interest expense (508) (508)
Other income (expense), net 47 15 62
------- ------ ------- -------
Income (loss) before
income taxes (2,705) (4,606) 777 (6,534)
Income tax expense 61 - - 61
------- ------ ------- -------
Income (loss) from
continuing operations $(2,766) $(4,606) $ 0 (6,595)
Accrued dividend - Class B
preferred stock 94 94
Amount applicable to (loss)
per common share $(2,860) $(4,606) $ (6,689)
======== ====== ========
(Loss) per common share $( 0.15) $ (.19)
======== ========
Number of common shares
used in per share
computations 19,598 17,066 E 36,664
======== ======== ========
</TABLE>
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
Year Ended December 31, 1996
(in thousands, except per share data)
<CAPTION>
Historical Historical Pro Forma LCA-Vision
LCA-Vision RCII Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Net revenue $13,760 $ 3,018 $ 16,778 A
Direct operating expenses 7,732 5,632 13,364 A
Depreciation and amortization 1,597 1,156 $ 600 B 3,353
Corporate general and
administrative expenses 7,327 13,714 (9,280) C 11,761
Center pre-opening costs 220 220
------- ------ --------- -------
Operating income (loss) (3,116) (17,484) 8,680 (11,920)
Equity in (loss) from
unconsolidated affiliates (906) (906)
Interest expense (770) (1,273) 1,273 D (770)
Other income (expense), net 741 741
-------- ------ -------- ------
Income (loss) before
income taxes (4,051) (18,757) 9,953 (12,855)
Income tax expense - - - -
-------- -------- -------- --------
(Loss) from
continuing operations $(4,051) $(18,757) $ 9,953 $(12,855)
======== ========= ========= =========
(Loss) per common
share $ (0.21) $ (0.35)
======== =========
Number of common shares
used in per share
computations 19,610 17,066 E 36,676
======== ====== =========
</TABLE>
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1997
(dollars in thousands)
<CAPTION>
Historical
LCA-Vision RCII Pro Forma LCA-Vision
Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,209 $10,000 $(4,000) F $ 7,209
Accounts receivable 1,356 136 1,492
Surgical supplies, prepaid
expenses, other 1,207 242 1,449
----- ------ --------- ------
Total Current Assets 3,772 10,378 (4,000) 10,150
Restricted cash 4,000 F 4,000
Property and equipment, net 9,069 7,353 1,500 G 17,922
Intangible assets 15,377 H 15,377
Investment in unconsolidated
affiliates 238 238
Other assets 789 849 117 I 1,755
------- ----- ---------- ------
Total Assets $13,868 $18,580 $16,994 $49,442
------ ------- --------- -------
Current Liabilities:
Accounts payable, accrued
liabilities and
other current liabilities $ 1,562 $ 1,871 $ 1,017 J $ 4,450
Current portion of long-term debt 7,744 (6,902) L 842
Deferred revenue 210 210
------- ------- ---------- ------
Total Current Liabilities 9,516 1,871 (5,885) 5,502
Long-term debt, net of current
maturities 4,494 6,902 L 11,396
Notes payable to shareholders 1,500 1,500
Shareholders' Equity:
Preferred stock 2,522 2,522
Common stock 79 50 (33) K 96
Additional paid-in capital 3,234 32,669 K 35,903
Investment by parent 51,008 (51,008) K 0
Treasury stock (30) (30)
Translation adjustment 6 6
Retained deficit (7,453) (34,349) 34,349 K (7,453)
Total Shareholders' Equity (1,642) 16,709 15,977 38,497
-------- ------- ---------- ---------
Total Liabilities and
Shareholders' Equity $13,868 $ 18,580 $16,994 $ 49,442
======== ======== =========== =========
</TABLE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(dollars in thousands)
(A) The combined pro forma amounts do not reflect the elimination
of revenues and direct operating expenses for RCII centers which
will be closed by the Company. Management expects that the four
centers located in West Palm Beach, Florida; Miami, Florida;
Towson, Maryland and Chicago, Illinois will be closed by December
31, 1997. The revenues and direct operating expenses for these
four centers for the periods presented are:
Year Ended Six Months
December 31, 1996 Ended June 30, 1997
Revenues $362 $967
Direct operating expenses $553 $432
(B) The adjustment reflects additional depreciation and
amortization resulting from the allocation of the Company's
purchase price to the assets acquired, including an increase in
property and equipment and the recording of goodwill associated
with the Acquisition. Property and equipment acquired is amortized
over a weighted average of 7 years and goodwill is amortized over
40 years.
(C) The adjustments reflect cost savings for the year ended
December 31, 1996 and the six months ended June 30, 1997 resulting
from the elimination of redundant corporate general and
administrative expenses, RCII's parent company overhead allocation
and certain marketing costs that will not be recurring expenses of
the Company. Such pro forma cost savings are expected to be as
follows:
Year ended Six months ended
December 31, 1996 June 30, 1997
Salaries terminated $ 967 $ 425
Corporate costs 8,397 652
RCII parent company allocation 1,042 -
------- -------
$10,406 $1,077
(D) Adjustment represents the elimination of RCII interest expense
to reflect interest expense based on the capitalization of the
Company.
(E) The adjustment represents the shares issued in conjunction
with the acquisition of RCII.
(F) The adjustment represents the reclassification of cash
acquired in the acquisition to restricted cash. In conjunction
with the acquisition of RCII, the Company entered into a new debt
facility with its primary lender which requires the Company to
maintain $4 million on deposit with the bank.
(G) The adjustment represents the allocation of the purchase price
to the estimated fair value of property and equipment acquired.
(H) The adjustment represents the recording of goodwill associated
with the acquisition. The purchase price is summarized as follows:
Issuance of 17,066 shares of Company Common stock valued at $1.97
per share in exchange for all the outstanding shares of RCII
common stock: $32,786
Acquisition costs 400
------
33,186
Net assets acquired at
fair market value (17,809)
---------
Goodwill recorded $ 15,377
=========
(I) Adjustment represents capitalized financing costs related to
renegotiation of the Company's credit facility.
(J) Adjustment represents accrued costs directly attributable to
the Acquisition, credit facility renegotiation and the issuance of
LCA-Vision common shares.
(K) Adjustment represents the net additional common stock issued
in connection with the acquisition of RCII after elimination of
historical common stock amounts for RCII, and the elimination of
the historical stockholders' equity of RCII as the acquisition
will be accounted for as a purchase.
(L) Adjustment represents effect of new credit facility.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PRO FORMA FINANCIAL
INFORMATION
Overview
The Company derives its revenue from three primary sources: (i)
fees for Laser Refractive Surgery performed at its Centers; (ii)
contractual fees for managing multi-specialty laser surgery
programs; and (iii) fees for marketing and education programs,
management fees for operating Laser Refraction Surgery centers of
investees, and miscellaneous sources. Miscellaneous sources
include product sales-lasers and laser surgery instruments - which
the Company began phasing out effective December 31, 1996.
Direct operating expenses include: (i) Laser Refractive Surgery
centers -- labor, physician fees, Pillar Point royalty fees (a
royalty fee to the manufacturers of the FDA-approved lasers of
$250 per procedure), Center rent and utilities, and surgical
supplies; (ii) multi-specialty laser surgery programs -- labor;
and (iii) other services and products -- labor and cost of
products sold.
Results of Operations
The Company's results of operations in any period are
significantly affected by the number of Laser Refractive Surgery
centers opened and operating, the number of hospitals under
management contract, and the level of services contracted by
hospitals and others during such period. Given the limited period
of time that the U.S. Laser Refractive Surgery centers have been
open, the earliest being January 1996, the Company's results of
operations may not be indicative of future results.
Revenues
Sources of revenue for the twelve months ended December 31, 1996
and the six months ended June 30, 1997 were:
(dollars in thousands) Twelve Months Six Months
December 31, 1996 June 30, 1997
Laser Refractive
Surgery Centers $ 6,733 $ 7,481
Multi-specialty
laser surgery programs 4,665 1,485
Others 5,380 1,088
-------- -------
Total $ 16,778 $ 10,054
======== ========
Management anticipates that the composition of future revenue will
change as Laser Refractive Surgery becomes more widely known and
accepted by ophthalmic physicians and their patients. Revenues
from hospital-based multi-specialty centers are anticipated to
decline and will be less significant to the Company while revenues
from Laser Refractive Surgery Centers are expected to increase.
The extent and degree of the shift in the Company's future
revenues are subject to significant uncertainty.
Laser Refractive Surgery Centers
At December 31, 1995, the Company owned and operated one Laser
Refractive Surgery center in Toronto, Canada. Following FDA
approval of the commercial sale for an excimer laser for
performing Laser Refractive Surgery in the U.S. in October 1995,
the Company began opening Centers. During 1996 the Company opened
23 wholly-owned Centers and three Centers in which it shares
ownership with unaffiliated investors ("Investee Centers") in the
U.S. and one wholly-owned and one investee Center outside the U.S.
In the first six months of 1997, the Company slowed its expansion
and opened three wholly-owned Centers in the U.S. Laser
Refractive Surgery procedures performed at the Company's wholly-owned and
investee Centers for the twelve months ended December
31, 1996 and the six months ended June 30, 1997 were:
Twelve Months Six Months
December 31, 1996 June 30, 1997
U.S.
Wholly-owned 2,753 3,892
Investee 872 847
----- -----
3,625 4,739
----- -----
Non-U.S.
Wholly-owned 1,511 713
Investee 63 189
----- -----
1,574 902
----- -----
Total 5,199 5,641
===== =====
A prime contributor to the Company's profitability and cash flow
is word-of-mouth referrals from individuals who have had Laser
Refractive Surgery. As Centers mature, the critical mass
necessary for word-of-mouth referrals is expected to be attained
and procedure volume generally increases. As of June 30, 1997,
one half of the Company's wholly-owned Centers have been open for
one year or longer.
Multi-Specialty Laser Surgery Programs
The decline in revenues from the Company's multi-specialty laser
surgery programs has been in direct proportion to the number of
programs under contract. The renewal of the Company's contracts
with the hospital providers has become increasingly difficult due
to price pressures and the lengthening of sales cycle. Hospital
providers and other entities are being driven to reduce costs and
scale back their operations, sometimes including the programs that
the Company manages. The Company's existing contracts provide
positive cash flow; however, the Company has decided to reduce its
provision of this service due to its difficult economic
environment. In addition, budget reductions at the facilities
have reduced the marketing and education programs, key elements to
a successful surgery program. Management does not believe that
the multi-specialty surgery programs will continue to constitute a
significant portion of its business on a long-term basis.
Other
Due to fewer contracts and to budget reductions at hospitals where
the Company has multi-specialty laser surgery programs, the
marketing and education revenues from such programs has declined.
In addition, in 1996 the Company began to phase out its products
business which had revenues of $318,000 in 1996. Revenues from
product sales were $17,000 in 1997.
Direct Operating Expenses
Direct operating expenses increase as the Company expands into the
Laser Refractive Surgery business. Direct operating expenses
comprise the significant fixed costs of performing the procedure
as well as the costs of maintaining a Center. These costs will
become a lesser percentage of revenue as procedure volume
increases. Direct operating expenses related to the other sources
of revenue are more variable and fluctuate generally with the
level of revenue.
General and Administrative Expenses
As the Company expanded into the Laser Refractive Surgery
business, marketing and advertising campaigns were launched to
educate both consumers and refractive surgeons as to the
procedures and their benefits. The Company spent over $4,800,000
in 1996 for advertising and marketing campaigns primarily aimed at
education. Marketing and advertising expenses in 1997
approximated $700,000. In addition, general and administrative
expenses such as telephone, legal, insurance and repairs and
maintenance increases as new Centers are opened.
Other Expenses
Depreciation and amortization increased due to the increase in
property and equipment, primarily equipment for the Centers.
Interest expense increased primarily due to the increased
borrowings related to the capitalized leases for the lasers used
to perform Laser Refractive Surgery; and borrowings under the line
of credit to fund current operating needs and capital equipment,
offset by the reduction in loans from Dr. and Mrs. Joffe.
Liquidity and Capital Resources
The Company's principal capital requirements since late 1995 have
been to fund its expansion into Laser Refractive Surgery -- the
furnishing and equipment of centers, the development of marketing
and advertising programs, and the funding of operating losses.
Historically, the Company's principal sources of funds to finance
its capital requirements have been borrowings under its bank line
of credit, operating and capital leases, cash flow its multi-specialty laser
program contracts, and the sale of common stock to
and borrowings from its principal shareholders in the third
quarter 1995.
On August 18, 1997, the Company issued 17,065,579 shares of its
Common Stock for 100% of the issued and outstanding common stock
of RCII, a majority-owned subsidiary of Summit. At the time of
the acquisition, RCII owned and operated 19 Laser Refractive
Surgery Centers and had management service agreements with six
"centers of excellence" located at prestigious hospitals and
university medical centers. The acquisition agreement required
RCII to have a minimum cash balance of $10 million at closing.
Subsequent to the acquisition, the Company has closed four of the
RCII Laser Refractive Surgery Centers (see Notes to Unaudited Pro
Forma Financial Information). In addition, the Company closed the
RCII corporate office in Waltham, MA and terminated the
administrative staff. The responsibilities of the Waltham staff
have been re-assigned to field and company headquarters personnel.
The Company estimates this closure will result in significant cost
savings due to the elimination of redundant general and
administrative expenses and the consolidation of marketing and
advertising programs.
In connection with the acquisition of RCII, the Company entered
into a new debt facility with its primary lender, The Fifth Third
Bank ("Fifth Third"), to replace the Company's previous facility
with Fifth Third. The Facility consists of an $8 million secured
line of credit ("Revolver") and a secured term loan ("Term Loan")
in the amount of $3.053 million. The Revolver and Term Loan bear
interest as follows: (1) August 18, 1997 until February 28, 1998,
1% above Fifth Third's prime rate in effect from time to time
("Prime Rate"); (ii) February 28, 1998 until August 31, 1998, 3%
above the Prime Rate; and (iii) August 31, 1998 until September
30, 1998, 6% above the Prime Rate. September 30, 1998 is the
maturity date of the Revolver and Term Loan. The Term Loan is
payable in 14 monthly installments, due on the first day of each
calendar month, commencing September 1, 1997 and ending with a
final payment on September 30, 1998.
The Facility requires, among other things, that the Company
maintain a minimum of tangible net worth and meet a debt coverage
ratio. The Facility also restricts and/or prohibits certain
transactions; including but not limited to, additional borrowing,
the issuance of additional shares of capital stock, the payment of
dividends and capital expenditures greater than $75,000. The
Facility is secured by a blanket lien in favor of Fifth Third on
all Company assets, including the Company's headquarters building,
and further requires the Company to maintain $4,000,000 in cash on
deposit with Fifth Third. Such cash collateral is therefore not
available to the Company to support its operations.
In addition to cash to fund operations, the Company's primary on-going cash
requirements are those necessary to service debt,
including capital and operating leases. The Company believes that
cash flow from Laser Refractive Surgery Centers as they mature,
the $10 million cash obtained via the acquisition of RCII, and the
availability of the Revolver will satisfy its operating cash and
debt service requirements for at least the next 12 months. The
Company believes that, with its improved liquidity and capital
position, it can obtain lease financing for significant capital
expenditures. However, there can be no assurance that the Company
will be able to replace its Facility, or on satisfactory terms, or
that the Company's Laser Refractive Surgery Centers can achieve a
positive cash flow.
ACQUISITION OF RCII
The Acquisition - On August 18, 1997 (the "Closing" or "Closing
Date"), pursuant to an Acquisition Agreement ("Acquisition
Agreement") by and among the Company, Summit and RCII dated July
23, 1997, the Company purchased all of the issued and outstanding
shares of RCII (the "Acquisition"). The Company at Closing
purchased from Summit 5,000,000 shares of RCII's common stock, par
value $.01 in exchange for 16,164,361 newly-issued shares of
Company Common Stock. Prior to the Closing, the 19 individual
Selling Stockholders had held options for 312,500 shares of RCII
common stock, 278,767 of which were exercisable at Closing. All
Selling Stockholders exercised their options prior to Closing and
the Company also purchased all 278,767 shares of RCII common stock
owned by them in exchange for 901,218 newly-issued shares of
Company Common Stock. As a result of these transactions, the
Company in the aggregate issued 17,065,579 shares of Company
Common Stock and came to own 100% of the issued and outstanding
shares of RCII common stock.
Registration of Company Common Stock Received in the Acquisition
- - The Acquisition Agreement, and the related Registration Rights
Agreement discussed below, require that the Company prepare, file
and cause to become effective registration statements under the
Securities Act of 1933 registering (i) the 9,000,000 shares of
Company Common Stock to be distributed by Summit as a Dividend,
(ii) the 901,218 shares of Company Common Stock held by the
Selling Stockholders, and (iii) the 7,164,301 shares of Company
Common Stock to be held by Summit following the Dividend. See
"Risk Factors - Sale of Company Common Stock by Summit and Major
Stockholders," and "Plan of Distribution." This Prospectus, which
is a part of one required registration statement, relates to and
accompanies the Shares distributed to the Summit Stockholders by
Dividend and the Shares offered for sale by the Selling
Stockholders. To satisfy its obligation with respect to Summit,
the Company intends to so register Summit's Company Common Stock
after this registration statement becomes effective. See "Risk
Factors - Sale of Company Common Stock by Summit and Major
Stockholders" and "Acquisition of RCII - Registration Rights
Agreement."
The Acquisition Agreement requires the Company to use its best
efforts to maintain the effectiveness of this registration
statement until the earlier of (i) completion of the sale of the
Selling Stockholders' Company Common Stock, or (ii) one year after
the effective date of the this registration statement. All
expenses of the registrations, including without limitation,
filing and registration fees and expenses of complying with state
securities laws, are the responsibility of the Company.
Non-Competition - The Acquisition Agreement restricts Summit from
owning or operating laser vision correction centers for a period
ending on the earlier of (i) July 22, 2000, or (ii) the expiration
of the Shareholders' Agreement described below.
Employment of Dr. Ronald Herskowitz - In connection with the
Acquisition, the Company entered into an Employment Agreement with
Dr. Ronald L. Herskowitz, the former Executive Vice President of
RCII, and appointed him Chief Operating Officer of the Company and
RCII. Dr. Herskowitz resigned as an employee, officer and
Director of the Company effective October 22, 1997. The
Employment Agreement had no specified term and contained customary
provisions on compensation, confidentiality, inventions and non-competition.
The Employment Agreement also provided that under
certain circumstances, Dr. Herskowitz would be entitled to a
severance benefit equal to one year's salary ($160,000) in the
event of his voluntary resignation for "good reason." Dr.
Herskowitz has asserted that he resigned with good reason and is
therefore entitled to the severance benefit. The Company does not
believe he is entitled to the benefit. The matter has not yet
been resolved. Dr. Herskowitz also was a Director of the Company.
See "Acquisition of RCII - the Shareholders' Agreement."
The Shareholders' Agreement - On or about the Closing Date of the
Acquisition, two of the Company's directors resigned, the
Company's Board of Directors was set at five directors, and the
vacancies were filled by the remaining directors with pre-selected
persons agreed to by Summit, the Company and the Major
Stockholders. One of these Directors, Dr. Ronald L. Herskowitz,
the former Executive Vice President of RCII, subsequently resigned
leaving one vacancy. These parties at the Closing signed a
Shareholders' Agreement ("Shareholders' Agreement") providing for
the above-described changes, the vote for certain designated
nominees as directors of the Company and a procedure for selecting
alternate nominees if any of the designated nominees is unable or
unwilling to serve as a director. See "Risk Factors - Control."
The term of the Shareholders' Agreement expires on the earlier of
(i) July 22, 2002, or (ii) the date on which Summit owns less than
5% of the issued and outstanding Company Common Stock. See "Board
of Directors."
The Registration Rights Agreement - Summit and the Company have
entered into a Registration Rights Agreement (the "Registration
Rights Agreement") pursuant to which Summit has the right to
demand that the Company register under the Securities Act of 1933
the 7,164,361 shares of Company Common Stock owned by Summit after
giving effect to the Dividend (the "Remaining Shares"), to enable
Summit to sell such shares on any date after May 17, 1998. The
Company intends to register Summit's Remaining Shares under the
Registration Rights Agreement immediately after this registration
statement becomes effective. All expenses of such registration,
including but not limited to, printing, legal and accounting
expenses, filing fees and expenses, state "blue sky" law-related
fees and expenses and, subject to certain exceptions, the
reasonable expenses of Summit, will be borne by the Company. See
"Risk Factors - Sale of Company Common Stock by Summit and Major
Stockholders."
The Registration Rights Agreement also contains a Right of First
Offer Upon Sale for Cash ("Right of First Offer") which provides,
among other things, that in the event Summit wishes to sell for
cash all or any part of the Remaining Shares, Summit must first
offer to sell the shares to the Company. The Registration Rights
Agreement also provides for the pricing, payment and closing terms
under the Right of First Offer as well as the Company's obligation
to indemnify Summit and the Selling Stockholders and Summit's
obligation to indemnify the Company relating to specified
liabilities arising from the registration statements. The term of
the Registration Rights Agreement ends when all Remaining Shares
have been sold under the Registration Rights Agreement. See
"Indemnification of Directors, Officers and Others."
The Service Contracts - In connection with the Acquisition, the
Company signed service contracts with Summit for all Summit lasers
owned or leased by the Company. These contracts each have a term
of three years and require fees of $80,000 per laser system for
such three-year period. With respect to up to five service
contracts, if during the term of a service contract the Company
discontinues all use of the laser system under the contract
(except in connection with the closing of a Laser Refractive
Surgery center), and does not replace the laser system with any
Summit excimer laser system, then the Company may terminate the
contract.
Change in Terms of the Company's Interim Series Class B Preferred
Stock - As required by the Acquisition Agreement and Shareholders'
Agreement, at Closing, the Company amended (the "Amendment") the
Certificates of Designations, Preferences and Rights governing the
Company's Interim Series Class B Preferred Stock, $.001 par value
("Preferred Stock"). Among other things, the Amendment provided
that the per share price at which the Preferred Stock may convert
into Company Common Stock would be changed such that each share of
Preferred Stock is now convertible into the number of fully-paid
and non-assessable shares of Company Common Stock that results
from dividing $3.50 into the sum of $200,000 plus all accrued but
unpaid dividends on each such share at the time of conversion.
See "Description of Securities" and "Shares of Company Common
Stock Eligible for Future Sale; Potential For Dilution."
Stock Market Listing for Company Common Stock - The Company Common
Stock trades on the Nasdaq SmallCap Market. The Acquisition
Agreement requires the Company to apply for and use its best
efforts to obtain a listing for the trading of the Company Common
Stock on the Nasdaq National Market. The Company filed an
application requesting such a listing and also has requested
listing on the American Stock Exchange. There can be no assurance
that either of these efforts will succeed.
Restrictions on the Payment of Company Debt to Stephen N. Joffe,
M.D. and Sandra F.W. Joffe - In connection with the Acquisition,
the Company agreed that it would not make principal payments under
the Company's Promissory Notes to each of Stephen N. Joffe, M.D.
and Sandra F.W. Joffe (the "Notes") unless the earnings of the
Company for the prior fiscal year exceeded $1,000,000, and then
payment may be made only to the extent of 25% of such excess.
Earnings for this purpose are income before taxes, amortization of
goodwill and depreciation, net of capital expenditures for such
fiscal year. Dr. and Mrs. Joffe agreed to such restrictions. See
"Certain Relationships and Related Transactions."
Financing Agreement with The Fifth Third Bank - On August 18,
1997, as required by the Acquisition Agreement, the Company
entered into a new debt Facility with Fifth Third to replace the
Company's previous facility with Fifth Third. The Facility
consists of an $8 million secured line of credit ("Revolver") and
a secured term loan ("Term Loan") in the amount of $3.053 million.
The Revolver and Term Loan bear interest as follows: (i) August
18, 1997 until February 28, 1998, 1% above Fifth Third's Prime
Rate in effect from time to time ("Prime Rate"); (ii) February 28,
1998 until August 31, 1998, 3% above the Prime Rate; and (iii)
August 31, 1998 until September 30, 1998, 6% above the Prime Rate.
September 30, 1998 is the maturity date of the Revolver and Term
Loan. The Term Loan is payable in 14 monthly installments, due on
the first day of each calendar month, commencing September 1, 1997
and ending with a final payment on September 30, 1998.
The Facility requires the Company to pay various closing and
facility fees and contains covenants that the Company must meet on
an ongoing basis. The Facility also restricts and/or prohibits
certain transactions, including but not limited to, additional
borrowing, the issuance of additional shares of capital stock, the
payment of dividends and capital expenditures greater than
$75,000. The Facility further requires the Company to maintain
$4,000,000 in cash on deposit with Fifth Third and is secured by a
blanket lien in favor of Fifth Third on all Company assets,
including the Company's headquarters building ("Headquarters")
located at 7840 Montgomery Road, Cincinnati, Ohio 45236.
In addition, the Company pledged to Fifth Third a $985,000
Certificate of Deposit ("CD") issued by Fifth Third as security
("Collateral") for a $985,000 loan ("Surgery Center Loan") made by
Fifth Third to The LCA Center for Surgery, Ltd. ("Surgery
Center"), an entity principally owned by Stephen N. Joffe, M.D.
The Company pledged the CD for up to 30 days while the Surgery
Center, or Stephen N. Joffe, M.D. personally, arranged to replace
the CD Collateral for the Surgery Center Loan. While Stephen N.
Joffe, M.D.'s personal guarantee of the prior Company facility
expired with the new Facility, he remained personally obligated to
the Company with respect to replacing the CD Collateral for the
Surgery Center Loan. Dr. Joffe has fulfilled his obligation to
the Company by pledging the required collateral and the Company is
no longer obligated to Fifth Third with respect to the CD. These
additional transactions related to the Facility were negotiated
and agreed because the Surgery Center, as a tenant in the
Company's Headquarters, could not timely provide Fifth Third
collateral for the Surgery Center Loan.
BUSINESS
The following is a general description of the Company's business
reflecting the Company's acquisition of RCII on August 18, 1997.
This section should be read in conjunction with the Company's
Annual Report for the year ended December 31, 1996, the Quarterly
Reports for the quarters ended March 31 and June 30, 1997, the
Proxy Statement dated June 9, 1997 and the Current Report
concerning the Acquisition with pro forma financial information,
all of which are incorporated herein by reference. See
"Incorporation of Certain Documents By Reference."
Background
The Company is the corporate successor to Laser Centers of
America, Inc. ("LCA"), a Delaware corporation which was founded by
Stephen N. Joffe, M.D. in 1986 to manage laser and minimally-invasive surgery
programs for hospitals and medical centers.
In the mid-1980s, LCA pioneered the multi-specialty laser surgery
center business, and, during its 11-year operating history, was
involved in the implementation of over 80 hospital-based, multi-specialty
surgery programs. Based on this experience, the Company
has an expertise in managing and promoting new laser surgery
techniques and technologies. The Company continues to manage a
number of hospital laser surgery programs on a contract basis,
although this is a decreasingly important aspect of its overall
business.
Beginning in 1991, with the opening of a Laser Refractive Surgery
center in Toronto, LCA applied its laser operating expertise to
the field of Laser Refractive Surgery, which had not then been
approved by the FDA for use in the United States. In 1995, LCA
merged into the Company, and the Company began opening Laser
Refractive Surgery Centers in the U.S. in 1996 shortly after the
FDA first approved laser devices for commercial sale in the U.S.
As of October 23, 1997, the Company, either directly or through
its wholly-owned subsidiary RCII, owned and operated 27 Centers in
the U.S., two in Ontario, Canada and one in Helsinki, Finland and
has a working relationship with six additional U.S. treatment
sites at university medical centers/hospitals and other locations.
The Company has announced plans to close up to ten Centers. The
Company took a third-quarter charge of $1.1 million, or $.03 per
share of Company Common Stock, to cover the costs of the
initiative. The closures should be completed by December 31,
1997.
Laser Refractive Surgery Centers
The Laser Refractive Surgery Centers operated by the Company
provide the facilities, equipment and support services necessary
for physicians to perform various corrective eye surgeries that
employ state-of-the-art laser technologies. Each Center is
equipped with one or more excimer laser systems in addition to
corneal topography instruments, ophthalmic examination equipment,
computer systems and standard office equipment. Physicians who
have completed extensive FDA-mandated training sessions and have
met the Company's qualification criteria, use the Company's
facilities to perform Refractive Laser Surgery on an out-patient
basis.
The most common procedures performed at the Centers are PRK
(photorefractive keratectomy) and LASIK (laser in situ
keratomileusis) to treat nearsightedness. PRK is an outpatient
procedure performed with an excimer laser to treat
nearsightedness, whereby submicron layers of tissue are ablated
(removed) from the surface of the cornea in a computer-assisted,
predetermined pattern to reshape the cornea. LASIK is an advanced
outpatient procedure to treat nearsightedness, also using an
excimer laser. As new laser-based surgical procedures are
approved by the FDA, the Company plans to accommodate the service
requirements for these procedures as well, to the extent feasible
at that time.
The results of a Company study of the initial 1,150 procedures
performed at its U.S. centers indicated that, of those procedures
with at least six months of follow-up, 85% of the eyes were
corrected to between 20/20 and 20/25 and 97% were corrected to at
least 20/40.
Operation of Centers
The operations of the Company generally consist of providing to
credentialed physicians fully-equipped and staffed laser surgery
centers, which these physicians use to perform Laser Refractive
Surgery and other ophthalmic procedures. The Company also
provides management services, including billing and marketing
functions, and educational programs. The Company is compensated
for a physician's use of the Company's Centers and support
services. Summit and VISX lasers are subject to a royalty fee of
$250 per procedure performed in the U.S.
By using the Company's facilities, physicians are able to
concentrate on treating patients and are free from the financial
and management requirements associated with establishing and
operating a surgery center. Additionally, participating
physicians benefit from the Company's marketing skills and
programs (such as its toll-free 800 numbers) in terms of
identifying and capturing potential new patients. Finally, many
of the administrative and financial functions are performed more
efficiently and cost-effectively in a centralized operation.
Because Laser Refractive Surgery is not generally reimbursable by
third-party payors, the Company offers several financing
alternatives. Customers can pay for the procedure with cash, bank
check, money order or credit card. The Company also offers
information regarding installment plans, insurance coverage, home
equity loans and payment through employer flexible benefit plans.
The Company bears no credit risk for any of these options.
Marketing
The Company's marketing program adopts a two-pronged approach to
promoting Laser Refractive Surgery. It is designed to advertise
Laser Refractive Surgery directly to consumers through television,
print, media and direct marketing. Further, Company personnel
work directly with ophthalmologists to increase the number of
credentialed physicians who are knowledgeable about and use the
Company's Centers to perform Laser Refractive Surgery.
The Company seeks to differentiate its centers in the marketplace
by providing locations and treatment environments that meet
patient and doctor preferences. Additionally, in keeping with
past practice, as the Company enters a market with an existing
laser system (produced by competitors Summit or VISX), it
typically will install the other system if that system better
satisfies the needs of local ophthalmologists. The Company
utilizes both Summit and VISX lasers at its U.S. Laser Refractive
Surgery centers and one each of Nidek, Chiron and Sunrise at its
non-U.S. Laser Refractive Surgery centers.
Competition
Laser Refractive Surgery, whether performed at a Company Center or
elsewhere, competes with several surgical and non-surgical
treatments to correct refractive disorders including eyeglasses,
contact lenses, other types of refractive surgery (such as radial
keratotomy) and corneal implants. In addition, other technologies
currently under development may ultimately prove to be more
attractive to consumers than Laser Refractive Surgery.
The Company further faces competition from other providers of
Laser Refractive Surgery. Eye care services in the U.S.,
including Laser Refractive Surgery, are delivered through a
fragmented system of local providers, including individual or
small groups of opticians, optometrists and ophthalmologists and
chains of retail optical stores and multi-site eye care centers.
Laser Refractive Surgery chains, such as the Company, are a
specialized type of multi-site eye care center that primarily
provide Laser Refractive Surgery. Among the Laser Refractive
Surgery center chains, the Company believes it is the largest
provider in terms of number of facilities, followed by Laser
Vision Centers, Inc. Other competing refractive surgery center
chains include TLC The Laser Center, Sight Resources Corp. and
Beacon Eye.
In addition to competition from other chains of Laser Refractive
Surgery centers, the Company faces competition from hospitals,
clinics and private ophthalmologists who practice in the same
geographic area as one of the Centers. Furthermore, retail
optical chains could potentially provide Laser Refractive Surgery.
Certain chains have entered the Laser Refractive Surgery market.
Management believes they have had limited success and have cut
back their involvement in the industry. Other retail optical
chains are not currently focusing on providing Laser Refractive
Surgery. See "Risk Factors - Competition."
Government Regulation
Numerous state laws and regulations presently affect the manner in
which the Company may establish or operate its Centers, which vary
significantly from state to state. In some instances, these laws
and regulations are ambiguous, and sometimes state regulators fail
to provide adequate guidelines. The Company believes that it has
adopted a strategy that will enable it to operate its network of
Centers in compliance with all applicable regulatory requirements.
However, federal and state regulatory attention may continue to be
directed to the practice of medicine, and any changes in state or
federal law or regulations, or in governmental agency and judicial
interpretations of such laws and regulations, could cause one of
the Company's strategies that is now in compliance with applicable
laws to cease so to comply. Additionally, there can be no
assurance that the federal regulatory scheme will not in the
future place impediments upon the Company's operations.
Current state regulatory requirements and restrictions that relate
to corporate entities such as the Company that are involved in the
ownership and operation of healthcare facilities include
prohibitions against the corporate practice of medicine except by
an entity owned by healthcare professionals and/or wherein the
professionals exercise control over medical judgments; patients
referrals by healthcare professionals (including ophthalmologists
and optometrists) to a facility owned or compensated by such
referring professional (either generally, or sometimes by defining
such payments as "kick backs"); and "fee splitting" between
healthcare professionals and corporate entities. Other state laws
specifically regulate the nature and compensation provisions of
employment or management relationships that healthcare
professionals may have with a corporate-owned facility, affect the
form of business entity to be utilized, limit payments either to
the entity or to healthcare professionals to the "fair market
value" of their contributions, or affect the manner of marketing
the service performed at the healthcare facility. Additional
regulations in some states also now affect, or in the future may
affect, the establishment of Centers, including requirements for
certificates of need and/or other licensing to open a Laser
Refractive Surgery center, and registration of medical laser
equipment. See "Risk Factors - Government Regulation."
Multi-Specialty Surgery Programs
The Company continues to manage multi-specialty surgery programs
at 13 medical facilities on a contract basis. However, the
renewal of the Company's contracts with the hospital providers is
becoming increasingly difficult due to increasing price pressures
and the lengthening of the sales cycle. Management does not
believe that the multi-specialty surgery programs will continue to
constitute a significant portion of its business. In addition,
most of the corporate resources previously engaged in the contract
management business have been reassigned to the refractive surgery
business, which the Company believes has better long-term
potential. See "Risk Factors - Renewal of Contracts."
Employees
As of October 23, 1997, the Company had 143 employees, of whom 124
employees were full-time. The personnel who constitute the
Company's independent practitioners are doctors and other
healthcare professionals retained, when and as needed, as
independent contractors to assist with the education and training
provided by the Company to its clients. The Company retains its
faculty from a pool of doctors or other healthcare professionals
who have agreed to provide services to the Company on an
independent contractor basis.
The Company's principal executive offices are located at 7840
Montgomery Road, Cincinnati, Ohio 45236.
BOARD OF DIRECTORS
On or about the Closing Date of the Acquisition, two of the
Company's Directors resigned, the Company's Board of Directors was
set at five Directors, and, as provided in the Shareholders'
Agreement, the vacancies were filled by the remaining Directors
with pre-selected persons agreed to by Summit, the Company and the
Major Stockholders. See "Acquisition of RCII - The Shareholders'
Agreement" and "Risk Factors - Control." Effective October 22,
1997, Dr. Ronald L. Herskowitz resigned as a Director and the
vacancy has not been filled.
The following individuals now serve on the Company's Board of
Directors.
Stephen N. Joffe, M.D., age 54, is the President of the Company.
He was also the founder of LCA and served as its Chairman of the
Board and Chief Executive Officer since its founding in 1985. He
also founded Surgical Laser Technologies, Inc. in 1983 and served
as its Chairman until January 1990. In addition, Dr. Joffe is an
Esteemed Professor of Surgery at the University of Cincinnati
Medical Center, a position he has held since 1990. He was a full-time
Professor of Surgery at the University of Cincinnati Medical
Center for nine years prior to 1990. Dr. Joffe obtained his
medical degree in 1967 from the University of Witwatersand (South
Africa), and was awarded a post-doctorate degree in 1976. He has
held faculty appointments at the Universities of London, Glasgow
and Cincinnati and holds fellowships at the College of Surgeons of
South Africa, the Royal College of Surgeons in Edinburgh, The
Royal College of Surgeons in Glasgow, and the American College of
Surgeons. Dr. Joffe led development efforts in Nd:YAG laser
surgical techniques, established the International Nd:YAG Laser
Society, and chaired the first two meetings. He is senior editor
of six textbooks on lasers, co-author of Lasers in Medicine,
author of over 180 papers in scientific journals, contributor of
chapters to 32 textbooks, and presenter of over 200 papers before
scientific societies in 20 countries throughout the world.
John C. Hassan, age 54, is and has been the President of Champion
Printing, Inc. for more than five years. Previously, he was Vice
President, Marketing of the Drackett Company, a division of
Bristol-Meyers Squibb. He currently serves as Treasurer of
Printing Industries of Southern Ohio, and is a board member of the
Ohio Graphics Arts Health Fund, the Camargo Club and serves on the
Greater Cincinnati United Way and Fine Arts campaigns. Mr. Hassan
received his undergraduate degree from Princeton University and
his M.B.A. from Dartmouth College.
William O. Coleman, age 68, formerly held positions at The Procter
& Gamble Company (1955 to 1989) that included General Sales
Manager, Vice President Food Products, Vice President
International/Latin America, and most recently, Vice President
Professional Affairs, Special Projects. Mr. Coleman continues to
serve as a Trustee of the Procter & Gamble Retirement Trusts. In
addition to his accomplishments professionally, Mr. Coleman also
has served as: General Chairman of the Greater Cincinnati United
Way Campaign; President of the Boys & Girl Clubs; Chairman of the
Dan Beard Council Boy Scouts; Vice Chairman, University of
Cincinnati Foundation; and Director of the Greater Cincinnati
Foundation. A graduate of the University of Oklahoma (B.B.A.,
Finance), Mr. Coleman served in the U.S. Navy in Korea.
John H. Gutfreund, age 67, is President of Gutfreund & Company,
Inc., a New York-based financial consulting firm that specializes
in advising select corporations and financial institutions in the
United States, Europe and Asia. Formerly, Mr. Gutfreund was with
Salomon Brothers from 1953 - 1991. He was: Chairman of the Board
and Chief Executive Officer, Salomon Brothers Inc. (1981 - 1991);
Co-Chairman, Phibro Corp. (1981 - 1983); Co-Chief Executive
Officer, Phibro-Salomon Inc. (formerly Phibro Corp.) 1983 - 1984;
Chief Executive Officer, Phibro-Salomon Inc. (1984 - 1986);
Chairman, Chief Executive Officer, President, Salomon Inc.
(formerly Phibro-Salomon Inc.) 1986 - 1991. Mr. Gutfreund is:
Director, Montefiore Medical Center, New York City and a Member of
the Executive Committee of the Board of Trustees and Finance and
Real Estate Committees; Member, Council on Foreign Relations;
Member, the Board of Trustees, New York Public Library, Astor,
Lenox and Tilden Foundations; Honorary Trustee, Oberlin (Ohio)
College; and Trustee, Arperture Foundation. He is past Vice
Chairman of the New York Stock Exchange (1985 - 1987); past
Member, Board of Directors, Securities Industry Association; past
Chairman of the Downtown Lower Manhattan Association; past
President and Member of the Board of Governors of the Bond Club of
New York; and past Member, The Trilateral Commission. A graduate
of Oberlin College (B.A., 1951), Mr. Gutfreund served in the U.S.
Army in Korea in 1951 - 1953.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 1995, the Company was a party, directly or
indirectly, to the following additional transactions with its
current directors, executive officers and principal stockholders
(including any of their associates or affiliates):
LCA previously was treated for federal income tax purposes as an S
corporation under Subchapter S of the Internal Revenue Code of
1986, as amended (the "Code"). In 1995, prior to the merger with
and into the Company, LCA declared and paid to its two
stockholders distributions of $8,456,000, in cash, which
constituted payments to the stockholders of LCA's past earnings on
which those stockholders had already paid income taxes under
Subchapter S of the Code.
Prior to the merger of LCA into the Company, Dr. and Mrs. Joffe,
utilizing a portion of the proceeds of their S corporation
distributions from LCA, agreed to lend a total of $4,390,772 to
the Company, receiving in return, two promissory notes for the
principal amount plus interest at a rate of 6.91% per annum. All
sums due to Dr. and Mrs. Joffe under the promissory notes are due
and payable in full upon the maturity of the promissory notes,
September 26, 2005. Since 1995, the Company repaid $369,100. See
"Restrictions on the Payment of Company Debt to Dr. Joffe and
Sandra F.W. Joffe."
In November and December, 1996, Dr. Joffe entered into debt
conversion transactions with the Company pursuant to which he
converted a total of $2,200,000 of the debt owed to him by the
Company into 11 shares of Interim Series Class B Preferred Stock.
Similarly, Mrs. Joffe converted a total of $321,672 of debt owed
to her into 1.6 shares of Interim Series Class B Preferred Stock.
See "Acquisition of RCII - Change in Terms of the Company's Series
B Preferred Stock."
Dr. Joffe was the guarantor of approximately $11,080,000 in bank
loans to the Company, including a mortgage note in the amount of
$3,080,000, and a working capital credit line of up to $8,000,000,
all of which were replaced by the Facility. Dr. Joffe was not
compensated for these personal guarantees. See "Acquisition of
RCII- Replacement Financing Agreement with The Fifth Third Bank,
Cincinnati, Ohio."
In May 1995, the Company acquired a 45% interest in the Surgery
Center of Georgia, LLC, Atlanta, Georgia ("SCG"). The transaction
was funded entirely by borrowings by SCG. The Company guaranteed
a portion of SCG's debt. Dr. Joffe acquired another 35% interest
in SCG in a similar fashion. In September 1995, the Company's 45%
interest in SCG was distributed to Dr. Joffe. The Company
remained as a guarantor on approximately $2,200,000 of SCG's debt
on a temporary basis after the distribution, until Dr. Joffe
arranged the elimination of the Company's guarantee prior to the
end of 1995.
Stephen N. Joffe, M.D. is the principal stockholder and majority
owner of The LCA Center for Surgery, Ltd. (the "Surgery Center"),
Cincinnati, Ohio, an Ohio limited liability company, which was
organized in September, 1995. The Company does not hold an
investment in the Surgery Center. The Company has leased to the
Surgery Center, for a period of 20 years at an annual rental of
$190,000, a portion of its headquarters building located at 7840
Montgomery Road. In February 1997, the Company agreed to forego
rent in return for the Surgery Center providing to the Company
certain systems and processes for research and development, for
providing additional staffing, and for giving the Company
unlimited use of the leased premises for research, testing,
educational and other agreed purposes. See "Acquisition of RCII -
Financing Agreement with The Fifth Third Bank, Cincinnati, Ohio."
In addition, the Company pledged to Fifth Third a $985,000
Certificate of Deposit ("CD") issued by Fifth Third as security
("Collateral") for a $985,000 loan ("Surgery Center Loan") made by
Fifth Third to The LCA Center for Surgery, Ltd. ("Surgery
Center"), an entity principally owned by Stephen N. Joffe, M.D.
The Company pledged the CD for up to 30 days while the Surgery
Center, or Stephen N. Joffe, M.D. personally, arranged to replace
the CD Collateral for the Surgery Center Loan. While Stephen N.
Joffe, M.D.'s personal guarantee of the prior Company facility
expired with the new Facility, he remained personally obligated to
the Company with respect to replacing the CD Collateral for the
Surgery Center Loan. Dr. Joffe has fulfilled his obligation to
the Company by pledging the required collateral and the Company is
no longer obligated to Fifth Third with respect to the CD. These
additional transactions related to the Facility were negotiated
and agreed because the Surgery Center, as a tenant in the
Company's headquarters building, could not timely provide Fifth
Third collateral for the Surgery Center Loan.
LCA and Stephen N. Joffe, M.D. previously owned all of the stock
of LCA Canada, Inc. ("LCA Canada") which owned 67% of the stock of
the Toronto Laservision Centre, Inc. (the "Centre"). LCA and
Stephen N. Joffe, M.D. contributed their entire interest in LCA
Canada to the Company in exchange for nominal consideration. The
Company renamed the subsidiary LCA-Vision Canada, and on August
31, 1995 acquired the remaining 33% of the stock of the Centre
from certain unaffiliated holders. Accordingly, the Centre is now
a wholly-owned subsidiary of the Company, through its subsidiary
LCA-Vision Canada.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information with respect to
beneficial ownership of the Company's Common Stock as of October
23, 1997, and after giving effect to the Dividend and the sales of
Company Common Stock by the Selling Stockholders, by (i) all
persons known to the Company to be the beneficial owner of 5% or
more thereof, and (ii) the Selling Stockholders.
<TABLE>
<CAPTION>
Prior to the Offering After the Offering(7)
Shares Shares to Shares
Beneficially be Sold or Beneficially
Name Owned(1) Percent Distributed(7) Owned(1) Percent
<S> <C> <C> <C> <C> <C>
Stephen N. Joffe, M.D.(1) 16,449,736(3) 44.881% -- 16,449,736 44.881%
Summit Technology, Inc. 16,164,361 44.102% 9,000,000(4) 7,164,361 19.540%
Sandra F.W. Joffe(2) 4,007,098(5) 10.933% -- 4,007,098 10.933%
Craig P.R. Joffe(6) 2,500,063 6.821% -- 2,500,063 6.821%
David B. Applegate 47,416 0.129% 47,416 -- --
Rajiv P. Bhatt 129,315 0.353% 129,315 -- --
Thomas Deutsch 24,247 0.066% 24,247 -- --
Michael Gordon 80,822 0.221% 80,822 -- --
Peter Hersch 48,493 0.132% 48,493 -- --
Ronald L. Herskowitz 210,137 0.573% 210,137 -- --
Suzanne Jobin 647 0.002% 647 -- --
Paul Klein 1,616 0.004% 1,616 -- --
Peter J. Klopotek 3,879 0.011% 3,879 -- --
Peter E. Litman 96,986 0.265% 96,986 -- --
John Marshall 32,329 0.088% 32,329 -- --
Julian Maughan 3,879 0.011% 3,879 -- --
Joanna Natkaniec 1,616 0.004% 1,616 -- --
Carmen A. Puliafito 32,329 0.088% 32,329 -- --
Rajesh Rajpal 24,247 0.066% 24,247 -- --
D. Verne Sharma 32,329 0.088% 32,329 -- --
Ronald Snyder 1,616 0.004% 1,616 -- --
Roger F. Steinert 48,493 0.132% 48,493 -- --
Vance Thompson 80,822 0.221% 80,822 -- --
___________________________
<FN>
1 Persons named in the table have sole voting and investment power with respect to all shares of
Company Common Stock shown as beneficially owned by them, subject to community property laws,
where applicable, and the information contained in other footnotes to this table. As of October
29, 1997, 36,651,906 shares of Company Common Stock were issued and outstanding. An additional
12,909 shares of Company Common Stock have been issued, but are currently held in treasury. All
percentages noted herein are calculated on the basis of the 36,651,906 shares issued and
outstanding.
2 Dr. and Mrs. Joffe's address is 8750 Red Fox Lane, Cincinnati, Ohio 45243.
3 The total for Dr. Joffe consists of 8,527,358 shares of Company Common Stock owned of record
and beneficially by him, 2,850,000 shares of Company Common Stock held of record by CEDE & Co.
but owned beneficially by him, 1,065,279 shares of Company Common Stock which Dr. Joffe
currently has the right to acquire upon conversion of 11 shares of convertible Class B Preferred
Stock he owns, 3,852,149 shares of Company Common Stock owned of record by Sandra Joffe which
Dr. Joffe is deemed to beneficially own, and 154,949 shares of Company Common Stock which Sandra
Joffe currently has the right to acquire upon conversion of 1.6 shares of Class B Preferred
Stock she owns and which Dr. Joffe is deemed to own.
4 Of the 16,164,361 shares owned by Summit Technology, Inc., 9,000,000 shares will be
distributed pursuant to the Dividend, and these shares are to be covered by this registration
statement. Pursuant to the Registration Rights Agreement, the additional 7,164,361 shares owned
by Summit may be sold only on or after May 17, 1998. Such additional shares are not covered by
this registration statement.
5 The total for Sandra Joffe includes 3,852,149 shares of Company Common Stock owned of record
and beneficially by her, and 154,949 shares of Company Common Stock she currently has the right
to acquire upon conversion of 1.6 shares of Class B Preferred Stock she owns. All of the shares
owned by Mrs. Joffe are also deemed to be beneficially owned by Dr. Joffe.
6 Craig P.R. Joffe's address is 21 Ladbroke Gardens, London W11-2PT, United Kingdom.
7 The information provided in this column assumes that the Selling Shareholders will offer for
sale all shares beneficially owned by them.
</FN>
</TABLE>
Messrs. Applegate, Bhatt, Herskowitz, Klopotek, Litman and Sharma,
Ms. Jobin and Ms. Natkaniec are now, or during the past three
years have been, employed by Summit and were previously involved
in the operations of RCII. The remaining Selling Stockholders
provided consulting services to Summit with respect to RCII prior
to the Closing. While Dr. Herskowitz and Ms. Jobin were employed
by the Company for a short period of time following the
Acquisition, none of the Selling Stockholders has any current
employment with the Company. The Selling Stockholders will
receive all proceeds of the sales of their Company Common Stock.
Pursuant to the Acquisition Agreement and the Registration Rights
Agreement, the Company agreed to register, at its expense, the
Selling Stockholders' shares of Company Common Stock and further
agreed to indemnify the Selling Stockholders with respect to such
registration.
PLAN OF DISTRIBUTION
The Dividend
In accordance with the terms of the Acquisition Agreement, Summit
intends to distribute to the Summit Stockholders as a Dividend a
total of 9,000,000 of the 16,164,361 shares of Company Common
Stock that Summit received in the Acquisition. The Dividend was
declared by Summit's Board of Directors on ______________, 1997.
The Board's declaration of the Dividend provides that each Summit
Stockholder of record on ____________, 1997 (the "Record Date")
will receive _____ Shares for each outstanding share of Summit
comon stock then owned by such Summit Stockholder. Fractional
shares of Company Common Stock will not be issued as a result of
the Dividend, and to the extent the Dividend would otherwise
result in a fractional share to a Summit Stockholder, the number
will be rounded to the nearest whole share. For a description of
the tax implications of the Dividend, see "Tax Matters." The
Dividend will be distributed to the Summit Stockholders as soon as
practicable after the Record Date. Neither the Company nor Summit
will receive any proceeds from the Dividend. All expenses of
registration of the Shares under the Securities Act of 1933 for
purposes of the Dividend will be borne by the Company. The fees
of counsel to Summit and any applicable taxes are payable by
Summit.
The Selling Stockholders
The Shares owned by the Selling Stockholders, which are included
herein pursuant to the Registration Rights Agreement, may be sold
from time to time by the Selling Stockholders (or their pledgees
or donees) in one or more transactions (which may include block
transactions), in negotiated transactions or otherwise, at prices
then prevailing or at negotiated prices. The Selling Stockholders
may effect such transactions by selling the Shares directly to
purchasers or to or through broker-dealers which may act as agents
or principals. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling
Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they may sell as
principal, or both. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers
or dealers to participate. Commissions or discounts which may be
received by brokers or dealers are not expected to exceed those
customary in the type of transactions involved. The Selling
Stockholders and any persons who act as broker-dealers in
connection with the sale of the Shares offered hereby might be
deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act, and any commissions received by them, and any
profit on the resale of the Shares as principal, may under certain
circumstances be deemed to be underwriting discounts and
commissions under the Securities Act.
All expenses of registration of the Selling Stockholders' Shares
under the Securities Act of 1933 will be borne by the Company.
Any commission expenses and brokerage fees, the fees of counsel to
the Selling Stockholders and any applicable taxes are payable
individually by the Selling Stockholders.
There can be no assurance that the Selling Stockholders will sell
any or all of the Shares offered hereby. The Company is not
required to maintain the effectiveness under the Securities Act of
the Registration Statement of which this Prospectus is a part for
a period greater than one year after the Registration Statement is
declared effective by the Commission.
DESCRIPTION OF SECURITIES
The Amended and Restated Certificate of Incorporation of the
Company authorizes 110,000,000 shares of common stock, $.001 par
value ("Company Common Stock"), and 10,000,000 shares of Preferred
Stock, $.001 par value. The holders of shares of Company Common
Stock have one vote per share. The Company Common Stock does not
have any conversion rights. The average of the closing bid and
asking prices of the Company Common Stock on the Nasdaq SmallCap
Market at October 28, 1997 was $2.75 per share. The holders of
shares of Company Common Stock are entitled to dividends when and
as declared by the Board of Directors from funds legally available
therefor. The Company does not anticipate declaring or paying any
cash dividends for the foreseeable future.
The Preferred Stock is voting stock and the holders of Preferred
Stock have the same voting rights per share as the Common
Stockholders. Neither the Preferred Stock nor the Company Common
Stock has preemptive or cumulative voting rights, is redeemable,
or is liable for assessments or further calls. The Company has
issued 12.6 shares of two Series of Interim Class B Preferred
Stock. Each of the 12.6 shares of the Company's Interim Series
Class B Preferred Stock and Second Interim Series Class B
Preferred Stock is convertible into the number of fully paid and
nonassessable shares of the Company Common Stock that results from
dividing $3.50 into the sum of $200,000 plus all accrued but
unpaid dividends on each such share at the time of conversion.
The Company's Amended and Restated Certificate of Incorporation
provides holders of Preferred Stock with a liquidation preference
payable upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company of $10.00 per share, plus all accrued
and unpaid dividends to be paid prior to any distributions to the
holders of Company Common Stock. In the event the assets of the
Company are insufficient to pay the holders of the Preferred Stock
their entire liquidation preference, the assets will be
distributed ratably among the holders of the outstanding Preferred
Stock. Subject to such preferential rights, the holders of
Company Common Stock are entitled to receive, ratably, all the
remaining assets of the Company.
SHARES OF COMPANY COMMON STOCK ELIGIBLE FOR FUTURE SALE;
POTENTIAL FOR DILUTION
The Company may issue significant amounts of Company Common Stock
as a result of the exercise of options or the conversion of
Preferred Stock. Further, as described above, the Company will
soon register for sale under the Securities Act of 1933 Summit's
Remaining Shares and 17,729,570 of the Major Stockholders' shares
of Company Common Stock. See "Risk Factors - Sale of Company
Common Stock by Summit and Major Stockholders" and "Acquisition of
RCII - Registration of Company Common Stock Received in the
Acquisition."
In particular, as of September 30, 1997, options issued pursuant
to the Company's 1995 Long-Term Stock Incentive Plan and the
Directors' Non-Discretionary Stock Option Plan to purchase up to
2,363,288 shares of Company Common Stock exercisable over the next
several years were outstanding at prices ranging from $2.25 to
$8.00. The shares of Company Common Stock issuable upon exercise
of the foregoing options have been registered and will be freely
tradeable upon exercise.
On September 30, 1997, the 12.6 shares of the Company's Interim
Series Class B Preferred Stock issued and outstanding would have
been convertible into 1,220,228 shares of Company Common Stock,
which number shall increase over time in accordance with the
formula governing the conversion of such Preferred Stock. See
"Description of Securities," "Acquisition of RCII - Change in
Terms of the Company's Interim Series Class B Preferred Stock" and
"Certain Relationships and Related Transactions."
Further, under the Registration Rights Agreement, Summit has the
right to demand that the Company register under the Securities Act
of 1933 the Remaining Shares to enable Summit to sell such shares
on any date after May 17, 1998. The Company also intends to
register up to 17,729,570 additional shares of Company Common
Stock for resale by the Major Stockholders. There is no
restriction on the timing of the disposition, or the amount of
sale, of these shares by Summit or the Major Stockholders once
the shares are registered. See "Acquisition of RCII -
Registration of Company Common Stock Received in the Acquisition"
and "-The Registration Rights Agreement," "Risk Factors - Sale of
Common Stock by Summit and Major Stockholders" and "Plan of
Distribution."
TAX MATTERS
Summit has been advised that the distribution of Shares to the
Summit Stockholders will not qualify as a tax-free distribution
for federal income tax purposes. A holder of Summit common stock
who receives shares of Company Common Stock pursuant to the
distribution will be treated under the Internal Revenue Code of
1986, as amended (the "Code"), as receiving a distribution equal
to the aggregate of the fair market value of the Company Common
Stock received on the distribution date plus the amount of cash,
if any, received. The distribution will be treatable as a
dividend to the extent of Summit's current and accumulated
earnings and profits. In computing such earnings and profits, the
accumulated deficit in earnings and profits will not be available
to offset any current earnings and profits for the year of the
distribution. Any excess portion of the distribution first will
be treated as a reduction in the basis of the Summit common stock
held by such stockholder, and, thereafter, as gain from the sale
or exchange of such holder's Summit common stock (which gain would
be treated as "adjusted net capital gain" or "mid-term gain" if
(i) the Summit common stock is held as a capital asset and (ii)
the respective requisite holding period has been satisfied). The
determination of a corporation's earnings and profits entails
complex factual and legal analysis, and the current earnings and
profits cannot be determined until the close of such taxable year.
The distribution itself may result in Summit having such earnings
and/or profits.
A holder's basis in Company Common Stock will be equal to the fair
market value of such stock on the distribution date and the
holding period for such stock will be deemed to commence as of the
distribution date. A Summit Stockholder's holding period for
Summit common stock will be unaffected by the distribution.
THE FOREGOING IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES ON THE DISTRIBUTION TO HOLDERS OF SUMMIT COMMON STOCK
UNDER CURRENT LAW. IT DOES NOT PURPORT TO ADDRESS ALL FEDERAL
INCOME TAX CONSEQUENCES, OR TAX CONSEQUENCES THAT MAY ARISE UNDER
THE TAX LAWS OR OTHER JURISDICTIONS OR THAT MAY APPLY TO
PARTICULAR CATEGORIES OR STOCKHOLDERS. EACH HOLDER OF SUMMIT
COMMON STOCK SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE
PARTICULAR CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX
LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY
AFFECT TAX CONSEQUENCES DESCRIBED ABOVE.
LEGAL MATTERS
The validity of the Shares of Company Common Stock offered hereby
will be passed upon by Dinsmore & Shohl LLP, Cincinnati, Ohio.
EXPERTS
The consolidated balance sheets of LCA-Vision Inc. and
subsidiaries as of December 31, 1996 and 1995 and the consolidated
statements of operations, shareholders' equity and cash flow for
each of the three years in the period ended December 31, 1996,
incorporated by reference in this registration statement, have
been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The financial statements of RCII as of December 31, 1996 and 1995
and for each of the years in the three-year period ended December
31, 1996, incorporated by reference in this Prospectus from the
Company's current Report on Form 8-K/A, filed October 23, 1997,
have been incorporated by reference herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
The Company's Amended Bylaws provide that each person who is made
a party or is otherwise involved in an action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company), by reason of
the fact that he is or was a director, officer, employee or agent
of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another entity, shall
be indemnified and held harmless by the Company to the fullest
extent authorized by the Delaware General Corporation Law (the
"DGCL") against all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if the director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The intent of the Company's Amended Bylaws is to make
indemnification for directors and officers mandatory rather than
permissive. In addition, the Amended Bylaws provide that the
Company may pay a director's or officer's expenses incurred in
defending any such proceeding, in advance of the proceeding's
final disposition, provided that the director or officer delivers
to the Company an undertaking to repay all advanced amounts if it
is ultimately determined that he is not entitled to be indemnified
under Delaware law. To the extent that an officer or director is
successful on the merits in any proceeding, Delaware law mandates
indemnification for expenses, including attorneys' fees. The
Company's Amended Bylaws also provide that the Company may
maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Company against any
expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such expense, liability
or loss under the DGCL. The Company has directors and officers
liability insurance.
Further, in the Registration Rights Agreement, the Company agreed
to indemnify Summit (including its officers, directors, affiliates
and partners), each Selling Stockholder and each person, if any,
who controls Summit, from and against all losses, claims, damages
and expenses in connection with certain liabilities arising under
this registration statement.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore unenforceable.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized statement of the expenses (all but
the SEC fees are estimates) in connection with the issuance of the
securities being registered hereunder. All such expenses will be
borne by the Company.
SEC registration fees $ 8,251.01
Legal fees and expenses $25,000.00
Accounting fees and expenses $25,000.00
Miscellaneous $ 1,748.99
----------
Total $60,000.00
===========
Item 15. Indemnification of Directors and Officers
The Company's Amended Bylaws provide that each person who is made
a party or is otherwise involved in an action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company), by reason of
the fact that he is or was a director, officer, employee or agent
of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another entity, shall
be indemnified and held harmless by the Company to the fullest
extent authorized by the Delaware General Corporation Law (the
"DGCL") against all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if the director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The intent of the Company's Amended Bylaws is to make
indemnification for directors and officers mandatory rather than
permissive. In addition, the Amended Bylaws provide that the
Company may pay a director's or officer's expenses incurred in
defending any such proceeding, in advance of the proceeding's
final disposition, provided that the director or officer delivers
to the Company an undertaking to repay all advanced amounts if it
is ultimately determined that he is not entitled to be indemnified
under Delaware law. To the extent that an officer or director is
successful on the merits in any proceeding, Delaware law mandates
indemnification for expenses, including attorneys' fees. The
Company's Amended Bylaws also provide that the Company may
maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Company against any
expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such expense, liability
or loss under the DGCL.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore unenforceable.
Item 16. Exhibits
Each of the following exhibits is filed or incorporated by
reference in this Registration Statement.
Exhibit
Number Description of Exhibit
(5) and
(23.1) Opinion and consent of Dinsmore & Shohl LLP, counsel to
the Registrant.
(8) and
(23.2) Opinion and Consent of Coopers & Lybrand L.L.P.(a)
(23.3) Consent of KPMG Peat Marwick LLP
(23.4) Consent of Coopers & Lybrand L.L.P.
(24) Powers of Attorney (b)
____________________
(a) To be filed by amendment.
(b) A power of attorney whereby various individuals authorize the
signing of their names to any and all amendments to this
Registration Statement and other documents submitted in connection
therewith is contained on the first page of the signature pages
following Part II of this Registration Statement.
Item 17. Undertakings
(a) Rule 415 Offering. The undersigned small business issuer
hereby undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(e) Request for Acceleration of Effective Date. Insofar as
indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has
been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer
of expenses incurred or paid by a director, officer or controlling
person of the small business issuer in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(f) Reliance on Rule 430A. The undersigned small business issuer
will:
(1) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the small business
issuer under Rule 424(b)(1), or (4) or 497(h) under the Securities
Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at
that time as the initial bona fide offering of those securities.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on a Form S-3 and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Cincinnati, State of Ohio on the 29th day of October, 1997.
LCA-VISION INC.
By:/S/ Stephen N. Joffe, M.D.
Stephen N. Joffe, M.D., President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Stephen N.
Joffe, M.D. and Larry P. Rapp, and each of them, jointly and
severally, as his or her true and lawful attorneys-in-fact and
agents, each with full power of substitution, and each with power
to act alone, to sign and execute on behalf of the undersigned any
amendment or amendments to this Registration Statement on Form S-3, and to
perform any acts necessary to be done in order to file
such amendment with exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission,
and each of the undersigned does hereby ratify and confirm all
that said attorneys-in-fact and agents, or their or his
substitutes, shall do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/S/ Stephen N. Joffe, M.D. President and October 29, 1997
Stephen N. Joffe, M.D. Chief Executive
Officer
(Principal Executive
Officer:)
/S/ Larry P. Rapp Chief Financial October 29, 1997
Larry P. Rapp Officer
(Principal Financial
and
Acounting Officer)
/S/ John C. Hassan Director October 29, 1997
John C. Hassan
/S/ Stephen N. Joffe, M.D. Director October 29, 1997
Stephen N. Joffe, M.D.
/S/ John H. Gutfreund Director October 29, 1997
John H. Gutfreund
/S/ William O. Coleman Director October 29, 1997
William O. Coleman
Exhibits 5 and 23.1
Charles F. Hertlein, Jr.
(513) 977-8315
October 27, 1997
LCA-Vision, Inc.
7840 Montgomery Road
Cincinnati, Ohio 45236
Ladies and Gentlemen:
This opinion is rendered for use in connection with the
Registration Statement on Form S-3, prescribed pursuant to the
Securities Act of 1933, to be filed by LCA-Vision, Inc. (the
"Company") with the Securities and Exchange Commission on or about
October 27, 1997, under which 9,901,218 shares of the Company's
Common Stock, $.001 par value ("Common Stock") are to be
registered.
We hereby consent to the filing of this opinion as Exhibits 5 and
23.1 to the Registration Statement and to the reference to our
name in the Registration Statement.
As counsel to the Company, we have examined and are familiar with
originals or copies, certified or otherwise identified to our
satisfaction, of such statutes, documents, corporate records,
certificates of public officials, and other instruments as we have
deemed necessary for the purpose of this opinion, including the
Company's Amended Certificate of Incorporation and Amended Bylaws
and the record of proceedings of the stockholders and directors of
the Company.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State
of Delaware.
2. When the Registration Statement shall have been declared
effective by order of the Securities and Exchange Commission, such
9,901,218 shares of Company Common Stock will be legally and
validly issued and outstanding, fully-paid and nonassessable.
Very truly yours,
DINSMORE & SHOHL LLP
/s/ Charles F. Hertlein, Jr.
Charles F. Hertlein, Jr.
Encl.
Exhibit 23.3
Consent of Independent Accountants
The Board of Directors
Refractive Centers International, Inc.
We consent to the use of our reports incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
Boston, Massachusetts
October 30, 1997
Exhibit 23.4
Consent of Independent Accountants
We consent to the incorporation by reference in this registration
statement of LCA-Vision Inc. on Form S-3 of our report dated March
18, 1997, on our audits of the consolidated financial statements
of LCA-Vision Inc. as of December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996. We also
consent to the reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
October 30, 1997
