UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number: 0-26082
VIDAMED, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0314454
------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
46107 Landing Parkway
Fremont, CA 94538
(Address of principal executive offices)
(510) 492-4900
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: Common Stock, $.001 par value
Preferred Share Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendments to this
Form 10-K. [ ]
The aggregate market value of the Common Stock of the registrant held by
non-affiliates as of March 19, 1999 was $56,318,565.
The number of outstanding shares of the registrant's Common Stock, $.001 par
value, was 20,479,478 as of March 19, 1999.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Certain information is incorporated into Part III of this report by reference to
the Proxy Statement for the Registrant's 1999 annual meeting of stockholders to
be filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the end of the fiscal year covered by this Form
10-K.
FORWARD LOOKING STATEMENTS
THIS REPORT ON FORM 10-K CONTAINS, IN ADDITION TO HISTORICAL INFROMATION,
FORWARD-LOOKING STATEMENTS THAT ARE BASED ON CURRENT EXPECTATIONS AND BELIEFS.
SUCH FORWARD-LOOKING STATEMENTS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. SOME OF THE FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, AMONG OTHERS, MARKET
ACCEPTANCE OF THE VIDAMED TUNA PROCEDURE, AVAILABILITY AND TIMING OF THIRD-PARTY
REIMBURSEMENT FOR PROCEDURES PERFORMED WITH THE VIDAMED TUNA SYSTEM,
AVAILABILITY OF CASH RESOURCES SUFFICIENT TO FUND OPERATIONS, THE POSSIBLE
VOLATILITY OF THE COMPANY'S STOCK PRICE, THE FACTORS DISCUSSED HEREIN UNDER
"MARKETING AND CUSTOMERS," "CLINICAL STATUS," "MANUFACTURING," "RESEARCH AND
DEVELOPMENT," "ADDITIONAL RISK FACTORS," AND "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, FACTORS AFFECTING
RESULTS OF OPERATIONS." VIDAMED UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE
THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES THAT ARISE
AFTER THE DATE HEREOF. READERS SHOULD CAREFULLY REVIEW THE RISK FACTORS
DESCRIBED IN OTHER DOCUMENTS THE COMPANY FILES FROM TIME TO TIME WITH THE
SECURITIES EXCHANGE COMMISSION, INCLUDING THE QUARTERLY REPORTS ON FORM 10-Q TO
BE FILED BY THE COMAPANY IN 1999 AND ANY CURRENT REPORTS ON FORM 8-K FILED BY
THE COMPANY.
<PAGE>
PART IV
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
1. Financial Statements
<CAPTION>
Included in Part II, Item 8 of this Report:
<S> <C>
Consolidated Balance Sheets as of December 31, 1998 and 1997 22
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 23
Consolidated Statement of Stockholders' Equity (Net Capital
Deficiency) for the years ended December 31, 1998, 1997 and 1996 24
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 25
Notes to Consolidated Financial Statements 26
Independent Auditors' Report 42
</TABLE>
2. Financial Statement Schedules
Schedule II is included, on page 10. All other schedules are omitted because
they are not applicable, or not required, or because the required information is
included in the consolidated financial statements or notes thereto.
<TABLE>
3. Exhibits
<CAPTION>
Exhibit No. Description
------------ --------------------------------------------------------------------------------------
<S> <C>
3.1 (1) Restated Certificate of Incorporation of the Company filed with the Delaware Secretary
of State on June 28, 1995.
3.2 (2) Certificate of Designation of Rights, preferences and Privileges of Series A
Participating Preferred Stock of the Company filed with the Delaware Secretary of
State on January 13, 1997.
3.3 (1) Restated Bylaws of the Company
4.1 (1) Form of common Stock Certificate of the Company.
4.2 (1) Warrant to Purchase Shares of Series B Preferred Stock, dated April 13, 1993,
issued to Dominion Ventures, Inc.
4.3 (1) Warrant Purchase Agreement, dated November 8, 1993, between the Company
and Dominion Ventures, Inc. and Warrant to Purchase Shares of
Series C Preferred Stock, issued to Dominion Ventures, Inc.
4.4 (1) Warrant Purchase Agreement, dated June 30, 1994, between the Company and
LINC Capital Management Services, Ltd. and Warrant to Purchase Shares of
Series D Preferred Stock, dated June 30, 1994,
issued to LINC Capital Management Services, Ltd.
4.5 (1) Representative Form of Note Subscription Agreement and Convertible
Subordinated Promissory Note.
4.6 (2) Preferred Shares Rights Agreement dated as of January 27, 1997, between the Company
and American Securities Transfer & Trust, Inc. including the Certificate of
Designations,
38
<PAGE>
the Form of Rights Certificate and the Summary of Rights attached
thereto as Exhibit A, Exhibit B and Exhibit C, respectively.
4.7 (3) Investment agreement, dated as of February 4, 1997, between the Company and
MeesPierson Clearing Services B.V., including Form of Pricing Period Confirmation,
Form of Warrant and Form of Opinion attached thereto as Exhibit A, Exhibit B and
Exhibit C, respectively.
4.8 (4) Purchase Agreement, dated as of September 22, 1997, among the Company and certain
purchasers named therein, including Schedule of Investors, Form of Common Stock
Purchase Warrant and Form of Opinion attached thereto as Exhibit A, Exhibit B and
Exhibit C, respectively.
10.1 (1) Form of Indemnification Agreement between the Company and each of its
directors and officers.
10.2 (2) 1992 Stock Plan, as amended.
10.3 (5) 1995 Director Option Plan, as amended.
10.4 (1) 1995 Employee Stock Purchase Plan.
10.5 (1) Dominion Ventures Master Lease Agreement, dated April 13, 1993, between
the Company and Dominion Ventures, Inc., and First Amendment thereto.
10.6 (1) Master Lease Agreement, dated June 24, 1994, between the Company and
LINC Capital Management Services, Inc.
10.7 (1) Representative Form of International Distribution Agreement.
10.8 (1) Cross License Agreement, dated August 2, 1994, between the Company and RITA, formerly
ZoMed International, Inc.
10.9 (1) International Distribution Agreement, dated May 9, 1994, between the
Company and Century Medical, Inc.
10.10 (1) Grant Agreement, dated July 19, 1993, between the Company and the United
Kingdom Department of Trade and Industry.
10.11 (1) Letter employment agreement, dated August 26, 1994, between the Company
and John N. Hendrick.
10.12 (1) Letter employment agreement, dated August 31, 1994, between the Company
and James A. Heisch.
10.13 (1) Restated Shareholder Rights Agreement, dated November 23, 1994,
among the Company and holders of the Company's Registerable Securities
10.14 (1) Loan and Security Agreement dated April 20, 1995 between the
Company and Venture Lending and Leasing, Inc. and related letter agreement.
10.15 (6) Operating Lease dated April 3, 1997, between the Company and Hopkins Brothers.
10.16 (6) Loan and Security Agreement, dated January 13, 1998, between the Company and Silicon Valley Bank.
10.17 Loan and Security Agreement and Streamlined Facility Agreement and Amended Agreement, dated October 20,
1998, between the Company and Transamerica Business Credit Corporation.
39
<PAGE>
10.18 Manufacturing Agreement, dated January 5, 1999, between the Company and Humphrey Systems
21.1 (1) Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page 42 of this report).
24.1 Power of Attorney (see signature page of this Report).
27.1 Financial Data Schedule.
<FN>
- -----------
(1) Filed as an Exhibit to the Company's Registration Statement on Form S-1 (File No. 33-90746) and incorporated herein by
reference.
(2) Filed as an Exhibit to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission
on January 31, 1997 and incorporated herein by reference thereto.
(3) Filed as an Exhibit to the Company's Current Report on form 8-K filed with the Securities and Exchange Commission on March
14, 1997 and incorporated herein by reference thereto.
(4) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on
September 24, 1997 and incorporated herein by reference thereto.
(5) Filed as an Exhibit to the Company's Registration Statement on Form S-8 (File No. 33-80619) and incorporated herein by
reference.
(6) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal year ended December 31, 1997, and incorporated
herein by reference.
</FN>
</TABLE>
b) Reports on Form 8-K
The Company was not required to and did not file any reports
on Form 8-K during the three months ended December 31, 1998.
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Fremont, State of California, on the 31st day of March, 1999.
VIDAMED, INC.
By /s/ David J. Illingworth
--------------------------------------------
David J. Illingworth, Chairman,
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints David J. Illingworth and
Richard D. Brounstein as his attorneys-in-fact, with full power of substitution,
for him in any and all capacities, to sign any and all amendments to this Report
on Form 10-K, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys to any and all amendments to said Report.
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons in the capacities and
on the dates indicated:
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ David J. Illingworth Chairman, President and Chief March 31, 1999
----------------------------------- Executive Officer
(David J. Illingworth) (Principal Executive Officer)
/s/ Richard D. Brounstein Vice President, Finance and Chief March 31, 1999
----------------------------------- Financial Officer
(Richard D. Brounstein) (Principal Financial Officer)
/s/ Franklin D. Brown* Director March 31, 1999
-----------------------------------
(Franklin D. Brown)
/s/ Robert J. Erra* Director March 31, 1999
-----------------------------------
(Robert J. Erra)
/s/ Wayne I. Roe* Director March 31, 1999
-----------------------------------
(Wayne I. Roe)
/s/ Michael H. Spindler* Director March 31, 1999
---------------------------------------
(Michael H. Spindler)
* Executed on behalf of the individual indicated pursuant to a power of attorney.
</TABLE>
41
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-80619, 333-59869 and 333-70201) pertaining to the 1992 Stock
Plan, the 1992 Consultant Stock Plan, the 1995 Director Option Plan, the 1995
Employee Stock Purchase Plan and the 1999 Nonstatutory Stock Option Plan and in
the Registration Statement (Form S-3 No. 333-45895) of VidaMed, Inc. of our
report dated January 15, 1999, with respect to the consolidated financial
statements of VidaMed, Inc. included in this Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
March 25, 1999
VIDAMED, INC - AUDITORS' REPORT AND CONSENT
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- -------------------------------------------------
The Board of Directors and Stockholders
VidaMed, Inc.
We have audited the accompanying consolidated balance sheets of VidaMed, Inc. as
of December 31, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1998. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly and in
all material respects, the consolidated financial position of VidaMed, Inc. at
December 31, 1998 and 1997, and the consolidated result of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/ Ernst & Young LLP
Palo Alto, California
January 15, 1999
