SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-1494566
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15 Link Drive
Binghamton, New York 13904
(607) 722-3800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Dr. Geoffrey T. Burnham
President, Chairman and Chief Executive Officer
15 Link Drive
Binghamton, New York 13904
(607) 722-3800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Richard A. Goldberg
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
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Approximate date of commencement of proposed sale to the public: On such date as
the Selling Stockholders shall elect to commence sales to the public following
the effective date of this registration statement.
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|
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. |_|
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
Cross Reference Sheet
Item Number and Caption Heading in Prospectus
- - - ----------------------- ---------------------
1. Forepart of the Registration Front Cover Page
Statement and Outside Front Page of
Prospectus
2. Inside Front and Outside Back Cover Table of Contents; Available
Pages of Prospectus information; Documents Incorporated by
Reference
3. Summary Information, Risk Factors Prospectus Summary; Risk Factors
and Ratio of Earnings to Fixed
Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Description of Securities
Registered
10. Interest of Named Experts and Experts; Legal Matters
Counsel
11. Material Changes *
12. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference Reference
13. Disclosure of Commission Position Disclosure of Commission Position on
on Indemnification for Securities Indemnification for Securities Act
Act Liabilities Liabilities
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* Not Applicable.
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SUBJECT TO COMPLETION
PROSPECTUS DATED DECEMBER 22, 1998
SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
1,650,000 shares of Common Stock
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This Prospectus relates to the sale of up to 1,650,000 shares (the
"Shares") of Common Stock, par value $0.01 per share ("Common Stock"), of
Semiconductor Laser International Corporation (the "Company ") which may be
offered for sale from time to time by certain stockholders of the Company (the
"Selling Stockholders"). The Shares were issued on June 8, 1998 in a private
placement. See "Prospectus Summary-Recent Developments-June 1998 Private
Placement" and "Selling Stockholders".
The Shares may be sold from time to time by the Selling Stockholders, or
by their pledgees, donees, transferees or other successors in interest. No
underwriting arrangements have been entered into by the Selling Stockholders. In
addition, as none of the Selling Stockholders have advised the Company whether
or not they have any current intention of selling any of the Shares, the Company
is unable to predict whether or when any of the Selling Stockholders will
determine to proceed with sales of the Shares, as such determination will be
made solely at the discretion of each Selling Stockholder. The distribution of
the Shares by the Selling Stockholders and/or their pledgees, donees,
transferees or other successors in interest, may be effected in one or more
transactions that may take place on the Nasdaq SmallCap Market, the
over-the-counter market, including ordinary brokers transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
the Shares as principals, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling Stockholders
in connection with such sales. The Selling Stockholders and intermediaries
through whom such Shares are sold may be deemed "underwriters" within the
meaning of the Securities Act, with respect to the Shares offered. See "Plan of
Distribution. "
The Company has agreed to bear all out of pocket expenses, other than
selling discounts and commissions, in connection with the registration of all of
the Shares which may be offered by the Selling Stockholders, estimated to be
approximately $20,000.
The Common Stock and certain warrants (the "Registered Warrants") to
purchase Common Stock are quoted on the Nasdaq SmallCap Market under the trading
symbols "SLIC" and "SLICW," respectively. On December 22, 1998, the last
reported sale prices of the Common Stock and the Registered Warrants were
$0.375 per share and $0.03125 per Registered Warrant, respectively.
THESE SECURITIES WHICH MAY BE OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND SHOULD BE PURCHASED ONLY BY THOSE PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" COMMENCING AT PAGE 9 OF THIS
PROSPECTUS.
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SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is _________________
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
registration statements and certain other filings made electronically with the
Commission through its "EDGAR" system are publicly available through the
Commission's site on the Internet's World Wide Web, located at
http://www.sec.gov. This Registration Statement, including all exhibits thereto,
has been filed with the Commission through EDGAR. Reports, proxy and information
statements and other information concerning the Company can also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1997 filed with the Commission on April 13, 1998.
(b) The Company's Quarterly Report on Form 10-QSB for the quarters ended
March 31, 1998 filed with the Commission on May 15,1998; June 30, 1998 filed
with the Commission on August 12, 1998; September 30, 1998 filed with the
Commission on November 23, 1998.
(c) All other reports and other documents filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1997.
In addition, all documents and reports subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the filing of a post effective
amendment which indicates that all securities which may be offered hereby have
been sold or which deregisters all securities then remaining unsold shall be
deemed to be incorporated by reference herein from their respective dates of
filing. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will furnish, without charge, to any person to whom a copy of
this Prospectus is delivered, upon such person's written or oral request, a copy
of any and all of the documents that have been incorporated by reference in the
Registration Statement and herein (not including exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents). The Company will also furnish, without charge, to any such person
upon such person's written or oral request, a copy of the Company's most recent
Annual Report to Stockholders. Any such request should be directed to Dr.
Geoffrey T. Burnham., Semiconductor Laser International Corporation, 15 Link
Drive, Binghamton, New York 13904, telephone number (607) 722-3800.
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PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to, and should be
read in conjunction with, the detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus or in the
documents incorporated herein by reference. The summary is intended to set forth
certain pertinent facts and highlights from material contained in the body of
this Prospectus and the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997 (the "Form 10-KSB") and the Company's Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1998; the quarter
ended June 30, 1998; and the quarter ended September 30, 1998
(the "Form 10-QSB"), each of which is incorporated herein by reference. Each
prospective investor is urged to read this Prospectus and the Form 10-KSB
and Form 10-QSB in their entirety.
THE COMPANY
General
Semiconductor Laser International Corporation (the "Company") develops
and produces high power semiconductor diode lasers ("HPDLs"). The
Company currently manufactures HPDLs for a variety of applications across
numerous industries, including medical, manufacturing, optical storage,
telecommunications, printing and military. Since its inception in 1993, the
Company has been primarily engaged in developing and improving upon the use of
patented technology (known as Desorption Mass Spectrometric Control ("DMS")) to
control and increase the reliability of a commonly known laser manufacturing
process referred to as Molecular Beam Epitaxy ("MBE"). The Company has
supplemented its own research and development with that of several universities
and research institutions including the United States Air Forces' Wright
Laboratory and Northwestern University Center for Quantum Devices. The use of
the DMS technology (exclusively licensed to the Company by the United States Air
Force (the "Air Force") through the year 2004 pursuant to a license agreement
(the "License Agreement")) to control the MBE production of HPDLs not only
offers significant cost advantages over the MBE production of HPDLs without DMS
but, more importantly, also offers cost advantages over the currently
prevailing manufacturing process for HPDLs known as Metal Organic Chemical
Vapor Deposition ("MOCVD"). In addition, the Company was granted an exclusive
worldwide license from Northwestern University relating to aluminum free
HPDLs, which generate greater power and evidence longer life and greater
reliability than existing HPDLs.
The Company manufactures its products at a newly constructed,
high technology facility in Broome County, New York built to the Company's
specifications. The Company currently utilizes 15,000 square feet at such
location, including a 4,500 square feet class 1,000 clean room and plans to
ultimately expand its operations to 60,000 square feet. See "Prospectus
Summary-The Company-Manufacturing Facility."
The Company was incorporated in New York in September of 1993 and
reincorporated in Delaware in September 1997.
Industry Background
Lasers produce a beam of radiation in the electromagnetic spectrum which
can be varied in intensity and wavelength depending upon the desired
application. This variable intensity enables high-powered lasers to be used as
power sources in a broad range of applications, including the materials
processing, fiber optic, telecommunications, printing, medical, dental,
automotive, machining, and optical data storage and DVD markets. HPDLs are
increasingly replacing traditional technologies, including other types of high
power lasers, in these and other applications, as HPDLs are generally less
complex, smaller, more reliable, more durable and/or more powerful than their
predecessor technologies.
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The kind and number of applications that can benefit from utilizing HPDLs
include all applications requiring intense and efficient power, particularly
where reliability, long useful life (without adjustment or replacement of parts)
and, in some applications, smaller size and/or adaptability to fiber optic
coupling are significant. The immense variety and magnitude of these
applications and potential applications is creating an expanding demand for
HPDLs and, if lower prices for HPDLs can be achieved, it is anticipated that new
applications requiring lower priced HPDLs will create significant additional
demand.
Strategy
The Company is currently competing against the existing MOCVD produced
HPDLs by producing HPDLs which it believes exceed the quality standards of such
competitive products and are produced at lower costs. The Company believes
that at such time that high volume sales of individual products are made, its
new manufacturing technology will permit it to reduce the prices of and to
manufacture a high volume of HPDLs of superior power and longevity and
greater reliability, although there can be no assurance that it will be able to
do so. See "Risk Factors." The Company is seeking to capitalize on such
opportunities through its manufacturing, marketing and research strategies.
The Company's manufacturing strategy is to take advantage of the advance
in HPDL manufacturing technology made possible through its DMS/MBE process and
through its acquisition of rights relating to aluminum free HPDLs. The Company
currently controls all stages of HPDL manufacturing, including all aspects of
the processing and packaging of its HPDL products, at its own manufacturing
facility where it utilizes the full benefit of its research and development
efforts to date. The Company hopes to continually improve and expand its
manufacturing capabilities through the ongoing purchase of equipment
incorporating further improvements, as developed, and to expand its
manufacturing space, as needed, to capitalize on anticipated commercial
market acceptance of its products. There can be no assurance that the
Company will be able to carry out its proposed manufacturing strategy, or
that anticipated commercial market acceptance of its products will develop. See
"Risk Factors."
The new equipment acquired by the Company for its manufacturing
facility incorporates the developments and modifications which the Company
had previously made to the DMS/MBE technology.
The Company believes that it has established, within the HPDL marketplace,
the credibility of its products, i.e. their comparable quality to those of
current HPDL manufacturers and their substantially lower cost. The Company's
initial marketing strategy is focused on finding potential customers to consider
the applicability of its products to existing and new uses. The Company believes
that once the quality of its product line and the lower prices charged for its
products is fully recognized, it will be able to achieve significant market
penetration. The Company participates in trade shows and publicizes its
improvements in scientific and trade journals.
Subject to the availability of capital, the Company engages in ongoing
research and development efforts to improve its manufacturing process and new
product development. The Company is also involved in research and development
with a number of academic institutions which provide the Company, through their
research collaboration, with access to new technologies, new product
applications, quality control measures, testing equipment, and experienced
research personnel.
License Agreement with the Air Force. The Company has an exclusive ten year
license on the DMS technology as it applies to laser technology, pursuant to its
License Agreement with the Air Force. The Air Force has received a patent with
respect to the DMS technology. The License Agreement is not assignable, other
than to the Company's subsidiaries, without the prior written approval of the
Air Force. Under the License Agreement, the Company is obligated to pay
royalties of .5% on all gross sales (other than sales to or for the U.S.
Government) of each laser or laser related product that was produced utilizing
any method defined in the Air Force's patent. In addition to the royalty
payments, the Company is obligated to pay a minimum royalty of $20,000 beginning
with the fifth year of the License Agreement (March 30, 1999). The Company was
required under the License Agreement to satisfy the Air Force that it had taken
effective steps to exploit the licensed technology commercially. The Company's
products
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currently being manufactured and sold represent the commercial exploitation of
the License Agreement as required by its terms. Failure to comply with
this requirement could result in loss of exclusive rights under the
License Agreement, which loss would have a material adverse affect on the
Company. Any improvements developed by the Company of the licensed technology
will be the sole property of the Company. After 2004, unless extended, the
License Agreement will become nonexclusive. The Air Force has a royalty free
right to employ the DMS technology in non-commercial production of HPDLs for its
own use.
Northwestern License. In September 1996, the Company entered into a license
agreement (the "Northwestern License") with Northwestern University granting the
Company exclusive worldwide rights relating to aluminum free HPDLs under patent
rights of Northwestern University. Under the Northwestern License, an initial
licensing fee was paid along with a small number of shares of Common Stock. An
additional small number of shares of Common Stock was issued in November
1997. The Northwestern License also provides for royalties on net sales as
well as a share of any payments received by the Company with respect to
sub-license fees. Certain obligations must be met by the Company in order to
maintain the Northwestern License, all of which the Company believes that it
will fully satisfy.
With the benefit of the Northwestern License, the Company is completing
plans for the manufacture and sale of aluminum free HPDLs. The significant
advantage of aluminum free HPDLs over existing HPDLs is the ability of
aluminum free HPDLs to generate greater power while evidencing
longer life and greater reliability. The Company believes the aluminum free
HPDLs will offer major competitive advantages as compared to the aluminum
based products of its competitors. The Company believes that the patent rights
and the Northwestern License cover all production methods, including, but
develop equivalent aluminum free technology could infringe on its exclusive
rights. Enforcement of these rights will require coordination by the Company
with Northwestern University. The Company believes that the exclusive right
granted under the Northwestern License constitutes a major competitive
advantage. Coherent, Inc., a competitor of the Company, has advised the Company
and Northwestern University that it believes that the patent rights under the
Northwestern License do not cover the manufacture of aluminum free products
other than by MOCVD. Alternatively, Coherent, Inc. claims that its products do
not infringe on the Northwestern patents. The Company is reviewing its options
with respect to such infringements. However, the Company further believes
that even if such rights are ultimately determined not to cover other
manufacturing methods, or if Northwestern University determines not to pursue
infringement actions, such a determination will not materially adversely impact
its financial condition and results of operation and that the Company will be
able to compete effectively with third party competitors using other
manufacturing methods. At this time, no litigation has been instituted by the
Company, Northwestern or any third party with respect to the scope of the
patent rights and under the Northwestern License.
Current and Future Markets
The Company has been selling its products to customers for use in a wide
range of applications requested by customers. For a description of existing
products see "Prospectus Summary - Manufacturing and Products." A purchaser of
the Company's products will typically incorporate the products into a particular
device or application developed by such purchaser. Depending upon a customer's
needs, the products purchased from the Company can either be sold in an
unpackaged processed form or in a packaged processed form. In situations where
packaged products are sold, they generally provide the Company with a
substantially higher profit margin.
There are many industries which are currently engaged in product and
design programs for which specialized HPDLs may be essential. The development
of one or more of these areas could greatly increase the demand for the
Company's products. The Company may be required to expand its operations in
order to meet such potential demand. There can be no assurance that such
increased demand for the Company's products will occur or that the Company
will be able to sufficiently expand its operations to meet such increased
demand.
Manufacturing Facility
The Company is currently operating a single-wafer V-80H DMS controlled MBE
machine at its manufacturing facility. The Company's manufacturing facility
(15,000 square feet) includes all related facilities and equipment necessary for
production, such as a 4,500 sq. ft. class 1,000 clean room and the tooling and
testing equipment for its production processing line.
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On December 18, 1996 the Company entered into an agreement (the "Sale and
Leaseback Agreement") with the Broome County IDA, in which the Company sold and
leased back its manufacturing facilities and equipment. The sale price was $1.00
and the lease payment is $1.00 per year for twenty years. In accordance with the
Sale and Leaseback Agreement, the Company has the unilateral right at any time
to purchase from the Broome County IDA all assets sold to them for the price of
$1.00. The Sale and Leaseback Agreement also provides that the Company would
make payments in lieu of taxes at a rate dependent on employment levels. All
rights of ownership in the facilities and equipment remain with the Company.
This transaction was reflected on the books of the Company as if there were no
Sale and Leaseback on the basis that the monetary values of the transaction and
the property rights did not represent in substance a true sale and leaseback
transaction.
Manufacturing and Products
General
The manufacturing process for the growth of HPDL wafers and the further
manufacturing steps necessary to process and package these wafers into bars,
chips and multi-bar stacked arrays in original equipment manufacturer ("OEM") or
end user ready format is a highly technical process. The general description of
these processes which follows necessarily simplifies the essentials and by its
nature does not include many of the more intricate elements involved in
successfully carrying out the complex growth and manufacture of HPDLs.
Growth
The two principal growth methods which have been developed to manufacture
HPDLs are MOCVD, the process that the Company believes is used by most of its
competitors (including SDL, Inc. ), and MBE, the process which the Company is
using. MOCVD has been the prevailing manufacturing process to date, even though
the yields of acceptable or usable wafers associated with this process (when
compared with the total number of wafers grown) are believed to be as low as
10%. The MBE process has historically had even lower useable wafer yields.
However, by monitoring and controlling the MBE production process with its
licensed DMS technology, the Company has developed what it believes to be a
process capable of producing commercially acceptable or usable wafers
(which meet the quality standards of existing MOCVD produced HPDLs).
Prior to the development of DMS, the MBE process had limited success in
producing repeatable, high quality wafers that met the precise specifications
necessary for HPDLs. This resulted from an inability to sufficiently control the
growth process on a layer by layer basis. With DMS hardware and software
controls added to MBE, the Company believes it has the ability to produce
uniform HPDLs with commercially acceptable yields.
Since the Company acquired the exclusive rights to the aluminum-free
technology from Northwestern University (see "Strategy"), the Company has
embarked upon a development program to ascertain the most cost effective
production technique for this technology. The Company is evaluating MOCVD, gas
source MBE and solid source MBE/DMS.
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Processing
After the growth process is completed and the wafers have been tested (a
complicated process requiring dedicated testing equipment) acceptable wafers are
processed and cut (a process referred to as cleaving) into one centimeter
individual laser bars. Each laser bar contains multiple laser chips or laser
emitters. The actual number varies depending upon the desired power
characteristics of the laser chip or emitter.
Packaging
The Company currently offers numerous packages, fitting the chips and bars
for unique applications, higher power output and fiber optic coupling. Although
many of the bars and chips are sold raw and unpackaged, the Company offers
packaging as a way to attract additional customers.
The final steps in the production process are the actual assembly and
packaging of the fully processed chips and bars into an OEM or end user ready
format. The Company's packages include a range of products, from single chip
devices, such as the C-Mount, the 9 mm package and the 5.6 mm pulse package, to
multiple chip devices up to 5 watts CW, such as the single-LD bar, LT-bar, LS
bar and SLD-bar packages and the stacked array packages and various fiber
coupled lasers up to 35 watts CW and 100 watts QCM. Customers' applications and
preferences dictate which package is best for their needs, and adaptations of
packages for specific product requirements can be designed. Wherever
appropriate, portions of the packaging process may be subcontracted by the
Company. Each packaging configuration can be utilized for different applications
with the principal differences being the power of the laser diode device or its
output and/or coupling connections. The sizes of the typical HPDL products are
merely a function of industry convention. Thus, the one centimeter single-laser
bar size could be easily modified by the Company or its competitors to a
different size.
The principal executive offices of the Company are located at 15 Link
Drive, Binghamton, New York 13904, telephone number: (607) 722-3800.
RECENT DEVELOPMENTS
June 1998 Private Placement
On June 8, 1998, the Company completed a private placement (the "Private
Placement") of 1,650,000 shares of its Common Stock, at an aggregate purchase
price of $1,237,500. The shares of Common Stock were issued and sold by the
Company without registration under the Securities Act in reliance upon the
exemption from registration afforded by Section 4(2) of the Securities Act and
Section 506 of Regulation D promulgated under the Securities Act in that they
were sold solely to "accredited investors" as defined in Rule 501 (a) of the
Securities Act. The placement agent for the shares, Empire Consulting
Company, LTD,(the "Placement Agent") was paid $194,665 for commissions and
expenses. After deducting the Placement Agent's commissions and expenses of
$194,665 in the aggregate, the net proceeds of the Private Placement to the
Company were approximately $1,042,835. The net proceeds of the Private
Placement which are substantially depleted and have been used for working
capital and general corporate purposes.
The Company has agreed to file the Registration Statement within 45 days
of the receipt of a request from the purchasers and to use its best efforts to
have it be declared effective by the Commission.
Placement agency fees of $194,665 have been charged against the gross
proceeds of the offering in accordance with Securities and Exchange Commission
Staff Accounting Bulletin Topic 5-A, "Expenses of Offering."
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In connection with the Private Placement the Company has agreed with the
Placement Agent that it would enter into an agreement with a financial public
relations firm to be selected by the Placement Agent pursuant to which the
Company would receive a range of services including the establishment of contact
with a number of brokers, the preparation of certain reports and the arrangement
of broker teleconferences. In consideration of the services to be provided, the
Company has paid to the Placement Agent the sum of $49,125.
The Shares being offered hereby consist of those issued by the Company in
the Private Placement. The issuance of shares of Common Stock and the
registration of such shares under the Securities Act may have a depressive
effect upon the market in that there may not exist sufficient depth or breadth
in the market for the Common Stock to absorb the sale of additional shares that
may come to the marketplace by reason of such issuance.
THE OFFERING
Common Stock Outstanding on the
date of this Offering(1)......... 10,039,552 shares
Risk Factors ...................... This offering involves a high degree of
risk. See "Risk Factors."
Use of Proceeds ................... All of the proceeds of this offering
will be paid to the respective Selling
Stockholders and none of the proceeds
will be received by the Company. See
"Use of Proceeds."
Nasdaq SmallCap Symbol
Common Stock ................. SLIC
Registered Warrants .......... SLICW
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(1) Does not include (i) 250,000 shares of Common Stock reserved for issuance
under the Company's 1995 Stock Option Plan (the "Plan"), of which 141,305
shares have been reserved for currently outstanding options, (ii) 112,604
shares issuable upon exercise of options and warrants issued outside of the
Plan to certain executive officers, non-employee directors and consultants,
(iii) 2,118,000 shares issuable on exercise of the Registered Warrants, (iv)
750,000 shares issuable upon exercise of the Marketing Direct Concepts, Inc.
("MDC") Warrants, and (v) 20,000 shares issuable upon exercise of
warrants issued to another consultant to the Company.
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RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
The following factors, in addition to those discussed elsewhere in this
Prospectus should be considered carefully in evaluating the Company and its
business. An investment in the Shares is suitable only for those investors who
can bear the risk of loss of their entire investment.
Special Note Regarding Forward-Looking Statements and Risk Factors
Certain statements in this Prospectus, including information set forth in
the Company's Form 10-QSB for the quarter ended September 30, 1998 and Form
10-KSB for the year ended December 31, 1997 filed under the Exchange Act, which
are incorporated by reference herein, constitute or may constitute "forward-
looking statements" within the meaning of the Litigation Reform Act of 1995
(the "Litigation Reform Act"). The Company desires to avail itself certain
"safe harbor" provisions of the Litigation Reform Act and is therefore
including this special note to enable the Company to do so. Forward-looking
statements included in this Prospectus (including the documents incorporated
herein by reference) or hereafter included in other publicly available
documents filed with the Commission, reports to the Company's stockholders
and other publicly available statements issued or released by the Company,
involve known and unknown risks, uncertainties, and other factors
which could cause the Company's actual results, performance (financial or
operating) or achievements to differ from the future results, performance
(financial or operating) achievements expressed or implied by such
forward-looking statements. Such future results are based upon management's
best estimates based upon current conditions and the most recent results of
operations. These risks include, but are not limited to, history of significant
losses, need for additional capital, risks associated with the manufacturing
process, certain patent and technology considerations, competition and
technological changes, governmental regulations, dependence upon key personnel
and other risks detailed in the Company's Commission filings, each of which
could adversely affect the Company's business and the accuracy of the forward-
looking statements contained herein. Risk factors and investment considerations
which may materially affect the Company, impact upon any forward-looking
statements, and which otherwise should carefully be considered, include the
following:
History of Significant Losses; Accumulated Deficit; Anticipated Future
Losses. The Company has incurred net losses from inception (September 21, 1993)
and has an accumulated deficit at September 30, 1998 of $15,979,950. Such
losses have resulted from the Company's activities as a development stage
enterprise and have been financed primarily out of proceeds from the Company's
initial public offering and private equity financing. It is anticipated that
the Company will continue to incur losses for the immediate future until it is
able to achieve profitable operations or to generate sales sufficient to
support its operations.
Need for Additional Capital. The Company expects that its cash and working
capital requirements will continue to be significant as its operations expand.
Potential sources for such cash and working capital requirements are revenue
growth and additional private equity financing. The Company has a line of
credit secured by accounts receivable and inventory in the amount of
$1,000,000. This line of credit bears interest at the rate of prime plus
1.5% (prime being 7.75% at November 30, 1998) on the outstanding balance. At
November 30, 1998 $550,000 was outstanding on this line of credit on which the
Company is required to pay interest only. This line matures March 31, 1999.
There can be no assurance that the lender will not demand payment sooner on this
line of credit. The Company had borrowings in excess of its borrowing base
requirements as of September 30, 1998. However, a waiver of the right to demand
payment for this excess has been provided by the lender through December 31,
1998. There can be no assurance that any additional extension of this waiver
can be negotiated. The Company is currently seeking to issue additional equity
capital through a private placement. The need to raise equity capital at
current stock prices is likely to result in substantial dilution to shareholders
and could result in a change of control. The Company is also taking actions to
reduce operating expenses. Without an infusion of additional equity, however,
the Company estimates that it has sufficient cash flow to operate through
approximately January 31, 1999. Legal fees associated with pending
investigations(see "Risk Factors-Investigations")are expected to be an
additional drain on the Company's cash flow. There can be no assurance that
the Company will be able to obtain additional financing, including any
institutional financing, when needed, on commercially reasonable terms or at
all.
Investigations. Since April 1998, the Company has been responding to
informal requests for information from the Securities and Exchange Commission.
In August 1998, the Company learned that in June 1998, the Commission had issued
a formal order of investigation to determine whether violations of certain
aspects of the federal securities laws had occurred in connection with the
Company. Pursuant to this formal order of investigation, the Company and
certain of its current and former officers and directors have produced
documents pursuant to subpoenas from the Northeast Regional Office of the
Commission. The investigation is in its early stages and the Company is not
able to speculate as to the specific subject matter of the investigation on the
Company. There can be no assurance as to the timeliness of the completion of
the investigation or as to the final result thereof, and no assurance can be
given that the final result of the investigation will not have a material
adverse effect on the Company. The Company is cooperating with the
investigation, and has responded and will continue to respond to requests for
information in connection with the investigation.
In August 1998, the Company learned that the United States Attorney's Office for
the Southern District of New York is investigating whether violations of
securities laws have occurred in connection with the Company's public
disclosures. The Company is cooperating with the investigation and is
responding to a grand jury subpoena issued in connection with the
investigation. There can be no assurance as to the timeliness of the completion
of the investigation or as to the final result thereof, and no assurance can be
given that the final result of the investigation will not have a material
adverse effect on the Company or its current management. Management believes
that there are meritorious defenses to the issues raised by this investigation
and intends to defend this matter vigorously.
Dispute with Key Customer. The Company is currently engaged in a dispute
with one of its key customers, Rocky Mountain Instruments("RMI"). RMI
disputes the amounts owed to the Company regarding certain orders, has made
claims regarding defects in certain of the units delivered and is currently
late in making payments on such orders. The Company believes that RMI owes
approximately $468,571 (including a late charge) to the Company. RMI
accounted for approximately 38.9 % of the Company's net sales for fiscal 1998
to date. Of the initial purchase order for 500 units, only 97 have been
delivered to date and RMI has indicated that it does not want the remaining
units. While the Company believes that RMI is obligated to accept such units
and intends to enforce its rights, it has reduced its backlog by approximately
$1.5 million. There can be no assurance that RMI will remain a customer of the
Company. Loss of RMI as a customer may have a material adverse impact on
the net sales and financial condition of the Company.
9
<PAGE>
Risk Associated with the Manufacturing Process. Since its inception in 1993,
the Company had been engaged primarily in research and development, business and
financial planning, recruitment of key management and technical personnel,
raising capital to fund operations and the development of its HPDL product
prototypes. The Company has since completed the construction and equipping of
the first phase of its manufacturing facility and has begun the
commercialization of its products and the generation of sales revenues. During
1997, the Company began the commercialization of many of its products.
The manufacture of semiconductor lasers such as those sold by the Company is
a highly complex and precise process, requiring production in a highly
controlled and clean environment with the utilization of materials free of
defects and contamination. These factors have a significant impact on production
yields and product reliability which in turn affect operating results and future
customer acceptance. The Company as well as other semiconductor laser
manufacturers have, from time to time, experienced technical production problems
which have resulted in adverse financial consequences. No assurance can be
given that the Company's systems, procedures, procurement efforts and
production efforts and process are such that these problems will not be
experienced in the future.
Since the onset of commercial production, the Company, on occasion, has
been unable to manufacture certain products in quantities sufficient to meet the
demands of its existing customer base and that of new customers based upon
equipment and/or other technical problems arising at various points during the
production process. While at this time the Company is not experiencing any
significant technical manufacturing problems, there can be no assurance that
technical manufacturing problems could not arise in the future. The Company's
attempts to develop new products and keep current in technological improvements
to existing products has placed considerable strain on the Company to
continually improve a variety of operating, financial and other systems. There
can be no assurance that any existing or new systems, procedures or controls
will be adequate to support the Company's preparations or that its systems,
procedures and controls will be designed, implemented or improved in a cost
effective and timely manner. Lack of financial resources to implement,
improve and expand such systems, procedures and controls in an efficient
manner and at a place consistent with the Company's business could have a
material adverse impact on the Company's business and results of operations.
Competition; Rapid and Fundamental Technological Change. The HPDL market
is highly competitive. Many of the Company's competitors have substantially
greater financial, manufacturing, personnel, technological, marketing,
distribution, operating, administrative and other resources than the Company and
have established reputations for success in the development, licensing, sale and
servicing of their products and technology. In addition, the Company believes
that all current competitors of the Company utilize MOCVD production methods and
can be expected to vigorously assert the claim that the MOCVD technology is
superior to that of the Company's DMS/MBE technology. The Company faces intense
competitive pressure and may be unsuccessful even if its products and
manufacturing process are superior to those of its competitors. Moreover,
although the Company believes that current MOCVD methodology will be vulnerable
to competition from the DMS/MBE process, competitors have been striving to
improve yields under the MOCVD process and may, in the future,
10
<PAGE>
develop a means of making such process more cost effective. In addition, certain
companies may be developing technologies or products of which the Company is
unaware, which may be functionally similar, or superior, to some or all of those
being developed by the Company. There can be no assurance that the Company will
be able to compete successfully with these companies or other competitors. As
the market for the Company's products grows, new competitors are likely to
emerge. Additional competition could adversely affect the Company's operations.
Moreover, the HPDL market is characterized by extensive research and rapid
technological change. The development by others of new or improved products,
processes or technologies may make the Company's current or future products
obsolete or less competitive than currently anticipated. There can be no
assurance that advances in other or alternative technologies will not make the
Company's products obsolete or less competitive.
Dependence on Third Party Suppliers of Raw Materials and Components. The
Company's products require high quality raw materials and components which the
Company purchases from others. The Company's ability to manufacture its products
will depend upon its ability to establish commercial relationships with at le
maintain, supply agreements with any of its suppliers (intending instead to
purchase needed raw materials and components pursuant to purchase orders in the
ordinary course of business). The Company's production will also be dependent
upon its suppliers satisfying the Company's performance and quality
specifications and dedicating sufficient production capacity to meet the
Company's scheduled delivery times. There can be no assurance that the Company
will be able to establish any commercial relationships with suppliers or, if it
is able to do so, that such suppliers will be able to satisfy the Company's
scheduled delivery or performance requirements or have sufficient production
capacity to satisfy such requirements during any period of sustained demand.
Failure or delay by the Company's suppliers in supplying the Company with needed
raw materials and components would adversely affect the Company's operating
margins and the Company's ability to manufacture and deliver products on a
timely and competitive basis, which could, in turn, have a material adverse
effect on the Company.
Dependence Upon Exclusive Rights to the DMS Technology and Aluminum Free
Technology; Uncertainty of Intellectual Proprietary Rights; No Assurance of
Enforceability or Significant Competitive Advantage The Company's rights to the
DMS technology are governed by the Company's License Agreement with the Air
Force. The Company's rights to aluminum free technology are governed by the
Northwestern License. The Company's success and potential competitive advantage
are dependent upon its ability to exploit the technology under both such
agreements and to do so, if possible, on an exclusive basis. Accordingly, the
Company considers patent protection for such DMS technology, and its trade
secrets relating thereto, to be critical to the Company's business prospects.
While both licenses are based on patents received by the Air Force and
Northwestern University, respectively, there can be no assurance, however, that
the patents will not be invalidated, circumvented or challenged. Moreover, no
applications for patent protection in foreign countries have yet been made.
There can also be no assurance that others will not independently develop, or
have not already developed, similar or more advanced technologies than the
Company's technology; that others will not design around or have not already
designed around aspects of the technology and/or the Company's trade secrets
developed therefrom; or that the steps taken by the Company and the Air Force,
to date, will prevent misappropriation of the DMS technology. In addition, to
the extent that consultants, key employees or third parties apply technological
information independently developed by them or others to Company projects,
disputes may arise as to the proprietary rights to such information. The laser
industry is characterized by frequent litigation regarding patent and other
intellectual property rights. Litigation may be necessary in the future to
enforce the intellectual properly rights of the Company or to determine the
validity and scope of the proprietary rights of others. There can be no
assurance that the Company will have the financial or other resources necessary
to enforce or defend a patent infringement or proprietary rights violation
action. If the Company's products or proposed products are deemed to infringe
upon the patents or proprietary rights of others, the Company could, under
certain circumstances, become liable for damages which could also have a
material adverse effect on the Company.
Coherent, Inc. a competitor of the Company, has advised the Company and
Northwestern University that it believes that the patent rights under the
Northwestern License do not cover the manufacture of aluminum free products
other than by MOCVD. Alternatively, Coherent, Inc. claims that its products do
not infringe on the Northwestern patents. The Company is reviewing its options
with respect to such infringements. At this time, no litigation has been
instituted by the Company, Northwestern or any third party with respect to the
scope of the patent rights under the Northwestern License and no assurance can
be given either as to what enforcement action, if any, will be taken by
Northwestern and the Company or as to the outcome of any such action, if taken.
11
<PAGE>
Potential Product Liability Claims. The products that the Company will
market are intended for use by commercial end users and OEMs in their end
products. Some of the Company's products may become critical components in
medical and surgical devices or in printing, data storage and data transmission
and communications systems. The use of HPDLs is regulated by the Center for
Disease and Radiological Health because the misuse or mishandling of such
products could result in injury from exposure to the laser light emissions. A
malfunction of the Company's products in any application could result in tort
lawsuits based on injuries resulting from such malfunctions, or in contract
damages lawsuits resulting from the high costs of repairing or replacing the
Company's HPDLs in applications such as satellites or fiber cables or due to
lost profits for data transmission down time. There can be no assurance that the
Company's warranty disclaimers and liability limitations and adherence to safety
standards will be effective in limiting the Company's liability for any such
damages Moreover, while the Company maintains product liability insurance in the
amount of $1,000,000 per occurrence with a $2,000,000 aggregate limit, there can
be no assurance that this insurance will be sufficient to cover potential claims
or that adequate levels of coverage will be available in the future at
reasonable cost. A partially insured or a completely uninsured claim against the
Company could have a material adverse effect on the Company.
Potential Adverse Impact of Environmental Regulations. The Company is, and
will be, subject to a variety of federal, state and local governmental
regulations related to the storage, use, discharge and disposal of toxic,
volatile or otherwise hazardous or regulated chemicals used in its manufacturing
processes. There can be no assurance that changes in environmental regulations
will not impose the need for additional capital equipment or other requirements.
Further, such regulations could restrict expansion of the Company's operations.
Any failure by the Company to obtain required permits for, control the use of,
or adequately restrict the discharge of, hazardous or regulated substances under
present or future regulations could subject the Company to substantial
liability, require costly changes in the Company's manufacturing processes or
facilities, or cause its manufacturing operations to be suspended. Such
liability or suspension of manufacturing operations could have a material
adverse effect on the Company's results of operations or financial condition.
The Company would also be forced to eliminate certain substances from its
manufacturing processes. Failure to obtain adequate replacements could result in
decreased manufacturing yield, impairment of product reliability, inability to
fabricate certain products, and increased manufacturing costs.
Dependence Upon, and Need for, Additional Key Personnel. The success of
the Company will be largely dependent on the abilities and continued personal
efforts of Dr. Geoffrey T. Burnham, its Chairman, President, and Chief Executive
Officer whose employment agreement provides for an initial three year term
commencing on October 1, 1995 and based upon the
automatic one-year extensions to maintain its three year term until the
agreement is terminated by either party, has been extended each year for an
additional one year. Any incapacity or inability of Dr. Burnham to perform his
services would have a material adverse effect on the Company. Moreover, other
than key man life insurance on the life of Dr. Burnham in the amount of $1
million, the Company does not intend to have key man life insurance on the lives
of its officers or employees. The success of the Company will also be dependent
upon its ability to attract and retain experienced HPDL production, marketing
and manufacturing personnel with the specific executive skills necessary to
assist the Company. The Company faces competition for personnel from other
companies, academic institutions, government entities and other organizations,
many of which have significantly greater resources than the Company. There can
be no assurance that the Company will be able to attract and retain personnel,
and the inability to do so could have a material adverse affect on the Company.
No Dividends. Since its inception, the Company has not paid any dividends
on its Common Stock. The Company intends to retain future earnings, if any, to
finance its business operations and, accordingly, although the Company is not
restricted from doing so by virtue of its Certificate of Incorporation, By-laws
or any agreement, does not anticipate paying any cash dividends on its Common
Stock in the reasonably foreseeable future.
Tax Loss Carry Forwards. The Company's net operating loss carry forwards
("NOLs") expire in the years 2008 to 2012. Under Section 382 of the Internal
Revenue Code of 1986, as amended, utilization of prior NOLs is limited after an
ownership change, as defined in Section 382, to an annual amount equal to the
value of the loss corporation's outstanding stock immediately before the date of
the ownership change multiplied by the federal long-
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<PAGE>
term exempt tax rate. The additional equity financings obtained by the Company
since its inception may have resulted in an ownership change and, thus, in a
limitation on the Company's use of its prior NOLs. In the event the Company
achieves profitable operations, any significant limitation on the utilization of
its NOLs would have the effect of increasing the Company's tax liability and
reducing net income and available cash resources.
Possible Delisting of the Common Stock from the Nasdaq SmallCap Market.
The Company has received notice from the Nasdaq Stock Market that the Common
Stock may be delisted from the Nasdaq Stock Market, based on its current
sub-$1.00 stock price. If delisted, the Common Stock would likely be quoted on
the OTC Bulletin Board. Any delisting could cause the market price of the
Common Stock decline and could make it much more difficult to buy or sell Common
Stock on the open market.
If the Common Stock is delisted from the Nasdaq Stock Market and it trades for
less than $5.00 per share, broker/dealers who recommend the Common Stock would
be subject to additional disclosure and sales practice requirements which could
severely limit the liquidity of the Common Stock. In addition, sales of the
Common Stock in this offering would become subject to state securities or "blue
sky" laws requiring the Company to register such sales or to obtain an
exemption before such sales could be made.
Certain Anti-Takeover Provisions. The Board of Directors of the Company has
the authority to issue up to 3,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the stockholders. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any preferred stock that may be issued in the future. The
issuance of shares of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. The Company has no present intention of issuing shares of
preferred stock. Additionally, the Company is subject to anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which will
prohibit 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 became an
13
<PAGE>
interested stockholder, unless the business combination is approved in a
prescribed manner. The application of Section 203 also could have the effect of
delaying or preventing a change-in-control of the Company. This provision may
also reduce the likelihood of an acquisition of the Company at a premium price
by another person or entity.
Year 2000 Compliance. The Year 2000 issue is the result of computer programs
written using two digits rather than four to define the applicable year. Any of
the Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
The Company relies on systems developed by other parties in regard to its
business, accounting and operational software. The Company believes that its
significant business, accounting and operational software are Year 2000
compliant. None of the Company's systems are believed to be affected by the
year 2000 issue. The Company expects the costs it incurs, if any, to achieve
Year 2000 compliance will be immaterial.
The Company has no computer interfaces with its vendors and customers.
However, it does not know the extent to which its vendors, or its customers
would be impaired by their own Year 2000 issues and the impact of such issues on
the Company. The costs of assessing such compliances are expected to be
minimal. In addition, although the Company believes it is adequately
addressing its Year 2000 issues, there can be no assurance that unanticipated or
undiscovered compliance problems with regard to the Company or its vendors
and customers will not have a material adverse effect on the Company's
financial condition, results of operations and business. Given that the
Company believes that it is currently Year 2000 compliant, the Company has
not prepared a contingency plan and does not currently believe that a
contingency plan is necessary.
USE OF PROCEEDS
All of the Shares which may be sold pursuant to this Prospectus will be
sold from time to time by the Selling Stockholders for their own accounts or by
pledgees, donees, transferees or other successors in interest thereof. The
Company will receive no proceeds from any such sales of Shares.
DESCRIPTION OF SECURITIES
General
The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock and 3,000,000 shares of $0.01 par value Preferred Stock
("Preferred Stock"). As of December 11, 1998, 10,039,552 shares of Common Stock
and no shares of Preferred Stock were issued and outstanding. All of the issued
and outstanding shares of Common Stock are validly issued, fully paid and
nonassessable. See "Selling Stockholders."
Common Stock
Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders, including the election of
directors. There is no cumulative voting with respect to the election of
directors, with the result that the holders of more than 50% of the shares
voting for the election of directors can elect all of the directors. Holders of
Common Stock will be entitled to receive dividends when, as and if declared by
the Board of Directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities. The holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
Preferred Stock
In connection with the Company's reincorporation in Delaware, the Company
included within its Delaware Certificate of Incorporation, a provision
authorizing the Company to issue "blank check" Preferred Stock, from time to
time, in one or more series, upon authorization by the Company's Board of
Directors. The Board of Directors, without further approval of the stockholders,
will be authorized to fix the dividend rights and terms, conversion rights,
voting rights, redemption rights and terms, liquidation preferences, and any
other rights, preferences, privileges and restrictions applicable to each series
of Preferred Stock. The issuance of Preferred Stock, while providing flexibility
in connection with possible acquisitions and other corporate purposes, could,
among other things, adversely affect the voting power of the holders of the
Common Stock and, under certain circumstances, make it more difficult for a
third party to gain control of the Company, discourage bids for the Common Stock
at a premium or otherwise adversely affect the market price of the Common Stock
and Registered Warrants.
Registered Warrants
In connection with the Company's initial public offering, the Company
issued Registered Warrants to purchase an aggregate of 2,118,000 shares of
Common Stock at an exercise price of $5.00 per share. The Registered Warrants
are exercisable on or prior to March 19, 2000.
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<PAGE>
The Registered Warrants are redeemable by the Company, upon the consent of
the underwriter in the Company's initial public offering (the "Underwriter"),
upon notice of not less than 30 days, at a price of $.10 per Registered Warrant,
provided that the closing bid quotation of the Common Stock for a period of 30
consecutive trading days ending on the third day prior to the day on which the
Company gives notice has been at least 150% (currently $7.50) of the then
effective exercise price of the Registered Warrants. The holders of the
Registered Warrants will have the right to exercise their warrants until the
close of business on the date fixed for redemption.
MDC Warrants
The Company has issued warrants to MDC ("MDC Warrants") to purchase an
aggregate of 750,000 shares of Common Stock with unlimited piggyback
registration rights. The MDC Warrants are exercisable at the exercise prices and
for the number of shares indicated: (i) 75,000 shares of Common Stock at
$3.4688; (ii) 25,000 shares of Common Stock at $4.3438; (iii) 25,000 shares of
Common Stock at $4.8438; and (iv) 25,000 shares of Common Stock at $5.3438, and
(b) a warrant to purchase 600,000 shares of Common Stock at an exercise price of
$3.4688. Of these shares, 150,000 can be exercised at any time through October
26, 2000 and 600,000 can be exercised at any time through December 11, 2000. The
shares underlying the MDC Warrants are currently subject to an effective
registration statement on Form S-3.
Transfer Agent and Registrar
The Company's Transfer Agent and Registrar is American Stock Transfer &
Trust Company, 40 Wall Street, 46th Floor, New York, New York 10005.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders as of December 11, 1998,
the number of Shares owned thereby covered by this Prospectus and the amount and
percentage ownership of each Selling Stockholder after the offering of the
Shares offered hereby assuming all the Shares covered by this Prospectus are
sold by the Selling Stockholders. None of the Selling Shareholders has had any
position, office or other material relationship with the Company within the past
three years other than as a result of the ownership of the Shares or other
securities of the Company. The Shares are being registered pursuant to a
certain Subscription Agreement for the purchase of the Company's Common Stock,
dated June 8, 1998 which provides for certain registration rights of the
Selling Shareholders. See "Recent Developments - June 1998 Private Placement."
<TABLE>
<CAPTION>
Shares of Common Shares
Stock Owned Owned Percentage Of
Beneficially Shares After Shares Owned
Name and of Record Offered Offering After Offering
- - ------ ------------- ------- -------- --------------
<S> <C> <C> <C> <C>
Amexcorp. Ltd. 575,000 575,000 0 0%
Danvers Inv.Ltd. 575,000 575,000 0 0%
Atom Corp. 500,000 500,000 0 0%
</TABLE>
PLAN OF DISTRIBUTION
The Shares are being registered in order to facilitate their sale from
time to time by the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest thereof, as market conditions permit in one or more
transactions. No underwriting arrangements have been entered into by the Selling
Stockholders. In addition, as none of the Selling Stockholders have advised the
Company whether or not they have any current intention of selling any of the
Shares, the Company is unable to predict whether or when any of the Selling
Stockholders will determine to proceed with sales of the Shares, as such
determination will be made solely at the discretion of each Selling Sto
pledgees, donees, transferees or other successors in interest, may be effected
in one or more transactions that
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<PAGE>
may take place on the Nasdaq SmallCap Market, the over-the-counter market,
including ordinary brokers transactions, privately negotiated transactions or
through sales to one or more dealers for resale of the Shares as principals, or
a combination of such methods of sale, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The Shares may be sold by one or more of the following methods, without
limitation: (a) a block trade in which a broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (d) face-to-face transactions between
sellers and purchasers without a broker-dealer. In effecting sales, brokers or
dealers engaged by the Selling Stockholder may arrange for other brokers or
dealers to participate. Such brokers or dealers may receive commissions or
discounts from the Selling Stockholders in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and such brokers and dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act, in connection with such sales.
The Company will receive no proceeds from any sales of the Shares offered
hereby by the Selling Stockholders. The Company has agreed to pay the filing
fees, costs and expenses associated with the Registration Statement, including
compliance with any state blue sky requirements, commissions and discounts of
underwriters, dealers or agents, if any, and any stock transfer taxes.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. The Certificate of Incorporation also
provides for the indemnification, to the fullest extent permitted by the General
Corporation Law of Delaware, of such persons. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 as amended, may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission (the "Commission") such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL MATTERS
The validity of the Shares offered hereby is being passed upon for the
Company by Swidler Berlin Shereff Friedman, LLP, 919 Third Avenue, New York,
NY,10022.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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<PAGE>
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act, with the Commission relating
to the Shares offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the Shares
offered hereby. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission are not necessarily complete, and in each instance reference
is made to the copy of such document so filed as an exhibit to, or incorporated
by reference into, the Registration Statement. Each statement shall be qualified
in its entirety by such reference.
17
<PAGE>
============================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby to any person in
any state or other jurisdiction in which such offer or solicitation is unlawful.
The delivery of this Prospectus at any time does not imply information that
information contained herein is correct as of any time subsequent to its date.
Until ____________________, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
----------------------------
TABLE OF CONTENTS
Page
----
Available Information ..................................................... 2
Incorporation of Certain Documents by Reference ........................... 2
Prospectus Summary ........................................................ 3
The Company ............................................................... 3
Recent Developments ....................................................... 7
The Offering .............................................................. 8
Risk Factors .............................................................. 9
Use of Proceeds ...........................................................14
Description of Securities .................................................14
Selling Stockholders ......................................................15
Plan of Distribution ......................................................15
Disclosure of Commission Position on Indemnification For Securities Act
Liabilities ..............................................................16
Legal Matters..............................................................16
Experts....................................................................16
Additional Information.....................................................17
===========================================================================
============================================================================
1,650,000 Shares
SEMICONDUCTOR
LASER
INTERNATIONAL
CORPORATION
Common Stock
---------------
PROSPECTUS
---------------
_________________
============================================================================
18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
The Company will bear no expenses in connection with any sale or other
distribution by the Selling Stockholders of the shares being registered other
than the expenses of preparation and distribution of this Registration Statement
and the Prospectus included in this Registration Statement. Such expenses are
set forth in the following table. All of the amounts are estimates except the
Securities and Exchange Commission filing fee.
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee ......................... 510
Accounting fees and expenses.................. 3,000
Legal fees and expenses....................... 15,000
Printing expenses............................. 500
Miscellaneous................................. 1,000
-------
Total....................................... $20,010
=======
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. Section 102(b)(7) of the Delaware General
Corporation Law permits a Delaware corporation, with the approval of its
stockholders, to include within its Certificate of Incorporation a provision
eliminating or limiting the personal liability of its directors to that
corporation or its stockholders for monetary damages resulting from certain
breaches of the directors' fiduciary duty of care, both in suits by or on behalf
of the corporation and in actions by stockholders of the corporation.
II-1
<PAGE>
Item 16. Exhibits.
Exhibit Description
- - --------- -----------
1 Not Applicable
2 Not Applicable
4 Instruments defining the rights of security holders, including
indentures:
(A) Certificate of Incorporation, as amended (Incorporated by
reference to the Company's Registration Statement on Form S-1
(File No: 333-754) effective March 19, 1996).
(B) By-Laws (Incorporated by reference to the Company's
Registration Statement on Form S-1(File No: 333-754) effective
March 19, 1996).
(C) Specimen Common Stock Certificate (Incorporated by reference
to the Company's Registration Statement on Form S-1 (File No:
333-754) effective March 19, 1996).
5 Opinion of Swidler Berlin Shereff Friedman, LLP filed herewith.
8 Not Applicable
12 Not Applicable
15 Not Applicable
23.1 Consent of PricewaterhouseCoopers, LLP, filed herewith.
23.2 Consent of Swidler Berlin Shereff Friedman, LLP (included in the
opinion filed as Exhibit No. 5)
24 Not Applicable
25 Not Applicable
26 Not Applicable
27 Not Applicable
99 Not Applicable
- - - ----------
* Previously filed.
II-2
<PAGE>
Item 17. Undertakings,
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, 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, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any additional or changed material information with
respect to the plan of distribution:
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required in a post-effective amendment is incorporated by
reference from periodic reports filed with the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act").
(2) That, for the purpose of determining any liability under the Securities
Act, treat each such post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time 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 end of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling persons of the
Company, pursuant to the provisions described in Item 15 above, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by any such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Binghamton in the State of New York on December
22, 1998.
By /s/ Geoffrey T. Burnham
-----------------------------
Dr. Geoffrey T. Burnham
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/ Geoffrey T. Burnham Chairman, President and December 21,1998
- - ----------------------- Chief Executive Officer
Dr. Geoffrey T. Burnham (Principal Executive
Officer)
/s/ Susan M. Burnham Vice President, Treasurer December 21,1998
- - --------------------- and a Director
Susan M. Burnham
/s/ Leonard E. Lundberg Chief Financial Officer, December 22,1998
- - ----------------------- Principal Financial Officer
Leonard E. Lundberg and Principal Accounting
Officer
/s/ George Barrett Director December 22,1998
- - -------------------
George Barrett
/s/ Brian J. Thompson Director December 22,1998
- - ----------------------
Brian J. Thompson
Exhibit 5.1
[LETTERHEAD OF SWIDLER BERLIN SHEREFF FRIEDMAN, LLP]
December 22, 1998
VIA FACSIMILE AND FEDERAL EXPRESS
Semiconductor Laser International Corporation
15 Link Drive
Binghamton, NY 13904
Ladies and Gentlemen:
Semiconductor Laser International Corporation, a Delaware
corporation(the "Company"), intends to transmit for filing with the Securities
and Exchang Commission a Registration Statement on Form S-3 under the Securities
Act of 1933, as amended(the "Registration Statement"), which relates to the sale
by certain selling stockholders of up to 1,650,000 shares of the Company's
Common Stock, par value $0.01 per share (the"Common Stock"). This opinion is
an exhibit to the Registration Statement.
We have acted as special counsel to the Company in connection
with the proposed offer and sale of the Common Stock as contemplated by the
Registration Statement. However, we are not general counsel to the Company and
would not ordinarily be familiar with or aware of matters relating to the
Company unless they are brought to our attention by representatives of the
Company. We have examined copies (in each case signed, certified or otherwise
proved to our satisfaction) of the Company's charter and by-laws as presently in
effect, minutes and other instruments evidencing actions taken by the Company's
directors and stockholders, and such other documents and instruments relating
to the Company and the proposed offering as we have deemed necessary under the
circumstances. In our examination of all such agreements, documents,
certificates and instruments, we have assumed the genuineness of all
signatures and the authenticity of all agreements, documents, certificates and
instruments submitted to us as originals and the conformity with the originals
of all agreements, instruments, documents and certificates submitted to us as
copies. Insofar as this opinion relates to securities to be issued in the
future, we have assumed that all applicable laws, rules and regulations in
effect at the time of such issuance are the same as such laws, rules and
regulations in effect as of the date hereof.
Our opinion in paragragh 1 is solely based on our review of the
Certificate of Incorporation of the Company certified by the Secretary of the
State of Delaware,certified on January 26, 1996, together with a certificate of
the Company certifying that the Certificate of Incorporation has not been
amended since such date.
We note that we are members of the Bar of the State of New York and
do not opine herein on the laws of any jurisdiction other than the State of New
York and the federal laws of the United States. To the extent the opinions
expressed herein involve the State of Delaware, our opinion is based solely on
our reading of the Delaware General Corporation Law.
<PAGE>
Based on the foregoing, and subject to and in reliance on the
accuracy and completeness of the information relevant thereto provided to us, it
is our opinion that:
1. The Company has been duly incorporated under the laws
of the State of Delaware and has an authorized capital
stock consisting of 20,000,000 shares of Common Stock,
par value $.01 per share, and 5,000,000 shares of
Preferred Stock, par value $.01 per share.
2. The Common Stock have been duly authorized and
(subject to the effectiveness of the Registration
Statement and compliance with applicable state
securities laws) will be legally and validly issued,
fully-paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and as an exhibit to any filing made by the Company
under the securities or "Blue Sky" laws of any state.
This opinion is furnished to you in connection with the filing of
the Registration Statement, and is not to be used, circulated, quoted or
otherwise relied upon for any other purposes, except as expressly provided in
the preceding paragraph.
Very truly yours,
SWIDLER BERLIN SHEREFF FRIEDMAN,LLP
SBSF,LLP:RAG;GA;DSR
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on form S-3 of our report dated
February 13, 1998 except as to Note 13 which is as of March 28, 1998, which
appears on page 19 of Semiconductor Laser International Corporation's Annual
Report on Form 10-KSB for the year ended December 31, 1997. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
December 21, 1998
