SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 1999.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Transition period from ___________ to
____________.
Commission File Number: 0-19671
LASERSIGHT INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 65-0273162
-------- ----------
(State of Incorporation) (IRS Employer Identification No.)
3300 University Blvd., Suite 140, Winter Park, Florida 32792
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 678-9900
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The Number of shares of the registrant's Common Stock outstanding as of
May 14, 1999 is 15,621,076.
1
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LASERSIGHT INCORPORATED AND SUBSIDIARIES
Except for the historical information contained herein, the discussion in this
report contains forward-looking statements (within the meaning of Section 21E of
the Exchange Act) that involve risks and uncertainties. LaserSight's actual
results could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in the sections entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations Uncertainties and Other Issues" in
this report and in LqserSight's Annual Report on Form 10-K for the year ended
December 31, 1998. LaserSight undertakes no obligation to update any such
factors or to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect any future events or
developments.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31,
1999 and December 31, 1998
Condensed Consolidated Statements of Operations for the
Three Month Periods Ended March 31, 1999 and 1998
Condensed Consolidated Statements of Comprehensive Loss for
the Three Month Periods Ended March 31, 1999 and 1998
Condensed Consolidated Statements of Cash Flows for the
Three Month Periods Ended March 31, 1999 and 1998
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Management's Quantitative and Qualitative Disclosures
about Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1999 1998
--------------- -------------
CURRENT ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 10,792,287 $4,437,718
Accounts receivable - trade, net 5,018,447 4,611,834
Notes receivable - current portion, net 4,327,675 4,805,831
Inventories 9,410,778 8,517,636
Deferred tax assets 167,712 184,997
Other current assets 433,880 159,057
------------ ------------
TOTAL CURRENT ASSETS 30,150,779 22,717,073
Restricted cash 194,000 194,000
Notes receivable, less current portion, net 2,714,940 2,880,358
Property and equipment, net 1,758,061 1,502,339
Patents, net 4,272,930 4,432,428
Pre-market approval application, net 3,436,198 3,663,466
Goodwill, net 6,421,706 6,552,863
Other assets, net 1,855,504 1,930,456
------------ ------------
$ 50,804,118 $ 43,872,983
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,601,759 $2,220,045
Capital lease obligations 45,527 --
Accrued expenses 3,227,302 3,224,369
Accrued commissions 1,038,464 1,451,180
Income tax payable 9,239 9,239
Deferred royalty revenue 866,297 937,602
------------ ------------
TOTAL CURRENT LIABILITIES 8,788,588 7,842,435
Refundable deposits 194,000 194,000
Accrued expenses, less current portion 874,429 642,880
Deferred royalty revenue, less current portion 333,333 433,333
Deferred income taxes 167,712 184,997
Long-term obligations 832,289 560,000
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock:
Series C - par value $.001 per share; authorized 2,000,000 shares; 2,000,000
issued and outstanding at March 31, 1999 and December 31, 1998 2,000 2,000
Series D - par value $.001 per share; authorized 2,000,000 shares; 2,000,000
issued and outstanding at March 31, 1999 and December 31, 1998 2,000 2,000
Common stock - par value $.001 per share; authorized 40,000,000 shares;
15,582,835 and 13,332,835 shares issued at March 31, 1999 and December
31, 1998, respectively 15,583 13,333
Additional paid-in capital 68,323,935 59,407,392
Stock subscription receivable (1,140,000) (1,140,000)
Accumulated deficit (27,068,667) (23,748,303)
Less treasury stock, at cost; 140,200 common shares at March 31, 1999
and December 31, 1998 (521,084) (521,084)
------------ ------------
39,613,767 34,015,338
------------ ------------
$ 50,804,118 $ 43,872,983
============ ============
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
3
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LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------------------------
1999 1998
-------------------- -------------------
REVENUES:
PRODUCTS $ 4,401,215 $ 3,796,766
ROYALTIES 380,000 247,917
SERVICES 107,083 198,536
----------- -----------
4,888,298 4,243,219
COST OF REVENUE:
PRODUCT COST 2,032,378 1,176,320
COST OF SERVICES 47,117 87,356
----------- -----------
GROSS PROFIT 2,808,803 2,979,543
RESEARCH, DEVELOPMENT AND
REGULATORY EXPENSES 781,191 817,556
OTHER GENERAL AND ADMINISTRATIVE
EXPENSES 3,666,221 2,181,702
SELLING RELATED EXPENSES 1,103,435 973,563
AMORTIZATION OF INTANGIBLES 634,071 591,784
----------- -----------
5,403,727 3,747,049
----------- -----------
LOSS FROM OPERATIONS (3,376,115) (1,585,062)
OTHER INCOME AND EXPENSES
Interest and dividend income 101,521 114,856
Interest expense (45,770) (396,521)
Gain on sale of subsidiaries
and securities -- 214,376
----------- -----------
NET LOSS BEFORE INCOME TAXES (3,320,364) (1,652,351)
INCOME TAX EXPENSE -- 311,156
----------- -----------
NET LOSS (3,320,364) (1,963,507)
CONVERSION DISCOUNT ON
PREFERRED STOCK -- (25,372)
PREFERRED STOCK ACCRETION AND
DIVIDEND REQUIREMENTS -- (1,098,121)
----------- -----------
LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS $(3,320,364) $(3,087,000)
=========== ===========
LOSS PER COMMON SHARE
Basic and Diluted: ($0.25) ($0.30)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
Basic and Diluted: 13,418,000 10,318,000
=========== ===========
See accompanying notes to the condensed consolidated financial statements.
4
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LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
March 31,
----------------------------------------------
1999 1998
-------------------- -------------------
NET LOSS $(3,320,364) $(1,963,507)
OTHER COMPREHENSIVE INCOME
Reclassification adjustment
for gains included in net
loss (net of tax of $75,997) -- (123,995)
----------- -----------
COMPREHENSIVE LOSS $(3,320,364) $(2,087,502)
=========== ===========
See accompanying notes to the condensed consolidated financial statements.
5
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LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $(3,320,364) $(1,963,507)
Adjustments to reconcile net loss
to net cash used in operating activities:
Gain on sale of subsidiaries and securities -- (214,376)
Depreciation and amortization 824,948 975,289
Warrants issued in conjunction with consulting agreement 68,793 --
Decrease (increase) in accounts and notes receivable 236,961 (2,057,289)
Increase in inventories (893,142) (213,647)
Increase (decrease) in accounts payable 1,381,714 (534,809)
Decrease in accrued expenses (178,234) (419,383)
Income taxes -- (789,847)
Increase (decrease) in deferred revenue (171,305) 1,133,334
Other (301,019) (54,539)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,351,648) (4,138,774)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (138,550) (138,674)
Proceeds from sale of investments -- 1,548,084
Net proceeds from exclusive license of patents -- 6,200,000
Transfer to restricted cash account -- (4,200,000)
Proceeds from restricted cash account -- 4,212,000
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (138,550) 7,621,410
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock financing 8,850,000 --
Repurchase of preferred stock -- (4,212,000)
Repayment of capital lease obligation (5,233) --
----------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 8,844,767 (4,212,000)
----------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,354,569 (729,364)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,437,718 3,858,400
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $10,792,287 $ 3,129,036
=========== ===========
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
6
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LASERSIGHT INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Month Periods Ended March 31, 1999 and 1998
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited, condensed consolidated financial statements
of LaserSight Incorporated and subsidiaries (LaserSight) as of March
31, 1999, and for the three months ended March 31, 1999 and 1998 have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and note disclosures required by
generally accepted accounting principles for complete financial
statements. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and
notes thereto included in the LaserSight's annual report on Form 10-K
for the year ended December 31, 1998. In the opinion of management, the
condensed consolidated financial statements include all adjustments
necessary for a fair presentation of consolidated financial position
and the results of operations and cash flows for the periods presented.
The results of operations for the three month period ended March 31,
1999 are not necessarily indicative of the operating results for the
full year.
NOTE 2 PER SHARE INFORMATION
Basic loss per common share is computed using the weighted average
number of common shares and contingently issuable shares (to the extent
that all necessary contingencies have been satisfied). Diluted loss per
common share is computed using the weighted average number of common
shares, contingently issuable shares, and common share equivalents
outstanding during each period. Common share equivalents include
options, warrants to purchase Common Stock, and convertible Preferred
Stock and are included in the computation using the treasury stock
method if they would have a dilutive effect.
NOTE 3 INVENTORIES
Inventories, which consist primarily of excimer and erbium laser
systems and related parts and components, are stated at the lower of
cost or market. Cost is determined using the first-in, first-out
method. The components of inventories at March 31, 1999 and December
31, 1998 are summarized as follows:
March 31, 1999 December 31, 1998
-------------- -----------------
Raw materials $5,999,173 $5,226,146
Work-in-process 1,474,902 1,837,460
Finished goods 1,456,624 1,046,756
Test equipment - clinical trials 480,079 407,274
---------- ----------
$9,410,778 $8,517,636
========== ==========
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NOTE 4 CAPITAL LEASE
During the quarter ended March 31, 1999, LaserSight entered into a
capital lease agreement for equipment to be utilized at its blades
manufacturing facility. All leases with an initial term greater that
one year are accounted for under Statement of Financial Accounting
Standards No. 13, "Accounting for Leases". Leased property or equipment
meeting certain criteria is capitalized and the present value of the
related lease payments is recorded as a liability. Amortization of
capitalized leased assets is computed on the straight-line method over
the five year term of the lease. Assets under capital lease are
capitalized using interest rates appropriate at the inception of the
lease.
Assets under capital lease are included in the consolidated
balance sheets, as follows:
March 31, 1999 December 31, 1998
----------------- -----------------
Equipment $308,049 $ --
Less accumulated amortization 10,268 --
-------- ---------
$297,781 $ --
======== =========
NOTE 5 STOCKHOLDERS' EQUITY
Private Placement
On March 23, 1999, LaserSight closed a transaction for the sale of
2,250,000 shares of Common Stock to a total of six investors, including
Pequot Capital Management, Inc. (Pequot) and TLC The Laser Center, Inc.
(TLC), in exchange for LaserSight receiving $9 million in cash. In
addition, the investors received a total of 225,000 warrants to
purchase Common Stock at $5.125 each, the Common Stock closing price on
March 22, 1999.
NOTE 6 SEGMENT INFORMATION
The Company operates principally in three industries: technology
related (laser equipment) products, patent services and health care
services. Laser equipment operations involve the development,
manufacture, and sale of ophthalmic lasers primarily for use in vision
correction procedures. Patent services generally relate to LaserSight
Patents, Inc., and primarily involves the revenues and expenses
generated from the ownership of certain refractive laser procedure
patents.
Operating profit is total revenue less operating expenses. In
determining operating profit for industry segments, the following items
have not been considered: general corporate expenses; expenses
attributable to Centers, a developmental stage company; non-operating
income; and the income tax expense (benefit). Identifiable assets by
industry segment are those that are used by or applicable to each
industry segment. General corporate assets consist primarily of cash,
marketable equity securities and income tax accounts.
8
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The table below summarizes information about reported segments as of
and for the three months ended March 31:
<TABLE>
<CAPTION>
Depreciation
Operating Operating and Capital
Revenues Profit (Loss) Assets Amortization Expenditures
--------- ------------ ------- ------------ ------------
1999
Operating profit segments:
<S> <C> <C> <C> <C> <C>
Technology related $ 4,401,215 $(2,905,917) $ 29,597,655 $ 553,916 $ 138,550
Patent services 380,000 250,670 3,499,474 129,330 --
Health care services 107,083 (129,769) 3,836,860 70,731 --
General corporate -- (521,925) 10,897,919 1,797 --
Developmental stage
company - LaserSight
Centers, Inc. -- (69,174) 2,972,210 69,174 --
----------- ----------- ------------ --------- ---------
Consolidated total $ 4,888,298 $(3,376,115) $ 50,804,118 $ 824,948 $ 138,550
=========== =========== ============ ========= ========
1998
Operating profit segments:
Technology related $ 3,796,766 $ (892,266) $ 22,190,831 $ 357,307 $ 121,812
Patent services 247,917 26,954 4,041,343 178,537 --
Health care services 198,536 (206,303) 4,298,948 77,382 16,862
General corporate -- (444,273) 9,735,571 687 --
Developmental stage
company - LaserSight
Centers, Inc. -- (69,174) 3,237,967 69,174 --
------------ ------------ ------------ --------- ---------
Consolidated total $ 4,243,219 $ (1,585,062) $ 43,504,660 $ 683,087 $ 138,674
============ ============ ============ ========= =========
</TABLE>
Amortization of deferred financing costs and accretion of discount on
note payable of $292,202 for the three months ended March 31, 1998 is
included as interest expense in the accompanying condensed consolidated
statement of operations
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues. The following tables presents LaserSight's net sales by major
operating segments: technology products and services, patents and health care
services for the three month periods ended March 31, 1999 and 1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 March 31, 1998
------------------- -------------------
Revenue % of Total Revenue % of Total
Technology $4,401,215 90% $3,796,766 89%
Patent services 380,000 8% 247,917 6%
Health care services 107,083 2% 198,536 5%
---------- ---- ---------- ----
Total net sales $4,888,298 100% $4,243,219 100%
=========== ==== ========== ====
Net sales and revenues in the first quarter of 1999 were $4,888,298, compared to
$4,243,219 (for an increase of $645,079 or 15%) over the comparable period in
1998. The improvement in technology related revenues is attributable to a 7%
increase in the average system selling price, a higher level of system upgrade
and miscellaneous part sales ($324,000) and revenues generated from
LaserSight's aesthetic product line ($421,000) which was acquired in the second
quarter of 1998. Thirteen laser systems were sold in the first quarter of 1999
compared to 14 during the first quarter of 1998.
Net revenue from patent services increased approximately $132,000 in the first
quarter of 1999 from the comparable period in 1998 due to increased licensing
fees.
Net revenue from health care services in the first quarter of 1999 was $107,083
compared to $198,536 (for a decrease of $91,453) over the comparable period in
1998. This decrease was primarily due to a reduction in consulting services
provided and was accompanied by a $167,989 reduction in expenses over the first
quarter 1998. Such revenue and expense decreases are primarily the result of
staffing reductions during mid-1998 to more closely match their cost structure
with anticipated revenues going forward.
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Cost of Revenues; Gross Profits. The following tables present a comparative
analysis of cost of revenues, gross profit and gross profit margins for the
three month periods ended March 31, 1999 and 1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 Percent Change March 31, 1998
------------------- -------------- -------------------
Product cost $2,032,378 73% $1,176,320
Cost of services 47,117 (46%) 87,356
Gross profit 2,808,803 (6%) 2,979,543
Gross profit percentage 57% 70%
Products only:
Gross profit 2,368,837 (10%) 2,620,446
Gross profit percentage 54% 69%
Gross profit margins were 57% of net sales in the first quarter of 1999 compared
to 70% for the comparable period in 1998. The gross profit margin percentage
decrease was primarily due to higher raw material costs relating to the
LaserScan LSX excimer laser system ($409,000), a higher level of manufacturing
overhead ($215,000), resulting primarily from increases at LaserSight's Costa
Rican manufacturing facility and an increase in LaserSight's inventory
obsolescence reserve ($116,000).
Research, Development and Regulatory Expense. The following tables present a
comparative analysis of research, development and regulatory expenses for the
three month periods ended March 31, 1999 and 1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 Percent Change March 31, 1998
------------------- -------------- -------------------
Research, development
and regulatory $ 781,191 (4%) $ 817,556
As a percentage of
technology revenues 18% 22%
Research, development and regulatory expenses for the first quarter of 1999 were
$781,191, a decrease of $36,365 or 4% from such expenditures during the
comparable period in 1998. LaserSight continued to develop its keratome systems,
excimer laser systems and continued to pursue its protocols in its effort to
attain FDA approval. As a result of a continuation of the efforts described plus
the anticipated development of new product ideas, LaserSight expects research
and development expenses during the remainder of 1999 to increase over levels
incurred during the first quarter of 1999. Regulatory expenses may increase as a
result of LaserSight's continued pursuit of FDA approval, protocols added during
1997 and 1998 related to the potential use of the Company's laser systems for
treatment of glaucoma and LASIK and the possible development of additional
future protocols for submission to the FDA.
11
<PAGE>
Other General and Administrative Expenses. The following tables present a
comparative analysis of other general and administrative expenses for the three
month periods ended March 31, 1999 and 1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 Percent Change March 31, 1998
------------------- -------------- ------------------
Other general and
administrative $ 3,666,221 68% $ 2,181,702
As a percentage of
total revenues 75% 51%
Other general and administrative expenses for the first quarter of 1999 were
$3,666,221, an increase of $1,484,519 or 68% from such expenditures during the
comparable period in 1998. This increase was due to an increase in other general
and administrative expenses incurred at LaserSight's technology subsidiary of
approximately $1,654,000 from first quarter 1998 levels. These increases were
incurred to fund the strategic initiatives of LaserSight and the development of
its products and services. Such efforts included enhancements to the customer
support, quality assurance, marketing, software development, manufacturing and
engineering departments ($585,000), costs of the aesthetic laser product line
acquired in April 1998 ($176,000), costs relating to developing LaserSight's
blade manufacturing operation ($164,000), higher depreciation and lease costs
(including the new blade manufacturing facility and larger office space)
($164,000), legal expenses ($131,000), salaries ($138,000), primarily resulting
from staffing additions to the intellectual property, customer training,
accounting, information systems and human resources departments and bad debt
expense ($227,000), which represented a general increase in reserves. See
"--Financial and Liquidity Risks--If Our Uncollectible Receivables Exceed Our
Reserves We will Incur Additional Unanticipated Expenses". The total increase
was partially offset by a reduction in other general and administrative expenses
of The Farris Group ("TFG") ($128,000) from 1998 levels.
Selling Related Expenses. The following tables present a comparative analysis of
selling related expenses for the three month periods ended March 31, 1999 and
1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 Percent Change March 31, 1998
------------------- -------------- -------------------
Selling related expenses $ 1,103,435 13% $ 973,563
As percentage of technology
revenues 25% 26%
Selling related expenses consist of those items directly related to sales
activities, including commissions on sales, royalty or license fees, warranty
expenses, and costs of shipping and installation. Commissions and royalties, in
particular, can vary significantly from sale to sale or period to period
depending on the location and terms of each sale.
Selling related expenses increased by $129,872 for the first quarter of 1999
compared to the comparable period in 1998. The primary reasons for this increase
include a higher level of royalty fees ($110,000) resulting from a higher
average system selling price and increased warranty estimates ($123,000)
resulting from the increased level of LaserScan LSX system sales. These
12
<PAGE>
increases were partially offset by a lower level of laser system sales with an
associated distributor commission ($145,000).
Amortization of Intangibles. The following tables present a comparative analysis
of amortization costs as related to intangible assets for the three month
periods ended March 31, 1999 and 1998.
For the Three Month For the Three Month
Period Ended Period Ended
March 31, 1999 Percent Chang March 31, 1998
------------------- -------------- -------------------
Amortization of
intangibles $ 634,071 7% $ 591,784
Those items directly related to the amortization of intangible assets are
acquired technology, acquired patents and goodwill. During the first quarter of
1999, costs relating to the amortization of intangible assets increased by
$42,287 over the comparable period in 1998.
Loss From Operations. There was an operating loss of $3,376,115 in the first
quarter of 1999 compared to an operating loss of $1,585,062 for the comparable
period in 1998. The increase in the loss from operations is primarily due to the
increase in other general and administrative expenses incurred by LaserSight's
technology subsidiary from 1998 levels. This increase in the loss from
operations was partially offset by an improvement in the operating gain
generated by the patent services subsidiary and a reduction in the operating
loss generated by TFG.
Other Income and Expense. Interest and dividend income was $101,521 in the first
quarter of 1999 compared to interest and dividend income of $114,856 for the
comparable period in 1998. Interest and dividend income was earned from the
investment of cash and cash equivalents and the collection of long-term
receivables related to laser system sales. Interest expense incurred was $45,770
in the first quarter of 1999 compared to interest expense of $396,521 for the
comparable period in 1998. Interest expense incurred during the first quarter
1999 related primarily to an adjustment to the fair value of the warrants issued
to Foothill Capital Corporation (Foothill). Interest expense incurred by
LaserSight during the three month period ended March 31, 1998, related primarily
to the credit facility established with Foothill on April 1, 1997 and repaid in
full in June 1998. In addition to interest paid on the outstanding note payable
balance, interest expense includes the amortization of deferred financing costs,
the accretion of the discount on the note payable, and fees associated with
amendments to the original loan agreement. During the first three months of
1998, LaserSight recognized gains on the sale of subsidiaries and securities of
$214,376 resulting from the sale of marketable equity securities received in
December 1997 in exchange for the sale of two health care subsidiaries.
Income Taxes. For the three months ended March 31, 1999, LaserSight had no
income tax expense compared to $311,156 in the first quarter of 1998. The 1998
provision for income taxes was primarily the result of $1,200,000 in royalties
received for the license of certain patents, the income from which was deferred
for accounting purposes.
Net Loss. Net loss for the first quarter of 1999 was $3,320,364 compared to a
net loss of $1,963,507 for the comparable period in 1998. The increase in net
loss for the first quarter of 1999 can be attributed to the increase in other
general and administrative expenses generated at LaserSight's technology
subsidiary.
Loss Attributable to Common Shareholders. For the three months ended March 31,
1998, LaserSight's loss attributable to common shareholders was impacted by the
following events: premiums paid on the repurchase of shares of Series B
Preferred Stock ($702,000), accretion of the financing costs related to such
shares ($396,121) and the value of the conversion discount on Series B Preferred
Stock ($25,372).
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<PAGE>
Loss Per Share. Loss per basic and diluted share decreased to ($0.25) for the
first quarter of 1999 compared to ($0.30) for the comparable period in 1998. Of
the basic and diluted losses per share for the three month period ended March
31, 1998, ($0.11), was a result of the value of the conversion discount on
preferred stock in accordance with EITF Topic D-60 and accretion and dividend
requirements on the Series B Preferred Stock. The weighted average shares of
Common Stock outstanding increased primarily due to the conversion of Series B
Preferred stock, acquisition activity, the exercise of options and warrants and
the private placement completed in March 1999.
Liquidity and Capital Resources.
Working Capital. Working capital increased $6,487,553 from $14,874,638 at
December 31, 1998 to $21,362,191 as of March 31, 1999. This increase in working
capital resulted primarily from the March 1999 private placement of common stock
and increases in accounts receivable and inventory offset by increases in
accounts payable.
Sources and Uses of Funds. Operating activities used net cash of $2,351,648
during the first three months of 1999, compared to $4,138,774 of net cash used
during the comparable period in 1998. This improvement is primarily the result
of a decrease in accounts and notes receivable ($237,000) (primarily resulting
from more favorable sales terms being obtained on the sale of our LaserScan LSX
excimer laser system), and an increase in accounts payable levels ($1,382,000),
partially offset by the larger first quarter net loss in 1999 of approximately
$3,320,000, higher inventory levels ($893,000) and a decrease in deferred
revenues ($171,000).
Net cash used in investing activities during the first three months of 1999 was
$138,550 compared to $7,621,410 of net cash provided by investing activities
over the comparable period in 1998. Net cash used in investing activities during
the first three months of 1999 can be attributed to the purchase of furniture,
equipment and leasehold improvements ($139,000). Net cash provided by investing
activities during the first quarter of 1998 can be primarily attributed to
proceeds generated from the licensing of patents ($6,200,000) and from the sale
of investments ($1,548,000), partially offset by the purchase of furniture,
equipment and leasehold improvements ($139,000).
Net cash provided from financing activities was $8,844,767 during the first
three months of 1999, compared to $4,212,000 in net cash used in financing
activities over the comparable period in 1998. Net cash provided from financing
activities during the first quarter of 1999 resulted from the issuance of common
stock in a private placement ($8,850,000). The proceeds from the private
placement were partially offset by payments made on a capital lease obligation
($5,000). Net cash used in financing activities during the first quarter of 1998
consisted of the repurchase of Series B Preferred Stock ($4,212,000).
With our $9 million financing that closed in March 1999, we believe that our
balances of cash and cash equivalents, together with our cash flows from
operations, should be sufficient to fund our anticipated working capital
requirements for the next 12 months in accordance with our current business
plan. Our belief regarding future working capital requirements is based on
various factors and assumptions including the anticipated timely entry into the
international marketplace with keratome related products during the second
quarter of 1999 and the U.S. market with both our keratome related products in
the second quarter of 1999 and LaserScan LSX excimer laser system late in 1999,
the anticipated timely collection of receivables including faster anticipated
collections and the lack of extended payment terms on keratome related products,
and the absence of unanticipated product development costs. These factors and
assumptions are subject to certain contingencies and uncertainties, some of
which are beyond our control. If we do not collect a material portion of current
receivables in a timely manner, experience significant further delays in the
shipment of our UniShaperTM Single-Use Keratome product or in the FDA clearance
and entry into the U.S. market of our LaserScan LSX excimer laser system, or
experience less market demand for our products than we anticipate, our liquidity
could be materially and adversely affected.
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Similarly, our long-term liquidity will be dependent on the successful
entrance into the U.S. market with our laser systems and/or our keratome
systems, and our success in collecting our receivables on a timely basis. We
cannot assure you that we will not seek additional debt or equity financing in
the future to implement our business plan or any changes thereto in response to
future developments or unanticipated contingencies. We currently do not have any
commitments for additional financing. We cannot be certain that additional
financing will be available in the future to the extent required or that, if
available, it will be on acceptable terms. If we raise additional funds by
issuing equity or convertible debt securities, the terms of the new securities
could have rights, preferences and privileges senior to those of our Common
Stock. If we raise additional funds through debt financing, the terms of the
debt could require a substantial portion of our cash flow from operations to be
dedicated to the payment of principal and interest and may render us more
vulnerable to competitive pressures and economic downturns.
We expect cash flow from operations to show improvement during 1999 as a
result of the expected shipment of the LaserScan LSX excimer laser system and
UniShaper single use keratome. However, we expect to incur a loss and a deficit
in cash flow from operations for the second quarter of 1999. There can be no
assurance that we can regain or sustain profitability or positive operating cash
flow in any subsequent fiscal period. We may from time to time reassess our
credit policies and the terms we make available to individual customers. There
can be no assurance as to the terms or amount of third-party financing, if any,
that our customers may obtain in the future. We are placing greater emphasis on
the terms and collection timing of future sales.
We expect to begin commercial shipment of our keratome products, increase
the level of manufacturing and distribution of our laser systems and to continue
a variety of research and development activities on our excimer and solid-state
laser systems over the next twelve months and it is anticipated that such
keratome, research and development and regulatory efforts in the U.S. will be
the most significant technology related expenses in the foreseeable future.
LaserSight is receptive to joint venture discussions with compatible
companies for the further development of international markets for our
products. We have no present commitments for joint venture relationships, and no
assurance can be given that any such relationships will be secured on terms
satisfactory to us.
Risk Factors and Uncertainties
The business, results or operations and financial condition of LaserSight and
the market price of it's Common Stock may be adversely affected by a variety of
factors, including the factors listed below:
Industry and Competition Risks
WE MAY ENCOUNTER DIFFICULTIES COMPETING IN THE HIGHLY COMPETITIVE VISION
CORRECTION INDUSTRY. The vision correction industry is subject to intense,
increasing competition, and we do not know if we will be able to compete
successfully against our current and future competitors. Many of our competitors
have existing products and distribution systems in the marketplace and are
substantially larger, better financed, and better known. Two of our principal
competitors, Summit Technology, Inc. and Autonomous Technology Corporation,
recently merged. The market presence, technology base and distribution
capabilities of the combined entities will be substantial. Further, the merger
provides Autonomous with licenses to use certain patents owned by Visx, Inc.
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MANY OF OUR COMPETITORS HAVE RECEIVED BROADER REGULATORY APPROVALS AND ARE
CURRENTLY MARKETING COMPETING PRODUCTS WHICH MAY PREVENT US FROM MARKETING OUR
PRODUCTS ONCE WE RECEIVE REGULATORY APPROVAL. We have not yet received the Good
Manufacturing Practices ("GMP") clearance from the FDA that is required for the
commercial sale of our LaserScan LSX excimer laser system. Based on the current
status of development efforts, we believe that it is reasonable to expect such
FDA clearance in the next four to seven months. However, we cannot be certain as
to the receipt or the timing of receipt of such clearance. A number of lasers
manufactured by other companies have either received, or are 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 our lasers. In
addition to laser systems of Summit Technology, Inc., Visx, Inc. and others
already approved for commercial sale in the U.S., Nidek Co., Ltd. obtained FDA
approval of its EC-5000 excimer laser system in December 1998. Other
manufacturers, including Bausch & Lomb, are expected to obtain approval during
1999, giving them the right to market their systems commercially in the U.S. The
established market presence in the U.S. of previously-approved laser systems, as
well as the entry of new competitors into the market upon receipt of regulatory
approvals, could impede our ability to successfully introduce our LaserScan LSX
excimer laser system and have a material adverse effect on our business,
financial condition and results of operations.
We have developed both a single use, disposable keratome product, the
UniShaper, formerly known as the AoDoKTM, and a multiple use durable keratome
product, the UltraShaperTM. The keratome is a surgical instrument used during
LASIK procedures to produce a corneal flap for this procedure. Based on reports
of industry analysts and our observations, we believe that during 1998, LASIK
captured a majority of refractive laser surgery cases and has emerged as the
surgeon's and patient's choice for laser refractive surgery both in the U.S. and
internationally. We believe there are five main competitors in the keratome
business, all of whom have received FDA clearance for and are marketing their
keratomes in the U.S. and elsewhere. FDA clearance for keratome systems is
significantly simpler than the approval process for laser systems and generally
takes 90 days or less. We have received FDA clearance on the UniShaper and
expect clearance on the UltraShaper within the next 30 to 60 days. The use of
our keratome products is not required to perform LASIK procedures.
NEW PRODUCTS OR TECHNOLOGIES COULD ERODE DEMAND FOR OUR PRODUCTS OR MAKE
THEM OBSOLETE. In addition to competing with eyeglasses, contact lenses and
radial keratotomy, excimer laser vision correction competes or may compete with
newer technologies such as intraocular lenses, corneal rings and surgical
techniques using different types of lasers. To date, we have not been materially
affected by the introduction of new or advanced technologies in the laser vision
correction industry. Two products that may become competitive within the next
one to three years are intraocular lenses and corneal rings. Both of these
procedures involve lens implants that require an invasive surgical procedure,
unlike an excimer laser, and their ultimate market acceptance is unknown at this
time. To the extent that any of these or other new technologies are perceived to
be clinically superior or economically more attractive than excimer laser vision
correction, they could erode demand for our excimer laser products, cause a
reduction in selling prices of such products or render such products obsolete.
In addition, if one or more competing technologies achieve broader market
acceptance or render our PRK and LASIK laser procedures obsolete, it could have
a material adverse effect on our business, financial condition and results of
operations.
While we do not anticipate that additional technical difficulties will
arise that would further delay or prevent the successful development,
introduction and marketing of the UniShaper, we cannot be certain that new
difficulties will not arise. Unanticipated logistical issues, such as the
manufacturer's failure to meet expected production goals, may arise which could
further delay the commercialization of the product. As is typical in the case of
new and rapidly evolving industries, demand and market for recently-introduced
technology and products is uncertain, and we cannot be certain that our
UniShaper single use product or future new products and enhancements will be
accepted in the marketplace. In addition, announcements of new products, whether
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for sale in the near future or at some later date, may cause customers to defer
purchasing our existing products.
BECAUSE THE SALE OF OUR PRODUCTS IS DEPENDENT ON MARKET ACCEPTANCE, THE
LACK OF BROAD MARKET ACCEPTANCE OF LASER-BASED EYE TREATMENT WILL HAVE AN
ADVERSE EFFECT ON BUSINESS. We believe that whether we achieve profitability and
growth will depend, in part, upon broad acceptance of PRK or LASIK in the U.S.
and other countries. We cannot be certain 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
adversely affected by:
o The cost of the procedure
o Possible concerns relating to safety and efficacy
o The public's general resistance to surgery
o The effectiveness and lower cost of alternative methods
of correcting refractive vision disorders
o The lack of long-term follow-up data
o The possibility of unknown side effects
o The lack of third-party reimbursement for the procedures
o Possible future unfavorable publicity involving patient outcomes
from the use of PRK or LASIK systems
o 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 our business, financial condition and results of
operations.
Financial and Liquidity Risks
WE HAVE EXPERIENCED SIGNIFICANT LOSSES AND OPERATING CASH FLOW DEFICITS
AND WE EXPECT THAT OPERATING CASH FLOW DEFICITS WILL CONTINUE THROUGH AT LEAST
THE SECOND QUARTER OF 1999. We experienced significant net losses and deficits
in cash flow from operations for the three month period ended March 31, 1999,
and the fiscal years ended December 31, 1998 and 1997, as set forth in the
following table. We cannot be certain that we will be able to regain or sustain
profitability or positive operating cash flow.
Three Month Period
Ended March 31, Years Ended December 31,
1999 1998 1997
---- ---- ----
Net Loss $3.3 million $11.9 million $7.3 million
Deficit in Cash Flow
from Operations $2.4 million $14.3 million $4.4 million
As of March 31, 1999, we had an accumulated deficit of $27.1 million. We
expect to report a loss and deficit in cash flow from operations for the second
quarter of 1999.
IF OUR UNCOLLECTIBLE RECEIVABLES EXCEED OUR RESERVES WE WILL INCUR
ADDITIONAL UNANTICIPATED EXPENSES. Although we monitor the status of our
receivables and maintain a reserve for estimated losses, we cannot be certain
that our reserves for estimated losses, which were approximately $2.8 million at
March 31, 1999, will be sufficient to cover the amount of our actual write-offs
over time. At March 31, 1999, our trade accounts and notes receivable totaled
approximately $12.1 and accrued commissions, the payment of which generally
depends on the collection of such net trade accounts and notes receivable,
totaled approximately $1.8. Actual write-offs that materially exceed amounts
reserved could have a material adverse effect on our consolidated financial
condition and results of operations. Total expense relating to uncollectible
accounts during the first quarter of 1999 was approximately $0.3 million. Our
total expense related to uncollectible accounts increased $1.9 million in 1997
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to approximately $2.3 million, related to accounts that were determined to be
uncollectible largely as a result of the customers' inability to sustain surgery
volumes necessary to support the system, the risks inherent in international
sales and additional reserves for uncollectible accounts. Such expense decreased
to approximately $1.2 million in 1998, reflecting our subsequent focus on
customers who have historically had more significant refractive surgery
practices, generally improved terms of sales in 1998 and additional history upon
which to estimate levels of reserves. No accounts were written off during the
first quarter of 1999. Actual accounts written off during 1998 and 1997 were
$0.5 million and $1.8 million, respectively. The amount of any loss that we may
have to recognize in connection with our inability to collect receivables is
principally dependent on our customer's ongoing financial condition, their
ability to generate revenues from our laser systems, and our ability to obtain
and enforce legal judgments against delinquent customers. Approximately 93% of
our net receivables at March 31, 1999 related to international accounts.
Our agreements with our customers typically provide that the contracts are
governed by Florida law. We have not determined whether or to what extent courts
or administrative agencies located in foreign countries would enforce our right
to collect such receivables or to recover laser systems from customers in the
event of a customer's payment default. When a customer is not paying according
to established terms, we attempt to communicate and understand the underlying
causes and work with the customer to resolve any issues we can control or
influence. In most cases, we have been able to resolve the customer's issues and
continue to collect our receivable, whether on the original schedule or under
restructured terms. If such issues are not resolved, we evaluate our legal and
other alternatives based on existing facts and circumstances. In most such
cases, we have concluded that the account should be written off as
uncollectible. We have generally been successful in recovering the laser systems
in such cases.
Our ability to evaluate the financial condition and revenue generating
ability of our prospective customers located outside of the United States, and
our ability to obtain and enforce legal judgments against non-U.S. customers, is
generally more limited than for our customers located in the U.S. See "--Company
and Business Risks--We are Subject to Certain Risks Associated with our
International Sales."
IF WE EXPERIENCE DIFFICULTY COLLECTING RESTRUCTURED RECEIVABLES WITH
EXTENDED PAYMENT TERMS, WE MAY EXPERIENCE LIQUIDITY PROBLEMS. At March 31, 1999,
we had extended the original payment terms of laser customer accounts totaling
approximately $1,989,000, by periods ranging from 12 to 48 months. Such
restructured receivables represent approximately 13 percent of our gross
receivables as of March 31, 1999. Our liquidity and operating cash flow would 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 or actual economic life of the
system, which we estimate to be approximately five to seven years. To date, we
do not believe any payment schedules extend beyond the economic life of the
applicable systems.
WE WILL EXPERIENCE LIQUIDITY PROBLEMS IF, AS IN THE PAST, WE ARE UNABLE TO
COLLECT OUR RECEIVABLES IN A TIMELY MANNER AND ADDITIONAL FINANCING MIGHT NOT BE
AVAILABLE IF WE NEED IT. During the three month period ended March 31, 1999, and
the year ended December 31, 1998, we experienced $2.4 million and $14.3 million
in deficits in cash flow from operations, respectively. We expect that any
improvements in cash flow from operations will depend on, among other things,
our ability to market, produce and sell our new LaserScan LSX laser systems in
larger quantities and our ability to market, produce and sell our UniShaper
single use keratome product on a commercial basis. During the first quarter of
1999 and the fourth quarter of 1998, LaserScan LSX laser system sales accounted
for the majority of laser systems sold, and we expect sales of our LaserScan LSX
laser system to make a more significant contribution to our operating results in
the future. Because we are still in the process of completing the clinical
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validation of our UniShaper single use keratome product, we do not believe that
regular commercial shipments of that product will begin until the second quarter
of 1999.
With our financing that closed in March 1999, we believe that our balances
of cash and cash equivalents, together with our cash flows from operations,
should be sufficient to fund our anticipated working capital requirements for
the next 12 months in accordance with our current business plan. Our belief
regarding future working capital requirements is based on various factors and
assumptions including the anticipated timely entry into the international
marketplace with keratome related products and the U.S. market with both our
keratome related products and LaserScan LSX system, the anticipated timely
collection of receivables including faster anticipated collections and the lack
of extended payment terms on keratome related products, and the absence of
unanticipated product development costs. These factors and assumptions are
subject to certain contingencies and uncertainties, some of which are beyond our
control. If we do not collect a material portion of current receivables in a
timely manner, experience significant further delays in the shipment of our
UniShaper single use keratome product or in the FDA clearance and entry into the
U.S. market of our LaserScan LSX laser system, or experience less market demand
for our products than we anticipate, our liquidity could be materially and
adversely affected.
Similarly, our long-term liquidity will be dependent on the successful
entrance into the U.S. market with our laser systems and/or our keratome
systems, and our success in collecting our receivables on a timely basis. We
cannot be certain that we will not seek additional debt or equity financing in
the future to implement our business plan or any changes thereto in response to
future developments or unanticipated contingencies. We currently do not have any
commitments for additional financing. We cannot be certain that additional
financing will be available in the future to the extent required or that, if
available, it will be on acceptable terms. If we raise additional funds by
issuing equity or convertible debt securities, the terms of the new securities
could have rights, preferences and privileges senior to those of our common
stock. If we raise additional funds through debt financing, the terms of the
debt could require a substantial portion of our cash flow from operations to be
dedicated to the payment of principal and interest and may render us more
vulnerable to competitive pressures and economic downturns.
Common Stock Risks
THE MARKET PRICE OF OUR COMMON STOCK MAY CONTINUE TO EXPERIENCE EXTREME
FLUCTUATIONS DUE TO MARKET CONDITIONS THAT ARE UNRELATED TO OUR OPERATING
PERFORMANCE. The volatility of our common stock imposes a greater risk of
capital losses on stockholders as compared to less volatile stocks. In addition,
such volatility makes it difficult to ascribe a stable valuation to a
stockholder's holdings of LaserSight common stock. Factors such as announcements
of technological innovations or new products by LaserSight or its competitors,
changes in domestic or foreign governmental regulations or regulatory approval
processes, developments or disputes relating to patent or proprietary rights,
public concern as to the safety and efficacy of the procedures for which the
laser system is used, and changes in reports and recommendations of security
analysts, have and may continue to have a significant impact on the market price
of LaserSight common stock. Moreover, the possibility exists that the stock
market, and in particular the securities of technology companies such as
LaserSight, could experience extreme price and volume fluctuations unrelated to
operating performance.
VARIATIONS IN OUR SALES AND OPERATING RESULTS MAY CAUSE OUR STOCK PRICE TO
DECLINE. Our operating results have fluctuated in the past, and may continue to
fluctuate in the future, as a result of a variety of factors, many of which are
outside of our control. For example, we have historically operated with little
or no backlog because our products are generally shipped as orders are received,
and a significant portion of orders for a particular quarter have been received
and shipped near the end of the quarter. As a result, our operating results for
any quarter often depend on orders received and laser systems shipped late in
that quarter. Other factors that may cause our operating results to fluctuate
include:
o timing of regulatory approvals and the introduction of new products;
o reductions, cancellations or fulfillment of major orders;
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o the addition or loss of significant customers;
o our relative mix of business;
o changes in pricing by us or our competitors;
o changes in personnel and employee utilization rates;
o costs related to expansion of our business;
o increased competition; and
o budget decisions by our customers.
As a result of these fluctuations, we believe that period-to-period
comparisons of our operating results cannot necessarily be relied upon as
indicators of future performance. In some quarters our operating results may
fall below the expectations of securities analysts and investors due to any of
the factors described above. In such event, the trading price of our common
stock would likely decline.
THE SIGNIFICANT NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE AND DILUTIVE
STOCK ISSUANCES MAY ADVERSELY AFFECT OUR STOCK PRICE. Sales, or the possibility
of sales, of substantial amounts of our common stock in the public market could
adversely affect the market price of our common stock. As of May 14, 1999, of
LaserSight's 15,621,076 shares of common stock outstanding, approximately 13.1
million shares were freely tradable without restriction or further registration
under the Securities Act, except to the extent such shares are held by
"affiliates" of LaserSight as that term is defined in Rule 144 under Securities
Act or subject only to the satisfaction of a prospectus delivery requirement.
Shares included in the March 1999 private placement will be freely tradable on a
similar basis once a registration statement covering such shares is filed and
declared effective.
Shares of common stock which LaserSight may issue in connection with
future acquisitions or financings or pursuant to outstanding warrants or
agreements could also adversely affect the market price of our common stock and
cause significant dilution in our earnings per share and net book value per
share.
o We may be required to issue more than 3.5 million additional shares of
common stock upon the exercise of outstanding warrants and to satisfy
certain contingent contractual obligations.
o In addition, the 4 million outstanding shares of Series C and Series D
Preferred Stock may be converted into common stock at any time.
o The anti-dilution provisions of certain of our existing securities and
obligations require us to issue additional shares if we issue shares of
common stock below specified price levels. If a future share issuance
triggers these adjustments, the beneficiaries of such provisions
effectively receive some protection from declines in the market price
of our common stock, while our other stockholders incur additional
dilution of their ownership interest.
We may include similar anti-dilution provisions in securities issued in
connection with future financings. Some of the factors we consider when we
determine whether to include such provisions are our cash resources, the trading
history of our common stock, the negotiating position of the selling party or
the investors, and the extent to which we estimate that the expected benefit
from the acquisition or financing exceeds the expected dilutive effect of the
price-protection provision.
CERTAIN ANTI-TAKEOVER MEASURES MAY HAVE AN ADVERSE EFFECT ON OUR STOCK
PRICE AND MAY ALSO DISCOURAGE TAKEOVERS THAT MIGHT BE BENEFICIAL TO
STOCKHOLDERS. Certain provisions of our certificate of incorporation, by-laws
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and Delaware law could delay or frustrate the removal of incumbent directors,
discourage potential acquisition proposals and delay, defer or prevent a change
in control of LaserSight, even if such events could be beneficial, in the short
term, to the interests of our stockholders. For example, our certificate of
incorporation allows us to issue preferred stock with rights senior to those of
the common stock without stockholder action. LaserSight also is subject to
provisions of Delaware corporation law that prohibit a publicly-held Delaware
corporation from engaging in a broad range of business combinations with a
person who, together with affiliates and associates, owns 15% or more of the
corporation's common stock (an "interested stockholder") for three years after
the person became an interested stockholder, unless the business combination is
approved in a prescribed manner. We also have adopted a stockholder rights
agreement and declared a dividend distribution of one preferred share purchase
right ("Right") on each outstanding share of common stock. The Rights would
cause substantial dilution to a person or group that attempts to acquire 15% or
more of our common stock on terms not approved by our Board of Directors.
Company and Business Risks
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS. Our ability
to maintain our competitive position depends in part upon the continued
contributions of our executive officers and other key employees, especially
Michael R. Farris, our President and Chief Executive Officer, and J. Richard
Crowley, the President and Chief Operating Officer of our 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
our business. We do not carry "key man" insurance on Mr. Farris, Mr. Crowley or
any other officers or key employees.
As we continue the clinical development of our excimer lasers and other
products and prepare for regulatory approvals and other commercialization
activities, we will need to continue to implement and expand our operational,
financial and management resources and controls. While to date we haven't
experienced problems recruiting or retaining the personnel necessary to
implement such actions, we cannot be certain that such problems won't arise in
the future. If we fail to attract and retain qualified individuals for necessary
positions, and if we are unable to effectively manage growth in our domestic and
international operations, it could have a material adverse effect on our
business, financial condition and results of operations.
FAILURE OF OUR "Y2K" COMPLIANCE EFFORTS, LACK OF COMPLIANCE BY OUR
MATERIAL SUPPLIERS AND OTHER UNCERTAINTIES RELATED TO THE "Y2K ISSUE" COULD
ADVERSELY AFFECT OUR BUSINESS. As many computer systems, software programs and
other equipment with embedded chips or processors use only two digits rather
than four to define the applicable year, they may be unable to process
accurately certain data, during or after the year 2000. As a result, LaserSight
as well as other business and governmental entities are at risk for possible
miscalculations or systems failures which could cause material disruptions in
business operations. This is commonly known as the Year 2000 ("Y2K") issue. The
Y2K issue concerns not only information systems and technology used by
LaserSight, but also concerns third parties, such as our customers, vendors and
distributors, using information systems and technology that may interact with or
affect our operations.
We have implemented a Y2K readiness program with the objective of having
all of our significant information systems and technology functioning properly
with respect to Y2K before January 1, 2000. We have developed a comprehensive
plan to assess the actual and potential Y2K impact on our operations, both in
information technology ("IT") areas and non-information technology ("Non-IT")
areas, as well as our product offerings. Our assessment included our
manufacturing and operating systems and the readiness of vendors and other third
parties upon whom we rely.
o IT Systems. Our IT systems are microcomputer-based and consist of
standard software purchased from outside vendors. All software is being
identified and assessed to determine the extent of modification
required in order to be Y2K compliant. We believe that all software
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will be made Y2K compliant before the end of June 1999 through
vendor-provided updates or replacement with other Y2K compliant
hardware and software. We, as has been planned for some time, are also
replacing our financial and accounting software, and expect to have the
majority of such new software implemented in the second quarter of
1999. The vendors of our financial and accounting software have
represented to us that the software is Y2K compliant. Our IT inventory
related to Y2K compliance is substantially complete, the remediation
assessment of problem areas is substantially complete, and testing,
including validation of compliance, is substantially complete.
o Non-IT Systems. For our Non-IT systems, we have identified third
parties with which we have a significant relationship that, in the
event of a Y2K failure, could have a material impact on our business,
financial condition or results of operations. The third parties include
utility suppliers, material and supply vendors, communication vendors
and our significant distributors. Some of these relationships,
especially those associated with certain suppliers, are material to us
and a Y2K failure by one or more of these parties could have a material
adverse effect on our business, financial condition and results of
operations. We are corresponding with these business partners and
service providers to assess their ability to support our operations
with respect to each of their Y2K issues. The issues that are
identified as part of this process are being prioritized in order of
significance to our operations and we will take corrective action as
appropriate. We have contacted all of our significant vendors, business
partners and service providers. Over 95% have responded to date, and we
are continuing to assess their responses.
o Products. We are not aware of any Y2K problems with our current
production model, the LaserScan LSX excimer laser system, as all
applicable components and the software have been validated and tested.
Older models, generally manufactured in the first half of 1998 and
earlier, may require upgraded software and/or hardware. We are taking
steps to promptly notify affected users and, except for those users
under warranty or service contract, offer such upgrades at additional
cost to the user. Such upgrades are currently available and, in
addition to resolving potential Y2K problems, also provide for more
efficient system performance.
We intend to develop contingency plans for Y2K issues which, if not timely
resolved, could have a significant impact on our operations. These plans will be
designed to minimize the impact of failure to achieve Y2K compliance. Such
contingency plans are substantially complete although we will continue to
monitor our plans as a result of future events and circumstances.
We estimate the costs to address Y2K issues will total $150,000, of which
approximately $70,000 has been incurred to date. Such costs will be expensed as
incurred, and will exclude the costs of our new financial and accounting
software. Y2K compliance related costs are estimated to be 50% of our total IT
expense budget through the end of 1999. No material IT projects are expected to
be delayed. The costs and time necessary to complete the Y2K modification and
testing processes are based on our best estimates, which were derived utilizing
numerous assumptions of future events including the continued availability of
certain resources, third party modification plans and other factors. Our Y2K
readiness program is an ongoing process and the estimates of costs and
completion dates for various components of the Y2K readiness program described
above are subject to change.
Due to the general uncertainty inherent in our Y2K compliance, mainly
resulting from our dependence upon the Y2K compliance of the government
agencies, suppliers, vendors and distributors with whom we and our service
providers deal, we are unable to determine at this time our most reasonably
likely worst case scenario. While we expect our Y2K compliance efforts to reduce
significantly our level of uncertainty about the impact of Y2K issues affecting
IT and Non-IT systems and our product offerings, we cannot be certain that costs
related to the lack of Y2K compliance of third parties, business interruptions,
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<PAGE>
litigation and other liabilities related to Y2K issues will not have a material
adverse effect on our business, financial condition and results of operations.
GOVERNMENT REGULATION AND REGULATORY DECISIONS MAY RESTRICT OR DELAY THE
MANUFACTURE AND MARKETING OF OUR PRODUCTS. Our laser products are subject to
strict governmental regulations which materially affect our ability to
manufacture and market these products and directly impact our overall prospects.
All laser devices 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. The regulations impose design and performance
standards, labeling and reporting requirements, and submission conditions in
advance of marketing for all medical laser products. Our ophthalmic laser
systems produced for medical use require Pre-Market Approval ("PMA") by the FDA
before we can ship our 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.
Since we received notification from the FDA that our PMA for PRK treatment
of nearsightedness had been accepted for filing in May 1998, the FDA has
requested additional information to which we have responded. Informal
communication continues on a regular basis. We underwent an FDA audit of the
clinical research portion of the PMA application in March 1999, completing that
portion of the inspection process. If and when our ophthalmic laser systems
receive PMA by the FDA, we will be required to obtain GMP clearance with respect
to our manufacturing facilities, the final step of the approval process, which
is expected in summer 1999. These regulations impose certain procedural and
documentation requirements with respect to our manufacturing and quality
assurance activities. Our facilities will be subject to inspections by the FDA,
and if any material noncompliance with GMP guidelines is noted during facility
inspections, the marketing of our laser products may be adversely affected. In
addition, if any of our suppliers of significant components or sub-assemblies
cannot meet our specification requirements, we 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, which 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. Both of our LaserScan LSX and LaserScan
2000 laser systems have received CE Mark certification, the former of which was
received in September 1998.
We cannot determine the costs or time it will take to complete the
approval process and the related clinical testing for our medical laser
products. Future legislative or administrative requirements, in the U.S., or
elsewhere, may adversely affect our ability to obtain or retain regulatory
approval for our laser products. The failure to obtain required approvals on a
timely basis could have a material adverse effect on our business, financial
condition and results of operations.
PATENT INFRINGEMENT ALLEGATIONS MAY IMPAIR OUR ABILITY TO MANUFACTURE AND
MARKET OUR PRODUCTS. There are a number of U.S. and foreign patents covering
methods and apparatus for performing corneal surgery that we do not own or have
the right to use. If we were found to infringe a patent in a particular market,
LaserSight and its customers may be enjoined from making, using and selling that
product in the market and be liable for damages for any past infringement of
such rights. In order to continue using such rights, we would be required to
obtain a license, which may require us to make royalty, per procedure or other
fee payments. We cannot be certain if we or our customers will be successful in
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<PAGE>
securing licenses, or that if we obtain licenses, such licenses will be on
acceptable terms. Alternatively, we might be required to redesign the infringing
aspects of these products. Any redesign efforts that we undertake could be
expensive and might require regulatory review. Furthermore, the redesign efforts
could delay the reintroduction of these products into certain markets, or may be
so significant as to be impractical. If redesign efforts were impractical, we
could be prevented from manufacturing and selling the infringing products, which
would have a material adverse effect on our business, financial and results of
operations.
While we are not currently involved in any material patent litigation, we
have been the subject of patent infringement allegations in the past and such
allegations are common in our industry. In 1992, Summit and Visx formed a U.S.
partnership, Pillar Point Partners, to pool certain of their patents related to
corneal sculpting technologies. As part of their agreement to dissolve Pillar
Point in June 1998, 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. In connection with our March 1996 settlement of litigation with
Pillar Point regarding alleged infringement by our lasers of certain U.S.
patents, we agreed to notify Pillar Point before we begin manufacturing or
selling our laser systems in the U.S. While we are not contractually obligated
to anyone to obtain a license prior to the selling our lasers in the U.S., one
or more of our competitors may assert that such a license is required. As of the
date of this prospectus, we have not obtained a U.S. license from either Summit
or Visx, and the terms of any license, if such license is granted, have not been
determined.
REQUIRED MINIMUM PAYMENTS UNDER OUR UNISHAPER LICENSE AGREEMENT MAY EXCEED
OUR GROSS PROFITS FROM SALES OF OUR UNISHAPER PRODUCT. In addition to the risk
that the UniShaper single use keratome will not be accepted in the marketplace,
we are required to make certain minimum payments to the licensors under our
UniShaper single use keratome limited exclusive license agreement. Under the
agreement, we are required to pay a total of $300,000 in two equal installments
due six and 12 months after the date of our receipt of completed limited
production molds and to provide an excimer laser. We provided the laser during
the quarter ended June 30, 1998, and we expect to accept and receive such molds
once we determine that the product is ready to be commercially shipped. We
currently anticipate regular commercial shipments to commence in the second
quarter of 1999. In addition, commencing seven months after such date, we will
be required to make royalty payments equal to 50% of our defined gross profits
from UniShaper single use keratome sales, with a minimum royalty of $400,000 per
calendar quarter for a period of eight quarters.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR INTERNATIONAL SALES.
Our international sales accounted for 83% and 87% of our total revenues during
the first quarter ended March 31, 1999, and the year ended December 31, 1998,
respectively. We expect sales to international accounts will continue to
represent a comparable percentage of our total sales unless and until our
systems are cleared for commercial distribution in the U.S., or with respect to
those products that do not require regulatory approval, otherwise enter the U.S.
market. The majority of our international sales for the first quarter ended
March 31, 1999, were to Canada, Italy and Spain and for the year ended December
31, 1998, were to customers in Canada, China, Brazil, Mexico, Italy, Argentina,
South Africa and Turkey. Our business, financial condition and international
results of operations may be adversely affected by present economic instability
in Brazil and the impact of that instability on other South American countries,
future economic instability in other countries in which we have sold or may
sell, increases in duty rates, difficulties in obtaining export licenses,
ability to maintain or increase prices, and competition. In addition,
international sales may be limited or disrupted by:
o The imposition of government controls
o Export license requirements
o Political instability
o Trade restrictions
o Changes in tariffs
o Difficulties in staffing and coordinating
communications among and managing international operations.
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Because all of our sales have been denominated in U.S. dollars, we do not
have exposure to typical foreign currency fluctuation risk. However, due to our
significant export sales, we are subject to currency exchange rate fluctuations
in the U.S. dollar, which could increase the effective price in local currencies
of our products. This could in turn result in reduced sales, longer payment
cycles and greater difficulty in collecting receivables. See "--If Our
Uncollectible Receivables Exceed Our Reserves We will Incur Additional
Unanticipated Expenses" above. Although we have not experienced any material
adverse effect on our operations as a result of such regulatory, political and
other factors, such factors may have a material adverse effect on our operations
in the future or require us to modify our business practices.
INADEQUACY OR UNAVAILABILITY OF INSURANCE MAY EXPOSE US TO SUBSTANTIAL
PRODUCT LIABILITY CLAIMS. Our business exposes us to potential product liability
risks that are inherent in the development, testing, manufacture, marketing and
sale of medical devices for human use. We have agreed in the past, and we will
likely agree in the future, to indemnify certain medical institutions and
personnel who conduct and participate in our clinical studies. While we maintain
product liability insurance, we cannot be certain that any such liability will
be covered by our insurance or that damages will not exceed the limits of our
coverage. Even if a claim is covered by insurance, the costs of defending a
product liability, malpractice, negligence or other action, and the assessment
of damages in excess of insurance coverage, could have a material adverse effect
on our business, financial condition and results of operations. Further, product
liability insurance may not continue to be available, either at existing or
increased levels of coverage, on commercially reasonable terms.
OUR SUPPLY OF CERTAIN CRITICAL COMPONENTS AND SYSTEMS MAY BE INTERRUPTED
BECAUSE OF OUR RELIANCE ON A LIMITED NUMBER OF SUPPLIERS. LaserSight currently
purchases certain components used in the production, operation and maintenance
of its laser systems and related products from a limited number of suppliers and
certain key components are provided by a single vendor. Any interruption in the
supply of critical laser components could have a material adverse effect on our
business, financial condition and results of operations. For example, the
UniShaper single use keratome product will be manufactured exclusively for
LaserSight by Frantz Medical Development Ltd., an ISO 9001 company experienced
in the manufacture of engineering-grade medical devices. We also have exclusive
supply arrangements for certain key laser system components with TUI
Lasertechnik und Laserintegration GmbH. If any of our key suppliers cease
providing us with products of acceptable quality and quantity in a timely
fashion, we would have to locate and contract with a substitute supplier. We do
not know if such substitute suppliers could be located and qualified in a timely
manner or could provide required products on commercially reasonable terms.
Acquisition Risks
PAST AND POSSIBLE FUTURE ACQUISITIONS THAT ARE NOT SUCCESSFULLY INTEGRATED
WITH OUR EXISTING OPERATIONS MAY ADVERSELY AFFECT OUR BUSINESS. We have made
several significant acquisitions since 1994, including TFG in 1994,
Photomed in 1997 and 1998, IBM Patents in August 1997 and our acquisition of
certain assets of SEO Medical in April 1998. Although we are currently focusing
on our existing operations, we may in the future selectively pursue strategic
acquisitions of, investments in, or enter into joint ventures or other strategic
alliances with, companies whose business or technology complement our business.
We may not be able to identify suitable candidates to acquire or enter into
joint ventures or other arrangements with or we may not be able to obtain
financing on satisfactory terms for such activities. In addition, with respect
to our recent acquisitions as well as any future transactions, we could have
difficulty assimilating the personnel, technology and operations of the acquired
company, which would prevent us from realizing expected synergies, and may incur
unanticipated liabilities and contingencies. This could disrupt our ongoing
business and distract our management and other resources. We cannot be certain
that we would succeed in overcoming these risks or any other problems in
connection with any acquisitions we may make or joint ventures or arrangements
we may enter into.
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AMORTIZATION AND CHARGES RELATING TO OUR SIGNIFICANT INTANGIBLE ASSETS
COULD ADVERSELY AFFECT OUR STOCK PRICE AND REPORTED NET INCOME OR LOSS. 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 intangible assets are
amortized over a period of time, with the amount amortized in a particular
period constituting a non-cash expense that reduces our net income or increases
our net loss. Of our total assets at March 31, 1999, approximately $15.6
million, or 31%, were intangible assets. The following table presents an
overview of our significant intangible assets and goodwill at March 31, 1999:
Value of Assets
at March 31, 1999 Amortization Period
----------------- -------------------
Goodwill $6.4 million 12-20 years
Cost of Patents $4.2 million 8-17 years
Acquired Licenses
and Technology $5.0 million 31 months-12 years
A reduction in net income resulting from the amortization of goodwill and
other intangible assets may have an adverse impact upon the market price of our
common stock. In addition, in the event of a sale or liquidation of LaserSight
or our assets, we cannot be certain that the value of such intangible assets
would be recovered.
In accordance with SFAS 121, we review 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. If we determine that an intangible asset is impaired, a noncash
impairment charge would be recognized. We continue 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. TFG's operating results have
improved in 1998 when compared to 1996 and 1997. If TFG is unsuccessful in
continuing to improve its financial performance, some or all of the carrying
amount of goodwill recorded, approximately $3.7 million at March 31, 1999, may
be subject to an impairment adjustment.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
LaserSight believes that its exposure to market risk for changes in
interest and currency rates is not significant. LaserSight's investments are
limited to highly liquid instruments with maturities of three months or less. At
March 31, 1999, LaserSight had approximately $7 million of short-term
investments classified as cash and equivalents. All of LaserSight's transactions
with international customers and suppliers are denominated in U.S. dollars.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain legal proceedings against LaserSight are described in Item 3
(Legal Proceedings) of LaserSight's Form 10-K for the year
ended December 31, 1998.
ITEM 2. CHANGES IN SECURITIES
a) Not applicable.
b) In connection with the March 1999 private placement of
Common Stock described below, LaserSight amended its
Stockholder Rights Agreement to provide, among other
things, that no person shall become an Acquiring Person
(as defined in the Rights Agreement) as the result of an
acquisition of LaserSight securities (or the acquisition
of Common Stock upon the exercise of such securities) in
such private placement. Reference is made to the Form
8-A/A filed with the SEC on March 29, 1999, for more
detailed information regarding the Amendment to the Rights
Agreement.
c) During the first quarter ended March 31, 1999, the Company
sold the following unregistered securities:
1) In February 1999, LaserSight issued 67,500 warrants
to purchase Common Stock at $5.00 per share to Guy
Numann as consideration for ongoing consulting
services. The warrants vest on February 22, 2002 and
expire on February 22, 2004. Reference is made to the
form of Warrant filed as an exhibit to this Form 10-Q
for the three months ended March 31, 1999, for more
detailed information regarding this warrant.
2) In March 1999, LaserSight closed a transaction for
the sale of 2,250,000 shares of Common Stock to a
total of six investors, including Pequot and TLC, in
exchange for the Company receiving $9 million in
cash. In addition, the investors received a total of
225,000 warrants to purchase Common Stock at $5.125
per share, the Common Stock closing price on March 22, 1999.
The warrants expire on March 22, 2004. Reference is made to the
Securities Purchase Agreement and form of Warrant filed as
exhibits to LaserSight's Form 10-K for the year ended
December 31, 1998, for more detailed information regarding
this private placement.
The issuance and sale of all such shares was exempt from
the registration and prospectus delivery requirements of
the Securities Act of 1933 by virtue of Section 4(2)
thereof due to, among other things, (i) the limited number
of persons to whom the shares were issued, (ii) the
distribution of disclosure documents to all investors,
(iii) the fact that each such person represented and
warranted to LaserSight, among other things, that such
person was acquiring the shares for investment only and
not with a view to the resale or distribution thereof, and
(iv) the fact that certificates representing the shares
were issued with a legend to the effect that such shares
had not been registered under the Securities Act or any
state securities laws and could not be sold or transferred
in the absence of such registration or an exemption
therefrom.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
2.1 See Exhibits 10.1, 10.2, 10.6, 10.7, 10.16, 10.22, 10.25, 10.26,
10.30 and 10.31.
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 1 of Form 8-A/A (Amendment No. 4) filed by
the Company on June 25, 1998*).
3.2 Bylaws, as amended (filed as Exhibit 3 to the Company's Form 10-K
for the year ended December 31, 1992*).
3.3 Rights Agreement, dated as of July 2, 1998, between LaserSight
Incorporated and American Stock Transfer & Trust Company, as
Rights Agent, which includes (i) as Exhibit A thereto the form of
Certificate of Designation of the Series E Junior Participating
Preferred Stock, (ii) as Exhibit B thereto the form of Right
Certificate (separate certificates for the Rights will not be
issued until after the Distribution Date) and (iii) as Exhibit C
thereto the Summary of Stockholder Rights Agreement (incorporated
by reference to Exhibit 99.1 to the Form 8-K filed by the Company
on July 8, 1998*).
3.4 First Amendment to Rights Agreement, dated as of March 22, 1999,
between LaserSight Incorporated and American Stock Transfer &
Trust Company, as Rights Agent (incorporated by reference to
Exhibit 2 to Form 8-A/A filed by the Company on March 29, 1999*).
4.1 See Exhibits 3.1, 3.2, 3.3, 3.4, 10.19, 10.23, 10.32, 10.33, 10.39
and 10.40.
10.1 Agreement for Purchase and Sale of Stock by and among LaserSight
Centers Incorporated, its stockholders and LaserSight Incorporated
dated January 15, 1993 (filed as Exhibit 2 to the Company's Form
8-K/A filed on January 25, 1993*).
10.2 Amendment to Agreement for Purchase and Sale of Stock by and among
LaserSight Centers Incorporated, its stockholders, and LaserSight
Incorporated dated April 5, 1993 (filed as Exhibit 2 to the
Company's Form 8-K/A filed on April 19, 1993*).
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10.3 Royalty Agreement by and between LaserSight Centers Incorporated
and LaserSight Partners dated January 15, 1993 (filed as Exhibit
10.5 to the Company's Form 10-K for the year ended December 31,
1995*).
10.4 Exchange Agreement dated January 25, 1993 between LaserSight
Centers Incorporated and Laser Partners (filed as Exhibit 10.6 to
the Company's Form 10-K for the year ended December 31, 1995*).
10.5 Stipulation and Agreement of Compromise, Settlement and Release
dated April 18, 1995 among James Gossin, Francis E. O'Donnell,
Jr., J.T. Lin, Wen S. Dai, Emanuela Dobrin-Charlton, C.H. Huang,
W. Douglas Hajjar, and LaserSight Incorporated (filed as Exhibit
10.7 to the Company's Form 10-K for the year ended December 31,
1995*).
10.6 Agreement for Purchase and Sale of Stock dated December 31, 1993,
among LaserSight Incorporated, MRF, Inc., and Michael R. Farris
(filed as Exhibit 2 to the Company's Form 8-K filed on December
31, 1993*).
10.7 First Amendment to Agreement for Purchase and Sale of Stock by and
among MRF, Inc., Michael R. Farris and LaserSight Incorporated
dated December 28, 1995 (filed as Exhibit 10.9 to the Company's
Form 10-K for the year ended December 31, 1995*).
10.8 LaserSight Incorporated 1995 Stock Option Plan (filed as Exhibit
10.5 to the Company's Form 10-Q for the quarter ended September
30, 1995*).
10.9 Modified Promissory Note between LaserSight Incorporated,
EuroPacific Securities Services, GmbH and Co. KG and Wolf Wiese
(filed as Exhibit 10.6 to the Company's Form 10-Q for the quarter
ended September 30, 1995*).
10.10 Patent License Agreement dated December 21, 1995 by and between
Francis E. O'Donnell, Jr. and LaserSight Centers, Inc. (filed as
Exhibit 10.21 to the Company's Form 10-K for the year ended
December 31, 1995*).
10.11 LaserSight Incorporated Amended and Restated 1996 Equity Incentive
Plan (filed as Exhibit 10.12 to the Company's Form 10-Q/A for the
quarter ended June 30, 1998*).
10.12 LaserSight Incorporated Amended and Restated Non-Employee
Directors Stock Option Plan (filed as Exhibit B to the Company's
definitive proxy statement dated May 19, 1997*).
10.13 Agreement dated September 18, 1996 between David T. Pieroni and
LaserSight Incorporated (filed as Exhibit 10.35 to the Company's
Form 10-K for the year ended December 31, 1996*).
10.14 Agreement dated January 1, 1997, between International Business
Machines Corporation and LaserSight Incorporated (filed as Exhibit
10.37 to the Company's Form 10-K for the year ended December 31,
1996*).
10.15 Addendum dated March 7, 1997 to Agreement between International
Business Machines Corporation and LaserSight Incorporated (filed
as Exhibit 10.38 to the Company's Form 10-K for the year ended
December 31, 1996*).
10.16 Second Amendment to Agreement for Purchase and Sale of Stock by
and among LaserSight Centers Incorporated, its stockholders and
LaserSight
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Incorporateddated March 14, 1997 (filed as Exhibit 99.1 to the
Company's Form 8-K filed on March 27, 1997*).
10.17 Amendment to Royalty Agreement by and between LaserSight Centers
Incorporated, Laser Partners and LaserSight Incorporated dated
March 14, 1997 (filed as Exhibit 99.2 to the Company's Form 8-K
filed on March 27, 1997*).
10.18 Employment Agreement dated September 16, 1996 by and between
LaserSight Incorporated and Richard L. Stensrud (filed as Exhibit
10.41 to the Company's Form 10-Q filed on May 9, 1997*).
10.19 Warrant to purchase 500,000 shares of Common Stock dated March 31,
1997 by and between LaserSight Incorporated and Foothill Capital
Corporation (filed as Exhibit 10.44 to the Company's Form 10-Q
filed on August 14, 1997*).
10.20 License Agreement dated May 20, 1997 by and between Visx
Incorporated and LaserSight Incorporated (filed as Exhibit 10.45
to the Company's Form 10-Q filed on August 14, 1997*).
10.21 Patent Purchase Agreement dated July 15, 1997 by and between
LaserSight Incorporated and Frederic B. Kremer, M.D. (filed as
Exhibit 2.(i) to the Company's Form 8-K filed on August 13,
1997*).
10.22 Agreement and Plan of Merger dated July 15, 1997 by and among
LaserSight Incorporated, Photomed Acquisition, Inc., Photomed,
Inc., Frederic B. Kremer, M.D., Linda Kremer, Robert Sataloff,
Trustee for Alan Stewart Kremer and Robert Sataloff, Trustee for
Mark Adam Kremer (filed as Exhibit 2.(ii) to the Company's Form
8-K filed on August 13, 1997*).
10.23 Warrant to purchase 750,000 shares of Common Stock dated August
29, 1997 by and between LaserSight Incorporated and purchasers of
Series B Convertible Participating Preferred Stock of LaserSight
Incorporated (filed as Exhibit 10.39 to the Company's Form 10-Q
filed on November 14, 1997*).
10.24 Independent Contractor Agreement by and between Byron Santos, M.D.
and LaserSight Technologies, Inc. (filed as Exhibit 10.42 to the
Company's Form 10-Q filed on November 14, 1997*).
10.25 Stock Purchase Agreement, dated December 30, 1997, by and among
LaserSight Incorporated, LSI Acquisition, Inc., MEC Health Care,
Inc. and Vision Twenty-One, Inc. (filed as Exhibit 2.(i) to the
Company's Form 8-K filed on January 14, 1998*).
10.26 Stock Distribution Agreement, dated December 30, 1997, by and
among LaserSight Incorporated, LSI Acquisition, Inc., MEC Health
Care, Inc. and Vision Twenty-One, Inc. (filed as Exhibit 2.(ii) to
the Company's Form 8-K filed on January 14, 1998*).
10.27 Agreement dated April 1, 1992 between International Business
Machines Corporation and LaserSight Incorporated (filed as Exhibit
10.1 on Form 10-K for the year ended December 31, 1995*).
10.28 Securities Purchase Agreement, dated June 5, 1998, by and between
LaserSight Incorporated and TLC The Laser Center, Inc. (filed as
Exhibit 99.1 to the Company's Form 8-K filed on June 25, 1998*).
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<PAGE>
10.29 Securities Purchase Agreement, dated June 12, 1998, by and between
LaserSight Incorporated and Pequot Funds (filed as Exhibit 99.5 to
the Company's Form 8-K filed on June 25, 1998*).
10.30 Letter Agreement dated September 11, 1998, amending the Agreement
and Plan of Merger dated July 15, 1997, by and among LaserSight
Incorporated, Photomed Acquisition, Inc., Photomed, Inc., Frederic
B. Kremer, M.D., Linda Kremer, Robert Sataloff, Trustee for Alan
Stewart Kremer and Robert Sataloff, Trustee for Mark Adam Kremer
(filed as Exhibit 10.31 to the Company's Form 10-Q filed on
November 16, 1998*).
10.31 Exclusive License Agreement dated August 20, 1998, by and between
LaserSight Technologies, Inc. and TLC The Laser Center Patents
Inc. (filed as Exhibit 10.32 to the Company's Form 10-Q filed on
November 16, 1998*).
10.32 Warrant to Purchase Common Stock, dated November 11, 1998 by and
between LaserSight Incorporated and Mercacorp, Inc. (filed as
Exhibit 10.33 to the Company's Form 10-Q filed on November 16,
1998*).
10.33 Warrant to Purchase Common Stock, dated November 11, 1998 by and
between LaserSight Incorporated and Mercacorp, Inc. (filed as
Exhibit 10.34 to the Company's Form 10-Q filed on November 16,
1998*).
10.34 Purchase Agreement, dated June 9, 1997, by and between LaserSight
Technologies, Inc. and TUI Lasertechnik Und Laserintegration GmbH
(filed as Exhibit 10.1 to the Company's Form S-3, Pre-Effective
Amendment No. 1 filed on February 1, 1999*).
10.35 License and Royalty Agreement, dated September 10, 1997, by and
between LaserSight Technologies, Inc. and Luis A. Ruiz, M.D. and
Sergio Lenchig (filed as Exhibit 10.2 to the Company's Form S-3,
Pre-Effective Amendment No. 1 filed on February 1, 1999*).
10.36 Manufacturing Agreement, dated September 10, 1997, by and between
LaserSight Technologies, Inc. and Frantz Medical Development Ltd.
(filed as Exhibit 10.3 to the Company's Form S-3, Pre-Effective
Amendment No. 1 filed on February 1, 1999*).
10.37 Employment Agreement by and between LaserSight Incorporated and
Michael R. Farris dated October 30, 1998 (filed as Exhibit 10.37
to the Company's Form 10-K filed on March 31, 1999*).
10.38 Securities Purchase Agreement by and between LaserSight
Incorporated and purchasers of Common Stock dated March 22, 1999
(filed as Exhibit 10.38 to the Company's Form 10-K filed on March
31, 1999*).
10.39 Warrant to purchase 225,000 shares of Common Stock dated March 22,
1999 by and between LaserSight Incorporated and purchasers of
Common Stock of LaserSight Incorporated (filed as Exhibit 10.39 to
the Company's Form 10-K filed on March 31, 1999*).
10.40 Warrant to purchase 67,500 shares of Common Stock dated February
22, 1999 by and between LaserSight Incorporated and Guy Numann.
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11 Statement of Computation of Loss Per Share
27 Financial Data Schedule
99 Press release dated May 17, 1999
b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
March 31, 1999.
- ---------------------------
* Incorporated herein by reference. File No. 0-19671.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the undersigned have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LaserSight Incorporated
Dated: May 17, 1999 By: /s/ Michael R. Farris
-------------------------------
Michael R. Farris,
Chief Executive Officer
Dated: May 17, 1999 By: /s/ Gregory L. Wilson
-------------------------------
Gregory L. Wilson,
Chief Financial Officer
34
Void after 5:00 p.m., Orlando, Florida time, on February 22, 2004
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAW AND MAY NOT BE EXERCISED, OFFERED FOR SALE,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS PERMITTED UNDER THIS
WARRANT AND THEN ONLY IF REGISTERED UNDER SUCH ACT AND ALL APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED, SUCH OPINION TO BE IN THE FORM OF OPINION
ANNEXED TO THIS WARRANT.
---------------------------------------
WARRANT TO PURCHASE COMMON STOCK
of
LASERSIGHT INCORPORATED
1. Grant of Warrant. This is to certify that, for value received, Guy
Numann ("Investor") or his permitted assigns (individually, "Holder" and
collectively, "Holders") are entitled, subject to the terms set forth below, to
purchase from LaserSight Incorporated, a Delaware corporation (the "Company") or
its successors or assigns, sixty-seven thousand five hundred (67,500), fully
paid, validly issued and non-assessable shares of common stock, $0.001 par
value, of the Company ("Common Stock") at an initial exercise price equal to
$5.00 per share in the manner and subject to the conditions hereinafter
provided. The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for each share of Common Stock may be
adjusted from time to time as provided in Section 16. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price per
share of Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price."
2. Term and Vesting. This Warrant is exercisable, to the extent vested,
at any time prior to expiration. This Warrant shall vest as follows: (i) on the
first anniversary of the date hereof, Holder may exercise his right to purchase
22,500 of the Warrant Shares, (ii) on the second anniversary of the date hereof,
Holder may exercise his right to purchase 22,500 of the Warrant Shares, and
(iii) on the third anniversary of the date hereof, Holder may exercise his right
to purchase 22,500 of the Warrant Shares. This Warrant shall expire in full to
the extent not vested or exercised by 5:00 p.m., Orlando, Florida time, on the
first to occur of (i) the fifth anniversary of the date hereof, or (ii) thirty
(30) days after the date on which that certain Consulting Agreement, dated
February 22, 1999 between the Company and Investor is terminated for any reason.
3. Exercise of Warrant. This Warrant may be exercised, to the extent
vested, in whole or in increments of 2,500 shares of Common Stock, subject to
the provisions hereof, by presentation and surrender hereof to the Company at
its principal office (or such other office or agency of the Company as it may
from time to time designate by notice in writing to Holder at the address of
Holder appearing on the books of the Company ("Other Office")) with the Notice
<PAGE>
of Exercise annexed hereto duly completed and executed on behalf of Holder, with
Holder's signature guaranteed by an eligible guarantor institution that is a
member of a recognized medallion signature guarantee program, and accompanied by
payment of the Exercise Price by wire transfer, certified or official bank
check. As soon as practicable after each such exercise of the Warrant, but not
later than ten (10) business days from the date of such exercise, the Company
shall issue and mail to Holder a certificate or certificates for the Warrant
Shares issuable upon such exercise, registered in the name of Holder. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, unless
such date is not a day on which banks are open for business in Orlando, Florida
which case this Warrant shall be deemed to have been exercised on the first
succeeding day on which banks are open for business in Orlando, Florida (such
date, the "Exercise Date"). The person entitled to receive the shares of Common
Stock issuable upon such exercise shall be deemed to be the holder of record
thereof from and after the Exercise Date, notwithstanding that certificates
representing such Warrant Shares shall not then have been physically delivered.
4. Reservation of Shares. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall from time to time be required for issuance and
delivery upon exercise of the Warrant in full.
5. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. Any
fractional share to which Holder would otherwise be entitled shall be rounded to
the nearest whole share.
6. Warrant Register. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder may change his address as shown on the Warrant Register by written notice
to the Company requesting such change. Any notice or written communication
required or permitted to be given to the Holder may be delivered or given by
mail to such Holder as named in the Warrant Register and at the address shown on
the Warrant Register. Until this Warrant is transferred on the Warrant Register
of the Company in accordance with the provisions hereof, the Company may treat
the Holder named in the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
7. Warrant Agent. The Company may, by written notice to all Holders,
appoint an agent ("Warrant Agent") for the purpose of maintaining the Warrant
Register, issuing the Common Stock or other securities then issuable upon the
exercise of this Warrant, exchanging this Warrant, or replacing this Warrant.
Thereafter, any such registration, issuance, exchange, or replacement shall be
made at the office of the Warrant Agent.
8. Transfer, Exchange or Replacement.
(a) Transferability and Non-Negotiability of Warrant. Neither
this Warrant nor any interest therein may be transferred or assigned in whole or
in part without compliance with all applicable federal and state securities laws
by Holder and the transferee or assignee thereof, including delivery of
investment intent representation letters and a legal opinion acceptable to the
Company and its counsel to the effect that such transfer or assignment is exempt
from the registration requirements of the Securities Act of 1933 and the rules
and regulations promulgated thereunder, or any similar successor statute
(collectively, the "Securities Act"), and any applicable state securities laws.
<PAGE>
Subject to the preceding sentence and the Company's prior written approval of
any proposed transferee (such approval, if any, being subject to the Company's
sole and absolute discretion), this Warrant may be transferred by endorsement
(by Holder executing the Assignment Form annexed hereto with Holder's signature
guaranteed by an eligible guarantor institution that is a member of a recognized
medallion signature guarantee program) and delivery thereof to the Company or
the Warrant Agent, as applicable, together with payment of any applicable
transfer taxes.
(b) Exchange of Warrant Upon a Transfer. On surrender of this
Warrant for exchange, properly endorsed on the Assignment Form with Holder's
signature guaranteed by an eligible guarantor institution that is a member of a
recognized medallion signature guarantee program, and subject to Section 8(a),
the Company at its expense shall issue to Holder a new warrant or warrants of
like tenor, in the name of Holder or as Holder (on payment by Holder of any
applicable transfer taxes) may direct, for the number of shares issuable upon
exercise hereof.
(c) Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in case of loss, theft or destruction, on delivery of a
third-party indemnity agreement reasonably satisfactory in form and substance to
the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of this
Warrant, an new warrant of like tenor and amount.
9. Compliance with Securities Laws.
(a) Holder, by acceptance of this Warrant, acknowledges that
neither this Warrant nor the Warrant Shares have been registered under the
Securities Act and represents and warrants to the Company that this Warrant is
being acquired for investment and not for distribution or resale, solely for
Holder's own account and not as a nominee for any other person, and that Holder
will not offer, sell, pledge or otherwise transfer this Warrant or any Warrant
Shares except (i) in compliance with the requirements for an available exemption
from the Securities Act and any applicable state securities laws, or (ii)
pursuant to an effective registration statement or qualification under the
Securities Act and any applicable state securities laws.
(b) Certificates for all Warrant Shares shall bear a legend in
substantially the following form:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH SHARES ARE REGISTERED
UNDER SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED.
10. Rights of the Holder. Subject to Sections 16 and 17, and until the
Warrant shall have been exercised as provided herein, Holder shall not be
entitled to vote, receive dividends or other distributions on, or be deemed the
holder for any purpose of, any Warrant Shares or any other securities of the
<PAGE>
Company that may from time to time be issuable upon the exercise hereof, nor
shall Holder, in such capacity, enjoy any of the rights of a stockholder of the
Company or any right to vote on, or consent (or withhold consent) to, the
election of directors of the Company or any other matter submitted to the
stockholders of the Company, or to receive notice of meetings thereof.
11. Piggy-Back Registration Rights.
(a) If during the Registration Period (as defined herein) the Company
proposes or is required to file with the SEC a registration statement (the
"Piggy-Back Registration Statement") under the Securities Act in connection with
an Underwritten Offering of Common Stock (other than a registration statement
that does not permit the inclusion therein of the Warrant Shares), the Company
will each such time give prompt written notice of its intention to do so to each
Holder. Upon the written request of any Holder given within 10 days after the
delivery or mailing of such notice from the Company, the Company will use
commercially reasonable efforts to include in such Piggy-Back Registration
Statement that number of the Warrant Shares specified by Holder in such written
request (subject to the limitations set forth in this Section 11(a) and in
Section 11(b) below) (the "Requested Shares") so as to permit the public sale of
such Requested Shares, provided that if the managing underwriter or underwriters
advise the Company that marketing factors require a limit on the number of
shares to be underwritten, the Company may (subject to the limitations set forth
below) exclude all Requested Shares from, or limit the number of Requested
Shares to be included in, the Piggy-Back Registration Statement and
underwriting. In such event, the Company shall so advise each requesting Holder,
and the number of Requested Shares and other shares ("Other Shares") requested
to be included in such Piggy-Back Registration Statement and underwriting by
other persons or entities that are then stockholders of the Company ("Other
Holders"), after providing for all shares that the Company proposes to offer and
sell for its own account, shall be allocated among the Requesting Holders and
Other Holders pro rata on the basis of (i) the number of Requested Shares then
held by the requesting Holders and (ii) the aggregate number of Other Shares
then held by Other Holders.
(b) The right of any Holder to registration shall be conditioned upon
(i) such Holder's execution of the underwriting agreement agreed to among the
Company and the managing underwriters selected by the Company for such
underwritten offering, (ii) such Holder's completion and execution of all
customary questionnaires and other documents which must be executed in
connection with such underwriting agreement, and (iii) such Holder supplying the
Company and the underwriter such additional information as may be necessary to
register such Holder's Registrable Securities.
(c) The registration rights granted pursuant to this Section 11, shall
commence as of the date of the first exercise of this Warrant (the "Initial
Exercise Date") and continue until the first to occur of (i) the date on which
all of the Warrant Shares have been sold by the Holders, (ii) the date on which
all of the Warrant Shares may be immediately sold to the public without
registration conditions or limitations, whether pursuant to Rule 144 or
otherwise, (iii) the date which is the one-year anniversary of the date on which
this Warrant is fully exercised, and (iv) the date which is the one-year
anniversary of the date on which this Warrant expires. The period of time
commencing on the Initial Exercise Date and ending on the earliest of the
foregoing dates shall be referred to as the "Registration Period".
<PAGE>
12. Blackout Period and Holdback Events.
(a) During any period of up to 90 days' duration following the
occurrence of a Blackout Event (a "Blackout Period"), the Company shall not be
required to file, or cause to be declared effective, under the Securities Act
the Piggy-Back Registration Statement, or, if applicable, the Holders will
discontinue the offer and sale of Warrant Shares pursuant to the Piggy-Back
Registration Statement.
(b) The Holders shall not, if requested by the managing
underwriter or underwriters of an Underwritten Offering, effect any public or
private sale of any Common Stock, including a sale pursuant to Rule 144, during
the period ("Holdback Period") beginning 14 days prior to, and ending 90 days
after, the effective date of the registration statement relating to a public
offering of Common Stock, or other securities convertible into, or exercisable
or exchangeable for, Common Stock that is underwritten on a firm commitment
basis.
(c) The aggregate number of days during which one or more
Blackout Periods or Holdback Periods are in effect shall not exceed 180 days
during the Registration Period, provided that the aggregate number of days
during which one or more Blackout Periods or Holdback Periods are in effect
shall not exceed 90 days in any 12 month period during the Registration Period.
(d) The Company shall promptly notify the Holders in writing
of any decision not to file the Piggy-Back Registration Statement or not to
cause the Piggy-Back Registration Statement to be declared effective or to
discontinue sales of Warrant Shares pursuant to this Section 12, which notice
shall set forth the reason for such decision (but not disclosing any nonpublic
material information) and shall include an undertaking by the Company promptly
to notify the Holders as soon as sales may resume.
For purposes of this Warrant "Blackout Event" shall mean a
determination by the Company's Board of Directors made in good faith, after
consulting with outside securities counsel, that the registration of Warrant
Shares under the Securities Act or the continuation of the disposition of
Warrant Shares pursuant to the Piggy-Back Registration Statement at such time
(i) would have a material adverse effect upon a proposed material sale of all
(or substantially all) of the assets of the Company or a material merger,
reorganization, recapitalization or similar current transaction materially
affecting the capital structure or equity ownership of the Company, or (ii)
would require the Company to make a public disclosure of information, which
disclosure would have a material adverse effect on the Company.
13. Registration Procedures. In connection with the filing of the
Piggy-Back Registration Statement, the Company shall effect such registrations
to permit the sale of the Warrant Shares covered thereby in accordance with the
intended method or methods of disposition thereof, and in connection with the
Piggy-Back Registration Statement the Company shall:
(a) Notify the selling Holders of Warrant Shares promptly (but
in any event within five business days), and confirm such notice in writing: (i)
when the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to the Piggy-Back Registration Statement or any
post-effective amendment, when the same has become effective under the
<PAGE>
Securities Act, and (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Piggy-Back Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose.
(b) Use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of the Piggy-Back Registration Statement
or of any order preventing or suspending the use of the Prospectus or suspending
the qualification (or exemption from qualification) of any of the Warrant Shares
for sale in any jurisdiction and, if any such order is issued, to use its
reasonable best efforts to obtain the withdrawal of any such order at the
earliest practicable time.
(c) Furnish to each selling Holder of Warrant Shares at the
sole expense of the Company one conformed copy of the Piggy-Back Registration
Statement and each post-effective amendment thereto and, if requested, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits.
(d) Deliver to each selling Holder of Warrant Shares at the
sole expense of the Company as many copies of the Prospectus (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Holder may reasonably
request; and, subject to the last paragraph of this Section 13, the Company
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders of Warrant Shares in connection with the offering
and sale of the Warrant Shares covered by such Prospectus and any amendment or
supplement thereto.
(e) Prior to any public offering of Warrant Shares, to use its
reasonable best efforts to register or qualify, and to cooperate with the
selling Holders of Warrant Shares in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Warrant Shares for offer and sale under the securities or blue sky laws of such
jurisdictions within the United States as any selling Holder reasonably
requests; keep each such registration or qualification (or exemption therefrom)
effective during the period the Piggy-Back Registration Statement is required to
be kept effective and do any and all other acts or things reasonably necessary
or advisable to enable the disposition in such jurisdictions of the Warrant
Shares covered by the Piggy-Back Registration Statement; provided, however, that
the Company shall not be required to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 13(e), (ii) subject itself to general taxation in any such jurisdiction,
(iii) file a general consent to service of process in any such jurisdiction,
(iv) provide any undertakings that cause the Company material expense or burden,
or (v) make any change in its Charter or By-laws, which in each case the
Company's Board of Directors determines to be contrary to the best interests of
the Company and its stockholders.
(f) Cooperate with the selling Holders of Warrant Shares to
facilitate the timely preparation and delivery of certificates representing
Warrant Shares to be sold, which certificates shall not bear any restrictive
legends and shall be in a form in compliance with any applicable rules of a
stock exchange on which the Common Stock is then listed; and enable such Warrant
Shares to be in such denominations and registered in such names as Holders may
reasonably request.
(g) Upon the occurrence of any event or any information
becoming known to the Company that makes any statement made in the Piggy-Back
Registration Statement or the Prospectus or any document incorporated or deemed
<PAGE>
to be incorporated therein by reference untrue in any material respect, as
promptly as practicable prepare and file with the SEC, at the sole expense of
the Company, a supplement or post-effective amendment to the Piggy-Back
Registration Statement or a supplement to the Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Warrant Shares being sold thereunder, any such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(h) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 90 days after the end of any 12-month period (or 120 days after the end of
any 12-month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company after the effective date of the
Piggy-Back Registration Statement, which statements shall cover said 12-month
periods.
(i) Cooperate with each seller of Warrant Shares covered by
the Piggy-Back Registration Statement in connection with any filings required to
be made with the National Association of Securities Dealers, Inc.
(j) Use its reasonable best efforts to cause all Warrant
Shares relating to the Piggy-Back Registration Statement to be listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed.
The Company may require each seller of Warrant Shares as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Warrant Shares as the Company
may, from time to time, reasonably request. The Company may exclude from such
registration the Warrant Shares of any seller so long as such seller fails to
furnish such information within a reasonable time after receiving such request.
Each seller as to which the Piggy-Back Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such seller not materially misleading.
Each Holder of Warrant Shares understands that the Securities Act may
require delivery of the Prospectus in connection with any sale thereof pursuant
to the Piggy-Back Registration Statement, and each such Holder shall comply with
the applicable Prospectus delivery requirements of the Securities Act in
connection with any such sale.
Each Holder of Warrant Shares agrees by acquisition of such Warrant
Shares that, upon actual receipt of any notice from the Company of the happening
of any event of the kind described in Section 13(a)(ii) hereof or any
information becoming known that makes any statement made in the Piggy-Back
Registration Statement or the Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect, such
Holder will forthwith discontinue disposition of such Warrant Shares covered by
the Piggy-Back Registration Statement or the Prospectus to be sold by such
Holder until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 13(d) hereof, or until it is advised in
<PAGE>
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company shall give any such notice, the Registration Period shall
be extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each seller of
Warrant Shares covered by the Piggy-Back Registration Statement, as the case may
be, shall have received (i) the copies of the supplemented or amended Prospectus
contemplated by Section 13(d) hereof or (ii) the Advice.
14. Expenses. With respect to such registration, the Company shall bear
all fees, costs and expenses, including without limitation all registration,
filing and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, all internal Company expenses, and all legal fees
and disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdiction in which the Warrant Shares are to be registered or
qualified, but excluding any underwriting discounts and commissions and transfer
taxes and any other related selling expenses incurred by the selling Holders.
The selling Holders will be responsible for fees and disbursements of such
parties' counsel and accountants.
15. Rule 144. During the Registration Period, the Company shall use its
reasonable best efforts to timely prepare and file all documents required to be
filed with the SEC as shall be necessary to enable the Holders to sell
unregistered Warrant Shares in accordance with Rule 144 under the Securities
Act. Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
16. Anti-Dilution Provisions. So long as this Warrant, or any portion
thereof, shall remain outstanding and unexpired, the Exercise Price in effect
from time to time and the number and kind of securities purchasable upon the
exercise of the Warrants shall be subject to adjustment from time to time as
follows:
(a) If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares (any of the foregoing, a
"Dilutive Event"), the Exercise Price in effect at the time of the record date
for such Dilutive Event shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such Dilutive Event, and the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
Dilutive Event (such fraction, the "Adjustment Factor"). Such adjustment shall
be made successively whenever any Dilutive Event shall occur.
(b) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Section 16(a), the number of shares purchasable
upon exercise of this Warrant shall simultaneously be adjusted by dividing the
number of shares issuable upon exercise of this Warrant by the Adjustment
Factor.
(c) If at any time, as a result of an adjustment made pursuant
to this Section 16(d) or 16(e), the Holder of this Warrant shall thereafter
become entitled to receive any shares of the Company, other than Common Stock or
shares of any issuer other than the Company, thereafter the Exercise Price and
<PAGE>
the number of such other shares so receivable upon exercise of this Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in Sections 16(a) or 16(b).
(d) If the Company by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 16.
(e) If at any time there shall be (i) a reorganization (other
than a subdivision, combination, reclassification, or other change of shares
otherwise provided for herein), (ii) a merger or consolidation of the Company
with or into another corporation in which the Company is not the surviving
entity, or a reverse triangular merger in which the Company is the surviving
entity but the shares of the Company's capital stock outstanding immediately
prior to the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash, or otherwise, or (iii) a sale or
transfer of the Company's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a Holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 16. The
foregoing provisions of this Section 16(e) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporate that are at the time receivable upon the
exercise of this Warrant. In all events, appropriate adjustment (as determined
by the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after the event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
(f) Whenever the Exercise Price shall be adjusted as required
by the provisions of Section 16, the Company shall promptly file in the custody
of its Secretary or an Assistant Secretary at its principal office or Other
Office and with the Warrant Agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement of
the number of additional shares of Common Stock or other securities, if any,
issuable upon exercise of this Warrant and such other facts as shall be
necessary to show the reason for and the manner of computing such adjustment.
Each such certificate shall be made available at all reasonable times for
inspection by Holder and the Company shall forthwith after each such adjustment
mail a copy of such certificate to Holder at its address last appearing in the
Warrant Register.
<PAGE>
17. Notices to Warrant Holders. If at any time while this Warrant, or
any portion thereof, remains outstanding and unexpired, (i) the Company shall
pay any dividend or make any distribution upon the Common Stock (other than
regular quarterly cash dividends or dividends paid in the form of Common Stock),
(ii) the Company shall offer to the holders of Common Stock generally for
subscription or purchase by them any share of the Company of any class or any
other rights issued by the Company, or (iii) the capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale of all or
substantially all of the property and assets of the Company to another
corporation or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed to Holder at its address specified in the Warrant Register, at
least 10 days prior to the date specified in (x) or (y) below, as applicable, a
notice containing a brief description of the proposed event described in (i),
(ii) or (iii) above and stating the date on which (x) a record is to be taken
for the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, sale, dissolution,
liquidation or winding up is to take place and the date, if any, is be fixed, as
of which the holders of the Common Stock or other securities shall receive cash
or other property deliverable upon such event. Notwithstanding the above, the
failure to give such notice shall not affect the validity of any transaction for
which the notice was required to be given.
18. Governing Law. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of Florida without regard to such
state's conflict of law provisions.
19. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
20. Authorization. The Company and Investor each represent and warrant
to the other, as applicable, that (i) each such party is duly organized, validly
existing and in good standing under the laws of their respective jurisdiction of
incorporation, (ii) each such party has the requisite corporate power and
authority to execute this Warrant and to carry out and perform the terms and
provisions of this Warrant, and (iii) this Warrant constitutes the valid and
legally binding obligation of such party.
21. Counterparts. This Warrant may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
22. Notice. Any notice required or permitted to be given shall be in
writing and may be personally served or delivered by courier or by confirmed
telecopy, and shall be deemed to be delivered at the time and date of receipt
(which shall include telephone line facsimile transmission). The addresses for
such communications shall be:
<PAGE>
If to the Company:
LaserSight Incorporated
3300 University Boulevard, Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9982
Attn: Chief Financial Officer
With a copy to:
The Lowenbaum Partnership, L.L.C.
222 South Central Avenue, Suite 901
St. Louis, Missouri 63105
Telecopy: (314) 746-4848
Attn: Timothy L. Elliott, Esq.
And:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telecopy: (312) 876-7934
Attn: Paul J. Miller, Esq.
If to the Holder:
Guy Numann
2727 Highway A1A #601
Indialantic, Florida 32903
Telecopy: (407) 777-2765
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized, as of the date below.
Dated as of: February 22, 1999
LASERSIGHT INCORPORATED
By: /s/Michael R. Farris
--------------------------------
Michael R. Farris
Attest: /s/Gregory L. Wilson
--------------------------------
Gregory L. Wilson, Secretary
ACCEPTED AND AGREE:
/s/Guy Numann
- --------------------------
Guy Numann
Date: February 22, 1999
<PAGE>
NOTICE OF EXERCISE
TO: LaserSight Incorporated Dated: __________, 199__
(1) The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _________ shares of Common Stock and hereby
makes payment of _________ in payment of the actual exercise price thereof.
(2) By exercising this Warrant, the undersigned acknowledges that such
shares have not been registered under the Securities Act of 1933, and represents
and warrants to the Company that such shares are being acquired for investment
and not for distribution or resale, solely for the undersigned's own account and
not as a nominee for any other person, and that the undersigned will not offer,
sell, pledge or otherwise transfer such shares except (i) in compliance with the
requirements for an available exemption from such Securities Act and any
applicable state securities laws, or (ii) pursuant to an effective registration
statement or qualification under such Securities Act and any applicable state
securities laws.
INSTRUCTIONS FOR REGISTRATION OF STOCK
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
-------------------------------------------------------------------------
(Please typewrite or print in block letters)
Name:
-------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
Signature:
-------------------------------------------------------------------------
(All signatures must be guaranteed by an eligible guarantor institution that is
a member of a recognized medallion signature guaranty program.)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
Name:
-------------------------------------------------------------------------
(Please typewrite or print name of Assignee in block letters)
Address:
-------------------------------------------------------------------------
Number of Shares:
-------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint
______________________________, attorney to make such transfer on the books of
LaserSight Incorporated, maintained for the purpose, with full power of
substitution in the premises.
Dated:
-----------------------
Signature of Holder:
--------------------------------------------
The undersigned ASSIGNEE acknowledges that neither the within Warrant
nor, if the Piggy-Back Registration Statement contemplated by Section 11 of this
Warrant has not been declared effective, any of the Warrant Shares (as defined
in the Warrant) have been registered under the Securities Act of 1933, and the
undersigned ASSIGNEE represents and warrants to the Company that the Warrant and
the Warrant Shares are being acquired for investment and not for distribution or
resale, solely for the undersigned's own account and not as a nominee for any
other person, and that the undersigned ASSIGNEE will not offer, sell, pledge or
otherwise transfer the Warrant or the Warrant Shares except (i) in compliance
with the requirements for an available exemption from such Securities Act and
any applicable state securities laws or (ii) pursuant to an effective
registration statement or qualification under such Securities Act and any
applicable state securities laws.
Dated:
-----------------------
Signature of Assignee:
--------------------------------------------
(All signatures must be guaranteed by an eligible institution that is a member
of a recognized medallion signature guaranty program.)
<TABLE>
EXHIBIT 11
LASERSIGHT INCORPORATED
COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1999 1998
---------------------------------
BASIC
<S> <C> <C>
Weighted average shares outstanding 13,418,000 10,318,000
=========== ===========
Net loss $(3,320,364) (1,963,507)
Conversion discount on preferred stock -- (25,372)
Preferred stock accretion and
dividend requirements -- (1,098,121)
----------- -----------
Loss attributable to common shareholders $(3,320,364) (3,087,000)
=========== ===========
Basic loss per share $ (0.25) (0.30)
=========== ===========
DILUTED
Weighted average shares outstanding 13,418,000 10,318,000
=========== ===========
Net loss $(3,320,364) (1,963,507)
Conversion discount on preferred stock -- (25,372)
Preferred stock accretion and
dividend requirements -- (1,098,121)
----------- -----------
Loss attributable to common shareholders $(3,320,364) (3,087,000)
=========== ===========
Diluted loss per share $ (0.25) (0.30)
=========== ===========
Loss attributable to common shareholders, above $(3,320,364) (3,087,000)
Additional adjustment to weighted average
number of shares:
Weighted average number of shares as adjusted
per above 13,418,000 10,318,000
Dilutive effect of contingently issuable shares,
stock options and convertible preferred stock 4,479,000 3,474,000
----------- -----------
Weighted average number of shares, as adjusted $17,897,000 13,792,000
=========== ===========
Diluted loss per share, adjusted $ (0.19)(A) (0.22)
=========== ===========
(A) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 13-14 of SFAS 128 because
it produces an anti-dilutive result.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This scheudle contains summary information extracted from the accompanying
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,792,287
<SECURITIES> 0
<RECEIVABLES> 11,728,609
<ALLOWANCES> 2,382,487
<INVENTORY> 9,410,778
<CURRENT-ASSETS> 30,150,779
<PP&E> 3,523,107
<DEPRECIATION> 1,765,046
<TOTAL-ASSETS> 50,804,118
<CURRENT-LIABILITIES> 8,788,588
<BONDS> 0
0
4,000
<COMMON> 15,583
<OTHER-SE> 39,594,184
<TOTAL-LIABILITY-AND-EQUITY> 50,804,118
<SALES> 4,401,215
<TOTAL-REVENUES> 4,888,298
<CGS> 2,032,378
<TOTAL-COSTS> 2,079,495
<OTHER-EXPENSES> 5,928,844
<LOSS-PROVISION> 256,074
<INTEREST-EXPENSE> 45,770
<INCOME-PRETAX> (3,320,364)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,320,364)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,320,364)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
LASERSIGHT ANNOUNCES JOINT VENTURE WITH BECTON DICKINSON AND
FIRST QUARTER RESULTS
Winter Park, FL. (May 17, 1999) - LaserSight Incorporated (NASDAQ: LASE) today
announced an alliance with Becton Dickinson Ophthalmic Systems, a Worldwide
Business of Becton Dickinson and Company (NYSE:BDX). The joint venture brings
together the products and expertise of two companies in the field of
ophthalmology focused particularly on refractive surgery.
As part of the joint venture Becton Dickinson Ophthalmic Systems and LaserSight
have entered into an exclusive arrangement to develop, manufacture and
distribute keratome blades for refractive surgery. Additionally, the partnership
will further expand the LaserSight product line by manufacturing cannulas,
custom kits for refractive surgery and other laser vision correction related
accessories. LaserSight will access Becton Dickinson's sales and distribution
capabilities around the world to accelerate the launch of its products and meet
the market's growing demand.
Becton Dickinson Ophthalmic Systems is the worldwide leader in the manufacture
and sales of surgical blades and ophthalmic cannula under the Beaver(R) and
Visitec(R) brands. The products of Becton Dickinson Ophthalmic Systems and
LaserSight enjoy a reputation for excellence and innovation. This combination
strategically positions the two companies to gain market share more effectively
and efficiently within the rapidly growing refractive surgery market.
Separately, the Company announced financial results for the first quarter ended
March 31, 1999. Revenues related to sales of laser systems, upgrades and part
sales increased over the quarter ended December 31, 1998 and the quarter ended
March 31, 1998.
<PAGE>
Revenues for the first quarter increased approximately 17% to $4.9 million from
$4.2 million in the first quarter of 1998. The Company reported a net loss of
$3.3 million, or $0.25 per share, compared to a net loss of $2.0 million
reported for the first quarter of 1998 before the additional $1.1 million loss
for that quarter of 1998, reflecting the effects of premiums, accretion and
conversion discounts on the redemption of Series B Preferred Stock. The loss per
share in the first quarter of 1998 was $0.30. The average common shares
outstanding were 13,418,000 during the first quarter of 1999 compared to
10,318,000 in the first quarter of 1998.
Compared to the fourth quarter of 1998, revenues increased approximately 48%
from $3.3 million. Additionally, the net loss for the first quarter of 1999
narrowed significantly compared to the net loss of $6.0 million, or $0.46 per
share reported in the fourth quarter of 1998. The relative improvement during
the first quarter of 1999 primarily resulted from the increased revenues and
corresponding improved margin as well as a reduction of approximately $1.0
million in total operating expenses.
During the three months ended March 31, 1999 the Company sold 13 refractive
laser systems to international customers compared to 8 systems during the fourth
quarter of 1998. In addition to an increase in average selling price during the
quarter, the terms of sale improved as a result of the markets the Company has
gained access to through the CE Mark approval previously announced.
Michael R. Farris, Chief Executive Officer, commented, "We continue to be
pleased with the progress we are making with our laser system and keratome
products. Our strategic alliance with Becton Dickinson, a well-respected and
resourceful organization, strenghthens LaserSight's position to compete with
other broad line companies while allowing us to lead the industry with focused
innovation. Focused on clinical quality and technological innovation, the
partnership will increase LaserSight's ability to meet customer demand for its
products, further establish its brand name recognition for quality and
innovation, and increase market share in a rapidly growing industry."
<PAGE>
LaserSight Incorporated provides quality technology solutions for laser
refractive surgery and other innovative applications, mainly in the vision
correction industry. The Company sells its products in more than 30 countries.
In the United States, LaserSight's refractive scanning laser system has a
pending pre-market approval application with the U.S. Food and Drug
Administration and is not yet commercially available in this market.
This press release contains forward-looking statements regarding future events
and future performance of the Company, including statements with respect to
anticipated sales revenue, which involves risks and uncertainties that could
materially affect actual results. Investors should refer to documents that the
Company files from time-to-time with the Securities and Exchange Commission for
a description of certain factors that could cause the actual results to vary
from current expectations and the forward looking statements contained in this
press release. Such filings include, without limitation, the company's Form
10-K, Form 10-Q and Form 8-K reports.
Following are selected LaserSight financial results:
THREE MONTHS ENDED
(in 000s except per share data)
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Total Revenues $ 4,888 $ 4,243
Cost of Revenues 2,079 1,263
Gross Profit 2,809 2,980
Research, Development and Regulatory 781 818
Selling, General & Administrative 5,404 3,747
Loss from Operations (3,376) (1,585)
Other Income (Expense) 56 (311)
Net Loss (3,320) (1,964)
Preferred Stock Accretions / Dividends
And Conversion Discounts -- (1,123)
Loss Attributable to Common Shareholders (3,320) (3,087)
Loss per Common Share - Basic and Diluted (0.25) (0.30)
Weighted Average Number of Shares Outstanding 13,418 10,318
SELECTED BALANCE SHEET DATA (in 000s):
March 31, 1999 December 31, 1998
-------------- -----------------
Cash and Cash Equivalents $10,792 $ 4,438
Accounts and Notes Receivable (Current) 9,346 9,418
Total Current Assets 30,151 22,717
Total Current Liabilities 8,789 7,842
Long-Term Obligations 832 560
Stockholders' Equity 39,614 34,015
</TABLE>
