SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended June 30, 1997.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Transition period from
to .
------------------------------ ----------------------------------
Commission File Number: 0-19671
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
August 13, 1997 is 9,973,672.
<PAGE>
EXPLANATORY NOTE
This filing amends certain previously-filed information contained in Part I.,
Items 1 and 2. No other items have been amended.
LASERSIGHT INCORPORATED AND SUBSIDIARIES
Except for the historical information contained herein, the discussion in this
Report contains forward-looking statements (within the meaning of Section 21E of
the Exchange Act) that involve risks and uncertainties. The Company's actual
results could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in the sections entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Uncertainties and Other Issues"
in this report and in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1997 and
December 31, 1996
Condensed Consolidated Statements of Operations for the Three
Month Periods and Six Month Periods Ended June 30, 1997 and
1996
Condensed Consolidated Statements of Cash Flows for the Six
Month Periods Ended June 30, 1997 and 1996
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
--------------- --------------
CURRENT ASSETS ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents $3,091,169 $2,003,501
Accounts receivable - trade, net 3,709,153 5,458,153
Notes receivable - current portion, net 3,616,510 3,159,575
Inventories 3,685,758 3,328,903
Deferred tax assets 570,296 667,998
Income taxes recoverable 61,118 803,154
Other current assets 313,985 221,922
--------------- --------------
TOTAL CURRENT ASSETS 15,047,989 15,643,206
Notes receivable, less current portion, net 3,228,939 2,620,375
Property and equipment, net 2,092,317 1,936,220
Deferred financing costs, net 490,053 -
Goodwill, net 15,014,710 12,099,032
Other assets, net 2,111,204 1,951,380
--------------- --------------
$37,985,212 $34,250,213
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $2,505,703 $2,216,792
Note payable 4,000,000 -
Discount on notes payable (402,778) -
Note payable - related party - 1,000,000
Current portion of capital lease obligation 218,222 206,139
Accrued expenses 1,083,623 764,084
Accrued commissions 1,203,635 1,214,235
Dividends payable - 39,000
Other current liabilities 65,018 182,155
--------------- --------------
TOTAL CURRENT LIABILITIES 8,673,423 5,622,405
Refundable deposits 206,000 240,000
Accrued commissions, less current portion 419,496 309,656
Deferred income taxes 570,296 667,998
Long-term obligations 1,029,652 641,623
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock - par value $.001 per share; authorized 10,000,000
shares; 0 and 8 issued and outstanding at June 30, 1997 and
December 31, 1996, respectively - -
Common stock - par value $.001 per share; authorized 20,000,000 shares;
9,599,107 and 8,454,266 shares issued at June 30,1997 and December 31,
1996, respectively 9,599 8,454
Additional paid-in capital 36,552,817 30,080,560
Obligation to issue common stock - 3,065,056
Stock subscription receivable (1,140,000) (1,140,000)
Accumulated deficit (7,703,362) (4,612,830)
Less treasury stock, at cost; 170,200 common shares (632,709) (632,709)
--------------- --------------
27,086,345 26,768,531
--------------- --------------
$37,985,212 $34,250,213
=============== ==============
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<TABLE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------- ------------------------------------
1997 1996 1997 1996
--------------- ---------------- ---------------- ----------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
REVENUES, Net $5,408,572 $5,992,612 $11,926,714 $10,576,250
COST OF SALES 821,705 830,498 1,865,503 1,464,545
PROVIDER PAYMENTS 1,415,343 994,538 2,820,239 1,929,496
--------------- ---------------- ---------------- ----------------
GROSS PROFIT 3,171,524 4,167,576 7,240,972 7,182,209
RESEARCH, DEVELOPMENT AND REGULATORY
EXPENSES 550,427 311,490 912,631 1,047,622
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 4,565,185 3,907,671 8,908,172 8,094,268
--------------- ---------------- --------------- ----------------
LOSS FROM OPERATIONS (1,944,088) (51,585) (2,579,831) (1,959,681)
OTHER INCOME AND EXPENSES
Interest and dividend income 100,507 35,168 197,871 89,914
Interest expense (368,529) (21,224) (428,172) (47,588)
Other (230,400) -- (280,400) --
--------------- ---------------- ---------------- ----------------
NET LOSS BEFORE INCOME TAXES (2,442,510) (37,641) (3,090,532) (1,917,355)
INCOME TAX BENEFIT -- (12,701) -- (660,651)
--------------- ---------------- ---------------- ----------------
NET LOSS (2,442,510) (24,940) (3,090,532) (1,256,704)
CONVERSION DISCOUNT ON PREFERRED STOCK -- (101,057) -- (1,010,557)
PREFERRED STOCK DIVIDEND REQUIREMENTS (3,487) (138,075) (13,350) (268,020)
--------------- ---------------- ---------------- ----------------
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $(2,445,997) $(264,072) $(3,103,882) $(2,535,281)
=============== ================ ================ ================
LOSS PER COMMON SHARE
Primary: ($0.26) ($0.04) ($0.34) ($0.36)
=============== ================ ================ ================
Assuming full dilution: ($0.26) ($0.04) ($0.34) ($0.36)
=============== ================ ================ ================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
Primary: 9,381,000 7,051,000 9,103,000 7,035,000
=============== ================ ================ ================
Assuming full dilution: 9,424,000 7,089,000 9,176,000 7,084,000
=============== ================ ================ ================
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<CAPTION>
1997 1996
------------------ ------------------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (3,090,532) $ (1,256,704)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 966,793 425,877
Decrease (increase) in accounts and notes receivable 683,501 (700)
Increase in inventories (448,155) (938,006)
Increase in accounts payable 288,911 160,156
Increase (decrease) in accrued liabilities 418,779 (196,879)
Decrease (increase) in income tax assets 742,036 (930,911)
Other (336,414) (3,339)
------------------ ------------------
NET CASH USED IN OPERATING ACTIVITIES (775,081) (2,740,506)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (350,593) (246,863)
Purchase of managed care contract (150,000) --
------------------ ------------------
NET CASH USED IN INVESTING ACTIVITIES (500,593) (246,863)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 49,088 46,940
Proceeds from issuance of notes payable, net 3,414,142 --
Repayments of notes payable - related party (1,000,000) (799,100)
Repayments of notes payable - officer -- (465,000)
Repayments of capital lease obligation (99,888) --
Proceeds from issuance of preferred stock, net -- 5,342,151
------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,363,342 4,124,991
------------------ ------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,087,668 1,137,622
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,003,501 1,598,339
------------------ ------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,091,169 $ 2,735,961
================== ==================
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
LASERSIGHT INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Month Periods Ended June 30, 1997 and 1996
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited, condensed consolidated financial statements
of LaserSight Incorporated and subsidiaries (the Company) as of June
30, 1997, and for the three month periods and six month periods ended
June 30, 1997 and 1996 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, 1996. 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
three and six month periods ended June 30, 1997 are not necessarily
indicative of the operating results for the full year.
NOTE 2 PER SHARE INFORMATION
Net 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 loss per share for the three and six month periods ended June
30, 1997 were anti-dilutive and therefore, except for the impact of
Preferred Stock converted to Common Stock during the period, are the
same as primary loss per share.
Accounting Change - Loss Per Share
Pursuant to Emerging Issues Task Force (EITF) Announcement No. D-60,
the value of the conversion discount on the Series A Convertible
Preferred Stock has been reflected as an increase to the loss
attributable to common shareholders for the three and six month periods
ended June 30, 1996. The value of the conversion discount,
approximately $100,000 and $900,000, respectively, and per share
effect, ($0.02) and ($0.14), respectively, has been reflected in the
condensed consolidated statement of operations. Primary loss per share
and fully diluted loss per share, as originally reported in the
Company's quarterly report, were both ($0.02) for the three months
ended June 30, 1996 and both ($0.22) for the six months ended June 30,
1996. This change did not affect any of the reported amounts in the
condensed consolidated balance sheet as of June 30, 1996 or the net
loss for the three and six month periods ended June 30, 1996.
<PAGE>
In February 1997, Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings Per Share," was issued establishing new standards
for computing and presenting earnings per share. The historical
measures of earnings per share (primary and fully diluted) are replaced
with two new computations of earnings per share (basic and diluted).
The Company will adopt SFAS 128 as of December 31, 1997. Loss per
share, on a pro forma basis, for the three and six month-periods ended
June 30, 1997 and 1996, computed pursuant to the provisions of SFAS
128, would have been as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
(Restated) (Restated)
Basic loss per share ($0.26) ($0.03) ($0.34) ($0.34)
Diluted loss per share ($0.26) ($0.03) ($0.34) ($0.34)
NOTE 3 INVENTORIES
Inventories, which consist primarily of laser systems, parts and
components, is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. The components of
inventories at June 30, 1997 and December 31, 1996 are summarized as
follows:
June 30, 1997 December 31, 1996
------------- -----------------
Raw materials $2,148,958 $2,008,610
Work-in-process 283,760 448,906
Finished goods 920,900 664,646
Test equipment-clinical trials 332,140 206,741
------- -------
$3,685,758 $3,328,903
========== ==========
NOTE 4 BUSINESS COMBINATIONS
LaserSight Centers Incorporated (Centers)
-----------------------------------------
In March 1997, the Company amended the purchase and royalty agreements
related to the 1993 acquisition of Centers. The amended purchase
agreement provided for the Company to issue 625,000 unregistered common
shares (valued at $3,320,321) with 600,000 additional shares
contingently issuable based upon future operating profits. This
replaces the provision calling for 1,265,333 contingently issuable
shares based on cumulative revenues or other future events and the
uncertainties associated therewith. The amended royalty agreement
reduces the royalty from $86 to $43 per refractive procedure and delays
the obligation to pay such royalties until the sooner of five years or
the issuance of all contingently issuable shares as described above.
<PAGE>
NOTE 5 COMMITMENTS AND CONTINGENCIES
Patent Agreement
----------------
In February 1997, the Company entered into an agreement with
International Business Machines Corporation (IBM) which provides for
LaserSight to acquire certain IBM patents relating to ultraviolet light
ophthalmic products and procedures for ultraviolet ablation for
$14,900,000.
The agreement provides for IBM to transfer to the Company all of IBM's
rights under its patent license agreements with certain licensees.
Subject to the closing of the transaction, the Company will be entitled
to receive all royalties accrued on or after January 1, 1997, under
such patent license agreements.
An escrow agreement between IBM and the Company was negotiated and
executed in March 1997, upon which the Company placed a $1 million
deposit of its common stock into escrow. If the transaction does not
close by August 31, 1997, IBM may terminate the agreement. In such
event, the Company's sole obligation is to deliver from the escrow or
otherwise its common stock and/or cash with a value of $1 million. The
transaction is subject to the Company's arrangements for payment of the
purchase price.
NOTE 6 FINANCING
On April 1, 1997, the Company entered into a loan agreement with
Foothill Capital Corporation (FCC) for a loan of up to $8 million,
consisting of a term loan in the amount of $4 million and a revolving
loan in an amount of 80% of the eligible receivables of LaserSight
Technologies, but not in excess of $4 million. The term loan bears
interest at an annual rate of 12.50% and requires repayment of
principal in monthly installments of $1.33 million beginning on May 1,
1998. The revolving loan bears interest at a variable annual rate of
1.50% above the base rate of Norwest Bank Minnesota. The $4 million
maximum amount of the revolving loan declines by $1.33 million per
month beginning on August 1, 1998. In connection with the loan, the
Company paid an origination fee of $150,000 and issued warrants to
purchase 500,000 shares of Common Stock. The warrants are exercisable
at any time from April 1, 1998 through April 1, 2002 at an exercise
price per share of $6.0667. Subject to certain conditions based on the
market price of the Common Stock, up to half of the warrants are
eligible for repurchase by the Company. Any warrants that remain
outstanding and unexercised on April 1, 2002 are subject to mandatory
repurchase by the Company at a price of $1.50 per warrant. The warrants
are classified as long-term obligations at June 30, 1997. The loan is
secured by a pledge of substantially all of the Company's accounts
receivable and other assets. The terms of the financing agreement
contain financial covenants with respect to, among other things,
current ratio, laser system sales, revenue, earnings before interest,
taxes, depreciation and amortization (EBITDA), and capital
expenditures. Due to the operating results of the quarter ended June
30, 1997, certain financial covenants have been waived by FCC for the
three months ended June 30, 1997. The Company is in the process of
working with FCC to revise the covenants.
The Company used a portion of the net proceeds of the term loan to pay
in full the balance due under its note to the former owners of MEC
Health Care, Inc., a wholly owned subsidiary of the Company acquired in
October 1995.
<PAGE>
NOTE 7 SUBSEQUENT EVENT
In July 1997, the Company acquired the rights to a Pre-Market Approval
(PMA) application filed with the Food and Drug Administration (FDA) for
a laser to perform Laser In-Situ Keratomileusis (LASIK), a refractive
surgery alternative to surface Photorefractive Keratectomy (PRK) from
Photomed, Inc. In addition, the Company purchased from a shareholder of
Photomed, Inc. U.S. patent number 5,586,980 for a microkeratome, the
instrument necessary to create the corneal "flap" in the LASIK
procedure. The Company issued a combination of 535,515 unregistered
shares of Common Stock and $333,300 as consideration for the PMA
application and the microkeratome patent. The seller will also receive
a percentage of any licensing fees or sale proceeds related to the
patent. If the FDA approves the PMA so as to allow the Company to
commercialize a laser to perform LASIK in the U.S., the Company will
pay an additional $1.75 million. If such FDA approval is not obtained
by July 29, 1998, the Company has the option to unwind the PMA
transaction and receive from Photomed, Inc. 274,285 shares of the
Company's Common Stock. Additionally, if the FDA approves the use of
the laser for the treatment of hyperopia (farsightedness), the Company
will pay unregistered Common Stock valued at $1 million. If the
Company's scanning laser is approved by the FDA for commercial sale in
the United States on or before April 1, 1998, the Company will pay
$1,000,000. Approval after such date will result in lesser payments
until January 1, 1999, when no payment will be required.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
Net Sales. The following tables present the Company's net sales by major
operating segments: technology products and services and health care services
for the three and six month periods ended June 30, 1997 and 1996.
For the Three Month For the Three Month
Period Ended Period Ended
June 30, 1997 June 30, 1996
------------- -------------
Net Sales % of Total Net Sales % of Total
--------- ---------- --------- ----------
Technology $2,130,698 39% $3,479,057 58%
Health care services 3,277,874 61% 2,622,753 44%
Intercompany revenues -- -- (109,198) (2%)
------------ ----- ---------- -----
Total net sales $5,408,572 100% $5,992,612 100%
============ ===== ========== =====
For the Six Month For the Six Month
Period Ended Period Ended
June 30, 1997 June 30, 1996
------------- -------------
Net Sales % of Total Net Sales % of Total
--------- ---------- --------- ----------
Technology $5,684,543 48% $5,463,407 52%
Health care services 6,242,171 52% 5,347,650 51%
Intercompany revenues -- -- (234,807) (3%)
---------- ----- --------- -----
Total net sales $11,926,714 100% $10,576,250 100%
=========== ===== =========== =====
Net sales in the second quarter of 1997 were $5,408,572, compared to $5,992,612
(for a decrease of 10%) over the same period in 1996. Net sales for the six
month period ended June 30, 1997, increased by $1,350,464 to $11,926,714 from
the same period in 1996. The increase in health care service revenue was
attributable to increased revenues generated by MEC Health Care, Inc. (MEC) and
revenues generated by the Company's latest acquisition, LSI Acquisition, Inc.
(NNJEI), the assets of which were acquired on July 3, 1996. These increases in
health care service revenues were partially offset by a substantial reduction in
revenues generated by The Farris Group. Net sales for The Farris Group in the
second quarter of 1997 were $420,190 compared to $1,151,280 (for a decrease of
$731,090) over the same period in 1996. These decreases were due primarily to a
reduction in consulting services provided and were accompanied by expense
reductions of $611,868 and $1,333,797 for the three and six month periods ended
June 30, 1997, respectively. Net sales for The Farris Group for the six month
period ended June 30, 1997, decreased by $1,708,179 to $652,068 from the same
period in 1996. The decrease in revenues generated by The Farris Group was
partially offset by revenues generated by NNJEI. The decrease in technology
revenues in the second quarter of 1997 was attributed to decreased sales of the
Company's LaserScan-2000 excimer laser system in overseas markets. The Company
<PAGE>
believes a contributing factor to the lower than expected number of laser sales
is the anticipation, particularly in Europe, of the introduction of the
LaserScan LSX announced in April. Eight laser systems were sold in the second
quarter of 1997 compared to thirteen systems sold over the same period in 1996.
Twenty-three laser systems were sold during the six month period ended June 30,
1997, compared to twenty systems, net of returns, sold over the same period in
1996. There were no system returns recognized during the first two quarters of
1997. In addition, due to competitive pressures in certain markets, the average
sales price per system declined from average levels during the same period in
1996. Based on the expected timing of the commercial introduction of its newest
laser system, the LaserScan LSX, the Company expects laser system sales to
remain below 1996 levels for the remaining two quarters of 1997, although it
expects such sales to exceed the second quarter of 1997 level.
Cost of Goods Sold and Gross Profits. The following tables present a comparative
analysis of cost of goods sold, gross profit and gross profit margins for three
and six month periods ended June 30, 1997 and 1996.
<TABLE>
<CAPTION>
For the Three Month For the Three Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
<S> <C> <C> <C>
Cost of goods sold $ 821,705 (1%) $ 830,498
Provider payments 1,415,343 42% 994,538
Gross profit 3,171,524 (24%) 4,167,576
Gross profit percentage 59% 70%
Technology related only 1,308,993 (51%) 2,648,559
61% 76%
For the Six Month For the Six Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
Cost of goods sold $1,865,503 27% $1,464,545
Provider payments 2,820,239 46% 1,929,496
Gross profit 7,240,972 1% 7,182,209
Gross profit percenetage 61% 68%
Technology related only 3,819,040 3,998,862
67% (4%) 73%
</TABLE>
Gross profit margins were 59% of net sales in the second quarter of 1997
compared to 70% for the same period in 1996. For the six month periods ended
June 30, 1997 and 1996, gross profit margins were 61% and 68%, respectively. The
gross profit margin decrease was attributable to (i) the decrease in revenues
generated by The Farris Group, which has no associated cost of sales, (ii) a
lower average sales price for laser systems sold during the first two quarters
of 1997, and (iii) a general increase in the operating costs of the Company's
Costa Rican manufacturing facility, which were spread over fewer sales during
the three months ended June 30, 1997.
Research, Development and Regulatory Expenses. The following tables present a
comparative analysis of research, development and regulatory expenses for the
three and six month periods ended June 30, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
For the Three Month For the Three Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
<S> <C> <C> <C>
Research, development
and regulatory $ 550,427 77% $ 311,490
As a percentage of technology
net sales 26% 9%
For the Six Month For the Six Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
Research, development
and regulatory $ 912,631 (13%) $1,047,622
As a percentage of technology
net sales 16% 19%
</TABLE>
Research, development and regulatory expenses for the second quarter of 1997
were $550,427, an increase of $238,937, or 77% from such expenditures during the
same period in 1996. Research, development and regulatory expenses for the six
month period ended June 30, 1997 decreased by $134,991 from $1,047,622 for the
same period in 1996 or 13%. The increase in research, development and regulatory
expenses during the second quarter of 1997 can primarily be attributed to
ongoing research and development of new refractive laser systems, including
development of the LaserScan LSX and refinements to the LaserScan-2000, and
continued software development for the excimer lasers. Initial shipments of the
LaserScan LSX are now anticipated during the fourth quarter. Since the initial
announcement of the development of the LaserScan LSX, the Company has solicited
and received input from clinical users and prospective customers. This has
resulted in modifications to the system, necessitating additional development
and testing for clinical validation. As a result of focusing its efforts on
having the LaserScan LSX available for limited commercial production and
shipment in the late fourth quarter of 1997, the Company expects research and
development expenses to remain at levels consistent with or higher than second
quarter 1997 levels throughout the remainder of 1997. Regulatory expenses for
the three month period ended June 30, 1997 have increased in comparison to the
same period in the prior year although for the six month period ended June 30,
1997 there has been a decrease in comparison to the same period in the prior
year. Regulatory expenses are expected to continue to increase for the remaining
portion of the year as a result of the Company's continuation of current FDA
clinical trials, the development of additional future protocols for submission
to the FDA and the PMA acquired in July 1997 (see Note 7).
Selling, General and Administrative Expenses. The following tables present a
comparative analysis of selling, general and administrative expenses for the
three and six month periods ended June 30, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
For the Three Month For the Three Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
<S> <C> <C> <C>
Selling, general and
administrative $4,565,185 17% $3,907,671
Percentage of net sales 84% 65%
For the Six Month For the Six Month
Period Ended Period Ended
June 30, 1997 Percent Change June 30, 1996
------------- -------------- -------------
Selling, general and
administrative $8,908,172 10% $8,094,268
Percentage of net sales 75% 77%
</TABLE>
Selling, general and administrative expenses increased by $657,514 and $813,904
for the second quarter of 1997 and the first six months of 1997, respectively,
over comparable periods in 1996. The primary reasons for these increases include
increased employment and other operating costs as a result of the acquisition of
NNJEI in July 1996, the growth of MEC, and a general increase in personnel and
costs necessary to fund the strategic initiatives of the Company and the
development of its products and services. These increases in operating costs
were partially offset by a substantial reduction in the operating costs of The
Farris Group. Legal and accounting expenditures continue to be incurred as a
result of ongoing regulatory filings, general corporate issues, litigation and
patent issues.
Loss From Operations. There was an operating loss of $1,944,088 in the second
quarter of 1997 compared to an operating loss of $51,585 for the same period in
1996. Operating loss for the six month period ended June 30, 1997 was $2,579,831
compared to an operating loss of $1,959,681 for the same period in 1996. The
decline in operating results can be attributed primarily to the decrease in
sales of the Company's lasers and operating losses generated by The Farris
Group, partially offset by the continued profitability of MEC and NNJEI.
Other Income and Expenses. Interest and dividend income was $100,507 in the
second quarter of 1997 compared to interest and dividend income of $35,168 for
the same period in 1996. Interest and dividend income for the six month period
ended June 30, 1997 was $197,871 compared to interest and dividend income of
$89,914 for the same period in 1996. Interest and dividend income was earned
from the Company's cash deposits and short-term investments and the collection
of long-term receivables related to laser system sales. Interest expense
incurred was $368,529 in the second quarter of 1997 compared to interest expense
of $21,224 for the same period in 1996. Interest expense for the six month
period ended June 30, 1997 was $428,172 compared to interest expense of $47,588
for the same period in 1996. Interest expense incurred by the Company during the
second quarter of 1997 related primarily to the credit facility established with
FCC on April 1, 1997. In addition to interest paid on the outstanding note
payable balance, included in interest expense is the amortization of deferred
financing costs and the accretion of the discount on the note payable. Included
in other expense in 1997 are costs related to settling patent litigation.
<PAGE>
Income Taxes. For the three and six months ended June 30, 1997, the Company
recorded no income tax benefit or expense compared to an income tax benefit of
$660,651 for the six month period ended June 30, 1996. The lack of income tax
benefit for the first two quarters of 1997 has been based on the lack of
availability of loss carrybacks.
Net Loss. Net loss for the second quarter of 1997 was $2,442,510 compared to a
net loss of $24,940 for the same period in 1996. Net loss for the six month
period ended June 30, 1997, was $3,090,532 compared to a net loss of $1,256,704
for the same period in 1996. The loss is attributed to the decreased revenues
from technology products, losses generated from The Farris Group and higher
operating expenses as previously described for the first and second quarter of
1997.
Loss Per Share. Loss per primary and fully diluted share increased to $0.26 for
the second quarter of 1997 compared to $0.04 for the same period in 1996. Loss
per primary and fully diluted share decreased to $0.34 for the six month period
ended June 30, 1997, compared to $0.36 for the same period in 1996. These
results are attributable to the higher net loss incurred during both the first
and second quarters of 1997 offset for the six months ended June 30, 1996 by the
value of the conversion discount on preferred stock of $1,010,557. Weighted
average shares outstanding increased from the second quarter of 1996 as a result
of the conversion into Common Stock of 116 shares of convertible Preferred Stock
issued in January 1996, the exercise of options, the issuance of shares in
conjunction with the 1996 acquisition of NNJEI, the 1997 amendment to the
purchase agreement related to LaserSight Centers and the earnout provisions of
the 1994 acquisition of The Farris Group.
Liquidity and Capital Resources.
- --------------------------------
Working capital decreased $3,646,235 from $10,020,801 at December 31, 1996 to
$6,374,566 as of June 30, 1997. This decrease in working capital resulted
primarily from the net loss previously mentioned and purchases of furniture and
equipment and a managed care contract.
Operating activities used net cash of $775,081 during the first six months of
1997, compared to $2,740,506 of net cash used during the same period in 1996.
This decrease in cash used is primarily attributable to a substantial decrease
in income tax assets during the first six months of 1997. Other factors
resulting in this decrease include an increase in amortization and depreciation
costs, a slight decrease in net receivables and an increase in accrued expenses,
partially offset by an increase in the net loss for the first six months of
1997. The Company used $500,593 in cash from investing activities during the
first six months of 1997 compared to $246,863 over the same period in 1996. Net
cash used in investing activities during the two quarters of 1997 can be
primarily attributed to the purchase of office and computer equipment and the
purchase of a managed care contract. Net cash provided by financing activities
during the first six months of 1997 was $2,363,342, and consisted of net
proceeds from the credit facility with FCC and the exercise of stock options,
offset by the repayment of a note payable to former owners of MEC and cost
related to the repayment of a capital lease obligation. That compares to cash
provided by financing activities in the first six months of 1996 of $4,124,991,
consisting of net proceeds from the sale of common and preferred stock totaling
$5,389,091 net of a repayment of $1,264,100 in notes payable.
The Company believes that its balances of cash and cash equivalents along with
operating cash flows and the availability of the FCC revolver 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. A
failure to collect timely a material portion of current receivables could have a
material adverse effect on the Company's liquidity. The Company, which
implemented more stringent sales criteria during 1996, may from time to time
reassess 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
<PAGE>
continued acceptance of the Company's laser systems, the Company intends to
internally finance a proportionately smaller number of sales over periods
exceeding eighteen months than in 1996 and preceding years. There can be no
assurance as to the terms or amount of 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.
The Company's operating performance in the second quarter caused it to fail to
comply with certain financial covenants under its FCC credit facility. The
Company has received from FCC a written waiver with respect to such
noncompliance and a verbal agreement to modify the financial covenants going
forward. Negotiations to amend the financial covenants are in process. Based on
discussions to date with FCC, management expects that such negotiations should
be successful. However, pending the execution of a definitive written amendment,
there can be no assurance that this expectation will materialize. Because of the
cumulative nature of the original financial covenants, the Company does not
expect that it will be able to satisfy certain such original covenants under the
FCC credit facility for the third quarter of 1997 (i.e., 20 laser system sales
and earnings before interest, taxes, depreciation and amortization (EBITDA, as
defined in the agreement) of approximately $2.0 million) and subsequent fiscal
periods. Achieving such operational targets would require a substantial
improvement in the Company's operating performance. Should the financial
covenants not be amended, and should the Company not achieve the necessary level
of improvement, the Company would be in default of its agreement and FCC would
have the right to accelerate the Company's repayment obligations.
The Company expects to continue a variety of research and development activities
on its excimer and solid-state laser systems over the next twelve months and it
is anticipated that such research and development as well as regulatory efforts
in the United States will be the most significant technology related expenses in
the foreseeable future. In addition, the Company expects to aggressively pursue
vision managed care contracts with HMOs, insurers and employer groups during the
next 12 months. The Company anticipates that such efforts will be the most
significant health care services-related expenses in the foreseeable future.
On March 4, 1997, the Company announced a tentative agreement to acquire
Intermountain Managed Eyecare, of Salt Lake City, Utah, a third-party
administrator of managed vision care contracts with a business strategy similar
to the Company's MEC Health Care subsidiary. The Company originally anticipated
closing this transaction on March 15, 1997. The Company has determined not to
proceed with this transaction at this time.
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 managed 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 relationship will be secured on terms satisfactory to the
Company.
<PAGE>
UNCERTAINTIES AND OTHER ISSUES
The Company's business, results of operations and financial conditions may also
be affected by a variety of factors, including the ones noted below and under
the same caption in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
Company-Related Uncertainties
- -----------------------------
Operating Results. The Company incurred losses of $4,074,369 and $3,090,532
during 1996 and the first six months of 1997, respectively. In addition,
although the Company achieved profitability in 1995 and 1994, the Company
incurred losses in 1991 through 1993. As of June 30, 1997, the Company had an
accumulated deficit of $7,703,362. There can be no assurance that the Company
can regain or sustain profitability.
Receivables. At June 30, 1997, the Company's trade accounts and notes receivable
aggregated approximately $10,555,000 net of total allowances for collection
losses and returns of approximately $1,575,000. Accrued commissions, the payment
of which generally depends on the collection of such net trade accounts and
notes receivable, aggregated approximately $1,623,000 at June 30, 1997. Exposure
to collection losses on technology-related receivables is principally dependent
on its customers' ongoing financial condition and their ability to generate
revenues from the Company's laser systems. The Company's ability to evaluate the
financial condition and revenue generating ability of prospective customers
located outside of the United States is generally more limited than for
customers located in the United States. The Company monitors the status of its
receivables and maintains a reserve for estimated losses. The Company's
operating history has been relatively short. There can be no assurance that the
current reserves for estimated losses ($1,418,000 at June 30, 1997) will be
sufficient to cover actual write-offs over time. Actual write-offs that
materially exceed amounts reserved could have a material adverse effect on the
Company's consolidated financial condition and results of operations.
Possible Additional Capital. The Company is exploring alternative sources of
capital to fund its product development activities, to fund the $14.9 million
purchase price for its purchase of certain patents from IBM, to consummate
future strategic acquisitions, and to accelerate its implementation of managed
care strategies. The Company may also need additional capital to introduce its
laser systems into the United States market after receiving FDA approval and to
satisfy certain contingent payment obligations under its PMA acquisition
agreement of July 1997 (see Note 7). In addition, based on ongoing negotiations
with potential investors, the Company believes that any financing it obtains for
the IBM patent purchase is likely to be in the form of convertible preferred
stock that would be redeemable at a premium over its face value shortly after
the occurrence of certain defaults, including a failure by the shareholders of
the Company to approve the financing within a specified time after the closing.
Except for up to $4 million of additional borrowing available under its credit
facility with FCC, 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. In addition, the
Company may have additional capital requirements upon FDA approvals and other
events discussed in Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources. To the extent that
future financing requirements are satisfied through the sale of equity
securities, holders of Common Stock may experience significant dilution in
earnings per share and in net book value per share. The FCC financing or other
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>
Technology-Related Uncertainties
- --------------------------------
Purchase of Patent Rights from IBM. On February 11, 1997 the Company executed an
agreement with IBM for the purchase of certain IBM patents relating to
ultraviolet light ophthalmic products and procedures for ultraviolet ablation
and IBM's patent license agreements with Summit Technology, Inc. and VISX, Inc.
The purchase price is $14.9 million, and was originally payable on July 1, 1997.
IBM subsequently agreed in writing not to exercise its right to terminate the
agreement until after July 31, 1997 and verbally advised the Company of its
intention not to exercise its right to terminate the agreement until after
August 31, 1997. LaserSight is exploring various alternatives to fund the
purchase price. There can be no assurance that such funding will be available.
If the transaction does not close by August 31, 1997, IBM may terminate the
agreement. In such event, LaserSight would be obligated to deliver to IBM shares
of Common Stock and/or cash with an aggregate value of $1 million.
New Products. There can be no assurance that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of its new LaserScan LSX excimer laser and other new
products and enhancements, or that its new products and enhancements will be
accepted in the marketplace. As is typical in the case of new and rapidly
evolving industries, demand and market acceptance for recently introduced
technology and products are subject to a high level or uncertainty. In addition,
announcements of currently planned or other new product offerings may cause
customers to defer purchasing existing Company products.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Pillar Point Partners
---------------------
On March 25, 1997, the Company entered into an agreement with Pillar
Point Partners and each co-plaintiff to resolve this litigation. Under
the agreement, Pillar Point Partners and each co-plaintiff granted a
release from liability under any of their patents for certain of the
Company's ultraviolet laser corneal surgery systems and any service or
procedure performed with such systems before the effective date of the
agreement. The Company paid a nominal fee in April 1997 and agreed to
notify Pilllar Point Partners and the co-plaintiffs before LaserSight
begins manufacturing or selling in the United States in the future. The
action was dismissed without prejudice in the United States District
Court for the District of Delaware on March 26, 1997.
VISX
----
On May 27, 1997, the Company entered into a License Agreement with
VISX, Incorporated to settle this litigaton as well as any and all
potential claims related to patent infringement prior to May 1, 1997.
The agreement calls for an aggregate of $230,400 to be paid in eight
quarterly installments of $28,800 each.
Euro Pacific Securities Services
--------------------------------
To collect a $1,140,000 stock subscription receivable, the Company
initiated a lawsuit that is presently pending before the United States
District Court for the Middle District of Florida-Orlando Division in
June 1996 against Euro Pacific Securities Services GMBH & Co., KG and
Wolf Wiese (the "defendants"). In July 1997, after failing to timely
file a counterclain, the defendants filed a separate lawsuit in the
same court against the Company and its LaserSight Technologies, Inc.
subsidiary, without obtaining leave from the court, claiming breach of
contract, coercion to enter a contract, misrepresentation, and other
charges and seeking an unspecified amount of monetary damages. The
Company believes that the charges are without merit and procedurally
flawed. A motion for summary judgement is currently on file with the
court, but has not been acted upon.
ITEM 2 CHANGES IN SECURITIES
a) Not applicable.
b) Not applicable.
c) During the second quarter ended June 30, 1997, the Company has sold
or issued the following unregistered securities:
<PAGE>
(1) In April 1997, the Company issued 406,700 shares of Common Stock to
Michael R. Farris, the former shareholder of MRF, Inc. ("The Farris
Group") (now the President and Chief Executive Officer at the Company),
as partial consideration for the acquisition in 1994 of the capital
stock of The Farris Group. Under the original agreement, the investor
received certain rights to have the shares registered by the Company at
a later date.
(2) In April 1997, the Company granted Foothill Capital Corporation
five year warrants to purchase 500,000 shares of Common Stock as
partial consideration for the extension of credit by Foothill Capital
Corporation. The warrants are exerciseable commencing on March 31, 1998
at a price of $6.0667 per share and the investor received certain
rights to have the shares registered by the Company at a later date.
The issuance and sale of all such shares was intended to be exempt from
registration and prospectus delivery requirements under the Securities
Act of 1933, as amended (the "Securities Act") by virtue of Section
4(2) thereof due to, among other things, (i) the limited number of
persons to whom the shares were issued, (ii) the distribution of
disclosure documents to all investors, (iii) the fact that each such
person represented and warranted to the Company, among other things,
that such person was acquiring the shares for investment only and not
with a view to the resale or distribution thereof, and (iv) the fact
that certificates representing the shares were issued with a legend to
the effect that such shares had not been registered under the
Securities Act or any state securities laws and could not be sold or
transferred in the absence of such registration or an exemption
therefrom.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 13, 1997, at the Company's annual meeting of shareholders, the
following members were elected to the Board of Directors:
Votes For (1) Votes Withheld
------------- --------------
J. Richard Crowley 7,769,640 171,282
Michael R. Farris 7,432,692 508,230
Richard C. Lutzy 7,772,870 168,052
Francis E. O'Donnell, Jr., M.D. 7,219,320 721,602
Thomas Quinn 7,772,670 168,252
David T. Pieroni 7,431,442 509,480
A proposal to appoint KPMG Peat Marwick LLP as auditors was ratified as
follows:
Votes For (1) 7,917,932
Votes Against 9,150
Abstain 14,000
<PAGE>
Amendment of the Non-Employee Directors Stock Option Plan was ratified
as follows:
Votes For 6,907,767
Votes Against 829,126
Abstain 15,037
(1) As set forth in the Proxy Statement, includes shares not voted by
proxy which were automatically voted for election of the nominees for
director and the appointment of auditors.
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
EXHIBIT INDEX
Exhibit 2 - Plans of Acquisition, Reorganization
2.1 See Exhibits 10.3, 10.8, 10.10, 10.19, 10.26, 10.29, 10.30, 10.46 and
10.47.
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 are incorporated herein
by reference from 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 (File No. 33-42734 and incorporated herein by
reference).
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*).
<PAGE>
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*).
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 November 1, 1996 by and between LaserSight
Technologies, Inc. and Emanuela Dobrin-Charlton (filed as Exhibit 10.14
to the Company's Form 10-K for the year ended December 31, 1996*).
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*).
<PAGE>
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, 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*).
10.22 Agreement dated April 4, 1996 to amend Agreement and Plan of Merger by
and among LaserSight Incorporated, Mark B. Gordon, O.D. and Howard M.
Levin, O.D. (filed as Exhibit 10.22 to the Company's Form 10-Q for the
2nd quarter ended June 30, 1996*).
10.23 Agreement dated June 27, 1996 to amend Agreement and Plan of Merger by
and among LaserSight Incorporated, Mark B. Gordon, O.D. and Howard M.
Levin, O.D. (filed as Exhibit 10.23 to the Company's Form 10-Q for the
2nd quarter ended June 30, 1996*).
10.24 LaserSight Incorporated 1996 Equity Incentive Plan (filed as Exhibit A
to the Company's definitive proxy statement dated April 30, 1996*).
10.25 LaserSight Incorporated Amended and Restated Non-Employee Directors
Stock Option Plan (filed as Exhibit B to the Company's definitive proxy
statement dated May 19, 1997*).
10.26 Agreement and Plan of Merger dated April 18, 1996 among LaserSight
Incorporated, Eye Diagnostics & Surgery, P.A., LSI Acquisition, Inc.,
John W. Norris, M.D. and Bernard Spier, M.D. (filed as Exhibit 2 (i) to
the Company's Form 8-K dated July 18, 1996*).
10.27 Amendment to the Agreement and Plan of Merger dated June 17, 1996
(filed as Exhibit 2 (ii) to the Company's Form 8-K dated July 18,
1996*).
10.28 Second Amendment to the Agreement and Plan of Merger dated July 3, 1996
(filed as Exhibit 2 (iii) to the Company's Form 8-K dated July 18,
1996*).
10.29 Agreement and Plan of Merger dated June 17, 1996 among LaserSight
Incorporated, LaserSight Acquisition, Inc., Cataract Hotline, Inc. and
Michael R. Norris (filed as Exhibit 2 (iv) to the Company's Form 8-K
dated July 18, 1996*).
<PAGE>
10.30 Asset Purchase Agreement dated April 18, 1996 between LaserSight
Incorporated and John W. Norris, M.D. (filed as Exhibit 2 (vi) to the
Company's Form 8-K dated July 18, 1996*).
10.31 Amendment to Asset Purchase Agreement dated June 17, 1996 (filed as
Exhibit 2 (vii) to the Company's Form 8-K dated July 18, 1996*).
10.32 Agreement dated August 12, 1996 to amend Agreement and Plan of Merger
by and among LaserSight Incorporated, Mark B. Gordon, O.D. and Howard
M. Levin, O.D. (filed as Exhibit 10.32 to the Company's Form 10-K for
the year ended December 31, 1996*).
10.33 Agreement dated October 30, 1996 to amend Agreement and Plan of Merger
by and among LaserSight Incorporated, Mark B. Gordon, O.D. and Howard
M. Levin, O.D. (filed as Exhibit 10.33 to the Company's Form 10-K for
the year ended December 31, 1996*).
10.34 Agreement dated January 8, 1997 to amend Agreement and Plan of Merger
by and among LaserSight Incorporated, Mark B. Gordon, O.D. and Howard
M. Levin, O.D. (filed as Exhibit 10.34 to the Company's Form 10-K for
the year ended December 31, 1996*).
10.35 Agreement dated September 18, 1996 between David T. Pieroni and
LaserSight Incorporated (filed as Exhibit 10.35 to the Company's Form
10-K for the year ended December 31, 1996*).
10.36 Agreement dated December 17, 1996 between Public Company Publishing,
Inc., Samuel S. Duffey and LaserSight Incorporated (filed as Exhibit
10.36 to the Company's Form 10-K for the year ended December 31,
1996*).
10.37 Agreement dated January 1, 1997, between International Business
Machines Corporation and LaserSight Incorporated (filed as Exhibit
10.37 to the Company's Form 10-K for the year ended December 31,
1996*).
10.38 Addendum dated March 7, 1997 to Agreement between International
Business Machines Corporation and LaserSight Incorporated (filed as
Exhibit 10.38 to the Company's Form 10-K for the year ended December
31, 1996*).
10.39 Second Amendment to Agreement for Purchase and Sale of Stock by and
among LaserSight Centers Incorporated, its stockholders and LaserSight
Incorporated dated March 14, 1997 (filed as Exhibit 99.1 to the
Company's Form 8-K filed on March 27, 1997*).
10.40 Amendment to Royalty Agreement by and between LaserSight Centers
Incorporated, Laser Partners and LaserSight Incorporated dated March
14, 1997 (filed as Exhibit 99.2 to the Company's Form 8-K filed on
March 27, 1997*).
10.41 Employment Agreement dated September 16, 1996 by and between LaserSight
Incorporated and Richard L. Stensrud (filed as Exhibit 10.41 to the
Company's Form 10-Q filed on May 9, 1997*).
10.42 Loan and Security Agreement dated March 31, 1997 by and between
LaserSight Incorporated and certain of its subsidiaries and Foothill
Capital Corporation (filed as Exhibit 10.42 to the Company's Form 10-Q
filed on August 14, 1997*).
<PAGE>
10.43 Consent and Amendment Number One to Loan and Security Agreement dated
July 28, 1997 by and between LaserSight Incorporated and Foothill
Capital Corporation (filed as Exhibit 10.43 to the Company's Form 10-Q
filed on August 14, 1997*).
10.44 Warrant to purchase 500,000 shares of Common Stock dated March 31, 1997
by and between LaserSight Incorporated and Foothill Capital
Corporation (filed as Exhibit 10.44 to the Company's Form 10-Q filed on
August 14, 1997*).
10.45 License Agreement dated May 20, 1997 by and between VISX, Incorporated
and LaserSight Incorporated (filed as Exhibit 10.45 to the Company's
Form 10-Q filed on August 14, 1997*).
10.46 Patent Purchase Agreement dated July 15, 1997 by and between LaserSight
Incorporated and Frederic B. Kremer, M.D. (filed as Exhibit 2.(i) to
the Company's Form 8-K filed on August 13, 1997*).
10.47 Agreement and Plan of Merger dated July 15, 1997 by and among
LaserSight Incorporated, Photomed Acquisition, Inc., Photomed, Inc.,
Frederic B. Kremer, M.D., Linda Kremer, Robert Satalof, Trustee for
Alan Stewart Kremer and Robert Satalof, Trustee for Mark Adam Kremer
(filed as Exhibit 2.(ii) to the Company's Form 8-K filed on August 13,
1997*).
11 Statement of Computation of Per Share Earnings.
27 Financial Data Schedule (filed as Exhibit 27 to the Company's Form 10-Q
filed on August 14, 1997*).
b) Reports on Form 8-K
On April 8, 1997, the Company filed with the Commission a
Current Report on Form 8-K regarding the press release issued
by the Company dated April 7, 1997, announcing that LaserSight
has completed financing.
On April 25, 1997, the Company filed with the Commission a
Current Report on Form 8-K regarding the press release issued
by the Company dated April 24, 1997, regarding LaserSight
expecting a first quarter loss.
- -------------------
* 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: December 11, 1997 By: /s/ Michael R. Farris
------------------- -------------------------
Michael R. Farris,
Chief Executive Officer
Dated: December 11, 1997 By: /s/ Gregory L. Wilson
------------------- -------------------------
Gregory L. Wilson,
Chief Financial Officer
EXHIBIT 11
<TABLE>
LASERSIGHT INCORPORATED
COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------------------------------- -----------------------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
PRIMARY
Weighted average shares outstanding 9,381,000 7,051,000 9,103,000 7,035,000
Net effect of dilutive stock options and warrants -- -- -- --
-------------------------------- -----------------------------
9,381,000 7,051,000 9,103,000 7,035,000
================================ =============================
Net loss ($2,442,510) ($24,940) ($3,090,532) ($1,256,704)
Conversion discount on preferred stock -- (101,057) -- (1,010,557)
Dividends on preferred stock (3,487) (138,075) (13,350) (268,020)
-------------------------------- -----------------------------
Loss attributable to common shareholders ($2,445,997) ($264,022) ($3,103,882) ($2,535,281)
================================ =============================
Primary loss per share ($0.26) ($0.04) ($0.34) ($0.36)
================================ =============================
Additional Primary Calculation:
Loss attributable to common shareholders, above ($2,445,997) ($264,022) ($3,103,882) ($2,535,281)
================================ =============================
Additional adjustment to weighted average # of shares:
Weighted average # of shares as adjusted per above 9,381,000 7,051,000 9,103,000 7,035,000
Dilutive effect of contingently issuable shares and
stock options 164,000 742,000 166,000 748,000
-------------------------------- -----------------------------
Weighted average # of shares, as adjusted 9,545,000 7,793,000 9,269,000 7,783,000
================================ =============================
Primary loss per share, as adjusted ($0.26) ($0.03)(A) ($0.33) ($0.33)(A)
================================ =============================
<PAGE>
FULLY DILUTED
Weighted average shares outstanding 9,381,000 7,089,000 9,103,000 7,084,000
Net effect of dilutive stock options and warrants -- -- -- --
Effect of preferred conversions from beginning of
period to date of conversion 43,000 -- 73,000 --
-------------------------------- -----------------------------
9,424,000 7,089,000 9,176,000 7,084,000
================================ =============================
Net loss ($2,442,510) ($24,940) ($3,090,532) ($1,256,704)
Conversion discount on preferred stock -- (101,057) -- (1,010,557)
Dividends on preferred stock, net of dividends
on preferred stock converted during period -- (138,075) -- (268,020)
-------------------------------- -----------------------------
Loss attributable to common shareholders ($2,442,510) ($264,072) ($3,090,532) ($2,535,281)
================================ =============================
Fully diluted loss per share ($0.26) ($0.04) ($0.34) ($0.36)
================================ =============================
Additional Fully Diluted Calculation:
Loss attributable to common shareholders, above ($2,442,510) ($264,072) ($3,090,532) ($2,535,281)
================================ =============================
Additional adjustment to weighted average # of
shares:
Weighted average # of shares as adjusted per above 9,424,000 7,089,000 9,176,000 7,084,000
Dilutive effect of contingently issuable shares, stock
options and convertible preferred stock 172,000 1,316,000 175,000 1,322,000
-------------------------------- -----------------------------
Weighted average # of shares, as adjusted 9,596,000 8,405,000 9,351,000 8,406,000
================================ =============================
Fully diluted loss per share, as adjusted ($0.25) ($0.03)(A) ($0.33) ($0.30)(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>
