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Previous: VIVUS INC, 10-Q, EX-27.1, 2000-11-13 |
Next: PALOMAR MEDICAL TECHNOLOGIES INC, 10-Q, EX-27, 2000-11-13 |
FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 0-22340
PALOMAR MEDICAL TECHNOLOGIES, INC.
(Exact name of issuer as specified in its charter)
Delaware
04-3128178
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
82 Cambridge Street, Burlington, Massachusetts 01803
(Address of principal executive offices)
(781) 993-2300
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
As of October 31, 2000, 10,221,558 shares of common stock, $.01 par value per share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Condensed Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statement of Stockholders' Equity 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
RISK FACTORS 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 17
ITEM 1. LEGAL PROCEEDINGS 18
ITEM 2. CHANGES IN SECURITIES 18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 18
ITEM 5. OTHER INFORMATION 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 20
December 31, September 30,
1999 2000
---------------- --------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $2,712,466 $6,356,512
Available-for-sale investments, at market value 22,505,996 10,860,552
Accounts receivable, net 1,879,612 1,588,951
Inventories 1,899,591 1,181,061
Receivable from sale of subsidiary 3,330,976 -
Income tax refund receivable - 1,619,935
Other current assets 729,301 607,462
---------------- --------------
Total current assets 33,057,942 22,214,473
---------------- --------------
Property and Equipment, Net
991,432 899,516
---------------- --------------
Other Assets:
Cost in excess of net assets acquired, net 631,026 -
Other non-current assets 162,468 122,024
---------------- --------------
Total other assets 793,494 122,024
---------------- --------------
$34,842,868 $23,236,013
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,122,008 $ 1,683,012
Accounts payable 659,280 598,711
Accrued liabilities 6,371,553 5,886,070
Accrued income taxes 2,500,000 1,822,146
Deferred revenue 918,642 367,948
Deferred gain from sale of subsidiary 3,139,556 -
---------------- --------------
Total current liabilities 14,711,039 10,357,887
---------------- --------------
Long-Term Debt, Net of Current Portion 1,622,008 500,000
---------------- --------------
Accrued Dividends and Interest on Preferred Stock 1,417,184 1,691,134
---------------- --------------
Stockholders' Equity:
Preferred stock, $.01 par value-
Authorized - 1,500,000 shares
Issued and outstanding -
6,000 shares
at December 31, 1999 and September 30, 2000 60 60
Common stock, $.01 par value-
Authorized - 45,000,000 shares
Issued - 11,034,493 shares and 11,074,393
shares at December 31, 1999 and September 30,
2000, respectively 110,345 110,744
Additional paid-in capital 162,275,613 161,991,709
Accumulated deficit (141,550,040) (148,235,638)
Unrealized loss on available-for-sale investments (67,943) (10,497)
Less: Treasury stock - 1,002,615 and 864,737
shares at cost at December 31, 1999 and (3,675,398) (3,169,386)
September 30, 2000, respectively ---------------- --------------
Total stockholders' equity 17,092,637 10,686,992
---------------- --------------
$34,842,868 $23,236,013
================ ==============
The accompanying notes are an integral part of these consolidated financial statements.
Three Months Ended Nine Months Ended
September 30, September 30,
1999 2000 1999 2000
--------------- -------------- -------------- --------------
Product revenues $ 1,716,517 $ 3,056,139 $ 20,074,303 $ 6,151,262
Royalty revenues 1,206,823 954,378 1,856,823 3,307,055
--------------- -------------- -------------- --------------
Total Revenues 2,923,340 4,010,517 21,931,126 9,458,317
Cost of product revenues 2,044,485 2,439,228 10,991,486 6,611,304
Cost of royalty revenues 482,729 381,751 742,749 1,322,822
--------------- -------------- -------------- --------------
Total Cost of Revenues 2,527,214 2,820,979 11,734,235 7,934,126
--------------- -------------- -------------- --------------
Gross Margin 396,126 1,189,538 10,196,891 1,524,191
--------------- -------------- -------------- --------------
Operating Expenses (Income)
Research and development 1,642,140 1,909,164 6,272,869 5,877,688
Sales and marketing 590,188 1,019,287 6,307,410 2,172,184
General and administrative 1,041,677 892,499 4,199,309 2,985,314
Goodwill and asset write-off (Note 5 and 11) - - - 745,804
Costs incurred for proxy contest - - 624,627 -
Setlement costs - - 750,000 -
Gain from sale of subsidiary - - (47,090,876) (3,139,556)
--------------- -------------- -------------- --------------
Total operating expenses (income) 3,274,005 3,820,950 (28,936,661) 8,641,434
--------------- -------------- -------------- --------------
Income (loss) from operations (2,877,879) (2,631,412) 39,133,552 (7,117,243)
Swiss Franc Redemption - - (6,167,369) -
Interest Income 469,984 309,854 877,618 999,466
Interest Expense (182,257) (36,429) (546,173) (123,689)
Other Income (Expense), net (8,148) 57,805 271,489 351,223
--------------- -------------- -------------- --------------
Income (Loss) from Continuing Operations
Before Provision (Benefit) for Income Taxes (2,598,300) (2,300,182) 33,569,117 (5,890,243)
Provision (Benefit) for Income Taxes - (191,056) 2,500,000 (191,056)
--------------- -------------- -------------- --------------
Income (Loss) from Continuing Operations Before
Cumulative Effect of Change in Accounting Method (2,598,300) (2,109,126) 31,069,117 (5,699,187)
Cumulative Effect of Change in Accounting Method (Note 12) - - - (712,359)
Loss from Discontinued Operations - - (435,000) -
--------------- -------------- -------------- --------------
Net Income (Loss) $ (2,598,300) $ (2,109,126) $ 30,634,117 $ (6,411,546)
=============== ============== ============== ==============
Basic Net Income (Loss) per Share:
Continuing operations $ (0.27) $ (0.22) $ 3.02 $ (0.59)
Cumulative effect of change in accounting method - - - (0.07)
Discontinued operations - - (0.04) -
--------------- -------------- -------------- --------------
Total Basic Net Income (Loss) Per Share $ (0.27) $ (0.22) $ 2.98 $ (0.66)
=============== ============== ============== ==============
Basic Weighted Average Number of Shares Outstanding 10,087,905 10,209,361 10,188,306 10,148,871
=============== ============== ============== ==============
Diluted Net Income (Loss) Per Share:
Continuing operations $ (0.27) $ (0.22) $ 2.85 $ (0.59)
Cumulative effect of change in accounting method - - - (0.07)
Discontinued operations - - (0.04) -
--------------- -------------- -------------- --------------
Total Diluted Net Income (Loss) Per Share $ (0.27) $ (0.22) $ 2.81 $ (0.66)
=============== ============== ============== ==============
Diluted Weighted Average Number of Shares Outstanding 10,087,905 10,209,361 10,957,857 10,148,871
=============== ============== ============== ==============
The accompanying notes are an integral part of these consolidated financial statements.
Preferred Stock Common Stock Treasury Stock Additional Unrealized Loss
Total
------------------------------------------------------------------------------------------------------------------
Paid-in on Available-for-
Stockholders'
Number $0.01 Number $0.01 Number Accumulated
of Shares Par Value of Shares Par Value of Shares Cost Capital Deficit Sale Investments
Equity
----------------------------------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
Balance, December 31, 1999 6,000 $ 60 11,034,493 110,345 (1,002,615) $ (3,675,398) $ 162,275,613 $ (141,550,040) $
(67,943) $ 17,092,637
Costs incurred related to the issuance of common stock - - - - - - (222,050) -
- (222,050)
Issuance of stock for Employee Stock Purchase Plan - - - - 19,035 69,858 (38,609) -
- 31,249
Issuance of stock for 401K plan - - - - 99,843 366,424 (247,860) -
- 118,564
Exercise of stock options - - 39,900 399 19,000 69,730 118,615 -
- 188,744
Fair value of warrants issued for investment banking services - - - - - - 106,000 -
- 106,000
Unrealized gain on available-for-sale investments - - - - - - - -
57,446 57,446
Preferred stock dividends - - - - - - - (274,052)
- (274,052)
Net loss - - - - - - - (6,411,546)
- (6,411,546)
----------------------------------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
Balance, September 30, 2000 6,000 $ 60 11,074,393 $ 110,744 (864,737) $ (3,169,386) $ 161,991,709 $ (148,235,638) $
(10,497) $ 10,686,992
================================================================================================================================================================
==========================================================
Nine Months Ended September 30,
1999 2000
------------- -------------
Cash Flows from Operating Activities:
Net Income (Loss) $ 30,634,117 $ (6,411,546)
Add: Net Loss from discontinued operations (435,000) -
------------- -------------
Net Income (Loss) from continuing operations 31,069,117 (6,411,546)
------------- -------------
Adjustments to reconcile net income (loss) from continuing
operations to net cash used in operating activities-
Depreciation and amortization 979,546 405,922
Gain from sale of subsidiary (47,090,876) -
Goodwill and asset write-off - 745,804
Inventory write-off - 597,000
Redemption of common stock held by Swiss Franc
debenture holder 6,167,369 -
Fair value of warrants issued for investment banking services - 106,000
Changes in assets and liabilities, net of effects
from sale of subsidiary
Accounts receivable 2,491,364 290,661
Inventories (1,221,512) 121,530
Receivable from sale of subsidiary (3,297,138) 3,330,976
Income tax refund receivable - (1,619,935)
Other current assets 263,186 121,839
Accounts payable (3,258,003) (60,567)
Accrued expenses 1,233,716 (454,147)
Accrued income taxes - (647,398)
Deferred gain from sale of subsidiary 3,139,556 (3,139,556)
Deferred revenue (764,128) (550,694)
------------- -------------
Net cash used in operating activities (10,287,803) (7,164,111)
------------- -------------
Cash Flows from Investing Activities:
Purchases of property and equipment (144,341) (428,785)
Purchases of available-for-sale investments (20,786,767) (8,871,049)
Proceeds of available-for-sale investments - 20,573,939
Proceeds from the sale of subsidiary, net of
cash on hand $288,000 49,448,023 -
Decrease (increase) in other assets (32,803) 40,443
------------- -------------
Net cash provided by investing activities 28,484,112 11,314,548
------------- -------------
Cash Flows from Financing Activities:
Net proceeds from the issuance of notes payable and
advances from distributor 750,000 -
Proceeds from exercise of warrants, stock options
and Employee Stock Purchase Plan 37,527 219,993
Costs incurred related to issuance of common stock (291,000) (222,050)
Payments on line of credit (1,000,000) -
Payment on Swiss Franc convertible debentures (4,441,064) (504,334)
Purchase of treasury stock (1,382,202) -
Payment on note payable (2,290,041) -
Redemption of preferred stock (781,387) -
------------- -------------
Net cash used in financing activities (9,398,167) (506,391)
------------- -------------
Net increase in cash and cash equivalents 8,798,142 3,644,046
Net cash used in discontinued operations (2,115,171) -
Cash and cash equivalents, beginning of the period 1,874,718 2,712,466
------------- -------------
Cash and cash equivalents, end of the period $8,557,689 $6,356,512
============= =============
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 357,829 $ 151,271
============= =============
Supplemental Disclosure of Noncash Financing and Investing
Activities:
Conversion of convertible debentures and related accrued
interest, net of financing fees $ 1,806,074 $ -
============= =============
Conversion of preferred stock $ 63,411 $ -
============= =============
Issuance of common stock for 1999 and 2000 employer 401(k)
matching contribution $ 206,659 $ 118,564
============= =============
Accrued dividends and interest on preferred stock $ 86,816 $ 274,052
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The results of operations for the interim periods shown in this report are not necessarily indicative of expected results for any future interim period or for the entire fiscal year. Palomar Medical Technologies, Inc. and its subsidiaries (the "Company" or "Palomar") believes that the quarterly information presented includes all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation in accordance with accounting principles generally accepted in the United States. The accompanying financial statements and notes should be read in conjunction with the Company's Form 10-K for the year ended December 31, 1999.
Cash equivalents consist principally of corporate notes, U.S. government-agency securities, commercial paper, money market funds, and other marketable securities purchased with an original maturity of three months or less. These investments are carried at cost, which approximates market value.
The Company accounts for marketable securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company's marketable equity securities with maturities greater than 90 days are considered available-for-sale investments in the accompanying balance sheet and are carried at market value, with the difference between cost and market value, net of related tax effects, recorded as a separate component of stockholders' equity. The aggregate market value, cost basis, and gross unrealized losses of available-for-sale investments are as follows:
December 31, September 30,
1999 2000
------------------ -----------------
Market Value $22,505,996 $10,860,552
================== =================
Cost Basis $22,573,939 $10,871,049
================== =================
Gross Unrealized Loss $(67,943) $(10,497)
================== =================
Available-for-sale investments in the accompanying balance sheet at September 30, 2000 include debt securities of $10,860,552. Actual maturities may differ from contractual maturities as a result of the Company's intent to sell these securities prior to maturity and as a result of call features of the securities that enable either the Company, the issuer, or both to redeem these securities at an earlier date. Unrealized holding gains totaling $57,446 on such debt securities were recorded in stockholders' equity during the nine months ended September 30, 2000.
Inventories are stated at lower of cost (first-in, first-out) or market and consist of the following:
December 31, September 30,
1999 2000
----------------- -----------------
Raw materials $1,403,001 $767,143
Work-in-process 496,590 215,556
Finished goods - 198,361
----------------- -----------------
$1,899,591 $1,181,061
================= =================
During the quarter ended June 30, 2000, the Company determined that certain inventory related to past generation products being phased out was obsolete. Accordingly, the Company wrote-off $597,000 of such inventory which was included in cost of sales.
Property and equipment consist of the following:
December 31, September 30,
1999 2000
------------------ ----------------
Machinery and equipment $1,062,774 $ 958,130
Furniture and fixtures 1,006,125 1,248,330
Leasehold improvements 139,046 206,554
------------------ ----------------
2,207,945 2,413,015
Less: Accumulated depreciation
And amortization 1,216,513 1,513,498
------------------ ----------------
$991,432 $899,516
================== ================
During the quarter ended June 30, 2000, the Company determined that carrying value of certain equipment related to past generation products being phased out had been impaired and, accordingly, wrote-off $223,715 of such equipment.
Notes payable consist of the following:
December 31, September 30,
1999 2000
------------------ ------------------
Dollar denominated convertible debentures $500,000 $500,000
Swiss franc denominated convertible debentures 2,244,016 1,683,012
------------------ ------------------
2,744,016 2,183,012
Less - current maturities (1,122,008) (1,683,012)
------------------ ------------------
$1,622,008 $500,000
================== ==================
Product revenue from international sources were $0.6 million and $1.5 million for the three months ended September 30, 1999 and 2000, respectively, and $8.0 million and $2.6 million for the nine months ended September 30, 1999 and 2000, respectively. The Company's revenue from international sources was primarily generated from customers located in Japan, Asia/Pacific and Canada/Australia.
The following table represents the percentage of product revenue by geographic region from customers for the three and nine months ended September 30, 1999 and 2000:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------ ------------------ ---------------
1999 2000 1999 2000
------------------ ------------------ ------------------ ---------------
United States 64.8% 51.5% 60.4% 58.4%
Japan 20.9% 34.5% 13.9% 28.1%
Asia/Pacific 8.5% 5.5% 4.1% 6.3%
Canada/Australia 5.8% 4.7% 1.9% 5.1%
Europe/Middle East 0.0% 1.7% 18.2% 1.0%
Latin America 0.0% 2.1% 1.5% 1.1%
------------------ ------------------ ------------------ ---------------
Total 100.0% 100.0% 100.0% 100.0%
================== ================== ================== ===============
During the nine months ended September 30, 2000, the Company granted options to purchase 1,011,200 shares of the Company's common stock at exercise prices ranging from $1.38 to $5.06 per share. During the nine months ended September 30, 2000, 58,900 options were exercised at $3.19. During the nine months ended September 30, 2000, options to purchase 354,055 shares of the Company's common stock at exercise prices ranging from $1.97 to $17.50 per share expired or were cancelled.
(b) Warrants to Purchase Common StockDuring the nine months ended September 30, 2000, the Company granted warrants to purchase 330,000 shares of the Company's common stock at an exercise price of $1.97 to $3.50 per share. During the nine months ended September 30, 2000, 408,132 warrants expired with an exercise price of $10.50 to $105.00 per share.
Basic net income (loss) per share was determined by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted net income (loss) per share was determined by dividing net income (loss) by diluted weighted average shares outstanding. Diluted weighted average shares reflect the dilutive effect, if any, of common stock options based on the treasury stock method and the assumed conversion of all debt obligations and convertible preferred stock and the elimination of related interest expense and preferred stock dividends. The calculations of basic and diluted weighted average shares outstanding are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------- -------------- -------------- -------------
Basic weighted average common
Shares outstanding 10,087,905 10,209,361 10,188,306 10,148,871
Potential common shares pursuant to:
Stock options and warrants - - 167,135 -
Convertible preferred stock - - 423,979 -
Convertible debentures - - 178,437 -
------------- -------------- -------------- -------------
Diluted weighted average common
Shares outstanding 10,087,095 10,209,361 10,957,857 10,148,871
============= ============== ============== =============
The Company's net income (loss) per share for the three and nine months ended September 30, 1999 and
2000 is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ----------------------------
1999 2000 1999 2000
--------------- --------------- ------------- --------------
Net income (loss) from continuing operations $(2,598,300) $(2,109,126) $31,069,117 $(5,699,187)
Preferred stock dividends (86,815) (92,817) (264,267) (274,052)
--------------- --------------- ------------- --------------
Income (loss) attributable to common
stockholders $(2,685,115) $(2,201,943) $30,804,850 $(5,973,239)
=============== =============== ============= ==============
Basic net income (loss) per common share from
continuing operations $(0.27) $(0.22) $3.02 $(0.59)
=============== =============== ============= ==============
Basic weighted average number of shares
outstanding 10,087,905 10,209,361 10,188,306 10,148,871
=============== =============== ============= ==============
Diluted net income (loss) per common share from
continuing operations $(0.27) $(0.22) $2.85 $(0.59)
=============== =============== ============= ==============
Diluted weighted average number of shares
outstanding 10,087,905 10,209,361 10,957,857 10,148,871
=============== =============== ============= ==============
For the three months ended September 30, 1999 and 2000, 4,420,021 and 4,834,214 shares, respectively, and for the nine months ended September 30, 1999 and 2000, 3,650,470 and 4,834,214 shares, respectively, of outstanding stock options, stock warrants and convertible debt and preferred stock were not included in the diluted weighted average shares outstanding as they were antidilutive.
A reconciliation of comprehensive income (loss) is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------- -------------------------------
1999 2000 1999 2000
----------------- ---------------- ----------------- -------------
Net income (loss) $(2,598,300) $(2,109,126) $30,634,117 $(6,411,546)
Unrealized gain (loss) on available-
for-sale investments (2,804) 8,333 (56,768) 57,446
----------------- ---------------- ----------------- -------------
Comprehensive income (loss) $(2,601,104) $(2,100,793) $30,577,349 $(6,354,100)
================= ================ ================= =============
The Company assesses the reliability of intangible assets in accordance with SFAS No. 121, Accounting for the Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of. Under SFAS No. 121, the Company is required to assess the valuation of its long-lived assets, including intangible assets, based on the estimated undiscounted cash flows to be generated by such assets. During the quarter ended June 30, 2000, the Company made a determination that goodwill related to certain past generation products being phased out had been impaired and, accordingly, wrote-off $522,089 of such goodwill.
During the quarter ended June 30, 2000, the Company adopted Securities and Exchange Commission (SEC) Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition. As a result of adopting SAB 101, the Company now records royalty income when received rather than when earned. In accordance with SAB No. 101, the Company recorded the impact of adopting SAB No. 101 as a cumulative catch-up adjustment to income in the current year's statement of operations, effective January 1, 2000. The impact of adopting SAB 101 for the nine months ended September 30, 2000 was to increase net income by approximately $140,000 ($0.01 per share), respectively. Restated results of operations for the quarter ended March 31, 2000 as a result of adopting SAB No. 101 are as follows:
Three Months Ended
March 31, 2000
--------------------------------
Revenues $2,853,050
Gross Profit $288,201
Operating Loss $(3,514,655)
Net Loss $(3,619,156)
Net Loss Per Share $(0.37)
If SAB 101 had been adopted effective January 1, 1999, the Company would have reported the following pro forma results:
Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999
----------------------- --------------------
(Pro forma - Unaudited)
----------------------- --------------------
Revenues $2,448,311 $21,456,097
Income from continuing operations
before extraordinary items $(2,883,317) $30,784,100
Net income $(2,883,317) $30,349,100
Net income per share - basic $(0.34) $2.91
Net income per share - diluted $(0.34) $2.75
In connection with the sale of the Company's subsidiary on April 27, 1999, the Company had deferred gain recognition of $3.1 million. This amount represented funds held in escrow until April 27, 2000 as security for claims made. On April 27, 2000, the Company received all funds held in escrow for which no claims had been made and recorded the deferred gain in operating income in the Accompanying Consolidated Statements of Operations.
We are a researcher and developer of proprietary laser systems for hair removal and other cosmetic laser systems and are the first company to obtain clearance from the FDA for using laser systems for "permanent hair reduction." Hundreds of Palomar laser hair removal systems have been installed in physician practices worldwide. Through Palomar's research partnership with Massachusetts General Hospital's Wellman Laboratories, new indications are being tested to further advance the laser hair removal market and other cosmetic laser applications including fat reduction and acne treatment.
On April 27, 1999, the Company sold all of the issued and outstanding common stock of Palomar's Star Medical Technologies, Inc. ("Star") subsidiary to Coherent, Inc. ("Coherent") for $65 million, paid in cash. The purchase price was paid to the stockholders of Star in proportion to their holdings of Star capital stock. On the date of sale, Palomar owned 82.46% of Star. Palomar received net proceeds of $49,736,023. As a result of the above transaction, the Company believes it will be able to fund its operations for the short-term. However, for the years ended December 31, 1998 and 1999, gross revenues associated with Star's LightSheer diode laser system comprised 80% and 60%, respectively, of the Company's total revenues. Consequently, the Company's revenues have declined significantly. The Company believes the successful introduction and marketing of new products will become critical to the Company's long-term success. Broad market acceptance of laser hair removal and specific acceptance of the Company's new hair removal laser, the Palomar SLP1000(TM)diode laser system for hair removal and vascular treatments ("Palomar SLP1000") is critical to the Company's success. During the quarter ended June 30, 2000, the Company began shipment of the Palomar SLP1000. The Company has traditionally spent a significant amount of its resources in developing new technology and products. The Company expects this trend will continue for the foreseeable future.
For the three months ended September 30, 2000, the Company's revenues increased to $4.0 million, as compared to $2.9 million for the three months ended September 30, 1999. The increase in the Company's revenues of $1.1 million, or 38% from the three months ended September 30, 1999, was mainly attributed to the introduction of the Palomar SLP1000.
Gross profit for the three months ended September 30, 2000 was $1.2 million, 30% of revenues, compared to $396,000, 14% of revenues, for the three months ended September 30, 1999. The increase in gross profit and gross profit percentage was mainly attributable to the introduction of the Palomar SLP1000.
(ii) OPERATING AND OTHER EXPENSES: Three Months Ended September 30, 2000,Research and development costs increased to $1.9 million for the three months ended September 30, 2000, as compared to $1.6 million for the three months ended September 30, 1999. Research and development expenses as a percentage of revenue totaled 47% for the three months ended September 30, 2000 and 56% for the three months ended September 30, 1999. The continued spending on research and development reflects the Company's commitment to research and development for devices and delivery systems for cosmetic and medical applications using a variety of lasers, while continuing dermatology research utilizing the Company's laser platforms. The research and development goals in the field of laser hair removal are to design systems that (1) permit more rapid treatment of large areas, (2) have high gross margins, and (3) are manufactured at a lower cost, thus addressing broader markets. Further, the Company is aiming to address dermatology and cosmetic procedure markets other than hair, including the fields of fat reduction, acne treatment and skin rejuvenation.
Selling and marketing expenses were $1.0 million, or 25% of revenues for the three months ended September 30, 2000, compared to $590,000, or 20% of revenues for the three months ended September 30, 1999. The increase in selling and marketing expenses is directly attributable to the introduction of the Palomar SLP1000.
General and administrative expenses decreased to $892,000, or 22% of revenues for the three months ended September 30, 2000, as compared to $1.0 million, or 36% of revenues for the three months ended September 30, 1999. This decrease in general and administrative expenses is attributable to the Company's restructuring and consolidation of administrative functions at the end of 1999.
Interest income decreased to $310,000 for the three months ended September 30, 2000, compared to $470,000 for the three months ended September 30, 1999. This decrease in interest income was the result of a decrease in cash, cash equivalents and available-for-sale investments.
Interest expense decreased to $36,000 for the three months ended September 30, 2000, compared to $182,000 for the three months ended September 30, 1999. As a result of the sale of Star, which generated $49.7 million in cash, the Company paid substantially all of its outstanding debt resulting in a decrease of interest expense.
Other income (expense), net increased to approximately $58,000 for the three months ended September 30, 2000. This amount compares to ($8,000) for the three months ended September 30, 1999.
(iii) REVENUES AND GROSS PROFIT: Nine Months Ended September 30, 2000,For the nine months ended September 30, 2000, the Company's revenues were $9.5 million, as compared to $21.9 million for the nine months ended September 30, 1999. The decrease in the Company's revenues of $12.4 million, or 57% from the nine months ended September 30, 1999, was mainly due to the reduction in sales volume of $14.5 million associated with the LightSheer diode laser system manufactured by Star. The decrease is offset by an increase of $1.4 million in royalties received by the Company and an increase of $0.7 million in other product revenues.
Gross profit for the nine months ended September 30, 2000 was $1.5 million, 16% of revenues, as compared to $10.2 million, or 46% of revenues for the nine months ended September 30, 1999. The decrease in the Company's gross profit of $8.7 million, or 85% from the nine months ended September 30, 1999, was mainly due to the reduction in sales volume associated with the LightSheer diode laser system manufactured by Star. Additionally, gross margin was negatively affected in the nine months ended September 30, 2000 as the Company wrote-off $597,000 of the remaining inventory associated with past generation product lines being phased out.
(iv) OPERATING AND OTHER EXPENSES: Nine Months Ended September 30, 2000,Research and development costs decreased to $5.9 million for the nine months ended September 30, 2000, from $6.3 million for the nine months ended September 30, 1999. Research and development expenses as a percentage of revenue totaled 62% for the nine months ended September 30, 2000 and 29% for the nine months ended September 30, 1999. The increase as a percentage of sales is directly attributable to the reduction in sales volume associated with the LightSheer diode laser system manufactured by Star while the Company continued to spend on research and development. The continued spending on research and development reflects the Company's commitment to research and development for devices and delivery systems for cosmetic and medical applications using a variety of lasers, while continuing dermatology research utilizing the Company's laser platforms. The research and development goals in the field of laser hair removal are to design systems that (1) permit more rapid treatment of large areas, (2) have high gross margins, and (3) are manufactured at a lower cost, thus addressing broader markets. Further, the Company is aiming to address dermatology and cosmetic procedure markets other than hair, including the fields of fat reduction, acne treatment and skin rejuvenation.
Selling and marketing expenses decreased to $2.2 million, 23% of revenues, for the nine months ended September 30, 2000 from $6.3 million, 29% of revenues, for the nine months ended September 30, 1999. The decrease in selling and marketing expenses as a percentage of revenues is a result of the Company's sale of Star.
General and administrative expenses decreased to $3.0 million, 32% of revenues, for the nine months ended September 30, 2000, as compared to $4.2 million, 19% of revenues, for the nine months ended September 30, 1999. This decrease in general and administrative expenses is attributable to the sale of the Company's Star subsidiary and due to the Company's restructuring and consolidation of administrative functions at the end of 1999.
During the nine months ended September 30, 2000, the Company made a determination that goodwill and equipment related to certain past generation products being phased out had been impaired and, accordingly, wrote-off $522,000 of goodwill and $224,000 of equipment.
Costs related to solicitation of proxies in connection with the Company's 1999 Annual Meeting of Stockholders were $625,000 for the nine months ended September 30, 1999 as a result of a proxy contest launched by a dissident stockholder group.
Settlement costs were $750,000 for the nine months ended September 30, 1999 and are attributable to various lawsuits and other claims against the Company.
Gain from the sale of a subsidiary was $47.1 million for the nine months ended September 30, 1999 due to the Company completing the sale of Star on April 27, 1999. Gain from sale of subsidiary was $3.1 million in the nine months ended September 30, 2000, as the one-year escrow was settled in connection with the sale of Star.
Redemption expense was $6.2 million for the nine months ended September 30, 1999. This amount reflects a redemption expense as a result of a settlement agreement between Palomar and certain European banks that had held 4.5% Swiss franc denominated subordinated convertible debentures originally totaling $7.7 million and due in 2003. Under the terms of this agreement, which resolved a lawsuit, Palomar agreed to rescind its conversion notices issued in November 1997. Through these conversion notices, Palomar converted the subordinated debentures into 130,576 shares of the Company's common stock. Since the conversion date, the Company had treated these shares as issued and outstanding. Under the terms of this compromise, the Company agreed to pay a total of $6.7 million to the European banks, of which $5.0 million has been paid. The balance of $1.7 million is due through 2001. Accordingly, the Company has recorded a charge to operations of $6.2 million. This amount represents the total amount due to the European banks less the fair market value of the redemption of the common shares previously considered outstanding by the Company.
Interest income increased to $1.0 million for the nine months ended September 30, 2000 as compared to $878,000 for the nine months ended September 30, 1999. This amount represents interest earned on the balance of the funds received from the April 27, 1999 sale of Star, which are invested in high-grade corporate and government notes and bonds and will be used to fund future operations and research and development efforts.
Interest expense decreased to $124,000 for the nine months ended September 30, 2000, from $546,000 for the nine months ended September 30, 1999. As a result of the sale of Star, which generated $49.7 million in cash, the Company paid substantially all of its outstanding debt resulting in a decrease of interest expense.
Other income (expense), net increased to $351,000 for the nine months ended September 30, 2000, as compared to $271,000 for the nine months ended September 30, 1999.
The Company had a provision for income taxes of $2.5 million for the nine months ended September 30, 1999 as a result of the sale of Star. The Company was not able to fully offset the gain with its net operating loss carry-forwards.
During the nine months ended September 30, 2000, the Company adopted Securities and Exchange Commission (SEC) Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition. As a result of adopting SAB 101, the Company now records royalty income when received rather than when earned. In accordance with SAB No. 101, the Company recorded the impact of adopting SAB No. 101 as a cumulative catch-up adjustment to income in the current year's statement of operations, effective January 1, 2000.
The loss from discontinued operations for the nine months ended September 30, 1999 was $435,000 and due to a settlement related to the operations of a former subsidiary.
The Company's operations are carried out at the subsidiary level and consist primarily of research and development. To date, the Company's operating subsidiaries have required cash advances from the Company to fund their operations. As of September 30, 2000, the Company had $17.2 million in cash, cash equivalents and available-for-sale investments. With the proceeds from the Star sale, the Company believes that its financial position will meet its ongoing cash flow requirements and fund expected operating losses of its subsidiaries in the near term. The successful introduction and marketing of new products currently under development will be critical to future liquidity.
As of September 30, 2000, the Company's accounts receivable, net totaled $1.6 million, as compared to $1.9 million as of December 31, 1999. The Company's allowance for doubtful accounts totaled $224,000 as of September 30, 2000, compared to $207,000 as of December 31, 1999.
As of September 30, 2000, the Company's accounts payable decreased to $599,000, as compared to $659,000 as of December 31, 1999.
The Company anticipates that capital expenditures for the remainder of 2000 will total approximately $100,000, consisting primarily of machinery, equipment, computers and peripherals. The Company expects to finance these expenditures with cash on hand and equipment leasing lines, if available.
We have not yet experienced any problems with our computer systems relating to distinguishing twenty-first century dates from twentieth century dates, which generally are referred to as Year 2000 problems. We are also not aware of any material Year 2000 problems with our clients or vendors. Accordingly, we do not anticipate incurring material expenses or experiencing any material operational disruptions as a result of any Year 2000 problems.
In addition to the other information in this Quarterly Report on Form 10-Q, the following cautionary statements should be considered carefully in evaluating the Company and its business. Statements contained in this Form 10-Q that are not historical facts (including, without limitation, statements concerning products under development, the timing of new product introductions, financing of future operations, and the Company's research partnership with MGH) and other information provided by the Company and its employees from time to time may contain certain forward-looking information, as defined by (i) the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and (ii) releases by the SEC. The risk factors identified below, among other factors, could cause actual results to differ materially from those suggested in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The cautionary statements below are being made pursuant to the provisions of the Reform Act and with the intention of obtaining the benefits of safe harbor provisions of the Reform Act.
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 develop in a timely and cost-effective manner new products that meet changing market demands, to enhance existing products, and to achieve market acceptance for such products. We have in the past experienced delays in developing and marketing new products and enhancing existing products. Furthermore, some of our new products under development are based on unproven technology and/or technology with which the Company has no previous experience. As a result of the sale of Star to Coherent, our future revenue will be almost entirely dependent on sales of newly introduced products. Sales to date for the Company's current products have been minimal and the Company's future products 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 intend to diversify our product line by developing cosmetic laser products other than hair removal lasers, but there can be no assurance that we will be able to successfully implement such strategy in a timely fashion or at all.
The laser hair removal industry is highly competitive and companies frequently introduce new products. We compete in the development, manufacture, marketing and servicing of hair removal lasers with numerous other companies, some 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, as a result of the Star sale, Coherent, our former exclusive distributor and one of the largest and best financed laser companies, is now our competitor and we have to find new ways to distribute our products. We currently have no significant sales force in place for our new products under development. 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.
Almost all of our revenues in 1999 were attributable to sales of the LightSheer diode laser system manufactured by Star. Therefore, as a result of the Star sale, our revenues have declined significantly. If our operating results fall below the expectations of investors or public market analysts, the price of our common stock could fall.
For continued listing on The NASDAQ SmallCap Market, a company must maintain a minimum bid price of $1.00 per share. In March 1999, NASDAQ held a hearing regarding our continued listing on The NASDAQ SmallCap Market in light of the fact that our common stock had traded below the $1.00 minimum bid price requirement for longer than 30 trading days. As a result of our reverse stock split, we regained compliance with the minimum bid price requirement before that date, and are now in compliance with all of NASDAQ's requirements for continued listing on The NASDAQ SmallCap Market. However, there can be no assurance that we will remain in compliance with NASDAQ's criteria for continued listing or that we will remain listed on NASDAQ. 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.
We develop laser systems that incorporate third-party components as part of the overall systems. Some of these items are custom made or otherwise not readily available on the market. We purchase some of these components from small, specialized vendors that are not well capitalized. A disruption in the delivery of these key components could have an adverse effect on our business. In 2000, we anticipate that we will be substantially dependent on an overseas third-party manufacturer over whom we do not have absolute control to provide us with critical components for our Super Long Pulse diode laser.
All of our current products are laser medical devices. Laser medical devices are subject to FDA regulations regulating clinical testing, manufacturing, labeling, sale, distribution and promotion of medical devices. Before a new laser medical 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 we may not be able to obtain such clearances in a timely fashion or at all.
Our products are subject to similar regulations in our major international markets. Complying with these regulations is necessary for our strategy of expanding the markets for and sales of our products into these countries. These approvals may necessitate clinical testing, limitations on the number of sales and controls of end user purchase price, among other things. In certain instances, these constraints can delay planned shipment schedules as design and engineering modifications are made in response to regulatory concerns and requests. In addition, there can be no assurance that we will obtain such approvals in timely fashion or at all.
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 Laboratories of Photomedicine at Massachusetts General Hospital. We provide research funding, laser technology and optics know-how in return for licensing rights with respect to specific medical applications and patents. Our success will be highly dependent upon the results of this research. We cannot be sure 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.
In the past, we have issued convertible securities, such as debentures, 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 exercise of these securities. These outstanding convertible securities, options and warrants could affect the rights of our stockholders, and could adversely affect the market price of our common stock.
Our business could be materially and adversely affected if we are not able to adequately protect our 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 the intellectual property rights of others, we cannot prevent someone else from asserting a claim against us in the future for violating their intellectual property rights. In addition, costly and time-consuming lawsuits 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.
The medical laser industry is characterized by frequent litigation regarding patent and other intellectual property rights. Because patent applications are maintained in secrecy for a period of time , we can conduct only limited searches to determine whether our technology infringes any patents or patent applications. Any claims for patent infringement could be time-consuming, result in costly litigation and diversion of technical and management personnel, cause shipment delays, require us to develop non-infringing technology or to enter into royalty or licensing agreements. Although patent and intellectual property disputes in the laser industry have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and often require the payment of ongoing royalties, which could have a negative impact on gross margins. There can be no assurance that necessary licenses would be available to us on satisfactory terms, or that we could redesign our products or processes to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling some of our products. This could have a material adverse effect on our business, results of operations and financial condition.
Our Second Restated Certificate of Incorporation and our By-laws contain provisions that could discourage takeover attempts or make more difficult the acquisition of a substantial block of our common stock. Our By-laws require a stockholder to provide to the Secretary of the Company advance notice of director nominations and business to be brought by such stockholder before any annual or special meeting of stockholders, as well as certain information regarding such nomination and/or business, the stockholder and others known to support such proposal and any material interest they may have in the proposed business. They also provide that a special meeting of stockholders may be called only by the affirmative vote of a majority of the Board of Directors. These provisions could delay any stockholder actions that are favored by the holders of a majority of the outstanding stock of the Company until the next stockholders' meeting. In addition, the Board of Directors is authorized to issue shares of common stock and preferred stock that, if issued, could dilute and adversely affect various rights of the holders of common stock and, in addition, could be used to discourage an unsolicited attempt to acquire control of the Company.
The Company is also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which prohibits the Company from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person becomes an interested stockholder, unless the business combination is approved in a prescribed manner. The application of Section 203 may limit the ability of stockholders to approve a transaction that they may deem to be in their best interests. These provisions of our Second Restated Certificate of Incorporation, By-laws and the Delaware General Corporation Law could deter certain takeovers or tender offers or could delay or prevent certain changes in control or management of the Company, including transactions in which stockholders might otherwise receive a premium for their shares over the then current market prices.
Market acceptance of our current and proposed products will depend, in large part, upon our or any marketing partner's ability to demonstrate to the marketplace the advantages of our products over other types of products. There can be no assurance that the marketplace will accept applications or uses for our current and proposed products or that any of our current or proposed products will be able to compete effectively.
At present, a material portion of our revenues consist of royalties from licensing both our own patents and patents licensed to us on an exclusive basis by Massachusetts General Hospital. However, there can be no assurance that we will be able to obtain valuable patent rights. Moreover, there can be no assurance that, even if we do obtain such patent rights and are able to license them to third parties, we will derive a significant revenue stream from such licenses.
We are involved in disputes with third parties. Such disputes have resulted in litigation with such parties. We have incurred, and likely will continue to incur, legal expenses in connection with such matters. There can be no assurance that such litigation will result in favorable outcomes for us. Although we have reached a settlement agreement with the plaintiffs in the Varljen litigation, the court must approve the settlement, and there can be no assurance that it will be approved. An adverse result in that suit could have a material adverse effect on our business, financial condition and results of operations.
As a small company with less than 100 employees, our success depends on the services of key employees in executive and research and development positions. The loss of the services of one or more of these employees could have a material adverse effect on our business.
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. We maintain general liability insurance in the amount of $1 million per occurrence and $2 million in the aggregate and maintain umbrella coverage in the aggregate amount of $25 million; however, there can be no assurance that such coverage will continue to be available on terms acceptable to us or that such coverage will be adequate for liabilities actually incurred. In the event we are found liable for damages in excess of the limits of our insurance coverage or if any claim or product recall results in significant adverse publicity against us, our business, financial condition and results of operations could be materially and adversely affected. In addition, although our products have been and will continue to be designed to operate in a safe manner, and although we attempt to educate medical personnel with respect to the proper use of our products, misuse of our products by medical personnel over whom we cannot exert control may result in the filing of product liability claims or in significant adverse publicity against us.
Not applicable.
On March 11, 1999, the United States District Court for the Southern District of New York granted plaintiffs leave to amend their complaint in the action styled Varljen v. H.J. Meyers, Inc., et. al. to join the Company, its former chief executive officer and current chief operating officer as defendants. On March 17, 1999, the Second Amended Class Action Complaint in Varljen was served upon the Company and its current chief operating officer, alleging that the Company and the former and current officer violated the federal securities laws in various public disclosures that the Company made directly and indirectly during the period from February 1, 1996 to March 26, 1997. Palomar and the Varljen plaintiffs have reached an agreement pursuant to which Palomar and its insurance carrier would pay plaintiffs $5 million in settlement of all their claims. Of this amount, Palomar would contribute up to $1 million in stock and $1.375 million in cash, and its insurance carrier the remaining $2.625 million in cash. This settlement agreement was approved by the court on November 6, 2000. A final Judgemnet of Dismissal with Prejudice was entered by the court on November 6, 2000.
The Company is involved in other legal and administrative proceedings and claims of various types. While any litigation contains an element of uncertainty, management, at present believes that the outcome of each such other proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse effect on the Company.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
(a) Exhibits
^^^3(i).1 Certificate of Designation, as filed with the Delaware Secretary of State on April 21, 1999.
^3(i).2 Second Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on
January 8, 1999.
‹‹3(ii) Bylaws, as amended.
^4.1 Common Stock Certificate.
^^4.2. Rights Agreement Between Palomar Medical Technologies, Inc. and American Stock Transfer &
Trust Company, dated as of April 20, 1999
##4.3 Form of 4.5% Convertible Debenture (denominated in Swiss Francs) due July 3, 2003.
####4.4 First Allonge and Amendment to 4.5% Subordinated Convertible Debenture
##4.5 Form of 6% Convertible Debenture due March 13, 2002.
‹4.6 Second Amended 1991 Stock Option Plan.
‹4.7 Second Amended 1993 Stock Option Plan.
‹4.8 Second Amended 1995 Stock Option Plan.
‹4.9 Second Amended 1996 Stock Option Plan.
‹4.10 Third Amended 1996 Employee Stock Purchase Plan.
*4.11 Form of Stock Option Grant under the 1991, 1993 and 1995 Amended Stock Option Plans.
##4.12 Form of Stock Option Agreement under the 1996 Amended Stock Option Plan.
#4.13 Form of Company Warrant to Purchase Common Stock
‹‹10.1 Amendment No. 1 to Key Employment Agreement between the Company and Joseph P. Caruso
dated June 8, 2000
27 Financial Data Schedule for the Period Ended September 30, 2000
^ Previously filed as an exhibit to Form 8-K, filed on April 21, 1999 and incorporated herein by
reference.
^^ Previously filed as an exhibit to Form 10-K for the period ended December 31, 1998, filed on March
30, 1999 and incorporated herein by reference.
^^^ Previously filed as an exhibit to Form 10-Q for the period ended March 31, 1999, filed on May 17,
1999 and incorporated herein by reference.
^^^^ Previously filed as an exhibit to Form 8-K, filed on December 16, 1999 and incorporated herein by
reference.
* Previously filed as an exhibit to Amendment No. 4 to Form S-1 Registration Statement No. 33-47479
filed on October 5, 1992, and incorporated herein by reference.
** Previously filed as an exhibit to the Company's Definitive Proxy Statement for the period ended
December 31, 1998 filed on March 12, 1999, and incorporated herein by reference.
# Previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995, and incorporated herein by reference.
## Previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996, and incorporated herein by reference.
### Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, and incorporated herein by reference.
#### Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by reference.
- Previously filed as an exhibit to Form S-8 Registration Statement No. 33-97710 filed on October 4,
1995, and incorporated herein by reference.
‹ Previously filed as an exhibit Form 10-Q for the period ended June 30, 1999, and incorporated
herein by reference.
‹‹ Previously filed as an exhibit Form 10-Q for the period ended June 30, 2000, and incorporated
herein by reference.
(b) Reports on Form 8-K
None
Pursuant to the requirements of the Securities Act of 1934, the Registrant certifies that it has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Burlington in the Commonwealth of Massachusetts on November 13, 2000.
PALOMAR MEDICAL TECHNOLOGIES, INC.
(Registrant)
Date: November 13, 2000 By: /s/ Louis P.Valente
Louis P. Valente
Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 2000 By: /s/ Joseph P.Caruso
Joseph P. Caruso
President and Chief Operating Officer
(Principal Financial Officer and
Principal Accounting Officer)
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