UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarter ended June 27, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 2-85008-NY
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SSI SURGICAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer specified in its charter)
NEW YORK 11-2621408
- ------------------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5776 HOFFNER AVENUE, SUITE 200, ORLANDO, FLORIDA 32822
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(Address of principal executive offices) (Zip Code)
(407) 249-1946
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Medical Sterilization, Inc. 225 Underhill Boulevard, Syossett, New York 11791
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15 (D) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |_| No |X|
Number of shares of Common Stock, $.01 par value, outstanding as of October 22,
1999.
19,491,216 shares
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Transitional Small Business Disclosure Format (Check One) Yes |_| No |X|
<PAGE>
SSI SURGICAL SERVICES, INC.
INDEX
Page No.
--------
Part I. Financial Information
Balance Sheets as of June 27, 1999 (unaudited) and
December 31, 1998 (audited)............................... 3
Statements of Operations for the three months and the six
months ended June 27, 1999 and June 30, 1998
(unaudited)............................................... 4
Statements of Cash Flows for the six months
ended June 27, 1999 and June 30, 1998
(unaudited)............................................... 5
Notes to Financial Statements............................. 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 9 - 13
Part II. Other Information......................................... 14 - 15
Signatures................................................ 16
2
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SSI Surgical Services, Inc.
Balance Sheets
June 27,
1999 December 31
(Unaudited) 1998
---------- ------------
Assets: (In thousands)
Cash $ 10 $ 57
Accounts receivable, net 6,561 1,967
Prepaid expenses 743 317
-------- --------
Total current assets 7,314 2,341
Fixed assets, net 17,339 6,281
Other assets (principally goodwill) 5,531 129
-------- --------
Total assets $ 30,184 $ 8,751
======== ========
Liabilities and Shareholders Equity:
Accounts payable and accrued expenses $ 4,021 $ 1,612
Current maturities of long-term debt 1,103 50
Current obligations under capital leases 1,016 561
Current income taxes payable 231 --
-------- --------
Total current liabilities 6,371 2,223
Long-term debt, less current maturities -- 1,182
Obligations under capital leases 1,560 1,571
Payable to affiliates 7,924 1,550
-------- --------
Total liabilities 15,855 6,526
Convertible redeemable cummulative preferred stock -- 1,945
Convertible preferred stock - series C -- 1,946
Common stock 195 32
Additional paid-in capital 22,911 7,565
Accumulated deficit (8,777) (9,263)
-------- --------
Total shareholders' equity 14,329 280
-------- --------
Total liabilities and equity $ 30,184 $ 8,751
======== ========
See notes to financial statements
3
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SSI Surgical Services, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 27, June 30, June 27, June 30,
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Revenues $ 7,747 $ 1,885 $ 15,462 $ 3,896
Cost of revenues 5,003 1,453 9,823 2,871
-------- -------- -------- --------
Gross profit 2,744 432 5,639 1,025
Selling, general and administrative expenses 2,188 542 4,589 1,019
Interest expense, net 171 119 333 235
-------- -------- -------- --------
Income (loss) before income taxes 385 (229) 717 (229)
Income taxes 125 -- 231 --
-------- -------- -------- --------
Net income (loss) 260 (229) 486 (229)
Preferred stock dividends -- 27 -- 55
-------- -------- -------- --------
Net income (loss) available for common
shareholders $ 260 $ (256) $ 486 $ (284)
======== ======== ======== ========
Net income (loss) per common share:
Basic .01 (.08) .02 (.09)
Diluted .01 (.08) .02 (.09)
Weighted average common shares outstanding:
Basic 19,491 3,170 19,491 3,170
Diluted 19,491 3,170 19,491 3,170
</TABLE>
See notes to financial statements
4
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SSI Surgical Services, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
------------------------
June 27 June 30
1999 1998
-------- --------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 486 $ (229)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,897 321
Changes in assets and liabilities:
(Increase) decrease in receivables (252) 716
Decrease (increase) in prepaid expenses 150 (146)
(Increase) in other assets (531) (4)
Increase in accounts payable
and accrued expenses 483 303
Increase in income taxes payable 231 --
-------- --------
Net cash provided by operating activities 2,464 961
Cash flows for investing activities:
Net capital expenditures (2,099) 345
-------- --------
Net cash (used) provided by investing activities (2,099) 345
Cash flows from financing activities:
Net repayments of revolving line of credit -- (505)
Borrowings under short-term notes payable -- 10
Repayments of long-term debt (129) (852)
Net (repayments) borrowings under capital lease obligations (304) 52
Borrowings from affiliate 21 --
-------- --------
Net cash used in financing activities (412) (1,295)
-------- --------
Net increase (decrease) in cash (47) 11
Cash at beginning of period 57 32
-------- --------
Cash at end of period $ 10 $ 43
======== ========
</TABLE>
See notes to financial statements
5
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SSI SURGICAL SERVICES, INC.
Notes to Financial Statements
(In thousands)
1. Unaudited Statements:
The accompanying unaudited financial statements have been prepared by the
Company in accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements have been condensed or omitted pursuant to such
rules and regulations although management believes that the disclosures
are adequate to make the information presented not misleading. In the
opinion of management, the accompanying financial statements contain all
adjustments necessary to present a fair statement of the results for the
interim period presented. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report filed on Form 10-KSB for the year
ended December 31, 1998.
2. Earnings Per Share Calculation:
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed in a similar manner except that the
weighted average number of common shares is increased for dilutive
securities.
3. Acquisitions:
In January, 1999, the Company acquired Endoscopy Specialists, Incorporated
("ESI"), a Florida-based surgical instrument management services firm, and
the remaining 62.5% of the shares of SSI Surgical Services, Inc. ("SSI"),
a joint venture in which the Company had held a 37.5% interest. Both
businesses were acquired from TFX Equities, Incorporated ("TFX"), a wholly
owned subsidiary of Teleflex Incorporated, a diversified publicly held
company, in exchange for 13.4 million common shares of the Company and
warrants for an additional 1.5 million common shares. TFX also converted
the preferred shares of the Company it owned into common shares of the
Company. As a result of this transaction, TFX now owns a majority
(approximately 84.5%) of the outstanding common stock of the Company.
6
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SSI SURGICAL SERVICES, INC.
Notes to Financial Statements.(continued)
The acquisition was accounted for as a purchase. Net assets of the
acquired businesses amounted to $13.0 million and the acquisition was
financed through a combination of the equity transactions noted above and
the assumption of approximately $6.5 million of intercompany financing
from TFX. The preliminary excess purchase price over the fair market value
of the assets acquired, approximately $5.1 million, was recorded as
goodwill and will be amortized to expense over 15 years. A preliminary
summary of the net assets acquired follows:
(In thousands)
Current assets $ 5,073
Current liabilities (2,273)
--------
Working capital 2,800
Fixed assets 10,640
Capital leased obligations (401)
--------
Net assets acquired 13,039
Affiliate borrowings assumed 6,508
Retirement of preferred stock (3,891)
Issuance of common stock 15,509
--------
Purchase price 18,126
Excess purchase price (goodwill) $ 5,087
========
The pro forma unaudited results of operations, assuming the acquisition
had occurred in January, 1998 are:
Three Months Six Months
Ended Ended
June 30, 1998 June 30, 1998
------------- -------------
(In thousands)
Revenues $7,254 $14,181
Net Income (loss) $ 1 $ (43)
Net income (loss) per common share Nil Nil
7
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SSI SURGICAL SERVICES, INC.
Notes to Financial Statements.(continued)
4. Reclassification:
Certain items in the 1998 financial statements have been reclassified to
conform to the 1999 presentation of the financial statements.
5. Divestiture of Electron Beam Accelerator:
On April 30, 1998, the Company successfully completed divestiture of its
electron beam accelerator and related equipment for the approximate sum of
$1,250. The proceeds of the sale were immediately used by the Company to
repay the entire balance of a bank note against the beam for approximately
$402, and the residual monies were applied against the Company's financing
agreement with its commercial lender.
8
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SSI SURGICAL SERVICES, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
(In thousands)
Results of Operations
In January, 1999, the Company acquired Endoscopy Specialists, Incorporated
("ESI") and SSI Surgical Services, Inc. ("SSI"). See footnote 3.
ESI is a surgical instrument management services firm that provides endoscopic
instruments sets and other specialty products to hospitals and other medical
facilities on a per procedure basis. SSI provides a broad menu of services, both
on-site (at customer locations) and off-site (at five SSI facilities), to
hospitals and other facilities. See the Company's Annual Report filed on Form
10-KSB for the year ended December 31, 1998 for a more detailed explanation of
ESI's and SSI's business.
Revenues for the six months ended June 27, 1999 of $15,462 increased $11,566 or
297%, from revenues of $3,896 for the six months ended June 30, 1998. Revenues
for the three months ended June 27, 1999 of $7,747 increased $5,862 or 311%,
from revenues of $1,885 for the three months ended June 30, 1998.
Cost of Revenues for the six months ended June 27, 1999 of $9,823 increased
$6,952 or 242%, from cost of revenues of $2,871 in the six months ended June 30,
1998. Cost of revenues for the three months ended June 27, 1999 of $5,003
increased $3,550 or 244%, from cost of revenues of $1,453 in the three months
ended June 30, 1998. Gross profits increased from 26.3% in the six months ended
June 30, 1998 to 36.5% in the six months ended June 27, 1999 and also increased
from 22.9% in the three months ended June 30, 1998 to 35.4% in the three months
ended June 27, 1999.
The increases in revenues and cost of revenues, as well as the higher gross
profits in both comparable periods, are the result of the acquisition of ESI and
SSI in January, 1999.
Selling, general and administrative expenses of $4,589 increased $3,570 or 350%,
from $1,019 of comparable expenses in the six months ended June 30, 1998.
Selling, general and administrative expenses of $2,188 for the three months
ended June 27, 1999 increased $1,646 or 304%, from the comparable expenses of
$542 reported in the three months ended June 30, 1998. The increases in both
comparable periods reflect the increased general and administrative expenses
resulting from the acquisition of ESI and SSI. Amortization of goodwill amounted
to $216 and $108 in the six months and three months ended June 27, 1999,
respectively, related to the acquisition of ESI and SSI.
9
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SSI SURGICAL SERVICES, INC.
Management's Discussion and Analysis, etc. (continued)
Interest expense of $333 for the six months ended June 27, 1999 increased $98 or
41.7%, from interest expense of $235 reported in the six months ended June 30,
1998. Interest expense of $171 in the three months ended June 27, 1999 increased
$52 or 43.7%, from interest expense of $119 reported in the three months ended
June 30, 1998. The increase in both comparable periods reflects the increased
intercompany financing from TFX assumed in the acquisition of ESI and SSI.
Net income of $486 in the six months ended June 27, 1999 increased $715 from the
$229 net loss incurred in the six months ended June 30, 1998. Net income of $260
in the three months ended June 27, 1999 increased $489 from the net loss of $229
reported in the three months ended June 30, 1998.
Significant Company and Management Changes:
Effective January 8, 1999, the Company's headquarters and principal place of
business was moved to Orlando, Florida. Management believes this move will help
strengthen the Company's operational, administrative and management information
systems infrastructure.
Effective May 28, 1999, the Company changed its name to SSI Surgical Services,
Inc. Management believes this change will better reflect the range of services
offered by the Company.
Effective August 20, 1999, Scott Bartos, President and Chief Executive Officer
resigned from the Company to pursue other interests. Effective September 9,
1999, Todd Riddell was elected Senior Vice President and Chief Operating Officer
of the Company. Mr. Riddell was formerly a senior vice president of the Company.
10
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SSI SURGICAL SERVICES, INC.
Management's Discussion and Analysis, etc. (continued)
Liquidity and Capital Resources
Current assets increased $4,973 or 212%, from $2,341 at December 31, 1998 to
$7,314 at June 27, 1999. Current liabilities increased $4,148 or 187%, from
$2,223 at December 31, 1998 to $6,371 at June 27, 1999. Working capital
improved, from a current ratio of 1.05 at December 31, 1998 to a current ratio
of 1.15 at June 27, 1999.
The increase in current assets and current liabilities, as well as the
improvement in working capital, are a result of the acquisition of ESI and SSI
in January 1999.
Effective December 1998, the Company has a $1,300 loan from TFX, due January
2000, and a revolving loan agreement for up to $750, due in no more than two
years. Effective with the acquisition of ESI and SSI in January 1999, the
Company assumed approximately $6.5 million of intercompany financing from TFX
and Teleflex is providing the Company with intercompany divisional cash
management, whereby all cash receipts and cash disbursements are coordinated by
Teleflex and interest, at 8 percent, is either charged or credited to the
Company each month on the net intercompany balance. While there is no guarantee
or obligation by Teleflex to provide these services or financing in the future,
management believes that the Company will continue to receive support from
Teleflex for its external financing needs.
Management plans to purchase additional surgical instruments and invest in other
growth initiatives for the Company. Cash flows from operating activities will
provide support for these expenditures; however, additional external financing
may also be required. There can be no assurance, however, that the Company will
generate cash flows from operating activities or that external financing will be
available from Teleflex, or any other source, or on acceptable terms to the
Company.
Year 2000 Issue
The Company is dependent on computer systems and applications to conduct its
business. Some computer systems and applications include programming code in
which calendar year data is abbreviated to only two digits. As a result of this
design decision, some of these systems could fail to operate or fail to produce
correct results if "00" is interpreted to mean 1900, rather than 2000. These
problems are commonly referred to as the "Millennium Bug" or "Year 2000
Problem."
The Company is currently executing a risk-based plan designed to make its
computer systems, applications and facilities Year 2000 ready. The plan covers
four stages including (i) identification, (ii) assessment, (iii) remediation,
and (iv) testing.
11
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SSI SURGICAL SERVICES, INC.
Management's Discussion and Analysis, etc. (continued)
The Company has identified substantially all of the major computers, software
applications, and related equipment used in connection with its internal
operations that must be modified, upgraded, or replaced to minimize the
possibility of a material disruption to its business. The Company has completed
the assessment and is in the process of modifying, upgrading, and replacing
major systems that have been identified as adversely affected.
In addition to computers and related systems, the operation of sterilization
equipment, other plant floor equipment and office equipment, such as fax
machines, photocopiers, security systems, and other common devices may be
affected by the Year 2000 Problem. The Company is currently assessing the
potential effects of the Year 2000 Problem on this type of equipment and any
needed remediation is underway.
The Company has incurred costs to date of approximately $190 through June 27,
1999, and estimates the total cost of any required modifications, upgrades, or
replacements of its internal systems will be approximately $250. While the
estimated cost of these efforts are not expected to be material to the Company's
financial position or any year's results of operations, there can be no
assurance to this effect. The estimated cost will be monitored and will be
revised as additional information becomes available.
The Company has initiated communications with its major customers and suppliers
to determine the extent to which the Company is vulnerable to those third
parties' failure to remediate their own Year 2000 Problems. There can be no
assurance that these customers and suppliers will resolve any or all Year 2000
Problems with its systems before the occurrence of a material disruption to the
business of the Company. Any failure of these customers and suppliers to resolve
Year 2000 Problems with their systems in a timely manner could have a material
adverse effect on the Company's business, financial condition, and results of
operation.
The Company is also developing contingency plans to be implemented as part of
its efforts to identify and correct Year 2000 Problems affecting its internal
systems. Depending on the systems affected, these plans include accelerated
replacement of affected equipment or software, the use of Year 2000 compliant
backup equipment and software, increased work hours for Company personnel and/or
the use of contract personnel to accelerate remedial actions on any Year 2000
Problems.
The discussion of the Company's efforts, and management's expectations, related
to Year 2000 compliance are forward-looking statements. The Company's ability to
achieve Year 2000 compliance and the level of incremental costs associated
therewith, could be adversely impacted by, among other things, the availability
and cost of programming and testing resources, vendors' ability to modify
proprietary software, and unanticipated problems identified in the ongoing
compliance review.
12
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SSI SURGICAL SERVICES, INC.
Management's Discussion and Analysis, etc. (continued)
Inflation
The Company does not anticipate that inflation will have any significant effect
on its business particularly since the United States, the only market in which
the Company currently intends to operate, is presently experiencing a relatively
low rate of inflation.
13
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SSI SURGICAL SERVICES, INC.
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On May 21, 1999 the Annual Meeting of Shareholders was held.
(b) The meeting involved the election of directors and the following
directors were elected with votes for and withheld with regard to
each director.
For Withheld
--- --------
Scott A. Bartos 17,623,439 38,710
Larry C. Buckelew 17,623,439 38,710
Steven K. Chance 17,623,439 38,710
D. Michael Deignan 17,312,139 311,300
John J. Sickler 17,623,439 38,710
Forrest R. Whittaker 17,623,439 38,710
(c) At the meeting the following actions were voted on by the
shareholders:
(1) The following votes were cast in favor of the proposed
amendment to change the name of the Company to SSI Surgical
Services, Inc.: 17,635,432. The following votes were cast in
opposition to the proposed amendment: 26,627. Abstentions
totaled: 100.
(2) The following votes were cast in favor of the proposed
amendment to change the location of the office of the Company
to the Village of Syosset, County of Nassau: 17,637,322. The
following votes were cast in opposition to the proposed
amendment: 24,627. Abstentions totaled: 200.
(3) The following votes were cast in favor of the proposed
amendment to change the post office address to which the
Secretary of State shall mail a copy of process served upon
him to Corporation Service Company, 80 State Street, Albany,
New York 12207-2543: 17,637,322. The following votes were cast
in opposition to the proposed amendment: 24,627. Abstentions
totaled: 200.
14
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(4) The following votes were cast in favor of the proposed
amendment to designate Corporation Service Company, 80 State
Street, Albany, New York 12207-2543 as the Company's
registered agent in New York: 17,637,422. The following votes
were cast in opposition to the proposed amendment: 24,627.
Abstentions totaled: 100.
(5) The following votes were cast in favor of the proposed
amendment to authorize the filing of a Restated Certificate of
Incorporation: 17,637,422. The following votes were cast in
opposition to the proposed amendment: 24,627. Abstentions
totaled: 100.
(6) The following votes were cast in favor of the proposal to
ratify and approve the Board's selection of
PricewaterhouseCoopers LLP as the Company's auditors:
17,635,422. The following votes were cast in opposition to the
proposal: 26,627. Abstentions totaled 100.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-KSB
(a) Exhibits
(3)(8) Restated Certificate of Incorporation of the Company filed
May 28, 1999
(b) Reports on Form 8-KSB
1. The Company filed a Form 8-KSB on January 11, 1999 and an
amended Form 8-KSB on June 24, 1999, both related to its
acquisition of Endoscopy Specialists, Incorporated and SSI
Surgical Services, Inc.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
This Form 10-QSB contains statements concerning certain trends and other
forward-looking information affecting or relating to the Company and its
industry that are intended to qualify for the protections afforded
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. There are many important factors that could cause actual results to
differ materially from those in the forward-looking statements. Many of these
important factors are outside SSI SURGICAL SERVICES, INC.'s control. Changes in
market conditions, including competitive factors and changes in government
regulations, could cause actual results to differ materially from the Company's
expectations. No assurance can be provided as to any future financial results.
SSI SURGICAL SERVICES, INC.
Date 11/10/99 /s/ Todd Riddell
-------------- --------------------------------
Todd Riddell
Senior Vice President and
Chief Operating Officer
/s/ Paul A. D'Alesio
--------------------------------
Paul A. D'Alesio
Treasurer and
Chief Financial Officer
16
RESTATED CERTIFICATE OF INCORPORATION
OF
MEDICAL STERILIZATION, INC.
Under Section 807 of the Business Corporation Law
We, Scott A. Bartos and Harvey Cohen, being respectively the President and
Assistant Secretary of Medical Sterilization, Inc. hereby certify:
1. The name of the corporation is MEDICAL STERILIZATION, INC.
2. The Certificate of Incorporation was filed on May 27, 1982 under the
name, General Sterilization Services, Inc. Restated Certificates of
Incorporation and Certificates of Amendment were filed on May 12, 1983, August
5, 1983, May 24, 1989, January 4, 1990, November 28, 1994, May 13, 1996, January
6, 1997, corrected on January 10, 1997 and January 11, 1999.
3. The Certificate of Incorporation is amended as follows:
(a) To change the name of the Corporation to SSI Surgical Services,
Inc.;
(b) To change the location of the office of the Corporation to the
Village of Syosset, County of Nassau;
(c) To change the post office address to which the Secretary of
State shall mail a copy of process served upon him to Corporation Service
Company, 80 State Street, Albany, New York 12207-2543.
(d) To designate Corporation Service Company, 80 State Street,
Albany, New York 12207-2543 as the Corporation's Registered Agent in New York.
1
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(e) To delete all provisions relating to the Series B Convertible
Preferred Stock and the Series C Convertible Preferred Stock in view of the
conversion of such Preferred Stock.
4. The Certificate of Incorporation is hereby restated to set forth its
entire text as amended:
"FIRST: The name of the Corporation shall be SSI SURGICAL SERVICES, INC.,
SECOND: The purposes for which it is formed are:
A. To engage in the business of providing sterilization services for
business and institutions, supplying and/or leasing materials, instruments and
equipment, experimenting with, developing, producing, buying, renting, leasing,
maintaining, servicing, repairing and generally dealing in all types of
sterilization equipment, x-ray equipment and instruments, electronic and nuclear
equipment, scientific apparatus and instruments, and all other articles and
equipment of kindred nature, and to engage in the business of acting as
scientific consultants in connection with the above.
B. To own, operate and control, to lease, manage, take over or in
any lawful manner acquire any business, factory, warehouse, plant, office, store
or establishment for the carrying on of the business of the Corporation and for
the purchase, sale, import, export, manufacture, fabrication, production or
storage of all kinds of goods, wares, merchandise of any and all descriptions.
C. To do all and everything necessary, suitable or proper for the
accomplishment of any of the purposes, the attainment of any of the objects, or
the furtherance of any of the powers hereinbefore set forth, either alone or in
connection with other corporations, firms or indi-
2
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viduals, and either as principals or agents, and to do every other act or acts,
thing or things, incidental or appurtenant to or growing out of or connected
with the aforesaid objects, purposes, or powers, or any of them.
THIRD: The office of the Corporation is to be located in the Village of
Syosset, County of Nassau.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is Thirty Three Million (33,000,000) shares to consist of
Thirty Million (30,000,000) shares of Common Stock, with a par value of $.0l per
share and Three Million (3,000,000) shares of Preferred Stock, with a par value
of $.01 per share.
The respective designations, preferences, privileges and voting powers or
restrictions or qualifications of each class of stock are as follows:
A. Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series and with such designation for each such series as
shall be stated and expressed in the resolution or resolutions providing for the
issue of each such series adopted by the Board of Directors. The Board of
Directors in any such resolution or resolutions is expressly authorized to state
and express for each such series:
(i) Voting rights, if any, including without limitation the
authority to confer multiple votes per share, voting rights as to specified
matters or issues such as mergers, consolidations or sales of assets, or voting
rights to be exercised either together with holders of common Stock as a single
class, or independently as a separate class;
3
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(ii) The rate per annum and the times at and conditions upon
which the holders of stock of such series shall be entitled to receive
dividends, and whether such dividends shall be cumulate or noncumulative and if
cumulative the terms upon which such dividends shall be cumulative;
(iii) The price or prices and the time or times at and the
manner in which the stock of such series shall be redeemable;
(iv) The rights to which the holders of the shares of stock of
such series shall be entitled upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(v) The terms, if any, upon which the shares of stock of such
series shall be convertible into, or exchangeable for, shares of stock of any
other class or classes or of any other series of the same or any other class or
classes, including the price or prices or the rate or rates of conversion or
exchange and the terms of adjustment, if any; and
(vi) Any other designations, preferences and relative,
participating, option or other special rights, and qualifications, limitations
or restrictions thereof so far as they are not inconsistent with the provisions
of the Certificate of Incorporation, as amended, and to the full extent now or
hereafter permitted by the laws of the State of New York.
(vii) All shares of the Preferred Stock of any one series
shall be identical to each other in all aspects, except that shares of any one
series issued at different times may differ as to the dates from which dividends
thereon, if cumulate, shall be cumulative.
4
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B. Common Stock.
(i) Whenever dividends upon the Preferred Stock at the time
outstanding shall have been paid in full for all past dividend periods or
declared and set apart for payment, such dividends as may be determined by the
Board of Directors may be declared by the Board of Directors and paid from time
to time to the holders of the Common Stock, subject to any restrictions stated
and expressed in any resolution or resolutions adopted by the Board of Directors
including any resolutions providing for the issuance of Preferred Stock.
(ii) In the event of any liquidation, dissolution or winding
up of the affairs of the corporation, whether voluntary or involuntary, all
assets remaining after the payment to the holders of the Preferred Stock at the
time outstanding of the full amounts to which they shall be entitled, shall be
divided and distributed among the holders of Common Stock according to their
respective shares.
(iii) Each holder of the Common Stock shall have one vote in
respect of each share of such stock held by him.
C. Pre-emptive Rights. No shareholder of this corporation shall have
a pre-emptive right because of his shareholdings to have first offered to him
any part of any of the presently authorized shares of this corporation hereafter
issued, optioned, or sold, or any part of any debenture, bonds, notes, or
securities of this corporation convertible into shares hereafter issued,
optioned, or sold by the corporation. This provision shall operate to defeat
rights in all shares and classes of shares now authorized and in all debentures,
bonds, notes, or securities of the corporation which may be convertible into
shares, and also to defeat pre-emptive rights in any and
5
<PAGE>
all shares and classes of shares and securities convertible into shares which
this corporation may be hereafter authorized to issue by any amended certificate
duly filed. Thus, any and all of the shares of this corporation presently
authorized, and any and all debentures, bonds, notes, or securities of this
corporation convertible into shares and any and all of the shares of this
corporation which may hereafter be authorized, may at any time be issued,
optioned, and contracted for sale, and/or sold and disposed of by direction of
the Board of Directors of this Corporation to such persons, and upon such terms
and conditions as may to the Board of Directors seem proper and advisable,
without first offering the said shares or securities or any part thereof to
existing shareholders.
D. Stock Rights and Options. The corporation shall have the power to
create and issue rights, warrants, or options entitling the holders thereof to
purchase from the corporation any shares of its capital stock of any class or
classes, upon such terms and conditions and at such time and prices as the Board
of Directors may provide, which terms and conditions shall be incorporated in an
instrument or instruments evidencing such rights. In the absence of fraud, the
judgment of the directors as to the adequacy of consideration for the issuance
of such rights or options and the sufficiency thereof shall be conclusive.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against it may be served, and the post office
address to which the Secretary of State shall mail a copy of such process served
upon him is Corporation Service Company, 80 State Street, Albany, New York
12207-2543.
6
<PAGE>
SIXTH: Corporation Service Company, a foreign Corporation authorized to do
business in the State of New York, having an office at 80 State Street, Albany,
New York 12207-2543, is designated as the Corporation's registered agent in New
York upon which process against this Corporation may be served."
5. The Restatement of the Certificate of Incorporation was authorized by
the vote of the Board, followed by the affirmative vote of the holders of a
majority of all outstanding shares entitled to vote thereon at the meeting of
shareholders.
IN WITNESS WHEREOF, we have signed this Restated Certificate of
Incorporation on the 21st day of May, 1999.
/s/ Scott A. Bartos,
----------------------------------------
Scott A. Bartos, President
/s/ Harvey Cohen
----------------------------------------
Harvey Cohen, Assistant Secretary
7
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF NASSAU )
On the 21st day of May, 1999, before me personally came SCOTT A. BARTOS,
and HARVEY COHEN, to me known to be the individuals described in and who
executed the foregoing Restated Certificate of Incorporation and they duly
acknowledged to me that they executed the same.
/s/ Joel B. Cutler
----------------------------------------
Notary Public
JOEL B. CUTLER
Notary Public, State of New York
No. [ILLEGIBLE]
Qualified in Nassau County
Commission Expires December 31, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SSI Surgical
Services Inc. Form 10-QSB Quarter Ended June 27, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> MAR-29-1999
<PERIOD-END> JUN-27-1999
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 6,561
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,314
<PP&E> 12,840
<DEPRECIATION> 7,501
<TOTAL-ASSETS> 30,184
<CURRENT-LIABILITIES> 6,371
<BONDS> 9,484
0
0
<COMMON> 195
<OTHER-SE> 14,134
<TOTAL-LIABILITY-AND-EQUITY> 30,184
<SALES> 0
<TOTAL-REVENUES> 7,747
<CGS> 0
<TOTAL-COSTS> 5,003
<OTHER-EXPENSES> 2,188
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 171
<INCOME-PRETAX> 385
<INCOME-TAX> 125
<INCOME-CONTINUING> 260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 260
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
