<PAGE>
As filed with the Securities and Exchange Commission on March 12, 1999
Reg. No. _______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELL ROBOTICS INTERNATIONAL, INC.
-------------------------------------
(Exact name of issuer as specified in its charter)
COLORADO 84-1153295
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2715 Broadbent Parkway, N.E.
Albuquerque, New Mexico 87107
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(Address of principal executive offices, including Zip Code)
STOCK OPTION AGREEMENTS
------------------------
(Full title of the plans)
Ronald K. Lohrding, Ph.D
2715 Broadbent Parkway, N.E.
Albuquerque, New Mexico 87107
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(Name and address of agent for service)
(505) 343-1131
----------------
(Telephone number, including area code, of agent for service)
Copy To:
Clifford L. Neuman, Esq.
Nathan L. Stone, Esq.
Neuman, Drennen & Stone, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
(303) 449-2100
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<PAGE>
CALCULATION OF REGISTRATION FEE
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Title of Proposed Maximum Proposed Maximum Amount
Securities to Amount to be Offering Price Aggregate of
be Registered Registered Per Share(1) Offering Price(1) Regis-
tration Fee
- ------------------------------------------------------------------------
Common Stock 450,000 $2.0625 $928,125 $320.05
$.004 par value shares
- ------------------------------------------------------------------------
Common Stock 35,000 $1.00 $ 35,000 $ 12.07
$.004 par value shares
- ------------------------------------------------------------------------
Common Stock 40,000 $2.00 $ 80,000 $ 27.59
$.004 par value shares
- ------------------------------------------------------------------------
Common Stock 75,000 $2.50 $187,500 $ 64.66
$.004 par value shares
- ------------------------------------------------------------------------
Total $1,230,625 $424.37
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(1) Pursuant to Rule 457(h), the maximum offering price was
calculated based upon the aggregate exercise price of the
outstanding Options.
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
CROSS REFERENCE SHEET REQUIRED BY ITEM 501(b) OF REGULATION S-K
Form S-8 Item Number and Caption Caption in Prospectus
-------------------------------- ---------------------
1. Forepart of Registration Statement Facing Page of Registration
Outside Front Cover Page of Statement and Cover Page of
Prospectus Prospectus
2. Inside Front and Outside Back Cover Inside Cover Page of
Pages of Prospectus Prospectus and Outside
Cover Page of Prospectus
3. Summary Information, Risk Factors Not Applicable
and Ratio of Earnings to Fixed
Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Plan of Distribution Cover Page of Prospectus and
Sales by Selling
Securityholder
8. Description of Securities to be Description of Securities;
Registered Stock Option Agreement; Sales
by Selling Securityholder
9. Interests of Named Experts and Interests of Named Experts
Counsel and Counsel
10. Material Changes Not Applicable
11. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference
12. Disclosure of Commission Position Indemnification
on Indemnification for Securities
Act Liabilities
<PAGE>
PROSPECTUS
CELL ROBOTICS INTERNATIONAL, INC.
600,000 Shares of Common Stock
($.004 par value)
TO BE ISSUED PURSUANT TO STOCK OPTION AGREEMENTS
This Prospectus is part of a Registration Statement which registers an
aggregate of 450,000 shares of our common stock, $.004 par value, which we
may issue to our President and CEO, Ronald K. Lohrding, Ph.D, pursuant to
common stock options issued under a stock option agreement granted to Dr.
Lohrding in the first quarter of fiscal 1998. We are also registering an
aggregate of 150,000 shares of our common stock which we may issue to a
consultant pursuant to common stock options issued under a stock option
agreement we entered into with the consultant. We have been advised by Dr.
Lohrding and the consultant that they may sell all or a portion of their
shares of common stock from time to time in the over-the-counter market at
prices obtainable at the time of sale, or in privately negotiated
transactions at prices determined by negotiation. Dr. Lohrding and the
consultant may effect such transactions by selling the shares to or through
securities broker/dealers. These broker/dealers may receive compensation
in the form of discounts, concessions or commissions from Dr. Lohrding and
the consultant, and/or the purchasers of the shares for whom these
broker/dealers may act as agent or to whom they sell as principals, or both
(which compensation as to a particular broker/dealer may be in excess of
customary commissions). Dr. Lohrding and the consultant, and the brokers
and dealers through whom sales of the shares are made, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as
amended, and any profits realized by them on the sale of the shares may be
considered to be underwriting compensation.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have
not authorized anyone else to provide you with different information.
Neither the delivery of this Prospectus nor any distribution of the shares
of common stock issuable upon exercise of the options shall, under any
circumstances, create any implication that there has been no change in our
affairs since the date of this prospectus.
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We are not making an offer of these securities in any state where the offer
is not permitted or to any person to whom it is unlawful to make such an
offer.
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The date of this Prospectus is ________________, 1999.
The securities we are offering have not been approved or disapproved by the
securities and exchange commission or any state securities commissions, nor
has the commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
<PAGE>
Available Information
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
You may read and copy any document we file at the Commission's Public
Reference Rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Rooms. You can also obtain copies of
our Commission filings by going to the Commission's website at
http://www.sec.gov. Our common stock is traded in the over-the-
counter market and quoted on the OTC Electronic Bulletin Board under the
symbol CRII.
We have filed with the Commission a registration statement on Form S-8
under the Securities Act of 1933, as amended, with respect to an aggregate
of 600,000 shares of our common stock which we may issue pursuant to
written stock option agreements. This prospectus does not contain all of
the information set forth in the registration statement, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission. For further information about us and the shares of the common
stock offered by this Prospectus, you should read and review the
registration statement and the exhibits attached to it. We may make
reference in this prospectus to other documents and our statements as to
these documents are not necessarily complete. Where a document we are
referring to is an exhibit to the registration statement or is incorporated
by reference in this prospectus, our statement in this prospectus is
qualified in all respects by the provisions of the exhibit or other
document. You may obtain a copy of the registration statement
electronically at the Commission's worldwide website at
http://www.sec.gov/edgarhp/htm.
Incorporation of Certain Documents by Reference
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later
information that we file with the Commission will automatically update and
supersede this information. We incorporate by reference the documents
listed below and any future filings made with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. This
prospectus is part of a registration statement we filed with the
Commission.
1. Pre-Effective Amendment No. 2 to our registration
statement on Form SB-2, Registration No. 333-40895;
2. Our Annual Report to Shareholders and Annual Report on
Form 10-KSB/A-1 for the year ended December 31, 1997;
3. Our definitive Proxy Statement;
4. Our Quarterly Report on Form10-QSB/A-2 for the quarter
ended March 31, 1998;
5. Our Quarterly Reports on Form 10-QSB/A-1 for the quarters
ended June 30, 1998 and September 30, 1998; and
6. Pre-Effective Amendment No. 3 to our registration
statement on Form S-3, filed with the Commission on
January 20, 1999; and
7. Post-Effective Amendment No. 3 on Form S-3 to our
registration statement on Form SB-2, Registration No. 33-
80347, and Post-Effective Amendment No. 1on Form S-3 to
our registration statement on Form SB-2, Registration No.
333-40895, filed with the Commission on February 12,
1999.
You may request a copy of these filings at no charge by a written or oral
request to Ronald K. Lohrding, Ph.D., President and CEO, Cell Robotics
International, Inc., 2715 Broadbent Parkway N.E., Albuquerque, New Mexico
87107, (505) 343-1131. In addition, you can obtain these filings
electronically at the Commission's worldwide website at http://www.sec.gov.
Forward-looking Statements
This prospectus contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 regarding our plans
and objectives for future operations. These statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by these
forward-looking statements. The forward-looking statements we make in this
prospectus are based on current expectations that involve numerous risks
and uncertainties. Our plans and objectives are based, in part, on
assumptions involving the growth and expansion of our business. These
assumptions involve judgments with respect to, among other things, future
economic, competitive and market conditions and our future business
decisions, all of which are difficult or impossible to predict accurately
and many of which are beyond our control. Although we believe that our
assumptions underlying the forward-looking statements are reasonable, any
of the assumptions could prove to be inaccurate and, as a result, we cannot
give any assurance that the forward-looking statements made in this
prospectus will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements we make in this
prospectus, particularly in view of our early stage of operations, you
should not regard the inclusion of this information as a representation by
us or any other person that our objectives and plans will be achieved.
<PAGE>
The Company
We were organized on September 28, 1988 as Intelligent Financial
Corporation. In February 1995, we acquired all of the issued and
outstanding shares of Cell Robotics, Inc., a New Mexico corporation, which
had been formed in 1988 to develop the Cell Robotics Workstation. In
May 1995, we changed our name from Intelligent Financial Corporation to
Cell Robotics International, Inc. We have developed, and are
manufacturing, marketing and selling, a number of sophisticated medical
laser products. We maintain our principal offices at 2715 Broadbent
Parkway, N.E., Suite A-E, Albuquerque, New Mexico 87107. Our telephone
number at that address is (505) 343-1131, our facsimile number is (505)
344-8112, and our internet website address is http://www.cellrobotics.com.
<PAGE>
Lohrding Stock Option Agreement
In February 1998, we sold in a public offering units consisting of one
share of Series A Convertible Preferred Stock, each convertible into four
common shares, and two common stock purchase warrants. Each unit was sold
at a price to the public of $8.25. In conjunction with this offering, we
granted a stock option to our President and CEO, Ronald K. Lohrding, Ph.D.,
pursuant to which we granted to Dr. Lohrding non-qualified stock options
exercisable to purchase, in the aggregate, 450,000 shares of our common
stock at an exercise price equal to 25% of the unit offering price, or
$2.0625 per share. 150,000 of Dr. Lohrding's options vested and became
exercisable on the closing of the public offering. The balance of Dr.
Lohrding's options will vest on December 31, 2002, subject to the following
early vesting criteria:
1. 150,000 options will vest and become exercisable thirty days
after the end of any quarter in which we report pre-tax income
of at least $50,000; and
2. 150,000 options will vest and become exercisable upon our
reporting our first fiscal year with net income of at least
$500,000.
The foregoing option is exercisable by Dr. Lohrding to purchase shares of
our common stock at an exercise price of $2.0625 per share for a period of
36 months from each respective vesting date, but in no event later than
December 31, 2002 (the "Expiration Date"). See "OPTION TERMS AND
PROVISIONS."
<PAGE>
Consultant's Stock Option Agreement
Effective September 4, 1998, we executed and entered into an Engagement
Agreement with RCG Capital Markets Group, Inc., pursuant to which RCG
agreed to provide us with various consulting services. In accordance with
the terms of the Engagement Agreement we executed and delivered to RCG a
Stock Option Agreement. Under this Stock Option Agreement we granted to
RCG non-qualified stock options exercisable until September 4, 2003 to
purchase an aggregate of 150,000 shares of our common stock at exercise
prices ranging from $1.00 per share to $2.50 per share. Specifically,
pursuant to the terms of the Stock Option Agreement, options exercisable to
purchase 35,000 shares of our common stock at a price of $1.00 per share
vested and became exercisable on September 4, 1998, the effective date of
the Engagement Agreement. Options exercisable to acquire an additional
15,000 shares of our common stock vested and became exercisable at an
exercise price of $2.00 per share on March 5, 1999, and options exercisable
to acquire up to 25,000 additional shares of our common stock vested and
became exercisable at an exercise price of $2.00 per share on January 28,
1999. The balance of the options will vest and become exercisable at the
exercise price contained in, and in accordance with, the following
schedule:
a. Options exercisable to purchase 25,000 shares of common
stock at a price of $2.50 per share will vest and become
exercisable on the date upon which the closing bid price
of our common stock has been at least $4.80 for ten
consecutive trading days.
b. Options exercisable to purchase 25,000 shares of common
stock at a price of $2.50 per share will vest and become
exercisable on the date upon which our common stock
commences trading on either the NASDAQ Small-Cap Market
or National Market System or commences trading on the
American Stock Exchange.
c. Options exercisable to purchase 25,000 shares of common
stock at a price of $2.50 per share will vest and become
exercisable on the date upon which the closing bid price
of the Company's Common Stock has been at least $6.00 for
ten consecutive trading days.
RCG was a consultant to the Company on the date of grant and the options
were issued in consideration of their providing services to us.
<PAGE>
Option Terms and Provisions
Option Terms and Provisions
All of the options were issued pursuant to the stock option
agreements and were not issued pursuant to any program or plan being
administered by our Board of Directors or any committee of our Board of
Directors organized for that purpose. The specific terms of the options
are as follows:
(a) Option Exercise Prices.
----------------------
The exercise price per share of the options granted to Dr.
Lohrding is $2.0625 per share, the exercise price per share of
the options granted to RCG are as follows:
1. Options exercisable to purchase 35,000 shares of common
stock are exercisable at a price of $1.00 per share;
2. Options exercisable to purchase 40,000 shares of common
stock are exercisable at a price of $2.00 per share;
3. Options exercisable to purchase 75,000 shares of common
stock are exercisable at a price of $2.50 per share;
Each respective exercise price was established by our Board of Directors
and was a price that was equal to or greater than the closing bid price of
the our common stock as quoted on the Bulletin Board on the date of grant.
(b) Term of Options.
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The Options granted to Dr. Lohrding expire 36 months from each
respective vesting date, but in any event not later than
December 31, 2002. The options granted to RCG expire on
September 4, 2003. We may extend the exercise period of any
or all of the options by giving notice of such extension.
(c) Manner of Exercise.
------------------
The holder of the options may exercise all or any whole number
of such options during their respective exercise period in the
manner stated herein. The exercise price shall be payable in
lawful money of the United States of America. The
optionholder shall surrender to us through our option agent
his/her option certificate, together with the purchase form
attached thereto, executed by the optionholder or the
optionholder's duly authorized attorney, payment of the
purchase price in cash or by certified or bank cashier's check
or bank draft payable to the order of Cell Robotics
International, Inc.. If upon exercise of any options, the
number of options exercised is less than the total number of
options evidenced by the surrendered option certificate, we
will issue or cause to be issued to the tendering optionholder
a new option certificate evidencing the number of options not
so exercised.
(d) Transferability.
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The options are not transferable by the holder thereof.
(e) Redemption.
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We do not have any redemption rights in connection with the
options.
(f) Adjustments.
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In the event our common stock issuable upon exercise of the
options is changed into the same or different number of shares
of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise, or in the event
we, at any time, issue common stock by way of dividend or
other distribution on any of our stock, or subdivide or
combine the outstanding shares of our common stock, then in
each such event a holder of any of the options shall have the
right thereafter to exercise the option and receive the kind
and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification
or other change by holders of the number of shares of common
stock into which such option might have been exercised
immediately prior to such reorganization, reclassification or
change. In the case of any such reorganization,
reclassification or change, the exercise price shall also be
appropriately adjusted so as to maintain the aggregate
exercise price. Further, in case we consolidate or merge with
or into another corporation in which consolidation or merger
we are not the continuing corporation, or in case of any sale
or conveyance to another corporation of our property as an
entirety, or substantially as an entirety, we shall cause
effective provision to be made so that the optionholder shall
have the right thereafter, by exercising the options, to
purchase the kind and amount of shares of stock and other
securities and property receivable upon such consolidation,
merger, sale or conveyance by holders of the number of shares
of common stock into which such option might have been
exercised immediately prior to such consolidation, merger,
sale or conveyance, which provision shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in the options.
The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and changes of
shares of our common stock and to successive consolidations,
mergers, sales or conveyances.
Notwithstanding the foregoing, no adjustment of the exercise
price shall be made as a result of or in connection with (1)
the issuance of our common stock pursuant to options, warrants
and share purchase agreements now in effect or hereafter
outstanding or created, (2) the establishment by us of option
plans, the modification, renewal or extension of any plan now
in effect or hereafter created, or the issuance of common
stock upon exercise of any options pursuant to such plans, (3)
the issuance of common stock in connection with an
acquisition, consolidation or merger of any type in which we
are the continuing corporation, or (4) the issuance of common
stock in consideration of such cash, property or service as
may be approved by our Board of Directors and permitted by
applicable law.
(g) Adjustment to Purchase Price.
----------------------------
We may, in our sole discretion, lower the purchase price at
any time, or from time-to-time. When any adjustment is made
in the purchase price, we will cause a copy of such statement
to be mailed to the optionholder, as of a date within ten (10)
days after the date when the purchase price has been adjusted.
(h) Reservation of Common Stock.
---------------------------
We agree that the number of shares of common stock sufficient
to provide for the exercise of the options upon the basis
herein set forth will at all times during the term of the
options be reserved for the exercise thereof.
(i) Issuance of Common Stock Upon Exercise.
--------------------------------------
We, at our expense, will cause to be issued, within thirty
(30) days after exercise of the options, a certificate or
certificates in the name requested by the optionholder of the
number of shares of our common stock to which the
optionholders are entitled upon such exercise. All shares of
common stock or other securities delivered upon the exercise
of the options shall be validly issued, fully paid and non-
assessable.
(j) No Right As Stockholder.
-----------------------
The optionholders are not, by virtue of ownership of the
options, entitled to any rights whatsoever of our
stockholders.
Federal Income Tax Effects
Optionholders do not recognize taxable income on the date of the
grant of the options, which is a non-statutory option, but recognize
ordinary income generally on the date of exercise in the amount of the
difference between the option exercise price and the fair market value of
the common stock on the date of exercise. However, if the holder is
subject to the restrictions on resale of common stock under Section 16 of
the Securities Exchange Act of 1934, such person generally recognizes
ordinary income at the end of the six-month period following the date of
exercise in the amount of the difference between the option exercise price
and the fair market value of the common stock at the end of the six-month
period. Nevertheless, such holder may elect within thirty (30) days after
the date of exercise to recognize ordinary income as of the date of
exercise. The amount of ordinary income recognized by the optionholder is
deductible by us in the year that income is recognized.
Restrictions Under Securities Laws
The sale of any shares of common stock acquired upon the exercise
of the options must be made in compliance with federal and state securities
laws. Our officers, directors and ten percent (10%) or greater
stockholders, as well as certain other persons or parties who may be deemed
to be our "affiliates" under the Federal Securities Laws, should be aware
that resales by affiliates can only be made pursuant to an effective
Registration Statement, Rule 144 or any other applicable exemption.
Officers, directors and ten percent (10%) and greater stockholders are also
subject to the "short swing" profit rule of Section 16(b) of the Exchange
Act of 1934. Section 16(b) of the Exchange Act generally provides that any
profit realized by an officer, director or beneficial owner of ten percent
(10%) or more of our equity securities from any purchase and sale, or any
sale and purchase of any of our equity securities within any period less
than six (6) months shall inure to and be recoverable by us. Section 16(b)
exempts all option exercises from being treated as purchases and, instead,
treats an option grant as a purchase of the underlying security, which
grant/purchase may be matched with any sale of the underlying security
within six (6) months of the date of grant.
<PAGE>
Description of Securities
We are authorized to issue up to 12,500,000 shares of $.004 par value
common stock and 2,500,000 shares of $.04 par value preferred stock. As of
March 4, 1999, 7,784,593 shares of common stock and no shares of preferred
stock were issued and outstanding.
Common Stock
Each holder of our common stock is entitled to one vote for each share held
of record. There is no right to cumulative voting of shares for the
election of directors. The shares of common stock are not entitled to
preemptive rights and are not subject to redemption or assessment. Each
share of common stock is entitled to share ratably in distributions to
shareholders and to receive ratably any dividends we may declare out of
funds legally available for the payment of dividends. Upon our
liquidation, dissolution or winding up, the holders of common stock are
entitled to receive, pro-rata, that portion of our assets which are legally
available for distribution to shareholders. The issued and outstanding
shares of common stock are validly issued, fully paid and non-assessable.
Preferred Stock
We are authorized to issue up to 2,500,000 shares of $.04 par value
preferred stock. Our preferred stock can be issued in one or more series
as we may determine from time-to-time. In establishing a series, we must
give it a distinctive designation so as to distinguish it from the shares
of all other series and classes, we must fix the number of shares in such
series, and the preferences, rights and restrictions thereof. All shares
of any one series must be alike in every particular. We have the
authority, without shareholder approval, to fix the rights, preferences,
privileges and restrictions of any series of preferred stock including,
without limitation:
1. the rate of distribution;
2. the price at and the terms and conditions on which shares
shall be redeemed;
3. the amount payable upon shares for distributions of any kind;
4. sinking fund provisions for the redemption of shares;
5. the terms and conditions on which shares may be converted if
the shares of any series are issued with the privilege of
conversion; and
6. voting rights except as limited by law.
Although we currently do not have any plans to issue shares of preferred
stock, or to designate any other series of preferred stock, there can be no
assurance that we will not do so in the future. As a result, we could
authorize the issuance of a series of preferred stock which would grant to
holders preferred rights to our assets upon liquidation, the right to
receive dividend coupons before dividends would be declared to common
stockholders, and the right to the redemption of the shares, together with
a premium, prior to the redemption to common stock. Holders of our common
stock have no redemption rights. In addition, we could issue large blocks
of voting stock to fend off unwanted tender offers or hostile takeovers
without further stockholder approval.
Placement Agent's Warrants
In connection with a private placement we undertook in 1995, we issued to
Paulson Investment Company, Inc., warrants to purchase, in the aggregate,
11.5 private units at a price of $25,000 per unit, each unit consisting of
20,000 shares of common stock and 10,000 Class A Warrants. Placement
Agent's Warrants exercisable to acquire 6.8 private units are exercisable
through August 30, 2000, and Placement Agent's Warrants exercisable to
acquire the remaining 4.7 private units are exercisable until September 18,
2000.
Representative's Warrant
In connection with a public offering of units of our securities that we
completed during the first quarter of 1998 we issued to Paulson a warrant
to purchase 40,000 public units at a price of $9.90 per unit. Each public
unit originally consisted of one share of our Series A Convertible
Preferred Stock and two Public Warrants. However, effective February 2,
1999, we exercised our right to automatically convert all outstanding
shares of our preferred stock into shares of common stock at a conversion
ratio of four shares of common stock for each share of preferred stock. As
a result, each public unit now consists of four shares of common stock and
two Public Warrants. The Representative's Warrant is exercisable until
February 2, 2003.
Class A Warrants
We have authorized the issuance of up to 115,000 Class A Warrants. Each
Class A Warrant is exercisable to purchase one share of our common stock at
a price of $1.75. The exercise price of the Class A Warrants is subject to
adjustment upon certain events such as stock splits, stock dividends and
similar transactions. We can redeem the Class A Warrants in accordance with
the provisions described below. The exercise period for the Class A
Warrants expires at 5:00 p.m., Mountain time, on December 31, 2000. We may
at any time and from time to time extend the term of the Class A Warrants
or reduce their exercise price, provided written notice of any extension or
reduction is given to the registered holders of the Class A Warrants prior
to the expiration date then in effect. We do not presently contemplate any
extension of the Class A Warrant term or reduction in the Class A Warrant
exercise price.
Subject to compliance with applicable securities laws, Class A Warrant
certificates may be transferred or exchanged for new certificates of
different denominations at the offices of the Warrant Agent described
below. The holders of Class A Warrants, as such, are not entitled to vote,
to receive dividends or to exercise any of the rights of shareholders for
any purpose.
Exercise. The Class A Warrants may be exercised during their term only
upon surrender of the Class A Warrant certificate at our offices with the
form of "Election to Purchase" on the reverse side of the Class A Warrant
certificate completed and signed, accompanied by payment of the full
exercise price for the number of Class A Warrants being exercised. Holders
of the Class A Warrants will receive one share of common stock for each
Class A Warrant exercised, subject to any adjustment required by the Class
A Warrant Agreement. For a holder to exercise his or her Class A Warrants,
there must be a current registration statement in effect with the
Commission and various state securities authorities registering the shares
of common stock underlying the Class A Warrants or, in our sole
determination, and the determination of our counsel, there must be a valid
exemption from these requirements. We have undertaken, and intend, to
maintain a current registration statement which will permit the exercise of
the Class A Warrants during their term. Maintaining a current effective
registration statement could result in substantial expense and there is no
assurance that we will be able to maintain a current registration statement
covering the shares issuable upon exercise of the Class A Warrants. Holders
of Class A Warrants will have the right to exercise the Class A Warrants
for the purchase of shares of common stock only if a registration statement
is then in effect and only if the shares are qualified for sale under
securities laws of the state in which the exercising warrant holder resides
or if we, in our and our counsel's sole discretion, are able to obtain
valid exemptions from these requirements. Although we believe that we will
be able to register or qualify the shares of common stock underlying the
Class A Warrants for sales in those states where the securities are
offered, there can be no guarantee that any registration or qualification,
or an exemption therefrom, can be accomplished without undue hardship or
expense. The Class A Warrants may be deprived of any value if a
registration statement covering the shares issuable upon exercise of the
Class A Warrants, or an exemption from these requirements, cannot be filed
or obtained without undue expense or hardship or if the underlying shares
are not registered or exempted from registration in the states in which the
holder of a Class A Warrant resides. In the latter event, the only option
available to a holder of a Class A Warrant may be to attempt to sell his or
her Class A Warrants into the market, if a market then exists and only then
in compliance with applicable securities laws and restrictions on transfer.
Redemption. We have the right, at our discretion, to call all or less than
all of the Class A Warrants for redemption on 30 days' prior written notice
at a redemption price of $.25 per Class A Warrant if:
1. a registration statement registering the sale of the shares of
common stock issuable upon the exercise of the Class A
Warrants under the Securities Act of 1933, as amended, is in
effect; and
2. there exists a public trading market on the Nasdaq SmallCap
Market or the OTC Electronic Bulletin Board for our common
stock; and
3. the closing public trading price of our common stock has
equaled or exceeded $3.50 per share for at least ten
consecutive trading days immediately preceding the date of our
Class A Warrant redemption notice..
If we elect to exercise our redemption right, holders of Class A Warrants
may either exercise their Class A Warrants, sell the Class A Warrants in
the market until the date next preceding the date fixed for redemption, or
tender their Class A Warrants to us for redemption. Within five business
days after the end of the 30 day period, we will mail a redemption check to
each registered holder of a Class A Warrant who holds unexercised Class A
Warrants as of the end of the 30 day period, whether or not the holder has
surrendered the Class A Warrant certificates for redemption. The Class A
Warrants may not be exercised after the end of the 30 day notice period.
Public Warrants
We have authorized the issuance of up to 1,157,576 Public Warrants. Each
Public Warrant is exercisable to purchase one share of our common stock at
a price of $2.40. The exercise price of the Public Warrants is subject to
adjustment upon certain events such as stock splits, stock dividends and
similar transactions. We can redeem the Public Warrants in accordance with
the provisions described below. The exercise period for the Public Warrants
expires at 5:00 p.m., Mountain time, on February 2, 2003. We may at any
time and from time to time extend the term of the Public Warrants or reduce
their exercise price, provided written notice of any extension or reduction
is given to the registered holders of the Public Warrants prior to the
expiration date then in effect. We do not presently contemplate any
extension of the Public Warrant term or reduction in the Public Warrant
exercise price.
Subject to compliance with applicable securities laws, Public Warrant
certificates may be transferred or exchanged for new certificates of
different denominations at the offices of the Warrant Agent described
below. The holders of Public Warrants, as such, are not entitled to vote,
to receive dividends or to exercise any of the rights of shareholders for
any purpose.
Exercise. The Public Warrants may be exercised during their term only upon
surrender of the Public Warrant certificate at our offices with the form of
"Election to Purchase" on the reverse side of the Public Warrant
certificate completed and signed, accompanied by payment of the full
exercise price for the number of Public Warrants being exercised. Holders
of the Public Warrants will receive one share of common stock for each
Public Warrant exercised, subject to any adjustment required by the Public
Warrant Agreement. For a holder to exercise his or her Public Warrants,
there must be a current registration statement in effect with the
Commission and various state securities authorities registering the shares
of common stock underlying the Public Warrants or, in our sole
determination, and the determination of our counsel, there must be a valid
exemption from these requirements. We have undertaken, and intend, to
maintain a current registration statement which will permit the exercise of
the Public Warrants during their term. Maintaining a current effective
registration statement could result in substantial expense and there is no
assurance that we will be able to maintain a current registration statement
covering the shares issuable upon exercise of the Public Warrants. Holders
of Public Warrants will have the right to exercise the Public Warrants for
the purchase of shares of common stock only if a registration statement is
then in effect and only if the shares are qualified for sale under
securities laws of the state in which the exercising warrant holder resides
or if we, in our and our counsel's sole discretion, are able to obtain
valid exemptions from these requirements. Although we believe that we will
be able to register or qualify the shares of common stock underlying the
Public Warrants for sales in those states where the securities are offered,
there can be no guarantee that any registration or qualification, or an
exemption therefrom, can be accomplished without undue hardship or expense.
The Public Warrants may be deprived of any value if a registration
statement covering the shares issuable upon exercise of the Public
Warrants, or an exemption from these requirements, cannot be filed or
obtained without undue expense or hardship or if the underlying shares are
not registered or exempted from registration in the states in which the
holder of a Public Warrant resides. In the latter event, the only option
available to a holder of a Public Warrant may be to attempt to sell his or
her Public Warrants into the market, if a market then exists and only then
in compliance with applicable securities laws and restrictions on transfer.
Redemption. We have the right, at our discretion, to call all or less than
all of the Public Warrants for redemption on 30 days' prior written notice
at a redemption price of $.25 per Public Warrant if:
1. the closing bid price of our common stock exceeds $4.80 per
share for at least ten consecutive trading days;
2. we have in effect a current registration statement covering
the common stock issuable upon exercise of the Public
Warrants; and
3. the expiration of the 30 day notice period is within the term
of the Public Warrant.
If we elect to exercise our redemption right, holders of Public Warrants
may either exercise their Public Warrants, sell the Public Warrants in the
market until the date next preceding the date fixed for redemption, or
tender their Public Warrants to us for redemption. Within five business
days after the end of the 30 day period, we will mail a redemption check to
each registered holder of a Public Warrant who holds unexercised Public
Warrants as of the end of the 30 day period, whether or not the holder has
surrendered the Public Warrant certificates for redemption. The Public
Warrants may not be exercised after the end of the 30 day notice period.
Warrant Solicitation Fees
We have no agreement nor any arrangement whereby any fees or other
compensation will be paid to any person or entity upon exercise of the
Placement Agent's Warrants or Representative's Warrant, or upon exercise of
any or all of the Class A Warrants and/or Pubic Warrants.
Transfer Agent, Warrant Agent and Registrar
The transfer agent, registrar and Warrant Agent for our common stock,
Class A Warrants and Public Warrants is Corporate Stock Transfer, Inc.,
Denver, Colorado.
Legal Matters
Legal matters in connection with the securities being offered hereby will
be passed upon for us by Neuman, Drennen & Stone, LLC, Temple-Bowron House,
1507 Pine Street, Boulder, Colorado 80302.
Experts
Our consolidated financial statements as of December 31, 1997 and 1996 and
for the years then ended, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, Independent Certified Public
Accountants, incorporated by reference herein and upon the authority of
said firm as experts in accounting and auditing.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
- ------ ---------------------------------------
The following documents filed by the Company with the Securities
and Exchange Commission pursuant to the Exchange Act are incorporated
herein by reference and made a part hereof:
1. Pre-Effective Amendment No. 2 to our registration statement on
Form SB-2, Registration No. 333-40895;
2. Our Annual Report to Shareholders and Annual Report on Form
10-KSB/A-1 for the year ended December 31, 1997;
3. Our definitive Proxy Statement;
4. Our Quarterly Report on Form 10-QSB/A-2 for the quarter ended
March 31, 1998;
5. Our Quarterly Reports on Form 10-QSB/A-1 for the quarters
ended June 30, 1998 and September 30, 1998; and
6. Pre-Effective Amendment No. 3 to our registration statement on
Form S-3, filed with the Commission on January 20, 1999; and
7. Post-Effective Amendment No. 3 on Form S-3 to our registration
statement on Form SB-2, Registration No. 33-80347, and Post-
Effective Amendment No. 1on Form S-3 to our registration
statement on Form SB-2, Registration No. 333-40895, filed with
the Commission on February 12, 1999.
All reports and documents filed by us pursuant to Section 13, 14 or 15(d)
of the Exchange Act, after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which de-registers all securities then
remaining unsold, shall be deemed to be incorporated by reference herein
and to be a part hereof from the respective date of filing of such
documents. Any statement incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this prospectus to the extent
that a statement contained herein or in any other subsequently filed
document, which also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
We hereby undertake to provide without charge to each person,
including any beneficial owner, to whom a copy of the prospectus has been
delivered, on the written or oral request of any such person, a copy of any
or all of the documents referred to above which have been or may be
incorporated by reference in the prospectus, other than exhibits to such
documents. Written requests for such copies should be directed to Ronald
K. Lohrding, Ph.D., President and CEO, Cell Robotics International, Inc.,
2715 Broadbent Parkway N.E., Albuquerque, New Mexico 87107, (505) 343-1131.
In addition, you can obtain these filings electronically at the
Commission's worldwide website at http://www.sec.gov.
Item 4. Description of Securities.
- ------ -------------------------
The class of securities to be offered hereby is registered under
Section 12 of the Securities Exchange Act of 1934, as amended. A
description of the Registrant's securities is set forth in the Prospectus
incorporated as a part of this Registration Statement.
Item 5. Interests of Named Experts and Counsel.
- ------ --------------------------------------
The legality of the Common Stock offered hereby will be passed on
for the Company by the law firm of Neuman, Drennen & Stone, Temple-Bowron
House, 1507 Pine Street, Boulder, Colorado 80302. Clifford L. Neuman, a
partner in the firm of Neuman, Drennen & Stone, LLC, is the beneficial
owner of 3,100 shares of our common stock.
Item 6. Indemnification of Directors and Officers.
- ------ -----------------------------------------
The only statute, charter provision, bylaw, contract, or other
arrangements under which any controlling person, director or officers of
the Registrant is insured or indemnified in any manner against any
liability which he may incur in his capacity as such, are as follows:
(a) Sections 7-109-101 through 7-109-110 of the Colorado Corporation
Code provide as follows:
7-109-101. Definitions. As used in this article:
(1) "Corporation" includes any domestic or foreign entity that
is a predecessor of a corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a
corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, fiduciary, or
agent of another domestic or foreign corporation or other person
or of an employee benefit plan. A director is considered to be
serving an employee benefit plan at the corporation's request if
his or her duties to the corporation also impose duties on, or
otherwise involve services by, the director to the plan or to
participants in or beneficiaries of the plan. "Director"
includes, unless the context requires otherwise, the estate or
personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine,
including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in a corporation and, when used
with respect to a person other than a director as contemplated in
section 7-109-107, the office in a corporation held by the
officer or the employment, fiduciary, or agency relationship
undertaken by the employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include service for
any other domestic or foreign corporation or other person or
employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to a proceeding
because the person is or was a director against liability
incurred in the proceeding if:
(a) The person conducted himself or herself in good
faith; and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity
with the corporation, that his or her conduct was in the
corporation's best interests; and
(II) In all other cases, that his or her
conduct was at least not opposed to the corporation's
best interests; and
(c) In the case of any criminal proceeding, the person had
no reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit
plan for a purpose the director reasonably believed to be in the
interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirement of subparagraph (II) of
paragraph (b) of subsection (1) of this section. A director's
conduct with respect to an employee benefit plan for a purpose
that the director did not reasonably believe to be in the
interests of the participants in or beneficiaries of the plan
shall be deemed not to satisfy the requirements of paragraph (a)
of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did
not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this
section:
(a) In connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that
the director derived an improper personal benefit, whether or not
involving action in an official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived
an improper personal benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
7-109-103. Mandatory indemnification of directors. Unless
limited by its articles of incorporation, a corporation shall
indemnify a person who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the person
was a party because the person is or was a director, against
reasonable expenses incurred by him or her in connection with the
proceeding.
7-109-104. Advance of expenses to directors.
(1) A corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if:
(a) The director furnishes to the corporation a written
affirmation of the director's good faith belief that he or she
has met the standard of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written
undertaking, executed personally or on the director's behalf, to
repay the advance if it is ultimately determined that he or she
did not meet the standard of conduct; and
(c) A determination is made that the facts then known to
those making the determination would not preclude indemnification
under this article.
(2) The undertaking required by paragraph (b) of subsection (1)
of this section shall be an unlimited general obligation of the
director but need not be secured and may be accepted without
reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in section 7-109-
106.
7-109-105. Court-ordered indemnification of directors.
(1) Unless otherwise provided in the articles of incorporation,
a director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to
another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court
considers necessary, may order indemnification in the following
manner:
(a) If it determines that the director is entitled to
mandatory indemnification under section 7-109-103, the court
shall order indemnification, in which case the court shall also
order the corporation to pay the director's reasonable expenses
incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and
reasonable entitled to indemnification in view of all the
relevant circumstances, whether or not the director met the
standard of conduct set forth in section 7-109-102 (1) or was
adjudged liable in the circumstances described in section 7-109-
102 (4), the court may order such indemnification as the court
deems proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the
circumstances described in section 7-109-102 (4) is limited to
reasonable expenses incurred in connection with the proceeding
and reasonable expenses incurred to obtain court-ordered
indemnification.
7-109-106. Determination and authorization of indemnification of
directors.
(1) A corporation may not indemnify a director under section 7-
109-102 unless authorized in the specific case after a
determination has been made that indemnification of the director
is permissible in the circumstances because the director has met
the standard of conduct set forth in section 7-109-102. A
corporation shall not advance expenses to a director under
section 7-109-104 unless authorized in the specific case after
the written affirmation and undertaking required by section 7-
109-104 (1) (a) and (1) (b) are received and the determination
required by section 7-109-104 (1) (c) has been made.
(2) The determinations required by subsection (1) of this
section shall be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and only
those directors not parties to the proceeding shall be counted in
satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of
a committee of the board of directors designated by the board of
directors, which committee shall consist of two or more directors
not parties to the proceeding; except that directors who are
parties to the proceeding may participate in the designation of
directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph
(a) of subsection (2) of this section, and a committee cannot be
established under paragraph (b) of subsection (2) of this
section, or, even if a quorum is obtained or a committee is
designated, if a majority of the directors constituting such
quorum or such committee so directs, the determination required
to be made by subsection (1) of this section shall be made:
(a) By independent legal counsel selected by a vote of the
board of directors or the committee in the manner specified in
paragraph (a) or (b) of subsection (2) of this section or, if a
quorum of the full board cannot be obtained and a committee
cannot be established, by independent legal counsel selected by a
majority vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses
shall be made in the same manner as the determination that
indemnification or advance of expenses is permissible; except
that, if the determination that indemnification or advance of
expenses is permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses shall be
made by the body that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries,
and agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification
under section 7-109-103, and is entitled to apply for court-
ordered indemnification under section 7-109-105, in each case to
the same extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the
same extent as to a director; and
(c) A corporation may also indemnify and advance expenses
to an officer, employee, fiduciary, or agent who is not a
director to a greater extent, if not inconsistent with public
policy, and if provided for by its bylaws, general or specific
action of its board of directors or shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain
insurance on behalf of a person who is or was a director,
officer, employee, fiduciary, or agent of the corporation, or
who, while a director, officer, employee, fiduciary, or agent of
the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another domestic or foreign corporation or
other person or of an employee benefit plan, against liability
asserted against or incurred by the person in that capacity or
arising from his or her status as a director, officer, employee,
fiduciary, or agent, whether or not the corporation would have
power to indemnify the person against the same liability under
section 7-109-102, 7-109-103, or 7-109-107. Any such insurance
may be procured from any insurance company designated by the
board of directors, whether such insurance company is formed
under the laws of this state or any other jurisdiction of the
United States or elsewhere, including any insurance company in
which the corporation has an equity or any other interest through
stock ownership or otherwise.
7-109-109. Limitation of indemnification of directors.
(1) A provision treating a corporation's indemnification of, or
advance of expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract, except an
insurance policy, or otherwise, is valid only to the extent the
provision is not inconsistent with sections 7-109-101 to 7-109-
108. If the article of incorporation limit indemnification or
advance of expenses, indemnification and advance of expenses are
valid only to the extent not inconsistent with the articles of
incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a
time when he or she has not been made a named defendant or
respondent in the proceeding.
7-109-110. Notice to shareholder of indemnification of director.
If a corporation indemnifies or advances expenses to a director
under this article in connection with a proceeding by or in the
right of the corporation, the corporation shall give written
notice of the indemnification or advance to the shareholders with
or before the notice of the next shareholders' meeting. If the
next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given
to the shareholders at or before the time the first shareholder
signs a writing consenting to such action.
* * *
Item 7. Exemption from Registration Claimed.
- ------ -----------------------------------
At the present time, options to purchase 600,000 shares of our common
stock have been granted, and no options to purchase have heretofore been
exercised. Inasmuch as the optionholders are knowledgeable, sophisticated
and/or have access to comprehensive information relevant to the Registrant,
such transactions are undertaken in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933. As a
condition precedent to such grant, the optionholders are required to
express an investment intent and consent to the imprinting of a restrictive
legend on the option certificate, and, until this Registration Statement is
declared effective, each stock certificate to be received from the
Registrant, upon exercise of the option.
<PAGE>
Item 8. Exhibits.
- ------ --------
Exhibit Description
------- -----------
2.1 Form of Lohrding Stock Option Agreement
2.2 Form of RCG Stock Option Agreement
5.0 Opinion of Neuman, Drennen & Stone, LLC relating to the
issuance of shares of Common Stock pursuant to the
Common Stock Options granted to certain key employees
of the Registrant.
23.1 Consent of Neuman, Drennen & Stone, LLC included in the
opinion filed as Exhibit 5.0 hereto
23.2 Consent of KPMG LLP, Certified Public Accountants
Item 9. Undertakings.
- ------ ------------
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offerings or sales are being
made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement;
(b) That, for the purposes of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. The undersigned Registrant hereby undertakes to deliver, or cause to
be delivered with the Prospectus, to each person to whom the Prospectus is
sent or given, the latest annual report to Securityholders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X are not set forth in the
Prospectus, to deliver, or cause to be delivered to each person to whom the
Prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the Prospectus to provide such
interim financial information.
4. Insofar as indemnification for liabilities arising under the Act may
be permitted to Directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a Director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Albuquerque, State of
New Mexico on the 15 day of March, 1999.
CELL ROBOTICS INTERNATIONAL, INC.
By: /s/ Ronald K. Lohrding
---------------------------------
Ronald K. Lohrding, President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities with Cell Robotics International, Inc. and on the
dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Ronald K. Lohrding, Ph.D. Chairman of the Board 3/15/99
- ----------------------------- Executive Officer ----------
Ronald K. Lohrding, Ph.D.
/s/ Jean M. Scharf Chief Financial Officer, 3/15/99
- ----------------------------- Chief Accounting Officer ----------
Jean M. Scharf and Controller
/s/ Craig T. Rogers Director 3/15/99
- ----------------------------- ----------
Craig T. Rogers
/s/ Mark Waller Director
- ----------------------------- ----------
Mark Waller
/s/ Raymond Radosevich Director
- ----------------------------- ----------
Raymond Radosevich
/s/ Debra Bryant Director
- ---------------------------- ----------
Debra Bryant
<PAGE>
The securities in the form of Non-Qualified Stock Options of Cell
Robotics International, Inc. have not been registered under the Securities Act
of 1933, as amended, or under any state securities laws. Such securities
cannot be sold, transferred, assigned or otherwise disposed of except in
accordance with the Securities Act of 1933, as amended, and applicable state
securities laws.
CELL ROBOTICS INTERNATIONAL, INC.
(a Colorado corporation)
Option No. NQ-01 450,000 Common Stock Options
CERTIFICATE FOR COMMON STOCK OPTIONS
This certifies that, for value received, Ronald K. Lohrding, or
registered assigns ("Optionholder"), is the registered owner of the above
indicated number of Options entitling the Optionholder, subject to the
provisions of paragraph 1 below, to subscribe for, purchase and receive one
(l) fully paid and non-assessable share of Common Stock, $.004 par value, (the
"Common Stock") of Cell Robotics International, Inc., a Colorado corporation
(the "Company"), upon presentation and surrender of this Option and upon
payment of the Exercise Price as hereinbelow defined, for the shares of Common
Stock of the Company, but only subject to the conditions set forth herein.
The Exercise Price, the number of shares purchasable upon exercise of each
Option, the number of Options outstanding and the Expiration Date are subject
to adjustments upon the occurrence of certain events. The Optionholder may
exercise all or any number of the Options represented hereby. Upon exercise
of this Option, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented
hereby shall not be exercised at or before the Expiration Date, this Option
shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
Vesting.
The Options represented by this Certificate are subject to vesting.
Options exercisable to purchase 150,000 shares of Common Stock shall vest and
become exercisable on the closing of a public offering by the Company of
400,000 units exercisable at $8.25 per unit, each unit consisting of one share
of Series A Convertible Preferred Stock, convertible into four common shares,
and two common stock purchase warrants, through several underwriters, of which
Paulson Investment Co., Inc. shall serve as the representative of such
underwriters ("Public Offering"); and the balance of Option, shall vest on
December 31, 2002; provided, however, that Options exercisable to purchase an
additional 150,000 shares of Common Stock will vest 30 days after the end of
any quarter in which the Company reports pre-tax income for any fiscal quarter
of at least $50,000; and Options exercisable to purchase an additional 150,000
shares of Common Stock shall vest and become exercisable upon the Company
reporting its first fiscal year with net income of at least $500,000.
Term of Options.
The Options evidenced by this Certificate may be exercised in whole
or in part commencing upon the respective vesting date such Option (the
"Exercise Date") and ending 36 months from each respective Exercise Date
("Expiration Date"), but in no event later than December 31, 2002 (the "Final
Expiration Date"); provided, however, that the Expiration Date may be extended
by the Company under paragraph 3.
Notice of Extended Expiration Date.
The Company may extend the Expiration Date for the exercise of this
Option at any time by giving sixty (60) days' written notice thereof to the
Optionholder. If this Option is not exercised on or before the extended
expiration date, it shall become wholly void.
Exercise Price.
Each vested and exercisable Option evidenced by this Certificate
shall be exercisable to purchase one share of Common Stock of the Company at
an Exercise Price equal to $2.0625 per share (the "Exercise Price"). The
Exercise Price is subject to adjustment under certain circumstances more fully
describe in paragraphs 5 and 6 below.
Adjustments of Exercise Price and Shares.
In the event the Common Stock issuable upon exercise of this Option
shall be changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise, or in the event the Company shall at any time issue Common Stock by
way of dividend or other distribution on any stock of the Company, or
subdivide or combine the outstanding shares of Common Stock, then in each such
event the Holder of this Option shall have the right thereafter to exercise
such Option and receive the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification
or other change by holders of the number of shares of Common Stock into which
such Option might have been exercised immediately prior to such
reorganization, reclassification or change. In the case of any such
reorganization, reclassification or change, the Exercise Price shall also be
appropriately adjusted so as to maintain the aggregate Exercise Price.
Further, in case of any consolidation or merger of the Company with or into
another corporation in which consolidation or merger the Company is not the
continuing corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety, or substantially as
an entirety, the Company shall cause effective provision to be made so that
the Optionholder shall have the right thereafter, by exercising this Option,
to purchase the kind and amount of shares of stock and other securities and
property receivable upon such consolidation, merger, sale or conveyance by
holders of the number of shares of Common Stock into which such Option might
have been exercised immediately prior to such consolidation, merger, sale or
conveyance, which provision shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Option. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, no adjustment of the Exercise Price
shall be made as a result of or in connection with (1) the issuance of Common
Stock of the Company pursuant to options, warrants and share purchase
agreements now in effect or hereafter outstanding or created, (2) the
establishment of option plans of the Company, the modification, renewal or
extension of any plan now in effect or hereafter created, or the issuance of
Common Stock upon exercise of any options pursuant to such plans, (3) the
issuance of Common Stock in connection with an acquisition, consolidation or
merger of any type in which the Company is the continuing corporation, or (4)
the issuance of Common Stock in consideration of such cash, property or
service as may be approved by the Board of Directors of the Company and
permitted by applicable law.
Adjustment to Exercise Price.
The Company may, in its sole discretion, lower the exercise price at
any time, or from time-to-time. When any adjustment is made in the exercise
price, the Company shall cause a copy of such statement to be mailed to the
Optionholder, as of a date within ten (10) days after the date when the
purchase price has been adjusted.
Manner of Exercise.
The Optionholder of the Options evidenced by this Option Certificate
may exercise all or any whole number of such Options during the Exercise
Period in the manner stated herein. This Option Certificate, together with
the purchase form provide for herein duly executed by the Optionholder or by
the Optionholder's duly authorized attorney, plus payment of the purchase
price, shall be surrendered to the Company. If upon exercise of any Options
evidenced by this Option Certificate the number of Options exercised shall be
less than the total number of Options so evidenced, there shall be issued to
the Optionholder a new Option Certificate evidencing the number of Options not
so exercised.
Manner of Payment.
The purchased price of each Option shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in cash at the
time the Option is exercised, or (ii) by delivery to the Company of other
common stock of the Company valued at its then-established fair market value,
or (iii) by delivery to the Company of either Options or Warrants of the
Company, valued at the difference between their Exercise Price and their then-
established fair market value of the Company's common stock, or (iv) according
to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the option is granted or to whom the option
is transferred, or (v) in any other form of legal consideration that may be
acceptable to the Board of Directors, in their discretion. For the purposes
of this Paragraph 8, the fair market value of the Company's common stock shall
be (i) the closing sale price for the Common Stock on the primary exchange
upon which the shares are listed and traded on the date the Option is
exercised, or (ii) if the shares are not traded on any national exchange, the
closing sale price for the Common Stock on the NASDAQ National Market on the
date the Option is exercised, or (iii) if the shares or neither traded on a
national exchange nor listed on the NASDAQ National Market, then the average
of the bid and ask prices for the Common Stock in the Over-The-Counter Market
as quoted on the NASDAQ Small-Cap Market or (iv) if the shares of Common Stock
are neither traded on a national exchange or the NASDAQ National Market nor
quoted on the NASDAQ Small-Cap Market, the average of the bid and ask prices
for the Common Stock as quoted by any recognized securities quotation service
such as the National Quotation Bureau, Inc. or the OTC Electronic Bulletin
Board on the date the Option is exercised. In the case of any deferred payment
arrangement, any interest shall be payable at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Internal Revenue Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
Reservation of Common Stock.
The Company agrees that the number of shares of Common Stock
sufficient to provide for the exercise of the Options upon the basis herein
set forth will at all times during the term of this Option be reserved for the
exercise thereof.
Issuance of Common Stock upon Exercise.
The Company, at its expense, shall cause to be issued, within ten
(10) days after exercise of this Option, a certificate or certificates in the
name requested by the Optionholder of the number of shares of Common Stock to
which the Optionholder is entitled upon such exercise. All shares of Common
Stock or other securities delivered upon the exercise of the Options shall be
validly issued, fully paid and non-assessable.
No Right as Stockholder.
The Optionholder is not, by virtue of ownership of the Options,
entitled to any rights whatsoever of a stockholder of the Company.
Assignment.
This Option is not assignable by the Optionholder hereof.
Dated: CELL ROBOTICS INTERNATIONAL, INC.
--------------------
Attest: By:
------------------------- ---------------------------------
Secretary
<PAGE>
PURCHASE FORM
Dated: , 199
-------------------- --
The undersigned hereby irrevocably elects to exercise the
attached Option to the extent of purchasing ______________________________
____________ shares of Common Stock of Cell Robotics International, Inc.
and hereby makes payment of $__________________ in payment of the Exercise
Price therefor.
- ---------------------------------------------------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
----------------------------------------------------------
(please typewrite or print in block letters)
Address
----------------------------------------------------------
Signature
----------------------------------------------------------
<PAGE>
The securities in the form of Non-Qualified Stock Options of Cell
Robotics International, Inc. have not been registered under the Securities Act
of 1933, as amended, or under any state securities laws. Such securities
cannot be sold, transferred, assigned or otherwise disposed of except in
accordance with the Securities Act of 1933, as amended, and applicable state
securities laws.
CELL ROBOTICS INTERNATIONAL, INC.
(a Colorado corporation)
Option No. NQ-02 150,000 Common Stock Options
CERTIFICATE FOR COMMON STOCK OPTIONS
This certifies that, for value received, RCG Capital Markets Group, Inc.,
or registered assigns ("Optionholder"), is the registered owner of the above
indicated number of Options entitling the Optionholder, subject to the
provisions of paragraph 1 below, to subscribe for, purchase and receive one
(l) fully paid and non-assessable share of Common Stock, $.004 par value, (the
"Common Stock") of Cell Robotics International, Inc., a Colorado corporation
(the "Company"), upon presentation and surrender of this Option and upon
payment of the Exercise Price as hereinbelow defined, for the shares of Common
Stock of the Company, but only subject to the conditions set forth herein.
The Exercise Price, the number of shares purchasable upon exercise of each
Option, the number of Options outstanding and the Expiration Date are subject
to adjustments upon the occurrence of certain events. The Optionholder may
exercise all or any number of the Options represented hereby. Upon exercise
of this Option, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented
hereby shall not be exercised at or before the Expiration Date, this Option
shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
Vesting and Exercise Price.
The Options represented by this Certificate are subject to vesting.
Options exercisable to purchase 35,000 shares of Common Stock shall vest and
become exercisable at an Exercise Price equal to $1.00 per share on the
effective date of that certain Engagement Agreement executed and entered into
between Optionholder and the Company. For purposes of this option, the
effective date of the Engagement Agreement shall be deemed to be September 4,
1998. The balance of the Options shall vest and become exercisable at the
Exercise Price contained in, and in accordance with, the following schedule:
a. Option exercisable to purchase 15,000 shares of Common Stock at
a price of $2.00 per share shall vest and become exercisable
on March 5, 1999, subject to the Engagement Agreement being in
full force and effect on that date without a breach or default
outstanding.
b. Option exercisable to purchase 25,000 shares of Common Stock at
a price of $2.00 per share shall vest and become exercisable on
the date upon which the sum of closing bid prices of the
Company's Series A Convertible Preferred Stock (OTC Electronic
Bulletin Board symbol "CRIIP") and two Common Stock Purchase
Warrants (OTC Electronic Bulletin Board symbol "CRIIW") has
been at least $12.375 for ten consecutive trading days.
c. Option exercisable to purchase 25,000 shares of Common Stock at
a price of $2.50 per share shall vest and become exercisable on
the date upon which the closing bid price of the Company's
Common Stock has been at least $4.80 for ten consecutive
trading days.
d. Option exercisable to purchase 25,000 shares of Common Stock at
a price of $2.50 per share shall vest and become exercisable on
the date upon which the Company's Common Stock commences
trading on either the NASDAQ Small-Cap or National Market
System or commences trading on the American Stock Exchange.
e. Option exercisable to purchase 25,000 shares of Common Stock at
a price of $2.50 per share shall vest and become exercisable on
the date upon which the closing bid price of the Company's
Common Stock has been at least $6.00 for ten consecutive
trading days.
Term of Options.
The Options evidenced by this Certificate may be exercised in whole
or in part commencing upon the respective vesting date of such Option (the
"Exercise Date") and ending 5 years from each respective Exercise Date
("Expiration Date"); provided, however, that all Options must be exercised, in
accordance with their terms, on or before 5:00 p.m. Mountain Daylight Time, on
September 4, 2003 (the "Final Expiration Date"), at which time this Option
shall become wholly void unless the Expiration Date is extended by the Company
under paragraph 3.
Notice of Extended Expiration Date.
The Company may extend the Expiration Date for the exercise of this
Option at any time by giving sixty (60) days' written notice thereof to the
Optionholder. If this Option is not exercised on or before the extended
expiration date, it shall become wholly void.
Adjustments of Exercise Price and Shares.
In the event the Common Stock issuable upon exercise of this Option
shall be changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise, or in the event the Company shall at any time issue Common Stock by
way of dividend or other distribution on any stock of the Company, or
subdivide or combine the outstanding shares of Common Stock, then in each such
event the Holder of this Option shall have the right thereafter to exercise
such Option and receive the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification
or other change by holders of the number of shares of Common Stock into which
such Option might have been exercised immediately prior to such
reorganization, reclassification or change. In the case of any such
reorganization, reclassification or change, the Exercise Price shall also be
appropriately adjusted so as to maintain the aggregate Exercise Price.
Further, in case of any consolidation or merger of the Company with or into
another corporation in which consolidation or merger the Company is not the
continuing corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety, or substantially as
an entirety, the Company shall cause effective provision to be made so that
the Optionholder shall have the right thereafter, by exercising this Option,
to purchase the kind and amount of shares of stock and other securities and
property receivable upon such consolidation, merger, sale or conveyance by
holders of the number of shares of Common Stock into which such Option might
have been exercised immediately prior to such consolidation, merger, sale or
conveyance, which provision shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Option. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, no adjustment of the Exercise Price
shall be made as a result of or in connection with (1) the issuance of Common
Stock of the Company pursuant to options, warrants and share purchase
agreements now in effect or hereafter outstanding or created, (2) the
establishment of option plans of the Company, the modification, renewal or
extension of any plan now in effect or hereafter created, or the issuance of
Common Stock upon exercise of any options pursuant to such plans, (3) the
issuance of Common Stock in connection with an acquisition, consolidation or
merger of any type in which the Company is the continuing corporation, or (4)
the issuance of Common Stock in consideration of such cash, property or
service as may be approved by the Board of Directors of the Company and
permitted by applicable law.
Adjustment to Exercise Price.
The Company may, in its sole discretion, lower each Exercise Price
set forth in paragraph 1 above at any time, or from time-to-time. When any
adjustment is made in an Exercise Price, the Company shall cause a copy of
such statement to be mailed to the Optionholder, as of a date within ten (10)
days after the date when the Exercise Price has been adjusted.
Manner of Exercise.
The Optionholder of the Options evidenced by this Option Certificate
may exercise all or any whole number of such Options during the Exercise
Period in the manner stated herein. This Option Certificate, together with
the purchase form provide for herein duly executed by the Optionholder or by
the Optionholder's duly authorized attorney, plus payment of the purchase
price, shall be surrendered to the Company. If upon exercise of any Options
evidenced by this Option Certificate the number of Options exercised shall be
less than the total number of Options so evidenced, there shall be issued to
the Optionholder a new Option Certificate evidencing the number of Options not
so exercised.
Manner of Payment.
The purchased price of each Option shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in cash at the
time the Option is exercised, or (ii) by delivery to the Company of other
common stock of the Company valued at its then-established fair market value,
or (iii) by delivery to the Company of either Options or Warrants of the
Company, valued at the difference between their Exercise Price and their then-
established fair market value of the Company's common stock, or (iv) according
to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the option is granted or to whom the option
is transferred, or (v) in any other form of legal consideration that may be
acceptable to the Board of Directors, in their discretion. For the purposes
of this Paragraph 7, the fair market value of the Company's common stock shall
be (i) the closing sale price for the Common Stock on the primary exchange
upon which the shares are listed and traded on the date the Option is
exercised, or (ii) if the shares are not traded on any national exchange, the
closing sale price for the Common Stock on the NASDAQ National Market on the
date the Option is exercised, or (iii) if the shares or neither traded on a
national exchange nor listed on the NASDAQ National Market, then the average
of the bid and ask prices for the Common Stock in the Over-The-Counter Market
as quoted on the NASDAQ Small-Cap Market or (iv) if the shares of Common Stock
are neither traded on a national exchange or the NASDAQ National Market nor
quoted on the NASDAQ Small-Cap Market, the average of the bid and ask prices
for the Common Stock as quoted by any recognized securities quotation service
such as the National Quotation Bureau, Inc. or the OTC Electronic Bulletin
Board on the date the Option is exercised. In the case of any deferred payment
arrangement, any interest shall be payable at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Internal Revenue Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
Reservation of Common Stock.
The Company agrees that the number of shares of Common Stock
sufficient to provide for the exercise of the Options upon the basis herein
set forth will at all times during the term of this Option be reserved for the
exercise thereof.
Issuance of Common Stock upon Exercise.
The Company, at its expense, shall cause to be issued, within ten
(10) days after exercise of this Option, a certificate or certificates in the
name requested by the Optionholder of the number of shares of Common Stock to
which the Optionholder is entitled upon such exercise. All shares of Common
Stock or other securities delivered upon the exercise of the Options shall be
validly issued, fully paid and non-assessable.
No Right as Stockholder.
The Optionholder is not, by virtue of ownership of the Options,
entitled to any rights whatsoever of a stockholder of the Company.
Assignment.
This Option is not assignable by the Optionholder hereof.
Dated: CELL ROBOTICS INTERNATIONAL, INC.
--------------------
Attest: By:
------------------------- ---------------------------------
Secretary
<PAGE>
PURCHASE FORM
Dated:
---------------------------------
The undersigned hereby irrevocably elects to exercise the
attached Option to the extent of purchasing _____________________________
________________ shares of Common Stock of Cell Robotics International,
Inc. and hereby makes payment of $_________________ in payment of the
Exercise Price therefor.
- ---------------------------------------------------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
----------------------------------------------------------
(please typewrite or print in block letters)
Address
----------------------------------------------------------
Signature
----------------------------------------------------------
WPC ?
WPC:KPMG PEAT MARWICK LLP
P.O. BOX 3939
6565 AMERICAS PARKWAY N.E., SUITE 700
ALBUQUERQUE, NEW MEXICO 87190
(505) 884-3939 (telephone) (505) 884-8348 (facsimile)
INDEPENDENT AUDITOR'S CONSENT
------------------------------
We consent to the use in the Form S-8 Registration Statement and
Prospectus of Cell Rotobics International, Inc. (the"Company") of our name and
the statements with respect to us, asappearing under the heading "Experts" in
the Prospectus.
KPMG Peat Marwick LLP
Certified Public Accountants
/s/
- -----------------------------
Albuquerque, New Mexico
March 15, 1999
WPCG NEWMAN DRENNEN & STONE, LLC
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
Telephone: (303) 449-2100
Telecopier: (303) 449-1045
March 12, 1999
Cell Robotics International, Inc.
2715 Broadbent Parkway, N.E.
Albuquerque, New Mexico 87107
Re: S.E.C. Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Cell Robotics International, Inc.(the
"Company") in connection with a Registration Statement to be filedwith the
United Stated Securities and Exchange Commission, Washington, D.C., pursuant
to the Securities Act of 1933, as amended, covering the registration of an
aggregate of 600,000 shares of the Company's $.004 par value common stock (the
"Common Stock") which may be issued to Ronald K. Lohrding and to RCG Capital
Markets Group, Inc. pursuant to Certificates for Common Stock Options.
In connection with such representation of the Company, we have examined
such corporate records, and have made such inquiry of government officials and
Company officials and have made such examination of the law as we deemed
appropriate in connection with delivering this opinion.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws
of the State of Colorado and is validly existing as a corporation in good
standing under the laws of that state.
2. The Company's authorized capital consists of 12,500,000 shares of
$.004 par value Common Stock and 2,500,000 shares of $.04 par value Preferred
Stock.
3. The 600,000 shares of the Company's common stock proposed to be
issued pursuant to the Certificates for Common Stock Options (the
"Certificates") shall upon the exercise of such Options, as more fully
described in the Registration Statement, be duly and validly authorized,
legally issued, fully paid and nonassessable.
Sincerely,
/s/ Nathan L. Stone
----------------------
Nathan L. Stone
NLS:gg
