UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended: December 29, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 1-11064
BRITESMILE, INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0410364
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(State or other jurisdiction (IRS employer
of incorporation or organization) identification no.)
490 North Wiget Lane
Walnut Creek, California 94598
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(Address of principal executive offices) (Zip Code)
(925) 941-6260
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(Issuer's telephone number, including area code)
Securities registered pursuant to Name of each exchange
Section 12(b) of the Act: on which registered:
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None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
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common stock, par value $0.001
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
------ ------
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates as of April 8, 2002 was approximately $83,959,173 based on the
closing sale price of the issuer's stock as reported by the NASDAQ NMS on such
date. The number of shares of common stock of the registrant outstanding as of
March 26, 2002 was 36,404,461.
DOCUMENTS INCORPORATED BY REFERENCE: None.
This Amendment is filed pursuant to General Instruction G(3) to Form 10-K, for
the sole purpose of filing the information required to be disclosed pursuant to
Part III of Form 10-K for the Company's fiscal year ended December 29, 2001.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the name, age and position of each director and
executive officer of the Company as of the date of this Report:
NAME AGE CURRENT POSITION(S) (1)
John L. Reed 60 Chief Executive Officer and Director
Paul Dawson 47 Chief Executive Officer of BriteSmile
International Limited, a subsidiary of the
Company
Linda S. Oubre 43 President, Center Division and Director
Derek Correia 33 Executive Vice President, Marketing
Peter P. Hausback 42 Executive Vice President, Chief Financial Officer, and
Secretary
Stephen Miller 55 Executive Vice-President, Manufacturing and
Distribution
Anthony M. Pilaro 66 Chairman of the Board
R. Eric Montgomery 47 Director
Peter Schechter 42 Director
Bradford G. Peters 34 Director
Harry Thompson 72 Director
Gerald Poch 55 Director
Dr. Gasper Lazzara, Jr. 59 Director
Dennis F. Hightower 60 Director since March, 2001
(1) All directors serve for one year and until their successors are elected
and qualified and, unless otherwise noted, have served as a director
during the entire fiscal year ended December 29, 2001 through the date of
this Report. All officers serve at the pleasure of the Board of Directors.
There are no family relationships between any of the officers and
directors.
John L. Reed
Prior to joining the Company in June 1999 as its Chief Executive Officer, Mr.
Reed was Chairman of the Pacific Retailing Division of Duty Free Shoppers Group
Limited ("DFS"), the world's leading specialty retailer catering to
international travelers. At DFS he was responsible for the operations of
multiple retail stores, including the largest single, self-standing retail
operation in the world. During his 21-year career at DFS, prior to being named
Chairman of the Pacific Retail Division in 1997, Mr. Reed was President of DFS
Hawaii. From 1982 to 1988, Mr. Reed was President of the DFS U.S. Mainland
Operation. Mr. Reed has also served as Vice President of Merchandising for both
Federated Department Stores and John Wanamaker.
Paul Dawson
Mr. Dawson, prior to joining the Company's subsidiary, BriteSmile International,
as its Chief Executive Officer, was Chief Executive Officer of Camus
International, a global marketer of luxury goods. During his nine-year tenure
with Camus, he spearheaded an aggressive worldwide market expansion program of
that company's premium cognac products. Prior to Camus, Mr. Dawson held the
position of Engagement Manager at McKinsey & Company, an international
consulting firm. While at McKinsey, he advised a broad range of multinational
consumer companies on international expansion strategies. Mr. Dawson has lived
and worked in the United States, Europe, Asia and the Middle East. He holds
masters degrees from Cambridge University and UC Berkeley, and an MBA from
Stanford University.
2
Linda S. Oubre
Linda S. Oubre commenced serving as a director of the Company in May 1998. In
July 1998, she was appointed President, Center Division of the Company. Prior to
joining the Company, Ms. Oubre served for 2 years as President of Tri Com
Ventures, a company which specialized in new venture planning and implementation
consulting for clients such as McGraw Hill's Business Week Magazine, Prodigy
Online Service, and the United Nations Business Development Project in the
Republic of Belarus. Prior to 1996, Ms. Oubre was General Manager, New Business
Development, for the Los Angeles Times, and also served as Director of
Operations for Walt Disney's Consumer Products Division and Manager of Financial
Planning for the Times Mirror Company. She has also been a visiting instructor
at the Wharton Business School. Ms. Oubre is a graduate of the University of
California, Los Angeles and received her MBA from the Harvard Business School.
Derek Correia
Mr. Correia initially joined BriteSmile in September 2000. In January 2002, he
was appointed Executive Vice President, Marketing. Mr. Correia brings to the
Company 10 years of experience in consumer marketing and brand management
working for Fortune 500 companies with dynamic consumer brands. Prior to joining
BriteSmile, Mr. Correia served as Senior Vice President of Marketing for
Renaissance Cruises; Vice-President, Product and Brand Marketing for Burger King
Corporation; and Director, Innovation and Brand Marketing for Pizza Hut, Inc.
Peter P. Hausback
In April 2001, the Company named Peter P. Hausback as Executive Vice President,
Chief Financial Officer and Secretary. Previously, Mr. Hausback served as the
CFO, VP-Finance and Secretary for Il Fornaio, a multi-state restaurant and
commercial bakery company. While at Il Fornaio, Mr. Hausback was responsible for
planning, directing and managing human resources, MIS and all financial
functions, including budget and analysis, SEC reporting, accounting, cost,
treasury, cash, credit and tax functions. Mr. Hausback also previously served as
a manager at Price Waterhouse LLP in San Francisco, and as a senior auditor with
Security Pacific Corporation in Los Angeles.
Stephen Miller
In October 2000, Stephen Miller was appointed Executive Vice President,
Manufacturing and Distribution. Prior to joining BriteSmile in May 1999 as it
Executive Vice President, Real Estate and Construction, Mr. Miller was for 11
years Vice President of Facility Development for DFS. While at DFS, Mr. Miller
was responsible for the development of the flagship retail gallerias, high-end
boutiques, duty free stores and entertainment complexes in the U.S., Oceania and
the Pacific. Prior to DFS, Mr. Miller was Senior Vice President of Commercial
and Industrial Development for Castle and Cooke, Inc. where for 17 years he was
responsible for commercial, industrial and retail development for Hawaii's
second largest private landowner.
Anthony M. Pilaro
Mr. Pilaro has been a director of the Company since August 1997. Presently, he
serves as Chairman of CAP Advisers Limited which maintains offices in Dublin,
Ireland. He is also founder and Chairman of Excimer Vision Leasing L.P., a
partnership primarily engaged in the business of leasing Excimer laser systems.
Mr. Pilaro has been involved in private international investment banking. He was
a Founding Director and former Chief Executive Officer of DFS and a founder of
the predecessor of VISX, Inc. A graduate of the University of Virginia, and the
University of Virginia Law School, Mr. Pilaro practiced law in New York City
through 1964.
3
R. Eric Montgomery
Mr. Montgomery has been a director of the Company since May 1998. He is an
experienced consultant, researcher and entrepreneur in the oral care and
cosmetic products industries, and has been granted over 65 US and foreign
patents since 1981. Previously, from November 1997 until May 1998, he served as
an independent consultant to the Company through Applied Dental Sciences, Inc.,
the oral care products research and development firm of which he has been
President since 1992. Mr. Montgomery is also the Founding Manager and President
of OraCeutical LLC, an organization dedicated to the development of innovative
products and technologies for dentistry and consumer oral care. Oraceutical is
currently engaged by the Company to provide technology development services. Mr.
Montgomery's organizations have provided consulting services to and developed
products for companies including The Dial Corporation, Natural White, Virbac SA,
Zila Pharmaceuticals, ProHealth Laboratories, OPI Products, American Dental
Hygienics, Premiere Dental, and Boots PLC. Mr. Montgomery is also President of
IDEX Dental Sciences, Inc., an intellectual property holding firm established in
March 1996.
Peter Schechter
Mr. Schechter was appointed a director of the Company in July 1999. Mr.
Schechter is a founder of Chlopak, Leonard, Schechter and Associates, an
international communications consulting firm. Previously, Mr. Schechter was
Managing Director in charge of international business at the Sawyer/Miller
Group, specializing in the management of international financial issues,
political campaigns and country image programs. A graduate of the School of
Advanced International Studies at Johns Hopkins University, Mr. Schechter has
lived in Europe and Latin America and has extensive experience in the area of
governmental relations. He is fluent in six languages.
Bradford Peters
Mr. Peters has been a director of the Company since December 1999. He is the
President of Blackfin Capital, a privately held investment company based in New
York. Prior to founding Blackfin Capital, from July 1993 to June 1998, Mr.
Peters was with Morgan Stanley Private Wealth Management Group. Mr. Peters holds
an MBA degree from Duke University.
Harry Thompson
Mr. Thompson has served as a director of the Company since December 1999. He is
currently the President of The Strategy Group and Managing Director of Swiss
Army Brands, Inc., where he has worked since 1989. Prior to founding The
Strategy Group, Mr. Thompson served in senior management of several core units
of the Interpublic Group of Companies, one of the world's leading advertising
groups. Mr. Thompson also has served as either manager or chairman of several
telecommunication companies of The Galesi Group. Mr. Thompson holds an MBA
degree from Harvard Business School.
Gerald Poch
Mr. Poch has served as a director of the Company since May 2000. He is a
Managing Director and co-head of the venture funds and the private equity funds
managed by Pequot Capital Management, Inc. Previously, Mr. Poch was the
chairman, president, and CEO of GE Capital Information Technology Solutions, a
technology solutions provider. Prior to that, Mr. Poch was a founder,
co-chairman and co-president of AmeriData Technologies, Inc., a value-added
reseller and systems integrator of hardware and software systems, and its
predecessor companies until its acquisition by GE Capital in 1996. Mr. Poch
received his B.S. from the University of Connecticut Honors College and
graduated cum laude with a J.D. from Boston University Law School.
4
Dr. Gasper Lazzara, Jr.
Dr. Gasper Lazzara, Jr. has served as a director of the Company since
2000. He served as Chairman of the Board and a director of the
Orthodontic Centers of America, Inc. ("OCA") from its inception in July 1994
through July 2000. He also served as Co-Chief Executive Officer of OCA from
September 1998 to July 2000, and he served as Chief Executive Officer of OCA
from July 1994 to September 1998. From 1989 to 1994, Dr. Lazzara served as
President or Managing Partner of certain predecessor entities of OCA. He is a
licensed orthodontist and, prior to founding OCA, maintained a private
orthodontic practice for over 25 years. He is a member of the American
Association of Orthodontists and is a Diplomat of the American Board of
Orthodontists.
Dennis F. Hightower
Mr. Hightower was named a director of the Company in March 2001. Most recently,
Mr. Hightower served as Chief Executive Officer of Europe Online Networks, SA,
from May 2000 to May 2001. Prior to that, he was a Professor of Management at
the Harvard Business School from July 1996 to May 2000. Previously, he was one
of the highest-ranking executives at Walt Disney, having served as President of
Walt Disney Television and Telecommunications, and President, Disney Consumer
Products for Europe, Middle East and Africa. His career includes positions with
Xerox, McKinsey & Co., General Electric, Mattel and Russell Reynolds. In
addition, he is a member of the Board of Directors of The Gillette Company,
Northwest Airlines, Pan Am Sat Corporation, Phillips Van-Huessen and the TJX
Companies. Mr. Hightower received his MBA from the Harvard Business School.
Significant Employees or Consultants
Dr. John W. Warner
Dr. Warner accepted the position of Research and Development Director for the
Company in May 1998. Dr. Warner is an experienced research and technology
consultant and entrepreneur who was one of the leading contributors to the
development of ophthalmic applications of laser technology. Dr. Warner leads the
Company's assessment of existing products and LATW development efforts. Dr.
Warner has served as a consultant to Northwestern University in the areas of
technology development and commercialization. From March 1986 to December 1990
he was the founder and CEO of Taunton Technologies, Inc., a predecessor of VISX,
Inc., engaged in the business of developing and manufacturing Excimer laser
systems to perform ophthalmic surgery.
Salim A. Nathoo, D.D.S.
Dr. Nathoo was formerly employed by Colgate-Palmolive Co. as a Senior Researcher
from 1990 to 1998 and was a key member in the successful worldwide launch of the
Colgate Whitening program during his tenure there. Dr. Nathoo has lectured
globally on both the clinical and scientific aspects of teeth whitening, and he
is recognized as one of the leading authorities on the subject. Dr. Nathoo is
one of the founders of Oral Health Clinical Services, LLC. Dr. Nathoo holds both
a PhD and DDS from New York University, and has published over 40 papers in
major scientific journals.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who beneficially own more than 10 percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10 percent shareholders are required by regulation of
the Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file.
5
Based solely upon its review of the copies of such forms furnished to it during
the fiscal year ended December 29, 2001, and representations made by certain
persons subject to this obligation that such filings were not required to be
made, the Company believes that all reports required to be filed by these
individuals and persons under Section 16(a) were filed in a timely manner,
except as follows: Form 4 report of Mr. Hausback filed June 13, 2001, to report
a transaction dated January 4, 2001; Form 4 report of Mr. Hightower dated May
17, 2001, to report a transaction dated March 6, 2001; Form 4 report of LCO
Invesments Limited filed May 24, 2001, to report a transaction dated January 4,
2001; Form 4 report of Ms. Oubre filed June 25, 2001, to report a transaction
dated January 2, 2001; Form 4 report of Ms. Oubre filed September 7, 2001, to
report a transaction dated July 26, 2001; Form 4 report of Mr. Reed filed June
25, 2001, to report a transaction dated January 2, 2001; and Form 4 report of
Mr. Schechter filed October 15, 2001, to report a transaction dated July 25,
2001.
Except as disclosed, the Company is not aware of any transactions in its
outstanding securities by or on behalf of any director, executive officer or 10
percent holder, which would require the filing of any report pursuant to Section
16(a) during the fiscal year ended December 29, 2001, that has not been filed
with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the Company
for services rendered during the fiscal year ended April 1, 2000 ("Fiscal
2000"), the nine-month transition period ended December 30, 2000 (the
"Transition Period"), and the fiscal year ended December 29, 2001 ("Fiscal
2001"), to John Reed, the Company's Chief Executive Officer, and to the
Company's four most highly compensated executive officers during Fiscal 2001.
Peter Hausback, the Company's CFO, commenced employment in April 2001.
6
Summary Compensation Table
Long Term
Compensation
----------------------
Annual
Compensation Awards
-------------------- ----------------------
Securities
Name and Underlying
Principal Position Period Salary ($) Options
-------------------------- -------------------------- -------------------- ----------------------
John Reed, CEO Fiscal 2001 $ 250,481 0
Transition Period 187,500 0
Fiscal 2000 201,923 250,000 (1)
Paul Dawson Fiscal 2001 $ 210,000 0
CEO, BriteSmile Transition Period $ 150,000 0
International, Ltd. Fiscal 2000 167,723 320,000 (2)
Peter Hausback Fiscal 2001 $ 141,433 150,000 (4)
Chief Financial
Officer(3)
Linda S. Oubre Fiscal 2001 $ 215,877 30,000 (5)
President, Center Transition Period 148,958 0
Division Fiscal 2000 176,058 25,000 (6)
Michael P. Whan Fiscal 2001 $ 366,169 50,000 (8)
President, Transition Period $ 428,987(9) 200,000 (10)
Worldwide Fiscal 2000 0 0
Marketing(7)
(1) Options vest 50,000 each year over 5 years beginning on March 24,
2001.
(2) Mr. Dawson was granted options to purchase 20,000 shares on November
1, 1999, which options vested on November 20, 2000, and options to
purchase 300,000 shares on April 19, 1999, of which 100,000 options
vested immediately and the remainder vest 40,000 per year beginning on
April 19, 2000.
(3) Peter Hausback replaced Paul Boyer as the Company's Chief Financial
Officer in April 2001.
(4) Mr. Hausback was granted options to purchase 150,000 shares on January
4, 2001, of which 50,000 vested in April 2001 and 20,000 vested in
December 2001, and 80,000 of which vest over 5 years on December 1 of
each year.
(5) Ms. Oubre was granted options to purchase 30,000 shares on March 20,
2001, which vested March 20, 2002.
(6) Options vested on November 1, 2000.
(7) Derek Correia replaced Mr. Whan in January 2002 as the Company's
Executive Vice President, Marketing.
7
(8) Mr. Whan was granted options to purchase 50,000 shares on March 20,
2001, which vested March 20, 2002, but which expired April 4, 2002.
(9) Mr. Whan received $200,000 for relocation expenses during the
transition period.
(10) 100,000 of the options granted vested immediately and the remainder
vest 20,000 per year beginning on April 23, 2001. However, all of Mr.
Whan's options expired April 4, 2002.
The following table lists individual grants of stock options made during the
Company's last completed fiscal year as compensation for services rendered as an
officer of the Company:
OPTION GRANTS IN FISCAL YEAR 2001
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
--------------------------------------------------------------------- -----------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) FY 2001 ($/Share) Date 5% 10%
--------------------- --------------- ---------------- ------------ -------------- -------------- ------------
John L. Reed 0 N/A N/A N/A N/A N/A
Paul Dawson 0 N/A N/A N/A N/A N/A
Linda S. Oubre 30,000 2.2% 4.44 3-20-11 $ 83,679 $ 212,287
Michael P. Whan (1) 50,000 3.7% 4.44 4-04-02 $ 11,100 $ 22,200
Peter Hausback 150,000 11.1% 3.50 1-04-11 $ 110,057 $ 278,905
(1) Derek Correia replaced Michael Whan as the Company's Executive Vice
President, Marketing in January, 2002.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR
AND DECEMBER 29, 2001 OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In the Money Options at
Acquired on Value December 29, 2001 (1) December 29, 2001 (1)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
John L. Reed 0 0 600,000 / 400,000 $1,410,000/ $940,000
Paul Dawson 0 0 200,000 / 120,000 0/ 0
Linda S. Oubre 18,000 145,920 147,000 / 90,000 $378,200 / $60,000
Michael P. Whan (2) 0 0 0 / 0 0 / 0
Peter Hausback (3) 0 0 70,000 / 80,000 $ 94,500 / $108,000
(1) Potential unrealized value is calculated as the fair market value at
December 29, 2001 ($4.85 per share), less the option exercise price,
times the number of shares.
8
(2) Derek Correia replaced Mr. Whan in January 2002 as the Company's
Executive Vice President, Marketing.
(3) Peter Hausback replaced Paul Boyer as Company CFO on April 2, 2001.
Compensation of Directors
Outside directors of the Company (non-employees) receive options to purchase
20,000 shares of common stock per year for each year during which they serve as
a director. The exercise price of such options is 100% of the fair market price
on the date of grant. Actual expenses incurred by outside directors are
reimbursed.
Employment Contracts and Termination of Employment Arrangements
Certain of the Company's executive officers whose compensation is required to be
reported in the Summary Compensation Table are parties to written employment
agreements with the Company as follows:
John Reed
Pursuant to a letter agreement between the Company and John Reed dated January
20, 1999, Mr. Reed agreed to serve as Chief Executive Officer of the Company.
The agreement provides that the Company will pay Mr. Reed $250,000 a year for
his services. Mr. Reed also received options to purchase 750,000 shares of the
Company's common stock at the closing price on the date of the agreement, of
which 550,000 have vested as of April 22, 2002. Mr. Reed's employment began
full-time and on location on June 2, 1999. On March 24, 2000, Mr. Reed was
granted options to purchase 250,000 shares of the Company's common stock at the
closing price on that date, of which 100,000 have vested as of April 22, 2002.
Paul Dawson
BriteSmile International, Ltd. entered into an employment agreement with Paul
Dawson on April 19, 1999. Under the terms of the agreement, Mr. Dawson has
served as Chief Executive Officer of BriteSmile International, a wholly-owned
subsidiary of the Company. The Company pays Mr. Dawson $16,666 per month for his
services. Mr. Dawson is eligible for a bonus based on the number of paid teeth
whitening procedures performed in a designated international area. The bonus
will be paid in cash and Common Stock of the Company. In addition, Mr. Dawson
received options to purchase 300,000 shares of the Company's common stock at the
closing price on the date of the agreement. Options to purchase 100,000 shares
vested on the date of the agreement. The remaining 200,000 options vest in equal
installments over five years.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 22, 2002, regarding
beneficial stock ownership of (i) all persons known to the Company to be
beneficial owners of more than 5% of the outstanding common stock; (ii) each
director or director nominee, and any other executive officer of the Company
whose compensation is required to be reported in this Proxy Statement, and (iii)
all officers and directors of the Company as a group. The percentages listed
below are calculated based on 36,404,461 shares of stock issued and outstanding.
Each of the persons in the table below has sole voting power and sole
dispositive power as to all of the shares shown as beneficially owned by them,
except as otherwise indicated.
9
Number of
Shares Percent of
Beneficially Outstanding
Name and Address Owned (1) Shares (2)
Executive Officers and Directors
Paul Dawson 467,397 (3) 1.3%
36 Fitzwilliam Place
Dublin 2, Ireland
Peter P. Hausback 70,000 (4) *
490 North Wiget Lane
Walnut Creek, California 94598
Dr. Gasper Lazzara, Jr. 559,096 (5) 1.5%
5000 Sawgrass Village Circle, Suite 28
Ponte Verda Beach, Florida 32082
R. Eric Montgomery 519,149 (6) 1.4%
29 Fairview Road
P. O. Box 487
Monterey, Massachusetts 01245
Linda S. Oubre 222,746 (7) *
490 North Wiget Lane
Walnut Creek, California 94598
Bradford Peters 2,138,557 (8) 5.8%
Blackfin Capital, LLC
622 Third Avenue, 38th Floor
New York, New York 10017
Anthony M. Pilaro 15,816,523 (9) 42.7%
36 Fitzwilliam Place
Dublin 2, Ireland
Gerald Poch 4,485,768 (10) 13.2%
Pequot Capital Management, Inc.
500 Nyala Farm Road
Westport, Connecticut 06880
John L. Reed 1,556,367 (11) 4.2%
490 North Wiget Lane
Walnut Creek, California 94598
Peter Schechter 60,712 (12) *
Chlopak, Leonard, Schechter & Assoc.
3021 O Street, N.W.
Washington, D.C. 20007
10
Harry Thompson 151,918 (13) *
169 E. 78th Street
New York, New York 10021
Dennis F. Hightower 120,000 (14) *
2600 Rock Creek Drive, N.W.
Washington, DC 20008-2704
Derek Correia 62,000 (15) *
490 North Wiget Lane
Walnut Creek, California 94598
Stephen Miller 193,700 (16) *
490 North Wiget Lane
Walnut Creek, California 94598
All Officers and Directors as a Group 26,783,933 (17) 66.9%
(13 persons)
5% Beneficial Owners
LCO Investments Limited 15,816,523 (9) 42.7%
Canada Court
Upland Road
St. Peter Port
Guernsey
Channel Islands
Pequot Capital Funds 4,485,768 (10) 13.2%
c/o Pequot Capital Management, Inc.
500 Nyala Farm Road
Westport, CT 06880
Andrew J. McKelvey 2,138,557 (18) 5.9%
c/o Blackfin Capital, LLC
622 Third Avenue, 38th Floor
New York, New York 10017
* Constitutes less than 1%.
(1) Includes any options or warrants to purchase shares which are
presently exercisable or exercisable within 60 days.
(2) All percentages are calculated based upon a total number of shares
outstanding which includes [36,404,461] shares of the Company issued
and outstanding as of [April 22, 2002,] plus that number of options or
warrants presently exercisable or exercisable within 60 days by the
named security holder.
(3) Consists of 227,397 shares owned beneficially, options to purchase
220,000 shares at $6.00 per share, and options to purchase 20,000
shares at $5.875 per share.
(4) Consists of options to purchase 70,000 shares at $3.50 per share.
(5) Consists of 392,395 shares held indirectly through OCAI Two Limited
Partnership, warrants to purchase 121,359 shares at $5.00 per share,
options to purchase 20,000 shares at $9.25 per share, and options to
purchase 25,342 shares at $5.00 per share.
11
(6) Consists of 235,957 shares owned beneficially, options to purchase
20,000 shares at $1.75 per share, options to purchase 33, 192 shares
at $4.44 per share, options to purchase 200,000 shares at $3.75 per
share, options to purchase 20,000 shares at $2.50 per share, and
options to purchase 10,000 shares at $5.00 per share.
(7) Consists of 45,746 shares owned beneficially, options to purchase
122,000 shares at $1.75 per share, options to purchase 25,000 shares
at $5.875 per share, and options to purchase 30,000 shares at $4.44
per share.
(8) Consists of 1,704,584 shares held of record by Andrew J. McKelvey in
which Mr. Peters has an economic interest in any appreciation, and in
which he shares control over their disposition, warrants held by Mr.
McKelvey or Brad Peters to purchase 382,055 shares at $5.00 per share,
options held by Mr. Peters to purchase 20,000 shares at 9.375 per
share, options to purchase 21,918 shares at $2.50 per share, and
options to purchase 10,000 shares at $5.00 per share.
(9) Consists of 8,339,026 shares owned of record and beneficially by LCO,
1,498,900 shares held indirectly through PdeP Tech Limited, a
subsidiary of LCO, 27,000 shares held by AMP Trust, of which Mr.
Pilaro is a beneficiary, 3,000,000 shares held by LCP II Trust, of
which Mr. Pilaro's wife is a beneficiary, 1,000,000 shares held by ACP
II Trust, of which one of Mr. Pilaro's adult sons not living in Mr.
Pilaro's household is a beneficiary, 1,000,000 shares held by CAP II
Trust, of which one of Mr. Pilaro's adult sons not living in Mr.
Pilaro's household is a beneficiary, 292,800 shares held by various
trusts of which CAP is a co-trustee, 638,797 warrants to purchase
shares at $5.00 per share held by LCO, and 20,000 warrants to purchase
shares held by PdeP, also exercisable at $5.00 per share. LCO is a
wholly owned subsidiary of the ERSE Trust. The sole trustee of the
ERSE Trust is CAP. Mr. Pilaro, a director of the Company, is Chairman
of CAP. Mr. Pilaro disclaims beneficial ownership of the shares held
by LCO, PdeP Tech Limited, AMP Trust, LCP II Trust, ACP II Trust, CAP
II Trust, and the trusts indicated above of which CAP is co-trustee.
(10) Consists of 2,211,660 shares held of record by Pequot Private Equity
Fund II, L.P., 1,105,829 shares held of record by Pequot Partners
Fund, L.P., 1,105,829 shares held of record by Pequot International
Fund, Inc., warrants held by Pequot Private Equity Fund II, L.P. to
purchase 178,554 shares at $5.00 per share, warrants held by Pequot
Partners Fund, L.P. to purchase 89,277 shares at $5.00 per share,
warrants held by Pequot International Fund, Inc. to purchase 89,277
shares at $5.00 per share, options held by Mr. Poch to purchase 20,000
shares at $11.25 per share, and options to purchase 25,342 shares at
$5.00 per share. Mr. Poch is a Managing Director of Pequot Capital
Management, Inc., which holds voting and dispositive power for all
share held of record by the Pequot Funds. Mr. Poch disclaims
beneficial ownership of the shares held by the Pequot Funds, except to
the extent of his pecuniary interest therein.
(11) Consists of 805,461 shares owned beneficially, warrants to purchase
100,906 shares at $5.00 per share, options to purchase 550,000 shares
at $2.50 per share, and options to purchase 100,000 shares at $9.25
per share.
(12) Consists of 2,000 shares owned beneficially in a Revocable Living
Trust, options to purchase 20,000 shares at $11.25 per share, options
to purchase 28,712 shares at $2.50 per share, and options to purchase
10,000 shares at $5.00 per share.
(13) Consists of options to purchase from LCO 100,000 shares at $1.50 per
share, options to purchase 20,000 shares at $9.375 per share, options
to purchase 21,918 shares at $2.50 per share, and options to purchase
10,000 shares at $5.00 per share.
(14) Consists of 100,000 shares owned beneficially and options to purchase
20,000 shares at $5.00 per share.
12
(15) Consists of options to purchase 60,000 shares at $8.23 per share.
(16) Consists of 8,700 shares owned beneficially, options to purchase
130,00 shares at $2.75 per share, options to purchase 25,000 shares at
$5.875 per share, and options to purchase 30,000 shares at $4.44 per
share.
(17) Includes exercisable options and warrants to purchase 3,557,743
shares.
(18) Consists of 1,704,584 shares held of record by Andrew J. McKelvey, and
warrants held by Mr. McKelvey to purchase 382,055 shares at $5.00 per
share, options held by Mr. Peters to purchase 20,000 shares at 9.375
per share, options to purchase 21,918 shares at $2.50 per share, and
options to purchase 10,000 shares at $5.00 per share.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LCO Properties Sublease
On December 1, 1999 the Company, as lessee, entered into an Agreement of
Sublease with LCO Properties, Inc., a Delaware corporation, as lessor. LCO
Properties, Inc. is affiliated with the Company's principal shareholder, LCO
Investments Limited ("LCO"). The Sublease covers approximately 4,821 square feet
of space located in the building known as 16-18 West 57th Street in the Borough
of Manhattan, New York City. The sublease term is for ten years and calls for
initial lease payments of $402,000 per year, subject to increase in the event of
increases in the rent payable under the parent lease for the property between
LCO Properties, Inc., and its lessor.
Stock Grants by Principal Shareholder
In 2001, the Company recorded non-cash compensation expense of $621,000 related
to the granting of 210,000 shares of Company common stock held by a principal
shareholder to two Company executives, an employee, and an outside consultant
for services performed on behalf of the Company.
Harry Thompson Consulting Agreement
In August 1999, Harry Thompson, a director of the Company, agreed to provide
marketing consulting services to the Company. In consideration for Mr.
Thompson's services to the Company, and pursuant to a letter agreement dated
August 17, 1999, the Company's principal shareholder, LCO granted Mr. Thompson
the right to purchase from LCO up to 100,000 shares of common stock of the
Company at a price of $1.50 per share. The option to purchase from LCO expires
on August 31, 2004.
Public Relations Services Agreement
On April 7, 1999, the Company entered into a Letter Agreement with Chlopak,
Leonard, Schechter and Associates ("CLS"), a public relations firm in
Washington, D.C. Pursuant to the agreement, CLS would provide public relations
advice and serve as communications counselors to the Company for consideration
of $23,000 per month, plus expenses. In January 2002, the agreement was modified
to reduce the payment to $10,000 per month. The agreement was entered into for a
minimum of six months, and remains in force. Peter Schechter, a director of the
Company, is one of three managing partners of CLS.
Oral Health Clinical Services Agreement
On March 24, 1999, the Company entered into a Consulting Agreement with Oral
Health Clinical Services, LLC, Salim A. Nathoo, and R. Eric Montgomery. Mr.
Montgomery is a director of the Company. Pursuant to the agreement, Oral Health,
13
Nathoo will devote their services to obtaining American Dental Association (ADA)
Certification for the BriteSmile 2000 Tooth Whitening Procedure. The term of the
contract is for two years or until ADA Certification, whichever is earlier. In
consideration for the services, the Company granted 75,000 stock options to Dr.
Nathoo, which have vested. The Company will grant up to 225,000 additional stock
options, of which the number and exercise price is dependent upon obtaining ADA
Certification, at the date the Certification is obtained. To date, certification
has not been obtained.
Oraceutical Agreement
On November 27, 2000, the Company entered into a Consulting Agreement with
Oraceutical, LLC. R. Eric Montgomery, a director of the Company, is the founding
Manager and President of Oraceutical. Pursuant to the agreement, Oraceutical
provides technology development services to the Company for various
light-activated teeth whitening products and procedures. In consideration for
its services, Oraceutical has been paid $25,000 a month, plus options to
purchase 200,000 shares of common stock, subject to vesting provisions,
exercisable at $3.75 per share.
EVL Lease Agreement
On December 29, 2000, as amended in February 2001 and March 2002, the Company
secured a lease line of credit of up to $15 million from Excimer Vision Leasing
L.P. ("EVL"). Anthony Pilaro, the Company's Chairman, serves as Chairman of EVL.
Effective June 30, 2001, CAP America Limited increased its ownership in EVL from
1.79% to 70% and CAP America Trust decreased its ownership interest from 78.21%
to 10%. On the same day, CAP America Limited was sold to LCO Investments, the
Company's major shareholder. The remaining 20% ownership interest in EVL is held
by persons unrelated to the Company.
CAP Advisers Line of Credit
In December 2001, as amended in March 2002, BriteSmile International, a
wholly-owned subsidiary of the Company, entered into Credit and Security
Agreements with CAP Advisers Limited which provides for a $2.5 million line of
credit facility to the Company and its subsidiary.
Additional Working Capital Guarantees
In March 2002 the Company received written commitments from certain existing
shareholders and directors of the Company to severally purchase, on or before
December 31, 2002, up to $4 million of additional shares of common stock of the
Company (or to otherwise secure, collateralize, or make available such funds to
the Company).
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Amended Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BriteSmile, Inc.
By: /s/ John L. Reed
John Reed
Chief Executive Officer
By: /s/ Peter P. Hausback
Peter P. Hausback
EVP, Chief Financial Officer
Date: April 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amended Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ A.M. Pilaro Chairman of the Board April 29, 2002
---------------------------- of Directors
Anthony M. Pilaro
/s/ John L. Reed Chief Executive Officer April 29, 2002
---------------------------- and Director (Principal
John L. Reed Executive Officer)
/s/Linda S. Oubre Director April 29, 2002
----------------------------
Linda S. Oubre
Director April __, 2002
----------------------------
R. Eric Montgomery
Director April __, 2002
----------------------------
Gerald Poch
Director April __, 2002
----------------------------
Dr. Gasper Lazzara, Jr.
/s/ Brad Peters Director April 29, 2002
----------------------------
Brad Peters
Director April __, 2002
----------------------------
Harry Thompson
/s/ Peter Schechter Director April 29, 2002
----------------------------
Peter Schechter
Director April __, 2002
----------------------------
Dennis F. Hightower