<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 3, 1998
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
PREMIER LASER SYSTEMS, INC.
---------------------------
(Exact name of registrant as specified in charter)
CALIFORNIA 33-0472684
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
COLETTE COZEAN, PH.D.
PREMIER LASER SYSTEMS, INC.
3 MORGAN, IRVINE, CALIFORNIA 92618 3 MORGAN, IRVINE, CALIFORNIA 92618
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(Address, including zip code, and (Name, address, including zip code,
telephone number, including area code, and telephone number, including area
of registrant's principal executive Code, of agent for service)
offices)
Approximate date of commencement of proposed sale to public: From time to
------------
time after the effective date of this Registration Statement, as determined by
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market conditions.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered per unit(1) offering price fee
<S> <C> <C> <C> <C>
Class A Common Stock, no par value... 1,116,626 shares(2) $9.44 $10,540,949 $3,109.58
Class B Warrants..................... 28,290 warrants $2.56 $ 72,422 $ 21.36
Class A Common Stock(3).............. 28,290 shares $9.44 $ 267,058 $ 78.78
TOTAL $10,880,500 $3,209.75
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c), as of February 2, 1998.
(2) Shares of Common Stock being registered for resale by certain registered
security holders. Includes shares issuable following exercise of presently
outstanding warrants and options held by such security holders.
(3) Consists of shares of Common Stock issuable upon the exercise of Class B
Warrants.
_______________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 3, 1998
PROSPECTUS
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PREMIER LASER SYSTEMS, INC.
1,116,626 SHARES OF CLASS A COMMON STOCK
28,290 CLASS B WARRANTS
The 1,116,626 shares (the "Shares") of Class A Common Stock ("Common
Stock") and 28,290 Class B Warrants ("Class B Warrants") of Premier Laser
Systems, Inc. (the "Company") which are the subject of this prospectus are being
offered by the holders thereof (the "Registered Shareholders") named herein. The
Shares and the Class B Warrants are sometimes collectively referred to herein as
the "Securities." Many of the Securities offered by the Registered Shareholders
may be acquired by such Registered Shareholders upon exercise of warrants or
options to purchase Common Stock (collectively, the "Warrants").
Some or all of the Securities covered by this prospectus may be offered for
sale from time to time by the Registered Shareholders at such prices and on such
terms as may then be obtainable, in negotiated transactions, or otherwise. This
prospectus may be used by the Registered Shareholders or by any broker-dealer
who may participate in the sale of the Securities covered hereby. The Registered
Shareholders will pay all commissions, transfer taxes and other expenses
associated with the sales of the Securities by them. The Company will pay the
expenses of the preparation of this prospectus. The Company has agreed to
indemnify certain of the Registered Shareholders against certain liabilities,
including liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Upon exercise of the Warrants, the Company will receive the
proceeds thereof, which will be $6,220,245 if all Warrants are exercised in
full. The Company will not receive any of the proceeds from the sale of the
Shares or Class B Warrants by the Registered Shareholders.
The Company's Common Stock and Class B Warrants are traded on the Nasdaq
National Market System. On January 30, 1998, the closing sale price of the
Common Stock, as reported by Nasdaq was $9.44 per share.
_______________________________
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 6.
_________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF ITS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is February 3, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission relating to its business, financial statements and other matters.
Reports and proxy and information statements filed pursuant to Section 14(a) and
14(c) of the Exchange Act and other information filed with the Commission as
well as copies of the Registration Statement can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Midwest Regional Office, 500 West Madison
Avenue, Suite 1400, Chicago, Illinois 60661; and Northeast Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. In addition, the Commission maintains
a Web site that contains reports, proxy and information statements and other
information that the Company files electronically with the Commission. The
Commission's Web site address is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by this reference into this Prospectus:
1. The Company's Current Report on Form 8-K, as filed with the Commission
on December 30, 1997.
2. The Company's Current Report on Form 8-K, as filed with the Commission
on December 8, 1997.
3. The Company's Current Report on Form 8-K, as filed with the Commission
on October 15, 1997, and amended by Form 8-K/A filed with the Commission on
November 14, 1997.
4. The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997, filed with the Commission on May 28, 1997 pursuant to Section
13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and amended by Form 10-K/A filed with the Commission on June 18, 1997.
5. The Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997 filed with the Commission on November 14, 1997, pursuant to
Section 13 or 15(d) of the Exchange Act, and amended by Form 10-Q/A filed with
the Commission on November 26, 1997.
6. The Company's Quarterly Report on Form 10-Q for the period ended June
30, 1997 filed with the Commission on August 14, 1997, pursuant to Section 13 or
15(d) of the Exchange Act.
7. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
December 7, 1994, as amended by Form 8-A/A filed with the Commission on January
31, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering which is the subject of
this Prospectus shall be deemed to be incorporated herein by this reference and
to be made a part hereof from the date of filing of such documents.
Upon the written or oral request of any person to whom this Prospectus
is delivered, the Company will provide, without charge, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents). Requests for such informational documents should be directed
to Premier Laser Systems, Inc., 3 Morgan, Irvine, California 92718, telephone
number (714) 859-0656, Attention: Corporate Secretary.
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<PAGE>
THE COMPANY
GENERAL
The Company develops, manufactures and markets several lines of surgical
lasers, laser waveguides and laser fiber optic devices, disposables and
associated accessory products for the medical market. The Company commenced
operations in August 1991 after acquiring substantially all of the assets of
Pfizer Laser Systems ("Pfizer Laser"), a division of Pfizer Hospital Products
Group, Inc. ("Pfizer HPG") which had entered the laser business in December
1984. The assets acquired from Pfizer Laser by the Company included proprietary
rights to a broad base of laser and fiber optic technologies.
In addition, the Company's recently acquired subsidiary Eyesys
Technologies, Inc. is engaged in the business of designing, developing and
marketing noninvasive corneal topography systems for use by ophthalmologists and
optometrists in surgical planning and evaluation, diagnosis of corneal
pathologists and contact lens fitting.
The Company's product line of patented proprietary lasers includes CO\\2\\,
diode, argon, neodymium: yttrium aluminum garnet ("Nd:YAG"), erbium:yttrium
aluminum garnet ("Er:YAG") and holmium:yttrium aluminum garnet ("Ho:YAG")
lasers, which the Company believes are capable of a wide range of procedures in
multiple medical and surgical specialties ranging from cutting bone and teeth to
removing precise layers of cellular tissue in the eye. Representative procedures
for which the Company has market clearance from the United States Food and Drug
Administration ("FDA") include treatment of gum disease, laparoscopic
procedures, hard tissue and cavity preparation procedures, treatment of
endometriosis, dermatological treatment of port wine stains and discectomy. The
Company is currently conducting various clinical trials relating to additional
applications for its laser products. The primary focus of the Company's
research, marketing and sales efforts is in specific niche medical specialties,
such as dentistry and ophthalmology, where the Company believes opportunities
exist for clinical advances and market growth.
The principal offices of the Company are located at 3 Morgan, Irvine,
California 92618, and its telephone number is (714) 859-0656.
A description of the Company's business is set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1997, as amended
(the "Annual Report"), which description is incorporated herein by this
reference.
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RISK FACTORS
The securities offered hereby are highly speculative in nature and involve
a high degree of risk. Prospective investors should carefully consider, along
with the other information contained in this Prospectus, the following
considerations and risks in evaluating an investment in the Company.
LIMITED OPERATING HISTORY; CONTINUING OPERATING LOSSES
The Company was formed in July 1991 and has not generated significant
revenues to date. As of March 31, 1997, the Company had an accumulated deficit
of approximately $24.2 million and tangible net worth of approximately $8.8
million. For the fiscal years ended March 31, 1995, 1996 and 1997, the Company
had operating losses of approximately $3.8 million, $5.8 million and $5.6
million, respectively, resulting principally from costs incurred in research and
development and other costs of operations. The Company expects that operating
losses will continue until such time as product sales generate sufficient
revenues to fund its continuing operations, as to which there can be no
assurance. The Company may incur losses for the foreseeable future due to the
significant costs associated with manufacturing, marketing and distributing its
laser products and due to continual research and development activities which
will be necessary to develop additional applications for the Company's laser
technology.
UNCERTAINTIES CONCERNING FUTURE PROFITABILITY
The Company's ability to achieve profitability will depend, in part, on its
ability to continue to successfully develop clinical applications, obtain
regulatory approvals for its products and develop the capacity to manufacture
and market such products on a wide scale. There is no assurance that the
Company will be able to successfully make the transition from research and
development to manufacturing and selling commercial medical laser products on a
broad basis. While attempting to make this transition, the Company will be
subject to all risks inherent in a growing venture, including the need to
produce reliable products, develop marketing expertise and enlarge its sales
force.
UNCERTAIN MARKET ACCEPTANCE
The Company's future sales are dependent, in part, on the Company's ability
to demonstrate to dentists, ophthalmologists and other physicians the potential
cost and performance advantages of its laser systems over traditional methods of
treatment and, to a lesser extent, over competitive laser systems. To date,
commercial sales of the Company's lasers have been limited, and no assurance can
be given that these laser products can be successfully commercialized on a broad
basis. Lasers have not been widely used in dentistry and their use requires
training and expertise. The acceptance of dental lasers may be adversely
affected by their high cost, concerns by patients and dentists relating to their
safety and efficacy, and the substantial market acceptance and penetration of
alternative dental tools such as the dental drill. Current economic pressure
may make doctors and dentists reluctant to purchase substantial capital
equipment or invest in new technology. The failure of medical lasers to achieve
broad market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. No assurance can be
given that any of the Company's products will be accepted by the medical or
dental community or by patients, or that a significant market for the Company's
laser systems will be developed and sustained. The Company currently has a
limited sales force and will need to hire additional sales and marketing
personnel to increase the general acceptance of its products.
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INTEGRATION OF ACQUIRED BUSINESSES
On September 30, 1997, the Company acquired EyeSys Technologies, Inc.
("EyeSys") through the merger of a newly formed subsidiary of the Company with
and into EyeSys (the "Merger"). Upon the effectiveness of the Merger, EysSys
became a wholly-owned subsidiary of the Company. As a result of such Merger, the
Company must integrate and coordinate the business formerly operated by EyeSys
with the Company's other businesses. Although the Company believes that there
are certain synergies in the two lines of business, it may incur expenses in
connection with its efforts to integrate the two businesses. For example,
although certain of the existing EyeSys management personnel have been retained
by EyeSys following the Merger, members of the Company's management must also
expend time and effort on new activities relating to the EyeSys operations,
which will detract from their time available to attend to the Company's pre-
Merger activities. No assurance can be given that the Company will receive the
advantages from the Merger, or that the expenses or dislocations it may suffer
or incur as a result of the post-Merger coordination of these businesses will
not be material.
EyeSys currently markets two primary products (a portable and a stationary
corneal topography measuring system) in a highly competitive market.
Historically, EyeSys has incurred substantial losses. The ability of EyeSys to
achieve a break even level of operating performance is dependent on the demand
for its products as well as maintaining sufficient research, development and
sales and marketing expenditures to meet the requirements of the market. There
can be no assurance that the revenues from the EyeSys product line will be
sufficient to cover all of the expenses related to such operations.
In the event that the Company's bid to acquire the remaining outstanding
shares of Ophthalmic Imaging Systems Inc. is accepted (See "Recent
Developments"), the Company will encounter issues similar to the above regarding
the integration of the two businesses. As a result, certain expenses may be
incurred in efforts to address such issues.
GOING CONCERN REPORT WITH RESPECT TO EYESYS
EyeSys' independent auditors have included an explanatory paragraph in
their report covering EyeSys' financial statements for the year ended December
31, 1996, which paragraph emphasizes substantial doubt as to EyeSys' ability to
continue as a going concern. EyeSys' independent auditors cited the following
reasons for such explanatory paragraph: (i) EyeSys has reported net losses of
$4,164,998, $3,424,996 and $3,708,657 for the years ended December 31, 1996,
1995 and 1994, respectively, (ii) EyeSys was in default of several loan
covenants relating to its revolving lines of credit, and (iii) EyeSys has not
repaid such loan obligations within their respective terms.
DEPENDENCE ON SUPPLIERS
The Company purchases certain raw materials, components and subassemblies
included in the Company's products from a limited group of qualified suppliers
and does not maintain long-term supply contracts with any of its key suppliers.
The disruption or termination of these sources could have a material adverse
effect on the Company's business and results of operations. For example, during
fiscal 1994, the Company's sole supplier of the specialized optic fiber required
for use in the Company's Er:YAG lasers ceased to provide this fiber to the
Company. While the Company has since qualified the new suppliers of this fiber,
the Company's inability to obtain sufficient quantities of this specialized
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<PAGE>
optical fiber had a material adverse effect on the volume of Er:YAG lasers the
Company was able to sell during fiscal 1994 and 1995. While the Company
believes that alternative suppliers could be found, there can be no assurance
that any supplier could be replaced in a timely manner. Any interruption in the
supply of other key components could have a material adverse effect on the
Company's ability to manufacture its products and on its business, financial
condition and results of operations.
Certain computer memory chips used by EyeSys in its proprietary hardware
are manufactured by a single company. These computer memory chips are subject to
rapid innovation and obsolescence. The discontinuance of the manufacturing of
this chip may require EyeSys to redesign certain hardware and software to
accommodate a replacement chip. While in the past EyeSys has been successful in
these redesign efforts, there can be no assurance that such an event would not
prove costly or cause a disruption in sales of corneal topography systems.
RISKS APPLICABLE TO FOREIGN SALES
Sales of the Company's products to foreign markets account for a
substantial portion of the Company's sales. Foreign sales expose the Company to
certain risks, including the difficulty and expense of maintaining foreign sales
distribution channels, barriers to trade, potential fluctuations in foreign
currency exchange rates, political and economic instability, availability of
suitable export financing, accounts receivable collections, tariff regulations,
quotas, shipping delays, foreign taxes, export licensing requirements and other
United States and foreign regulations that may apply to the export of medical
lasers. The regulation of medical devices worldwide also continues to develop,
and there can be no assurance that new laws or regulations will not have an
adverse effect on the Company. In addition, the Company may experience
additional difficulties in providing prompt and cost effective service of its
medical lasers in foreign countries. The Company does not carry insurance
against such risks. The occurrence of any one or more of these events may
individually or in the aggregate have a material adverse effect upon the
Company's business, financial condition and results of operations.
RISK OF TECHNOLOGICAL OBSOLESCENCE
The markets in which the Company's laser products compete are subject to
rapid technological change as well as the potential development of alternative
surgical techniques or new pharmaceutical products. Such changes could render
the Company's products uncompetitive or obsolete. The Company will be required
to invest in research and development to attempt to maintain and enhance its
existing products and develop new products. No assurances can be given that
such research and development efforts will result in the introduction of new
products or product improvements.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY
The Company's success will depend in part on its ability to obtain patent
protection for products and processes, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties. While the
Company holds 23 U.S. patents and 16 foreign patents (including 2 utility model
patents) and has other patent applications pending in the United States and
foreign countries, no assurance can be given that any additional patents will be
issued, that the scope of any patent protection will exclude competitors or that
any of the Company's patents will be held valid if subsequently challenged.
Further, there can be no assurance that others will not independently develop
similar products, duplicate the Company's products or design products that
circumvent any patents used by the Company. The Company is aware of certain
patents which, along with other patents that may exist or be granted in the
future, could restrict the Company's right to market certain of its technologies
without a license, including, without limitation, patents relating to the
Company's lens emulsification product and ophthalmic probes
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for the Er:YAG laser. In the past, the Company has received allegations that
certain of the Company's laser products infringe other patents. American Dental
Technologies ("ADT") recently has asserted that an aspect of the delivery system
of the Company's Er:YAG laser infringes a patent held by ADT. In addition,
BriteSmile, Inc., a wholly-owned subsidiary of Ion Laser Technology, Inc. has
alleged that the use of one of the Company's products in connection with a laser
bleaching procedure infringes a patent which they hold. There has been
significant patent litigation in the medical industry in general, and in the
medical laser industry in particular. Adverse determinations in litigation or
other patent proceedings to which the Company may become a party could subject
the Company to significant legal judgments or other liabilities to third parties
and could require the Company to seek licenses from third parties that may or
may not be economically viable. Patent and other intellectual property rights
disputes often are settled through licensing arrangements. No assurance can be
given that any licenses required under these or any other patents or proprietary
rights would be available on terms acceptable to the Company, if at all. If the
Company does not obtain such licenses, it could encounter delays in product
introductions while it attempts to design around such patents, or it could find
that the development, manufacture or sale of products requiring such licenses
could be enjoined. If the Company is found, in a legal proceeding, to have
infringed the patents or other proprietary rights of others, it could be liable
for significant damages. The Company also relies upon unpatented trade secrets,
and no assurance can be given that others will not independently develop or
otherwise acquire substantially equivalent trade secrets. In addition, at each
balance sheet date, the Company is required to review the value of its
intangible assets based on various factors, such as changes in technology. Any
adjustment downward in such value may result in a write-off of the intangible
asset and a substantial charge to earnings, thereby adversely affecting the
operating results of the Company in the future.
NEED FOR FDA AND FOREIGN GOVERNMENTAL APPROVALS; GOVERNMENT REGULATION
The Company's products are regulated as medical devices by the FDA under
the Federal Food, Drug and Cosmetic Act (the "FDC Act"). As such, these devices
require either Section 510(k) premarket clearance ("510(k)") or approval of a
premarket approval application ("PMA") by the FDA prior to commercialization.
Satisfaction of applicable regulatory requirements may take several years and
varies substantially based upon the type, complexity and novelty of such
devices, as well as the clinical procedure. Filings and governmental approvals
may be required in foreign countries before the devices can be marketed in these
countries. There is no assurance that further clinical trials of the Company's
medical lasers or of any future products will be successfully completed or, if
they are completed, that any requisite FDA or foreign governmental approvals
will be obtained. FDA or other governmental approvals of products developed by
the Company in the future may require substantial filing fees which could limit
the number of applications sought by the Company and may entail limitations on
the indicated uses for which such products may be marketed. In addition,
approved or cleared products may be subject to additional testing and
surveillance programs required by the FDA and other regulatory agencies, and
product approvals and clearances could be withdrawn for failure to comply with
regulatory standards or by the occurrence of unforeseen problems following
initial marketing. Also, the Company has made modifications to certain of its
existing products which it does not believe require the submission of a new
510(k) notification to the FDA. However, there can be no assurance that the FDA
would agree with the Company's determination and not require the Company to
discontinue marketing one or more of the modified devices until they have been
cleared by the FDA. The Company is also required to adhere to applicable
requirements for current Good Manufacturing Practices ("CGMP") and radiological
health requirements, to engage in extensive record keeping and reporting and to
comply with the FDA's product labeling, promotional and advertising
requirements. Noncompliance with state, local, federal or foreign requirements
can result in fines, injunctions, civil penalties, recall or seizure of
products, total or partial suspension of production, delay, denial or withdrawal
of premarket clearance or approval of devices, recommendations by the FDA that
the Company not be allowed to enter into government contracts, and criminal
prosecution, all of which would have a material adverse effect on the Company's
business, financial condition and results of operations. The Company's
manufacturing facilities are subject to
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periodic inspections by state and federal agencies, including the FDA, the
California Department of Health Services, and comparable agencies in other
countries.
DEPENDENCE ON KEY PERSONNEL
The Company depends to a considerable degree on a limited number of key
personnel, including Colette Cozean, Ph.D., its Chairman of the Board,
President, Chief Executive Officer and Director of Research. Dr. Cozean is also
an inventor of a number of the Company's patented technologies. During the
Company's limited operating history, many key responsibilities within the
Company have been assigned to a relatively small number of individuals. The
loss of Dr. Cozean's services or those of certain other members of management
could adversely affect the Company. The Company carries key person life
insurance in excess of $5 million on Dr. Cozean. The Company has no employment
agreements with its key personnel. The success of the Company will also depend,
among other factors, on the successful recruitment and retention of qualified
technical and other personnel.
HIGHLY COMPETITIVE INDUSTRY
The medical laser industry is subject to intense competition and is
characterized by rapid technological change. The Company is and will continue
to be subject to competition in its targeted markets, principally from
businesses providing other traditional surgical and nonsurgical treatments,
including existing and developing technologies, and to a lesser extent
competitors' CO\\2\\, Argon, Er:YAG and Nd:YAG lasers. Many of the Company's
competitors have substantially greater financial, marketing and manufacturing
resources and experience than the Company. Furthermore, the Company expects
other companies will enter the market, particularly as medical lasers gain
increasing market acceptance. Significant competitive factors which will affect
future sales in the marketplace include regulatory approvals, performance,
pricing and general market acceptance.
The corneal topography market is also highly competitive. There are many
companies, both public and private, some with significantly greater resources
than EyeSys, engaged in the corneal topography market. These companies include
Alcon Laboratories (a subsidiary of Nestle), Humphrey Instruments (a subsidiary
of Carl Zeiss), and Tomey Technology. These companies, together with EyeSys and
others, market corneal topography instruments which utilize a technology for
measuring corneal curvature based on reflected images. Other companies,
including PAR Technology and Orbtek, utilize other technologies to measure the
corneal surface. There can be no assurances that EyeSys' competitors will not
succeed in developing technologies, procedures or products that are more
effective or economical than those marketed or being developed by EyeSys or that
would render EyeSys' products obsolete or noncompetitive.
To continue to remain competitive, EyeSys must develop new software and
hardware meeting the needs of ophthalmologists and optometrists. EyeSys' future
revenues will depend, in part, on its ability to develop and commercialize these
new products as well as on the success of development and commercialization
efforts of its competitors.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
Due to the relatively high sales price of the Company's laser systems and
the low sales unit volume, minor timing differences in receipt of customer
orders have produced and could continue to produce significant fluctuations in
quarterly results. In addition, if anticipated sales and shipments in any
quarter do not occur when expected, expenditures and inventory levels could be
disproportionately high, and the Company's operating results for that quarter,
and potentially for future quarters, would be
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adversely affected. Quarterly results may also fluctuate based on a variety of
other factors such as seasonality, production delays, product mix, cancellation
or rescheduling of orders, new product announcements by competitors, receipt of
FDA clearances or approvals by the Company or its competitors, notices of
product suspension or recall, the Company's ability to manage product
transitions, sales prices and market conditions. In addition, if the Company
expands or augments its manufacturing capabilities in connection with the
introduction of new products, quarterly revenues and operating results are
expected to fluctuate to an even greater degree.
UNCERTAIN ABILITY TO MEET CAPITAL NEEDS
The Company will require substantial additional funds for its research and
development programs, preclinical and clinical testing, development of its sales
and distribution force, operating expenses, regulatory processes and
manufacturing and marketing programs. The Company's capital requirements will
depend on numerous factors, including the progress of its research and
development programs, results of preclinical and clinical testing, the time and
cost involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing any patent claims and other intellectual
property rights, competing technological and market developments, developments
and changes in the Company's existing research, licensing and other
relationships and the terms of any new collaborative, licensing and other
arrangements that the Company may establish. The Company believes its available
current assets and investment income will be sufficient to meet its operating
expenses and capital expenditures through the next 12 months. However, the
Company's cash requirements may vary materially from those now planned due to
potential future acquisitions, the progress of research and development
programs, results of clinical testing, relationships with strategic partners, if
any, competitive and technological advances, the FDA and foreign regulatory
processes and other factors. There can be no assurance, however, that
additional financing will be available when needed, or if available, will be
available on acceptable terms. Insufficient funds may prevent the Company from
implementing its business strategy or may require the Company to delay, scale
back or eliminate certain of its research and product development programs or to
license to third parties rights to commercialize products or technologies that
the Company would otherwise seek to develop itself.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Securities. In addition, the market price of the Securities
has been and is likely to be highly volatile. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new products by the Company or its competitors, FDA and
international regulatory actions, developments with respect to patents or
proprietary rights, public concern as to the safety of products developed by the
Company or its competitors, changes in health care policy in the United States
and internationally, changes in analysts' recommendations regarding the Company,
other medical companies or the medical laser industry generally and general
market conditions may have a significant effect on the market price of the
Securities.
PRODUCT LIABILITY EXPOSURE
The sale of the Company's laser systems and corneal topography systems
involves the inherent risk of product liability claims against the Company. The
Company currently maintains product liability insurance coverage in the
-11-
<PAGE>
amount of $5 million per occurrence and $5 million in the aggregate, but such
insurance is expensive, subject to various coverage exclusions and may not be
obtainable by the Company in the future on terms acceptable to the Company.
There can be no assurance that claims against the Company arising with respect
to its products will be successfully defended or that the insurance carried by
the Company will be sufficient to cover liabilities arising from such claims. A
successful claim against the Company in excess of the Company's insurance
coverage could have a material adverse effect on the Company.
LIMITATIONS ON THIRD PARTY REIMBURSEMENT
The Company's products are generally purchased by physicians, dentists and
surgical centers which then bill various third party payors, such as government
programs and private insurance plans, for the procedures conducted with these
products. Third-party payors carefully review and are increasingly challenging
the prices charged for medical products and services. Reimbursement rates from
private companies vary depending on the procedure performed, the third-party
payor, the insurance plan and other factors. Medicare reimburses hospitals a
prospectively-determined fixed amount for the costs associated with an in-
patient hospitalization based on the patient's discharge diagnosis, and
reimburses physicians a prospectively-determined fixed amount based on the
procedure performed, regardless of the actual costs incurred by the hospital or
physician in furnishing the care and unrelated to the specific devices used in
that procedure. Third-party payors are increasingly scrutinizing whether to
cover new products and the level of reimbursement for covered products. While
the Company believes that the laser procedures using its products have generally
been reimbursed, payors may deny coverage and reimbursement for the Company's
products if they determine that the device was not reasonable and necessary for
the purpose for which used, was investigational or not cost-effective. As a
result, there can be no assurance that reimbursement from third party payors for
these procedures will be available or if available, that reimbursement will not
be limited, thereby adversely affecting the Company's ability to sell its
products on a profitable basis. Moreover, the Company is unable to predict what
legislation or regulation, if any, relating to the health care industry or
third-party coverage and reimbursement may be enacted in the future, or what
effect such legislature or regulation may have on the Company.
UNCERTAINTIES REGARDING HEALTH CARE REFORM
Several states and the United States government are investigating a variety
of alternatives to reform the health care delivery system and further reduce and
control health care spending. These reform efforts include proposals to limit
spending on health care items and services, limit coverage for new technology
and limit or control the price health care providers and drug and device
manufacturers may charge for their services and products. If adopted and
implemented, such reforms could have a material adverse effect on the Company's
business, financial condition and results of operations.
CHARGE TO EARNINGS IN THE EVENT OF RELEASE OF ESCROW SHARES
The Company has outstanding shares of Class E-1 and Class E-2 Common Stock
(the "Escrow Shares") which are being held by the Company in escrow, and which
will be released from escrow and converted into shares of Common Stock if
certain criteria are met. In the event any of these criteria are met and any
shares are released from escrow to stockholders who are officers, directors,
employees or consultants of the Company, a substantial noncash compensation
expense will be recorded for financial reporting purposes. The recognition of
such compensation expense may have an adverse effect on the market price of the
Company's securities.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF OUTSTANDING OPTIONS AND WARRANTS
Sales of a substantial number of shares of Common Stock in the public
market could adversely affect the market price for the Common Stock.
Substantially all of the Company's shares of Common Stock outstanding as of the
date hereof are freely tradeable, subject to compliance with Rule 144
promulgated under the Securities Act. As of February 3, 1998, an additional
approximately 7,593,160 shares of Common Stock are issuable upon the full
exercise of the Company's outstanding Class B Warrants, and in excess of four
million shares of Common Stock are issuable upon exercise of other outstanding
warrants and options. The issuance of shares upon the exercise of the Class B
Warrants has been registered under the Securities Act, and substantially all of
the shares of Common Stock issuable upon exercise of the remaining options and
warrants may be resold pursuant to currently effective registration statements
or Rule 701 under the Securities Act. The existence of the Company's outstanding
warrants and options could adversely affect the Company's ability to obtain
future financing. The price which the Company may receive for the Common Stock
issued upon exercise of such options and warrants will likely be less than the
market price of the Common Stock at the time such options and warrants are
exercised. Moreover, the holders of the options and warrants might be expected
to exercise them at a time when the Company would, in all likelihood, be able to
obtain needed capital by a new offering of its securities on terms more
favorable than those provided for by the options and warrants.
POTENTIAL ANTI-TAKEOVER EFFECTS OF PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of 8,850,000
shares of "blank check" preferred stock, which will have such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of the Common Stock. In the event of such
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company.
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<PAGE>
USE OF PROCEEDS
Holders of Warrants are not obligated to exercise their Warrants and
there can be no assurance that any such holder will choose to exercise all or
any of his Warrants. In the event that all of the outstanding Warrants are
exercised, the gross proceeds to the Company would be $6,220,245.
The Company intends to use the proceeds received upon the exercise of the
Warrants, if any, for general corporate purposes and working capital to support
anticipated growth, including research and development programs and continuing
development of a distributor network. The Company may also use a portion of the
net proceeds received upon exercise of the Warrants for possible acquisitions of
complementary businesses, products and technologies.
-14-
<PAGE>
RECENT DEVELOPMENTS
The Company has recently acquired on the open market 29% of the outstanding
common stock of Ophthalmic Imaging Systems Inc. ("OISI"), a company engaged in
the business of designing, developing, manufacturing and marketing digital
imaging systems and image enhancement and analysis software for use by
practitioners in the ocular health field. In addition, the Company has submitted
a proposal to the Board of Directors of OISI to acquire approximately 2.7
million additional shares of common stock for $1.75 per share in cash. Such bid
is at a 30% premium over the current bid price of $1.34 per share of OISI common
stock and is presently being considered by the OISI Board of Directors. The
Company is presently unable to predict whether its offer will be accepted.
In addition, the Company recently completed the redemption of all of its
outstanding publicly traded Class A Warrants. In connection with such
redemption, 2,200,043 or approximately 99% of the outstanding Class A Warrants
were exercised by the holders thereof and an aggregate of $14,300,279 was
received by the Company. This total includes the proceeds from the exercise of
warrants associated with unit purchase options granted in connection with prior
offerings and exercised during the warrant call period.
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<PAGE>
REGISTERED SHAREHOLDERS
The Securities which are the subject of this Prospectus are listed in the
table set forth below. See "Plan of Distribution." The table sets forth certain
information as of February 2, 1998 concerning the Registered Shareholders,
including the Securities registered on their behalf or offered by them and their
beneficial ownership of the Company's Common Stock. The securities registered
under the Registration Statement of which this Prospectus is a part include
securities issuable upon the exercise of outstanding options and warrants, as
described in the footnotes which follow the table set forth below. The holders
of such options and warrants are entitled to determine whether and when such
options and warrants will be exercised.
<TABLE>
<CAPTION>
Shares Beneficially Owned
February 2, 1998/(1)/
-------------------------
Ownership after
Class A Securities being the Sale of the
Name of Shareholder Common Stock Registered/(2)/ Registered Securities/(3)/
- ------------------------------------------ ------------------------ ---------------- --------------------------
<S> <C> <C> <C>
Silicon Valley Bank/(5)/ 9,756 9,756/(4)/ 0
RSS, LLC/(6)/ 159,787 159,787 0
Josepthal Lyon & Ross Incorporated/(7)/ 150,000 150,000/(4)/ 0
Proclosure, Inc. 21,706 21,706/(4)/ 0
Rodman & Renshaw, Inc./(8)/ 60,000 60,000/(4)/ 0
Julia Heckman/(9)/ 41,000 41,000/(4)/ 0
Karl Schmidt/(9)/ 11,000 11,000/(4)/ 0
John Borer/(9)/ 4,000 4,000/(4)/ 0
Andy Swartz/(9)/ 3,000 3,000/(4)/ 0
Michael Sellinger/(9)/ 1,000 1,000/(4)/ 0
Colette Cozean, Ph.D./(10)/ 876,740 358,650/(4)/ 518,090
Patrick Day/(11)/ 178,055 65,000/(4)/ 113,255
Grace Lin/(12)/ 113,229 65,000/(4)/ 48,229
E. Donald Shapiro/(13)/ 105,000 65,000/(4)/ 40,000
T. Daniel Caruso/(14)/ 119,744 14,522/(4)/ 105,222
Ronald Higgins/(15)/ 64,400 10,000/(4)/ 54,400
Bear Stearns & Co., Inc./(16)/ 56,580 56,580/(4)/ 0
J. Charles Casebeer, M.D. 3,849 3,849 0
Stephen G. Slade, M.D. 3,849 3,849 0
Luis Ruiz, M.D. 3,849 3,849 0
Gregory K. Hanson 413 413 0
Guy Kezirian, M.D. 413 413 0
William F. Duffey 2,063 2,063 0
Richard Lindstrom, M.D. 2,063 2,063 0
Marguerite McDonald, M.D. 2,063 2,063 0
George O. Waring, M.D. 2,063 2,063 0
</TABLE>
______________________
(1) Includes shares subject to options or warrants exercisable within 60 days.
Also includes shares offered pursuant to this prospectus, where such shares
are subject to options or warrants, even if such options or warrants are
not exercisable within 60 days. Does not include Class E-1 or Class E-2
Common Stock held by the Registered Shareholder.
(2) All of the Securities being registered hereby consist of shares of Class A
Common Stock except for those securities being registered on behalf of Bear
Stearns & Co., Inc. which consist of 28,290 shares of Class A Common Stock
and 28,290 Class B Warrants. The figures shown assume the sale of all
shares of Common Stock presently held or which may be received upon
exercise of the options or warrants held by the holder.
(3) No Registered Shareholder will beneficially own more than 1% of the
Company's outstanding Class A Common Stock after the sale of the Shares
offered hereby.
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<PAGE>
(4) The Shares offered by this Registered Shareholder consist solely of shares
issuable upon exercise of outstanding options or warrants.
(5) Silicon Valley Bank is a lender to the Company, and received the warrants
described above in connection with a loan made to the Company.
(6) RSS, LLC is a minority member of a limited liability company, Data.Site,
LLC, of which the Company is the majority member.
(7) Josepthal Lyon & Ross Incorporated acts as a financial advisor to the
Company.
(8) Rodman & Renshaw, Inc. acts as a financial advisor to the Company.
(9) This Registered Shareholder is an affiliate or former affiliate of Rodman &
Renshaw, Inc.
(10) Dr. Cozean is the Chairman of the Board and Chief Executive Officer of the
Company. The shares to be registered on behalf of Dr. Cozean pursuant to
this prospectus consist solely of shares which may be received upon the
exercise of options held by her. The exercise of options to purchase
251,055 shares is subject to the satisfaction of certain conditions. The
shares owned beneficially as of February 2, 1998 includes 1,594 shares of
Class A Common Stock held by Dr. Cozean as custodian for her two minor
children.
(11) Mr. Day is a director of the Company. The shares to be registered on
behalf of Mr. Day pursuant to this prospectus consist solely of shares
which may be received upon the exercise of options or warrants held by him.
The exercise of options to purchase 45,000 shares is subject to the
satisfaction of certain conditions.
(12) Ms. Lin is a director of the Company. The shares to be registered on
behalf of Ms. Lin pursuant to this prospectus consist solely of shares
which may be received upon the exercise of options held by her. The
exercise of options to purchase 45,000 shares is subject to the
satisfaction of certain conditions. The shares owned beneficially as of
February 2, 1998 includes 6,330 shares of Class A Common Stock held by
Linco Investments, a limited partnership in which Ms. Lin's husband serves
as a general partner, and 1,899 shares of Class A Common Stock held by a
pension plan for Ms. Lin's husband.
(13) Mr. Shapiro is a director of the Company. The shares to be registered on
behalf of Mr. Shapiro pursuant to this prospectus consist solely of shares
which may be received upon the exercise of options held by him. The
exercise of options to purchase 45,000 shares is subject to the
satisfaction of certain conditions.
(14) Mr. Caruso is an executive officer of the Company. The shares to be
registered on behalf of Mr. Caruso pursuant to this prospectus consist
solely of shares which may be received upon the exercise of options held by
him. The exercise of options to purchase 7,022 shares is subject to the
satisfaction of certain conditions.
(15) Mr. Higgins is a former executive officer of the Company. The shares to be
registered on behalf of Mr. Higgins pursuant to this prospectus consist
solely of shares which may be received upon the exercise of options held by
him. The exercise of options to purchase 2,500 shares is subject to the
satisfaction of certain conditions.
(16) The Company has granted Bear Stearns & Co., Inc. an option to purchase
28,290 shares of Class A Common Stock and 28,290 Class B Warrants. Each
Class B Warrant entitles the holder to purchase one share of Class A Common
Stock at an exercise price of $8.00.
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<PAGE>
DESCRIPTION OF SECURITIES
The following description of the Company's capital stock and selected
provisions of its Articles of Incorporation and Bylaws is a summary and is
qualified in its entirety by the Company's Articles of Incorporation and Bylaws,
copies of which have been filed with the Securities and Exchange Commission.
COMMON STOCK
The Company is authorized to issue 35,600,000 shares of Class A Common Stock,
no par value, 2,200,000 shares of Class E-1 Common Stock, no par value, and
2,200,000 shares of Class E-2 Common Stock. The Class A Common Stock, Class E-1
Common Stock and the Class E-2 Common Stock have equal voting rights and are
entitled to share equally in dividends from sources available therefor when, as
and if declared by the Board of Directors. Holders of Class A Common Stock have
no preemptive rights and no right to convert their Common Stock into any other
securities. The holders of each class of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of the
shareholders, except that holders of Common Stock are entitled to cumulative
voting with respect to the election of directors upon giving notice as required
by law. In cumulative voting, the holders of Common Stock are entitled to cast
for each share held the number of votes equal to the number of directors to be
elected. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding Preferred Stock. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares are, and all
shares to be sold and issued as contemplated hereby will be, fully paid and
nonassessable and legally issued. The Board of Directors is authorized to issue
additional shares of Common Stock within the limits authorized by the Company's
charter and without shareholder action. As of February 2, 1998, there were
14,814,523 shares of Class A Common Stock outstanding.
CLASS E-1 COMMON STOCK
The Company is authorized to issue 2,200,000 shares of Class E-1 Common
Stock, no par value. As of February 2, 1998, there were outstanding 1,257,178
shares of Class E-1 Common Stock and 1,257,178 shares of Class E-2 Common Stock
(the "Escrow Shares"). The Escrow Shares are not transferrable (but may be
voted), and each Escrow Share will automatically convert into one share of
Common Stock and be released to the owners thereof upon the achievement of the
objectives described below. On June 30, 2000, all Escrow Shares not previously
converted into Common Stock will be cancelled. This arrangement was required by
the representative of the underwriters for the Company's initial public offering
as a condition of such offering.
All of the Class E-1 Common Stock will be automatically converted into Class
A Common Stock in the event that the Company's net income before provision for
income taxes, as defined, exceeds certain amounts. These amounts were
originally $6,850,000, $8,425,000, and $9,900,000 for the fiscal years ending
March 31, 1998 through 2000, respectively, but these amounts will be increased
in future fiscal years in proportion to increases in the weighted average number
of shares of Class A Common Stock outstanding (as defined) in the relevant year,
as compared to the number of shares outstanding immediately after the Company's
initial public offering in 1994.
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<PAGE>
CLASS E-2 COMMON STOCK
The Company is authorized to issue 2,200,000 shares of Class E-2 Common
Stock, no par value. All of the shares of Class E-2 Common Stock will be
automatically converted into Class A Common Stock in the event that the
Company's net income before provision for income taxes, as defined, amounts to
at least $14,750,000, $20,475,000 or $26,750,000 for years March 31, 1998
through 2000, respectively (which amounts shall be adjusted in the same manner
as those for the Class E-1 Common Stock).
Any money, securities, rights or property distributed in respect of the
Escrow Shares, including any property distributed as dividends or pursuant to
any stock split, merger, recapitalization, dissolution or total or partial
liquidation of the Company, shall be held by the Company in escrow until
conversion of the Escrow Shares. If none of the foregoing earnings levels are
attained, the Escrow Shares, as well as any dividends or other distributions
made with respect thereto, will be cancelled. The earnings levels set forth
above were determined by negotiation between the Company and the representative
of the underwriter in the Company's initial public offering and should not be
construed to imply or predict any future earnings by the Company. There can be
no assurance that such earnings levels will be attained or that any or all of
the Escrow Shares will be converted into Common Stock. However, the conversion
to Common Stock of all or any portion of the Escrow Shares may result in a
charge to earnings to the extent that such shares are held by management or
employees.
PREFERRED STOCK
The Company's authorized preferred stock consists of 20,000,000 shares, no
par value (the "Preferred Stock"), of which 11,150,000 shares have been
cancelled or already designated. The Board of Directors has the authority,
without further action by the shareholders, to issue from time to time up to
8,850,000 shares of Preferred Stock in one or more series and to fix the
dividend rights and terms, conversion rights, voting rights (whole, limited or
none), redemption rights and terms, liquidation preferences, sinking funds and
any other rights, preferences, privileges and restrictions applicable to each
such series of Preferred Stock. The purpose of authorizing the Board of
Directors to determine such rights and preferences is to eliminate delays
associated with a shareholder vote on specific issuances. The issuance of the
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, could make it more difficult for a third party to gain control of
the Company. Such issuance of Preferred Stock could also adversely affect the
distributions on and liquidation preference of the Common Stock by creating more
series of Preferred Stock with distribution or liquidation preferences senior to
the Common Stock. The Company has no present plan to issue any shares of
Preferred Stock.
Class B Warrants
Each Class B Warrant entitles the registered holder to purchase one share of
Common Stock at an exercise price of $8.00 per share at any time prior to
November 30, 1999. As of February 2, 1998, the Company had outstanding
7,593,160 Class B Warrants. The Company has a right to redeem all of the Class B
Warrants at a price of $.05 per Class B Warrant upon not less than 30 days'
prior written notice at any time, provided that before any such redemption can
take place, the last sale price of the Company's Class A Common Stock in the
Nasdaq National Market shall have been in excess of $11.20 per share for 30
consecutive business days ending within 15 days prior to the date of the notice
of redemption. During the 30-day notice period, a holder shall have the option
to exercise his Class B Warrants. This right of redemption shall not apply to
the Class B Warrants that are components of the IPO Unit Purchase Options or the
Secondary Unit Purchase Options which have been granted in connection with
previous offerings.
TRANSFER AND WARRANT AGENT
The Transfer and Warrant Agent for the Company's securities is American Stock
Transfer & Trust Company, New York, New York.
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<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Securities being registered on behalf of the
Registered Shareholders may be delivered and/or sold in transactions from time
to time on the Nasdaq National Market at prices prevailing at the time, at
prices related to such prevailing prices or at negotiated prices. The Registered
Shareholders may effect such transactions by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Registered
Shareholders. The Registered Shareholders and any broker-dealers that
participate in the distribution may under certain circumstances be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received by such broker-dealers and any profits realized on the sale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Registered Shareholders may agree to indemnify
such broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify certain of the
Registered Shareholders with respect to the Securities being registered
hereunder against certain liabilities, including, without limitation, certain
liabilities under the Securities Act.
The Registered Shareholders will pay all commissions, transfer taxes,
and other expenses associated with the sale of Securities by them. The Company
has paid the expenses of the preparation of this Prospectus. The Company has not
made any underwriting arrangements with respect to the sale of Securities
being registered hereunder on exercise of the Warrants. Upon exercise of
Warrants, the Securities will be issued by the Company directly to the persons
exercising the Warrants.
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<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted by California law. The Company is
also empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and certain others and to purchase insurance on behalf of
any person it is required or permitted to indemnify. Pursuant to this
provision, the Company has entered into indemnity agreements with each of its
directors and executive officers and certain key consultants.
In addition, the Company's Articles of Incorporation provide that, to the
fullest extent permitted by California law, the Company's directors will not be
liable for monetary damages for breach of the directors' fiduciary duty of care
to the Company or its shareholders. This provision in the Articles of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
nonmonetary relief would remain available under California law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omissions involving intentional misconduct
or knowing and culpable violations of law, for acts or omissions that a director
believes to be contrary to the best interests of the Company or its shareholders
or involve the absence of good faith on the part of the director, for any
transaction from which the director derived an improper personal benefit, for
acts or omissions involving a reckless disregard for the director's duty to the
Company or its shareholders when the director was aware or should have been
aware of a risk of serious injury to the Company or its shareholders, for acts
or omissions that constitute an unexcused pattern of inattention that amounts to
an abdication of the director's duty of the Company or its shareholders, for
improper transaction between the director and the Company, for improper
distributions to shareholders and loans to directors and officers or for acts or
omissions by the director as an officer. This provision also does not affect a
director's responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws.
There is no pending litigation or proceeding involving a director or officer
of the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.
The Company believes the foregoing provisions are necessary to attract and
retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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<PAGE>
===============================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information....................... 4
Incorporation of Certain Documents
by Reference.............................. 4
The Company................................. 5
Risk Factors................................ 6
Use of Proceeds............................. 14
Recent Developments......................... 15
Registered Shareholders..................... 16
Description of Securities................... 18
Plan of Distribution........................ 20
Indemnification of Directors and Officers... 21
</TABLE>
Until ________________, 1998, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a Prospectus.
PREMIER LASER SYSTEMS, INC.
February 3, 1998
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The following table sets forth the estimated expenses of the Registrant in
connection with the issuance and distribution of the securities described in the
Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee ........ $ 4,206
Legal Fees and Expenses..................................... $ 8,000
Accounting Fees and Expenses................................ $ 16,000
Printing and Engraving Expenses............................. $ 3,000
Miscellaneous............................................... $ 5,000
--------
Total....................................................... $ 36,206
========
</TABLE>
All of the above expenses will be paid by the Registrant.
II-1
<PAGE>
15. Indemnification of Directors and Officers.
-----------------------------------------
The California General Corporations Law provides that California
corporations may include provisions in their articles of incorporation relieving
directors of monetary liability for breach of their fiduciary duty as directors,
except for the liability of a director resulting from (i) any transaction from
which the director derives an improper personal benefit, (ii) acts or omissions
involving intentional misconduct or a knowing and culpable violation of law,
(iii) acts or omissions that a director believes to be contrary to the best
interests of the Registrant or its shareholders or that involves the absence of
good faith on the part of the director (iv) acts or omissions constituting an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the Registrant or its shareholders, (v) acts or omissions showing a
reckless disregard for the director's duty to the Registrant or its shareholders
in circumstances in which the director was aware or should have been aware, in
the ordinary course of performing a director's duties, of a risk of serious
injury to the Registrant or its shareholders, (vi) any improper transaction
between a director and the Registrant in which the director has a material
financial interest, or (vii) the making of an illegal distribution to
shareholders or an illegal loan or guaranty. The Registrant's Articles of
Incorporation provide that the Registrant's directors are not liable to the
Registrant or its shareholders for monetary damages for breach of their
fiduciary duties to the fullest extent permitted by California law.
The inclusion of the above provision in the Articles of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Registrant and its
shareholders. At present, there is no litigation or proceeding pending
involving a director of the Registrant as to which indemnification is being
sought, nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any director.
The Registrant's Articles of Incorporation provide that the Registrant
shall indemnify its directors and officers to the fullest extent permitted by
California law, including circumstances in which indemnification is otherwise
discretionary under California law. Since the California statute is
nonexclusive, it is possible that certain claims beyond the scope of the statute
may be indemnifiable. Accordingly, the Registrant has also entered into an
indemnification agreement (the "Indemnification Agreement") with certain of its
directors and officers that requires the Registrant to indemnify such directors
and officers to the fullest extent permitted by law. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant, 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 Securities Act, and
is, therefore, unenforceable.
It is intended that the Indemnification Agreements provide a scheme of
indemnification which may be broader than that specifically provided by the
California statute. It has not yet been determined, however, the degree to
which the indemnification expressly permitted by the California statute may be
expanded.
Set forth below is a description of the principal provisions of the
Indemnification Agreement:
First, the Indemnification Agreement imposes upon the Company the burden of
proving that the Indemnified Party has not met the applicable standard of
conduct required for indemnification. The California statute requires a finding
by the Board of Directors, independent legal counsel, or the stockholders that
the applicable standard of conduct has been met.
II-2
<PAGE>
Second, the Indemnification Agreement provides that litigation expenses
shall be advanced to an Indemnified Party at his or her request, against an
undertaking to repay the amount advanced if it is ultimately determined that he
is not entitled to indemnification for such expenses. The California statute
provides that such expenses may be advanced against such an undertaking, upon
authorization by the Board of Directors.
Third, in the event the Company does not pay a requested indemnification
amount, the Indemnification Agreement allows such Indemnified Party to contest
this determination by petitioning a court to make an independent determination
of whether such indemnified Party is entitled to indemnification under the
Indemnification Agreement. The California statute does not set forth the
procedure for contesting a corporation's determination of a party's right to
indemnification.
Finally, the Indemnification Agreement explicitly provides that actions by
an Indemnified Party at the request of the Company as a director, officer or
agent of an employee benefit plan, corporation, partnership, joint venture or
other enterprise owned or controlled by the Company shall be covered by the
indemnification. The California statute does not specifically address this
issue. It does, however, provide that to the extent that an Indemnified Party
has been successful on the merits, he shall be entitled to such indemnification.
The Company is not aware of any threatened litigation or proceeding which
may result in a claim for indemnification under the Indemnification Agreement by
any director or officer.
16. Exhibits.
--------
3.1 Amended and Restated Articles of Incorporation (incorporated
herein by this reference to Exhibit 4.8 to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended December
31, 1994).+
4.1 Warrant Agreement (including forms of Class A and Class B Warrant
Certificates) (incorporated herein by this reference to Exhibit
4.1 to the Registrant's Registration Statement on Form SB-2,
registration no. 33-83984).+
4.2 Amendment to Warrant Agreement (incorporated herein by this
reference to Exhibit 4.3 to Amendment No. 3 to the
Registrant's Registration Statement on Form SB-2, registration
no. 33-4219).+
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of Rutan & Tucker, LLP (included in Exhibit 5)
23.2 Consent of Price Waterhouse LLP*
23.3 Consent of Ernst & Young LLP*
23.4 Consent of Coopers & Lybrand L.L.P.*
24 Power of Attorney (included on signature page hereof)
____________________________
+ Previously filed.
* Filed herewith.
17. Undertakings.
------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to:
(i) Include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
II-3
<PAGE>
(iii) 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;
provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That for the purpose of determining liability under the Securities Act
of 1933, the Registrant will treat each post-effective amendment as a new
Registration Statement of the securities offered, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To file a post-effective amendment or remove from registration any of
the securities that remain unsold at the end of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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 as the time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 27th day of
January, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
----------------------------
Colette Cozean, Ph.D.
President and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Colette
Cozean his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, at
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith or in connection
with the registration of the Common Stock under the Securities Exchange Act of
1934, as amended, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary in connection with such matters
and hereby ratifying and confirming that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
- ------------------------- ----------------------------------- -----------------
<S> <C> <C>
/s/ COLETTE COZEAN
- ------------------------- Chairman of the Board, President January 27, 1998
Colette Cozean, Ph.D. and Chief Executive Officer
(Principal Executive Officer)
/s/ MICHAEL HIEBERT
- ------------------------- Vice President of Finance and January 27, 1998
Michael Hiebert Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
/s/ PATRICK J. DAY
- ------------------------- Director January 27, 1998
Patrick J. Day
/s/ GRACE CHING-HSIN LIN
- ------------------------- Director January 27, 1998
Grace Ching-Hsin Lin
/s/ G. LYNN POWELL
- ------------------------- Director January 27, 1998
G. Lynn Powell, D.D.S.
/s/ E. DONALD SHAPIRO
- ------------------------- Director January 27, 1998
E. Donald Shapiro
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Pages
----------- ----------- --------------
<C> <S> <C>
3.1 Amended and Restated Articles of Incorporation (incorporated
herein by this reference to Exhibit 4.8 to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1994).+
4.1 Warrant Agreement (including forms of Class A and Class B
Warrant Certificates) (incorporated herein by this
reference to Exhibit 4.1 of the Registrant's Registration
Statement on Form SB-2, registration no. 33-83984).+
4.2 Amendment to Warrant Agreement (incorporated herein by this
reference to Exhibit 4.3 to Amendment No. 3 to the Registrant's
Registration Statement on Form SB-2, registration no. 33-4219).+
5 Opinion of Rutan & Tucker, LLP*................................. 22
23.1 Consent of Rutan & Tucker, LLP (included in Exhibit 5).......... 22
23.2 Consent of Price Waterhouse LLP*................................ 23
23.3 Consent of Ernst & Young LLP*................................... 24
23.4 Consent of Coopers & Lybrand L.L.P*............................. 25
24 Power of Attorney (included on signature page hereof)........... --
</TABLE>
*Filed herewith
+Previously filed
<PAGE>
EXHIBIT 5
[LETTERHEAD OF RUTAN & TUCKER, LLP]
January 30, 1998
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Ladies and Gentlemen:
We are rendering this opinion in connection with the Registration Statement
on Form S-3 (the "Registration Statement") to be filed by Premier Laser Systems,
Inc. (the "Company") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on or about the date hereof. The
Registration Statement relates to certain outstanding shares of the Company's
Class A Common Stock, no par value, and to shares of Class A Common Stock and
Class B Warrants issuable upon the exercise of certain outstanding warrants and
options, as described in the Registration Statement.
We have acted as counsel in connection with the preparation of the
Registration Statement and are familiar with the proceedings taken by the
Company in connection with the authorization and issuance of the securities in
the manner set forth in the Registration Statement. We have examined such
documents as we consider necessary to render this opinion.
Based on the foregoing, we are of the opinion that the securities described
above, including those to be issued in the manner set forth in the Registration
Statement, have been duly authorized, and upon issuance in the manner described
therein, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ RUTAN & TUCKER, LLP
RUTAN & TUCKER, LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Premier Laser
Systems, Inc. of our report dated May 17, 1996 appearing on page 26 of the
Company's Amendment No. 1 to Annual Report on Form 10-K for the year ended March
31, 1997. We also consent to the application of such report to the Financial
Statement Schedule for the two years ended March 31, 1996 listed in the
accompanying index when such schedule is read in conjunction with the financial
statements referred to in our report. The audits referred to in such report
also included this schedule.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Costa Mesa, California
January 29, 1998
<PAGE>
EXHIBIT 23.3
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-3 and related Prospectus pertaining to the registration of 1,458,202
shares of Class A Common Stock and 28,290 Class B Warrants of Premier Laser
Systems, Inc. of our report dated May 1, 1997, with respect to the consolidated
financial statements and schedules of Premier Laser Systems, Inc. included in
its Annual Report (Form 10-K) for the year ended March 31, 1997, as amended,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Orange County, California
January 30, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement Form S-3 of our report, which includes an explanatory paragraph
concerning the Company's ability to continue as a going concern, dated March 21,
1997, except for Notes 5 and 15 as to which the date is June 3, 1997, of our
audits of the financial statements of Eyesys Technologies, Inc. as of December
31, 1996 and 1995, and for the three years in the period ended December 31,
1996, appearing in the registration statement on Form S-4 (File No. 333-29573)
of Premier Laser Systems, Inc. filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933. We also consent to the incorporation by
reference of our report in the registration statements on Form S-8 (File No.
333-01680), Form S-8 (File No. 333-27151), and Form S-8 (File No. 333-29497).
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
January 30, 1998
