As filed with the Securities and Exchange Commission on July 31, 1998.
Registration No. ______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
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:
Walter M . Epstein, Esq.
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
(212) 486-4911
--------------
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. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
Proposed
Amount to maximum Proposed maximum Amount of
Title of each class of be offering price aggregate offering registration
securities to be registered registered per unit(s) price(s) fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 1,650,000 $1.046875 $1,727,344 $510
============================================================================================
</TABLE>
<PAGE>
(1) Based on the average of the high and low prices of the common stock reported
on the Nasdaq SmallCap Market on July 27, 1998 of $1.046875 per share, solely
for the purpose of calculating the registration fee pursuant to Rule 457(c).
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.
<PAGE>
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
- ----------
* Not Applicable.
<PAGE>
SUBJECT TO COMPLETION
PROSPECTUS DATED JULY 31, 1998
SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
1,650,000 shares of Common Stock
------------------
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 $10,000.
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 July 27, 1998, the last reported
sale prices of the Common Stock and the Registered Warrants were $1.046875 per
share and $0.25 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.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
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.
----------------------
The date of this Prospectus is August __,1998.
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<PAGE>
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 quarter ended
March 31, 1998 filed with the Commission on May 15, 1998; and
(c) All other reports and other documents filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since March 31, 1998.
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") in and the Form 10-QSB for the
quarter ended March 31, 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") is a leading
developer and producer of 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 significant 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 substantially longer life
and greater reliability than existing HPDLs. The Company's commitment to
research and development, as well as its unique practical experience, has made
it one of the few companies in the world with the technical expertise necessary
for the production of commercially viable HPDLs. The Company is currently
capitalizing on such advantages and producing HPDLs which meet or exceed the
quality standards of existing HPDLs, at lower cost, thereby permitting the
Company to reduce the prices charged for HPDLs and facilitate new market
applications for HPDL products. See "Prospectus Summary-The Company-Strategy."
The Company manufactures its products at a newly constructed,
state-of-the-art, ultra-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. As a result, while worldwide sales of HPDLs in 1994
were
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<PAGE>
approximately $100 million, they are expected to reach in excess of $1 billion
by 2001, according to industry surveys conducted by two separate marketing firms
retained by the Company.
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 substantially 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
charged for and to be a high volume manufacturer of HPDLs of superior power and
longevity and greater reliability. 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 plans to carry out a program of continuous
improvement and expansion of its manufacturing capabilities through the ongoing
purchase of equipment incorporating further improvements, as developed, and the
expansion of its manufacturing space, as needed, to capitalize on anticipated
commercial market acceptance of its products.
The new, state-of-the-art equipment recently 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.
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 partnerships 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 have complied with
this requirement could have resulted in loss of exclusive rights under the
License Agreement, which loss would have had 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 issuance of Common Stock occurred 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 over existing HPDLs is the ability of aluminum free HPDLs to generate
greater power while evidencing substantially longer life and greater
reliability. The Company has received substantial interest in the aluminum free
HPDLs and believes it will offer major competitive advantages 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 not
limited to MBE and MOCVD. The Company believes that attempts by others to
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. 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 will be essential. The development
of one or more of these areas could greatly increase the demand for the
Company's products. It should be noted that the Company may be required to
expand its operations in order to meet such potential demand and that there can,
however, 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. The Company intends (based
on its current expectations of product demand during 1998, of which there can be
no assurance) to install an additional wafer producing machine in the
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latter part of 1998. Thereafter, further expansion and additional equipment and
production lines can be effected, as needed. The Company is also considering the
purchase of additional manufacturing and packaging equipment and the expansion
of its facilities.
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 significantly higher yields of acceptable or usable
wafers (which meet the quality standards of existing MOCVD produced HPDLs) and,
thus, of producing such wafers at a significantly reduced cost per wafer.
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 has the ability to produce uniform HPDLs with
significantly higher yields of acceptable or useable wafers.
An additional cost advantage associated with the DMS controlled MBE
process is that while 100% of the wafers produced with MOCVD require testing
(due to the inherent lack of uniformity and reproducibility of the MOCVD process
output) only a 20% sample of the wafers produced with the DMS/MBE process need
to be tested (due to the inherent uniformity of the MBE output when DMS is used
to control the process). In addition, while an MOCVD wafer growth production run
takes less time then an MBE wafer growth production run, the time required to
load and unload the wafers and to prepare each wafer for growth is less with the
MBE process. As a result, overall production times associated with the MOCVD and
the MBE/DMS growth manufacturing processes are basically equivalent.
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
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solid source MBE/DMS. The Company currently has a number of aluminum-free wafers
in processing and expects to have the preliminary results on this new product
line within the next several months. See "Prospectus Summary - The
Company-Strategy."
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. The surface of the bars is then
given optical facet coatings in order to create the laser beam path that is
formed by the laser mirrors.
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, for 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 (the "Placement Agent") was
paid $185,625 for commissions and expenses. After deducting the Placement
Agent's commissions and expenses of $185,625 in the aggregate, the net proceeds
of the Private Placement to the Company were $1,051,875. The net proceeds of the
Private Placement are being 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 $185,625 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 $50,000.
The Shares being offered hereby comprise 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
- ----------
(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 MDC Warrants, and (v) 20,000
shares issuable upon exercise of warrants issued to another consultant to
the Company.
8
<PAGE>
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 March 31, 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 Private Securities Litigation Reform Act
of 1995 (the "Litigation Reform Act"). The Company desires to avail itself of
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; Shareholders' Deficit;
Anticipated Future Losses. Through March 31, 1997, the Company was classified as
a development-stage company for financial accounting purposes by reason of the
fact it has not generated significant revenues from operations prior to such
date. Since that date, the Company has continued to incur significant losses.
The Company has incurred operating losses in each period since its inception,
resulting in an accumulated deficit at March 31, 1998 of $13,844,928 and has
continued to incur losses through the date hereof. It is anticipated that the
Company will continue to incur losses for the immediate future until it is able
to generate sales levels sufficient to support its operations. There can be no
assurance that the Company will be able to achieve profitable operations.
Need for Additional Capital. The Company has experienced significant
losses, which losses are continuing. The Company believes that on an operating
basis it can achieve break even on monthly sales of approximately $550,000. The
Company believes it will begin to achieve this level of sales at some point
prior to the end of 1998. There is no assurance that this projection will be met
or that profits will be achieved and/or positive cash flow will be achieved.
Until such time, working capital must be obtained from equity financings and/or
borrowings or the Company must undertake actions to reduce operating expenses.
The Company has available $700,000 from a $1,000,000 secured line of credit for
purposes of providing working capital, if necessary. The line bears interest at
prime plus 1.5% on the used portion and matures March 31, 1999. The proceeds
from the Private Placement will not be sufficient to meet the future capital
needs of the Company as currently projected. The Company intends to seek
additional financing, from financial and banking institutions as well as through
further equity financings. In the event that the Company's plans change or its
assumptions change or prove to be inaccurate, the Company could be required to
obtain additional financing sooner than currently anticipated. In connection
with the projected development of its business, the Company could be required to
buy substantial additional equipment as well as increase the size of its
manufacturing facility and expand its operating personnel. Such expansion could
require substantial additional capital beyond that currently available to the
Company. Such capital will have to be raised from the sale of additional equity
and/or from bank or institutional financing. There
9
<PAGE>
can be no assurance the Company will be able to obtain additional financing
including any institutional financing, when needed, on commercially reasonable
terms or at all. Any inability to obtain additional financing when needed would
limit the projected growth plans of the Company which would have a material
adverse effect on the Company. Any additional equity financing may involve
substantial dilution to the Company's then existing shareholders.
Under certain bank loans described in Note 8 of the Company's audited
financial statements included in the Form 10-KSB, the Company is obligated to
maintain certain financial ratios and indicators. As of the date of this
Prospectus, the Company is in compliance with such financial ratios and
indicators. The Company believes that, in the event it failed to comply with
such financial ratios and indicators and the bank loans were called, that the
Company's financial condition and results of operations would not be materially
adversely affected and that it could obtain alternative financing on
substantially the same terms as the bank loans based upon the equity in the
assets securing such loans. There can, however, be no assurance that the Company
would be able to secure such additional financing or that the terms of such
alternative financing would be on an equivalent cost basis.
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. The Company believes it
has taken the appropriate steps in its development to address such problems,
although 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 full 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 recent
growth in the Company's product demand and the expansion in the scope of its
operations 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 least
some of such suppliers. The Company does not maintain, and does not intend to
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.
The Company has been advised by another company that it believes that the
Northwestern License does not cover the production of aluminum free HPDLs under
manufacturing methods other than MOCVD. At this time, no litigation has been
instituted by the Company, Northwestern or any third parry 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, Chief Executive
Officer and Chief Financial 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-
12
<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.
Impact of Nasdaq Listing on Marketability of Securities. The Common Stock
and Registered Warrants are quoted on the Nasdaq SmallCap Market. The National
Association of Securities Dealers, Inc. ("NASD") has rules which establish
criteria for the continued listing of securities on Nasdaq. For continued
listing on the Nasdaq SmallCap Market, a company must maintain at least
$2,000,000 in net tangible assets, $35,000,000 in market capitalization or
$500,000 in net income (in the latest fiscal year or two of the last three
fiscal years), a public float of at least 500,000 shares and a $1,000,000 market
value, at least 300 shareholders owning 100 or more shares, a minimum bid price
of $1.00 per share and at least two market makers. The Company may not be able
to maintain the standards for continued listing in the future and the listed
securities could, at such time, become subject to delisting from Nasdaq. If the
shares or warrants are not listed or are delisted in the future, trading in the
securities could be conducted on the OTC Bulletin Board or in the
over-the-counter market in what is commonly referred to as the "pink sheets." If
this occurs, an investor will find it more difficult to dispose of the
securities or to obtain accurate quotations as to the price of the securities
and it could have an adverse effect on the news coverage of the Company.
Disclosures Relating to Low Priced Stocks; Possible Restriction on Resales
of Low Priced Stocks and on Broker Dealer Sales; Possible Adverse Effect of
Penny Stock Rules on Liquidity of the Company's Securities. If the Company's
securities were delisted from Nasdaq, they may become subject to Rule 15g-9
under the Exchange Act, which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and accredited investors (generally, individuals with net worth in
excess of $1,000,000 or annual incomes exceeding $200,000 or $300,000 together
with their spouses). For transactions covered by this rule, a broker dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, such
rule may affect the ability of broker-dealers to sell the Company's securities
and may affect the ability of purchasers in this offering to sell any of the
securities acquired hereby in the secondary market.
In addition, if the Company's securities were to become delisted from
trading on Nasdaq and the trading price of the Common Stock was to fall below
$5.00 per share, trading in the Common Stock would also be subject to the
requirements of certain rules promulgated under the Exchange Act, which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-Nasdaq equity security that
has a market price (as therein defined) of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions). For
any transaction by broker-dealers involving a penny stock, unless exempt, the
rules require delivery, prior to a transaction in a penny stock, of a risk
disclosure document relating to the penny stock market. Disclosure is also
required to be made about compensation payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stocks. The additional burdens imposed upon broker-dealers similar to
those enumerated in the preceding paragraph and these requirements may
discourage broker-dealers from effecting transactions in the Company's
securities, which could severely limit the market liquidity of the Company's
securities and the ability of purchasers in this offering to sell the Company's
securities in the secondary market.
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.
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 July 23, 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.
14
<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 July 23, 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.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned Percentage Of
Beneficially Shares Owned Shares Owned
Name and of Record Shares Offered After Offering After Offering
- ---- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Amexcorp. Ltd. 575,000 575,000 0 0%
Danvers Investments Limited 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 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
15
<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 Davis & Gilbert LLP, 1740 Broadway, New York, New York, 10019. Walter
M. Epstein, Esq., a member of the firm, beneficially owns 5,000 shares of Common
Stock and 35,000 Registered Warrants.
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.
16
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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
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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 obligtion 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
================================================================================
================================================================================
1,650,000 Shares
SEMICONDUCTOR
LASER
INTERNATIONAL
CORPORATION
Common Stock
---------------
PROSPECTUS
---------------
August ___, 1998
================================================================================
18
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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....................... 5,000
Printing expenses............................. 500
Miscellaneous................................. 1,000
-------
Total....................................... $10,010
=======
- ----------
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 Davis & Gilbert LLP, filed herewith.
8 Not Applicable
12 Not Applicable
15 Not Applicable
23.1 Consent of PricewaterhouseCoopers, LLP, filed herewith.
23.2 Consent of Davis & Gilbert 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
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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
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
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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 July 29,
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 July 29, 1998
- ----------------------- Chief Executive Officer
Dr. Geoffrey T. Burnham (Principal Executive
Officer and Principal
Accounting Officer)
/s/ Susan M. Burnham Vice President, Treasurer July 29, 1998
- ----------------------- and a Director
Susan M. Burnham
/s/ George Barrett Director July 29, 1998
- -----------------------
George Barrett
/s/ Brian J. Thompson Director July 29, 1998
- -----------------------
Brian J. Thompson
Exhibit 5.1
[LETTERHEAD OF DAVIS & GILBERT LLP]
July 29, 1998
VIA FEDERAL EXPRESS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Semiconductor Laser International Corporation
Ladies/Gentlemen:
We have acted as counsel to Semiconductor Laser International
Corporation, a Delaware corporation (the "Company"), in connection with the
registration pursuant to a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, of an aggregate of
1,650,000 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"), which shares are currently issued and outstanding.
In connection with this opinion, we have examined originals, or
copies certified to our satisfaction, of the Certificate of Incorporation of the
Company, as amended, the By-Laws of the Company, as amended, the minutes and
other records of the proceedings of the Board of Directors and of the
stockholders of the Company, and such other documents, corporate and public
records, agreements, and certificates of officers of the Company and of public
records, agreements, and certificates of officers of the Company and of public
and other officials, and we have considered such questions of law, as we have
deemed necessary as a basis for the opinions hereinafter expressed. In such
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as
<PAGE>
originals and the conformity to original documents of all documents submitted to
us as certified or photostatic copies.
Based on and subject to the foregoing, we hereby advise you that, in
our opinion, the shares of Common Stock to be sold pursuant to the Registration
Statement have been duly authorized and are validly issued fully-paid and
nonassessable.
Please be advised that Walter M. Epstein, a partner of this firm, is
a shareholder of the Company.
We hereby consent to the use and filing of this opinion in
connection with the Registration Statement and to the reference to our firm
under the caption "Legal Matters" in the Registration Statement and in the
related Prospectus.
Very truly yours,
Davis & Gilbert LLP
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 25, 1998, which
appears on page 19 of Semiconductor Laser International Corporation's Annual
Report on Form 10-K 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
July 27, 1998
