<PAGE>
Filing Pursuant to Rule 424(b)(2)
Registration Statement No. 333-68923
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 16, 1999)
151,445 Shares
PLC SYSTEMS INC.
Common Stock
--------------------
You should read this prospectus supplement and the accompanying
prospectus carefully before you invest. Both documents contain information
you should consider when making your investment decision.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THE PROSPECTUS TO READ ABOUT
FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
PLAN OF DISTRIBUTION
We are offering 151,445 shares of our common stock to an institutional
investor pursuant to this prospectus supplement. The common stock will be
purchased at a negotiated purchase price of $555,556. The $555,556 purchase
price reflects the average of recent trading prices of the common stock on
the American Stock Exchange, net of a 7% discount. In addition, we will pay
$30,556 in commissions on the sale of our common stock. We will not pay any
other compensation in conjunction with the sale of our common stock. We have
agreed to indemnify the institutional investor against liabilities, including
liabilities under the Securities Act of 1933.
USE OF PROCEEDS
The proceeds to us from this offering will be $525,000. We plan to use
the net proceeds for general corporate purposes, including:
- repaying our obligations as they become due;
- financing capital expenditures; and
- working capital.
Pending use of the net proceeds for any of these purposes, we may invest the
net proceeds in short-term investment grade instruments, interest-bearing
bank accounts, certificates of deposit, money market securities, U.S.
government securities or mortgage-backed securities guaranteed by federal
agencies.
S-1
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MARKET FOR OUR COMMON STOCK
On March 4, 1999, the last reported sales price of our common shares on
the American Stock Exchange was $4.00 per share. Our common stock is listed
on the American Stock Exchange under the symbol "PLC." The common stock sold
under this prospectus supplement will be listed on the American Stock Exchange
after we notify the American Stock Exchange that the shares have been issued.
As of March 4, 1999, we have 20,058,690 shares of common stock
outstanding.
GENERAL
You should rely only on the information provided or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authoriezed anyone else to provide you with different information. You
should not assume that the information in this prospectus supplement is
accurate as of any date other than the date on the front of these documents.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
The date of this prospectus supplement is March 5, 1999.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PROSPECTUS SUPPLEMENT
Plan of Distribution.. . . . . . . . . . . . . . . . . . . S-1
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . S-1
Market for Our Common Stock. . . . . . . . . . . . . . . . S-2
General. . . . . . . . . . . . . . . . . . . . . . . . . . S-2
PROSPECTUS
Risk Factors.. . . . . . . . . . . . . . . . . . . . . . . 2
Highlights of Our Company. . . . . . . . . . . . . . . . . 8
Recent Developments. . . . . . . . . . . . . . . . . . . . 9
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . 9
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . 10
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Where You Can Find More Information. . . . . . . . . . . . 10
</TABLE>
S-3
<PAGE>
PROSPECTUS
DATED FEBRUARY 16, 1999.
$12,000,000
PLC SYSTEMS INC.
COMMON STOCK
--------------------
This prospectus will allow us to issue common stock over time. This
means:
- we may issue up to $12,000,000 of common stock from time to time.
- we will provide a prospectus supplement each time we issue common
stock.
- the prospectus supplement will inform you about the specific terms of
that offering and also may add, update or change information contained
in this document.
- you should read this document and any prospectus supplement carefully
before you invest.
Our common stock is traded on the American Stock Exchange under the
symbol "PLC". On February 16, 1999, the last reported sale price for the
common stock on the American Stock Exchange was $5.25 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
The date of this prospectus is February 16, 1999.
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision.
OUR COMPANY HAS A LIMITED OPERATING HISTORY AND A HISTORY OF LOSSES
PLC Systems Inc. was founded in 1987 and is still developing its
principal product. We have incurred operating losses in every year of our
existence except 1995. We incurred net losses of $1,540,000 million for the
year ended December 31, 1996 and $14,404,000 million for the year ended
December 31, 1997. For the nine months ended September 30, 1998, we incurred
a net loss of $13,344,000. As of September 30, 1998, we have an accumulated
deficit of $64,877,000. We have not achieved profitability and expect to
continue to incur net losses for at least the next fiscal year. Moreover,
although our business is not seasonal in nature, our revenues tend to vary
significantly from fiscal quarter to fiscal quarter.
OUR COMPANY IS DEPENDENT ON ONE PRINCIPAL PRODUCT
We develop and market one principal product: a patented high-powered
carbon dioxide laser system known as The Heart Laser System. Approximately
93.2% of our revenue in the fiscal year ended December 31, 1997 and 83.4% in
the nine month period ended September 30, 1998 was derived from The Heart
Laser System.
IN ORDER TO COMPETE EFFECTIVELY, WE NEED TO GAIN COMMERCIAL ACCEPTANCE
The Heart Laser System is designed for use in the treatment of coronary
artery disease in a surgical laser procedure we pioneered known as
transmyocardial revascularization. Transmyocardial revascularization is
commonly referred to in our industry as "TMR." TMR is a new technology that
is only recently becoming known. We may never achieve widespread commercial
acceptance. To be successful, we need to:
- demonstrate to the medical community in general, and to heart surgeons
and cardiologists in particular, that TMR procedures and The Heart
Laser System are effective, relatively safe and cost effective; and
- train heart surgeons to perform TMR procedures using The Heart Laser
System.
To date, we have trained only a limited number of heart surgeons and will
need to expand our marketing and training capabilities.
Over 4,000 patients have been treated with TMR procedures using the
Heart Laser System in the United States and overseas. As of September 30,
1998, we have shipped The Heart Laser System to 36 sites in the United States
and 71 sites overseas. Although a number of research studies, including one
conducted by the Texas Heart Institute, have reported favorably on The Heart
Laser System, we have not yet received widespread commercial acceptance. If
we are unable to maintain regulatory approvals or to achieve widespread
commercial acceptance of The Heart Laser System, our business, financial
condition and results of operations will be materially and adversely affected.
RESULTS OF LONG-TERM CLINICAL STUDIES MAY ADVERSELY AFFECT OUR BUSINESS
Patients have only been treated with The Heart Laser System since
January 1990, and, as a result, there have been few long-term follow-up
studies. If patients suffer harmful, long-term consequences from The Heart
Laser System, our business, financial condition and results of operations
will be materially and adversely affected.
2
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RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY COULD MAKE THE HEART LASER SYSTEM
OBSOLETE
Our industry is characterized by rapid technological change and intense
competition. New technologies and products and new industry standards will
develop at a rapid pace. They could make The Heart Laser System obsolete.
The advent of new devices and procedures and advances in new drugs and
genetic engineering are especially threatening. Our future success will
depend upon our ability to develop and introduce a variety of product
enhancements to address the increasingly sophisticated needs of our
customers. Material delays in introducing product enhancements may cause
customers to forego purchases of our product and purchase those of our
competitors.
Many of our competitors have substantially greater financial resources
and are in a better financial position to exploit marketing and research and
development opportunities. Most of our direct competitors are using a
different type of laser than ours, including holmium and excimer lasers.
Several of the companies that have entered the market are developing less
invasive methods of performing TMR procedures. These new methods may
eliminate the need to make an incision in the patient's chest, reducing costs
and speeding recovery.
WE MUST RECEIVE AND MAINTAIN GOVERNMENT APPROVAL IN ORDER TO MARKET OUR PRODUCT
GENERAL
The Heart Laser System and our manufacturing activities are subject to
extensive, rigorous and changing federal and state regulation in the United
States and to similar regulatory requirements in other major markets,
including the European Community and Japan. To date, we have received
regulatory approval in the United States and the European Community, but not
in Japan. Without regulatory approval, we cannot market The Heart Laser
System in Japan. Even if granted, regulations may significantly restrict the
use of The Heart Laser System. The process of obtaining and maintaining
required regulatory approval is lengthy, expensive and uncertain.
UNITED STATES -- ALTHOUGH WE HAVE RECEIVED FDA APPROVAL, THE FDA HAS
RESTRICTED THE USE OF THE HEART LASER SYSTEM AND COULD REVERSE ITS APPROVAL
AT ANY TIME
In August 1998, we became the first company to receive FDA approval to
market a laser system for TMR procedures. However, the FDA:
- has not allowed us to market the Heart Laser System to treat patients
whose condition is amenable to conventional treatments, such as heart
bypass surgery and angioplasty; and
- could reverse its ruling and prohibit use of The Heart Laser System at
any time.
EUROPE -- ALTHOUGH WE HAVE RECEIVED REGULATORY APPROVAL FROM THE EUROPEAN
COMMUNITY, THE EUROPEAN COMMUNITY COULD REVERSE ITS APPROVAL AT ANY TIME
AND FRANCE HAS PROHIBITED USE OF THE HEART LASER SYSTEM
The Heart Laser System received the CE Mark, which is similar to FDA
approval, from the European Community in 1995. The CE Mark allows us to
market The Heart Laser System in all European Community countries. However:
- The European Community could reverse its ruling and prohibit use of
The Heart Laser System at any time; and
- We cannot market The Heart Laser System in France.
Despite receiving the CE Mark, The French Ministry of Health instituted a
commercial moratorium on TMR procedures in October 1997. In its opinion, the
procedure is considered to be experimental and should only be performed
within the context of a clinical study. An evaluation of the safety of The
Heart Laser System is currently
3
<PAGE>
under review by a panel of French experts. We have provided our clinical
results to the panel and are actively working to have this moratorium lifted.
There is no assurance when or if we will be successful.
ASIA -- WE CANNOT MARKET OUR PRODUCT IN MAJOR ASIAN MARKETS UNTIL WE
RECEIVE GOVERNMENT APPROVAL
We believe that Japan represents the largest potential market for The
Heart Laser System in Asia. Prior to marketing The Heart Laser System in
Japan, we must receive approval from the Japanese Ministry of Health and
Welfare. This approval requires a clinical study in Japan with at least 60
patients. We submitted the results of this study to the Japanese Ministry of
Health and Welfare in December 1998. We do not know whether the clinical
study will be sufficient or when, if ever, we will receive approval from the
Japanese Ministry of Health.
Additional regulatory applications are pending in China, Taiwan and
South Korea. We cannot be sure when, if at all, we will obtain regulatory
approval in any particular country.
ASSERTING AND DEFENDING INTELLECTUAL PROPERTY RIGHTS MAY IMPACT RESULTS OF
OPERATION REGARDLESS OF SUCCESS
In our industry, competitors often assert intellectual property
infringement claims against one another. The success of our business depends
on our ability to successfully defend our intellectual property. Future
litigation may have a material impact on our financial condition even if we
are successful in marketing The Heart Laser System. We may not be successful
in defending or asserting our intellectual property rights.
WE MAY BE SUBJECT TO PRODUCT LIABILITY LAWSUITS; OUR INSURANCE MAY NOT BE
SUFFICIENT TO COVER DAMAGES
We may be subject to product liability claims. A recent United States
Supreme Court decision held that compliance with FDA regulations will not
shield a company from common-law negligent design claims or manufacturing and
labeling claims based on state rules. Although we have product liability
insurance with an yearly aggregate maximum of $10 million, we cannot be sure
that our insurance is adequate to cover any product liability law suits. Our
insurance is expensive and in the future may not be available on acceptable
terms, if at all. If a successful product liability claim or series of claims
exceeded our insurance coverage, it would divert the attention of our key
personnel, degrade the reputation and marketability of our technology and
products, and could have a material adverse effect on our business, financial
condition and results of operations.
WE HAVE BEEN SUED FOR ALLEGED VIOLATIONS OF SECURITIES LAW
In July 1997, an FDA advisory panel recommended against approval of our
application to market The Heart Laser System. Following this recommendation,
we were named as defendant in 21 purported class action lawsuits filed
between August 1997 and November 1997 in the United States District Court for
the District of Massachusetts. The lawsuits seek an unspecified amount of
damages in connection with alleged violations of the federal securities laws
based on our failure to obtain a favorable FDA panel recommendation in 1997.
Nineteen of these complaints have been consolidated by the court into a
single action for pretrial purposes and two suits have been dismissed. We
have filed motions to dismiss all of the remaining claims. However, our
motions to dismiss these claims may not be successful. We have also been
named as a defendant in a lawsuit filed in Massachusetts Superior Court in
September 1998. This suit seeks over $2 million in damages for alleged
negligent misrepresentations and fraud arising from our failure to obtain a
favorable FDA recommendation in 1997. We cannot make a meaningful estimate of
the amount or range of loss that could result from an unfavorable outcome of
these lawsuits, but an unfavorable outcome could have a material adverse
affect on our business, financial position and results of operations. We may
not be able to pay the amount of any judgment against us. We believe that
we have valid defenses to these litigation matters and intend to conduct a
vigorous defense.
We may not earn a favorable return with the proceeds of this offering
Our management can spend most of the proceeds from this offering in ways
with which you may not agree. We cannot predict that the proceeds will be
invested to yield a favorable return.
4
<PAGE>
BECAUSE WE ARE INCORPORATED IN BRITISH COLUMBIA, YOU ARE RESTRICTED IN
ELECTING DIRECTORS
We are currently incorporated under the laws of British Columbia. Under
British Columbia law, a majority of our directors must be residents of Canada
and at least one director must be a resident of British Columbia. As a
result, you may be limited with respect to the persons that you can nominate
and elect as directors.
We plan to change our place of incorporation from British Columbia,
Canada, to the Yukon Territory, Canada, by May of 1999 to eliminate the
restrictions on who may be a director. Our stockholders have already
approved the change in our place of incorporation.
BECAUSE WE ARE INCORPORATED IN CANADA, YOU MAY NOT BE ABLE TO ENFORCE
JUDGMENTS AGAINST US AND OUR CANADIAN DIRECTORS
Under Canadian law, you may not be able to enforce a judgment issued by
courts in the United States against us or our Canadian directors. The status
of the law in Canada is unclear as to whether a U.S. citizen can enforce a
judgment from a U.S. court in Canada for violations of U.S. securities laws.
A separate suit may need to be brought directly in Canada. You will still be
subject to this risk even after we change the place of our incorporation to
the Yukon Territory.
ANTITAKEOVER PROVISIONS MAY PREVENT YOU FROM REALIZING A PREMIUM RETURN
Provisions of British Columbia law could make it more difficult for a
third party to acquire us, even if the acquisition would be beneficial to
you. Specifically, British Columbia law requires any person who makes a
tender offer that would increase the person's stock ownership to more than
20% of our outstanding common stock to make a tender offer for all of our
common stock. These provisions could prevent you from realizing the premium
return that stockholders may realize in conjunction with corporate takeovers.
You will still be subject to this risk even after we change the place of our
incorporation to the Yukon Territory.
In addition, our Articles provide for three classes of directors, with
one-third elected each year for a three year term. These provisions may have
the effect of delaying or preventing a corporate takeover or a change in our
management. This could adversely affect the market price of your common
stock.
MARKET PRICE OF OUR STOCK MAY FALL IF OTHER STOCKHOLDERS SELL THEIR STOCK
If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could fall. Such sales also might make it more difficult for us to sell
equity or equity-related securities in the future at a price we deem
appropriate.
As of February 12, 1999 and before this offering, we have 19,739,647
shares of common stock outstanding. Of these shares, approximately
18,550,000 shares are eligible for sale in the public market. An
undetermined number of shares may be issued as part of this offering.
5
<PAGE>
THE VALUE OF YOUR COMMON STOCK MAY DECREASE IF OTHER SECURITY HOLDERS
EXERCISE THEIR OPTIONS AND WARRANTS OR CONVERT THEIR DEBT INTO COMMON STOCK
As shown in the table below, we have reserved an additional 3,126,291
shares of common stock for future issuance upon exercise or conversion of
outstanding options, redeemable warrants and convertible debt.
<TABLE>
<CAPTION>
Weighted Average Shares Reserved
Range of Exercise/ Exercise/ for Future
Conversion Prices Conversion Price Issuance
------------------ ---------------- ---------------
<S> <C> <C> <C>
Options $3.69 - $8.88 $5.26 2,808,162
Redeemable Warrants $15.78 - $27.81 $21.33 154,864
Convertible Debt $6.125 $6.125 163,265
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Total 3,126,291
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</TABLE>
We plan to issue additional options and warrants in the future. If any of
these securities are exercised or converted, you may experience significant
dilution in the market value and earnings per share of your common stock.
IF WE ARE UNABLE TO RAISE NEEDED FUNDS, YOUR INVESTMENT COULD BE ADVERSELY
AFFECTED
We believe that the proceeds from this offering and existing revenues
will be sufficient to meet our cash requirements for the next 12 months.
However, we may be unable to raise the total amount of proceeds covered by
this prospectus. Furthermore, we may have unforeseen problems in obtaining
government approval and commercial acceptance of The Heart Laser System or we
may incur unanticipated decreases in operating revenues or increases in
expenses. Any of these events may adversely impact our capital resources,
requiring us to raise additional funds to finance continued research and
development, production, and sales efforts. In such an event, we will need
to obtain financing through sale of debt or equity securities, bank
financing, joint ventures or other means. We may not be able to raise
additional capital upon satisfactory terms and our business, financial
condition and results of operations could be materially and adversely
affected.
WE HAVE NO INTENTION TO PAY DIVIDENDS
We have never paid any cash dividends on our common stock. We currently
intend to retain all future earnings, if any, for use in our business and do
not expect to pay any dividends in the foreseeable future.
THE YEAR 2000 PROBLEM COULD CAUSE US TO EXPERIENCE MANUFACTURING DELAYS
The Year 2000 problem is the result of computer programs that use two
digits rather than four to define the applicable year. On January 1, 2000,
computer equipment and programs that have time-sensitive software may not be
able to distinguish whether "00" means 1900 or 2000. This could cause a
major system failure or could create erroneous results. We could be unable
to process transactions, send invoices, or engage in similar business
activities. We may also be vulnerable to other companies' Year 2000 issues.
In the last two months, we formed a task force to determine what if any
Year 2000 compliance issues we face. The task force has developed and
implemented a Year 2000 readiness plan that defines compliance and sets
critical milestones to identify any deficiencies and correct them. We
identified three basic operational areas that have been and will continue to
be examined:
- Products -- products we sell, products we have sold previously, and
products of our most significant suppliers;
6
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- Business Systems -- computer hardware and software we use to operate
our business, including purchasing, manufacturing, sales and finance;
and
- Peripherals -- our telephone, e-mail, security and shipping systems.
In 1998, we tested The Heart Laser System and believe that it is Year
2000 compliant. In addition, we spent approximately $200,000 on new
enterprise resource planning system software that the vendor has represented
is Year 2000 compliant. This new software system replaced substantially all
of our previous financial software system. Our current estimates of the
impact of the Year 2000 problem on our operations and financial results do
not include costs and time that may be incurred as a result of our vendors'
or customers' failure to become Year 2000 compliant.
Despite investigation and testing by us and our business partners, our
products may contain errors or defects associated with Year 2000 date
functions. We believe that our new enterprise resource planning software
substantially addresses our material Year 2000 risks; however, we are
continuing to test our secondary systems and continuing to investigate third
party compliance efforts. On a worst case scenario, known and unknown errors
and defects that affect the operation of our products or software could
result in:
- delay or loss of revenue;
- cancellation of customer contracts;
- diversion of product development resources;
- damage to our reputation; and
- increased service, warranty and litigation costs.
Furthermore, we have not developed a Year 2000 contingency plan to
address any failure of our Year 2000 compliance review to identify and
correct significant Year 2000 risks. Development of contingency plans is in
progress and will continue during calendar year 1999. Such plans could
include stockpiling inventory parts and raw materials, accelerating
replacement of affected equipment or software, using back-up equipment and
software, developing temporary manual procedures to compensate for system
deficiencies, and identifying alternative Year 2000 capable suppliers. We
cannot be sure that our contingency plans will adequately address the year
2000 problem. Any of these occurrences could have a material adverse effect
on our business, financial condition and results of operations.
OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
FORWARD-LOOKING STATEMENTS
This prospectus and information incorporated by reference contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements deal with our current plans and
expectations and involve known and unknown risks and uncertainties.
Statements containing terms such as:
- believes
- does not believe
- plans
- expects
- intends
- estimates
- anticipates
and other phrases of similar meaning are considered to contain uncertainty and
are forward-looking statements.
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No forward-looking statement is a guarantee of future performance. Our
actual results could differ materially from those anticipated in these
forward-looking statements. We make cautionary statements in certain
sections of this prospectus, including in the risk factors identified above,
and in materials incorporated by reference into this prospectus. You should
read these cautionary statements as being applicable to all related
forward-looking statements, wherever they appear in this prospectus, in the
materials referred to in this prospectus, in the materials incorporated by
reference into this prospectus, or in our press releases. You should not
place undue reliance on any forward-looking statement.
HIGHLIGHTS OF OUR COMPANY
OUR PRINCIPAL PRODUCT -- THE HEART LASER SYSTEM
We believe that The Heart Laser System may:
- be used to treat patients who cannot be helped by conventional
treatments;
- provide an additional or alternative therapy to conventional
treatments of coronary artery disease, such as coronary artery bypass
graft surgery and balloon angioplasty; and
- lead to lower treatment costs, decreased hospital stays, quicker
recovery, reduced trauma and side effects, and improved quality of
life for patients who suffer from severe heart disease.
HOW THE HEART LASER SYSTEM WORKS
TMR procedures, performed with The Heart Laser System, create new
channels in the heart. These channels are believed to permit oxygenated
blood to flow from the inside of the heart to areas of the heart muscle that
are not fully functional because of coronary artery disease. Through a small
incision between a patient's ribs, a heart surgeon uses The Heart Laser
System to make 20 to 40 tiny channels from the outside of the heart muscle
into the cavity of the heart holding oxygenated blood. Because we designed
The Heart Laser System to be used on a beating heart, it does not require the
use of a heart-lung machine or a blood transfusion. The Heart Laser System
also utilizes patented technology to synchronize the firing of the laser with
the patient's heartbeat. The laser fires when the heart is relatively still,
reducing the risk of harm that has occurred when TMR procedures are performed
without synchronization.
OUR PRODUCT AND SURGICAL PROCESS ARE PATENTED
Since April 1992, we have received 17 United States patents, including
12 which relate to TMR procedures performed with The Heart Laser System and
related technologies. Twelve additional United States patent applications
are pending. We have also received eight patents internationally and have a
number of patent applications pending in international patent offices. We
expect to continue to file domestic and foreign patent applications on
various enhancements of The Heart Laser System.
GENERAL INFORMATION AND WEB SITE ADDRESS
We incorporated pursuant to the Company Act of British Columbia, Canada
on March 3, 1987. Our principal offices are located at 10 Forge Park,
Franklin, Massachusetts 02038. Our telephone number is (508) 541-8800. For
more information, please refer to our web site at www.plcmed.com.
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<PAGE>
RECENT DEVELOPMENTS
FAVORABLE SETTLEMENT OF PATENT LITIGATION
In January 1999, we settled all outstanding litigation between our
company and a competitor. Under the settlement, CardioGenesis Corporation
agreed that patents covering our heart-synchronized laser system are valid
and enforceable. The United States patent and related international patents
cover our synchronization technology, a critical factor in ensuring the
safety of TMR procedures. As part of the settlement, CardioGenesis must pay:
- a minimum of $2.5 million to us over the next 42 months; and
- so long as the patents remain valid, license fees and ongoing
royalties through at least 2009.
INSURANCE REIMBURSEMENT OF TMR PROCEDURES
HCFA RECOMMENDS MEDICARE COVERAGE FOR TMR PROCEDURES
On January 26, 1998, the Health Care Financing Administration (HCFA)
released a draft decision memorandum recommending that Medicare provide
coverage for TMR procedures performed with FDA approved devices. The Heart
Laser System is the only device that has obtained FDA approval for commercial
use. Although HCFA's recommendation is a significant step that will lead to
Medicare reimbursement of TMR procedures, there may be a delay before
hospitals and other health care providers actually receive reimbursement for
TMR procedures. Moreover, there is no assurance that Medicare reimbursement,
when provided, will be adequate to cover the cost of TMR procedures.
BLUE CROSS/BLUE SHIELD PASSES FAVORABLE TECHNOLOGY REVIEW FOR TMR
PROCEDURES
On January 25, 1999, Blue Cross and Blue Shield Association's Technology
Evaluation Center completed a favorable assessment of TMR procedures.
Although the Blue Cross and Blue Shield finding does not guarantee
reimbursement by third-party payers, it is a significant step that could
eventually lead to reimbursement of TMR procedures by third-party payers.
USE OF PROCEEDS
We plan to use the net proceeds from the sale of the common stock for
general corporate purposes, including working capital, capital expenditures
and the repayment or refinancing of debt. Each time we sell the common
stock, we will provide a prospectus supplement that will contain information
about how we intend to use the net proceeds from the common stock sold at
that time.
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
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<PAGE>
Regardless of the method used to sell the common stock, we will provide
a prospectus supplement that will disclose:
- the identity of any underwriters, dealers, agents or institutional
investors who purchase the common stock;
- the material terms of the distribution, including the number of shares
sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be
received by the underwriters, dealers, or agents;
- the terms of any indemnification provisions, including indemnification
from liabilities under the federal securities laws; and
- the nature of any transaction by an underwriter, dealer or agent
during the offering that is intended to stabilize or maintain the
market price of the common stock.
LEGAL MATTERS
Certain legal matters with respect to the common stock offered hereby
will be passed upon for us by Brownstein Hyatt Farber & Strickland, P.C. of
Denver, Colorado, and DuMoulin Black of Vancouver, British Columbia.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K
for the year ended December 31, 1997, as set forth in their report, which is
incorporated in this prospectus by reference. Our consolidated financial
statements are incorporated by reference in reliance on their report, given
on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public
over the internet at the SEC's web site at www.sec.gov. You may also read
and copy any document we file at the SEC's Public Reference Rooms in
Washington, D.C., New York, New York and Chicago, Illinois. The Public
Reference Room in Washington, D.C. is located at 450 Fifth Street, N.W.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Rooms.
Our common stock is listed on the American Stock Exchange, 86 Trinity
Place, New York, New York 10006. Reports, proxy statements and other
information concerning our Company can be reviewed at the American Stock
Exchange.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the common stock:
- Annual Report on Form 10-K for the year ended December 31, 1997;
10
<PAGE>
- Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 1998;
- Current Reports on Form 8-K, filed August 21, and January 13, 25, and
26, 1999; and
- The description of our common stock contained in our registration
statement on Form 8-A, filed August 21, 1992, and amended September 11
and October 19, 1992.
We have also filed a registration statement on Form S-3 with the SEC under
the Securities Act of 1933. This prospectus does not contain all of the
information set forth in the registration statement. You should read the
registration statement for further information about our company and the
common stock. You may request a copy of these filings at no cost. Please
direct your requests to:
Jennifer Miller, Esq.
General Counsel
PLC Systems Inc.
10 Forge Park
Franklin, Massachusetts 02038
(508) 541-8800
You may also want to refer to our web site at www.plcmed.com.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of the common stock in any state where the offer is not
permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on
the front page of those documents.
11
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
Risk Factors.. . . . . . . . . . . . . . . . . . . . . . . 2
Highlights of Our Company. . . . . . . . . . . . . . . . . 8
Recent Developments. . . . . . . . . . . . . . . . . . . . 9
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . 9
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . 10
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Where You Can Find More Information. . . . . . . . . . . . 10
</TABLE>
COMMON STOCK,
NO PAR VALUE
PLC SYSTEMS INC.
PROSPECTUS
FEBRUARY 16, 1999
