As filed with the Securities and Exchange Commission on January 11, 1999
Registration No.
----------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PALOMAR MEDICAL TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
04-3128178
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(IRS employer identification number)
45 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02421-3102 (781) 676-7300
----------------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Sarah Burgess Reed
General Counsel
Palomar Medical Technologies, Inc.
45 Hartwell Avenue
Lexington, Massachusetts 02421-3102
(781) 676-7300
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
from time to time after the effective date of this Registration statement as
determined by market conditions.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
______________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ______________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C> <C>
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Title of Shares Amount to be Proposed Proposed
to be Registered Registered Maximum Maximum Amount of
Offering Price Aggregate Registration
Per Share Offering Price Fee
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Common Stock, par value $.01 3,000,000 $.84375(2) $2,531,250(2) $767(2)
per share.
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
Common Stock, par value $.01 3,000,000 $3.00(2) $9,000,000(2) $2,727(2)
per share.
- -------------------------------- ----------------- -------------------- ----------------- ---------------------
</TABLE>
(1) Consists of (i) 3,000,000 shares of common stock and (ii) 3,000,000
shares of common stock issuable upon exercise of warrants, all of which
were issued in connection with a Securities Purchase Agreement dated
July 24, 1998 and are exercisable at prices and terms described in the
Description of Capital Stock and Warrants section of the Prospectus.
(2) Estimated solely for purposes of calculation of the fee. The fee for
the warrants is estimated pursuant to Rule 457(g) under the Act on the
basis of the exercise price. The fee for the common stock is estimated
pursuant to Rule 457(c) under the Act on the basis of the average of
the high and low sale prices reported on the Nasdaq SmallCap Market on
January 8, 1999. The Registrant has previously paid the aggregate
filing fee of $3,594.
Pursuant to Rule 416, there are also registered hereby such additional
indeterminate number of shares of such common stock as may become issuable or to
prevent dilution resulting from stock splits, stock dividends or similar
transactions as set forth in the terms of the warrants referred to above.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities, and the selling stockholders are
not soliciting offers to buy these securities, in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 11, 1999
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PROSPECTUS
PALOMAR MEDICAL TECHNOLOGIES, INC.
6,000,000 shares of common stock
consisting of:
(i) 3,000,000 shares of common stock and
(ii) 3,000,000 shares of common stock issuable upon exercise of
common stock purchase warrants.
This prospectus relates to the offer and sale of 6,000,000 shares of
common stock of Palomar Medical Technologies, Inc., a Delaware corporation,
consisting of: (i) 3,000,000 shares of common stock and (ii) 3,000,000 shares of
common stock issuable upon the exercise of certain common stock purchase
warrants, all of which were issued in connection with a Securities Purchase
Agreement dated July 24, 1998. All of the shares being registered may be offered
and sold from time to time by certain of our stockholders. (See "Selling
Stockholders" and "Plan of Distribution.") We will not receive any proceeds from
the sale of such shares, other than the $9,000,000 representing the exercise
price of the warrants. We have agreed to indemnify the selling stockholders
against certain liabilities, including certain liabilities under the Securities
Act of 1933, as amended, or to contribute to payments which such selling
stockholders may be required to make in respect of such liabilities.
Our common stock, $.01 par value per share, is listed on the National
Association of Securities Dealers Automated Quotation System and traded on the
Nasdaq SmallCap Market under the symbol "PMTI." The last reported bid price of
our common stock on the Nasdaq SmallCap Market on January 8, 1999 was $.8125 per
share.
AN INVESTMENT IN THESE SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "DISCLOSURE
REGARDING FORWARD LOOKING STATEMENTS/RISK FACTORS" BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
JANUARY 11, 1998.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
NEITHER WE NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING
STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON
STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. IN THIS
PROSPECTUS, REFERENCES TO "WE," "US" AND "OUR" REFER TO PALOMAR MEDICAL
TECHNOLOGIES, INC. AND ITS SUBSIDIARIES.
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TABLE OF CONTENTS
PAGE
Prospectus Summary............................................................5
Disclosure Regarding Forward-Looking Statements/Risk Factors .................8
Selling Stockholders ........................................................12
Use of Proceeds..............................................................13
Plan of Distribution ........................................................13
Experts......................................................................13
Legal Matters................................................................14
Material Changes.............................................................14
Where You Can Find More Information .........................................19
Disclosure of Commission Position on Indemnification.........................20
It is anticipated that the selling stockholders will pay usual and
customary brokerage fees on the sale of the common stock registered in this
prospectus. We will pay the other expenses of this offering. The offer of shares
of common stock by the selling stockholders as described in this prospectus is
referred to as the "OFFERING."
<TABLE>
<S> <C> <C> <C>
- ---------------------------- -------------------------- ---------------------------- ----------------------------
PRICE TO PUBLIC Underwriting Discounts and Proceeds to Issuer or
Commissions Other Persons
- ---------------------------- -------------------------- ---------------------------- ----------------------------
Per Unit..................... .8125(1) 0(2) $.8125(1)(3)
Total....................... $4,875,000(1) 0(2) $4,875,000(1)(3)
- ---------------------------- -------------------------- ---------------------------- ----------------------------
</TABLE>
(1) Based on the closing bid price of the Company's common stock as reported on
the Nasdaq SmallCap Market on January 8, 1999.
(2) None, to the Company's knowledge.
(3) Less usual and customary brokerage fees.
The date of this Prospectus is ____________, 1999.
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PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the
information that may be important to you. You should read the entire prospectus,
including "Disclosure Regarding Forward-Looking Statements/Risk Factors" and the
information incorporated by reference, before deciding to invest in shares
offered by this prospectus.
THE COMPANY
BACKGROUND.................. The Company was organized to design, manufacture
and market lasers, delivery systems and related
disposable products for use in medical
procedures. After a period of rapid growth and
expansion in which we acquired and invested in a
number of businesses, many of which were outside
our core laser business, within the last year
and a half we have refocused on our core
competency and divested those non-core
subsidiaries and investments. At this point in
time, our exclusive focus is laser hair removal
and research and development relating to that
and other cosmetic laser products. In addition
to manufacturing lasers for hair removal, as a
small part of our operations we place our lasers
in clinical and cosmetic settings, and receive
in exchange a share of the revenue generated
from the laser hair removal procedures.
OUR PRODUCTS................ We have three lasers that have been cleared by
the FDA for hair removal in addition to other
dermatological applications. The first, our
EpiLaser(R)hair removal system, is based in part
on ruby laser technology originally developed in
our corporate headquarters in Massachusetts for
tattoo and pigmented lesion removal. (We still
manufacture and sell in small quantities a laser
cleared by the FDA for the removal of tattoos
and benign pigmented lesions.) The EpiLaser(R)
is specifically configured to allow the
appropriate wavelength, energy and pulse
duration to be delivered to the hair follicle
without energy being absorbed by the surrounding
tissue. That delivery method, combined with our
patented cooling handpiece, allows safe and
effective hair removal. The EpiLaser(R)is the
only hair removal laser on the market that has
been cleared by the FDA for "permanent hair
reduction" labeling. The EpiLaser(R)is
manufactured at our headquarters in
Massachusetts.
Our second FDA cleared hair removal laser, the
LightSheer(TM) diode hair removal laser, is
based on diode technology developed at our Star
Medical Technologies, Inc. subsidiary in
California. The LightSheer(TM) is manufactured
at Star, In California. The LightSheer(TM) is
the only diode-based haIr removal product on the
market that has FDA clearance.
PENDING SALE OF STAR........ The laser diode stacking technology used in the
LightSheer(TM) laser has wide applications
across a variety of commercial, industrial and
medical lasers, applications which Palomar, as a
narrowly focused cosmetic laser company, does
not utilize. This technology, however, has
enormous value to our exclusive distributor,
Coherent, Inc. (also located in California)
which does manufacture a wide variety of lasers
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- medical, commercial and industrial. As a
result, Coherent has entered into an agreement
with us to buy Star for $65 million in cash. The
sale must still be approved by our stockholders
and by the Federal Trade Commission, and thus we
expect that it may take an additional two to
three months to consummate the transaction. As
part of the deal, Coherent has agreed to pay us
an ongoing 7.5% royalty on future sales of its
hair removal lasers. Thus, although the
LightSheer(TM)diode laser will no longer be in
the Palomar family of products after the sale of
Star, Palomar will continue to receive an
ongoing royalty on sales of that product.
OUR FUTURE STRATEGY......... Assuming the sale of Star to Coherent is
completed, we will continue to manufacture and
develop cosmetic lasers at our Massachusetts
facility. We have recently introduced our second
generation ruby laser, the E2000(TM), a product
which We anticipate will be superior to hair
removal lasers currently on the market in a
number of respects, including speed and
efficacy. We will consider a number of
alternatives with respect to our future
products, including manufacturing them ourselves
and selling them directly and/or through
distributors or (as in the case of Star) selling
the product line and/or technology to others. We
will continue to choose the alternative in each
case which we believe best maximizes long-term
shareholder value. If Star is sold to Coherent,
Coherent will continue to act as a distributor
of our products, but on a non-exclusive basis.
Our core research and development also takes
place in Massachusetts, under the guidance of a
team of scientists who work closely with our
partners at Massachusetts General Hospital and
the Institute of Fine Mechanics and Optics Laser
Center in St. Petersburg, Russia. Among our
research and development goals in the field of
laser hair removal is to design systems that 1)
permit more rapid treatment of large areas, 2)
have high gross margins, and 3) are lower cost,
thus addressing broader markets. We are also
seeking to develop products that address
dermatology and cosmetic procedures markets
other than hair removal.
To enhance shareholder value and increase
revenues, we will also consider licensing our
intellectual property (in particular, the
patents licensed exclusively to us by
Massachusetts General Hospital under which we
practice our proprietary method of skin cooling
and hair removal), selling intellectual property
rights that we do not intend to exploit, and
mergers, acquisitions or other transactions.
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THE OFFERING
SECURITIES OFFERED.......... 6,000,000 shares of our common stock, $.01 par
value per share. The actual number of shares
offered by this prospectus, and included in the
registration statement of which this prospectus
is a part, includes such additional shares of
common stock as may be issuable by reason of any
stock split, stock dividend or similar
transaction involving the common stock, in order
to prevent dilution, in accordance with Rule 416
under the Securities Act of 1933.
OFFERING PRICE.............. All or part of the shares offered hereby may be
sold from time to time in amounts and on terms
to be determined by the selling stockholders at
the time of sale.
USE OF PROCEEDS............. We will receive no part of the proceeds from the
sale of the shares registered in this
registration statement, other than the
$9,000,000 representing the exercise price of
the warrants.
SELLING STOCKHOLDERS........ The shares may be offered for sale from time to
time by the selling stockholders specified under
the caption "selling stockholders."
NASDAQ TRADING SYMBOL....... PMTI
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<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS/RISK FACTORS
An investment in shares of our common stock is risky. You should
consider carefully the following risk factors in addition to the remainder of
this prospectus, including information incorporated by reference, before
purchasing shares offered by this prospectus.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "continue" and similar words. You should
read statements that contain these words carefully because they (1) discuss our
future expectations, (2) contain projections of our future operating results or
financial conditions or (3) state other "forward-looking" information. We
believe it is important to communicate certain of our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed in this section, as well as any other cautionary language in this
prospectus, provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of any of the events described in these risk factors
and elsewhere in this prospectus could have a material adverse effect on our
business, financial condition and results of operations. In such case, the
trading price of our commons tock could decline and you could lose all or part
of your investment.
WE MAY NOT BE ABLE TO CLOSE THE SALE OF OUR STAR MEDICAL TECHNOLOGIES, INC.
SUBSIDIARY
We have recently signed an agreement with Coherent, Inc. in which
Coherent has agreed to buy our Star Medical Technologies, Inc. subsidiary for 65
million dollars in cash. The sale must be approved by stockholders holding a
majority of the shares of our outstanding common stock, and is subject to
regulatory approval and other standard closing conditions. We may not receive a
sufficient number of stockholder votes to approve the transaction, or the
transaction may fail to close for other reasons. Our future operating plan is
now to a great extent dependant on completing the sale, in that it will provide
us with the money necessary to finance our future operations, including research
and product development.
WE MAY BE DELISTED FROM NASDAQ
We have been notified by the Nasdaq Stock Market that for continued
listing on the Nasdaq SmallCap Market we must meet Nasdaq's minimum bid price of
$1.00 per share. Because our stock price fell below $1.00 for a 30 day trading
period between August 28 and October 9, 1998, it is now subject to delisting.
Nasdaq informed us that we have until January 13, 1999 to regain compliance with
the $1.00 minimum bid price requirement We have not and will not be able to
regain compliance before that date. However, we have requested a hearing and
have been informed that the delisting of our common stock will be stayed during
the pendency of our appeal. To regain compliance with the minimum bid price
requirement, we plan to ask our stockholders to approve a ten-for-one reverse
split of our common stock. However, there can be no assurance that we would
secure stockholder approval for any reverse split, or that, even if stockholder
approval is obtained, a reverse split will enable us to regain compliance with
the minimum bid price requirement in time to prevent delisting. The delisting of
our common stock would likely reduce the liquidity of our common stock and our
ability to raise capital. If our common stock is delisted from the Nasdaq
SmallCap Market, it will likely be quoted on the "pink sheets" maintained by the
National Quotation Bureau, Inc. or Nasdaq's OTC Bulletin Board. These listings
can make trading more difficult for stockholders. In addition, a reverse split
itself could adversely impact the market price of our common stock.
WE WILL CONTINUE TO BE DEPENDENT ON COHERENT IF WE DO NOT SELL STAR
Under our sales agency agreement with Coherent, which will remain in
effect until November, 2001 if we do not sell Star to Coherent, Coherent
receives a marketing and sales commission, based on the end-user price, for each
of our lasers that it sells. If Coherent remains as our exclusive distributor
because we do not close the Star sale, Coherent may not be successful in
distributing our lasers or may not give sufficient priority to marketing our
products. In addition, Coherent may develop, market and manufacture its own
lasers that incorporate our proprietary technology and
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compete with our lasers, in which case it must pay us a royalty on such sales.
Under our agreement, if we are unable (as defined in the agreement) or unwilling
to manufacture the cosmetic laser products to be distributed by Coherent, then
we must license to Coherent the technology necessary to make such products.
WE NEED TO DEVELOP NEW PRODUCTS
We face rapidly changing technology and continuing improvements in
cosmetic laser technology. In order to be successful, we must continue to make
significant investments in research and development in order to (a) develop in a
timely and cost-effective manner new products that meet changing market demands,
(b) enhance existing products and (c) achieve market acceptance for such
products. We have in the past experienced delays in developing new products and
enhancing existing products. If we sell our Star subsidiary, our future revenue
will be entirely dependent on sales of newly introduced products. Although we
have recently introduced a new hair removal laser, it may not achieve market
acceptance or generate sufficient margins. In addition, the market for this type
of hair removal laser may already be saturated. At present, broad market
acceptance of laser hair removal is critical to our success. We need to
diversify our product line by developing cosmetic laser products other than hair
removal lasers.
WE FACE INTENSE COMPETITION FROM COMPANIES WITH SUPERIOR FINANCIAL, MARKETING
AND OTHER RESOURCES
The laser hair removal industry is highly competitive and is
characterized by the frequent introduction of new products. We compete in the
development, manufacture, marketing and servicing of hair removal lasers with
numerous other companies, many of which have substantially greater financial,
marketing and other resources than we do. As a result, some of our competitors
are able to sell hair removal lasers at prices significantly below the prices at
which we sell our hair removal lasers. In addition, if and when we sell Star,
our current distributor, Coherent, one of the largest and best financed laser
companies, will become our competitor, and we will have to find new ways to
distribute our products. Our laser products also face competition from
alternative medical products and procedures, such as electrolysis and waxing,
among others. We may not be able to differentiate our products from the products
of our competitors, and customers may not consider our products to be superior
to competing products or medical procedures, especially if competitive products
and procedures are offered at lower prices. Our competitors may develop products
or new technologies that make our products obsolete or less competitive.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
Our operating results are difficult to predict and may fluctuate
significantly from quarter to quarter, especially if we sell our Star
subsidiary. Almost all of our revenues in our most recent quarter were
attributable to sales of the LightSheer(TM) diode laser manufactured by Star. If
our operating results fall belOw the expectations of investors or public market
analysts, the price of our common stock could fall dramatically.
WE MAY NEED TO SECURE ADDITIONAL FINANCING, AND OUR AUDITORS HAVE EXPRESSED
DOUBT ABOUT OUR ABILITY TO CONTINUE AS GOING CONCERN
We have a history of losses. As a result, the report of our independent
public accountants in connection with our Consolidated Balance Sheets as of
December 31, 1997 and 1996, and the related Consolidated Statements of
Operations, Stockholders' Equity (Deficit) and Cash Flows for the three years
ended December 31, 1997 includes an explanatory paragraph stating that our
recurring losses, working capital deficiency and stockholders' deficit raises
substantial doubts about our ability to continue as a going concern. If we do
not sell our Star subsidiary, we may have to secure additional financing to
complete our research and development activities, commercialize our current and
proposed cosmetic laser products, and fund ongoing operations. We may also
determine, depending upon the opportunities available, to seek additional debt
or equity financing to fund the costs of acquisitions or expansion. To the
extent that we finance an acquisition with a combination of cash and equity
securities, any such issuance of equity securities could result in dilution to
the interests of our stockholders. Additionally, to the extent that we incur
indebtedness to fund increased levels of accounts receivable or to finance the
acquisition of capital equipment or issues debt securities in connection with
any acquisition, we will be subject to risks associated with incurring
substantial additional indebtedness, including the risks that interest rates may
fluctuate and cash flow may be insufficient to pay principal and interest on any
such indebtedness.
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WE ARE SUBJECT TO NUMEROUS GOVERNMENT REGULATIONS
We are subject to regulation in the United States and abroad. Failure to
comply with applicable regulatory requirements can result in fines, denial or
suspension of approvals, seizures or recall of products, operating restrictions
and criminal prosecutions. All laser medical devices are subject to FDA
regulations regulating clinical testing, manufacture, labeling, sale,
distribution and promotion of medical devices. Before a new device can be
introduced into the market, we must obtain clearance from the FDA. Compliance
with the FDA clearance process is expensive and time-consuming, and there is no
assurance that we will be able to obtain such clearances timely or at all. The
FDA also imposes various requirements on manufacturers and sellers of products
under its jurisdiction, such as labeling, good manufacturing practices, record
keeping and reporting requirements. In order to be sold outside the United
States, our products are subject to FDA permit requirements that are conditioned
upon clearance by the importing country's appropriate regulatory authorities.
Many countries also require that imported products comply with their own or
international electrical and safety standards. Additional approvals may be
required in other countries.
WE ARE DEPENDENT ON THIRD PARTY RESEARCHERS
We are substantially dependent upon third party researchers, over whom
we do not have absolute control, to satisfactorily conduct and complete research
on our behalf and to grant us favorable licensing terms for products which they
may develop. At present, our principal research partner is the Wellman Labs at
Massachusetts General Hospital. We provide research funding, laser technology
and optics know-how in return for licensing agreements with respect to specific
medical applications and patents. Our success will be highly dependent upon the
results of the research, and there can be no assurance that such research
agreements will provide us with marketable products in the future or that any of
the products developed under these agreements will be profitable for us.
OUR COMMON STOCK COULD BE FURTHER DILUTED AS THE RESULT OF OUR ISSUING
CONVERTIBLE SECURITIES, WARRANTS AND OPTIONS
In the past, we have issued convertible securities (such as debentures
and preferred stock) and warrants in order to raise money. We have also issued
options and warrants as compensation for services and incentive compensation for
our employees and directors. We have a substantial number of shares of common
stock reserved for issuance upon the conversion and/or exercise of these
securities. The issuance of any such additional convertible securities, options
and warrants could affect the rights of the holders of common shares, and could
reduce the market price of the common shares.
WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS
We face an inherent business risk of financial exposure to product
liability claims in the event that use of our products results in personal
injury. Our products are and will continue to be designed with numerous safety
features, but it is possible that patients could be adversely affected by use of
one of our products. Further, in the event that any of our products prove to be
defective, we may be required to recall and redesign such products. Although we
have not experienced any material losses due to product liability claims to
date, there can be no assurance that we will not experience such losses in the
future.
OUR PROPRIETARY TECHNOLOGY IS SUBJECT TO LIMITED PROTECTIONS
Our business could be materially and adversely affected if we are not
able to protect adequately our proprietary intellectual property rights. We rely
on a combination of patent, trademark and trade secret laws, license and
confidentiality agreements to protect our proprietary rights. We generally enter
into non-disclosure agreements with our employees and customers and restrict
access to, and distribution of, our proprietary information. Nevertheless, we
may be unable to deter misappropriation of our proprietary information, detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights. Our competitors also may independently develop technologies that are
substantially equivalent or superior to our technology. Although we believe that
our services and products do not infringe on the intellectual property rights of
others, we cannot prevent someone else from asserting a
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claim against us in the future for violating their intellectual property rights.
In addition, costly and time consuming litigation may be necessary to enforce
patents issued or licensed exclusively to us, to protect our trade secrets
and/or know-how or to determine the enforceability, scope and validity of
others' intellectual property rights.
OUR PRODUCTS, SERVICES AND SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT
Many existing computer systems and software applications use only two
digits to identify a year in the date field. These systems and applications were
designed and developed without considering the impact of the upcoming change in
the century. If not corrected, year 2000 problems may cause many computer
applications to fail or create erroneous results for calculations involving
years after 1999.
We are using internal resources to identify, correct or reprogram, and
test our systems for year 2000 compliance. We currently are evaluating the
readiness of those of our internal systems that are business-critical. We
consider hardware, software, systems, technologies and applications to be
"business-critical" if a failure would either have a material adverse impact on
our business or involve a safety risk to our employees or customers. We have
reviewed certain of our internal systems and future system plans to assess year
2000 compliance. We expect that our internal system development plans will
address the year 2000 issue and will correct any existing non-compliant systems
without the need to accelerate the overall information systems implementation
plans. Our business would be adversely affected if there are unidentified
dependencies on internal systems to operate the business, or if any required
modifications are not completed on a timely basis or are more costly to
implement than currently anticipated. We are in the process of assessing the
year 2000 compliance costs; based on information to date (excluding the possible
impact of vendor systems), we do not believe that it will have a material effect
on our earnings.
In addition, there can be no assurance that the systems of other
companies on which our systems rely will also be converted in a timely manner or
that any such failure to convert by another company would not have an adverse
effect on our systems.
OUR ANTI-TAKEOVER PROVISIONS MAY DISCOURAGE POTENTIAL TAKEOVER ATTEMPTS
Certain provisions of our Second Restated Certificate of Incorporation
and Delaware law could be used by our incumbent management to make it more
difficult for a third party to acquire control of us, even if the change in
control might be beneficial to our stockholders. This could discourage potential
takeover attempts and could adversely affect the market price of our common
stock.
In particular, we may issue preferred stock in the future without
stockholder approval, upon terms determined by our board of directors. The
rights of holders of our common stock would be subject to, and may be adversely
affected by, the rights of holders of any preferred stock issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of our outstanding stock.
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SELLING STOCKHOLDERS
All of the shares of common stock are being sold by the selling
stockholders identified in the following table (including the footnotes). The
table lists, in each case as of December 22, 1998:
1. the name of each selling stockholder;
2. the number of shares each selling stockholder beneficially
owns;
3. how many shares of common stock the selling stockholder may
resell under this prospectus; and
4. assuming each selling stockholder sells all the share listed
next to its name, the number of shares each selling
stockholder will beneficially own after completion of the
offering.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by the notes to the
following table, we believe that the selling stockholders listed below have sole
voting power and investment power over the shares beneficially held by them,
subject to community property laws where applicable. To the best of our
knowledge, except as stated in this prospectus, the selling stockholders have
not held any office or maintained any material relationship with us or any of
our predecessors or affiliates over the past three years. The selling
stockholders may reduce the number of shares offered for sale or decline to sell
any or all of the shares registered in the prospectus
No predictions can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sales, will have on the
market price of the common stock prevailing from time to time. Sales of
substantial amounts of common stock (including shares issued upon the exercise
of stock options or warrants), or the perception that such sales could occur,
could adversely affect prevailing market prices for the common stock.
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Number Shares to be
of Shares Beneficially of Beneficially Owned
Owned Prior Shares After Offering If
Selling to Offering(1) Offered All Shares Sold
STOCKHOLDERS NUMBER PERCENT NUMBER PERCENT
- -------------------------------------------------------------------------------------------------------------------
Rockside Foundation(2) 9,330,800 13.5% 3,600,000 5,730,800 8.3%
c/o Woodlawn Foundation, Inc.
524 North Avenue
New Rochelle, NY 10801
Mark T. Smith(3) 9,330,800 13.5% 2,400,000 6,930,800 10.0%
5090 Warwick Tr.
Pittsburgh, PA 15213
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Under the rules of the Securities and Exchange Commission, shares of
common stock which an individual or group has a right to acquire within
60 days by exercising options or warrants are counted as outstanding
for the purpose of computing the ownership of such individual or group.
Percentage of beneficial ownership is based on 69,265,003 shares of
common stock outstanding as of January 8, 1999.
2. Based on information provided in Amendment No. 1 to a Schedule 13D,
filed on December 22, 1998. Includes 3,922,200 shares beneficially
owned with respect to which the Rockside Foundation shares voting and
dispositive power with four other individuals and entities. Also
includes 3,000,000 shares of common stock beneficially owned which may
be acquired within 60 days upon the exercise of warrants.
12
<PAGE>
3. Based on information provided in Amendment No. 1 to a Schedule 13D,
filed on December 22, 1998. Includes 6,288,900 shares beneficially
owned with respect to which Mark T. Smith shares voting and dispositive
power with four other individuals and entities. Also includes 3,000,000
shares of common stock beneficially owned which may be acquired within
60 days upon the exercise of warrants.
USE OF PROCEEDS
The common stock is being sold by the selling stockholders for their
own accounts, and we will not receive any of the proceeds from the sale of the
selling stockholders' common stock or warrants other than $9,000,000
representing the exercise price of the warrants.
PLAN OF DISTRIBUTION
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may from time to time offer shares
of our common stock registered in this registration statement, depending on
market conditions and other factors, in one or more transactions on Nasdaq or
other securities exchanges on which our common stock is traded, in the over the
counter market or otherwise, at market prices prevailing at the time of sale, at
negotiated prices or at fixed prices. The selling stockholders also may sell
such shares through the sale and exercise of warrants. Common stock may be
offered in any manner permitted by law, including through underwriters, licensed
brokers, dealers or agents, and directly to one or more purchasers.
Sales of common stock may involve:
- sales to underwriters who will acquire shares of common stock
for their own account and resell them in one or more
transactions at fixed prices or at varying prices determined
at time of sale;
- block transactions in which the broker or dealer so engaged
may sell shares as agent or principal;
- purchases by a broker or dealer as principal who resells the
shares for its account;
- an exchange distribution in accordance with the rules of any
such exchange;
- ordinary brokerage transactions and transactions in which a
broker solicits purchasers; and
- privately negotiated sales, which may include sales directly
to institutions.
Brokers and dealers will receive customary compensation in the form of
underwriting discounts, concessions or commissions from the selling stockholders
and/or purchasers of our common stock in respect of transactions described above
(other than privately negotiated sales). The selling stockholders and any broker
or dealer that participates in the distribution of common stock may be deemed to
be underwriters and any commissions received by them and any profit on the
resale of our common stock positioned by a broker or dealer may be deemed to be
underwriting discounts and commissions under the Securities Act. In the event
the selling stockholders engage an underwriter in connection with the sale of
our common stock, to the extent required, a prospectus supplement will be
distributed, which will set forth the number of shares of common stock being
offered and the terms of the offering, including the names of the underwriters,
any discounts, commissions and other items constituting compensation to
underwriters, dealers or agents, the public offering price and any discounts,
commissions or concessions allowed or reallowed or paid by underwriters to
dealers.
In addition, the selling stockholders may, from time to time, sell
shares in transactions under Rule 144 promulgated under the Securities Act.
Certain of the underwriters, brokers, dealers or agents and their
associates may engage in transactions with and perform other services for
Palomar in the ordinary course of their business.
13
<PAGE>
EXPERTS
The audited consolidated financial statements incorporated by reference
in this registration statement and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein upon the
authority of said firm as experts in accounting and auditing. Reference is made
to that report, which includes an explanatory paragraph regarding the Company's
ability to continue as a going concern.
LEGAL MATTERS
Our General Counsel has advised us with respect to the validity of the
shares of common stock offered by this prospectus.
MATERIAL CHANGES
INTRODUCTION TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998 AND
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
On December 7, 1998, we entered into an Agreement and Plan of
Reorganization to sell all of the issued and outstanding shares of common stock
of our majority-owned Star subsidiary to Coherent for $65,000,000 in cash.
Assuming that certain options to purchase 625,507 shares of Star's common stock
at exercise prices ranging from $2.50 to $19.00 per share are exercised, we will
own 82.46% of Star. Under the terms of this transaction, we will receive gross
proceeds of approximately $54,000,000. We anticipate that we will receive net
proceeds of approximately $48,825,000. This amount reflects transaction costs of
approximately $600,000, income taxes of approximately $2,500,000, costs
associated with the repurchase of Coherent's EpiLaser inventory of $1,125,000
and an earnout bonus of $950,000 for the employees of Star based on the
attainment of certain production milestones through the date of closing.
The accompanying pro forma consolidated condensed balance sheet as of
September 30, 1998 assumes that Coherent purchased Star on the last reported
balance sheet date, September 30, 1998. The accompanying pro forma information
is presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations which actually would have been
reported had the disposition occurred as assumed, or which may be presented in
the future.
The accompanying pro forma consolidated condensed Statements of
Operations for the year ended December 31, 1997 and nine months ended September
30, 1998 assume the sale of Star took place on December 31, 1996, immediately
before the fiscal year presented. The pro forma consolidated condensed
statements of operations do not include the effect of the gain from our sale of
Star to Coherent.
The accompanying pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which would actually have been reported had the sale of
Star occurred as assumed, or which may be reported in the future.
The accompanying pro forma consolidated condensed financial statements
should be read in conjunction with the historical financial statements and
related notes thereto for Palomar.
14
<PAGE>
PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Historical Pro Forma
Consolidated Star Other Adjustments Pro Forma
--------------- ---------------- ------------------------------ --------------
ASSETS (a)
CURRENT ASSETS:
Cash and cash equivalents $2,665,686 $(565,395) (b) $ 48,070,092 $ $
- 50,170,383
Marketable securities 15,944 - - - 15,944
Accounts receivable, net 5,901,131 (5,209,070) - - 692,061
Inventories, net 4,117,425 (2,740,453) - - 1,376,972
Escrow amount due from Coherent, Inc. - - (c) 3,254,908 - 3,254,908
Other current assets 1,358,886 (26,395) - - 1,332,491
--------------- ---------------- -------------- ------------ --------------
Total current assets 14,059,072 (8,541,313) 51,325,000 - 56,842,759
--------------- ---------------- -------------- ------------ --------------
PROPERTY AND EQUIPMENT, AT COST, NET 3,517,716 (844,262) - - 2,673,454
--------------- ---------------- -------------- ------------ --------------
OTHER
ASSETS:
Cost in excess of net assets acquired, 1,850,574 (904,024) - - 946,550
net
Deferred financing costs 99,167 - - - 99,167
Other noncurrent assets 160,642 (18,190) - - 142,452
--------------- ---------------- -------------- ------------ --------------
Total other assets 2,110,383 (922,214) - - 1,188,169
--------------- ---------------- -------------- ------------ --------------
$ 19,687,171 $(10,307,789) $51,325,000 $ - 60,704,382
=============== ================ ============== ============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $5,765,486 $(4,000,000) $ $ $ 1,765,486
Accounts payable 3,009,978 (1,848,502) - - 1,161,476
Accrued expenses 10,652,657 (2,600,238) - (d) 2,500,000 10,552,419
Current portion of deferred revenue 1,181,213 - - - 1,181,213
--------------- ---------------- -------------- ------------ --------------
Total current liabilities 20,609,334 (8,448,740) - 2,500,000 14,660,594
--------------- ---------------- -------------- ------------ --------------
NET LIABILITIES OF DISCONTINUED
OPERATIONS 1,687,079 - - - 1,687,079
--------------- ---------------- -------------- ------------ --------------
LONG-TERM DEBT, NET OF CURRENT PORTION 3,173,542 - - - 3,173,542
--------------- ---------------- -------------- ------------ --------------
DEFERRED REVENUE, NET OF CURRENT PORTION 1,120,000 - - - 1,120,000
--------------- ---------------- -------------- ------------ --------------
INTERCOMPANY PAYABLE - (14,282,944) - (e) 14,282,944 -
--------------- ---------------- -------------- ------------ --------------
STOCKHOLDERS' EQUITY
(DEFICIT):
Preferred stock, $.01 par value- 75 - - - 75
Common stock, $.01 par value- 693,493 (2,220,000) - (e) 2,220,000 693,493
Additional paid-in capital 160,634,871 (1,874,823) - (e) 1,874,823 160,634,871
Accumulated deficit (166,592,364) 16,518,718 (e) 16,518,718 46,965,951 (119,626,413)
(f)
Less: Treasury stock- (345,000 shares
at cost) (1,638,859) - - - (1,638,859)
--------------- ---------------- -------------- ------------ --------------
Total stockholders' equity
(deficit) (6,902,784) 12,423,895 16,518,718 51,060,774 40,063,167
--------------- ---------------- -------------- ------------ --------------
$ 19,687,171 $(10,307,789) $16,518,718 $67,843,718 $ 60,704,382
=============== ================ ============== ============ ==============
</TABLE>
15
<PAGE>
PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C><C>
Historical Pro Forma
Consolidated Star Other Adjustments Pro Forma
---------------- --------------- ---------------------- ----------------
(g)
REVENUES $ 20,994,546 $ (394,000) $ - $ 20,600,546
COST OF REVENUES 20,055,963 (180,000) - 19,875,963
---------------- --------------- ---------------------- -----------------
Gross margin 938,583 (214,000) - 724,583
---------------- --------------- ---------------------- -----------------
OPERATING EXPENSES
Research and development 11,990,332 (8,402,000) 4,000,000 (h) 7,588,332
Sales and marketing 6,959,750 (863) - 6,958,887
General and administrative 17,393,093 (1,077,000) - 16,316,093
Restructuring and asset write-off 3,325,000 - - 3,325,000
Settlement and litigation costs 3,199,000 - - 3,199,000
---------------- --------------- ---------------------- -----------------
Total operating expenses 42,867,175 (9,479,863) 4,000,000 37,387,312
---------------- --------------- ---------------------- -----------------
Loss from operations (41,928,592) 9,265,863 (4,000,000) (36,662,729)
---------------- --------------- ---------------------- -----------------
INTEREST EXPENSE (6,993,898) 402,000 1,019,599 (5,572,299)
(i)
INTEREST INCOME 456,945 456,945
NET LOSS ON TRADING SECURITIES (52,272) - - (52,272)
ASSET WRITE-OFF (9,658,000) - - (9,658,000)
OTHER INCOME (EXPENSE) (193,262) - - (193,262)
---------------- --------------- ---------------------- -----------------
NET LOSS FROM CONTINUING
OPERATIONS $ (58,369,079) $ 9,667,863 $ (2,980,401) $ (51,681,617)
================ =============== ====================== =================
BASIC AND DILUTED NET LOSS
PER COMMON SHARE FROM:
Continuing Operations $(1.79) $(1.60)
================ =================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 35,105,272 35,105,272
================ =================
</TABLE>
16
<PAGE>
PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Historical Pro Forma
Consolidated Star Other Adjustments Pro Forma
--------------- ---------------- -------------------- ---------------
(g)
REVENUES $ 29,968,108 $ (22,006,599) $ - $ 7,961,509
COST OF REVENUES 16,870,561 (8,856,776) - 8,013,785
--------------- ---------------- -------------------- ---------------
Gross margin 13,097,547 (13,149,823) - (52,276)
--------------- ---------------- -------------------- ---------------
OPERATING EXPENSES
Research and development 5,653,066 (2,657,435) - 2,995,631
Sales and marketing (9,118,366) - 1,350,481
General and administrative 6,980,037 (4,273,115) 2,706,922
--------------- ---------------- -------------------- ---------------
Total operating expenses 23,101,950 (16,048,916) - 7,053,034
--------------- ---------------- -------------------- ---------------
Loss from operations (10,004,403) 2,899,093 - (7,105,310)
--------------- ---------------- -------------------- ---------------
INTEREST EXPENSE (1,013,630) 730,000 (142,887) (i) (426,517)
OTHER INCOME 750,781 - - 750,781
--------------- ---------------- -------------------- ---------------
NET LOSS FROM
CONTINUING OPERATIONS $(10,267,252) $ 3,629,093 $ (142,887) $ (6,781,046)
=============== ================ ==================== ===============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE FROM:
Continuing Operations $(0.19) $(0.13)
=============== ===============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 60,880,311 60,880,311
=============== ===============
</TABLE>
17
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998 AND
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
(Unaudited)
NOTE (1) PRO FORMA BALANCE SHEET ADJUSTMENTS
The following pro forma adjustments are required to reflect the
anticipated sale of our majority owned subsidiary, Star, to Coherent as of
September 30, 1998 (the balance sheet date). Such allocations may be revised to
reflect the actual costs of this transaction as of the closing date.
(a) To eliminate Star's assets, liabilities and equity.
<TABLE>
<S> <C> <C>
OTHER PRO FORMA ADJUSTMENTS NET AMOUNT
(b) To account for Palomar's net cash received from the sale
of Star to Coherent. $48,070,092
(c) To account for the amount due from Coherent for the escrow
related to the sale of Star. $3,254,908
(d) To record income taxes due related to the sale of Star. $2,500,000
(e) To eliminate Palomar's intercompany balance due from Star
and net investment basis of Star. $1,859,049
(f) To reflect the gain, net of related income taxes, on the
sale of Star. $46,965,951
</TABLE>
18
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998 AND
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
(Unaudited)
NOTE (2) PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
The following pro forma adjustments are required to reflect the pro
forma consolidated condensed statements of operations as a result of the
anticipated sale of our majority owned subsidiary, Star, to Coherent. For
purposes of the pro forma statements of operations, it is assumed that the sale
of Star and resulting gain of approximately $47 million occurred on December 31,
1996, so that the statement of operations would only include results from
continuing operations.
(g) To eliminate the effects of Star's operations on the consolidated
statements of operations for the year ended December 31, 1997 and the
nine months ended September 30, 1998.
<TABLE>
<S> <C> <C> <C>
OTHER PRO FORMA ADJUSTMENTS NET AMOUNT FOR THE PERIOD ENDED
--------------------------- -------------------------------
DECEMBER 31, 1996 SEPTEMBER 30, 1996
----------------- ------------------
(h) Represents the add back of research and development
expense incurred by Palomar and allocated to Star. $4,000,000 $--
(i) To record additional (excess) interest expense based on
Star's percentage of Palomar's total funding. $(142,887) $(1,019,599)
</TABLE>
19
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can inspect
and copy these reports, proxy statements and other information at the public
reference facilities of the SEC, in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York
10048; and Suite 1400, Citicorp Center, 500 W. Madison Street, Chicago, Illinois
60661-2511. You can also obtain copies of these materials from the public
reference section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The SEC also maintains a web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC
(http://www.sec.gov).
We have filed a registration statement and related exhibits with the
SEC under the Securities Act of 1933, as amended. The registration statement
contains additional information about us and our common stock. You may inspect
the registration statement and exhibits without charge at the office of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies
from the SEC at prescribed rates.
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 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 following documents we filed with the SEC in accordance with
Section 13 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"):
- Annual Report on Form 10-K for the year ended December 31,
1997;
- Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
- Current Report on Form 8-K filed on June 3, 1998;
- Description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on June 6, 1992,
including the amendment on Form 8 dated December 17, 1992; and
- All documents filed by us with the SEC in accordance with
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and before the offering the common
stock thereby is stopped (other than those portions of such
documents described in paragraphs (i), (k), and (l) of Item
402 of Regulation S-K promulgated by the SEC).
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Palomar Medical Technologies, Inc.
45 Hartwell Avenue
Lexington, Massachusetts 02421-3102
(781)676-7300
Attention: John J. Ingoldsby
(e-mail: [email protected])
20
<PAGE>
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
21
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Registrant in connection with the issuance and distribution of the shares of
common stock being registered. All amounts shown are estimates except for the
Securities and Exchange Commission registration fee. The Registrant will pay all
expenses in connection with the distribution of the shares of common stock being
sold by the selling stockholders (including fees and expenses of counsel for the
Registrant), except for any commission or discounts due to any broker or dealer
in connection with sales of shares offered by this prospectus.
<TABLE>
<S> <C> <C>
Securities and Exchange Commission Filing Fee $ 767
Accounting Fees and Expenses 3,000
Legal Fees and Expenses 1,000
Blue Sky Filing Fees and Expenses 500
Printing and Mailing Costs 100
Transfer Agent Fees 500
Miscellaneous 500
-------------------
Total Expenses $6,367
===================
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was deemed illegal or obtaining an improper
personal benefit. The Company's Certificate of Incorporation includes the
following language:
"To the maximum extent permitted by Section 102(b)(7) of the General Corporation
Laws of Delaware, a director of this corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit."
Section 145 of the General Corporation Law of the State of Delaware
generally provides that a corporation may indemnify any director, officer,
employee or agent against expenses, judgments, fines and amounts paid in
settlement in connection with any action against him by reason of his being or
having been such a director, officer, employee or agent, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action, had no
reasonable cause to believe his conduct was unlawful. No indemnification shall
be made, however, if he is adjudged liable for negligence or misconduct in the
performance of his duty to the corporation, unless a court determines that he is
nevertheless entitled to indemnification. If he is successful on the merits or
otherwise in defending the action, the corporation must indemnify him against
expenses actually and reasonably incurred by him. Article IX of the Company's
Bylaws provides indemnification as follows:
22
<PAGE>
INDEMNIFICATION
SECTION 1. ACTIONS, ETC. OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall, to the full extent legally permissible, indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including a grand jury proceeding, and all
appeals (but excluding any such action, suit or proceeding by or in the right of
the Corporation), by reason of the fact that such person is or was a director,
executive officer (as hereinafter defined) or advisory council member of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct in question was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that such person did not act in good faith and in a
manner which such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that such person had reasonable cause to believe that the conduct in
question was unlawful. As used in this Article IX, an "executive officer" of the
Corporation is the president, treasurer, a vice president given the title of
executive vice president, or any officer designated as such pursuant to vote of
the Board of Directors.
SECTION 2. ACTIONS. ETC. BY OR IN THE RIGHT OF THE CORPORATION. The Corporation
shall, to the full extent legally permissible, indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit, including appeals, by or in the right of the
Corporation to procure a judgment in its favor, by reason of the fact that such
person is or was a director or executive officer of the Corporation as defined
in Section 1 of this Article, or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 3. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any indemnification of a
director or officer (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that such
indemnification is proper in the circumstances because the director or executive
officer has met the applicable standard of conduct as set forth in Sections 1
and 2 hereof. Such a determination shall be reasonably and promptly made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) (if such a
quorum is not obtainable, or, even if obtainable if a quorum of disinterested
directors so directs) by independent legal counsel in a written opinion, or
(iii) by the stockholders.
SECTION 4. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
any other provision of this Article, to the extent that a director or officer of
the Corporation has been successful in whole or in part on the merits or
otherwise, including the dismissal of an action without prejudice, in defense of
any action, suit or proceeding or in defense of any claim, issue or matter
therein, such person shall be indemnified against all expenses incurred in
connection therewith.
23
<PAGE>
SECTION 5. ADVANCES OF EXPENSES. Expenses incurred by a director or officer in
any action, suit or proceeding shall be paid by the Corporation in advance of
the final disposition of thereof, if such person shall undertake to repay such
amount in the event that it is ultimately determined, as provided herein, that
such person is not entitled to indemnification. Notwithstanding the foregoing,
no advance shall be made by the Corporation if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum of
disinterested directors, or (ii) (if such a quorum is not obtainable or, even if
obtainable, if a quorum of disinterested directors so directs) by independent
legal counsel in a written opinion, that, based upon the facts known to the
Board of Directors or such counsel at the time such determination is made, such
person has not met the relevant standards set forth for indemnification in
Section 1 or 2, as the case may be.
SECTION 6. RIGHT TO INDEMNIFICATION UPON APPLICATION: PROCEDURE UPON
APPLICATION. Any indemnification or advance under Sections 1, 2, 4 or 5 of this
Article shall be made promptly, and in any event within ninety days, upon the
written request of the person seeking to be indemnified, unless a determination
is reasonably and promptly made by the Board of Directors that such person acted
in a manner set forth in such Sections so as to justify the Corporation's not
indemnifying such person or making such an advance. In the event no quorum of
disinterested directors is obtainable, the Board of Directors shall promptly
appoint independent legal counsel to decide whether the person acted in the
manner set forth in such Sections so as to justify the Corporation's not
indemnifying such person or making such an advance. The right to indemnification
or advances as granted by this Article shall be enforceable by such person in
any court of competent jurisdiction, if the Board of Directors or independent
legal counsel denies the claim therefor, in whole or in part, or if no
disposition of such claim is made within ninety days.
SECTION 7. OTHER RIGHT AND REMEDIES: CONTINUATION OF RIGHTS. The indemnification
and advancement of expenses provided by this Article shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, Vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office. All
rights to indemnification or advancement under this Article shall be deemed to
be in the nature of contractual rights bargained for and enforceable by each
director and executive officer as defined in Section 1 of this Article who
serves in such capacity at any time while this Article and other relevant
provisions of the General Corporation Law of the State of Delaware and other
applicable laws, if any, are in effect. All right to indemnification under this
Article or advancement of expenses shall continue as to a person who has ceased
to be a director or executive officer, and shall inure to the benefit of the
heirs, executors and administrators of such a person. No repeal or modification
of this Article shall adversely affect any such rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought based in whole or
in part upon any such state of facts. The Corporation shall also indemnify any
person for attorneys' fees, costs, and expenses in connection with the
successful enforcement of such person's rights under this Article.
SECTION 8. OTHER INDEMNITIES. The Board of Directors may, by general vote or by
vote pertaining to a specific officer, employee or agent, advisory council
member or class thereof, authorize indemnification of the Corporation's
employees and agents, in addition to those executive officers and to whatever
extent it may determine, which may be in the same manner and to the same extent
provided above.
SECTION 9. INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, advisory council member or agent of the
Corporation, or is or was serving at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article.
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SECTION 10. CONSTITUENT CORPORATIONS. For the purposes of this Article,
reference to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors and officers so that any person who is or was a director or officer of
such a constituent corporation or is or was serving at the request of such
constituent corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
SECTION 11. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, executive officer,
advisory council member, and those employees and agents of the Corporation
granted indemnification pursuant to Section 3 hereof as to expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding, and all appeals, and any
action by the Corporation, to the full extent permitted by any applicable
portion of this Article that shall not have been invalidated or by any other
applicable law.
SECTION 12. OTHER ENTERPRISES. FINES. AND SERVING AT CORPORATION'S REQUEST. For
purposes of this Article, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to any employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner such person reasonably believed to be in
the interest of the participants and beneficiaries of any employee benefit plan
shall be deemed to have acted in a manner not opposed to the best interests of
the Corporation" as referred to in this Article.
In addition, the Company maintains a directors' and officers' insurance
policy that covers certain liabilities of directors and officers of the Company,
including liabilities under the Securities Act of 1933.
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ITEM 16. EXHIBITS
The following are filed as part of this registration statement:
EXHIBIT NO. DESCRIPTION
3.1 Second Restated Certificate of Incorporation of the
Company (included with Registration Statement on Form
S-3 as initially filed on January 11, 1999).
4.2* By-laws of the Company as amended (incorporated by
reference to Exhibit 3.5 to the Company's Report on Form
10KSB/A-4 for the period ending December 31, 1996).
4.3* Specimen certificate for the Common Stock (incorporated
by reference to Exhibit No. 4.1 of the Company's Annual
Report on Form 10-KSB/A-4 for the fiscal year ending
December 31, 1996).
4.4 Form of Securities Purchase Agreement (included with
Registration Statement on Form S-3 as initially filed on
January 11, 1999).
4.5* Form of warrant to purchase common stock (incorporated
by reference to Exhibit 4(b) of the Company's Form S-3
Registration Statement No. 333-57261).
5 Opinion of General Counsel of Palomar regarding legality
of shares registered hereunder (inlcuded with
Registration Statement on Form S-3 as initially filed on
January 11, 1999).
23.1 Consent of Arthur Andersen LLP, independent public
accountants.
23.2 Consent of General Counsel of Palomar (included in
Exhibit 5) (included with Registration Statement on Form
S-3 as initially filed on January 11, 1999).
* Previously filed.
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ITEM 17. UNDERTAKINGS
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) We hereby undertake that, for purposes of determining any liability under
the Securities Act of 1933, each filing of our annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described in this registration statement above, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of us in
the successful defense of any action, suit or proceeding) is asserted against us
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Lexington, Commonwealth of Massachusetts, on January
21, 1999.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By: /S/ LOUIS P. VALENTE
----------------------------------
Louis P. Valente,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons, in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C> <C>
SIGNATURE TITLE DATE
/s/ Louis P. Valente Chairman of the Board January 21, 1999
- ------------------------------ President and Chief Executive
Louis P. Valente Officer (Chief Executive Officer)
/s/ Joseph P. Caruso Chief Financial Officer and Treasurer January 21, 1999
- ------------------------------ (Principal Financial and Accounting
Joseph P. Caruso Officer)
/s/ Nicholas P. Economou Director January 21, 1999
- ------------------------------
Nicholas P. Economou
/s/ A. Neil Pappalardo Director January 21, 1999
- ------------------------------
A. Neil Pappalardo
/s/ James G. Martin Director January 21, 1999
- ------------------------------
James G. Martin
</TABLE>
