U.S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment No. 1
to
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
Commission file no. 0-24921
Surgical Safety Products, Inc.
--------------------------------------------
(Name of small business issuer in its charter)
New York 65-0565144
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2018 Oak Terrace
Sarasota, Florida 34231
------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (941) 927-7874
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None
- ----------------------------- -------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------------
(Title of class)
Copies of Communications Sent to:
Mercedes Travis, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of September 30, 1999, there are 11,811,373 shares of voting stock
of the registrant issued and outstanding.
<PAGE>
PART I
Item 1. Financial Statements
<TABLE>
<S> <C>
Condensed Balance Sheets as of September 30, 1999 and December 31, 1998 F-2
Condensed Statements of Operations for the Three and Nine Months Ended
September 30, 1999 and 1998 F-3
Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 1998 F-4
Notes to the Condensed Financial Statements F-6
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September December
30 31,
1999 1998
-------------- ---------------
Assets
<S> <C> <C>
Current Assets
Cash $ 12,970 41,191
Accounts receivable 16,500 1,941
Deposits 750 58,700
Inventory 5,901 6,555
-------------- ------------
Total current assets 36,121 108,387
-------------- ------------
Property and equipment, net 201,151 112,772
-------------- ------------
Other Assets
Intangible assets, net 44,139 49,232
Software development costs, net 131,444 92,873
Other assets 10,250 10,250
-------------- ------------
Total other assets 185,833 152,355
-------------- ------------
Total Assets $ 423,105 373,514
============== ============
Liabilities and Stockholders' Equity
Current Liabilities
Line of credit $ 50,000 $
Notes payable - related parties 52,500
Deferred revenue 6,874
Accounts payable and accrued expenses 72,005 55,331
Total current liabilities 181,379 55,331
Stockholders' Equity
Common stock, $.001 par value,
20,000,000 shares authorized;
11,798,373 and 10,746,973 shares issued
and outstanding in 1999 and 1998 11,799 10,787
Additional paid-in capital 2,422,420 1,998,242
Accumulated deficit (2,192,493) (1,690,846)
Total stockholders' equity 241,726 318,183
Total Liabilities and Stockholders' Equity $ 423,105 $ 373,514
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
-2-
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
9 Months ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
--------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C>
Revenue
Net sales $ 720 $ 797 $ 240 $ 355
Leasing and other fees 162,577 38,007 111,264
Other 1,924 6,910 984 6,059
income
Total revenue 165,221 45,714 112,488 6,414
Costs and expenses
Cost of medical products sold 14,271 1,966 5,866 687
Operating expenses 602,555 497,649 207,321 174,867
Research and development expenses 40,287 20,202
Interest expense 9,755 13,639 2,315 186
Total costs 666,868 513,254 235,704 175,740
Net loss before income taxes (501,647) (467,540) (123,216) (169,326)
Provision for income taxes
Net loss $ (501,647) $ (467,540) $ (123,216) $ (169,326)
Net loss per share $ (0.045) $ (0.045) $ (0.010) $ (0.016)
</TABLE>
The accompanying notes are an integral part of
these financial statements.
F-3
-3-
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
1999 1998
--------------------------------------------
Cash Flows From Operating Activities
<S> <C> <C>
Net loss $ (501,647) $ (467,540)
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization 86,680 24,562
Common stock issued for services and
employee compensation 41,303 141,875
Stock option compensation expense (91,113)
Decrease (increase) in operating assets
Receivables (14,559) 248,487
Inventory 654 (6,885)
Increase (decrease) in operating liabilities
Deferred revenue 6,874
Accounts payable and accrued expenses 16,674 (45,161)
Total adjustments 46,513 362,878
Net cash used in operating activities (455,134) (104,662)
Cash Flows From Investing Activities
Furniture and equipment purchased (93,239) (61,195)
Software development additions (57,348) (67,528)
Net cash used in investing activities (150,587) (128,723)
Cash Flows From Financing Activities
Proceeds from related party loans 77,500
Advances/(repayments) on line of credit, 50,000 (100,000)
net
Repayment of stockholder loans (25,000) (233,720)
Proceeds from issuance of common stock 475,000 939,000
Net cash provided by financing activities 577,500 605,280
Net increase (decrease) in cash (28,221) 371,895
Cash at beginning of year 41,191 -
Cash at end of year $ 12,970 $ 371,895
Supplemental Cash Flow Information:
Cash paid for interest $ 5,474 $ 31,678
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
-4-
<PAGE>
For purposes of the statement of cash flows, management considers all deposits
and financial instruments with original maturities of less than three months to
be cash and cash equivalents.
Material non-cash transactions not reflected in the statement of cash flows
include:
For the Nine Months Ended September 30, 1999
The Company received fixed assets in the amount of $58,700 for which it had
recorded deposits of such amount at December 31, 1998.
For the Nine Months Ended September 30, 1998
TheCompany issued common stock for prepaid legal and public relations
services in the amount of $47,500 as of September 30, 1998
The accompanying notes are an integral part of these financial statements.
F-5
-5-
<PAGE>
Notes to the Condensed Financial Statements
Note 1 - Account Policies
Basis of Presentation
The condensed financial statements of Surgical Safety Products, Inc. (Company)
have been prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These consolidated financial statements should be read in
conjunction with the financial statement and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1998.
The results of operations for the nine month period ended September 30, 1999 are
not necessarily indicative of the results to be expected for any other period or
for the full year.
In the opinion of Company's management the accompanying unaudited financial
statements contain all adjustments, consisting of only normally recurring
adjustments, necessary to present fairly the financial position as of September
30, 1999, the results of operations and cash flows for the three and nine months
ended September 30, 1999 and September 30, 1998.
Net Loss Per Share
Net loss per share has been computed in accordance with Statement of Financial
Accounting Standards (FASB) no. 128, "Earnings Per Share," by dividing net loss
by the weighted average number of shares outstanding during the period. Common
stock equivalents have not been include in the computation of weighted average
number of shares outstanding since the effect would have been anti-dilutive.
Reclassifications
Certain reclassifications have been made in the prior year's financial
statements to conform to the current period presentations.
Note 2 - Stock Compensation Expense
During fiscal year 1998, the Company issued stock options with an exercise price
that was below market to certain of its employees. Accordingly, the Company
recorded $91,113 of compensation expense related to the issuance for the year
ended December 31, 1998.
In the first quarter of 1999, the Company canceled these stock options and
issued options with an exercise price above that of market. Accordingly, the
Company decreased its payroll expenses by $91,113 for the cancellation of these
options for the nine months ended September 30, 1999. In addition, during the
nine months ended September 30, 1999, the Company issued common stock valued at
$39,053 to certain of its employees and $7,500 to certain consultants in lieu of
cash compensation for services. The common stock was valued based on the fair
market value for the shares on the dates the compensation would have been paid
F-6
-6-
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations.
General
On July 30, 1999, the Company entered into a long term agreement with US
Surgical which is a private partner network agreement (the "Long Term
Agreement"). Under the Long Term Agreement, Surgical agreed to sell four hundred
(400) licenses for the use of one or more OASiS systems and US Surgical agreed
to nominated four hundred (400) hospitals for such licenses. Each license is for
a term of three (3) years commencing with "substantial installation" of such
unit. "Substantial installation" is defined as delivery of the OASiS unit to the
hospital and connection to the Internet.
Under the terms of the Long Term Agreement, US Surgical must purchase two
hundred (200) licenses within the first year, and subject to certain obligations
on the part of Surgical to license units to third parties, must purchase an
additional two hundred (200) licenses by the end of the second year. Hospital s
with units installed under the Short Term Agreement are counted toward the
minimum number of hospitals required. On August 10, 1999 US Surgical paid
Surgical $100,000.00 as a non-refundable down payment for such licenses. The
first 200 licenses are an additional $1,500 each and subsequent licenses are
$1,000 each.
The Long Term Agreement further provides that neither Surgical, nor any
third party other than US Surgical, may place OASiS units in any of the
"protected departments" of the hospitals, unless it is installed prior to
receipt of a purchase order from US Surgical or unless US Surgical does not
exercise its right of first refusal after notice from Surgical for such
hospital. The Long Term Agreement defines "protected departments" as Operating
Room, Labor and Delivery, Emergency Room, Ambulatory/Same Day Surgery /
Outpatient, Nuclear Medicine, Intensive Care, Orthopedic / Ortho Casting Room,
and Dialysis. US Surgical is required to have each hospital bear the entire risk
of loss and damage to any OASiS system except if such is caused by the
negligence or wilful misconduct of Surgical. US Surgical must maintain casualty
insurance in amounts and with companies acceptable to Surgical on the OASiS
units and its related amenities with Surgical as the loss payee. US Surgical may
elect to have the OASiS systems installed in hospitals it nominates co-branded
with its name. Surgical has the discretion to select the content, related
services and in- service products for the OASiS systems installed under this
agreement; however, during the term of the agreement, US Surgical is required to
pay for and maintain a minimum of one hundred forty (140) product in-services
modules in an average of at least 80% of all OASiS systems installed in the
United States whether or not covered by this agreement and 100% on those that
are covered by the agreement. US Surgical's product-based modules produced by
Surgical become the property of US Surgical. Surgical retains the right to
display such modules on other OASiS units. All other modules remain the property
of Surgical. Surgical receives a fee for production of the modules. If Surgical
installs additional OASiS units in a designated hospital, US Surgical receives a
10% commission. Surgical receives a monthly maintenance fee for each unit, of
$149, unless paid a year in advance in which case it may be discounted up to
10%.
In July 1999, the Company executed a Consulting and Assistance Agreement
with Triton Capital, Inc., a Florida corporation ("Triton"). Under the terms
-7-
<PAGE>
of this agreement, Triton has been engaged to identify sources of capital or
potential business relationships and to assist the Company in (i) raising equity
or debt financing in the amount of $6,000,000 (ii) arranging for trade financing
for production, sale, lease, rental or other disposal of the Company's products;
and (iii) arranging for the sale, merger, or consolidation of the Company or for
joint ventures or strategic alliances with other appropriate business. This
agreement is non-exclusive. In the event Investment Financing is secured, the
Company was to pay compensation equal to 8% for any investment financing to the
person or entity placing such investment; provided such person or entity is
qualified to receive such compensation in the state of residence of the investor
and will issue warrants to purchase restricted Common Stock in the Company in an
amount equal to 100,000 for every $1 million funded, exercisable for a period of
five (5) years at a price equal to the closing bid price of the Company's shares
on the date of such funding and which warrants are to have piggy-back
registration rights and cashless exercise provisions. The Company is free to
reject any offered financing or arrangements; however, in the event that the
Company enters any arrangement within 180 days of its written rejection, on
terms less favorable to the Company, Triton is to receive a flat fee. In the
event the Company "shops" any offer of financing presented to it to other
potential sources and accepts such other financing, Triton is entitled to a
success fee. Triton is to be reimbursed pre-approved disbursements and expenses.
The agreement provides for confidentiality and cross-indemnification . The
agreement is subject to cancellation by either party with five (5) days written
notice. Any disputes under the agreement are required to be submitted to
arbitration, with costs payable by the losing party. No funding under this
agreement has been received as of the date hereof.
Discussion and Analysis
The Company was founded in 1992 to combat the potential spread of
bloodborne pathogenic infections such as HIV and hepatitis. It has broadened its
mission to research, develop, manufacturing, marketing and selling medical
products and services to the healthcare community.
The Company was in the development stage until 1993 when it began
commercial shipments of SutureMate(R), its first product. From inception in
June, 1992 through December 31, 1998, the Company generated revenues of
approximately $1,100,000 from a limited number of customers. Since inception
through December 31, 1998, the Company has generated cumulative losses of
approximately $1,690,000. Although the Company has experienced a significant
percentage growth in revenues from fiscal 1992 to fiscal 1998, the Company does
not believe prior growth rates are indicative of future operating results,
especially in light of the contract with US Surgical to assist in the
introduction of OASiS. Due to the Company's operating history and limited
resources, among other factors, there can be no assurance that profitability or
significant revenues on a quarterly or annual basis will occur in the future.
Moreover, the Company expects to continue to incur operating losses through at
least the first half of 2000, and there can be no assurance that losses will not
continue after such date. The Company had commitments for installations in a
total of 12 hospitals on or before June 30, 1999, ten of which related to the
agreement with US Surgical and two are a result of the Company's sales
department. As of the date hereof the Company has completed installations of
fourteen (14) units in seven (7) hospitals, five (5) of which are under the
original agreement with US Surgical. Installation of the remaining units under
the US Surgical initial agreement have been merged into the Long Term Agreement.
-8-
<PAGE>
As discussed in the independent auditors' report, the operating losses
incurred by the Company raise doubt about its ability to continue as a going
concern. In addition, with the implementation of its agreement with US Surgical
and in the event of the reactivation of its various distribution agreements
and/or with the establishment of one or more strategic alliances in addition to
US Surgical, the Company expects to experience a period of growth, which
requires it to significantly increase the scale of its operations. This increase
will include the hiring of additional personnel in the areas of (i) customer
service to provide technical support for the hospitals where installations are
located and (ii) technical staff to make changes requested by those hospitals.
This will result in significantly higher operating expenses. The increase in
operating expenses is expected to be partially funded by an increase in
revenues. However, the Company's net loss may continue to increase. Expansion of
the Company's operations may cause a significant strain on the Company's
management, financial and other resources. The Company's ability to manage
recent and any possible future growth, should it occur, will depend upon a
significant expansion of its sales and marketing, research and development,
accounting and other internal management systems and the implementation and
subsequent improvement of a variety of systems, procedures and controls. There
can be no assurance that significant problems in these areas will not occur. Any
failure to expand these areas and implement and improve such systems, procedures
and controls in an efficient manner at a pace consistent with the Company's
business could have a material adverse effect on the Company's business,
financial condition and results of operations. As a result of such expected
expansion and the anticipated increase in its operating expenses, as well as the
difficulty in forecasting revenue levels, the Company expects to continue to
experience significant fluctuations in its revenues, costs and gross margins,
and therefore its results of operations.
The Company's plan of operations for the next twelve months is to focus on
building revenue from the installation of the OASiS system in the hospitals
designated by US Surgical and to install additional OASiS systems in hospitals
not under the US Surgical agreement but with whom the Company has begun
negotiations and in some cases reached a commitment. Additionally, the Company
intends to install the inservice modules from US Surgical and other medical
product manufacturers at both the US Surgical and the other hospitals. The
Company also is aggressively seeking strategic alliances with targeted industry
partners such as manufacturers of devices, manufacturers of pharmaceuticals,
professional organizations such as nursing associations and hospital group
purchasing organizations and integrated health networks.
The Company estimates that revenues will be sufficient to fund ongoing
operations at the current level when the number of OASiS installations reaches
approximately 100 to 125 and the total number of inservice modules reaches
approximately 150. The Company has purchased 20 OASiS units from Kiosk
Information Systems, Inc., of which eleven (11) were installed under the US
Surgical agreements and at St. Francis Hospital. The Company already has 32
inservice modules under the US Surgical agreement and is in discussion with
various manufacturers interested in using OASiS to inservice more than 50 of
their products. The Company believes that each of the initial installations
should have a position as to long term acceptance within three (3) to six (6)
months and that this initial time is the test period to determine the potential
for market acceptance at that hospital. In the case of US Surgical hospitals
under the initial agreement, this period was nine (9) months by contract. At the
end of such test period, the Company believes it will be in a position to
execute three (3) year leases and finance such leases through a leveraged
leasing arrangement with Rockford or a similar funding source.
-9-
<PAGE>
In the short term, to fund operations through the fourth quarter, 1999, the
Company will be required to seek additional funds from strategic alliances with
potential clients, its shareholders, from additional third party financing or
seek third party debt or equity financing other than those planned by the
current anticipated private placement. Currently, the Company has exhausted its
existing lines of credit. Therefore, the Company has begun to scale back
operations. The Company is exploring a program to substitute stock for cash in
its compensation program. In addition, immediate focus is being placed on other
methods to reduce its breakeven point, such as staffing cuts, or the licensing
or sale of some of the Company's assets or product lines to third parties.
Provided that additional funding or its scale back is successful, the Company
believes that it can meet its capital needs through year end. There can be no
assurance that the Company will be successful in these efforts.
As discussed in Note 10 to the Financial Statements, if the financing
referred to above is not secured, the recoverability of the recorded asset
amounts may be impaired.
In 2000, the Company will require between $8 and $9 million in additional
capital in the form of debt or equity to fund the continued expansion of the
OASiS system and its development to meet increased demand and to implement its
plans for increased marketing of its medical device products. The Company has
met with several venture capital firms, investment bankers, factoring companies
and traditional lending sources, each of whom have expressed early interest and
many of whom are awaiting the conclusion of the testing period. The Company has
accepted no definite offer, with the exception of the short term funding being
sought through Triton. There can be no assurance that such long-term financing
will be available to the Company or that it will be on terms that the Company
may seek.
Results of Operations for the Three and Nine Months Ended September 30, 1999 and
1998
Overview
From its inception, the Company has incurred losses from operations. As of
September 30, 1999, the Company had cumulative net losses totaling approximately
$2,192,493. Through fiscal 1998, the Company focused primarily on the design and
development of its propriety products, as well as providing consulting services.
During fiscal 1999, management shifted its focus to aggressively marketing its
proprietary products.
Financial Position
Working capital as of September 30, 1999 was a deficit of $145,258, as
compared to working capital of $53,056 at December 31, 1998. This decrease is
primarily due to additional borrowings on the Company's line of credit and
increases in Notes payable-related parties, the transfer of deposits to property
and equipment and the reduction in cash.
Revenues
-10-
<PAGE>
For the three months ended September 30, 1999 and 1998, the Company had
total revenues of $112,488 and $6,414, respectively. For the three months ended
September 30, 1999, revenues were comprised primarily of the initial payments
received from US Surgical associated with the Long Term Agreement and for Oasis
unit rentals. For the nine months ended September 30, 1999, total revenues were
$165,221 compared to $6,413 in the same period last year. The increase of
$140,130 or 574% is due to revenue from the 1999 launch of Oasis. In 1998, Oasis
was still under development.
Selling, General, and Administrative Expenses
For the nine months ended September 30, 1999, operating expenses increased
by $104,906 or 21% from $497,649 for the nine months ended September 30, 1998.
This increase is primarily related to marketing support expenditures to sustain
the launch of the Company's Oasis system. In accordance with the Company's
marketing plan for fiscal 1999, expenses related to promotion, trade shows, and
conventions were increased to enhance the industry awareness of the company's
products and services.
In the past, the Company has focused on the design and development of
proprietary products. For fiscal 1999, the Company has launched an aggressive
marketing plan that is designed to increase worldwide sales of its products.
Surgical believes that the increased operating expenses incurred during the nine
months ended September 30, 1999 will position the Company to generate increased
revenue in the 2000 fiscal year.
Liquidity and Capital Resources
The financial condition, liquidity and capital resources of the Company
should be assessed in context with the ability of the Company to continue as a
going concern as discussed in the independent auditors' report.
The Company's operations have been funded primarily from the $475,000
proceeds of the private placement completed in the second quarter 1999 and from
cash flow of $102,500 from shareholder loans and advances on the line of credit
during the nine months ended September 30, 1999. This allowed the Company to
purchase capital assets, enhance its OASiS software and fund current operations.
At September 30, 1999, the Company has a $11,220 cash position.
The Company has a line of credit in the amount of $100,000 that expires in
May 2017 and is guaranteed by Dr. Swor and his wife. The line of credit also has
been used to fund operations on a short-term basis and $100,000 is currently
outstanding.
Net cash used for investing for the nine months ended September 30, 1999
was approximately $150,587, representing primarily OASiS units purchased and
costs related to the new version of OASiS which have been capitalized.
In the short term, to fund operations through the fourth quarter, 1999, the
Company will be required to seek additional funds from strategic alliances with
potential clients, its shareholders, from additional third party financing or
seek third party debt or equity financing other than those planned by the
-11-
<PAGE>
anticipated private placement. Currently, the Company has exhausted its existing
lines of credit. Therefore, the company has begun to scale back operations. The
company is exploring programs to substitute stock for cash in its compensation
programs. In addition, immediate focus is being placed on other methods to
reduce its breakeven point, such as staffing cuts or the licensing or sale of
some of the Company's assets or product lines to third parties. Provided that
additional funding is secured and its scale back is successful, the Company
believes that it can meet its capital needs through year end. There can be no
assurance that the Company will be successful in these efforts.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize the date using 00 as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
Management has reviewed its current internal systems and is in the process
of upgrading its accounting system to be Year 2000 compliant. The Company
purchased new hardware in 1998 that is Year 2000 compliant. Its internal systems
are Year 200 compliant and the Company expects the testing of such systems to be
completed in the fourth quarter of 1999. Management does not anticipate any
significant additional costs that would relate to upgrading its systems to
support the Year 2000.
Further, management does not believe the Year 2000 will impact the
operation of the OASiS system since the software for this system does not rely
on legacy applications or subsystems. OASiS is designed to handle dates in the
form of a two digit month and day and a four digit year, thus avoiding the Year
2000 problem
The Company believes that it has disclosed all required information
relative to Year 2000 issues relating to its business and operations. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely also will be converted in a timely manner or that any
such failure to convert by another company would not have an adverse affect on
the Company's business, operations or financial condition.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), demand
for the Company's products and services, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
-12-
<PAGE>
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject, which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending September 30, 1999,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
-13-
<PAGE>
Exhibit No. Description
- ----------- --------------------------------
3.(I).1 Articles of Incorporation of Surgical Safety Products, Inc., a
Florida corporation filed May 15, 1992 [1]
3.(I).2 Articles of Amendment filed December 9, 1992 [1]
3.(I).3 Articles of Amendment filed July 19, 1994 [1]
3.(I).4 Articles of Amendment filed October 11, 1994 [1]
3.(I).5 Articles of Incorporation of Sheffeld Acres, Inc., a New York
Corporation filed May 7, 1993 [1]
3.(I).6 Articles of Merger filed in the State of Florida
October 12, 1994 [1]
3.(I).7 Certificate of Merger filed in the State of New York
February 8, 1995 [1]
3.(I).8 Certificate to Do Business in the State of Florida
filed April 11, 1995 [1]
3.(I).9 Certificate of Amendment filed May 1, 1998 [1]
3.(II).1 Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety
Products, Inc. [1]
3.(II).2 Amended Bylaws of Surgical Safety Products, Inc. [2]
10.1 Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE
dated December 8, 1997 [1]
10.2 Prepaid Capital Lease Agreement with Community Health Corporation
relative to Sarasota Medical Hospital OASiS Installation dated
January 30, 1998 [1]
10.3 Letter of Intent with United States Surgical Corporation
dated February 12, 1998 [1]
10.4 Form of Rockford Industries, Inc. Rental Agreement and Equipment
Schedule to Master Lease Agreement [1]
10.5 Ad-Vantagenet Letter of Intent dated June 19, 1998 [1]
10.6 Distribution Agreement with Morrison International Inc.
dated September 30, 1996 [1]
10.7 Distribution Agreement with Hospital News
dated August 1, 1997 [1]
-14-
<PAGE>
10.8 Clinical Products Testing Agreement with Sarasota Memorial
Hospital dated January 30, 1998 [1]
10.9 Real Estate Lease for Executive Offices effective
June 1, 1998 [1]
10.10 Employment Agreement with Donald K. Lawrence dated
April 1, 1997 [1]
10.11 Employment Agreement with G. Michael Swor dated June 15, 1998 [1]
10.12 Employment Agreement with Frank M. Clark dated June 15, 1998 [1]
10.13 Agreement for Consulting Services with Stockstowatch.com Inc.
dated March 30, 1988 [1]
10.14 Form of Employee Option Agreement dated July 1994 [1]
10.15 Form of Employee Option Agreement dated 1998 [1]
10.16 Form of Consultants Option Agreement dated July 1994 [1]
10.17 Form of Consultants Option Agreement dated 1998 [1]
10.18 Confidential Private Offering Memorandum dated May 30, 1995 [1]
10.19 Supplement to Private Offering Memorandum dated
October 30, 1995 [1]
10.20 Stock Option Agreement with Bay Breeze Enterprises LLC dated
April 9, 1998 [1]
10.21 Revolving Loan Agreement, Revolving Note, Security Agreement with
SouthTrust Bank dated May 2, 1997 [1]
10.22 Agreement between the Company and T. T. Communications, Inc.
dated October 15, 1998 [2]
10.23 Agreement between the Company and U.S. Surgical Corporation dated
October 28, 1998. [2]
10.24 Collaborative Agreement between the Company and Dr. William B.
Saye dated November 16, 1998. [2]
10.25 Kiosk Information System, Inc. Purchase Order dated
November 3, 1998 [2]
10.26 Surgical Safety Products 1999 Stock Option Plan adopted
January 1999 [2]
-15-
<PAGE>
10.27 Form of the Employee Option Agreement under the Surgical Safety
Products 1999 Stock Option Plan dated January 1999 [2]
10.28 Form of the Director, Consultant and Advisor Option Agreement
under the Surgical Safety Products 1999 Stock Option Plan dated
January 1999 [2]
10.29 Verio, Inc. Access Service Agreement dated February 16, 1999. [2]
10.30 Form of Investor Subscription Documents and Agreements relative
to the April 1999 Self Directed Private Placement Offering under
Rule 506 of Regulation D. [3]
10.31 Form of the Warrant issued pursuant to the April 1999 Self
Directed Private Placement Offering under Rule 506 of
Regulation D. [3]
10.32 Consulting Agreement dated April 1999 with Koritz Group, LLC. [3]
10.33 Agreement dated April 1999 with KJS Investment Corporation. [4]
10.34 Agreement dated May 1999 with Ten Peaks Capital Corp. [4]
10.35 Private Partner Network Agreement dated July 30, 1999 with
US Surgical [5]
10.36 Staff/Client Leasing Agreement dated October 16, 1999, as amended
September 15, 1999 [5]
10.37 Agreement dated July 15, 1999 with Triton Capital Inc.[6]
27.1 * Financial Data Sheet
- ----------------
[1] Previously filed with the Company's Form 10SB
[2] Previously filed with the Company's Amendment No. 1 to the Form 10SB
[3] Previously filed with the Company's Form 10QSB for the Quarter ended
March 30, 1999
[4] Previously filed with the Company's Form 10QSB for the Quarter ended
June 30, 1999
[5] Previously filed with the Company's Amendment No. 2 to the Form 10SB
[6] Previously filed with the Company's Form 10QSB for the Quarter ended
September 30, 1999
* Filed Herewith
- ----------------
(b) No Reports on Form 8-K were filed during the quarter
ended September 30, 1999.
-16-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Surgical Safety Products, Inc. (Registrant)
Date: December 27, 1999
By:/s/ Frank M. Clark
------------------------
Frank M. Clark, President and CEO
By:/s/ Donald K. Lawrence
-----------------------
Donald K. Lawrence
Vice President and Secretary
By:/s/ G. Michael Swor
----------------------
G. Michael Swor
Treasurer
By:/s/ David Collins
----------------------
David Collins
Acting Chief Financial Officer
[sign page SSP 10QSB/A 9.30.99]
-17-
EXHIBIT 10.37
CONSULTING AND ASSISTANCE AGREEMENT
THIS AGREEMENT dated this 15th day of July, 1999 by and between SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation with a principal place of business at 2018
Oak Terrace, Sarasota, Florida 34231 (hereinafter the "Company"), and Triton
Capital, Inc., a Florida corporation with a principal place of business at 2898
University Drive, Coral Springs, FL. 33065 (hereinafter "Consultant").
WITNESSETH:
WHEREAS, Consultant is, inter alia, engaged in the business of
identifying, reviewing, analyzing, structuring and implementing various and
diverse business and financial relationships and transactions on behalf of its
clients;
WHEREAS, the Company has expressed an interest in retaining Consultant,
on a non-exclusive basis, to provide consulting services in connection with the
review, analysis, structure and, if feasible, implementation of various and
diverse business and financial relationships and transactions; and
WHEREAS, Consultant is prepared to use its best efforts, expertise and
network of clients and contacts to provide said consultation services to the
Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties agree as follows:
1. Engagement
1.1 The Company hereby engages Consultant, and Consultant hereby accepts to
become engaged by the Company, as a Consultant to seek to "assist" (as such
term is hereinafter defined) the Company in accomplishing the following
tasks:
1.1.1 initially raise equity or debt financing in an amount up to Six Million
($6,000,000.00) Dollars, either in lump sum or in staged financing, as
the case may be, and to thereafter raise equity or debt financing as
the Company may request ("Investment Financing");
1.2 For the Purpose of this Agreement, as it concerns Consultant's activities,
"assist" will mean the introduction of a party to the Company, as evidenced
in a writing from Consultant, from whom the Company has not previously
obtained investment or trade financing, with whom the Company is not
presently in negotiation for such financing or with whom the Company
otherwise has not done business and, at the request and direction of the
Company, to assist the Company in structuring and negotiating an
arrangement with such a party. If the Company obtained or obtains financing
from, is or was in negotiation with any party introduced by Consultant or
otherwise has done or is doing business with such a party, the Company will
provide evidence of such prior business to Consultant upon its written
notification to the Company.
1.3 Scope of Services and Non-Exclusivity. It is understood and agreed between
the parties that:
-18-
<PAGE>
1.3.1 Consultant will work in concert with the Company and, at each time at
the Company's request, to identify sources of capital and potential
business relations, with the objective of arranging meetings and
thereafter, at the Company's request and expense, participate in such
meetings, for:
1.3.1.1 Investment Financing by such parties as venture capital firms,
institutional and strategic investors, investment banks and
others potentially interested in effecting or facilitating an
investment into the Company;
1.3.2 The Company will use its best efforts to assist and cooperate with
Consultant in the performance of its duties hereunder, including
promptly providing all information and documentation reasonably
requested by Consultant;
1.3.3 Consultant may provide its services at those times (day or evening) and
from those locations (via telephone, telefax and/or e-mail) as mutually
agreed between Consultant and the Company; and
1.3.4 The Company may engage other third parties to assist it in raising
and/or providing investment or trade financing and arranging business
arrangements.
2. Success Fee:
2.1 The Company will be free to accept or reject any prospective Business
Arrangement Consultant proposes by so notifying Consultant in writing.
3. Investment Financing Success Fee:
3.1 In the event Investment Financing is secured, the Company will pay
compensation equal to eight percent (8%) of the amount of equity or debt
raised as a Success Fee to the person or entity placing such equity or
debt; provided that such person or entity is qualified to receive such
compensation in the state of residence, incorporation or principal place of
business, as applicable, of the investor and in addition, if warrants are
granted to the investor, the Company will grant warrants to purchase
100,000 shares of the Company's Common Stock for each $1 million funded,
exercisable at any time up to the last business day of the sixtieth (60th)
month from the date of issue which will provide that such person or entity
will have the right to acquire restricted common stock of the Company at an
exercise price equal to that of the closing bid price of the Company's
shares on the date of the completion of the transaction, which warrants
shall contained provisions for "piggy-back" registration rights and rights
for cashless exercise. The said warrants and underlying securities will be
issued to such person or entity subject to usual and standard restrictions,
such as restrictions pursuant to Rule 144 under the Securities Act of 1933,
as amended (the "Act"), and will contain the same rights and privileges as
granted to the investor.
3.2 The Company will be free to accept or reject any prospective Investment
Financing Consultant proposes by so notifying Consultant in writing.
Notwithstanding anything to the contrary contained herein, if the Company
enters into an arrangement for Investment Financing within one hundred
eighty (180) days following its written notice of rejection on terms and
conditions less favorable to the Company (excluding computation of the
Success Fee), the Company will pay the person or entity to whom
compensation would have been paid the sum of _____________ Dollars
($_________) at each such closing thereon.
4. Conflict. The Company expressly understands that Consultant and/or its
managers, partners, shareholders, officers, directors, affiliates or
representatives may have an ownership interest in, be
-19-
<PAGE>
a director or officer of, or otherwise be in a contractual relationship
with a party (i) from whom the Company may obtain Investment Financing or
Trade Financing, (ii) with whom the Company may enter into a Business
Arrangement, or (iii) from whom Consultant may receive compensation
independent of, and in addition to, the Success Fee due and payable
pursuant to this Agreement. The Company hereby expressly waives any and all
direct or indirect conflict that may arise from any such relationships;
provided that in each instance the Company has been informed of its
existence.
5. Expenses. Forthwith upon its submission of an invoice therefor to the
Company, the Company will reimburse Consultant for any pre-approved
disbursements or expenses advanced by Consultant on behalf of the Company
in the performance of this Agreement.
6. Confidentiality and Non-Circumvention.
6.1 Each party will treat information provided by the other party pursuant to
this Agreement as confidential ( as it relates to the Company, the
"Confidential Information"; as it relates to Consultant, the "Confidential
Contacts"). The recipient thereof will not, directly or indirectly (a)
transfer or disclose any Confidential Information or Confidential Contacts,
as the case may be, to any third party (other than its representatives as
hereinafter provided or otherwise as required by law), (b) use any
Confidential Information or Confidential Contacts, as the case may be, for
any purpose other than for its representatives' information and assessment
without the prior written approval of the disclosing party.
6.2 As used herein:
6.2.1 as it relates to the Company, "Confidential Information" will include,
regardless of the medium, all confidential and proprietary information
so marked when disclosed, including financial data, research, know-how,
test data, technology, and other trade secrets relating to the Company,
furnished or made available by the Company. Notwithstanding the
foregoing, the Company's Confidential Information will not include
information which Consultant can evidence was prior to its receipt (i)
in the public domain (other than as a result of a breach of this
Agreement), (ii) in Consultant's possession, or (iii) independently
known through a party other than the Company, which party has no duty of
confidentiality and otherwise has the right to disclose same; and
6.2.2 as it relates to Consultant, "Confidential Contacts" will include any
person, firm or entity with whom Consultant has contact or done business
except any Confidential Contact from whom the Company can evidence it
has previously obtained Investment Financing or Trade Financing or with
whom it has otherwise done business, as the case may be, prior to the
date Consultant makes such Confidential Contact available to the Company
6.3 Except as specifically agreed to in writing between the parties, the
Company agrees it will not, directly or indirectly, without first having
obtained Consultant' written consent, which consent shall not be
unreasonably withheld: (i) negotiate or enter into, or attempt to negotiate
or enter into, any agreement, covenant or understanding, written or oral,
with any Confidential Contacts in regard to Investment Financing, Trade
Financing or Business Arrangements; or (ii) advise others to utilize
Confidential Contacts for investment or trade finance or business
arrangements; or (iii) interfere with, circumvent, frustrate or otherwise
impede in any manner the relationship of Consultant with any Confidential
Contacts.
-20-
<PAGE>
6.4 The permitted recipient of any Confidential Information and Confidential
Contacts, as the case may be:
6.4.1 will take all necessary or appropriate action to (i) protect the
Confidential Information or the Confidential Contacts, as the case may
be, which standard of protection will be no less stringint than it takes
to protect its own proprietary and confidential information, and (ii)
prevent its employees, agents and/or representatives from acting in a
manner inconsistent with the terms of this Agreement; and
6.4.2 may disclose same to its employees, agents and/or representatives having
a need for access thereto by virtue of his/its employment or engagement
by recipient, and who/which have been instructed as to, and have agreed
to be bound by, the terms and conditions of this Agreement prior to the
disclosure of the Confidential Information or Confidential Contacts,
as the case may be.
7. Equitable Relief. Each party hereto agrees that any violation of this
Agreement by one party may result in irreparable injury to the other party,
because the Confidential Information, as it concerns the Company, and the
Confidential Contacts, as it concerns Consultant, and the fruits thereof,
are valuable in ways not susceptible to full and accurate valuation or have
an adequate remedy at law in the event the other party breaches the
provisions of this Agreement. Accordingly, the Company and Consultant, as
the case may be, may be entitled to injunctive relief or other equitable
remedy to prevent, curtail or enforce any such breach, threatened or
actual, or the performance of this Agreement. The foregoing will be in
addition, and without prejudice, to such other rights as the Company and
Consultant may have at law or in equity. The parties each acknowledge and
agree that the covenants contained herein are necessary for the protection
of the other party's legitimate business interest, and are reasonable in
scope.
8. Indemnification. The Company and Consultant will indemnify and hold each
other and their respective directors, employees, agents and controlled and
controlling persons, harmless from and against any and all losses, claims,
damages, liabilities and expenses, joint or several, including all
reasonable fees and expenses of counsel, whether or not resulting in any
liability relating to or arising from any acts taken by Consultant and the
Company, as the case may be, for the other pursuant to this Agreement;
provided, however, that neither the Company no Consultant will be
responsible for any losses, claims, damages, liabilities or expenses
relating to or arising from the other's negligence or wrongdoing. Nothing
in this Agreement will be interpreted to create an agency between the
Company and Consultant, nor will Consultant or the Company act in any
manner to bind the other vis-a-vis third parties without first having
obtained the other party's written consent.
9. Termination.
9.1 Either party may terminate this Agreement upon five (5) days prior written
notice to the other party. As of the date that termination of this
Agreement becomes effective:
9.1.1 Consultant will forthwith cease to perform its duties hereunder;
9.1.2 The Company will continue to be obligated to pay, or to complete
the payment, when due of each Success Fee; to grant warrants due or to
become due and owing to Consultant or
-21-
<PAGE>
other person or entity for it services rendered prior to termination of
this Agreement and to pay any outstanding invoices for approved expenses
and
9.1.3 Notwithstanding anything to the contrary contained herein, the previsions
of this Agreement relating to the payment of fees, the granting of
warrants, the payment of expenses, confidentiality, and each of their
enforcement, indemnification and evidence of transactions will survive
termination of this Agreement.
10. Evidence of Transactions. The Company will provide Consultant with evidence
of any potential or completed transaction relating to this Agreement
forthwith and will keep Consultant appraised of all communications relating
to such transaction.
11. Arbitration.
11.1 Any controversy or dispute arising out of or in connection with this
Agreement, or the breach thereof ("Dispute"), will be settled by binding
arbitration conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA") in effect at that time. Any
such arbitration will take place in Florida before (1) arbitrator; however,
if the parties hereto disagree as to such appointment, the arbitration will
be before three (3) arbitrators, one of whom is to be designated by the
Company, one by Consultant and the third by the two arbitrators so
designated. All of the arbitrators so designated will be from any list or
panel published by the AAA. The decision by the arbitrators will state the
reasons for the award, and will be binding and conclusive upon the parties,
their successors and assigns, all of whom will comply with such decision in
good faith as if it were a final decision of a court. Each party hereby
submits itself to the jurisdiction of the appropriate courts in the city
designated for the arbitration for the entry of judgment with respect to
the decision of the arbitrators hereunder. Notwithstanding the foregoing,
judgment upon the award may be entered in any court having jurisdiction
thereof.
11.2 The arbitrators will have the power to (i) order the production of
documents under the AAA Rules by one party for inspection and reproduction
by the other party, (ii) in addition to damages and other remedies
available at law, grant preliminary and/or permanent injunctive relief, and
(iii) order specific performance and/or other equitable relief.
12. Costs.
12.1 In the event of a Dispute leading to arbitration as set forth hereinabove,
the losing party will reimburse the prevailing party its "Costs" (as
hereinafter defined). As used herein, the term "Costs" will include
reasonable attorneys' fees and costs of arbitration, recovery of a money
award and other relief (including, but not limited to, settlement
negotiations). The arbitrators will, in the first instance, include Costs
of the arbitration in the award, and the arbitrators will adjudge any other
Costs on the basis of the Dispute as a whole.
12.2 If the arbitrators determine that: (i) neither party prevailed, each party
will bear its own Costs; or (ii) if a party only partially prevailed, such
partially prevailing party will be awarded a pro-rata portion of its Costs.
13. Notice. Any notice or other communication required or authorized to be
given by either party to the other hereunder will be deemed given by either
party to the other hereunder when received in writing, either personally or
by registered mail, telex, telegraph, cable or telefax (postage or other
-22-
<PAGE>
charges prepaid), addressed as first above written or to such other address
as a party has given notice under this paragraph.
14. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof, and merges and supercedes all prior discussions and writings with
respect hereto. No modifications or alterations of this Agreement or waiver
of any of its provisions will be effective unless made in writing, and
signed by each party hereto.
15. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Florida.
16. Cooperation. Each party hereto agrees to execute all documents and take
such actions as are appropriate or may be reasonably requested by the other
party so as to effectuate the terms and discharge the responsibilities of
such party under this Agreement.
17. Miscellaneous. This Agreement may be executed in counterparts. No
representations relating to the subject matter of this Agreement have been
made or relied upon by any party that is not set forth herein. This
Agreement may not be assigned by either party without the prior written
consent of the other party. The invalidity or unenforceability of any
particular provision of this Agreement will not affect the other
provisions, and this Agreement will be construed in all respects as if such
invalid or unenforceable provision were omitted.
WHEREFORE, the parties hereto have executed this Agreement as of the date
first above written.
SURGICAL SAFETY PRODUCTS, INC.
By: /s/ Frank Clark
- --------------------
Frank Clark,
President & CEO
TRITON CAPITOL, INC.,
Consultant
By: /s/Neil Grossman
- -----------------------
Neil Grossman
President
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001063530
<NAME> Surgical Safety Products, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1999
<PERIOD-END> Sep-30-1999
<EXCHANGE-RATE> 1
<CASH> 12,970
<SECURITIES> 0
<RECEIVABLES> 16,500
<ALLOWANCES> 0
<INVENTORY> 5,901
<CURRENT-ASSETS> 36,121
<PP&E> 201,151
<DEPRECIATION> 0
<TOTAL-ASSETS> 423,105
<CURRENT-LIABILITIES> 50,000
<BONDS> 0
0
0
<COMMON> 11,799
<OTHER-SE> 241,726
<TOTAL-LIABILITY-AND-EQUITY> 423,105
<SALES> 720
<TOTAL-REVENUES> 165,221
<CGS> 14,271
<TOTAL-COSTS> 666,868
<OTHER-EXPENSES> 642,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,755
<INCOME-PRETAX> (501,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (501,647)
<EPS-BASIC> (0.045)
<EPS-DILUTED> 0
</TABLE>
