SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 1996.
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the Transition period
Commission File Number: 0-19671
LASERSIGHT INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 65-0273162
---------------------------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
12161 Lackland Road, St. Louis, Missouri 63146
(Address of principal executive offices) (Zip Code)
(314) 469-3220
(Registrant's telephone number, including area code)
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
-------- --------
The Number of shares of the registrant's Common Stock outstanding as of
May 6, 1996 is 7,033,427.
<PAGE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
INDEX PAGE
PART I FINANCIAL INFORMATION PAGE
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March
31, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations for
the Three Month Periods Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows for
the Three Month Periods Ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS March 31, December 31,
1996 1995
---- ----
<S> <C> <C>
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents ............................ 3,794,114 $ 1,598,339
Trade accounts receivable, net ....................... 7,260,908 8,512,744
Notes receivable - current portion, net .............. 2,086,742 1,632,221
Inventory ............................................ 2,894,699 1,836,750
Deferred tax assets .................................. 376,000 221,000
Income taxes recoverable ............................. 398,706 --
Other current assets ................................. 279,781 378,905
------- --------
TOTAL CURRENT ASSETS ......................... 17,090,950 14,179,959
NOTES RECEIVABLE, less current portion, net ............ 2,833,058 3,026,148
FURNITURE AND EQUIPMENT, net ........................... 1,185,274 1,045,481
GOODWILL, net .......................................... 8,528,915 8,640,645
OTHER ASSETS, net ...................................... 2,166,203 2,210,260
--------- ---------
$31,804,400 $29,102,493
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ......................................$ 2,566,113 $ 2,088,736
Notes payable - related parties ....................... 1,000,000 2,264,100
Accrued expenses ...................................... 400,804 92,641
Accrued commissions ................................... 1,400,816 1,777,007
Dividends payable ..................................... 129,945 --
Income taxes payable .................................. -- 314,205
Other current liabilities ............................. 384,409 171,743
-------- --------
TOTAL CURRENT LIABILITIES ............................. 5,882,087 7,108,432
========= =========
REFUNDABLE DEPOSITS ................................... 357,000 425,000
ACCRUED COMMISSIONS ................................... 471,619 518,920
DEFERRED INCOME TAXES ................................. 615,000 630,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - par value $.001 per share;
authorized 10,000,000 shares; 116 issued at
March 31,1996
Common stock - par value $.001 per share;
authorized 20,000,000 shares; 7,192,132 and
7,186,032 shares issued at March 31,1996 and
December 31, 1995, respectively ...................... 7,192 7,186
Additional paid-in capital ............................ 27,234,311 21,944,000
Obligation to issue common stock ...................... 780,125 780,125
Stock subscription receivable ......................... (1,140,000) (1,140,000)
Accumulated deficit ................................... (1,770,225) (538,461)
Less treasury stock, at cost; 170,200 shares .......... (632,709) (632,709)
---------- ----------
24,478,694 20,420,141
---------- ----------
$31,804,400 $29,102,493
=========== ===========
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
REVENUES, net ................................ $ 4,583,638 $ 4,488,564
COST OF SALES ................................ 634,047 737,728
PROVIDER PAYMENTS ............................ 934,958 --
----------- -----------
GROSS PROFIT ................................. 3,014,633 3,750,836
RESEARCH, DEVELOPMENT AND
REGULATORY EXPENSES ........................ 736,132 219,678
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES ................................... 4,186,597 2,040,942
----------- -----------
INCOME (LOSS) FROM OPERATIONS ................ (1,908,096) 1,490,216
OTHER INCOME AND EXPENSES
Interest and dividend income ............... 54,746 66,600
Interest expense ........................... (26,364) (15,091)
Other ...................................... -- 980,125
----------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES ........ (1,879,714) 2,521,850
INCOME TAX EXPENSE (BENEFIT) ................. (647,950) 600,000
----------- -----------
NET INCOME (LOSS) ............................ $(1,231,764) $ 1,921,850
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE
Primary: ................................. $ (0.19) $ 0.29
=========== ===========
Assuming full dilution: .................. $ (0.19) $ 0.29
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Primary: ................................. 7,020,000 6,587,000
=========== ===========
Assuming full dilution: .................. 7,020,000 6,587,000
=========== ===========
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<CAPTION>
<S> <C> <C>
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ..................................................... $(1,231,764) $ 1,921,850
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ......................................... 206,017 64,350
Provision for uncollectible accounts .................................. 237,500 3,796
Decrease (increase) in accounts receivable ............................ 1,014,336 (1,685,617)
Increase in notes receivable .......................................... (261,431) (894,000)
Increase in inventory ................................................. (1,057,949) (272,478)
Increase (decrease) in accounts payable ............................... 477,377 (6,027)
(Decrease) increase in accrued liabilities ............................ (302,663) 311,238
Other ................................................................. (844,231) 485,731
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES ................................... (1,762,808) (71,157)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment .................................. (197,578) (53,887)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock ................................ -- 1,213,332
Proceeds from exercise of stock options ............................... 31,232 107,083
Repayments of notes payable - related party ........................... (799,100) --
Repayments of notes payable - officer ................................. (465,000) (500,000)
Proceeds from issuance of preferred stock, net ........................ 5,389,029 --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ............................... 4,156,161 820,415
----------- -----------
INCREASE IN CASH AND CASH
EQUIVALENTS ........................................................... 2,195,775 695,371
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ................................................... 1,598,339 1,882,528
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................ $ 3,794,114 $ 2,577,899
=========== ===========
See accompanying notes to the condensed consolidated financial statements
</TABLE>
<PAGE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS Three Month Periods
Ended March 31, 1996 and 1995
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited, condensed consolidated financial statements of
LaserSight Incorporated and subsidiaries (the Company) as of March 31,
1996, and for the three-month periods ended March 31, 1996 and 1995 have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and note disclosures required by generally accepted
accounting principles for complete financial statements. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
In the opinion of management, the condensed consolidated financial
statements include all adjustments necessary for a fair presentation of
consolidated financial position and the results of operations and cash
flows for the periods presented. The results of operations for the period
ended March 31, 1996 are not necessarily indicative of the operating
results for the full year.
NOTE 2 PER SHARE INFORMATION
Net earnings (loss) per common share is computed using the weighted average
number of common shares and common share equivalents outstanding during
each period. Common share equivalents include options and warrants to
purchase common stock and are included in the computation using the
treasury stock method if they would have a dilutive effect. Fully diluted
earnings (loss) per share for the three months ended March 31, 1996 was
anti-dilutive and therefore are the same as primary earnings (loss) per
share.
NOTE 3 INVENTORIES
Inventories, which consist primarily of laser system parts and components,
is stated at the lower of cost or market. Cost is determined using the
first-in, first-out method.
March 31, 1996 December 31, 1995
-------------- -----------------
Raw materials $1,991,429 $ 839,984
Work-in-process -- 431,766
Finished goods 738,270 280,000
Test equipment-clinical
trials 165,000 285,000
---------- ----------
$2,894,699 $1,836,750
========== ==========
<PAGE>
NOTE 4 STOCKHOLDERS' EQUITY
Private Placement Offerings
---------------------------
On January 10, 1996, the Company completed a private placement of Series A
Convertible Preferred Stock (Preferred Stock), yielding net proceeds after
related costs of $5.39 million. The Company also issued warrants to
purchase 17,509 shares of Common Stock at $13.25 per share to the placement
agent. The Preferred Stock is convertible into the Company's Common Stock
at the option of the holders at any time from April 9, 1996 to January 10,
1998, on which date all Preferred Stock remaining outstanding will
automatically be converted into Common Stock. The number of shares of
Common Stock issuable upon the conversion of each of the 116 shares of
Preferred Stock equals the purchase price of such share($50,000)divided by
a conversion price equal to the lesser of $14.18 per common share or 85% of
the average closing price of the Common Stock during the five trading days
preceding the conversion date, subject to a minimum conversion price.
The Company, subject to certain conditions, has the right to redeem the
Preferred Stock for cash or cause it to be converted to Common Stock.
Dividends on the Preferred Stock are cumulative and accrue at an annual
rate of 10% on the issue price and are payable in Common Stock or cash, at
the Company's option, at the time of conversion or redemption of the
Preferred Stock.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net Sales. The following table presents the Company's net sales by major
operating segments: technology related products and services and health care
services for the three month periods ended March 31, 1996 and 1995.
For the quarter ended For the quarter ended
March 31, 1996 March 31, 1995
Net Sales % of Total Net Sales % of Total
---------- ---------- --------- ----------
Technology related $1,984,350 43% $3,359,458 75%
Health care services 2,724,897 60% 1,129,106 25%
Intercompany revenues (125,609) (3%) -- --
---------- ---- ---------- --
Total net sales $4,583,638 100% $4,488,564 100%
========== ==== ========== ====
1996 % Change 1995
---- -------- ----
Net Sales $4,583,638 2.1% $4,488,564
========== ==== ==========
Net sales in the first quarter of 1996 were $4,583,638 compared to $4,488,564
(for an increase of $95,074)during the same period in 1995. This increase was
primarily attributable to (i) increased revenues generated by The Farris Group;
and (ii) revenues generated by the Company's new subsidiary, MEC Health Care,
Inc. (MEC), acquired on October 5, 1995. The Farris Group and MEC generated
revenues of $1,334,576 and $1,390,321, respectively. The increase in health care
services revenue was largely offset by a decrease in sales of technology related
products and services of $1,375,108. Net of returns, seven laser systems were
sold in the first quarter of 1996 compared to ten systems sold over the same
period in 1995. Sales returns in the first quarter of 1996 exceeded the amount
of the Company's reserves for returns and accounted for approximately 20 percent
of the Company's loss from operations. The decrease in laser systems sold from
levels in the latter part of 1995 is primarily the result of the Company's
revised credit policy. Due to this policy, five of the fifteen orders received
during the first quarter of 1996 were rejected because the terms offered were
inconsistent with the Company's credit policy. The impact on sales over the
remainder of 1996 of more restrictive credit policies cannot currently be
determined. In addition, the average sales price per system decreased
approximately five percent from 1995 average levels. Included in the first
quarter of 1995 were non-recurring revenues from the sale of revenue rights from
procedure fees at six surgical centers located in China in the amount of
$600,000.
Cost of goods sold; gross profits. The following table presents a comparative
analysis of cost of goods sold, gross profit and gross profit margins.
For the quarter ended % For the quarter ended
March 31, 1996 Change March 31, 1995
-------------- ------ --------------
Overall:
Cost of goods sold $ 634,047 (14%) $ 737,728
Provider payments 934,958 N/A --
Gross profit 3,014,633 3,750,836
Gross profit percentage 66% 84%
Technology related only:
Gross profit 1,350,303 2,621,730
Gross profit percentage 68% 78%
<PAGE>
Gross profit margins were 66% of net sales in the first quarter 1996 compared to
84% for the same period in 1995. The gross profit margin decrease was
attributable to (i) a lower average sales price for lasers sold during the
period; and (ii) the sale of the Company's future revenue rights for six lasers
in China for $600,000 in the first quarter of 1995. The sale of the Company's
future revenue rights did not involve any cost of sales. Excluding such revenue,
the gross profit percentage in the first quarter of 1995 was 73 percent.
Research, development and regulatory expenses. The following table presents a
comparative analysis of research, development and regulatory expenses.
For the quarter ended For the quarter ended
March 31, 1996 % Change March 31, 1995
-------------- -------- --------------
Research, development
and regulatory $736,132 235% $219,678
As a % of technology
related net sales 37% 7%
Research, development and regulatory expenses for the three months ended March
31, 1996 were $736,132, an increase of $516,454, or 235% from such expenditures
during the same period in 1995. The increase in research, development and
regulatory expenses can primarily be attributed to ongoing research and
development of new refractive laser systems, including refinements to the
LaserScan 2000, continued software development for the excimer lasers, and
continued development of the LaserHarmonic solid state laser. Regulatory
expenses have increased as a result of the Company's continuation of FDA
clinical trials for myopia and the development of additional protocols for
submission to the FDA.
Selling, general and administrative expenses. The following table presents a
comparative analysis of selling, general and administrative expenses.
For the quarter ended For the quarter ended
March 31, 1996 % Change March 31, 1995
-------------- -------- --------------
Selling, general and
administrative $4,186,597 105% $2,040,942
As a % of net sales 91% 45%
Selling, general and administrative expenses increased $2,145,655 for the first
quarter 1996 compared to the same period in 1995. The primary reasons for these
increases include higher selling expenses from the increased sale of lasers in
international markets throughout the past year, including warranty related
costs, increased employment and other operating expenses as a result of the
acquisition of MEC in October 1995, a general increase in technology related
personnel and costs as a result of the growth of the Company during 1995, the
establishment of a manufacturing facility in Costa Rica and resources devoted to
the Company's strategy related to managed vision care. As a result of increased
selling activities for the Company's laser in international markets, beginning
in March 1995, the Company significantly increased its in-house marketing staff.
Such expenses include salaries and benefits, commissions on laser sales,
training, consulting, communication and travel-related costs.
During the first quarter of 1996, the Company continued to increase its reserve
for uncollectible accounts. However, there can be no assurance that the reserve
will be sufficient to cover actual write-offs over time. Actual write-offs that
materially exceed any amounts reserved ($1,140,000 at March 31, 1996) could have
a material adverse effect on the Company's financial condition and results of
operations. At March 31, 1996, the Company's net trade accounts and notes
receivable aggregated approximately $12.2 million. Accrued commissions, the
payment of which generally depends on the collection of such net trade accounts
and notes receivable, aggregated approximately $1.9 million at March 31, 1996.
Legal and accounting expenditures continue to be incurred as a result of ongoing
regulatory filings, general corporate issues, litigation and patent issues.
<PAGE>
Income (loss) from operations. There was an operating loss of $1,908,096 in the
first quarter 1996 compared to income from operations of $1,490,216 for the same
period in 1995. The decline in operating results can be attributed primarily to
the decrease in sales of the Company's lasers, the first quarter 1995 sale of
the Company's revenue rights to be generated from procedure fees, and an overall
increase in expenses, including research and development, regulatory and
selling, general and administrative expenses.
Other income and expenses. During the first quarter of 1995, the Company
received aggregated payments of $980,125 in settlement of its claims against
Residue Recovery Corp., and recognized a non-recurring gain.
Interest and dividend income was $54,746 in the first quarter 1996 compared to
$66,600 for the same period in 1995. Interest and dividend income was earned
from the Company's cash deposits and short-term investments. Interest expense
incurred was $26,364 in the first quarter of 1996 compared to $15,091 for the
same period in 1995. Interest expense incurred by the Company in the first
quarter of 1996 and 1995 related primarily to the notes payable to the former
owner of The Farris Group and, in 1996, to the former owners of MEC.
Income taxes. For the three months ended March 31, 1996, the Company recorded an
income tax benefit of $647,950. For the quarter ended March 31, 1995, the
provision for taxes of $600,000 reflected an effective income tax rate of 24%
resulting from utilization of net operating loss carryforwards and income tax
credits.
Net income (loss). Net loss for the first quarter of 1996 was $1,231,764
compared to a net income of $1,921,850 for the same period in 1995. The loss is
attributed to the decreased revenues from technology related products and
services and higher operating expenses as previously described for the first
quarter of 1996.
Earnings per share. Earnings (loss) per primary and fully diluted share
decreased to ($0.19) for the first three months of 1996 compared to $0.29 for
the same period in 1995. The decrease is attributed to the net loss in the first
quarter of $1,231,764. All 116 shares of the Company's Series A Convertible
Preferred Stock ("Preferred Stock") became convertible into Common Stock on
April 9, 1996. As of the date of this filing, 11,495 shares of Common Stock had
been issued upon the conversion of two shares of such Preferred Stock (including
shares of Common Stock payable as accrued dividends on such converted shares).
The number of shares of Common Stock issuable upon the conversion of the
remaining 114 shares of Preferred Stock will depend on the market price of the
Common Stock shortly before the conversion and, to a lesser extent, on the
amount of dividends that have accrued on the Preferred Stock through the
conversion date. See Note 4 of Notes to Condensed Consolidated Financial
Statements. The conversion of the Preferred Stock will increase shares
outstanding and thereby reduce per share operating results.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Working capital increased $4,137,336 from $7,071,527 at December 31, 1995 to
$11,208,863 as of March 31, 1996. This increase in working capital resulted
primarily from the proceeds from issuance of preferred stock. The proceeds were
used primarily for repayment of debt and funding general operations.
Operating activities used net cash of $1,762,808 during the first three months
of 1996, compared to $71,157 of net cash used in operations during the same
period in 1995. This decrease is primarily attributable to a first quarter 1996
net loss of $1,231,764 compared to a net income of $1,921,850 for the same
period in 1995. Other factors resulting in this decrease include the significant
growth in inventories resulting from increased production of the Company's
lasers. The first quarter net loss and growth in inventories offset a decrease
in accounts receivable of $1,014,336 resulting from cash collections. The
Company used $197,578 in cash for investing activities in the first quarter of
1996 compared to $53,887 in the same period in 1995. Net cash used in investing
activities during the first quarter of 1996 can be primarily attributed to the
purchase of office and computer equipment. Net cash provided by financing
activities during the first quarter of 1996 was $4,156,161, consisting of net
proceeds from the sale of common and preferred stock totaling $5,420,261 net of
a repayment of $1,264,100 in notes payable relating to the Company's
acquisitions of The Farris Group in February 1994 and MEC in October 1995.
The Company believes that its balances of cash and cash equivalents along with
operating cash flows will be sufficient to fund its anticipated working capital
requirements for the next twelve month period based on modest growth and
anticipated collection of receivables. However, approximately $3 million of the
Company's outstanding receivables are due to be collected in June and July 1996.
A failure to collect timely a material portion of such receivables could have a
material adverse effect on the Company's liquidity. The Company continues to
assess its credit policy and the terms it will make available to individual
customers. As a result of a growing presence in a number of countries and
continued acceptance of the LaserScan 2000 and Compak-200, the Company does not
intend to internally finance a significant number of sales over extended periods
in the future. The Company is working with financing companies to involve them
in appropriate transactions at an early stage, as well as to assess the use of
current receivables as collateral for a line of credit. However, during the
first quarter of 1996, no new sales or existing receivables were financed
through third-party sources (except that approximately $1.0 million of
receivables from first quarter sales were secured by third-party letters of
credit). There can be no assurance as to the terms or amount of such third-party
financing, if any, that the Company's customers may obtain in the future. The
Company is placing greater emphasis on the terms and collection timing of future
sales.
All of the shares of stock of MEC owned by the Company are being held in escrow
pending the Company's payment in full of a promissory note in the original
principal amount of $1,799,100 and a current principal amount of $1,000,000 (the
"MEC Note") issued by the Company as part of the consideration for its
acquisition of MEC in October 1995. The MEC Note was originally due on demand on
or after April 1, 1996, but has been extended to be due on demand on or after
July 1, 1996. If the Company were to default under the MEC Note, the former
shareholders of MEC would be entitled to regain ownership of all such shares.
The Company expects to continue manufacturing of its medical lasers for
international sales and to continue a variety of research, development and
regulatory activities over the next twelve months and it is anticipated that
such research and development, manufacturing and selling-related expenditures
will be significant expenses in the foreseeable future. The existing
infrastructure of the Company's health care related services can absorb
significant growth without significant capital investment. The Company expects
to devote resources to its managed care strategies involving MEC and the
acquisition of selected ophthalmic practices.
<PAGE>
The Company is receptive to joint venture discussions with compatible companies
for the development and operation in international markets of surgical centers
that will utilize the Company's products or provide synergies to the development
of optometric networks. In addition to cash contributions that may be available
from joint venture partners, the Company is also seeking complementary strengths
and other synergies that may provide strategic advantages. The Company has no
present commitments for joint venture relationships, and no assurance can be
given that any such relationships will be secured on terms satisfactory to the
Company.
The Company may seek additional capital through conventional debt financing or
joint ventures from third-party sources, or by the public or private sale of
additional equity securities to fund its increased manufacturing and sales
activities, to consummate future strategic acquisitions, or to accelerate its
implementation of managed care strategies. The Company has no present
commitments to obtain such capital, and no assurance can be given that the
Company will be able to obtain additional capital on terms satisfactory to the
Company. To the extent that future financing requirements are satisfied through
the issuance of equity securities, holders of Common Stock may experience
significant dilution in earnings per share and in net book value per share of
the Common Stock. Debt financing could result in a substantial portion of the
Company's cash flow from operations being dedicated to the payment of principal
and interest on such indebtedness and may render the Company more vulnerable to
competitive pressures and economic downturns.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
Public Company Publishing, Inc. On May 10, 1996, the Company received from
counsel to Public Company Publishing Inc. ("PCP") a copy of a complaint which
such counsel stated had been filed in the Circuit Court for Orange County,
Florida by PCP. The complaint alleges that the Company breached a written
agreement between PCP and the Company dated July 10, 1992, as modified by a
written agreement between PCP and the Company dated October 30, 1992, pursuant
to which agreements PCP was to receive certain options to purchase Common Stock
in exchange for rendering financial consulting services to the Company. The
complaint alleges that the options entitled PCP to purchase an aggregate of
180,000 shares of Common Stock as follows: 60,000 shares at $4.00 per share
through July 1997, 60,000 shares at $9.25 per share through January 1998, and
60,000 shares at $4.62 per share through July 1998. The complaint seeks monetary
damages in an unspecified amount for breach of contract and unjust enrichment,
as well as specific performance of the options. The Company intends to present a
vigorous defense. In the opinion of management, the ultimate disposition of this
case will not have a material adverse effect on the financial condition of the
Company.
Certain other legal proceedings against the Company are described in Item 3
(Legal Proceedings) of the Company's Form 10-K for the year ended December 31,
1995.
ITEM 2 Changes in Securities
a) Not applicable.
b) As previously reported, the Company completed a private placement of its
Series A Convertible Preferred Stock ("Preferred Stock") on January 10,
1996. Holders of the Preferred Stock are entitled to a liquidation
preference equal to its issue price (an aggregate of $5.8 million) plus
accrued but unpaid dividends. Holders of the Preferred Stock are also
entitled to a preference as to dividends which accrue in the amount of 10%
per annum on the issue price and are payable upon the conversion or
exchange of the Preferred Stock. The Preferred Stock is convertible into
Common Stock. See Note 4 of Notes to Condensed Consolidated Financial
Statements. For further information, see the Company's Form 8-A/A
(Amendment No. 2) filed with the Commission on April 26, 1996.
ITEM 3 Defaults Upon Senior Securities
Not applicable.
ITEM 4 Submission of Matters to a vote of Security Holders
Not applicable.
ITEM 5 Other Information
Not applicable.
ITEM 6 Exhibits and Reports on Form 8-K
a) Exhibits
<PAGE>
EXHIBIT INDEX
-------------
PAGE
----
Exhibit 2 - Plans of Acquisition, Reorganization
2.1 See Exhibits 10.3, 10.8, 10.10 and 10.19.
Exhibit 4 - Instruments Defining the Rights of Security Holders
4.1 Instruments defining the rights of security holders are set
forth in the Articles of Incorporation, as amended, and is
incorporated herein by reference from Form 8-A/A filed
January 18, 1996.
Exhibit 10 - Material Contracts
10.1 Agreement dated April 1, 1992, between International
Business Machines Corporation and LaserSight Incorporated
(filed as Exhibit 10.1 on Form 10-K for the year ended
December 31, 1995*).
10.2 Covenant Not to Compete entered into between LaserSight
Incorporated and Dr. J. T. Lin (filed as Exhibit 10(c) to
the Company's Registration Statement on Form S-18.*)
10.3 Agreement for Purchase and Sale of Stock by and among
LaserSight Centers Incorporated, its stockholders and
LaserSight Incorporated dated January 15, 1993 (filed as
Exhibit 2 to the Company's Form 8-K/A filed on January 25,
1993*).
10.4 Amendment to Agreement for Purchase and Sale of Stock by and
among LaserSight Centers Incorporated, its stockholders, and
LaserSight Incorporated dated April 5, 1993 (filed as
Exhibit 2 to the Company's Form 8-K/A filed on April 19,
1993*).
10.5 Royalty Agreement by and between LaserSight Centers
Incorporated and LaserSight Partners dated January 15, 1993
(filed as Exhibit 10.5 to the Company's Form 10-K for the
year ended December 31, 1995*).
10.6 Exchange Agreement dated January 25, 1993 between LaserSight
Centers Incorporated and Laser Partners (filed as Exhibit
10.6 to the Company's Form 10-K for the year ended December
31, 1995*).
10.7 Stipulation and Agreement of Compromise, Settlement and
Release dated April 18, 1995 among James Gossin, Francis E.
O'Donnell, Jr., J.T. Lin, Wen S. Dai, Emanuela
Dobrin-Charlton, C.H. Huang, W. Douglas Hajjar, and
LaserSight Incorporated (filed as Exhibit 10.7 to the
Company's Form 10-K for the year ended December 31, 1995*).
10.8 Agreement for Purchase and Sale of Stock dated December 31,
1993, among LaserSight Incorporated, MRF, Inc., and Michael
R.Farris (filed as Exhibit 2 to the Company's Form 8-K filed
on December 31, 1993*).
10.9 First Amendment to Agreement for Purchase and Sale of Stock
by and among MRF, Inc., Michael R. Farris and LaserSight
Incorporated dated December 28, 1995 (filed as Exhibit 10.9
to the Company's Form 10-K for the year ended December 31,
1995*).
10.10 Contribution Agreement dated July 7, 1994, between
LaserSight Incorporated and LaserSight Technologies, Inc.
(filed as Exhibit 2.6 to the Company's Form 10-K for the
year ended December 31, 1994*).
- ----------
* Incorporated herein by reference. File No. 0-19671
<PAGE>
PAGE
----
10.11 Research and Development Consulting Agreement dated March
31, 1995 between LaserSight Technologies, Inc. and J. T.
Lin, Ph.D. (filed as Exhibit 10.3 to the Company's Form 10-Q
for the quarter ended September 30, 1995*).
10.12 Technology Transfer Agreement dated July 25, 1995 between
LaserSight Technologies, Inc., J.T. Lin, Ph.D. and Photon
Data, Inc. (filed as Exhibit 10.4 to the Company's Form 10-Q
for the quarter ended September 30, 1995*).
10.13 LaserSight Incorporated 1995 Stock Option Plan (filed as
Exhibit 10.5 to the Company's Form 10-Q for the quarter
ended September 30, 1995*).
10.14 Consulting Agreement dated June 21, 1994 by and between
LaserSight Incorporated and Emanuela Dobrin-Charlton (filed
as Exhibit 10.14 to the Company's Form 10-K for the year
ended December 31, 1995*).
10.15 Consulting Agreement dated June 7, 1995 by and between
LaserSight Incorporated and Richard C. Lutzy (filed as
Exhibit 10.15 to the Company's Form 10-K for the year ended
December 31, 1995*).
10.16 Modified Promissory Note between LaserSight Incorporated,
EuroPacific Securities Services, GmbH and Co. KG and Wolf
Wiese (filed as Exhibit 10.6 to the Company's Form 10-Q for
the quarter ended September 30, 1995*).
10.17 Employment Agreement by and between LaserSight Incorporated
and Michael R. Farris dated December 28, 1995 (filed as
Exhibit 10.17 to the Company's Form 10-K for the year ended
December 31, 1995*).
10.18 Employment Agreement dated December 28, 1995 by and between
LaserSight Incorporated and David Pieroni (filed as Exhibit
10.18 to the Company's Form 10-K for the year ended December
31, 1995*).
10.19 Agreement and Plan of Merger by and among LaserSight
Incorporated, MEC Health Care, Inc., Dr. Mark B. Gordon,
O.D. and Dr. Howard M. Levin, O.D., dated August 28, 1995 as
amended as of October 5, 1995 (filed as Exhibit 2 to the
Company's Form 8-K filed on October 19, 1995*).
10.20 Manufacturer's Representative Agreement by and between
LaserSight Technologies, Inc. and Natural Vision of Malta
dated September 1, 1995 (filed as Exhibit 10.20 to the
Company's Form 10-K for the year ended December 31, 1995*).
10.21 Patent License Agreement dated December 21, 1995 by and
between Francis E. O'Donnell, Jr. and LaserSight Centers,
Inc. (filed as Exhibit 10.21 to the Company's Form 10-K for
the year ended December 31, 1995*).
Exhibit 11 Statement of Computation of Per Share Earnings 17
Exhibit 27 Financial Data Schedule 18
b) Reports on Form 8-K
On January 12, 1996, the Company filed with the Commission a Current Report
on Form 8-K regarding its completion of a private placement of Series A
Convertible Preferred Stock.
- ----------
* Incorporated herein by reference. File No. 0-19671
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
undersigned have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LaserSight Incorporated
Dated: May 14 , 1996 By: /s/ Michael R. Farris
------------------------- ------------------------
Michael R. Farris,
Chief Executive Officer
Dated: May 14 , 1996 By: /s/ Gregory L. Wilson
------------------------- ------------------------
Gregory L. Wilson,
Chief Financial Officer
.
<TABLE>
EXHIBIT 11
LASERSIGHT INCORPORATED
COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
PRIMARY
Weighted average shares outstanding 7,019,908 6,013,295
Contingently issuable shares, acquisition of The
Farris Group - 204,000
Net effect of dilutive stock options - 369,705
--------- ---------
7,019,908 6,587,000
========= =========
Net income (loss) $(1,231,764) $ 1,921,850
Dividends on preferred stock (129,945) -
---------- ----------
Adjusted income (loss) $(1,361,709) $ 1,921,850
=========== ===========
Primary earnings (loss) per share $(0.19) $0.29
====== =====
Additional Primary Calculation:
Net loss, as adjusted per computation above $(1,361,709)
===========
Additional adjustment to weighted average # of shares:
Weighted average # of shares as
adjusted per above 7,019,908
Anti-dilutive effect of contingently issuable
shares and stock options 693,092
-------
Weighted average # of shares, as adjusted 7,713,000
=========
Primary loss per share, as adjusted $(0.18) (A)
======
FULLY DILUTED
Weighted average shares outstanding 7,019,908 6,013,295
Contingently issuable shares, acquisition of
The Farris Group - 204,000
Net effect of dilutive stock options - 369,705
Convertible preferred stock and dividends payable -
---------- ---------
7,019,908 6,587,000
========= =========
Net income (loss) $(1,231,764) $ 1,921,850
Dividends on preferred stock (129,945) -
-------- ---------
Adjusted income (loss) $(1,361,709) $ 1,921,850
Fully diluted earnings (loss) per share $(0.19) $0.29
====== =====
Net loss, as adjusted per computation above $(1,361,709)
===========
Additional adjustment to weighted average # of shares:
Weighted average # of shares as
adjusted per above 7,019,908
Anti-dilutive effect of contingently issuable
shares, stock options and convertible preferred
stock 1,323,429
---------
Weighted average # of shares, as adjusted 8,343,337
=========
Fully diluted loss per share, as adjusted $(0.16) (A)
======
(A) - This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,794,114
<SECURITIES> 0
<RECEIVABLES> 13,320,708
<ALLOWANCES> 1,140,000
<INVENTORY> 2,894,699
<CURRENT-ASSETS> 17,090,950
<PP&E> 1,682,897
<DEPRECIATION> 497,623
<TOTAL-ASSETS> 31,804,400
<CURRENT-LIABILITIES> 5,882,087
<BONDS> 0
0
0
<COMMON> 7,192
<OTHER-SE> 24,471,502
<TOTAL-LIABILITY-AND-EQUITY> 31,804,400
<SALES> 4,583,638
<TOTAL-REVENUES> 4,583,638
<CGS> 1,569,005
<TOTAL-COSTS> 1,569,005
<OTHER-EXPENSES> 4,922,729
<LOSS-PROVISION> 237,500
<INTEREST-EXPENSE> 26,364
<INCOME-PRETAX> (1,879,714)
<INCOME-TAX> (647,950)
<INCOME-CONTINUING> (1,231,764)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,231,764)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
