Filed pursuant to Rule 424(b)(2)
File No. 333-59369
PROSPECTUS
4,119,109 Shares
LASERSIGHT INCORPORATED
Common Stock ($.001 par value)
This Prospectus relates to an aggregate of 4,119,109 shares of common
stock, $.001 par value, including the associated preferred stock purchase rights
issued pursuant to the Rights Agreement, dated as of July 2, 1998, between
LaserSight Incorporated and American Stock Transfer & Trust Company as Rights
Agent (the "Shares" or "Common Stock"), of LaserSight Incorporated, a Delaware
corporation (the "Company"), being offered for sale from time to time by the
selling stockholders named in this Prospectus (the "Selling Stockholders") as
follows:
(i) 2,000,000 shares of Common Stock issuable upon the conversion (such shares,
the "Series C Conversion Shares") from time to time of the Company's Series C
Convertible Participating Preferred Stock, $.001 par value (the "Series C
Preferred Stock");
(ii) 2,000,000 shares of Common Stock issuable upon the conversion (such shares,
the "Series D Conversion Shares") from time to time of the Company's Series D
Convertible Participating Preferred Stock, $.001 par value (the "Series D
Preferred Stock");
(iii) 105,820 shares of Common Stock (the "Schwartz Shares") issued to Schwartz
Electro-Optics, Inc. ("Schwartz") in connection with that certain Agreement for
Sale and Purchase of Assets dated April 15, 1998 between the Company and
Schwartz;
(iv) up to 12,616 shares of Common Stock (the "Series B Anti-Dilution Warrant
Shares") issuable upon the exercise of warrants (the "Series B Anti-Dilution
Warrants") issued to the former holders of the Company's Series B Convertible
Participating Preferred Stock, $.001 par value (the "Series B Preferred Stock")
as a result of certain anti-dilution adjustments and other agreements among such
holders and the Company; see "Risk Factors--Possible Dilutive Issuance of Common
Stock--Series B Warrant;" and
(v) up to 673 shares of Common Stock (the "Shoreline Anti-Dilution Warrant
Shares") issuable upon the exercise of warrants (the "Shoreline Anti-Dilution
Warrants") issued to four individuals associated with the Company's placement
agent in connection with the Company's private placement of the Series B
Preferred Stock as a result of certain anti-dilution adjustments; see "Risk
Factors--Possible Dilutive Issuance of Common Stock--Shoreline Warrant."
If all of the Series B Anti-Dilution Warrants and the Shoreline
Anti-Dilution Warrants are exercised, the Company would realize approximately
$38,070 in proceeds. See "Use of Proceeds." The Company will not receive any
proceeds from any sale of the Series C Conversion Shares, the Series D
Conversion Shares, the Schwartz Shares, the Series B Anti-Dilution Warrant
Shares or the Shoreline Anti-Dilution Warrant Shares by the Selling
Stockholders.
The Company has been advised by the Selling Stockholders that there are no
underwriting arrangements with respect to the sale of Common Stock, that the
Shares may be offered hereby from time to time for the account of the Selling
Stockholders in transactions on The Nasdaq Stock Market, in negotiated
transactions or a combination of both at prices related to prevailing market
prices, or at negotiated prices. See "Selling Stockholders" and "Plan of
Distribution." The Company will pay the expenses in connection with the
registration of the Shares (other than any underwriting discounts and selling
commissions, and fees and expenses of counsel and other advisors, if any, to the
Selling Stockholders) estimated to be $60,000.
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The Common Stock is traded on The Nasdaq Stock Market under the symbol
"LASE." On August 28, 1998, the closing sale price for the Common Stock was
$4.63 per share.
THE SHARES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Selling Stockholders, through broker-dealers or agents designated from
time to time, may sell the Shares from time to time on terms to be determined at
the time of sale. The aggregate proceeds to the Selling Stockholders from the
Shares will be the purchase price of the Shares sold less the aggregate
brokerage or agents' commissions, if any, and other expenses of issuance and
distribution not borne by the Company. The Selling Stockholders and any
broker-dealer or agent that participates with the Selling Stockholders in the
distribution of the Shares may be deemed "underwriters" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), and any
commission received by them and any profit on the resale of the Shares purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act. See "Plan of Distribution."
The date of this Prospectus is September 3, 1998
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TABLE OF CONTENTS
Documents Incorporated by Reference Capitalization
The Company Description of Securities
Recent Developments Plan of Distribution
The Offering Selling Stockholders
Risk Factors Legal Matters
Use of Proceeds Experts
Available Information
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained or
incorporated by reference in this Prospectus in connection with the offerings
described herein, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or the Selling
Stockholders. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make an offer or
solicitation. Neither the delivery of this Prospectus nor any offer, sale or
exchange made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs or operations of the Company since
the date of this Prospectus, or that the information herein is correct as of any
time subsequent to such date.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company filed with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the
"Exchange Act") are incorporated by reference in this Prospectus:
A. Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by a Form 10-K/A filed on April 29, 1998;
B. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
and June 30, 1998 (as amended by a Form 10-Q/A filed on August 19,
1998);
C. Current Reports on Form 8-K filed on January 2, January 14, January 20,
January 22, February 17, February 27, March 13, March 16, March 18,
June 8, June 16, June 25, July 8, 1998 and August 4, 1998; and
D. The description of the Common Stock contained in the Company's Form
8-A/A (Amendment No. 4) filed on June 25, 1998.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of
a post-effective amendment which indicates that all Shares offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated in this Prospectus by reference shall be modified or superseded for
the purpose of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated in this Prospectus by reference modifies or replaces
such statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on the
written or oral request of such person, a copy of any and all of the information
that has been or may be incorporated by reference in this Prospectus (not
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including exhibits to the information that is incorporated by reference into the
information that this Prospectus incorporates). Written requests for such copies
should be directed to Secretary, LaserSight Incorporated, 3300 University
Boulevard, Suite 140, Orlando, Florida 32792; telephone: (407) 678-9900.
THE COMPANY
The Company and its subsidiaries operate in two major operating
segments: technology and health care services.
The Company's technology segment includes LaserSight Technologies, Inc.
("LaserSight Technologies"), LaserSight Patents, Inc. ("LaserSight Patents") and
LaserSight Centers Incorporated ("LaserSight Centers"). LaserSight Technologies
develops, manufactures and markets ophthalmic lasers with a galvanometric
scanning system primarily for use in performing PRK (photorefractive
keratectomy) which utilizes a one millimeter scanning laser beam to ablate
microscopic layers of corneal tissue in order to reshape the cornea and to
correct the eye's point of focus in persons with myopia (nearsightedness),
hyperopia (farsightedness) and astigmatism. LaserSight Patents licenses various
patents related to the use of excimer lasers to ablate biological tissue and to
keratome design and usage. LaserSight Centers is a developmental-stage company
through which the Company may provide PRK, LASIK (Laser In Situ Keratomileusis)
and other eyecare surgical services.
Since December 31, 1997, the health care services segment has consisted of
MRF, Inc. ("TFG" or "The Farris Group"). The Farris Group provides health care
and vision care consulting services to hospitals, managed care companies and
physicians. Until that date, this segment had also included MEC Health Care,
Inc. ("MEC") and LSI Acquisition, Inc. ("LSIA"). Under the Company's ownership,
MEC was a vision managed care company which managed vision care programs for
health maintenance organizations (HMOs) and other insured enrollees and LSIA was
a physician practice management company which managed the ophthalmic practice
known as the "Northern New Jersey Eye Institute" under a management services
agreement.
The Company was incorporated in Delaware in 1987, but was inactive until
1991. In April 1993, the Company acquired LaserSight Centers in a
stock-for-stock exchange with additional shares issued in March 1997 pursuant to
an amended purchase agreement. In February 1994, the Company acquired The Farris
Group. In July 1994, the Company was reorganized as a holding company. In
October 1995, the Company acquired MEC. In July 1996, the Company's LSIA
subsidiary acquired the assets of the Northern New Jersey Eye Institute
("NNJEI"). In August of 1997 the Company formed LaserSight Patents which then
acquired certain patents (the "IBM Patents") from International Business
Machines Corporation. On December 30, 1997, the Company sold MEC and LSIA,
effective as of December 1, 1997. In April 1998, the Company acquired the assets
of the medical products division of Schwartz ("SEO Medical").
As used herein, the term the "Company" refers to LaserSight Incorporated
and its subsidiaries, unless the context otherwise requires. The Company's
principal office and mailing address are 3300 University Boulevard, Suite 140,
Orlando, Florida 32792.
RECENT DEVELOPMENTS
On June 5, 1998, the Company entered into a Securities Purchase Agreement
with TLC The Laser Center Inc. ("TLC"), pursuant to which the Company issued to
TLC 2,000,000 shares of the newly-created Series C Convertible Participating
Preferred Stock (the "Series C Preferred Stock") of the Company with a face
value of $4.00 per share, resulting in an aggregate offering price of $8
million. The Series C Preferred Stock is convertible on a fixed, one-for-one
basis, subject to customary anti-dilution adjustments, into 2,000,000 shares of
Common Stock, at the option of TLC at any time until June 5, 2001, on which date
all shares of Series C Preferred Stock then outstanding will automatically be
converted into an equal number of shares of Common Stock. See "Description of
Securities--Preferred Stock--Series C Preferred Stock." A portion of the
proceeds received by the Company in connection with the issuance of the Series C
Preferred Stock was used to repurchase all of the outstanding shares of Series B
Preferred Stock. The Company's strategic business relationship with TLC will
allow the Company to develop its mobile refractive laser strategy.
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On June 12, 1998, the Company entered into a Securities Purchase Agreement with
Pequot Private Equity Fund, L.P., Pequot Scout Fund, L.P., and Pequot Offshore
Private Equity Fund, Inc. (collectively, the "Pequot Funds"), whereby the
Company issued, collectively, to the Pequot Funds 2,000,000 shares of the
newly-created Series D Convertible Participating Preferred Stock (the "Series D
Preferred Stock") of the Company with a face value of $4.00 per share, resulting
in an aggregate offering price of $8 million. The Series D Preferred Stock is
convertible on a one-for-one basis into an equal number of shares of Common
Stock, subject to certain anti-dilution adjustments, at the option of the Pequot
Funds at any time until June 12, 2001, on which date all shares of Series D
Preferred Stock then outstanding will automatically be converted into an equal
number of shares of Common Stock. See "Description of Securities--Preferred
Stock--Series D Preferred Stock."
On August 3, 1998, Mercacorp, Inc. commenced an action in the
U.S.District Court for the Eastern District of New York against the Company,
Michael R. Farris (the President and Chief Executive Officer of the Company),
Wall & Broad Equities, Inc., a "purported investment banking establishment" and
Isaac Weinhouse, the principal of such purported investment banking
establishment. This action asserts violations of Section 10(b) of the Exchange
Act and common law fraud in connection with the alleged issuance of false press
releases, misrepresentations and omissions by all of the defendants on which the
plaintiff allegedly relied in purchasing the Company's Common Stock and later
holding (rather than selling) such Common Stock. The plaintiff asks that they be
awarded $5 million in actual damages and $50 million in punitive damages. The
Company believes that the allegations made by the plaintiff against the Company
and Mr. Farris are without merit, and it intends to vigorously defend the
action.
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THE OFFERING
Common Stock outstanding on September 2, 1998 12,970,135 shares
Shares Offered by the Selling Stockholders 4,119,109
Risk Factors The Shares involve a
high degree of risk. Investors
should carefully consider the
information set forth under
"Risk Factors."
The Nasdaq Stock Market trading symbol LASE
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RISK FACTORS
The Shares offered hereby involve a high degree of risk. In addition, this
Prospectus contains forward-looking statements (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) which involve
risks and uncertainties. The following risk factors could affect the Company's
actual results and could cause the Company's actual results to differ in
material respects from the results discussed in any forward-looking statements
made in this Prospectus and the documents incorporated by reference herein. In
addition to the other information contained elsewhere or incorporated by
reference in this Prospectus, purchasers of the Shares should carefully consider
the following risk factors:
Shares Eligible For Future Sale. Except as provided below, substantially
all of the Company's outstanding Common Stock (12,970,135 shares as of September
2, 1998), including Shares offered by this Prospectus, is freely tradeable
without restriction or further registration under the Securities Act, unless
such shares are held by "affiliates" of the Company as that term is defined in
Rule 144 under the Securities Act. The shares of Common Stock listed below are
"restricted securities." Restricted securities may be sold in the public market
only if they have been registered under the Securities Act or if their sales
qualify for Rule 144 or another available exemption from the registration
requirements of the Securities Act.
o All shares issued from the conversion of Series B Preferred Stock (the
"Series B Conversion Shares") are freely saleable, subject only to the
satisfaction of a prospectus delivery requirement.
o A warrant to purchase 40,000 shares of Common Stock (the "Shoreline
Warrant")(with an exercise price of $5.81 per share) has been issued to
four individuals associated with the Company's placement agent in
connection with the placement of the Series B Preferred Stock, and the
shares of Common Stock issuable under the Shoreline Warrant (the
"Shoreline Shares") will be freely saleable following such exercise,
subject only to the satisfaction of a prospectus delivery requirement.
o A warrant to purchase 750,000 shares of Common Stock (the "Series B
Warrant") (with an exercise price of $2.71 per share) has been issued
to the former holders of the Series B Preferred Stock, and the shares
of Common Stock issuable under the Series B Warrant (the "Series B
Shares") will be freely saleable following such exercise, subject only
to the satisfaction of a prospective delivery requirement. As of August
27,1998, 140,625 of the Series B Warrants have been exercised.
o The 535,515 shares in an unregistered acquisition transaction in July
1997 (the "Photomed Shares") have become freely tradeable, subject only
to a prospectus delivery requirement.
o The 581,825 shares of Common Stock (the "Foothill Shares") issuable
upon the exercise of the warrants issued to Foothill Capital
Corporation ("Foothill") are the subject of certain demand and
piggy-back registration rights.
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o Other shares of Common Stock (the "Other Shares") which the Company may
be required to issue in the future may become eligible for resale
pursuant to Rule 144, the exercise of registration rights, or
otherwise. See "Possible Dilutive Issuance of Common Stock--LaserSight
Centers and Florida Laser Partners; --TFG; --Foothill Warrant; --Series
D Preferred Stock; --Series B Warrant; --Shoreline Warrant."
Sales, or the possibility of sales, of the Series B Conversion Shares, Series B
Shares, the Shoreline Shares, Photomed Shares, Foothill Shares, or Other Shares,
whether pursuant to a prospectus, Rule 144 or otherwise, could depress the
market price of the Common Stock.
Past and Expected Future Losses and Operating Cash Flow Deficits; No Assurance
of Future Profits or Positive Operating Cash Flows. The Company incurred losses
of $3.7 million for the six months ended June 30, 1998 and $7.3 million and $4.1
million during 1997 and 1996, respectively. During such periods, the Company had
a deficit in cash flow from operations of $7.2 million, $4.4 million, and $4.2
million, respectively. Although the Company achieved profitability during 1995
and 1994, it had a deficit in cash flow from operations of $1.9 million during
1995. In addition, the Company incurred losses in 1991 through 1993. As of June
30, 1998, the Company had an accumulated deficit of $15.6 million. As a result
of the Company's sale of MEC and LSIA in December 1997, the Company's losses and
deficits in cash flow from operations in future periods may be greater than if
the Company had not sold MEC and LSIA. The Company expects to report a loss and
deficit in cash flow from operations for the third quarter of 1998. There can be
no assurance that the Company can regain or sustain profitability or positive
operating cash flow.
Uncollectible Receivables Could Exceed Reserves. At June 30, 1998, the Company's
trade accounts and notes receivable aggregated approximately $13,135,820 net of
allowances for collection losses and returns of approximately $2,162,000.
Accrued commissions, the payment of which generally depends on the collection of
such net trade accounts and notes receivable, aggregated approximately
$1,735,230 at June 30, 1998. Exposure to collection losses on receivables is
principally dependent on the Company's customers' ongoing financial condition
and their ability to generate revenues from their utilization of the Company's
laser systems. In addition, approximately 93% and 90% of net receivables at June
30, 1998 and December 31, 1997, respectively, related to international accounts.
The Company's ability to evaluate the financial condition and revenue generating
ability of its prospective customers located outside of the U.S. is generally
more limited than for customers located in the U.S. Although the Company
monitors the status of its receivables and maintains a reserve for estimated
losses, there can be no assurance that the Company's reserves for estimated
losses ($1,962,000 at June 30, 1998) 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.
Restructuring of Receivables. At June 30, 1998, the Company had restructured
laser customer accounts in the aggregate amount of approximately $860,450 (5.6%
of the gross receivables as of such date), resulting in the extension of the
original payment terms by periods ranging from 12 to 60 months. The Company's
liquidity and operating cash flow will be adversely affected if additional
extensions become necessary in the future. In addition, it may be more difficult
to collect laser system receivables if the payment schedule extends beyond the
expected economic life of the laser system.
Potential Liquidity Problems. During the six months ended June 30, 1998, the
Company experienced a $7.2 million deficit in cash flow from operations largely
resulting from the loss incurred during the period, an increase in accounts
receivable and a decrease in liabilities. Of this amount, the Company expects
that any improvements in cash flow from operations will depend on, among other
things, the Company's ability to market, produce and sell its new LSX laser
systems and its Automated Disposable Keratome ("A*D*K") product on a commercial
basis. Beginning in the third quarter of 1998, the LSX laser system is expected
to make a more significant contribution to the Company's operating results.
Based on the status of clinical validation and refinement of the manufacturing
processes, the Company does not expect significant commercial shipments of the
A*D*K in the third quarter of 1998. Subject to these factors, the Company
believes that its balances of cash and cash equivalents, will be sufficient to
fund its anticipated working capital requirements for a 12-month period based on
anticipated collection of receivables. However, if the Company does not collect
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a material portion of current receivables in a timely manner, experiences
significant further delays in the shipment of its A*D*K product, experiences
less market demand for such products than it anticipates, the Company's
liquidity could be materially adversely affected.
Uncertainty Regarding Availability or Terms of Capital to Satisfy Possible
Additional Needs. The Company may need additional capital, including to fund the
following:
o Any future negative cash flow from operations.
o Certain cash payment obligations under the Company's LASIK Pre-Market
Approval ("PMA") application acquisition agreement of July 1997 with
Photomed, Inc. ("Photomed"). Such contingent cash payment obligations
currently include (i) an amount to be determined payable if the
Company decides to pursue the commercialization of the LASIK laser
(originally, the contingent obligation was $1.75 million payable if
the United States ("U.S.") Food and Drug Administration ("FDA")
approved the LASIK PMA application for commercial sale before July 29,
1998; the FDA, on July 30, 1998, approved the single site PMA, but has
not yet approved the commercial sale of such laser.), and (ii) an
amount to be determined if the FDA approves the Company's scanning
laser for commercial sale in the U.S. before January 1, 1999.
(Originally, the contingent obligation was $3,633 for each day (or
approximately $110,000 for each month) between the date of such
approval and January 1, 1999.) The Company is currently assessing the
opportunity, cost and timing of proceeding with the development of the
LASIK laser. The Company is also discussing the restructuring of the
payment obligations associated with commercialization of the LASIK
laser and FDA approval of the Company's scanning laser.
o Additional working capital necessary to develop a production line for
the LASIK laser system and to obtain the GMP (Good Manufacturing
Practices) clearance from the FDA that is required for the commercial
sale of the LASIK laser system.
o Additional working capital necessary to support the commercial
introduction of its laser systems into the U.S. market after receiving
FDA approval. (The Company believes these expenses may begin to be
incurred in the second half of 1998.)
o Additional working capital necessary to more fully develop the mobile
refractive laser business plan and other possible business lines and
products.
In addition, the Company may seek alternative sources of capital to fund its
product development activities and to consummate future strategic acquisitions.
The Company has no commitments from third parties to supply additional capital,
and there can be no assurance as to whether or on what terms the Company could
obtain additional capital.
To the extent that the Company satisfies its future financing requirements
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. Such
dilution may be more significant if the Company sells Common Stock at a price
below current market prices or sells additional preferred stock with a
conversion price linked to the market price of the Common Stock at the time of
conversion. 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. If the Company needs but cannot
obtain additional capital on satisfactory terms, it may be required to sell
additional assets.
Possible Dilutive Issuance of Common Stock--LaserSight Centers and Florida Laser
Partners. Based on previously-reported agreements entered into in 1993 in
connection with the Company's acquisition of LaserSight Centers (the Company's
development-stage subsidiary) and modified in July 1995 and March 1997, the
Company is obligated as follows:
o To issue to the former stockholders and option holders (including two
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trusts related to the Chairman of the Board of the Company and certain
former officers and directors of the Company) of LaserSight Centers,
up to 600,000 unregistered shares of Common Stock (the "Centers
Contingent Shares") based on the Company's pre-tax operating income
through March 2002 from utilizing a fixed or mobile excimer laser to
perform PRK, arranging for the delivery of PRK or receiving license or
royalty fees associated with patents held by LaserSight Centers. The
Centers Contingent Shares are issuable at the rate of one share per
$4.00 of such operating income.
o To pay to a partnership whose partners include the Chairman of the
Board of the Company and certain former officers and directors of the
Company a royalty of up to $43 (payable in cash or shares of Common
Stock (the "Royalty Shares")), for each eye on which PRK is performed
on a fixed or mobile excimer laser system owned or operated by
LaserSight Centers or its affiliates. Royalties do not begin to accrue
until the earlier of March 2002 or the delivery of all of the 600,000
Centers Contingent Shares.
As of September 2, 1998 the Company had not accrued any obligation to issue
Centers Contingent Shares or Royalty Shares. There can be no assurance that any
issuance of Centers Contingent Shares or Royalty Shares will be accompanied by
an increase in the Company's per share operating results. The Company is not
obligated to pursue strategies that may result in the issuance of Centers
Contingent Shares or Royalty Shares. It may be in the interest of the Chairman
of the Board for the Company to pursue business strategies that maximize the
issuance of Centers Contingent Shares and Royalty Shares.
Possible Dilutive Issuance of Common Stock--TFG. To the extent that TFG achieves
certain pre-tax income levels during 1998, the earnout provisions of the
Company's agreement for the acquisition of TFG in 1994 would require the Company
to issue to the former owner of such company (Mr. Michael R. Farris, the
President and Chief Executive Officer of the Company) up to approximately
343,000 shares of Common Stock (the "Farris Contingent Shares"). There can be no
assurance that any issuance of the Farris Contingent Shares will be accompanied
by an increase in the Company's per share operating results.
Possible Dilutive Issuance of Common Stock--Photomed. If the FDA approves a
LaserSight-manufactured laser system for general commercial use in the treatment
of hyperopia after having approved for commercial sale the LASIK PMA application
to which the Company acquired rights in July 1997, the Company would be required
to issue additional shares of Common Stock with a market value of $1.0 million
(based on the average closing price of the Common Stock during the preceding
10-day period) to the former Photomed stockholders. If such market value had
been computed as of September 3, 1998, the number of additional shares issuable
would have been approximately 222,000. Depending on whether and when such FDA
approval is received and on the market price of the Common Stock at the time of
any such approval, the actual number of additional shares of Common Stock
issuable could be more (but not more than permitted under the listing rules of
The NASDAQ Stock Market) or less than this number.
Possible Dilutive Issuance of Common Stock--SEO Medical. In connection with the
acquisition of certain assets of SEO Medical in April 1998, the Company agreed
to issue up to 223,280 additional shares of Common Stock if the five-day average
price of Common Stock on April 15, 1999 is less than $5.00 per share. All
223,280 shares of Common Stock will be issuable unless such price is more than
$2.36 per share.
Possible Dilutive Issuance of Common Stock--Foothill Warrant. In April 1996, the
Company issued to Foothill a warrant to purchase 500,000 shares of Common Stock
(the "Foothill Warrant") at a price of $6.067 per share. The Company is required
to make anti-dilution adjustments to both the number of warrant shares and the
warrant exercise price in the event the Company sells Common Stock or Common
Stock-equivalents (such as convertible securities or warrants) at a price per
share that is (or could be) less than the fair market value of the Common Stock
at the time of such sale. In connection with its sale of Series B Preferred
Stock in August 1997 and subsequent conversion of such preferred shares into
Common Stock, the sale of the Series C Preferred Stock and the Series D
Preferred Stock, such anti-dilution adjustments have resulted in (i) an increase
in the number of Foothill Warrant shares to approximately 581,825, and (ii) a
reduction to the exercise price of the Foothill Warrant shares to approximately
$5.21 per share. Additional anti-dilution adjustments to the Foothill warrant
could also result from any future below-market sales of Common Stock by the
Company.
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Possible Dilutive Issuance of Common Stock--Series B Warrant. In connection with
its sale of the Series B Preferred Stock in August 1997, the Company issued the
Series B Warrant to the former holders of the Series B Preferred Stock. The
Series B Warrant was issued with an exercise price of $5.91 per share and may be
exercised at any time before August 29, 2002. In connection with a March 1998
agreement whereby the Company obtained the option to repurchase the Series B
Preferred Stock and a lock-up on conversions, the exercise price of the Series B
Warrant shares was reduced to $2.753 per share. The Company is required to make
anti-dilution adjustments to both the number of warrant shares and the warrant
exercise price in the event the Company sells Common Stock or Common
Stock-equivalents (such as convertible securities or warrants) at a price per
share that is (or could be) less than the fair market value of the Common Stock
at the time of such sale. As a result of the Company's sale of the Series C
Preferred Stock and the Series D Preferred Stock such anti-dilution adjustments
and other agreements among the former holders of the Series B Preferred Stock
and the Company have resulted in (i) an increase in the number of Series B
Warrant shares to approximately 762,616, and (ii) a reduction to the exercise
price of Series B Warrant shares to approximately $2.71 per share. Additional
anti-dilution adjustments to the Series B Warrants could also result from any
future below-market sales of Common Stock by the Company. As of September 2,
1998, 140,625 such shares had been exercised.
Possible Dilutive Issuance of Common Stock--Shoreline Warrant. In connection
with its sale of the Series B Preferred Stock in August 1997, the Company issued
the Shoreline Warrant to four individuals associated with the Company's
placement agent. The Shoreline Warrant was issued with an exercise price of
$5.91 per share and may be exercised at any time before August 29, 2002. The
Company is required to make anti-dilution adjustments to both the number of
warrant shares and the warrant exercise price in the event the Company sells
Common Stock or Common Stock-equivalents (such as convertible securities or
warrants) at a price per share that is (or could be) less that the fair market
value of the Common Stock at the time of such sale. In connection with the
Company's sale of the Series C Preferred Stock and the Series D Preferred Stock
such anti-dilution adjustments have resulted in (i) an increase in the number of
Shoreline Warrant shares to approximately 40,673, and (ii) a reduction to the
exercise price of Shoreline Warrant shares to approximately $5.81 per share.
Additional anti-dilution adjustments to the Shoreline Warrants could also result
from any future below-market sales of Common Stock by the Company.
Possible Dilutive Issuance of Common Stock--Series D Preferred Stock. In
accordance with the terms of the Company's Certificate of Designation,
Preferences and Rights of Series D Preferred Stock, the holders of the Series D
Preferred Stock are entitled to certain anti-dilution adjustments if the Company
issues its Common Stock or Common Stock equivalents (such as convertible
securities or warrants) at a price per share (or having a conversion or exercise
price per share) less than $4.00 per share. See "Description of
Securities--Preferred Stock--Series D Preferred Stock."
Acquisition- and Financing-Related Contingent Commitments to Issue Additional
Common Shares. The Company may from time to time include in future acquisitions
and financings, provisions that would require the Company to issue additional
shares of its Common Stock at a future date based on the market price of the
Common Stock at such date. Persons who are the beneficiaries of such provisions
effectively receive some protection from declines in the market price of the
Common Stock, but other stockholders of the Company will incur additional
dilution of their ownership interest in the event of a decline in the price of
the Common Stock. Such dilution may be increased by provisions in the Foothill
Warrant, the Series B Warrant and the Shoreline Warrant that may increase the
number of shares issuable under each of such warrants and decrease the exercise
price of such warrants. The factors to be considered by the Company in including
such provisions may include the Company's cash resources, the trading history of
Common Stock, the negotiating position of the selling party or the investors, as
applicable, and the extent to which the Company estimates that the expected
benefit from the acquisition or financing exceeds the expected dilutive effect
of the price-protection provision.
Dependence on Key Personnel. The Company is dependent on its executive officers
and other key employees, especially Michael R. Farris, its President and Chief
Executive Officer, and J. Richard Crowley, the President and Chief Operating
Officer of its LaserSight Technologies subsidiary. A loss of one or more such
officers or key employees, especially of Mr. Farris or Mr. Crowley, could have a
material adverse effect on the Company's business. The Company does not carry
"key man" insurance on Mr. Farris, Mr. Crowley or any other officers or key
employees.
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As the Company continues the clinical development of its excimer lasers and
other products and prepares for regulatory approvals and other commercialization
activities, it will need to continue to implement and expand its operational,
financial and management resources and controls. The failure of the Company to
attract and retain experienced individuals for necessary positions, as well as
any inability of the Company to effectively manage growth in its domestic and
international operations, could have a material adverse effect on the Company's
business, financial condition and results of operations.
Risks Associated with Past and Possible Future Acquisitions. The Company has
made several significant acquisitions since 1994, including TFG in 1994,
Photomed in 1997, the IBM Patents in August 1997 and its acquisition of SEO
Medical in April 1998. These acquisitions, as well as any future acquisition,
may not achieve adequate levels of revenue, profitability or productivity or may
not otherwise perform as expected. Acquisitions involve special risks, including
unanticipated liabilities and contingencies, diversion of management attention
and possible adverse effects on operating results resulting from increased
goodwill amortization, increased interest costs, the issuance of additional
securities and difficulties related to the integration of the acquired
businesses. Although the Company is currently focusing on its existing
operations, the future ability of the Company to achieve growth through
acquisitions will depend on a number of factors, including the availability of
attractive acquisition opportunities, the availability of funds needed to
complete acquisitions, the availability of working capital needed to fund the
operations of acquired businesses and the effect of existing and emerging
competition on operations. Should additional acquisitions be sought, there can
be no assurance that the Company will be able to successfully identify
additional suitable acquisition candidates, complete additional acquisitions or
integrate acquired businesses into its operations.
Amortization of Significant Intangible Assets. Of the Company's total assets at
June 30, 1998, approximately $15.7 million (31%) were intangible assets, of
which approximately $6.8 million reflects goodwill (which is being amortized
using an estimated life ranging from 12 to 20 years), approximately $4.7 million
reflects the cost of patents (which is being amortized over a period ranging
from approximately 8 to 17 years), and approximately $4.2 million reflects the
cost of acquired licenses and technology (which is being amortized over a period
ranging from 31 months to 12 years). The 12-year life of acquired technology was
determined based on the Company's best judgment at the time of the most likely
life-span of a solid-state laser product and related patent. The major factors
involved in the Company's ongoing assessment are its judgment whether there will
be a market for solid-state as an improvement to existing excimer laser
technology and that there is an industry and marketplace interest in such
development that can be successfully pursued by the Company or others that will
result in revenue from the associated patent. Goodwill is an intangible asset
that represents the difference between the total purchase price of the
acquisitions and the amount of such purchase price allocated to the fair value
of the net assets acquired. Goodwill and other intangibles are amortized over a
period of time, with the amount amortized in a particular period constituting a
non-cash expense that reduces the Company's net income (or increases the
Company's net loss) in that period. A reduction in net income resulting from the
amortization of goodwill and other intangibles may have an adverse impact upon
the market price of the Common Stock. In addition, in the event of a sale or
liquidation of the Company or its assets, there can be no assurance that the
value of such intangible assets would be recovered.
In accordance with SFAS 121, the Company reviews intangible assets for
impairment whenever events or changes in circumstances, including a history of
operating or cash flow losses, indicate that the carrying amount of an asset may
not be recoverable. In such cases, the carrying amount of the asset is compared
to the estimated undiscounted future cash flows expected to result from the use
of the asset and its eventual disposition. If the sum of the expected
undiscounted future cash flows is less than the carrying amount of the asset, an
impairment loss will be computed and recognized in accordance with SFAS 121.
Expected cash flows are based on factors including historical results, current
operating budgets and projections, industry trends and expectations, and
competition.
The Company continues to assess the current results and future prospects of TFG
in view of the substantial reduction in the subsidiary's operating results in
1996 and 1997. If TFG is unsuccessful in continuing to improve its financial
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performance, some or all of the carrying amount of goodwill recorded ($3,852,000
at June 30, 1998) may be subject to an impairment adjustment.
Year 2000 Concerns. The Company believes that, other than its financial and
accounting software already scheduled to be replaced in late 1998 or early 1999,
it has prepared its computer systems and related applications to accommodate
date-sensitive information relating to the Year 2000; however, the Company
continues to assess its systems and applications. The Company expects that any
additional costs related to ensuring such systems to be Year 2000-compliant will
not be material to the financial condition or results of operations of the
Company. Such costs will be expensed as incurred. In addition, the Company is
discussing with its vendors the possibility of any interface difficulties or
other disruptions that may affect the Company. To date, no significant concerns
have been identified. However, there can be no assurance that no Year
2000-related operating problems or expenses will arise with the Company's
computer systems and software or in their interface with the computer systems
and software of the Company's vendors.
Government Regulation. The Company's laser products are subject to strict
governmental regulations that materially affect the Company's ability to
manufacture and market these products and directly impact the Company's overall
prospects. All laser devices to be marketed in interstate commerce are subject
to the laser regulations required by the Radiation Control for Health and Safety
Act, as administered by the FDA. Such Act imposes design and performance
standards, labeling and reporting requirements, and submission conditions in
advance of marketing for all medical laser products. The Company's laser systems
produced for medical use require PMA by the FDA before the Company can ship its
laser systems for use in the U.S. Each separate medical device requires a
separate FDA submission, and specific protocols have to be submitted to the FDA
for each claim made for each medical device.
If and when the Company's laser systems receive PMA approval by the FDA, the
Company will be required to obtain GMP clearance with respect to its
manufacturing facilities. These regulations impose certain procedural and
documentation requirements upon the Company with respect to its manufacturing
and quality assurance activities. The Company's facilities will be subject to
inspections by the FDA, and if any noncompliance with GMP guidelines is noted
during facility inspections, the marketing of the Company's laser products may
be adversely affected. In addition, if any of the Company's suppliers of
significant components or sub-assemblies cannot meet the quality requirements of
the Company, the Company could be delayed in producing commercial systems for
the U.S. market.
Additionally, product and procedure labeling and all forms of promotional
activities are subject to examination by the FDA, and current FDA enforcement
policy prohibits the marketing of approved medical devices for unapproved uses.
Noncompliance with these requirements may result in warning letters, fines,
injunctions, recall or seizure of products, suspension of manufacturing, denial
or withdrawal of PMAs, and criminal prosecution.
Laser products marketed in foreign countries are often subject to local laws
governing health product development processes that may impose additional costs
for overseas product development. In particular, all member countries of the
European Economic Union ("EU") require CE Mark certification of compliance with
the EU medical directives as the standard for regulatory approval for sale of
laser systems in EU member countries. While the Company's LaserScan 2000 laser
system has received CE Mark certification, the Company's LSX laser system is
currently undergoing the CE Mark certification process. Until the Company
receives its CE Mark certification with the respect to its LSX laser system, the
Company is prohibited from placing the LSX laser system for use in EU member
countries. A lengthy delay in CE Mark certification could have a material
adverse effect on the business, financial condition, and results of operations
of the Company. The Company expects to receive CE Mark certification for its LSX
laser system during 1998.
The Company cannot determine the costs or time it will take to complete the
approval process and the related clinical testing for its medical laser
products. Future legislative or administrative requirements in the U.S., or
elsewhere, may adversely affect the Company's ability to obtain or retain
regulatory approval for its laser products. The failure to obtain required
approvals on a timely basis could have a material adverse effect on the
Company's business, financial condition and results of operations.
Uncertainty Concerning Patents--International. Should LaserSight Technologies'
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lasers infringe upon any valid and enforceable patents in international markets,
then LaserSight Technologies may be required to obtain licenses for such
patents. Should such licenses not be obtained, LaserSight Technologies may be
prohibited from manufacturing or marketing its excimer lasers in those countries
where patents are in effect. The Company's international sales accounted for 94%
and 43%, respectively, of the Company's total revenues during the six months
ended June 30, 1998 and 1997, respectively. In the future, the Company expects
its percentage of international sales to be more comparable to the sales
percentages that were reported for the six months ended June 30, 1998.
Uncertainty Concerning Patents--U.S. Two of the Company's competitors, Summit
Technology, Inc. ("Summit") and VISX, Inc. ("VISX") formed a U.S. partnership,
Pillar Point Partners ("Pillar Point"), in 1992 to pool certain of their
respective patents related to corneal sculpting technologies. On June 9, 1998,
Summit and VISX announced that they had reached agreement on the dissolution of
Pillar Point to be effected as soon as possible. As a part of this dissolution,
Summit and VISX granted each other a worldwide, royalty free cross-license
whereby each party will have full rights to license all existing patents owned
by either company relating to laser vision correction for use with their
systems.
Should LaserSight Technologies' lasers infringe upon any valid and enforceable
patents held by VISX or Summit in the U.S., then LaserSight Technologies may be
required to obtain a license for such patents and pay royalties and per
procedure fees to VISX or Summit for all revenues generated in the U.S. If such
licenses are required but not obtained, LaserSight Technologies may be
prohibited from manufacturing or marketing its excimer lasers in the U.S. In
connection with its March 1996 settlement of litigation with Pillar Point, the
Company agreed to notify Pillar Point before the Company begins manufacturing or
selling its laser systems in the U.S. As of this date, the Company has not
obtained a U.S. license from either of Summit or VISX, and the actual per
procedure fee and other terms of any license, if such license is granted, have
yet to be determined.
In addition, there may be other U.S. and foreign patents for which the Company
will need to negotiate licenses in order to sell, lease or use the excimer
lasers in certain markets. There can be no assurance that the Company or its
customers will be successful in securing licenses, including any necessary
licenses from Summit or VISX, or that if the Company does obtain licenses, such
licenses will be on terms acceptable to the Company. The failure to either
obtain required licenses or to obtain licenses on terms favorable to the Company
could have a material adverse effect on the business of the Company.
Competition. The vision correction industry is subject to intense, increasing
competition. The Company competes against both alternative and traditional
medical technologies (such as eyeglasses, contact lenses and radial keratomy
(RK)) and other laser manufacturers. Many of the Company's competitors have
existing products and distribution systems in the marketplace and are
substantially larger, better financed, and better known. A number of lasers
manufactured by other companies have either received, or are much further
advanced in the process of receiving, FDA approval for specific procedures, and,
accordingly, may have or develop a higher level of acceptance in some markets
than the Company's lasers. The entry of new competitors into the markets for the
Company's products could cause downward pressure on the prices of such products
and a material adverse effect on Company's business, financial condition and
results of operations.
Technological Change. Technological developments in the medical and laser
industries are expected to continue at a rapid pace. Newer technologies and
surgical techniques could be developed which may offer better performance and
clinical results than the Company's laser systems. The success of any competing
alternatives to PRK and LASIK could have a material adverse effect on the
Company's business, financial condition and results of operations.
New Products. The Company may experience difficulties that could further delay
or prevent the successful development, introduction and marketing of its
recently-announced A*D*K, 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 of
uncertainty. In addition, announcements of new products (whether for sale in the
near future or at some later date) may cause customers to defer purchasing
existing Company products.
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Minimum Payments Under A*D*K License Agreement. In addition to the risks
relating to the introduction of any new product (see "--New Products") above,
the Company's A*D*K is subject to the risk that the Company is required to make
certain minimum payments to the licensors under its limited exclusive license
agreement relating to the A*D*K. Under that agreement, the Company is required
to pay a total of $300,000 in two installments due six and 12 months after the
date of the Company's receipt of completed limited production molds for the
A*D*K and provide an excimer laser (such laser was provided during the quarter
ended June 30, 1998). The Company expects to receive such molds during the third
quarter of 1998. In addition, commencing seven months after such date, the
Company's royalty payments (50% of its defined gross profits from A*D*K sales)
will become subject to a minimum of $400,000 per calendar quarter for a period
of eight quarters.
Uncertainty of Market Acceptance of Laser-Based Eye Treatment. The Company
believes that its achievement of profitability and growth will depend in part
upon broad acceptance of PRK or LASIK in the U.S. and other countries. There can
be no assurance that PRK or LASIK will be accepted by either the
ophthalmologists or the public as an alternative to existing methods of treating
refractive vision disorders. The acceptance of PRK and LASIK may be affected
adversely by their cost, possible concerns relating to safety and efficacy,
general resistance to surgery, the effectiveness and lower cost of alternative
methods of correcting refractive vision disorders, the lack of long-term
follow-up data, the possibility of unknown side effects, the lack of third-party
reimbursement for the procedures, any future unfavorable publicity involving
patient outcomes from use of PRK or LASIK systems, and the possible shortages of
ophthalmologists trained in the procedures. The failure of PRK or LASIK to
achieve broad market acceptance could have a material adverse effect on the
Company's business, financial condition and results of operations.
International Sales. International sales may be limited or disrupted by the
imposition of government controls, export license requirements, political
instability, trade restrictions, changes in tariffs, difficulties in staffing
and coordinating communications among and managing international operations.
Additionally, the Company's business, financial condition and international
results of operations may be adversely affected by increases in duty rates,
difficulties in obtaining export licenses, ability to maintain or increase
prices, and competition. To date, all sales made by the Company have been
denominated in U.S. dollars. Therefore, the Company does not have exposure to
typical foreign currency fluctuation risk. Due to its export sales, however, the
Company is subject to currency exchange rate fluctuations in the U.S. dollar,
which could increase the effective price in local currencies of the Company's
products. This could in turn result in reduced sales, longer payment cycles and
greater difficulty in collection of receivables. See "--Receivables" above.
Although the Company has not experienced any material adverse effect on its
operations as a result of such regulatory, political and other factors, such
factors may have a material adverse effect on the Company's operations in the
future or require the Company to modify its business practices.
Potential Product Liability Claims; Limited Insurance. As a producer of medical
devices, the Company may face liability for damages to users of such devices in
the event of product failure. The testing and use of human care products entails
an inherent risk of negligence or other action. An award of damages in excess of
the Company's insurance coverage could have a material adverse effect on the
Company's business, financial condition and results of operations. While the
Company maintains product liability insurance, there can be no assurance that
any such liability of the Company will be included within its insurance coverage
or that damages will not exceed the limits of its coverage. The Company's
"claims made" product liability insurance coverage is limited to $10 million and
its general liability insurance coverage is limited to $6 million, including up
to $5 million of coverage under an excess liability policy. The Company has in
the past agreed, and is likely in the future to agree, to indemnify certain
medical institutions and personnel thereof conducting and participating in the
Company's clinical studies.
Supplier Risks. The Company contracts with third parties for certain components
used in its lasers. Single vendors provide certain key components. If any of
these single-source suppliers were to cease providing components to the Company,
the Company would have to locate and contract with a substitute supplier, and
there can be no assurances that such substitute supplier could be located and
qualified in a timely manner or could provide required components on
commercially reasonable terms. An interruption in the supply of critical laser
components could have a material adverse effect on the Company's business,
financial condition and results of operations.
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No Backlog; Concentration of Sales at End of Quarter. The Company has
historically operated with little or no backlog because its products are
generally shipped as orders are received. Historically, the Company has received
and shipped a significant portion of its orders for a particular quarter near
the end of the quarter. As a result, the Company's operating results for any
quarter often depend on orders received and laser systems shipped late in that
quarter. Any delay in such orders or shipments may cause a significant
fluctuation in period-to-period operating results.
Anti-takeover Measures; Potential Adverse Effect on Common Stock Price. The
Company's Certificate of Incorporation authorizes the Company's Board of
Directors to issue shares of the Company's Preferred Stock and to determine the
rights, preferences, privileges and restrictions of such shares without any vote
or action by the stockholders. The issuance of Preferred Stock under such
circumstances could have the effect of delaying or preventing a change in
control of the Company. The rights of the holders of the Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be created and issued in the future. One of the effects
of the provisions described above may be to discourage a future attempt to
acquire control of the Company that is not presented to and approved by the
Board of Directors, but which a substantial number, and perhaps even a majority
of the Company's stockholders, might believe to be in their best interests or in
which stockholders might receive a substantial premium for their shares over the
current market prices. As a result, stockholders who might desire to participate
in such a transaction may not have an opportunity to do so. See "Description of
Securities--Series E Preferred Stock--Stockholder Rights Plan."
USE OF PROCEEDS
If all of the Series B Anti-Dilution Warrants and all of the Shoreline
Anti-Dilution Warrants are exercised, the Company will realize proceeds in the
amount of $38,070. Such proceeds will be contributed to the working capital of
the Company and used for general corporate purposes. The Company will not
receive any proceeds from any sale of the Series C Conversion Shares, the Series
D Conversion Shares, the Schwartz Shares, the Series B Anti-Dilution Warrant
Shares or the Shoreline Anti-Dilution Warrant Shares by the Selling
Stockholders.
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CAPITALIZATION
The following table sets forth the actual capitalization of the Company at
June 30, 1998.
Long-term obligations............................. $ 500,000
Stockholders' equity:
Convertible Preferred Stock, Series C, par
value $.001 per share, authorized 2,000,000;
actual 2,000,000 shares;.................... 2,000
Convertible Preferred Stock, Series D, par
value $.001 per share, authorized 2,000,000;
actual 2,000,000 shares;.................... 2,000
Common Stock, par value $.001 per share
authorized 40,000,000 shares; actual
12,867,912 shares........................... 12,868
Additional paid-in capital.................. 57,873,297
Stock subscription receivable............... (1,140,000)
Accumulated deficit......................... (15,580,294)
Treasury stock, at cost 155,200 shares...... (576,884)
---------------
Total capitalization and stockholders' equity..... $ 41,092,987
===============
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DESCRIPTION OF SECURITIES
The following description of the Company's capital stock is not complete
and is subject in all respects to the Delaware General Corporation Law (the
"DGCL") and to the provisions of the Company's Certificate of Incorporation, as
amended (the "Charter"), and By-Laws.
The authorized capital stock of the Company consists of 40,000,000 shares
of Common Stock and 10,000,000 shares of preferred stock, $.001 par value,
issuable in series. As of September 2, 1998, the Company had outstanding (i)
12,970,135 shares of Common Stock (not including any shares of Common Stock
issuable upon the conversion of Preferred Stock or the exercise of outstanding
options and warrants to acquire Common Stock), (ii) 2,000,000 shares of Series C
Preferred Stock, and (iii) 2,000,000 shares of Series D Preferred Stock. No
shares of the Series A Convertible Preferred Stock (issued in January 1996) or
the Series B Convertible Participating Preferred Stock (issued in August 1997)
are outstanding.
Common Stock
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to share pro rata in
such dividends and other distributions, if any, as may be declared by the Board
of Directors out of funds legally available therefor, subject to any prior
rights accruing to any holders of Preferred Stock. Upon the liquidation or
dissolution of the Company, the holders of Common Stock are entitled to share
proportionally in all assets available for distribution to such holders. Holders
of Common Stock have no preemptive, redemption or conversion rights. The
outstanding shares of Common Stock issued are fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
Preferred Stock
The Charter provides that the Board of Directors is authorized, subject to
certain limitations prescribed by law, without further stockholder approval, to
issue from time to time up to an aggregate of 10,000,000 shares of Preferred
Stock in one or more series and to fix or alter the designations, preferences,
rights and any qualifications, limitations or restrictions of the shares of each
such series thereof, including the dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The rights, preferences
and privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future.
Series A and Series B Preferred Stock
On January 10, 1996, the Company issued 116 shares of Series A Convertible
Preferred Stock, par value $.001 per share, and on August 29, 1997, the Company
issued 1,600 shares of Series B Preferred Stock. All such shares have been
converted, redeemed or repurchased.
Series C Preferred Stock
On June 5, 1998, the Company issued 2,000,000 shares of Series C Preferred
Stock. The Series C Preferred Stock is convertible into Common Stock at the
option of the holders of the Series C Preferred Stock at any time until June 5,
2001, on which date all shares of Series C Preferred Stock then outstanding will
automatically be converted into an equal number of shares of Common Stock,
subject to customary anti-dilution adjustments.
For a more detailed description of the terms of the Series C Preferred
Stock see the Company's Form 8-A/A (Amendment No. 4) filed with the SEC on June
25, 1998 which is incorporated herein by reference.
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Series D Preferred Stock
On June 12, 1998, the Company issued 2,000,000 shares of Series D
Preferred Stock. The Series D Preferred Stock is convertible into Common Stock
at the option of the holders of the Series D Preferred Stock at any time until
June 12, 2001, on which date all shares of Series D Preferred Stock then
outstanding will automatically be converted into an equal number of shares of
Common Stock, subject to customary and certain anti-dilution adjustments
discussed below.
The holders of the Series D Preferred Stock are entitled to certain
anti-dilution adjustments if the Company issues or sells any shares of Common
Stock (or Common Stock equivalents) before June 12, 2001 at a price per share
(or having a conversion or exercise price per share) less than $4.00 per share.
In the event of such an issuance, subject to all applicable listing rules of The
Nasdaq Stock Market, the conversion price of the Series D Preferred Stock will
be adjusted in order to allow the Series D Preferred Stock to convert into that
number of shares of Common Stock which will maintain the Series D Preferred
Stock holders' percentage level of ownership of the Company's Common Stock
outstanding (including Series C Preferred Stock and Series D Preferred Stock
which is convertible into Common Stock) as such ownership exists immediately
prior to such below $4.00 per share issuance. This anti-dilution adjustment only
relates to the conversion price of the Series D Preferred Stock and does not
result in adjustments to the number of shares of Common Stock, if any, held by
the holders of the Series D Preferred Stock.
For a more detailed description of the terms of the Series D Preferred
Stock see the Company's Form 8-A/A (Amendment No. 4) filed with the SEC on June
25, 1998 which is incorporated herein by reference.
Series E Preferred Stock
The Board of Directors has designated 500,000 shares of Series E Junior
Participating Preferred Stock (the "Series E Preferred Stock") in connection
with the adoption of the Stockholders Rights Agreement described below. Because
of the nature of the Series E Preferred Stock dividend, liquidation and voting
rights, the value of the one one-thousandth interest in a share of Series E
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock. The Series E Preferred Stock purchasable
upon exercise of the Rights will not be redeemable. Each share of Series E
Preferred Stock will be entitled to the greater of (i) a preferential quarterly
dividend payment of $1.00 per share or (ii) an aggregate dividend of 1,000 times
the dividend declared per share of Common Stock. In the event of liquidation,
the holders of the Series E Preferred Stock will be entitled to a preferential
liquidation payment of $1,000 per share, plus an amount equal to 1,000 times the
aggregate amount to be distributed per share of Common Stock. Each share of
Series E Preferred Stock will have 1,000 votes, voting together with the Common
Stock except as otherwise required by law. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Series E Preferred Stock will be entitled to receive
1,000 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions.
Stockholder Rights Plan
The Board of Directors adopted a Stockholder Rights Agreement in July 1998
and declared a dividend of one preferred share purchase right ("Right") on each
outstanding share of the Company's Common Stock payable to stockholders of
record as of the close of business on July 13, 1998 (the "Record Date"). Except
as described below, each Right, when exercisable, entitles the holder thereof to
purchase from the Company one-thousandth of a share of Series E Preferred Stock
of the Company at an exercise price of $20.00 per one -thousandth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company, a New York corporation, as Rights
Agent.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons has become an
"Acquiring Person" (as defined below) or (ii) 10 business days (or such later
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date as may be determined by action of the Board of Directors prior to such time
as any person or group becomes an Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in a person or group becoming an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced by Common Stock certificates.
An "Acquiring Person" is a person or group of affiliated or associated
persons who have acquired beneficial ownership of 15% or more of the outstanding
Common Stock, other than the Company, any subsidiary of the Company, or any
employee benefit plan of the Company or its subsidiaries ("Exempt Persons");
provided, however that (i) in no event shall any Exempt Person be deemed to be
an Acquiring Person, (ii) no person shall become an Acquiring Person as the
result of an acquisition of Common Stock by the Company which increases the
proportionate number of shares beneficially owned by such person and its
affiliates and associates to 15% or more of the Common Stock then outstanding
(provided, however, that if such person becomes the beneficial owner of 15% or
more of the Common Stock then outstanding by reason of share acquisitions by the
Company and, after such share acquisitions, (A) acquires beneficial ownership of
an additional number of shares of Common Stock which exceeds the lesser of
10,000 shares of Common Stock or 0.25% of the then-outstanding Common Stock, and
(B) beneficially owns after such acquisition 15% or more of the aggregate number
of Common Stock then outstanding, then such person shall be deemed to be an
Acquiring Person), (iii) no person who, together with its affiliates and
associates, was the beneficial owner of 15% or more of the aggregate number of
shares of Common Stock of the Company outstanding as of 5:00 p.m., New York
time, on July 2, 1998 shall be deemed an Acquiring Person (provided, however,
that if such person or any of its affiliates and associates, after 5:00 p.m.,
New York time, on July 2, 1998, (A) acquires beneficial ownership of an
additional number of shares of Common Stock which exceeds 2% of the
then-outstanding Common Stock and (B) beneficially owns after such acquisition
15% or more of the aggregate number of shares of Common Stock of the Company
then outstanding, then such person shall be deemed to be an Acquiring Person),
and (iv) if the Board of Directors of the Company determines in good faith that
a person who would otherwise be an Acquiring Person has become such
inadvertently, and such person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such person would no longer be an
Acquiring Person, then such person shall not be deemed to be an Acquiring Person
for any purposes of the Rights Agreement.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common Stock
will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on July 2, 2008 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by the Company, as described below.
The Purchase Price payable, and the number of shares of Series E Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series E Preferred Stock, (ii) upon the grant to holders of the Series E
Preferred Stock of certain rights or warrants to subscribe for or purchase
Series E Preferred Stock at a price, or securities convertible into Series E
Preferred Stock with a conversion price, less than the then-current market price
of the Series E Preferred Stock, or (iii) upon the distribution to holders of
the Series E Preferred Stock of evidences of indebtedness, assets or capital
stock (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in shares of Series E Preferred Stock) or
of subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. The Company will not be required to issue fractional Common Stock or
Series E Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share of Series E Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash may be made based on the market price of the
Common Stock or Series E Preferred Stock on the last trading day prior to the
date of exercise.
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<PAGE>
If any person or group becomes an Acquiring Person, then each holder of a
Right (other than Rights beneficially owned by the Acquiring Person, any
Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, which will be void) will have the
right to receive upon exercise of such Right that number of Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a market value of two times the exercise price of the Right.
If at any time after the time that any person or group becomes an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by the Acquiring Person, any Associate or
Affiliate thereof, and certain transferees thereof, which will be void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after the time that any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Stock, the Board of Directors of the Company may exchange
the Rights (other than Rights beneficially owned by such person or group, any
Associate or Affiliate thereof, and certain transferees thereof, which will be
void), in whole or in part, at an exchange ratio of one share of Common Stock or
one-thousandth of a share of Series E Preferred Stock (or of a share of a class
or series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
At any time prior to the time that any person becomes an Acquiring Person,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right, subject to adjustment (the "Redemption
Price"), which may (at the option of the Company) be paid in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish; provided, however, that no redemption will be permitted or required
after the time that any person becomes an Acquiring Person. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of the Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person becomes an Acquiring Person no such amendment may
make the Rights redeemable if the Rights are not then redeemable in accordance
with the terms of the Rights Agreement or may adversely affect the interests of
the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights will have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors.
Delaware Law and Certain Charter Provisions
The provisions of the Company's Charter and Delaware statutory law
described in this section may delay or make more difficult acquisitions or
changes in control of the Company that are not approved by the Board of
Directors.
The Company is subject to the provisions of Section 203 of the DGCL.
Subject to certain exceptions, Section 203 prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the interested
stockholder attained such status with the approval of the Board of Directors or
unless the business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder which is not shared pro rata
with the other stockholders of the Company. Subject to certain exceptions, an
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<PAGE>
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or by-laws, unless a corporation's certificate of
incorporation or by-laws, as the case may be, requires a greater percentage. The
By-laws may, subject to the provisions of DGCL, be amended or repealed by a
majority vote of the Board of Directors.
The Charter contains certain provisions permitted under the DGCL relating
to the liability of directors. These provisions eliminate a director's liability
for monetary damages for a breach of fiduciary duty, except in certain
circumstances involving certain wrongful acts, such as the breach of a
director's duty of loyalty or acts or omissions which involve intentional
misconduct or a knowing violation of law. The Charter contains provisions
indemnifying the directors and officers of the Company to the fullest extent
permitted by the DGCL. The Company also has a directors and officers liability
insurance policy which provides for indemnification of its directors and
officers against certain liabilities incurred in their capacities as such. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as directors.
Warrants
In connection with the private placement of Series A Preferred Stock on
January 10, 1996, the Company issued to its placement agent and to an assignee
of the placement agent, the 1996 Warrants to purchase a total of 17,509 shares
of Common Stock at an exercise price of $13.25 per share. The 1996 Warrants may
be exercised at any time through January 10, 1999.
In connection with the establishment of its Foothill credit facility in
April 1997, the Company issued the Foothill Warrants, subject to certain
anti-dilution adjustments. In connection with its sale of Series B Preferred
Stock in August 1997 and subsequent conversion of such preferred shares into
Common Stock, the sale of the Series C Preferred Stock and the Series D
Preferred Stock such anti-dilution adjustments have resulted in (i) an increase
in the number of Foothill Warrant shares to approximately 581,825, and (ii) a
reduction to the exercise price of the Foothill Warrant shares to approximately
$5.21 per share. Additional anti-dilution adjustments to the Foothill Warrant
could also result from any future below-market sales of Common Stock by the
Company. The Foothill Warrant may be exercised at any time through April 1,
2002.
In connection with its sale of the Series B Preferred Stock in August
1997, the Company issued the Series B Warrant and the Shoreline Warrant subject
to certain anti-dilution adjustments. As a result of the Company's sale of the
Series C Preferred Stock and the Series D Preferred Stock such anti-dilution
adjustments and other agreements among the former holders of the Series B
Preferred Stock and the Company have resulted in (i) an increase in the number
of Series B Warrant shares to approximately 762,616, and (ii) a reduction to the
exercise price of Series B Warrant shares to approximately $2.71 per share. As
of September 2, 1998, 140,625 of such warrants have been exercised. With respect
to the Shoreline Warrant the Company's sale of the Series C Preferred Stock and
the Series D Preferred Stock triggered anti-dilution adjustments which resulted
in (i) an increase in the number of Shoreline Warrant shares to approximately
40,673, and (ii) a reduction to the exercise price of the Shoreline Warrant
shares to approximately $5.81 per share. The Company is obligated to maintain
the effectiveness of the registration of the Series B Warrant shares under the
Securities Act. The Series B Warrant and the Shoreline Warrant may be exercised
at any time through August 29, 2002.
PLAN OF DISTRIBUTION
Conversion Shares. The Company will issue the Series C Conversion
Shares and the Series D Conversion Shares upon the conversion from time to time
of the outstanding shares of Series C Preferred Stock and Series D Preferred
Stock pursuant to the terms governing the Series C Preferred Stock and the
Series D Preferred Stock, as applicable. Upon issuance, such shares will be
"restricted securities" for purposes of the Securities Act. The Company has
granted certain registration rights to such Selling Stockholders, and this
Registration Statement is being issued as a result of those rights. The Company
will not receive any of the proceeds from sale of the Series C Conversion Shares
or the Series D Conversion Shares. See "Description of Securities--Preferred
Stock--Series C Preferred Stock; and "Description of Securities--Preferred
Stock--Series D Preferred Stock."
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<PAGE>
Schwartz Shares. The Company issued the Schwartz Shares in connection
with the Agreement For Sale And Purchase Of Assets dated April 15, 1998 by and
between the Company and Schwartz (the "Purchase Agreement"). Upon issuance by
the Company the Shares were "restricted securities" for purposes of the
Securities Act. However, pursuant to the Purchase Agreement, the Company
provided certain registration rights to the Selling Stockholders. The Schwartz
Shares are being registered under this registration statement as a result of
those rights. The Company will not receive any of the proceeds from sales of the
Schwartz Shares.
Warrant Shares. The Company will issue the Series B Anti-Dilution Warrant
Shares and the Shoreline Anti-Dilution Warrant Shares from time to time upon the
exercise of the Series B Anti-Dilution Warrants and the Shoreline Anti-Dilution
Warrants by the holders thereof. Upon issuance, such shares will be "restricted
securities" for purposes of the Securities Act. The Company has granted certain
registration rights to such Selling Stockholders, and this Registration
Statement is being issued as a result of those rights. The Company shall receive
from such holders the exercise price of the Series B Anti-Dilution Warrants and
the Shoreline Anti-Dilution Warrants upon such exercise. See "Use of Proceeds."
The Company will not receive any of the proceeds from the sale of the Series B
Anti-Dilution Warrant Shares or the Shoreline Anti-Dilution Warrant Shares.
Pursuant to this Prospectus, holders of the Shares may resell from time to
time all or a portion of such Shares. The Company has been advised by the
Selling Stockholders that there are no underwriting arrangements with respect to
the sale of Common Stock and that the Shares will be offered for sale in
transactions on The Nasdaq Stock Market, in negotiated transactions or through a
combination of both, at prices related to such prevailing market prices at the
time of sale, or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through one or more broker-dealers or
agents. In the event that one or more broker-dealers or agents agree to sell the
Shares, they may do so by purchasing the Shares as principals or by selling the
Shares as agents for the Selling Stockholders. Any such broker-dealer may
receive compensation from the Selling Stockholders in the form of underwriting
discounts, concessions or commissions and may receive commissions from
purchasers of the Shares for whom it may act as agent. If any such broker-dealer
purchases the Shares as principal, it may effect resales of the Shares from time
to time to or through other broker-dealers, and such other broker-dealers may
receive compensation in the form of concessions and commissions from the Selling
Stockholders or purchasers of the Shares for whom they may act as agents. Any
such compensation may be equal to, less than or in excess of customary levels.
In addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers.
The Selling Stockholders and any broker-dealer who acts in connection with
the resale of the Shares hereunder, may be deemed to be an "underwriter" within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and/or profit on any resale thereof as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock for a period of one
business day prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M. These provisions may
limit the timing of purchases and sales of shares of Common Stock by the Selling
Stockholders.
A supplement to this Prospectus will be filed, if required, pursuant to
Rule 424 under the Securities Act disclosing (a) the name of the participating
broker-dealer(s); (b) the number of Shares involved; (c) the price at which such
Shares were sold; (d) the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable; and (e) other facts material to the
transaction, including the name and other information regarding the Selling
Stockholders.
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<PAGE>
Pursuant to the asset and securities purchase agreements described above,
the Company has agreed to use its reasonable best efforts to maintain the
effectiveness of the Registration Statement until the earlier of (i) the date on
which all of the Shares have been disposed of in accordance with the intended
methods of disposition set forth in the Registration Statement, (ii) the Shares
are no longer subject to volume or manner of sale restrictions under the
securities laws, or (iii) December 12, 2000.
SELLING STOCKHOLDERS
The following table sets forth certain information with regard to the
beneficial ownership of Common Stock by the Selling Stockholders, and the number
of shares of Common Stock to be offered by the Selling Stockholders.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Common Stock Beneficially
to Offering Owned After the Offering
----------- ------------------------
Shares of
Common
Selling Stockholder Number of Percent of Stock Number Percent of
Shares (1) Outstanding (2) to be sold of Shares Outstanding
---------- --------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Schwartz Electro-Optics, Inc. 305,820 2.4% 105,820 200,000 1.5%
TLC The Laser Center Inc.(3) 2,264,800 15.1% 2,000,000 264,800 1.8%
Pequot Private Equity Fund, L.P.(3) 1,553,331 10.4% 1,553,331 - -
Pequot Scout Fund, L.P.(3) 250,000 1.7% 250,000 - -
Pequot Offshore Private Equity Fund, Inc.(3) 196,669 1.3% 196,669 - -
CC Investments, LDC 238,318 1.8% 3,943 234,375 1.8%
Societe Generale 2,365 * 2,365 - -
Shepherd Investments International Ltd.
and Stark International 381,308 2.9% 6,308 375,000 2.8%
Harlan P. Kleiman 26,962 * 446 26,516 *
Robert K. Schacter 8,326 * 138 8,188 *
Thomas J. Griesel 1,440 * 24 1,416 *
Steven Lamar 3,945 * 65 3,880 *
* Less than 1%.
</TABLE>
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares listed in the table, subject to
community property laws, where applicable. For purposes of this table,
a person or group of persons is deemed to have "beneficial ownership"
of any shares which such person has the right to acquire within 60
days.
(2) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named above, any security which such
person or group of persons has the right to acquire within 60 days is
deemed to be outstanding for the purpose of computing the percentage
ownership for such person or persons, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person.
(3) A representative of each of (i) TLC The Laser Center Inc. and (ii) the
combined Pequot funds, is a member of the Company's board of directors.
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<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
EXPERTS
The consolidated financial statements of LaserSight Incorporated and
subsidiaries as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997 have been incorporated herein by
reference and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein and in the Registration Statement upon the authority of said
firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the SEC a Registration Statement on Form S-3
(together with any amendments thereto, the "Registration Statement") under the
Securities Act with respect to the Shares offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules of the SEC. For further information with respect to the Company and
the Shares offered hereby, reference is made to the Registration Statement and
the exhibits and the schedules thereto. Statements contained in this Prospectus
as to the contents of any contract or any document referred to are not
necessarily complete. With respect to each such contract or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matters involved, and each such statement
shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files periodic reports, proxy statements and
other information with the SEC. A copy of the Registration Statement, including
exhibits and schedules thereto, filed by the Company with the SEC, as well as
other reports, proxy statements and other information filed by the Company may
be inspected without charge at the office of the SEC, 450 Fifth Street, N.W.,
Washington, D.C., and at the following Regional Offices of the SEC-7 World Trade
Center, Suite 1300, New York, New York, and 500 West Madison Street, Suite 1400,
Chicago, Illinois. Copies of such material can be obtained, upon payment of
prescribed fees at the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. The SEC maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of such site is
http://www.sec.gov. Such reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
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