SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 0-19671
LASERSIGHT INCORPORATED
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0273162
-------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
3300 University Blvd., Suite 140, Winter Park, Florida 32792
------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 678-9900
--------------
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None N/A
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Preferred Share Purchase Rights
-------------------------------
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
---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
The aggregate market value of the voting stock held by non-affiliates
of the registrant based on the closing sale price on April 29, 1999 was
approximately $113,539,497. Shares of Common Stock held by each officer and
director and by each person who has voting power of 10% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
Number of shares of Common Stock outstanding as of April 29, 1999:
15,506,135.
EXPLANATORY NOTE
This filing amends certain information on the cover page and certain
other previously-filed information contained in Items 10, 11, 12 and 13. No
other items have been amended.
<PAGE>
PART III
Item 10. Directors and Executive Officers
The Company's executive officers and directors are set forth below. The
terms of all incumbent directors expire at the Annual Meeting of the Company's
stockholders on June 18, 1999 (the "Annual Meeting") or at such later time as
their successors have been duly elected and qualified.
Name Age Title Director Since
- ---- --- ----- --------------
Michael R. Farris 39 President, Chief Executive 1995
Officer and Director
Francis E. O'Donnell, Jr., M.D. 49 Chairman of the Board 1992
Thomas Quinn 50 Director 1994
Richard C. Lutzy 53 Director 1995
J. Richard Crowley 43 President of LaserSight 1994
Technologies, Chief Operating
Officer and Director
David T. Pieroni 53 Director 1996
Terry A. Fuller, Ph.D. 50 Director 1997
Juliet Tammenoms Bakker 37 Director 1998
Gary F. Jonas 54 Director 1998
Gregory L. Wilson 41 Chief Financial Officer N/A
Mr. Farris has been the Company's President and Chief Executive Officer
since November 1995. He had previously been President and Chief Executive
Officer of The Farris Group ("TFG") (which the Company acquired from Mr. Farris
in February 1994) and predecessor consulting and search firms for more than 10
years.
Dr. O'Donnell has been the Chairman of the Board of the Company since
April 1993. He also was Chief Executive Officer of the Company from April 1993
to July 1993. He is the Medical Director of the O'Donnell Eye Institute, St.
Louis, Missouri, which has performed photorefractive keratectomy procedures
since 1989. He is Chairman and Chief Executive Officer of Per Ardua and BioKeys,
privately-held biopharmaceutical companies. He was a member of Laser Skin Toner,
L.L.C., a privately-held aesthetic laser company, until its sale in July 1998,
and is a member of Sublase, L.L.C., a privately-held medical laser company. He
is also a Clinical Professor of Ophthalmology at the St. Louis University School
of Medicine and the founder and managing partner of the Hopkins Capital Group,
L.L.C.
Mr. Quinn has been President of Smithton Rockwell & Irwin, a development
company in the areas of healthcare management services and consulting programs
for managed care, since February 1998. From 1995 to 1997, he was a Vice
President of the Hospital Alliance Division of Olsten Kimberly QualityCare, a
home health care management services provider and a subsidiary of Olsten Corp.
From 1992 to 1995, he was Vice President of Sales and Marketing of Integrated
Health Services, Inc., a post-acute health care provider.
Mr. Lutzy has been the founder and Chief Executive Officer of Palmer
Capital Corporation, a financial advisory and venture capital services company,
since 1988. From 1981 through 1987, he was Managing Director of Merrill Lynch
Private Capital, Ltd., a London-based investment banking subsidiary of Merrill
Lynch & Company.
Mr. Crowley has been President of LaserSight Technologies since October
1997, its Chief Operating Officer since June 1997 and the Company's Chief
Operating Officer since October 1998. He had previously been the Chief Operating
Officer and Chief Financial Officer of Clinical Diagnostic Systems, Inc., a
2
<PAGE>
medical diagnostic testing company, since 1991. From 1984 to 1991, he was
President and Chief Financial Officer of Control Laser Corporation, a
manufacturer of industrial lasers.
Mr. Pieroni has been President of Pieroni Management Counselors, Inc., a
management consulting company, since September 1996 and during a portion of
1995. He was President of the Company's TFG subsidiary from November 1995 to
September 1996. From 1991 to 1995, he was President of Spencer & Spencer
Systems, Inc., an information systems consulting company. From 1977 to 1990, he
was a partner in the health care and management consulting practice of a
predecessor of Ernst & Young LLP. He is a director of Citation Computer Systems
Inc., a health care software company.
Dr. Fuller has been President and Chief Executive Officer of Fuller
Research Corporation, a privately-held producer of high-technology surgical
devices, since March 1984. Since December 1998, he has also served as President
and Chief Executive Officer of PhotoVision Pharmaceuticals, Inc., a
development-stage biotechnology company. From December 1997 through its sale in
July 1998, he served as President and Chief Executive Officer of Laser Skin
Toner, L.L.C. From 1990 to January 1997, he was Chief Operating Officer and
Executive Vice-President of Surgical Laser Technologies, Inc., a producer of
laser systems for surgical use.
Mr. Jonas has been the Executive Vice President, Strategic Growth for TLC
The Laser Center Inc. since 1997. Prior to joining TLC in 1997, Mr. Jonas was a
founder and Chief Executive Officer of 20/20 Laser Centers Inc. from 1993 to
February 1997. From 1988 to 1993, Mr. Jonas served as the President and Chief
Operating Officer of Earle Palmer Brown, an advertising agency in the United
States. From 1975 to 1988, Mr. Jonas was the Chief Executive Officer of
University Research Corporation, a health service consulting
company.
Ms. Tammenoms Bakker has been a Vice President of Pequot Capital
Management, Inc., and a predecessor thereof, Dawson Samberg Capital Management,
Inc., both private investment firms, since March 1997. Pequot is the investment
manager of Pequot Equity Fund, L.P. Previously, Ms. Tammenoms Bakker had the
following roles at Waste Management International in London and the U.S.:
Director of Strategic Planning, 1993-1994 and Director, Operations, 1994-1996.
Mr. Wilson has been Chief Financial Officer of the Company since July 1994
and of its TFG subsidiary since 1993. From 1986 to 1993, he was a management
consultant with Deloitte & Touche LLP, an international accounting and
consulting firm.
Compliance With Section 16(a) of the Exchange Act
- -------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than 10%
of the outstanding Common Stock, to file reports of ownership and changes in
ownership of such securities with the SEC. Officers, directors and over-10%
beneficial owners are required to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon a review of the copies of the forms
furnished to the Company, and/or written representations from certain reporting
persons that no other reports were required, the Company believes that all
Section 16(a) filing requirements applicable to its officers, directors and
over-10% beneficial owners during or with respect to the year ended December 31,
1998 were met.
3
<PAGE>
Item 11. Executive Compensation
The following table sets forth summary information concerning the
compensation paid or earned for services rendered to the Company in all
capacities during 1996, 1997 and 1998 for (i) the Company's Chief Executive
Officer ("CEO"), and (ii) each of the other executive officers of the Company
serving at December 31, 1998 whose total annual salary and bonus for 1998
exceeded $100,000 (collectively, the "Named Executive Officers"). During such
years, the Company did not make any grants of stock appreciation rights ("SARs")
or restricted stock or any awards or payouts under any long-term incentive plan.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
------------------- ------
Other Securities All
Annual Underlying Other
Compen- Options/ Compensation
Name and Principal Position Year Salary ($) Bonus ($) sation SARs(#) ($)
--------------------------- ---- ----------- --------- ------- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Michael R. Farris 1998 250,000 50,000 -- 250,000 --
President and CEO 1997 250,000 -- -- -- --
1996 250,000 -- -- -- --
J. Richard Crowley 1998 154,800 -- -- -- --
Chief Operating Officer (1) 1997 80,221 -- -- 80,000 --
Gregory L. Wilson 1998 155,400 -- -- 25,000 13,192 (2)
Chief Financial Officer 1997 150,000 -- -- -- --
1996 120,000 -- -- -- --
</TABLE>
(1) Mr. Crowley joined the Company in June 1997 and has been President and
Chief Operating Officer of LaserSight Technologies since that time and Chief
Operating Officer of the Company since October 1998.
(2) Consists of relocation allowance paid.
The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during 1998. No SARs were granted during
1998.
Option/SAR Grants In Last Fiscal Year
Individual Grants
-----------------
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed
Securities Options/ Annual Rates of Stock
Underlying SARs Price Appreciation for
Options/ Granted to Exercise or Option Term
SARs Employees in Base Price Expiration ----------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ----------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Farris 40,000 7.6% $4.78 6/30/2003 $ 52,825 $ 116,730
210,000 47.3% 4.38 12/31/2006 438,662 1,050,672
J. Richard Crowley -- -- -- -- -- --
Gregory L. Wilson 25,000 4.7% 2.41 4/16/2003 16,646 36,783
</TABLE>
4
<PAGE>
The following table sets forth certain information relating to options
held by the Named Executive Officers at December 31, 1998:
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs at In-the-Money Options/
Exercise (#) Realized($)(1) Year-End(#)(1) SARs at Year-End($)(1)(2)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
<S> <C> <C> <C>
Michael R. Farris -- -- 30,000/250,000 $0/108,750
J. Richard Crowley -- -- 45,000/60,000 1,020/0
Gregory L. Wilson -- -- 22,500/12,500 30,863/30,862
</TABLE>
(1) No SARs have been issued by the Company.
(2) Based on the $4.875 closing price of the Common Stock on the Nasdaq National
Market on December 31, 1998 when such price exceeds the exercise price for
an option.
Compensation of Directors
- -------------------------
Each non-employee director receives a fee of $500 for each board or
committee meeting attended. In addition, during 1998, each non-employee director
was granted an option under the Company's Non-Employee Directors Stock Option
Plan to purchase 15,000 shares of Common Stock and each committee chairman and
the Chairman of Board was granted an additional option to purchase 5,000 shares.
The exercise price of each such option on June 30, 1998, was $4.78 per share
(100% of the market price of Common Stock on the date of grant). Directors who
are also full-time employees of the Company received no additional cash
compensation for services as directors.
Employment Agreements
- ---------------------
In October 1998, the Company entered into a revised employment agreement
with Mr. Farris, which the Company and Mr. Farris agreed to further amend in
April 1999 (as amended, the "Employment Agreement"). The Employment Agreement
provides for a three-year term, an annual base salary of $250,000, a total of
210,000 stock options granted in 1998 and 131,250 stock options granted in 1999.
In addition, 58,750 stock options will be granted on June 18, 1999, the date of
the Company's 1999 annual meeting, if the Company's shareholders approve an
increase in the number of shares available in the Company's stock option plan.
The Employment Agreement also provides for opportunity for an annual cash
performance bonus of up to 25% of base salary based upon specific objectives
established by the Executive Compensation and Stock Option Committee, and an
opportunity for an annual cash additional bonus in an aggregate amount of 20% of
base salary if all or a portion of certain events or goals identified from time
to time by the Executive Compensation and Stock Option Committee occur or are
achieved. If the employment of Mr. Farris is terminated by the Company without
"cause" or by him with "good reason" (as such terms are defined in the
Employment Agreement), Mr. Farris would be entitled to all salary and other
benefits under the Employment Agreement through the later of (i) the remaining
term of the Agreement or (ii) one year after the date of his termination. The
Employment Agreement includes non-compete and confidentiality covenants. The
Compensation Committee reviews Mr. Farris' employment arrangements from time to
time and may grant Mr. Farris additional stock options or otherwise modify his
employment arrangements in the future based on those reviews.
5
<PAGE>
Severance Arrangement
- ---------------------
In connection with the resignation of Mr. Pieroni as President of TFG and
Chief Development Officer of the Company in September 1996, the Company agreed,
in lieu of the provisions under his employment agreement, to the following: (i)
the payment of six months salary ($75,000) in monthly installments, (ii) the
amendment of Mr. Pieroni's option to purchase 200,000 shares of Common Stock at
an exercise price of $11.25 per share to provide that as to 100,000 shares, such
options become fully exercisable, and as to the remaining 100,000 shares, the
options will be canceled, and (iii) the continuation of a car allowance, office
space and clerical support for six months. The Company has not yet determined
whether the options should remain exercisable for more than 90 days after the
termination of Mr. Pieroni's service as a director.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
During 1998, the Compensation Committee consisted of Messrs. Quinn, Lutzy
and Fuller until December, when it was revised to include Messrs. Jonas, Quinn,
Lutzy and Ms. Bakker. None of the members of this committee were employees of
the Company while serving on this committee.
6
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership, as of April 29, 1999, of the Company's voting securities
which includes its Common Stock, Series C Convertible Participating Preferred
Stock ("Series C Preferred Stock") and Series D Convertible Participating
Preferred Stock ("Series C Preferred Stock") by (i) each person known to the
Company to beneficially own 5% or more of any class of voting security, (ii)
each director, and (iii) all officers and directors of the Company as a group.
Unless otherwise indicated below, the persons named below have sole voting and
investment power with respect to the number of shares set forth opposite their
respective names. For purposes of the following table, each person's "beneficial
ownership" of the Common Stock has been determined in accordance with the rules
of the SEC.
<TABLE>
<CAPTION>
Class of Voting Securities
--------------------------
Common Stock Voting Authority
Name and Address of Beneficial Owner Ownership(1) Series C Preferred Series D Preferred Ownership (8)
- ------------------------------------ ------------- ------------------ ------------------ -------------
Directors, Nominees and Executive Officers
<S> <C> <C> <C> <C>
Francis E. O'Donnell, Jr., M.D. 419,552 (2)(3) 0 0 419,552
2.7% 2.1%
Michael R. Farris 546,000 (3) 0 0 546,000
3.5% 2.8%
J. Richard Crowley 88,700 (3) 0 0 88,700
* *
Terry A. Fuller 0 0 0 0
* *
Richard C. Lutzy 38,000 (3) 0 0 38,000
* *
Thomas Quinn 41,050 (3) 0 0 41,050
* *
David T. Pieroni 117,500 (3) 0 0 117,500
* *
Juliet Tammenoms Bakker 0 0 0 0
* *
Gary F. Jonas 0 0 0 0
* *
Gregory L. Wilson 50,000 (3) 0 0 50,000
* *
All directors, nominees and executives officers
as a group (8 persons) 1,300,802 (3) 0 0 1,300,802
8.1% 6.5%
Other 5% Stockholders
James W. Vaughan (4) 1,110,225 0 0 1,110,225
2470 Schuetz Road 7.2% 5.7%
Maryland Heights, Missouri 63043
TLC The Laser Center, Inc. 814,800 (5) 2,000,000 (6) 0 2,814,800
5600 Explorer Drive, Suite 301 5.2% 100% 14.4%
Mississauga, Ontario
Canada L4W 4Y2
Pequot Capital Management, Inc. 550,000 (5) 0 2,000,000 (6) 2,550,000
500 Nyala Farm Road 3.5% 100% 13.0%
Westport, Connecticut 06880
Michael A. Roth and Brian J. Stark 940,508 (7) 940,508
1500 West Market Street 5.7% 0 0 4.7%
Mequon, Wisconsin 53092
Mercacorp Inc. 1,500,000 0 0 1,500,000
c/o Ziegler, Ziegler & Altman LLP 8.8% 7.1%
750 Lexington Avenue
New York, New York 10022
</TABLE>
* Less than 1%.
7
<PAGE>
(1) Each number of shares of Common Stock shown as owned in this column assumes
the exercise of all currently-exercisable options and warrants held by the
applicable person or group. Each percentage shown in this column assumes
the exercise of all such options and warrants by the applicable person or
group, but assumes that no options, warrants held by any other persons are
exercised or converted.
(2) Includes 262,274 shares held by the Irrevocable Trust No. 7 for the benefit
of the Francis E. O'Donnell, Jr., M.D. Trust and 22,778 shares held by the
Francis E. O'Donnell, Jr. Descendants Trust. Ms. Kathleen M. O'Donnell, the
sister of Dr. O'Donnell, is trustee of both Trusts. Dr. O'Donnell disclaims
beneficial ownership of such shares.
(3) Includes options to acquire shares of Common Stock which are now
exercisable or will first become exercisable on or before June 28, 1999, as
follows: Dr. O'Donnell (86,000); Mr. Farris (130,000); Mr. Crowley
(80,000); Mr. Lutzy (30,000); Mr. Quinn (40,000); Mr. Pieroni (115,000);
Mr. Wilson (35,000); and all directors and executive officers as a group
(516,000).
(4) Information derived from a beneficial owners report as of March 15, 1999.
(5) Represents the number of actual shares of Common Stock presently owned by
such persons (based on written information supplied to the Company as of
April 29, 1999), and (ii) such additional shares of Common Stock that would
have been issuable if the indicated person had exercised all of its
warrants at a price of $5.125 (50,000 each by TLC and Pequot).
(6) Each share of Series C Preferred Stock and Series D Preferred Stock is
convertible into one share of Common Stock.
(7) Information derived from a Schedule 13G as of March 24, 1999. Represents
(i) the number of actual shares of Common Stock beneficially owned by Stark
International (354,600 shares) and Shepherd Investments International, Ltd.
(154,600 shares), both of which are partnerships of which both reporting
persons are managing partners, and (ii) additional shares of Common Stock
that would have been issuable if the indicated beneficial owners had
exercised all of its warrants previously issued by the Company (Stark
International 225,654 warrant shares and Shepherd Investments 205,654
warrant shares).
(8) On the basis of voting authority, as of April 29, 1999, a total of
19,506,135 shares of Common Stock would be outstanding. This amount is
composed of (i) 15,506,135 shares of Common Stock outstanding as of April
29, 1999, (ii) 2,000,000 shares of Common Stock issuable upon the exercise
of the Series C Preferred Stock, (iii) 2,000,000 shares of Common Stock
issuable upon the exercise of the Series D Preferred Stock. Added to this
total are the exercisable options and warrants held by the applicable
person or group.
8
<PAGE>
Item 13. Certain Relations and Related Transactions
- ----------------------------------------------------
LaserSight Centers. In March 1997, pursuant to an amendment to a
previously-reported 1993 acquisition agreement (as so amended, the "Amended
Centers Agreement"), the Company issued 625,000 unregistered shares of Common
Stock to a group of former stockholders and former optionholders (the "Former
Centers Holders") of LaserSight Centers Incorporated ("LaserSight Centers"), a
developmental stage company that the Company acquired in April 1993 and through
which the Company intends to begin to provide services for ophthalmic laser
surgical centers using excimer and other lasers. The Amended Centers Agreement
also provides for issuance of up to 600,000 additional shares of Common Stock to
the Former Centers Holders to the extent that a revised earnout (as described
below) is satisfied through March 31, 2002. Trusts for the benefit of Dr.
O'Donnell, the Chairman of the Board of the Company, or his descendants
(collectively, the "O'Donnell Trusts") received 226,644 (approximately 36%) of
the 625,000 shares issued and would be entitled to receive the same percentage
of any additional shares issued.
Under the Amended Centers Agreement, Earnout Shares are issuable at the
rate of one share of Common Stock per $4.00 of PRK Earnings (as defined)
received by the Company through March 31, 2002. No Earnout Shares have become
issuable as of the date of this Report on Form 10-K/A. For this purpose, the
following items are considered revenue: (i) per procedure revenues received by
the Company in connection with the utilization of a fixed or mobile excimer
laser owned or operated by the Company to perform photorefractive keratectomy
("PRK") and treat myopia, astigmatism and hyperopia; (ii) certain revenues
received by the Company from managed care companies or employers for arranging
the delivery of PRK, and (iii) any royalties received by the Company on account
of patents assigned to LaserSight Centers. The Amended Centers Agreement
excludes the following from the computation of PRK Earnings: (i) revenues
derived from the manufacture and servicing of excimer lasers, (ii) fees from
patents not assigned to LaserSight Centers, (iii) managed care fees for non-PRK
services, and (iv) revenues from non-excimer procedures. Management of the
Company believes that these exclusions will benefit the Company by eliminating
uncertainty as to how the LaserSight Centers earnout is to be computed. In
addition, the Company is no longer required to use LaserSight Centers as its
exclusive representative in the U.S. and Canada for the sale and distribution of
ophthalmic refractive lasers or related refractive procedures. However, it may
be in the interest of Dr. O'Donnell for the Company to pursue business
strategies that maximize the issuance of Earnout Shares.
In March 1997, the Company also amended its previously-reported royalty
agreement (as so amended, the "Amended Royalty Agreement") with Laser Partners,
a Florida general partnership, that it had entered into shortly before the
LaserSight Centers acquisition. The Amended Royalty Agreement reduces the
maximum per eye royalty to be paid by the Company from $86 to $43, and delays
the commencement of such royalty payments until after March 2002 or, if sooner,
the delivery of all of the 600,000 shares contingently issuable under the
earnout provisions of the Amended Centers Agreement. The Company's obligations
under the Amended Royalty Agreement are perpetual. The Company understands that
one of the O'Donnell Trusts is a partner of Laser Partners with a 36%
partnership interest.
The Amended Royalty Agreement provides that the Company is not required to
pay a royalty in connection with any of the following: (i) procedures which do
not involve both an excimer laser and PRK, (ii) laser procedures performed by a
third party in connection with any license granted by the Company, and (iii)
laser procedures performed pursuant to a contract with a managed care company or
an employer, pursuant to which the Company agrees to arrange for the delivery of
eye care services other than PRK or for eye care services which include PRK
without any identifiable fee attributable thereto. The management of the Company
believes that these exclusions reduce the scope of the Company's obligation to
make royalty payments. It may be in the interest of Dr. O'Donnell for the
Company to pursue business strategies that maximize such royalty payments.
9
<PAGE>
The Board of Directors has discretion to discontinue, sell or transfer at
any time the Company's business related to arranging for the performance of PRK.
Sale of Laser System. As previously reported, in December 1995, the
Company sold one of its laser systems to a company owned by Dr. O'Donnell at a
price of $235,000 for use in clinical trials. The Company received payment of
the $235,000 in January 1997.
Acquisition of TFG. Pursuant to a December 1995 amendment to the earnout
provisions of the agreement pursuant to which the Company had acquired TFG from
Mr. Farris in February 1994, the Company and Mr. Farris agreed that the earnout
would be payable in shares of Common Stock in both January 1997 (based on TFG's
annual performance during 1994, 1995, and 1996) and January 1999 (based on TFG's
annual performance during 1997 and 1998). The 406,700 earnout shares which had
been earned under the amended agreement for the three-year period ended December
31, 1996 were issued in April 1997. In view of TFG's losses in 1997 and 1998, no
earnout shares were payable for those years.
Consulting Arrangement. In May 1997, the Company's LaserSight Technologies
subsidiary entered into an agreement, effective as of January 1, 1997, with Dr.
Byron A. Santos ("Dr. Santos"), an ophthalmologist employed by the O'Donnell Eye
Institute, a corporation of which Dr. O'Donnell, the Chairman of the Board of
the Company, is the Medical Director and owner. The amount that became payable
to Dr. Santos under this agreement during 1997 was $96,000. Under the agreement,
Dr. Santos is required to be available to provide a minimum of 40 hours of
services each month. Such services have related to the development of the
LaserScan 2000 excimer laser system, the development of clinical protocols, and
training and other consulting services. The agreement provides for a term ending
December 31, 2002, subject to LaserSight Technologies' right to terminate the
agreement in the event that Dr. Santos fails to perform in accordance with the
terms of the agreement.
Fuller Agreement. In exchange for his consulting services on behalf of the
Company with respect to the Company's patent portfolio, the Company granted Dr.
Fuller an option to acquire 8,750 shares of Common Stock pursuant to the
Company's Equity Incentive Plan at a price of $4.78, the Common Stock closing
price on June 30, 1998.
TLC Laser Sales. In June 1998, the Company sold three laser systems for a
total of $900,000 to TLC. The Company received full payment for the systems sold
in August 1998.
TLC License Agreement. In October 1998, the Company entered into an
agreement with a subsidiary of TLC that grants the Company an exclusive license
under U.S. Patent No. 5,630,810 relating to a treatment method for preventing
formation of central islands during laser surgery. Central islands are a problem
generally associated with laser refractive surgery performed with broad beam
laser systems used to ablate corneal tissue. The Company has agreed during the
term of the patent license agreement to pay TLC 20% of the aggregate net
royalties it receives in the future from licensing of the TLC patent and certain
other patents owned by the Company.
1999 Private Placement. In connection with the Company's March 1999
private placement transaction, TLC and Pequot Capital Management, Inc. each
purchased 500,000 shares of Common Stock and received warrants to purchase
50,000 shares of Common Stock with an exercise price of $5.125 per share. Juliet
Tammenoms Bakker, Vice President of Pequot Capital Management, Inc., and Gary F.
Jonas, Executive Vice President, Strategic Growth of TLC, are members of the
Company's Board of Directors.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LASERSIGHT INCORPORATED
Dated: April 29, 1999 By: /s/ Michael R. Farris
------------------------------------------
Michael R. Farris, President and
Chief Executive Officer
Dated: April 29, 1999 By: /s/ Gregory L. Wilson
------------------------------------------
Gregory L. Wilson, Chief Financial Officer
(Principal accounting officer)
11
