FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 28, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______to _______
Commission file number: 0-17919
SURGICAL LASER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1093148
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
147 Keystone Drive
Montgomeryville, PA 18936
(Address of principal executive offices)
(Zip Code)
(215) 619-3600
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes (X) No ( )
On November 7, 1997 the registrant had outstanding 9,887,070
shares of Common Stock, $.0l par value.
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
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PART I. FINANCIAL INFORMATION: PAGE
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ITEM 1. Financial Statements:
a. Condensed Consolidated Balance Sheets,
September 28, 1997 (unaudited) and December 29, 1996 3
b. Condensed Consolidated Statements of Operations (unaudited) for the quarters ended
September 28, 1997 and September 29, 1996 4
c. Condensed Consolidated Statements of Operations (unaudited) for the nine months ended
September 28, 1997 and September 29, 1996 5
d. Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended
September 28, 1997 and September 29, 1996 6
e. Notes to Condensed Consolidated Financial Statements (unaudited) 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 11
ITEM 2. Changes in Securities 12
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS:
EXHIBIT 27 - Financial Data Schedule 14
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2
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
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<CAPTION>
Sep. 28, 1997 Dec. 29, 1996
(Unaudited)
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ASSETS
Current Assets:
Cash and cash equivalents (including restricted amount of $100) $2,161 $2,795
Short-term investments 4,989 3,325
Accounts receivable, net of allowance for doubtful accounts of
$82 and $116, respectively 2,744 2,899
Inventories 2,790 3,534
Other 94 134
----------------------------------------
Total current assets 12,778 12,687
Property and equipment, net 1,892 2,325
Property held for sale, net 4,921 5,636
Patents and licensed technology, net 583 610
Other assets 790 232
----------------------------------------
Total Assets $20,964 $21,490
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $502 $468
Accounts payable 666 777
Accrued liabilities 2,312 2,306
----------------------------------------
Total current liabilities 3,480 3,551
----------------------------------------
Long-term debt 6,247 6,631
----------------------------------------
Stockholders' equity:
Common stock, $.01 par value, 30,000 shares authorized,
9,886 shares and 9,882 shares issued and outstanding 99 99
Additional paid-in capital 33,075 32,714
Accumulated deficit (21,937) (21,505)
----------------------------------------
Total stockholders' equity 11,237 11,308
----------------------------------------
Total Liabilities and Stockholders' Equity $20,964 $21,490
========================================
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The accompanying notes are an integral part of these statements.
3
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
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For the Quarter Ended:
Sep. 28, 1997 Sep. 29, 1996
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Net sales $3,007 $2,416
Cost of sales 1,097 840
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Gross profit 1,910 1,576
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Operating expenses:
Selling, general and administrative 1,704 2,048
Product development 362 344
Non-recurring charges (credits) (177) 1,504
-------------------------------------------
1,889 3,896
-------------------------------------------
Operating income (loss) 21 (2,320)
Interest expense 158 140
Interest income (88) (95)
Other (income) expense (96) 58
Equity in loss of joint venture -- 60
-------------------------------------------
Net income (loss) before income taxes 47 (2,483)
Provision for income taxes -- --
-------------------------------------------
Net income (loss) $47 $(2,483)
===========================================
Net income (loss) per share $0.00 $(0.25)
===========================================
Shares used in calculating net income (loss) per share 9,886 9,872
===========================================
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The accompanying notes are an integral part of these statements.
4
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
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<CAPTION>
For the Nine Months Ended:
Sep. 28, 1997 Sep. 29, 1996
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Net sales $8,984 $7,965
Cost of sales 3,715 2,819
---------------------------------------------
Gross profit 5,269 5,146
---------------------------------------------
Operating expenses:
Selling, general and administrative 5,131 6,387
Product development 811 1,154
Non-recurring charges (credits) (177) 1,504
---------------------------------------------
5,765 9,045
---------------------------------------------
Operating loss (496) (3,899)
Interest expense 491 424
Interest income (287) (286)
Other (income) expense (268) 43
Equity in loss of joint venture -- 164
---------------------------------------------
Loss before income taxes (432) (4,244)
Provision for income taxes -- --
---------------------------------------------
Net loss $(432) $(4,244)
=============================================
Net loss per share $(0.04) $(0.43)
=============================================
Shares used in calculating net loss per share 9,884 9,861
=============================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
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For the Nine Months Ended:
Sep. 28, 1997 Sep. 29, 1996
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Cash Flows From Operating Activities:
Net loss $(432) $(4,244)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Equity in loss of joint venture -- 164
Depreciation and amortization 795 696
Imputed interest (8) (12)
Non-recurring charges 823 1,346
(Increase) decrease in assets:
Accounts receivable 155 527
Inventories 687 326
Other current assets 40 12
Other assets (25) 7
Increase (decrease) in liabilities:
Accounts payable (111) 385
Accrued liabilities (433) 40
--------------------------------------------
Net cash provided by (used in) operating activities 1,491 (753)
--------------------------------------------
Cash Flows From Investing Activities:
Sale (purchase) of short-term investments, net (1,664) 2,028
Investment in joint venture -- (200)
Purchase of property and equipment (68) (236)
Patent costs 15 (57)
Purchase of marketing rights (81) --
--------------------------------------------
Net cash provided by (used in) investing activities (1,798) 1,535
--------------------------------------------
Cash Flows From Financing Activities:
Payments on long-term debt (327) (159)
--------------------------------------------
Net cash used in financing activities (327) (159)
--------------------------------------------
Net increase (decrease) in cash and cash equivalents (634) 623
Cash and Cash Equivalents, Beginning of Period 2,795 4,903
--------------------------------------------
Cash and Cash Equivalents, End of Period $2,161 $5,526
============================================
</TABLE>
The accompanying notes are an integral part of these statements.
6
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Summary Financial Information and Results of Operations:
In the opinion of Surgical Laser Technologies, Inc. and Subsidiaries (the
"Company"), the accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and with the regulations of the Securities and Exchange Commission
and contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of September 28, 1997 and
the results of operations and cash flows for the quarters and nine months ended
September 28, 1997 and September 29, 1996.
Interim Financial Information:
While the Company believes that the disclosures presented are adequate to
prevent misleading information, it is suggested that the unaudited condensed
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and notes included in the Company's Form 10-K
report for the fiscal year ended December 29, 1996, as filed with the Securities
and Exchange Commission. Interim results for the quarter and nine months ended
September 28, 1997 are not necessarily indicative of the results to be expected
for the full year.
2. Supplemental Cash Flow Information:
Income taxes paid for the nine months ended September 28, 1997 were $9,000.
Income taxes paid for the nine months ended September 29, 1996 were $35,000,
primarily representing federal alternative minimum taxes. Interest paid for the
nine months ended September 28, 1997 and September 29, 1996 was $491,000 and
$423,000, respectively.
The following noncash investing and financing activities took place:
For the nine months ended September 28, 1997 and September 29, 1996, the value
of the stock warrants and capitalized cash payments outstanding to MedTREK(TM)
was $505,000 and $0, respectively (see Note 8, MedTREK Agreement).
For the nine months ended September 28, 1997 and September 29, 1996, $23,000 and
$126,000, respectively, of the 8% convertible subordinated notes were converted
at the request of the noteholders into common stock at a conversion price of
$4.50 per share.
3. Net Income (Loss) Per Share:
Net income (loss) per share has been computed using the weighted average number
of common shares outstanding during each period. Common share equivalents have
not been included in the calculation of earnings per share for the quarter ended
September 28, 1997, as they had no effect on earnings per share in the quarter.
For all other periods presented, common share equivalents have not been
considered as they are anti-dilutive. In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," which the Company is required to adopt on December
28, 1997. The impact of SFAS No. 128 would not have had any effect on net income
(loss) per share for the quarters and nine months ended September 28, 1997 and
September 29, 1996.
7
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4. Bank Borrowings:
At September 28, 1997, the Company had a $2.75 million line of credit agreement
with a bank, which included a $750,000 sub-line for letters of credit. Under its
sub-line, the Company issued a letter of credit in the amount of $515,000 in
favor of the Montgomery County Industrial Development Corporation ("MCIDC")
under the terms of the Mortgage and Security Agreement. Other than for this
letter of credit and one other minor trade letter of credit, there were no
borrowings under the line during the nine months ended or at September 28, 1997.
Borrowings on the line are secured by the Company's accounts receivable and
inventories and bear interest at the bank's prime rate plus 1/2%. The line
expires on June 30, 1998. The Company's line of credit agreement prohibits the
declaration or payment of any dividends or distributions on any of its capital
stock without the prior written consent of the bank at any time there are
outstanding obligations to the bank. The line is subject to the Company
maintaining certain financial covenants, as defined, with which the Company was
in compliance at September 28, 1997.
5. Income Taxes:
No income tax provision was made for the nine months ended September 28, 1997 or
for the comparable nine months of 1996 due to losses incurred.
6. Segment and Geographic Data:
The Company is engaged in one business segment: the design, development,
manufacture and marketing of laser products for medical applications. The
Company's customers are primarily hospitals and medical centers. Foreign sales
represented 18% of net sales in the first nine months of 1997, as compared to
24% in the same period in 1996. Sales to the Company's joint venture (see Note
7) were 2% of net sales in the first nine months of 1996.
7. Investment in Mediq PRN/SLT:
On September 30, 1996 the Company acquired the remaining 50% interest in the
Mediq PRN/SLT joint venture held by Mediq PRN for the assumption of outstanding
liabilities. The joint venture company was formed in the third quarter of 1993
to provide rentals of lasers and related equipment to hospitals and other health
care providers. Prior to the acquisition, the investment in Mediq PRN/SLT was
recorded using the equity method of accounting. Sales to Mediq PRN/SLT were
recorded at an arms-length price. Under the equity method, 50% of the gross
margin from sales to the joint venture was deferred and amortized to income as
the related asset was used by the joint venture. The Company's sales to Mediq
PRN/SLT were $131,000 for the nine months ended September 29, 1996. While Mediq
PRN is continuing to provide logistic services to the Company, the Company is
now fully responsible for the management, sales and operations of the business.
The business is now conducted under the trade name "Laser OnCall(TM)."
8. MedTREK Agreement:
During the third quarter ending September 28, 1997, and as previously announced,
the Company acquired exclusive worldwide rights to certain new products and
medical devices used in minimally invasive otolaryngology and head and neck
surgery, pursuant to an agreement with MedTREK(TM) Corporation and its
President Mr. Dom L. Gatto. In accordance with the terms of the agreement, the
Company is required to make cash payments to MedTREK(TM) when certain products
have been commercially introduced and to issue stock warrants to MedTREK(TM)
when predetermined revenue targets have been achieved. The Company has valued
the stock warrants using the Black-Scholes option pricing model and has recorded
both the cost of these stock warrants and the cash payments for commercial
introduction of products, a total of $586,000, within Other Long-Term Assets.
This asset is being amortized over a five year period, the initial term of the
agreement.
8
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Historically, the Company has generated its net sales from positioning its
technology and products across a wide range of surgical specialties. In an
effort to attain more significant growth in sales, the Company is transitioning
from this historical marketing approach to an emphasis which would provide a
broader array of products to a more select market segment. The change in
marketing approach is aimed at identifying and acquiring additional products and
technologies that will complement the Company's current product offerings and
serve to leverage its existing customer base and distribution organization.
While focusing its efforts on a more select market segment, the Company intends
to serve other specialty markets by entering into distribution arrangements with
companies which, by focusing their activities in those other specialties, are
closer to the customer and are therefore better suited to serving the customer's
needs.
The Company is also taking actions intended to improve its international
customer relationships, consistent with a focus on a more specific surgical
segment. Additionally, as part of this transition, the Company is exploring
opportunities to expand the utilization of its proprietary technologies by
entering into private label relationships with other companies which will market
products encompassing SLT's core competencies under their product labeling.
Net sales for the quarter ended September 28, 1997 of $3,007,000 increased
$591,000 or 24% compared to the third quarter 1996 net sales of $2,416,000. For
the nine months ended September 28, 1997, net sales were $8,984,000 compared to
$7,965,000 in the first nine months of 1996, an increase of $1,019,000 or 13%.
Net sales of Nd:YAG laser systems for the nine months ended September 28, 1997
increased 18% from the first nine months of 1996. The increase in sales of laser
systems was due to a higher unit volume in the Company's laser systems for ENT
surgery as well as the Company's effort to reduce inventory levels. All other
net sales for the nine months ended September 28, 1997, including contact laser
delivery systems, accessories, rentals and other sales, increased 11% from the
comparable period in 1996.
Gross profits of $1,910,000 for the quarter ended September 28, 1997 increased
$334,000 or 21% from the third quarter of 1996, while gross profits for the nine
months ended September 28, 1997 of $5,269,000 increased $123,000, or 2% from the
first nine months of 1996. As a percentage of net sales, gross profit decreased
to 59% for the first nine months of 1997 from 65% in the comparable period of
1996. The decrease in gross profit as a percentage of sales was due primarily to
two factors. The main factor was a reduction in the selling price on certain
Contact Laser Systems, enacted in an effort to reduce inventory levels. The
second factor was the inclusion in the 1997 period of the Laser OnCall(TM)
rental business which operates at a lower percentage gross profit as compared to
the sale of lasers and delivery systems. The Laser OnCall(TM) rental business
had been accounted for in the prior year period under the equity method. (See
Note 7, Investment in Mediq PRN/SLT).
In the third quarter of 1997, the Company recorded a benefit from the settlement
of litigation with C.R. Bard and the Bard Urological Division (see Part II, Item
1 Legal proceedings) of $1,000,000. This benefit was offset in part by
non-recurring facility related charges of $542,000 related to the Company's
former headquarters facility and $281,000 related to the Company's former
manufacturing facility in Kentucky. The $542,000 charge resulted from a
write-down in the carrying value of the former headquarters facility
necessitated by the terms on which the facility is expected to be sold at the
end of the tenant's initial lease term. The $281,000 charge resulted from the
loss of the Company's former tenant and subsequent signing of a new tenant at a
lesser rate. In the third quarter of 1996, the Company recorded a charge for
severance and related costs and for the write-off of certain leasehold
improvements, amounting to $1,504,000. The charge for severance and related
costs was due primarily to changes in and the elimination of executive level
positions. The write-off of certain leasehold improvements in the Company's
former manufacturing facility in Oaks, PA resulted from the consolidation and
relocation of all of the Company's activities into one leased office/research
and manufacturing facility in Montgomeryville, PA.
9
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Operating expenses, excluding the above mentioned charges, for the third quarter
of 1997 were $2,066,000, a decrease of $326,000 or 14% from the third quarter of
1996. For the first nine months of 1997, operating expenses, excluding the above
mentioned charges, were $5,942,000, a decrease of $1,599,000 or 21% from the
first nine months of 1996. These reductions in operating expenses were mainly
due to cost reduction actions initiated in the third quarter of 1996.
Product development expenses of $362,000 in the third quarter of 1997 increased
by $18,000 or 5% from the comparable period in 1996. The net increase was a
result of costs incurred during the third quarter of 1997 for new development
activities offset by personnel expense reduction actions taken in the third
quarter of 1996 and lower operating costs resulting from the consolidation of
the Company's facilities into one location. Product development expenses of
$811,000 in the first nine months of 1997 decreased by $343,000 or 30% from the
comparable period in 1996 due to the cost reduction measures mentioned above.
Selling, general and administrative expenses were $1,704,000 in the third
quarter of 1997, a decrease of $344,000 or 17% from the comparable prior year
period. In the first nine months of 1997, selling, general and administrative
expenses were $5,131,000 compared to $6,387,000 in the first nine months of
1996, a decrease of $1,256,000 or 20%. Reductions in workforce and related
expenses enacted in the third quarter of 1996 as well as a reduction in legal
fees accounted for the majority of the reduced spending level.
Net interest expense was $70,000 in the third quarter of 1997 and $204,000 in
the first nine months of 1997, an increase of $25,000 and $66,000, respectively,
from the comparable periods in 1996. The increase was primarily attributable to
interest payments related to the capital leases acquired in the purchase of the
Mediq PRN/SLT joint venture.
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term investments of $7,150,000
at September 28, 1997, of which $100,000 was restricted. In addition, the
Company currently has a $2.75 million credit facility with its bank. The
facility includes a sub-line for letters of credit of $750,000. Other than for
the letter of credit issued in the amount of $515,000 in favor of the Montgomery
County Industrial Development Corporation ("MCIDC") as a condition of the
Mortgage and Security Agreement with MCIDC, and one other minor letter of
credit, there were no borrowings outstanding under the line of credit.
Borrowings under the line are secured by the Company's accounts receivable and
inventories. The line is subject to the Company maintaining certain financial
covenants, as defined, with which the Company was in compliance at September 28,
1997. The facility expires on June 30, 1998.
Net cash provided by operating activities was $1,491,000 in the first nine
months of 1997 compared to cash used in operating activities of $753,000 in the
comparable period in 1996. The comparable increase in cash provided by operating
activities resulted from the reduction in the net loss incurred, a reduction in
inventories and the receipt in the third quarter of 1997 of $1,000,000 from the
settlement of litigation. The benefit of this legal settlement is included in
the income statements as a component of the net special credit of $177,000.
Net cash used in investing activities was $1,798,000 in the first nine months of
1997 compared to cash provided by investing activities of $1,535,000 in the
first nine months of 1996. The decrease was due principally to the purchase of
certain short-term investments amounting to $1,664,000 during the first nine
months of 1997 as compared to the maturity of certain short-term investments of
$2,028,000 during the comparable period in 1996.
Net cash used in financing activities, which represents payments on long-term
debt, was $327,000 and $159,000 in the first nine months of 1997 and 1996,
respectively. The increase in cash used in financing activities was the result
of the Company's payments on capital leases which were acquired in the purchase
of the Mediq PRN/SLT joint venture on September 30, 1996 (see Note 7, Investment
in Mediq PRN/SLT).
10
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Management believes that the Company's current cash position, cash flow from
operations and available line of credit will be sufficient to fund operations
and meet its commitments for long-term debt, other commitments and contingencies
and capital expenditures.
Management believes that inflation has not had a material effect on operations.
Forward Looking Statements
The forward looking statements contained herein, including the statements
regarding the Company's change in marketing approach by focusing on the ENT
market, serving other specialty markets through distribution arrangements and
expanding the use of private label and OEM relationships, reflect management's
current views with respect to future events and financial performance. These
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those in the forward looking
statements, including the risk that the Company will experience short-term
disruptions or an adverse impact on results of operations during the transition
to this new marketing approach. Moreover, no assurance can be given that the
change in marketing approach will have a long-term positive financial impact.
For a further discussion of certain risk factors that could cause actual results
to differ materially from those in the forward looking statements included
herein or made from time to time by the Company, reference is made to the
Company's Form 10-K, Item 7, "Risk Factors" for the fiscal year ended December
29, 1996.
PART II. OTHER INFORMATION
ITEM 1. Legal proceedings
For information regarding certain pending lawsuits, reference is made to the
Company's Form 10-K, Item 3, for the fiscal year ended December 29, 1996, and
the Company's Forms 10-Q, Item 1, for the fiscal quarters ended March 30, 1997,
and June 29, 1997.
As of July 18, 1997, the Company settled the law suit which it had brought
against C.R. Bard, Inc. and the Bard Urological Division in the United States
District Court for the Eastern District of Pennsylvania. As part of the
settlement, Bard has paid the Company $1,000,000.
On November 7, 1997, the Company reached a settlement in the action brought in
February 1995 by Norio Daikuzono in the United States District Court for the
Southern District of Ohio, later transferred to the Eastern District of
Pennsylvania. The settlement confirms that the Company will continue to
calculate royalties due to Mr. Daikuzono under its three Contact Laser(TM)
patents as it has done from 1985, when the Company made its first sales of
probes and scalpels. Having received in conjunction with this settlement
appropriate tax documentation from Mr. Daikuzono, the Company will now pay him
certain royalties which it had set aside since 1993 pending receipt from him of
necessary tax documentation. No other financial payments are required by the
terms of the settlement. A formal order dismissing the action is expected within
the next few days.
Moreover, the settlement with Mr. Daikuzono and his affiliated company, SLT
Japan Co., Ltd., confirms the continuing validity of the prior assignment by Mr.
Daikuzono to SLT of all rights in the Contact Laser patents and any other
patents and patent applications related thereto, including European and Japanese
patent applications and patents issued pursuant thereto. As a result of the
settlement, SLT remains free to sell its products worldwide, including Japan,
although it has agreed, subject to certain legal requirements, not to use its
own name in Japan to reduce potential market confusion with SLT Japan Co. Ltd.
SLT also agreed, for a three year period, not to import into Japan certain laser
units previously manufactured in conjunction with NEC Electronics, Inc. Mr.
Daikuzono and SLT Japan Co. Ltd. remain free to sell products that do not
infringe SLT's patents, and SLT granted to Mr. Daikuzono a royalty-free,
non-exclusive license to practice in Japan all rights under any patents that may
be issued pursuant to SLT's Japanese patent applications related to the Contact
Laser patents.
11
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ITEM 2. Changes in Securities.
On July 28, 1997, the Company issued to C.R. Bard, Inc. a warrant to purchase
200,000 shares of the Company's Common Stock, $.01 par value ("Common Stock"),
with the exercise price of $2.00 per share. The warrant was fully exercisable
when issued and will expire on December 31, 2002. The warrant was granted in
consideration for a $250,000 payment by C.R. Bard, Inc. to support the Company's
efforts to develop and supply certain products.
Also on July 28, 1997, the Company issued two warrants to purchase an aggregate
of 50,000 shares of Common Stock to consultants to the Company, with an exercise
price of $1.53 per share. The warrants were fully exercisable when issued and
will expire on October 10, 2002. The warrants were granted in consideration for
consulting services supporting the Company's commercialization of products in
the fields of ENT, head and neck, and neurosurgery. The Company also issued as
of the same day four additional warrants to purchase an aggregate of 250,000
shares of Common Stock with an exercise price of $1.53 per share. These warrants
were issued to consultants in consideration for services to be rendered in
support of the Company's commercialization of products in the fields of ENT,
head and neck and neurosurgery. These warrants will also expire on October 10,
2002 and will become exercisable based on certain revenue benchmarks for the
products as to which such services are being provided. The Company has valued
the 300,000 warrants on the shares of Common Stock at $338,000 using the
Black-Scholes option pricing model (see Note 8, MedTREK Agreement).
On May 28, 1997, the Company granted to a consultant an option to acquire 20,000
shares of Common Stock and five warrants to purchase an aggregate of 125,000
shares of Common Stock. The option and warrants are granted in consideration for
services to be provided in support of the Company's efforts to expand its
international product distribution, have exercise prices ranging from $1.19 per
share to $7.00 per share and will expire on December 31, 2002. The option and
warrants will become exercisable based on certain revenue benchmarks for sales
to the markets as to which such services are being provided.
The above-described securities were issued in transactions exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, in
transactions by an issuer not involving any public offering.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits: Exhibit 3.1- Restated Certificate of Incorporation,
incorporated by reference to Exhibit 3.1 filed
with the Annual Report on Form 10-K for the fiscal
year ended December 29, 1991, filed on March 30,
1992.
Exhibit 3.2- Bylaws, as amended, incorporated by reference
to Exhibit 3.2 filed with the Annual Report on
Form 10-K for the fiscal year ended December 30,
1990, filed on March 29, 1991.
Exhibit 27 - Financial Data Schedule.
b. Reports on Form 8-K: none
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SURGICAL LASER TECHNOLOGIES, INC.
Date: November 12, 1997 By: /s/ Michael R. Stewart
------------------------------
Michael R. Stewart
Vice President, Finance and
Chief Financial Officer
Signing on behalf of the Registrant and
as principal financial officer.
13
<TABLE> <S> <C>
<ARTICLE> 5
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