Registration No. 333-_____
As filed with the Securities and Exchange Commission on November 21, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LASERSIGHT INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 3845 65-0273162
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(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or Industrial Classification Identification
organization) Code Number) Number)
3300 University Boulevard, Suite 140
Winter Park, Florida 32792
(407) 678-9900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Mr. Gregory L. Wilson Copy to:
Chief Financial Officer Paul J. Miller, Esq.
LaserSight Incorporated Sonnenschein Nath & Rosenthal
3300 University Boulevard, Suite 140 8000 Sears Tower
Winter Park, Florida 32792 Chicago, Illinois 60606
(407) 678-9900 (312) 876-8000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to public: From time
to time after the Registration Statement is declared effective.
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 to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for
the same offering. |_|
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
Title of Each Class of Proposed Maximum Proposed
Securities to be Amount to be Offering Price per Maximum Aggregate Amount of
Registered Registered (1) Share (2) Offering Price (2) Registration Fee
---------------------- -------------- ------------------ ------------------ ----------------
Common Stock, $.001 par 18,561,294 $0.235 $4,361,905 $401.30
value(3) shares
(1) Pursuant to Rule 416, the shares of common stock registered hereby also
includes such indeterminable number of shares issuable to prevent
dilution resulting from stock splits, stock dividends and similar
transactions and is deemed to include such additional shares.
(2) Estimated solely for purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
Based on the average high and low prices reported for the Common Stock
on The Nasdaq Stock Market on November 15, 2002.
(3) Includes the associated preferred stock purchase rights (the "Rights")
to purchase one one-thousandth of a share of Series E Junior
Participating Preferred Stock. The Rights initially are attached to and
trade with the Common Stock of the Registrant. The value attributable
to such Rights, if any, is reflected in the offering price of the
Common Stock.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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The information contained in this prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED NOVEMBER 21, 2002
PROSPECTUS
18,561,294 Shares
LASERSIGHT INCORPORATED
Common Stock
This prospectus relates to 18,561,294 shares of common stock of
LaserSight Incorporated being offered for sale by the selling stockholders named
in this prospectus consisting of 18,561,294 shares of LaserSight common stock
that will be issued upon the conversion of series H convertible participating
preferred stock that were issued to the selling stockholders in October 2002 in
connection with LaserSight's private placement transaction that was closed in
August 2002.
We have agreed to pay certain expenses in connection with the
registration of the common stock by this prospectus and to indemnify the selling
stockholders named in this prospectus against certain liabilities, including
liabilities under the Securities Act.
We have been advised by the selling stockholders named in this
prospectus that there are no underwriting arrangements with respect to the sale
of the common stock being registered by this prospectus, and that the selling
stockholders may offer the shares in transactions on The Nasdaq Stock Market, in
negotiated transactions, or a combination of both at prices related to
prevailing market prices, or at negotiated prices. LaserSight common stock is
traded on The Nasdaq Stock Market under the symbol "LASE." On November 20, 2002,
the last reported sale price for LaserSight common stock was $0.25 per share.
Investing in these securities involves a high degree of risk. See "Risk
Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________________, 2002.
TABLE OF CONTENTS
Overview of LaserSight Incorporated Selling Stockholders
Risk Factors Plan of Distribution
Forward-Looking Statements Legal Matters
Use of Proceeds Experts
Capitalization Where to Find More Information
Description of Capital Stock Documents Incorporated by Reference
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with information that is different. We are not making
an offer of the securities in any jurisdiction where the offer is not permitted.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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OVERVIEW OF LASERSIGHT INCORPORATED
Operating Segment Information
LaserSight Incorporated operates in two operating segments: refractive
products and patent services. Our principal operating segment, refractive
products, primarily includes the laser vision correction products and services
of LaserSight Technologies which develops, manufactures and markets narrow beam
scanning excimer laser systems, topography-based diagnostic workstations,
keratomes, keratome blades and other related products used to perform procedures
that correct common refractive vision disorders such as nearsightedness,
farsightedness and astigmatism. Our patent services segment consists primarily
of various patents that we own and license related to the use of excimer lasers
to ablate biological tissue.
We have significant liquidity and capital resource issues relative to
the timing of our accounts receivable collection and the successful completion
of new sales compared to our ongoing payment obligations. We have experienced
significant losses and operating cash flow deficits, and we expect that
operating cash flow deficits will continue without improvement in our operating
results. Our recurring losses from operations and net capital deficiency raises
substantial doubt about our ability to continue as a going concern. Although as
a result of the China Transaction described below the Company's short-term
liquidity has improved and its operating results are improving, further
improvements in revenues will be needed to achieve profitability and positive
cash flow. There can be no assurance that such improvements will continue. Your
attention is directed to the discussion under the caption "Risk Factors and
Uncertainties--Financial and Liquidity Risks" set forth in this prospectus as
well as the financial statements and disclosures set forth in the documents
incorporated in this prospectus by reference.
China Transaction
In July 2002, we signed a non-binding letter of intent with Shenzhen
New Industries Medical Development Co. Ltd., a company based in the People's
Republic of China that specializes in advanced medical treatment services and
medical device distribution, and an affiliate that invests in medical projects.
Definitive agreements relating to the China Transaction were executed on August
15, 2002, establishing a strategic relationship that includes the commitment to
purchase at least $10.0 million worth of our products during the 12-month period
ending August 15, 2003, distribution of our products in mainland China, Hong
Kong, Macao and Taiwan, and a $2.0 million investment in LaserSight. The
investment was completed in October 2002 in the form of Series H convertible
preferred stock that, subject to certain restrictions, could be converted into
shares of our common stock and result in the purchaser holding approximately 40%
of our common stock. The products purchased will be paid by irrevocable letters
of credit, confirmed by a U.S. bank and payable upon presentation of shipping
documents. The Company started shipping products under this agreement in August
2002. Through November 20, 2002, approximately $2.0 million worth of products
were sold under these agreements.
Organizational Information
We were incorporated in Delaware in 1987 but were inactive until 1991.
In April 1993, we acquired LaserSight Centers in a stock-for-stock exchange with
additional shares issued in March 1997 pursuant to an amended purchase
agreement. In February 1994, LaserSight acquired The Farris Group (TFG). In July
1994, we were reorganized as a holding company. In October 1995, we acquired MEC
Healthcare, Inc. (MEC). In July 1996, our LSI Acquisition, Inc. (LSIA)
subsidiary acquired the assets of the Northern New Jersey Eye Institute. In
August 1997 we formed LaserSight Patents which then acquired certain patents
from International Business Machines Corporation. In December 1997, we sold MEC
and LSIA. In April 1998, we acquired the assets of the medical products division
of Schwartz Electro-Optics, Inc. In March 2000, we acquired from Premier Laser
Systems, Inc. the intellectual property relating to a technology development
project under design to provide an integrated refractive diagnostic workstation
that includes front-to-back analysis of aberrations within the total eye. Late
in 2000, we abandoned the LaserSight Centers mobile laser strategy due to
industry conditions and our increased focus on development and commercialization
of our refractive products. In March 2001, we sold U.S. Patent No. 4,784,135
(the Blum Patent) acquired from IBM in 1997, but retained our rights as licensor
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under a license to the Blum Patent previously granted to Visx, Incorporated. In
late 2001 we discontinued our health care services segment consisting of TFG.
Principal Office
Our principal office and mailing address are 3300 University Boulevard,
Suite 140, Winter Park, Florida 32792. Our telephone number at that address is
(407) 678-9900 and our address on the world wide web is www.lase.com.
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RISK FACTORS
In addition to the other information we provide or incorporate by
reference in this prospectus, you should carefully consider the following risks
before deciding whether to invest in our common stock. In evaluating the risks
of investing in our common stock, you should also evaluate the other information
set forth or incorporated by reference in this prospectus, including our
financial statements and the notes accompanying them.
FINANCIAL AND LIQUIDITY RISKS
WE HAVE EXPERIENCED SIGNIFICANT LOSSES AND OPERATING CASH FLOW DEFICITS
AND WE EXPECT THAT OPERATING CASH FLOW DEFICITS WILL CONTINUE.
We continue to be challenged by our significant liquidity and capital
resource issues relative to the timing of our accounts receivable collection and
the successful completion of new sales compared to our ongoing payment
obligations. We started shipping products related to the China Transaction in
August 2002 and received the equity investment portion of the transaction in
October 2002. As a result, the Company's short-term liquidity has improved and
its operations are improving. We continue undertaking steps as part of a plan to
attempt to continue to improve liquidity and operations with the goal of
sustaining Company operations. These steps include seeking (a) to increase
sales; and (b) to control overhead costs and operating expenses.
We will still need to generate increased revenues and collect them.
While we are working to achieve these improved results, we cannot assure you
that we will be able to generate increased revenues and collections to fund
required cash expenditures in a timely manner.
Our working capital remains positive (approximately $3.8 million as of
the end of October 2002), though the timing of the conversion of our current
assets into cash is not totally in our control. For example, we cannot dictate
the timing of the collection of our accounts receivable with our customers and
converting our inventory into cash is dependent on our ability to generate new
sales with our products and collect the sales price in a timely manner.
We experienced significant net losses and deficits in cash flow from
operations for the years ended December 31, 2001 and 2000 and the nine months
ended September 30, 2002, as set forth in the following table. We cannot be
certain that we will be able to achieve or sustain profitability or positive
operating cash flow in the future.
Nine Months Ended
Year Ended December 31, September 30,
2000 2001 2002
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Net loss $21.4 million $26.2 million $11.9 million
Deficit in cash flow from
operations $15.7 million $17.7 million $1.8 million
In the longer term, our expectations are based on additional factors
including: the success of our sales efforts in China and in Europe where our
efforts will initially be primarily focused, the uncertain timing of additional
supplemental FDA approvals for our LaserScan LSX excimer laser system (which has
resulted in our decision to not actively market our laser system in the U.S.
until additional FDA approvals are received), potential growth in laser sales
after receipt of further FDA approvals, increases in accounts receivable and
inventory purchases when sales increase, our present inability to borrow under
our revolving credit facility, the uncertain impact of the market introduction
of our UltraShaper durable keratomes and AstraMax diagnostic workstations, and
the absence of unanticipated product development and marketing costs. These
factors and assumptions are subject to substantial uncertainty and risks beyond
our control and no assurances can be given that these expectations will prove
correct. These risks and uncertainties include:
o the willingness of trade creditors to continue to extend credit to
LaserSight;
o reductions and cancellations in orders;
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o our ability to fulfill orders in light of our current financial
condition;
o our ability to sell products and collect accounts receivables at or
above the level of management's expectations;
o the occurrence of unforeseen expenses and our ability to control
expected expenses and overhead;
o the occurrence of property and casualty losses which are uninsured or
that generate insurance proceeds that cannot be collected in a short
time frame;
o our ability to improve pricing and terms of international sales;
o the loss of, or failure to obtain additional, customers; and
o changes in pricing by our competitors.
With respect to management's expectations regarding LaserSight's
ability to continue operations for the expected period and the risks and
uncertainties relating to those expectations, readers are encouraged to review
the discussions under the captions "--If our uncollectible receivables exceed
our reserves we will incur additional unanticipated expenses, and we may
experience difficulty collecting restructured receivables with extended payment
terms," "--Industry and Competitive Risks--We do not intend to continue actively
marketing our LaserScan LSX laser system in the U.S. until we receive additional
FDA approvals," "--Additional Company and Business Risks--Required per procedure
fees payable to Visx under our license agreement may exceed per procedure fees
collected by us,"and "--Our supply of certain critical components and systems
may be interrupted because of our reliance on a limited number of suppliers."
These risks and uncertainties can affect LaserSight's ability to continue
operations for the expected period in the absence of obtaining additional
capital resources.
IF OUR UNCOLLECTIBLE RECEIVABLES EXCEED OUR RESERVES WE WILL INCUR
ADDITIONAL UNANTICIPATED EXPENSES, AND WE MAY EXPERIENCE DIFFICULTY COLLECTING
RESTRUCTURED RECEIVABLES WITH EXTENDED PAYMENT TERMS.
Although we monitor the status of our receivables and maintain a
reserve for estimated losses, we cannot be certain that our reserves for
estimated losses, which were approximately $5.8 million at September 30, 2002,
will be sufficient to cover the amount of our actual write-offs over time. At
September 30, 2002, our net trade accounts and notes receivable totaled
approximately $8.8 million, and accrued commissions, the payment of which
generally depends on the collection of such net trade accounts and notes
receivable, totaled approximately $1.8 million. Actual write-offs that exceed
amounts reserved could have a material adverse effect on our consolidated
financial condition and results of operations. The amount of any loss that we
may have to recognize in connection with our inability to collect receivables is
principally dependent on our customers' ongoing financial condition, their
ability to generate revenues from our laser systems, and our ability to obtain
and enforce legal judgments against delinquent customers.
Our ability to evaluate the financial condition and revenue-generating
ability of our prospective customers located outside of the U.S., and our
ability to obtain and enforce legal judgments against customers located outside
of the U.S., is generally more limited than for our customers located in the
U.S. Our agreements with our international customers typically provide that the
contracts are governed by Florida law. We have not determined whether or to what
extent courts or administrative agencies located in foreign countries would
enforce our right to collect such receivables or to recover laser systems from
customers in the event of a customer's payment default. When a customer is not
paying according to established terms, we attempt to communicate and understand
the underlying causes and work with the customer to resolve any issues we can
control or influence. In most cases, we have been able to resolve the customer's
issues and continue to collect our receivable, either on the original schedule
or under restructured terms. If such issues are not resolved, we evaluate our
legal and other alternatives based on existing facts and circumstances. In most
such cases, we have concluded that the account should be written off as
uncollectible.
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INDUSTRY AND COMPETITIVE RISKS
The following industry and competitive risks relate primarily to the
longer term.
WE DO NOT INTEND TO CONTINUE ACTIVELY MARKETING OUR LASERSCAN LSX LASER
SYSTEM IN THE U.S. UNTIL WE RECEIVE ADDITIONAL FDA APPROVALS.
We received the FDA approval necessary for the commercial marketing and
sale of our LaserScan LSX excimer laser system in the U.S. in late 1999 and
commercial shipments to customers in the U.S. began in March 2000. To date, our
LaserScan LSX laser system and per procedure fee business model have not
achieved a level of market acceptance sufficient to provide our cash flows from
operations to fund our business. As a result of our current liquidity and
capital resource issues, we have decided to focus on international markets,
primarily China with our LaserScan LSX laser system and Europe with a custom
ablation product line, and not to continue actively marketing our laser system
in the U.S. until we receive additional FDA approvals.
The current level of per procedure fees payable to us by existing
refractive surgeon customers in the U.S. may not continue to be accepted by the
marketplace or may exceed those charged by our competitors. If our competitors
reduce or do not charge per procedure fees to users of their systems, we could
be forced to reduce or eliminate the fees charged under this business model,
which could significantly reduce our revenues. See also "--Additional Company
and Business Risks--Required per procedure fees payable to Visx under our
license agreement may exceed per procedure fees collected by us."
WE CANNOT ASSURE YOU THAT OUR KERATOME PRODUCTS WILL ACHIEVE MARKET
ACCEPTANCE.
Keratomes are surgical devices used to create a corneal flap
immediately prior to LASIK laser vision correction procedures. We began to roll
out our MicroShape family of keratome products with the commercial launch of our
UltraEdge keratome blades in July 1999 and of our UniShaper single-use keratomes
and control consoles in December 1999. We have suspended the manufacture and
sale of our UniShaper keratome product. If we decide in the future to re-focus
our efforts on the manufacture and sale of our UniShaper product, it will need
to be reengineered, if possible, to include most or all of the features included
in our UltraShaper keratome for the UniShaper to be commercially viable. In
November 2001, we commercially released our UltraShaper durable keratomes after
a thorough process of engineering refinement and validity testing. Our
UltraShaper durable keratome incorporates the features found in the ACS keratome
previously marketed by Bausch & Lomb, Inc. with new enhancements and features.
However, Bausch & Lomb has not aggressively marketed or serviced the ACS since
1997 when we licensed the rights to commercially market keratomes based on the
same technology, and has successfully transitioned a large number of refractive
surgeons from the ACS to its Hansatome durable keratome product. We believe that
many refractive surgeons learned to perform the LASIK procedure using the ACS
and prefer the surgical technique required by the ACS, which is also used to
operate our UltraShaper durable keratome, to the surgical technique required to
operate the Hansatome keratome product. However, we cannot assure you that we
will be successful in commercially introducing or achieving broad market
acceptance of our UltraShaper durable keratome or our other keratome products.
If we cannot successfully market and sell our keratome products or if
we are unable to successfully find a marketing and distribution alliance with
another company, our business, financial condition and results of operations may
be adversely effected. See also "--Additional Company and Business
Risks--Required minimum payments under our keratome license agreement may exceed
our gross profits from sales of our keratome products."
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THE VISION CORRECTION INDUSTRY CURRENTLY CONSISTS OF A FEW ESTABLISHED
PROVIDERS WITH SIGNIFICANT MARKET SHARES AND WE ARE ENCOUNTERING DIFFICULTIES
COMPETING IN THIS HIGHLY COMPETITIVE ENVIRONMENT.
The vision correction industry is subject to intense, increasing
competition, and we do not know if we will be able to compete successfully
against our current and future competitors. Many of our competitors have
established products, distribution capabilities and customer service networks in
the U.S. marketplace, are substantially larger and have greater brand
recognition and greater financial and other resources than we do. Visx, the
historical industry leader for excimer laser system sales in the U.S., sold
laser systems that performed a significant majority of the laser vision
correction procedures performed in the U.S. in 1999, 2000 and 2001. Similarly,
Bausch & Lomb sold a significant majority of the keratomes used by refractive
surgeons in the U.S. in 1999, 2000 and 2001. Alcon, one of the largest
ophthalmic companies in the world, and its narrow beam laser technology platform
also competes directly with our precision beam, scanning microspot LaserScan LSX
excimer laser system. In addition, Alcon, as a result of its acquisition of
Summit Autonomous Inc., is able to sell its narrow beam laser systems under a
royalty-free license to certain Visx patents without incurring the expense and
uncertainty associated with intellectual property litigation with Visx. Alcon
also has the ability to leverage the sale of its laser systems with its other
ophthalmic products, and has placed a significant number of its lasers systems
in the U.S. Competitors are using our weak financial condition as a reason why a
buyer shouldn't buy our laser.
MANY OF OUR COMPETITORS RECEIVED EARLIER REGULATORY APPROVALS THAN US
AND MAY HAVE A COMPETITIVE ADVANTAGE OVER US DUE TO THE SUBSEQUENT EXPANSION OF
THEIR REGULATORY APPROVALS AND THEIR SUBSTANTIAL EXPERIENCE IN THE U.S. MARKET.
We received the FDA approval necessary for the commercial sale of our
LaserScan LSX excimer laser system in the U.S. in November 1999 and commercial
shipments to customers in the U.S. began in March 2000. Our direct competitors
include large corporations such as Visx and Alcon, each of whom received FDA
approval of excimer laser systems more than three years prior to our approval
and has substantial experience manufacturing, marketing and servicing laser
systems in the U.S. In addition to Visx and Alcon, Nidek and Bausch & Lomb have
also received FDA approval for their laser systems.
In the U.S., a manufacturer of excimer laser vision correction systems
gains a competitive advantage by having its systems approved by the FDA for a
wider range of treatments. Initial FDA approvals of excimer laser vision
correction systems historically have been limited to the treatment of low to
moderate nearsightedness, with additional approvals for other and broader
treatments granted only as a result of subsequent FDA applications and clinical
trials. Our LaserScan LSX is currently approved for the LASIK treatment of
nearsightedness with and without astigmatism for a range of treatment of
refractive errors up to -6.0 diopters MRSE with or without a refractive
astigmatism up to 4.5 diopters and the PRK treatment of low to moderate
nearsightedness (up to -6.0 diopters) without astigmatism. Additionally, we have
received FDA approval to operate our laser systems at a 200 Hz pulse repetition
rate, twice the originally approved rate. We have submitted PMA supplements to
the FDA to permit our laser systems sold to customers in the U.S. to utilize
LASIK to treat hyperopia, hyperopic astigmatism and mixed astigmatism. FDA
approval of these applications is anticipated in 2002, though we cannot ensure
if or when the approval will be received. Our ability to sell our laser systems
in the U.S. may be severely impaired if the FDA does not give timely approval to
these supplements.
Currently, excimer laser vision correction systems manufactured by
Visx, Alcon, Bausch & Lomb and Nidek have been approved for higher levels of
nearsightedness than the LaserScan LSX. Alcon's Apex Plus and Ladarvision
Excimer Laser Workstations, Visx's Star S2 Excimer Laser System and Nidek's
EC-5000 Excimer Laser System have received FDA approval for the LASIK treatment
of nearsightedness with or without astigmatism. The approvals for many of the
systems are for the correction of nearsightedness in the range of 0 diopters to
-14.0 diopters and nearsightedness with astigmatism generally in the range of
-0.5 diopters to -5.0 diopters. Bausch & Lomb's Technolas 217 excimer laser has
also received FDA approval for the treatment of nearsightedness from -1.0
diopter up to -7.0 diopters with up to -3.0 diopters of astigmatism. The Visx
and Alcon excimer laser systems are also approved for the treatment of moderate
farsightedness. In September 2000, the FDA approved Alcon's Ladarvision system
for the correction using LASIK of farsightedness of up to +6.0 diopters and an
astigmatism range of up to 6.0 diopters. In October 2000, the FDA approved
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Visx's Star S2 and S3 systems for the correction using PRK of farsightedness of
up to +5.0 diopters and an astigmatism range of up to 3.0 diopters. In February
2001, the FDA approved of Visx's Custom-Contoured Ablation Pattern Method for
treatment of decentered ablations under a Humanitarian Device Exemption (HDE).
An HDE authorizes the use and marketing of a device that is intended to benefit
patients in the treatment of conditions that affect fewer than 4,000
individuals. In August 2002, Alcon announced the approval of its
wavefront-guided laser eye surgery application for the treatment of myopia
between zero and -7.0 diopters. Competitors' earlier receipt of LASIK and
hyperopia-specific FDA regulatory approvals could give them a significant
competitive advantage that could impede our ability to successfully sell our
LaserScan LSX system in the U.S. Our failure to successfully market our product
could have a material adverse effect on our business, financial condition and
results of operations.
All of our principal competitors in the keratome business, including
current market leader Bausch & Lomb, received FDA clearance prior to the
commercialization of our keratome products and have substantial experience
marketing their keratome products. The established market presence in the U.S.
of previously approved laser systems and keratome products, as well as the entry
of new competitors into the market upon receipt of new or expanded regulatory
approvals, could impede our ability to successfully introduce our LaserScan LSX
system in the U.S. and our keratome products worldwide and may have a material
adverse effect on our business, financial condition and results of operations.
WE DEPEND UPON OUR ABILITY TO ESTABLISH AND MAINTAIN STRATEGIC
RELATIONSHIPS.
We believe that our ability to establish and maintain strategic
relationships will have a significant impact on our ability to meet our business
objectives. These strategic relationships are critical to our future success
because we believe that these relationships will help us to:
o extend the reach of our products to a larger number of refractive
surgeons;
o develop and deploy new products;
o further enhance the LaserSight brand; and
o generate additional revenue.
Entering into strategic relationships is complicated because some of
our current and future strategic partners may decide to compete with us in some
or all of our markets. In addition, we may not be able to establish
relationships with key participants in our industry if they have relationships
with our competitors, or if we have relationships with their competitors.
Moreover, some potential strategic partners have resisted, and may continue to
resist, working with us until our products and services have achieved widespread
market acceptance. Once we have established strategic relationships, we will
depend on our partners' ability to generate increased acceptance and use of our
products and services. To date, we have established only a limited number of
strategic relationships, and many of these relationships are in the early stages
of development. There can be no assurance as to the terms, timing or
consummation of any future strategic relationships. If we lose any of these
strategic relationships or fail to establish additional relationships, or if our
strategic relationships fail to benefit us as expected, we may not be able to
execute our business plan, and our business will suffer.
BECAUSE THE SALE OF OUR PRODUCTS IS DEPENDENT ON THE CONTINUED MARKET
ACCEPTANCE OF LASER-BASED REFRACTIVE EYE SURGERY USING THE LASIK PROCEDURE, THE
LACK OF BROAD MARKET ACCEPTANCE WOULD HURT OUR BUSINESS.
We believe that whether we achieve profitability and growth will
depend, in part, upon the continued acceptance of laser vision correction using
the LASIK procedure in the U.S. and other countries. We cannot be certain that
laser vision correction will continue to be accepted by either the refractive
surgeons or the public at large as an alternative to existing methods of
treating refractive vision disorders. The acceptance of laser vision correction
and, specifically, the LASIK procedure may be adversely affected by:
o possible concerns relating to safety and efficacy, including the
predictability, stability and quality of results;
o the public's general resistance to surgery;
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o the effectiveness and lower cost of alternative methods of correcting
refractive vision disorders;
o the lack of long-term follow-up data;
o the possibility of unknown side effects;
o the lack of third-party reimbursement for the procedures;
o the cost of the procedure; and
o unfavorable publicity involving patient outcomes from the use of laser
vision correction.
Unfavorable side effects and potential complications that may result
from the use of laser vision correction systems manufactured by any manufacturer
may broadly affect market acceptance of laser-based vision correction surgery.
Potential patients may not distinguish between our precision beam scanning spot
technology and the laser technology incorporated by our competitors in their
laser systems, and customers may not differentiate laser systems and procedures
that have not received FDA approval from FDA-approved systems and procedures.
Any adverse consequences resulting from procedures performed with a competitor's
systems or an unapproved laser system could adversely affect consumer acceptance
of laser vision correction in general. In addition, because laser vision
correction is an elective procedure that is not typically covered by insurance
and involves more significant immediate expense than eyeglasses or contact
lenses, adverse changes in the U.S. or international economy may cause consumers
to reassess their spending choices and to select lower-cost alternatives for
their vision correction needs. Any such shift in spending patterns could reduce
the volume of LASIK procedures performed that would, in turn, reduce the number
of laser systems sold and our revenues from per procedure fees and sales of
single-use products such as our UltraEdge keratome blades.
The failure of laser vision correction to achieve continued market
acceptance could have a material adverse effect on our business prospects. Even
if laser vision correction achieves and sustains market acceptance, sales of our
keratome products could be adversely impacted if a laser procedure that does not
require the creation of a corneal flap was to emerge as the procedure of choice.
NEW PRODUCTS OR TECHNOLOGIES COULD ERODE DEMAND FOR OUR PRODUCTS OR
MAKE THEM OBSOLETE, AND OUR BUSINESS COULD BE HARMED IF WE CANNOT KEEP PACE WITH
ADVANCES IN TECHNOLOGY.
In addition to competing with eyeglasses and contact lenses, excimer
laser vision correction competes or may compete with newer technologies such as
intraocular lenses, intracorneal inlays, corneal rings and surgical techniques
using different or more advanced types of lasers. Two products that may become
competitive within the near term are implantable contact lenses, which are
pending FDA approval, and corneal rings, which have been approved by the FDA.
Both of these products require procedures with lens implants, and their ultimate
market acceptance is unknown at this time. To the extent that any of these or
other new technologies are perceived to be clinically superior or economically
more attractive than currently marketed excimer laser vision correction
procedures or techniques, they could erode demand for our excimer laser and
keratome products, cause a reduction in selling prices of such products or
render such products obsolete. In addition, if one or more competing
technologies achieves broader market acceptance or renders laser vision
correction procedures obsolete, it would have a material adverse effect on our
business, financial condition and results of operations.
As is typical in the case of new and rapidly evolving industries, the
demand and market for recently introduced products and technologies is
uncertain, and we cannot be certain that our LaserScan LSX laser system,
UltraShaper durable keratome, UltraEdge keratome blades, UniShaper single-use
keratome or future new products and enhancements will be accepted in the
marketplace. In addition, announcements or the anticipation of announcements of
new products, whether for sale in the near future or at some later date, may
cause customers to defer purchasing our existing products.
If we cannot adapt to changing technologies, our products may become
obsolete, and our business could suffer. Our success will depend, in part, on
our ability to continue to enhance our existing products, develop new technology
that addresses the increasingly sophisticated needs of our customers, license
leading technologies and respond to technological advances and emerging industry
standards and practices on a timely and cost-effective basis. The development of
our proprietary technology entails significant technical and business risks. We
10
may not be successful in using new technologies effectively or adapting our
proprietary technology to evolving customer requirements or emerging industry
standards.
ADDITIONAL COMPANY AND BUSINESS RISKS
The following Additional Company and Business Risks relate primarily to
the longer term.
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.
Our ability to maintain our competitive position depends in part upon
the continued contributions of our executive officers and other key employees,
especially Michael R. Farris, our president and chief executive officer. A loss
of one or more such officers or key employees could have a material adverse
effect on our business. We do not carry "key person" life insurance on any
officer or key employee.
Our staff reductions during 2001 and to date in 2002 may have a
negative impact on our ability to attract and retain personnel. If we fail to
attract and retain qualified individuals for necessary positions, it could have
a material adverse effect on our business, financial condition and results of
operations.
WE HAVE MOVED ALL INTERNATIONAL MANUFACTURING OPERATIONS FROM COSTA
RICA TO THE U.S. AND MUST CONTINUE TO COMPLY WITH STRINGENT REGULATION OF OUR
MANUFACTURING OPERATIONS.
We moved the manufacturing location our laser systems for sale in
international markets to our U.S. location from our manufacturing facility in
Costa Rica. We cannot assure you that we will not encounter difficulties in
increasing our production capacity for our laser systems at our Florida
facility, including problems involving production delays, quality control or
assurance, component supply and lack of qualified personnel. Any products
manufactured or distributed by us pursuant to FDA clearances or approvals are
subject to extensive regulation by the FDA, including record-keeping
requirements and reporting of adverse experience with the use of the product.
Our manufacturing facilities are subject to periodic inspection by the FDA,
certain state agencies and international regulatory agencies. We require that
our key suppliers comply with recognized standards as well as our own quality
standards, and we regularly test the components and sub-assemblies supplied to
us. Any failure by us or our suppliers to comply with applicable regulatory
requirements, including the FDA's quality systems/good manufacturing practice
(QSR/GMP) regulations, could cause production and distribution of our products
to be delayed or prohibited, either of which could have a material adverse
effect on our business, financial condition and results of operations.
REQUIRED PER PROCEDURE FEES PAYABLE TO VISX UNDER OUR LICENSE AGREEMENT
MAY EXCEED PER PROCEDURE FEES COLLECTED BY US.
In addition to the risk that our refractive lasers will not be accepted
in the marketplace, we are required to pay Visx a royalty for each procedure
performed in the U.S. using our refractive lasers. The required per procedure
fees we are required to pay to Visx may exceed the per procedure fees we are
able to charge and/or collect from refractive surgeons, which could result in a
material adverse effect on our financial condition and results of operations.
REQUIRED MINIMUM PAYMENTS UNDER OUR KERATOME LICENSE AGREEMENT MAY
EXCEED OUR GROSS PROFITS FROM SALES OF OUR KERATOME PRODUCTS.
We are required to make certain minimum payments to the licensor under
our keratome license agreement that was amended and restated on January 4, 2001.
This amendment replaced a January 18, 2000 amendment in its entirety. Under the
terms of the amendment we issued 730,552 shares of common stock to the
licensors, valued at approximately $1.1 million, in partial payment for
royalties during the term of the license. The term of the license was extended
three years until July 31, 2005. In addition, remaining minimum royalty payments
totaling approximately $4.1 million as of November 13, 2002 will be due in
monthly installments (averaging approximately $150,000 per month through 2003)
or quarterly installments (averaging approximately $238,000 per quarter from
January 2004 through October 2005) through the term of the amendment. As a
11
result of our obligations under this license arrangement, the minimum royalty
payments we are required to make to the licensors may exceed our gross profits
from sales of our UniShaper and UltraShaper keratome products. The amendment
eliminated a restriction on us manufacturing, marketing and selling other
keratomes, but the sale of other keratomes will be included in the gross profit
to be shared with the licensors. The licensor's share of the gross profit, as
defined in the amendment, decreased from 50% to 10%.
OUR FAILURE TO TIMELY OBTAIN OR EXPAND REGULATORY APPROVALS FOR OUR
PRODUCTS AND TO COMPLY WITH REGULATORY REQUIREMENTS COULD ADVERSELY AFFECT OUR
BUSINESS.
Our excimer laser systems, diagnostic and custom ablation products and
keratome products are subject to strict governmental regulations that materially
affect our ability to manufacture and market these products and directly impact
our overall business prospects. FDA regulations impose design and performance
standards, labeling and reporting requirements, and submission conditions in
advance of marketing for all medical laser products in the U.S. New product
introductions, expanded treatment types and levels for approved products, and
significant design or manufacturing modifications require a premarket clearance
or approval by the FDA prior to commercialization in the U.S. The FDA approval
process, which is lengthy and uncertain, requires supporting clinical studies
and substantial commitments of financial and management resources. Failure to
obtain or maintain regulatory approvals and clearances in the U.S. and other
countries, or significant delays in obtaining these approvals and clearances,
could prevent us from marketing our products for either approved or expanded
indications or treatments, which could substantially decrease our future
revenues.
In March 2002, we pursued a "real time" PMA supplement seeking approval
for the use of our advanced adaptive eye tracking system in an accelerated time
frame, as few as 30 days. In April 2002, we were advised by the FDA that they
would review the submission in a 180-day timeframe. We are currently in the
process of addressing the FDA's questions related to this submission.
Additionally, product and procedure labeling and all forms of
promotional activities are subject to examination by the FDA, and current FDA
enforcement policy prohibits the marketing by manufacturers of approved medical
devices for unapproved uses. Noncompliance with these requirements may result in
warning letters, fines, injunctions, recall or seizure of products, suspension
of manufacturing, denial or withdrawal of PMAs, and criminal prosecution. Laser
products marketed in foreign countries are often subject to local laws governing
health product development processes, which may impose additional costs for
overseas product development. Future legislative or administrative requirements,
in the U.S. or elsewhere, may adversely affect our ability to obtain or retain
regulatory approval for our products. The failure to obtain approvals for new or
additional uses on a timely basis could have a material adverse effect on our
business, financial condition and results of operations.
OUR BUSINESS DEPENDS ON OUR INTELLECTUAL PROPERTY RIGHTS, AND IF WE ARE
UNABLE TO PROTECT THEM, OUR COMPETITIVE POSITION MAY BE ADVERSELY AFFECTED.
Our business plan is predicated on our proprietary systems and
technology, including our precision beam scanning microspot technology laser
systems. We protect our proprietary rights through a combination of patent,
trademark, trade secret and copyright law, confidentiality agreements and
technical measures. We generally enter into non-disclosure agreements with our
employees and consultants and limit access to our trade secrets and technology.
We cannot assure you that the steps we have taken will prevent misappropriation
of our intellectual property. Misappropriation of our intellectual property
would have a material adverse effect on our competitive position. In addition,
we may have to engage in litigation or other legal proceedings in the future to
enforce or protect our intellectual property rights or to defend against claims
of invalidity. These legal proceedings may consume considerable resources,
including management time and attention, which would be diverted from the
operation of our business, and the outcome of any such legal proceeding is
inherently uncertain.
We are aware that certain competitors are developing products that may
potentially infringe patents owned or licensed exclusively by us. In order to
protect our rights in these patents, we may find it necessary to assert and
pursue infringement claims against such third parties. We could incur
substantial costs and diversion of management resources litigating such
infringement claims and we cannot assure you that we will be successful in
12
resolving such claims or that the resolution of any such dispute will be on
terms that are favorable to us. See "--Patent infringement allegations may
impair our ability to manufacture and market our products."
PATENT INFRINGEMENT ALLEGATIONS MAY IMPAIR OUR ABILITY TO MANUFACTURE
AND MARKET OUR PRODUCTS.
There are a number of U.S. and foreign patents covering methods and
apparatus for performing corneal surgery that we do not own or have the right to
use. If we were found to infringe a patent in a particular market, we and our
customers may be enjoined from manufacturing, marketing, selling and using the
infringing product in the market and may be liable for damages for any past
infringement of such rights. In order to continue using such rights, we would be
required to obtain a license, which may require us to make royalty, per
procedure or other fee payments. We cannot be certain if we or our customers
will be successful in securing licenses, or that if we obtain licenses, such
licenses will be available on acceptable terms. Alternatively, we might be
required to redesign the infringing aspects of these products. Any redesign
efforts that we undertake could be expensive and might require regulatory
review. Furthermore, the redesign efforts could delay the reintroduction of
these products into certain markets, or may be so significant as to be
impractical. If redesign efforts were impractical, we could be prevented from
manufacturing and selling the infringing products, which would have a material
adverse effect on our business, financial condition and results of operations.
Litigation involving patents is common in our industry. While we do not
believe our laser systems or keratome products infringe any valid and
enforceable patents that we do not own or have a license to, we cannot assure
you that one or more of our other competitors or other persons will not assert
that our products infringe their intellectual property, or that we will not in
the future be deemed to infringe one or more patents owned by them or some other
party. We could incur substantial costs and diversion of management resources
defending any infringement claims. Furthermore, a party making a claim against
us could secure a judgment awarding substantial damages, as well as injunctive
or other equitable relief that could effectively block our ability to market one
or more of our products. In addition, we cannot assure you that licenses for any
intellectual property of third parties that might be required for our products
will be available on commercially reasonable terms, or at all.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR INTERNATIONAL
SALES.
Our international sales accounted for 79% and 73% of our total revenues
during the nine months ended September 30, 2002 and the year ended December 31,
2001, respectively. In the future, we expect that sales to U.S. accounts will
represent a higher percentage of our total sales only when additional regulatory
approvals are received for our LaserScan LSX laser system in the U.S. We are
presently focusing our sales efforts on international sales in China and Europe.
International sales of our products may be limited or disrupted by:
o the imposition of government controls;
o export license requirements;
o economic or political instability;
o trade restrictions;
o difficulties in obtaining or maintaining export licenses;
o changes in tariffs; and
o difficulties in staffing and managing international operations.
Our sales have historically been and are expected to continue to be
denominated in U.S. dollars. The European Economic Union's conversion to a
common currency, the euro, is not expected to have a material impact on our
business. However, due to our significant export sales, we are subject to
exchange rate fluctuations in the U.S. dollar, which could increase the
effective price in local currencies of our products. This could result in
reduced sales, longer payment cycles and greater difficulty in collecting
receivables relating to our international sales.
13
OUR SUPPLY OF CERTAIN CRITICAL COMPONENTS AND SYSTEMS MAY BE
INTERRUPTED BECAUSE OF OUR RELIANCE ON A LIMITED NUMBER OF SUPPLIERS.
We currently purchase certain components used in the production,
operation and maintenance of our laser systems and keratome products from a
limited number of suppliers, and certain key components are provided by a single
vendor. We are currently seeking a replacement blade manufacturer, and the
majority of our UltraShaper components are manufactured exclusively by Owens
Industries pursuant to our agreement with them. We do not have long-term
contracts with providers of some key laser system components, including TUI
Lasertechnik und Laserintegration GmbH, which currently is a single source
supplier for the laser heads used in our LaserScan LSX excimer laser system.
Currently, SensoMotoric Instruments GmbH, Teltow, Germany, is a single source
supplier for the eye tracker boards used in our excimer laser systems. Any
interruption in the supply of critical laser or keratome components could have a
material adverse effect on our business, financial condition and results of
operations. If any of our key suppliers ceases providing us with products of
acceptable quality and quantity at a competitive price and in a timely fashion,
we would have to locate and contract with a substitute supplier and, in some
cases, such substitute supplier would need to be qualified by the FDA. If
substitute suppliers cannot be located and qualified in a timely manner or could
not provide required products on commercially reasonable terms, it would have a
material adverse effect on our business, financial condition and results of
operations.
UNLAWFUL TAMPERING OF OUR SYSTEM CONFIGURATIONS COULD RESULT IN REDUCED
REVENUES AND ADDITIONAL EXPENSES.
We include a procedure counting mechanism on LaserScan LSX lasers
manufactured for sale and use in the U.S. Users of our LaserScan LSX excimer
laser system could tamper with the software or hardware configuration of the
system so as to alter or eliminate the procedure counting mechanism that
facilitates the collection of per procedure fees. Unauthorized tampering with
our procedure counting mechanism by users could result in us being required to
pay per procedure fees to Visx that we were not able to collect from users. If
we are unable to prevent such tampering, our license agreement with Visx could
be terminated after all applicable notice and cure periods have expired.
INADEQUACY OR UNAVAILABILITY OF INSURANCE MAY EXPOSE US TO SUBSTANTIAL
PRODUCT LIABILITY CLAIMS.
Our business exposes us to potential product liability risks and
possible adverse publicity that are inherent in the development, testing,
manufacture, marketing and sale of medical devices for human use. These risks
increase with respect to our products that receive regulatory approval for
commercialization. We have agreed in the past, and we will likely agree in the
future, to indemnify certain medical institutions and personnel who conduct and
participate in our clinical studies. While we maintain product liability
insurance, we cannot be certain that any such liability will be covered by our
insurance or that damages will not exceed the limits of our coverage. Even if a
claim is covered by insurance, the costs of defending a product liability,
malpractice, negligence or other action, and the assessment of damages in excess
of insurance coverage in the event of a successful product liability claim,
could have a material adverse effect on our business, financial condition and
results of operations. Further, product liability insurance may not continue to
be available, either at existing or increased levels of coverage, on
commercially reasonable terms.
COMMON STOCK RISKS
VARIATIONS IN OUR SALES AND OPERATING RESULTS MAY CAUSE OUR STOCK PRICE
TO FLUCTUATE.
Our operating results have fluctuated in the past, and may continue to
fluctuate in the future, as a result of a variety of factors, many of which are
outside of our control. For example, historically a significant portion of our
laser system orders for a particular quarter have been received and shipped near
the end of the quarter. As a result, our operating results for any quarter often
depend on the timing of the receipt of orders and the subsequent shipment of our
laser systems. Other factors that may cause our operating results or stock price
to fluctuate include:
o our significant liquidity and capital resource issues;
14
o the addition or loss of significant customers;
o reductions, cancellations or fulfillment of major orders;
o changes in pricing by us or our competitors;
o timing of regulatory approvals and the introduction or delays in
shipment of new products;
o the relative mix of our business; and
o increased competition.
As a result of these fluctuations, we believe that period-to-period
comparisons of our operating results cannot be relied upon as indicators of
future performance. In some quarters our operating results may fall below the
expectations of securities analysts and investors due to any of the factors
described above or other uncertainties.
THE MARKET PRICE OF OUR COMMON STOCK MAY CONTINUE TO EXPERIENCE EXTREME
FLUCTUATIONS DUE TO MARKET CONDITIONS THAT ARE UNRELATED TO OUR OPERATING
PERFORMANCE.
The stock market, and in particular the securities of technology
companies like us, could experience extreme price and volume fluctuations
unrelated to our operating performance. Our stock price has historically been
volatile. Because of the lengthy period during which our common stock traded
below $1 per share, it no longer met the listing requirements for the Nasdaq
National Market and was transferred on August 9, 2002 to the Nasdaq SmallCap
Market. On August 15, 2002, Nasdaq approved our application to transfer our
listing to that market.
Factors such as announcements of technological innovations or new
products by us or our competitors, changes in domestic or foreign governmental
regulations or regulatory approval processes, developments or disputes relating
to patent or proprietary rights, public concern as to the safety and efficacy of
refractive vision correction procedures, and changes in reports and
recommendations of securities analysts, have and may continue to have a
significant impact on the market price of our common stock.
THE SIGNIFICANT NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE AND DILUTIVE
STOCK ISSUANCES MAY ADVERSELY AFFECT OUR STOCK PRICE.
Sales, or the possibility of sales, of substantial amounts of our
common stock in the public market could adversely affect the market price of our
common stock. Substantially all of our 27,841,941 shares of common stock
outstanding at November 20, 2002 were freely tradable without restriction or
further registration under the Securities Act of 1933, except to the extent such
shares are held by "affiliates" as that term is defined in Rule 144 under the
Securities Act or subject only to the satisfaction of a prospectus delivery
requirement. An additional 9,280,647 shares of preferred stock, convertible into
18,561,294 shares of common stock, were issued in October 2002 upon the funding
of the equity investment portion of the China Transaction. We have agreed to
register the shares of common stock under the Securities Act of 1933, and this
registration statement registers these shares. Once registered, the shares will
be available for sale.
Other shares of common stock that we may issue in the future in
connection with financings or pursuant to outstanding warrants or agreements
could also adversely affect the market price of our common stock and cause
significant dilution in our earnings per share and net book value per share. We
may be required to issue more than 5,800,000 additional shares of common stock
upon the exercise of outstanding warrants and stock options. Including the China
Transaction, the number of shares we may be required to issue upon the
conversion of outstanding preferred stock and the exercise of outstanding
warrants and stock options will increase to approximately 24,400,000.
The anti-dilution provisions of certain of our existing securities and
obligations require us to issue additional shares if we issue shares of common
stock below specified price levels. If a future share issuance triggers these
adjustments, the beneficiaries of such provisions effectively receive some
protection from declines in the market price of our common stock, while our
other stockholders incur additional dilution of their ownership interest. We may
15
include similar anti-dilution provisions in securities issued in connection with
future financings. See "Description of Capital Stock--Warrants and Other
Agreements to Issue Shares."
THE CHINA TRANSACTION INCLUDES A PROVISION UNDER WHICH THE PURCHASER OF
OUR PREFERRED STOCK CAN ACQUIRE APPROXIMATELY 40% OF OUR COMMON STOCK. THAT
STOCKHOLDING POSITION ALONE DIMINISHES THE POSSIBILITY OF A COMPETING BID FOR A
MAJORITY OF THE COMMON STOCK, BUT THE ANTI-TAKEOVER PROVISION UNDER DELAWARE LAW
AND IN OUR CERTIFICATE OF INCORPORATION, OUR BY-LAWS AND OUR STOCKHOLDER RIGHTS
PLAN WILL NONETHELESS REQUIRE THE BOARD TO EXERCISE ITS FIDUCIARY DUTY ON ANY
BID (WHETHER BY THE PURCHASER IN THE CHINA TRANSACTION OR ANOTHER) TAKING INTO
CONSIDERATION ALL OF THE CIRCUMSTANCES AT THAT TIME.
Certain provisions of our certificate of incorporation, by-laws,
stockholder rights plan and Delaware law could delay or frustrate the removal of
incumbent directors, discourage potential acquisition proposals and delay, defer
or prevent a change in control of us, even if such events could be beneficial,
in the short term, to the economic interests of our stockholders. For example,
our certificate of incorporation allows us to issue preferred stock with rights
senior to those of the common stock without stockholder action, and our by-laws
require advance notice of director nominations or other proposals by
stockholders. We also are subject to provisions of Delaware corporation law that
prohibit a publicly-held Delaware corporation from engaging in a broad range of
business combinations with a person who, together with affiliates and
associates, owns 15% or more of the corporation's common stock (an interested
stockholder) for three years after the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. We also have
adopted a stockholder rights agreement, or "poison pill," and declared a
dividend distribution of one preferred share purchase right for each share of
common stock.
The board will act with respect to anti-takeover provisions with its
fiduciary duty in mind.
RISKS RELATING TO INTANGIBLES
AMORTIZATION AND CHARGES RELATING TO OUR SIGNIFICANT INTANGIBLE ASSETS
COULD ADVERSELY AFFECT OUR STOCK PRICE AND REPORTED NET INCOME OR LOSS.
Of our total assets at September 30, 2002, approximately $4.9 million,
or 20%, were intangible assets. Any reduction in net income or increase in net
loss resulting from the amortization of intangible assets resulting from future
acquisitions by us may have an adverse impact upon the market price of our
common stock. In addition, in the event of a sale of LaserSight or our assets,
we cannot be certain that the value of such intangible assets would be
recovered.
In accordance with FASB Statement No. 144, we review intangible assets
for impairment whenever events or changes in circumstances, including a history
of operating or cash flow losses, indicate that the carrying amount of an asset
may not be recoverable. If we determine that an intangible asset is impaired, a
non-cash impairment charge would be recognized.
OTHER RISKS
The following relates to risks on both a short and longer-term basis:
The risks described above are not the only risks facing LaserSight.
There may be additional risks and uncertainties not presently known to us or
that we have deemed immaterial which could also negatively impact our business
operations. If any of the foregoing risks actually occur, it could have a
material adverse effect on our business, financial condition and results of
operations. In that event, the trading price of our common stock could further
decline, and you may lose all or part of your investment.
FORWARD-LOOKING STATEMENTS
This prospectus, and the documents incorporated by reference, contain
certain "forward-looking" statements as described in Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements involve
16
known and unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, those listed under "Risk Factors" and
elsewhere in this prospectus and the documents incorporated by reference.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "expects," "plans,"
"intends," "anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms and other comparable terminology.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable based on currently available
information, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor anyone else assumes responsibility for
the accuracy and completeness of such statements. We are under no duty to update
any of the forward-looking statements after the date of this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
being offered by the selling stockholders pursuant to this prospectus. The
selling stockholders, through broker-dealers or agents designated from time to
time, may sell the shares from time to time on terms to be determined at the
time of sale. The aggregate proceeds to the selling stockholders from the shares
will be the purchase price of the shares sold less the aggregate commissions,
underwriting discounts or similar amounts payable in respect of any sale
pursuant to this prospectus, if any, and other expenses of issuance and
distribution not borne by LaserSight.
17
CAPITALIZATION
The following table sets forth LaserSight's actual capitalization at
September 30, 2002 and proforma capitalization on that date, including the
issuance of series H preferred stock.
Actual Proforma
-------- ---------
Long-term obligations $ -- $ --
Stockholders' equity:
Convertible Preferred Stock, par
value $.001 per share, authorized
10,000,000 total preferred shares;
Series H, issued and outstanding
proforma 9,280,647 shares -- 9,281
Common Stock, par value $.001 per
share, authorized 100,000,000 shares; issued
actual and proforma 27,987,141 shares 27,987 27,987
Additional paid-in capital 101,981,093 103,796,812
Stock subscription receivable (47,952) (47,952)
Accumulated deficit (97,722,763) (97,722,763)
Treasury stock, at cost, 145,200 shares (542,647) (542,647)
----------- -----------
Total capitalization and stockholders' equity $ 3,695,718 $ 5,520,718
=========== ===========
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DESCRIPTION OF CAPITAL STOCK
Capital Stock Overview
As of the date of this prospectus, LaserSight is authorized to issue up
to 100,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of
preferred stock, $.001 par value, issuable in series. As of November 20, 2002,
LaserSight had 27,841,941 shares of common stock outstanding, excluding any
shares of common stock issuable upon the exercise of outstanding options and
warrants to acquire common stock, and 9,280,647 shares of series H preferred
stock outstanding, with 500,000 shares of series E preferred stock designated in
connection with our stockholders rights agreement described below.
All references to our common stock in this prospectus include the
associated preferred stock purchase rights issued pursuant to the stockholder
rights agreement described below between LaserSight and American Stock Transfer
& Trust Company, as rights agent. See "Stockholder Rights Agreement."
Common Stock
Holders of our common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights, subject to any preferential rights of our outstanding
preferred stock. Holders of a majority of the shares of capital stock entitled
to vote in any election of directors may elect all of the directors standing for
election, subject to any preferential rights of our outstanding preferred stock.
Holders of our common stock are entitled to share pro rata in such dividends and
other distributions as may be declared by our board of directors out of funds
legally available for that purpose, subject to any preferential rights of our
outstanding preferred stock. Upon the liquidation or dissolution of LaserSight,
the holders of common stock are entitled to share proportionally in all assets
available for distribution to such holders subject to the rights and preferences
of any holder of outstanding preferred stock. Holders of common stock have no
preemptive, redemption or conversion rights. The issued and outstanding shares
of our common stock are fully paid and nonassessable.
Preferred Stock
Our certificate of incorporation authorizes our board of directors,
without further stockholder approval, to issue up to an aggregate of 10,000,000
shares of preferred stock in one or more series. The board of directors may fix
or alter the designations, preferences, rights and any qualifications,
limitations or restrictions of the shares of each series of preferred stock,
including:
o dividend rights;
o dividend rates;
o conversion rights;
o voting rights;
o terms of redemption;
o redemption price or prices; and
o liquidation preferences.
The rights, preferences and privileges of holders of our common stock
may be adversely affected by the rights of the holders of shares of any series
of preferred stock which LaserSight may designate and issue in the future. The
issuance of preferred stock could also, under some circumstances, have the
effect of making it more difficult for a third party to acquire, or discouraging
a third party from acquiring, a majority of our outstanding common stock or
otherwise adversely affect the market price of our common stock.
Series A, Series B, Series D, Series F and Series G Preferred Stock
All previously issued and outstanding shares of our series A preferred
stock, par value $.001 per share; series B preferred stock, par value $.001 per
share; series D preferred stock, par value $.001 per share; and series F
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preferred stock, par value $.001 per share, have been converted, redeemed or
repurchased. The series G preferred stock was never issued.
Series C Preferred Stock
All previously issued and outstanding shares of our series C preferred
stock, par value $.001 per share, have been converted.
The former series C preferred stockholders have the right to nominate
one candidate to stand for election to our board of directors. This nomination
right will continue for as long as the former series C preferred stockholders
own at least 7.5% of our outstanding common stock on the record date for a
meeting of stockholders at which directors will be elected.
For as long as the former series C preferred stockholders own at least
5% of our outstanding common stock, such holders have the right, subject to the
exceptions noted below, to participate in any below-market equity financing
transaction so as to maintain their percentage ownership level of common stock
at the same level as immediately prior to the closing of any such financing.
This right to participate in certain below-market third party financings does
not include:
o the grant of options or warrants, or the issuance of securities, under
any employee or director stock option, stock purchase or restricted
stock plan;
o the issuance of common stock pursuant to any contingent obligation
existing as of June 5, 1998;
o the issuance of securities upon the exercise or conversion of options,
warrants or other convertible securities outstanding as of June 5,
1998;
o the declaration of a rights dividend to holders of common stock in
connection with the adoption of a stockholder rights plan;
o the issuance of securities in connection with a merger, acquisition,
joint venture or similar arrangement; or
o a public offering of our securities.
Series E Preferred Stock
Our board of directors designated 500,000 shares of our preferred stock
as series E junior participating preferred stock in connection with the adoption
of the stockholders rights agreement described below. Because of the nature of
the dividend, liquidation and voting rights of the series E preferred stock, the
value of each one one-thousandth interest in a share of series E preferred stock
purchasable upon exercise of a preferred share purchase right should approximate
the value of one share of common stock. The series E preferred stock purchasable
upon exercise of the preferred share purchase rights will not be redeemable.
Each share of series E preferred stock will be entitled to the greater of (1) a
preferential quarterly dividend payment of $1.00 per share, or (2) an aggregate
dividend of 1,000 times the dividend declared per share of common stock. In the
event of liquidation, the holders of the series E preferred stock will be
entitled to a preferential liquidation payment of $1,000 per share, plus an
amount equal to 1,000 times the aggregate amount to be distributed per share of
common stock. Each share of series E preferred stock will have 1,000 votes, and
will vote on all matters submitted to a vote of the holders of our common stock
except as otherwise required by law. Finally, in the event of any merger,
consolidation or other transaction in which shares of common stock are
exchanged, each share of series E preferred stock will be entitled to receive
1,000 times the amount of consideration received per share of common stock.
Series H Preferred Stock
On October 25, 2002, we issued 9,280,647 shares of series H convertible
participating preferred stock. Each share of series H preferred stock is,
subject to certain restrictions, convertible into two shares of common stock at
the option of the holder until October 25, 2004. Of the shares of series H
preferred stock that were issued, 8,980,647 shares may not be converted until
the first to occur of (i) the one-year anniversary of the date the series H
preferred stock was issued, (ii) our failure to deliver products in accordance
with the delivery schedule set forth under the terms of the definitive
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agreements that were executed in connection with the China Transaction, or (iii)
we have received payment for at least $10,000,000 worth of our products to be
sold pursuant to the terms of the definitive agreements that were executed in
connection with the China Transaction. After October 25, 2004, each share of
series H preferred stock then outstanding will automatically convert into two
shares of common stock. Upon the occurrence of certain triggering events, we
will have the option to repurchase shares of the series H preferred stock at a
per share price equal to $0.2155.
The holders of each share of series H preferred stock shall be entitled
to vote upon all matters upon which holders of the common stock have the right
to vote, and the shares of series H preferred stock held by each such holder
shall be entitled to the number of votes equal to the number of shares of series
H preferred stock at the record date for the determination of the stockholders
entitled to vote on such matters. The series H preferred stockholders receive
dividends only if dividends are payable on our common stock. Each outstanding
share of series H preferred stock entitles its holder to a liquidation
preference equal to $0.2155.
The series H preferred stockholders also have the right to, voting
separately as a single class, elect that number of directors that will
constitute up to 40% of the membership on our board of directors with the
remaining directors being elected by classes of stock, other than the series H
preferred stock, entitled to vote in the election of directors. The number of
directors that the series H preferred stockholders have the right to elect will
decrease as the series H preferred stock is converted or repurchased by us.
Except as noted above, holders of our series H preferred stock have no
preemptive, subscription, redemption or conversion rights. There are no
redemption or sinking fund provisions applicable to the series H preferred
stock. The issued and outstanding shares of our series H preferred stock are
fully paid and nonassessable.
Stockholder Rights Agreement
Our board of directors adopted a rights agreement in July 1998 and
declared a dividend of one right on each outstanding share of common stock.
Subject to certain exceptions, each right, when exercisable, entitles the holder
thereof to purchase from LaserSight one-thousandth of a share of series E
preferred stock of LaserSight at an exercise price of $20.00 per one-thousandth
of a preferred share, subject to adjustment. The terms of the rights are set
forth in the rights agreement between LaserSight and American Stock Transfer &
Trust Company, as the rights agent.
Until the first to occur of (1) 10 days following a public announcement
that a person or group of affiliated or associated persons has become an
"acquiring person"(as defined below), or (2) 10 business days (or such later
date as may be determined by action of our board of directors prior to such time
as any person or group becomes an acquiring person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in a person or group becoming an
acquiring person (the earlier of such dates being called the "distribution
date"), the rights will be evidenced by common stock certificates.
Subject to certain exceptions, an "acquiring person" is a person or
group of affiliated or associated persons who have acquired beneficial ownership
of 15% or more of our outstanding common stock. In no event however, will
LaserSight, any subsidiary of LaserSight, or any employee benefit plan of
LaserSight or its subsidiaries be deemed to be an acquiring person. In addition,
no person shall become an acquiring person as the result of an acquisition of
common stock by LaserSight which by reducing the number of our common shares
outstanding increases the proportionate number of shares beneficially owned by
such person and its affiliates and associates to 15% or more of the common stock
then outstanding. If a person becomes the beneficial owner of 15% or more of the
common stock then outstanding by reason of share acquisitions by LaserSight and,
after such share acquisitions, (1) acquires beneficial ownership of an
additional number of shares of common stock which exceeds the lesser of 10,000
shares of common stock or 0.25% of the then-outstanding common stock, and (2)
beneficially owns after such acquisition 15% or more of the aggregate number of
common stock then outstanding, then such person shall be deemed to be an
acquiring person. Moreover, if our board of directors determines in good faith
that a person who would otherwise be an acquiring person has become such
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inadvertently, and such person divests as promptly as practicable a sufficient
number of shares of common stock so that such person would no longer be an
acquiring person, then such person shall not be deemed to be an acquiring person
for any purposes of the rights agreement.
The rights are not exercisable until the distribution date. The rights
will expire on July 2, 2008, unless the Rights are earlier redeemed or exchanged
by LaserSight, as described below.
To prevent dilution the exercise price payable and the number of shares
of series E preferred stock or other securities or property issuable upon
exercise of the rights are subject to adjustment from time to time:
o in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the series E preferred stock;
o upon the grant to holders of the series E preferred stock of certain
rights or warrants to subscribe for or purchase series E preferred
stock at a price, or securities convertible into series E preferred
stock with a conversion price, less than the then-current market price
of the series E preferred stock; or
o upon the distribution to holders of the series E preferred stock of
evidences of indebtedness, assets or capital stock (excluding regular
periodic cash dividends paid out of earnings or retained earnings or
dividends payable in shares of series E preferred stock) or of
subscription rights or warrants other than those referred to above.
With certain exceptions, no adjustment in the exercise price will be required
until cumulative adjustments require an adjustment of at least 1% of such
exercise price. LaserSight will not be required to issue fractional shares of
common stock or series E preferred stock other than fractions which are integral
multiples of one-thousandth of a share of series E preferred Stock, which may,
at the election of LaserSight, be evidenced by depositary receipts. In lieu of
such issuance of fractional shares, an adjustment in cash may be made based on
the market price of common stock or series E preferred Stock on the last trading
day prior to the date of exercise.
Subject to certain exceptions described in the rights agreement, if any
person or group becomes an acquiring person, then each holder of a right will
have the right to receive upon exercise of such right that number of common
stock or, in certain circumstances, cash, property or other securities of
LaserSight, having a market value of two times the exercise price of the right.
If at any time after the time that any person or group becomes an
acquiring person, LaserSight is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a right,
other than rights beneficially owned by the acquiring person, any associate or
affiliate thereof, and certain transferees thereof, which will be void, will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the right.
At any time after the time that a person or group becomes an acquiring
person and prior to the acquisition by such person or group of 50% or more of
the outstanding common stock, our board of directors may exchange the rights,
subject to certain exceptions, in whole or in part, at an exchange ratio of one
share of common stock or one-thousandth of a share of series E preferred stock
per right.
At any time prior to the time that a person or group becomes an
acquiring person, our board of directors may redeem the rights in whole, but not
in part, at a price of $.01 per right, subject to adjustment which may at
LaserSight's option be paid in cash, common stock or other consideration deemed
appropriate by the board of directors. The redemption of the rights may be made
effective at such time, on such basis and with such conditions as the board of
directors in its sole discretion may establish; provided, however, that no
redemption will be permitted or required after the time that any person becomes
an acquiring person. Immediately upon any redemption of the rights, the right to
exercise the rights will terminate and the only right of the holders of the
rights will be to receive the redemption price.
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The terms of the rights may be amended by our board of directors
without the consent of the holders of the rights, except that from and after
such time as any person becomes an acquiring person no such amendment may make
the rights redeemable if the rights are not then redeemable in accordance with
the terms of the rights agreement or may adversely affect the interests of the
holders of the rights.
Until a right is exercised, the holder thereof, as such, will have no
rights as a LaserSight stockholder, including the right to vote or to receive
dividends. The rights will have anti-takeover effects. The rights, if exercised,
would cause substantial dilution to a person or group that attempts to acquire
LaserSight on terms not approved by our board of directors.
Warrants and Other Agreements to Issue Shares
Based on previously-reported agreements entered into in 1993 in
connection with our acquisition of LaserSight Centers, and modified in July 1995
and March 1997, we may be obligated as follows:
o To pay to a partnership whose partners include our chairman of the
board and certain of our former officers and directors a royalty of up
to $43 for each eye on which certain specified types of laser surgery
is performed on a fixed or mobile excimer laser system owned or
operated by LaserSight Centers or its affiliates. This royalty may be
paid either in cash or in shares of common stock.
To date, we have not accrued any obligation to issue contingent shares
or royalty shares described above. We cannot be certain that any issuance of
contingent shares or royalty shares will be accompanied by an increase in our
per share operating results. We are not obligated to pursue strategies that may
result in the issuance of royalty shares and, in fact, late in 2000 we abandoned
the LaserSight Centers mobile laser strategy due to industry conditions and our
increased focus on development and commercialization of our refractive products.
It may be in the interest of our chairman of the board for us to pursue business
strategies that maximize the issuance of royalty shares.
In connection with our sale of common stock in March 1999, we issued
the purchasers warrants to purchase a total of 225,000 shares of common stock at
an exercise price of $5.125 per share, the closing price of the our common stock
on March 22, 1999. The warrants have a term of five years. As of November 20,
2002, 45,000 of such warrants had been exercised and 180,000 of such warrants
remained outstanding.
On February 22, 1999, in connection with a consulting services
agreement that we entered into with an individual, we issued warrants to
purchase a total of 67,500 shares of our common stock at a price of $5.00 per
share. One-third of the warrants become exercisable on each annual anniversary
of the grant until all the warrants are exercisable. The warrants expire on
February 22, 2004. As of November 20, 2002, all such warrants had become
exercisable and all such warrants remained outstanding.
In connection with our sale of common stock in September 2000, we
issued the purchasers warrants to purchase a total of 600,000 shares of common
stock at an exercise price of $3.60 per share. The warrants have a term of three
years. As of November 20, 2002, all such warrants remained outstanding.
In connection with the March 2001 loan agreement that we entered into
with Heller Healthcare Finance, Inc., we issued to Heller warrants to purchase a
total of 243,750 shares of common stock at an exercise price of $3.15 per share.
The warrant is exercisable during the period beginning on its date of issue and
ending March 12, 2004. As of November 20, 2002, all such warrants remained
outstanding.
Delaware Law and Certain Charter and By-law Provisions
Certain provisions of our certificate of incorporation, by-laws and
Delaware corporate law described in this section may delay, make more difficult
or prevent acquisitions or changes in control of LaserSight that are not
approved by our board of directors, including those attempts that might result
in a premium over the market price for the shares held by stockholders.
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Section 203 of Delaware General Corporation Law
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to certain exceptions, Section 203 prohibits a
publicly-held Delaware corporation 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 interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless:
o the business combination is approved by the corporation's board of
directors prior to the date the interested stockholder became an
interested stockholder;
o the interested stockholder acquired at least 85% of the voting stock of
the corporation (other than stock held by directors who are also
officers or by certain employee stock plans) in the transaction in
which it becomes an interested stockholder; or
o the business combination is approved by a majority of the board of
directors and by the affirmative vote of 66-2/3% of the outstanding
voting stock that is not owned by the interested stockholder voting at
an annual or special meeting of stockholders and not by written
consent.
A "business combination" includes mergers, consolidations, asset sales
and other transactions having an aggregate value in excess of 10% of the
consolidated assets of the corporation and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three years
did own, 15% or more of the corporation's voting stock.
Indemnification and Limitation of Liability
Our certificate of incorporation contains certain provisions that
eliminate a director's liability for monetary damages for a breach of fiduciary
duty, except in certain circumstances involving certain wrongful acts. These
acts include the breach of a director's duty of loyalty or acts or omissions
that involve intentional misconduct or a knowing violation of law.
Our certificate of incorporation also contains provisions indemnifying
the directors and officers of LaserSight to the fullest extent permitted by the
Delaware General Corporation Law. Our by-laws require that we advance the
expenses of an indemnified person defending a legal proceeding after we receive
an undertaking from the person to repay such advance if a court ultimately
determines that he or she is not entitled to indemnification. Our by-laws also
require us to pay any expenses of an indemnified person in connection with such
person enforcing their indemnification rights. We also maintain a directors and
officers liability insurance policy that provides for indemnification of our
directors and officers against certain liabilities incurred in their capacities
as such.
Amendment of Certificate of Incorporation and By-laws
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. Our by-laws may, subject to the provisions of
Delaware General Corporation Law, be amended or repealed by a majority vote of
the board of directors or by two-thirds vote of stockholders entitled to vote on
such matter.
Advance Notice Requirements for Stockholder Proposals and Nomination of
Directors
Our by-laws provide that stockholders seeking to bring business before
an annual meeting of stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide timely notice in
writing. To be timely, a stockholder's notice must be delivered to or mailed and
received at our principal executive offices not less than 90 days and not more
than 120 days prior to the anniversary date of the immediately preceding annual
24
meeting of stockholders. However, in the event that the annual meeting is called
for a date that is not within 30 days before or after such anniversary date,
notice by the stockholder in order to be timely must be received not later than
the close of business on the tenth day following the date on which notice of the
date of the annual meeting was publicly announced. Our by-laws also specify
requirements as to the form and content of a stockholder's notice.
Special Meetings of Stockholders; Procedural Requirements for
Stockholder Action by Written Consent
Our by-laws provide that special meetings of our stockholders may be
called only by our chairman of the board, chief executive officer or by the
board of directors. In addition, our by-laws provide:
o procedures for setting a record date to determine which stockholders
may express written consent;
o that no written consent shall be effective unless, within 60 days of
the record date, consents signed by holders of the requisite minimum
number of shares have been delivered to us; and
o that no action by written stockholder consent could become effective
until the completion of a ministerial review of the consents within
five business days after delivery of the requisite number of written
consents.
Number of Directors, Stockholder Removal of Director
Our by-laws provide that we have at least three directors on the board
of directors and currently provide that we have seven directors. The board of
directors may increase or decrease the number of directors, provided that the
board cannot decrease the number directors to fewer than three. A majority of
the directors remaining in office generally can fill any vacancies on the board
of directors.
Our by-laws provide that the stockholders can remove a member of the
board of directors only if the holders of at least a majority of the outstanding
shares of stock entitled to vote generally in the election of directors, voting
together as a single class, vote in favor of the removal.
Super-Majority Board Approval Requirement
Our by-laws provide that, except as described below, the affirmative
vote of a majority of those directors present at a meeting at which a quorum is
present shall be necessary for the passage of any resolution or act of the board
of directors. The following actions must be approved by at least 75% of those
directors present at any meeting at which a quorum is present:
o the issuance of a particular class of stock if the number of shares of
such class of stock to be issued would exceed 20% of the then
outstanding shares of such class of stock;
o the sale, other than in the ordinary course of our business, of assets
(including without limitation intellectual property) having a book
value in excess of 10% of our total assets on a consolidated basis, as
reflected on our most recently filed 10-Q or 10-K, as applicable;
o any merger or consolidation of LaserSight; and
o an amendment to our by-laws.
Stockholder Rights Plan
In July 1998, our board of directors adopted a stockholder rights plan.
A stockholder rights plan typically creates dilution and other impediments that
would discourage persons seeking to gain control of LaserSight by means of a
merger, tender offer, proxy contest or otherwise if our board of directors
determines that such change in control is not in the best interests of our
stockholders.
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Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company, New York, New York.
SELLING STOCKHOLDERS
The following table describes the beneficial ownership of LaserSight
common stock by the selling stockholders named in this prospectus, and the
number of shares of common stock to be offered by the selling stockholders.
Unless otherwise indicated, each person has sole investment and voting power
over the shares listed in the table, subject to community property laws, where
applicable. For purposes of this table, a person or group of persons is deemed
to have "beneficial ownership" of any shares that such person has the right to
acquire within 60 days. For purposes of computing the percentage of outstanding
shares held by each person or group of persons named in the table, any security
which such person or group of persons has the right to acquire within 60 days is
deemed to be outstanding for the purpose of computing the percentage ownership
for such person or persons, but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person.
Common Stock Beneficially Common Stock Beneficially
Owned Prior To Offering Owned After The Offering
----------------------- ------------------------
Shares of
Preferred Conversion Percent of Common Stock Number of Percent of
Selling Stockholder Stock Shares (1) Outstanding to be Sold Shares Outstanding
------------------- ------ ---------- ----------- ------------ ------ -----------
New Industries Investment
Consultants (H.K.) Ltd. 8,980,647 17,961,294 39.2% 17,961,294 -- 0.0%
Benchmark Capital
Consulting, Inc. 300,000 600,000 2.1% 600,000 -- 0.0%
(1) Assumes the conversion of all series H preferred stock held by such
selling stockholder at a conversion factor of two common shares for
each preferred share.
PLAN OF DISTRIBUTION
The shares of LaserSight common stock being registered pursuant to this
prospectus are being registered on behalf of the selling stockholders named in
this prospectus. All costs, expenses and fees in connection with registration of
the shares offered by this prospectus will be paid by LaserSight. Brokerage
commissions, underwriting discounts and similar selling expenses, if any,
attributable to the sale of shares shall be paid by the selling stockholders.
The selling stockholders may sell the shares registered by this prospectus from
time to time in one or more types of transactions including (A) over-the-counter
market transactions, (B) negotiated transactions, (C) through put or call
options transactions relating to the shares, (D) through short sales of shares,
or (E) a combination of such methods of sale. The shares may be sold at market
prices prevailing at the time of sale, or at negotiated prices. These
transactions may or may not involve securities brokers or dealers. The selling
stockholders have advised LaserSight that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling stockholders.
The selling stockholders may sell shares directly to purchasers or to
or through broker-dealers, which may act as agents or principals. These
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from the selling stockholders or the purchasers of shares for
whom such broker-dealers may act as agents or to whom they sell as principal, or
both. Any such compensation may be equal to, less than or in excess of customary
amounts.
The selling stockholders named in this prospectus and any
broker-dealers that act in connection with the sale of shares might be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
26
any commissions received by such broker-dealers and any profit on the resale of
the shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the selling stockholders, to the extent they are
deemed "underwriters", will be subject to the prospectus delivery requirements
of the Securities Act. LaserSight has informed the selling stockholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
Upon LaserSight being notified by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the Act,
disclosing (A) the name of each such selling stockholder and of the
participating broker-dealer(s), (B) the number of shares involved, (C) the price
at which such shares were sold, (D) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (E) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, and (F) other facts
material to the transaction.
LaserSight has agreed to indemnify each selling stockholder against
certain liabilities, including liabilities arising under the Securities Act. The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for
LaserSight by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
EXPERTS
The consolidated financial statements of LaserSight and subsidiaries as
of December 31, 2001 and 2000, and for each of the years in the three-year
period ended December 31, 2001, have been incorporated by reference herein and
in the Registration Statement in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The audit report
covering the December 31, 2001 consolidated financial statements contains an
explanatory paragraph that states the Company's recurring losses from operations
and net accumulated deficit raise substantial doubt about the Company's ability
to continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of that uncertainty.
With respect to the unaudited interim financial information for the
periods ended March 31, 2002 and 2001; June 30, 2002 and 2001; and September 30,
2002 and September 30, 2001 incorporated by reference herein, the independent
accountants have reported that they applied limited procedures in accordance
with professional standards for a review of such information. However, their
separate reports included in LaserSight's quarterly reports on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 2002, and incorporated by
reference herein, state that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act of 1933
(the Act) for their reports on the unaudited interim financial information
because those reports are not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Act.
27
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Pubic Reference Room at 450 Fifth Street, N.W., Washington, D.C.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room. Our SEC filings are also available to the public
from our Internet site at www.lase.com or at the SEC's Internet site at
http://www.sec.gov. The other information at those Internet sites is not part of
this prospectus. Such reports, proxy statements and other information concerning
LaserSight can also be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus is only part of a Registration Statement on Form S-3
that we have filed with the SEC under the Securities Act. We have also filed
exhibits and schedules with the Registration Statement that are not included in
this prospectus, and you should refer to the applicable exhibit or schedule for
a complete description of any statement referring to any contract or other
document. A copy of the Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge at the Public Reference Room
of the SEC described above, and copies of such material may be obtained from
such office upon payment of the fees prescribed by the SEC.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the selling
stockholders sell all of the shares being registered by this prospectus:
o Annual Report on Form 10-K for the year ended December 31, 2002 filed
on April 1, 2002, as amended by Form 10-K/A filed on April 26, 2002;
o Quarterly Reports on Form 10-Q for the quarter ended March 31, 2002
filed on May 15, 2002; for the quarter ended June 30, 2002 filed on
August 14, 2002; and for the quarter ended September 30, 2002 filed on
November 14, 2002, as amended by Form 10-Q/A filed on November 21,
2002.
o Definitive Proxy Statement filed on September 27, 2002;
o Current Reports on Form 8-K filed on February 15, 2002; April 16, 2002;
August 14, 2002; August 30, 2002; and November 14, 2002; and
o The description of the Common Stock contained in LaserSight's Form
8-A/A (Amendment No. 6) filed on August 10, 2001.
You may request a copy of any of these filings, at no cost, by writing
or telephoning us at the following address: LaserSight Incorporated, 3300
University Boulevard, Suite 140, Winter Park, Florida 32792; telephone: (407)
678-9900; Attn: Corporate Secretary.
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee....................... $ 401.30
Legal fees and expenses.................... 110,000.00
Accountants' fees.......................... 2,000.00
Nasdaq listing fees........................ 45,000.00
Miscellaneous.............................. 17,598.70
----------
Total................................ $175,000.00
==========
---------------------------------------
The foregoing items, except for the SEC registration fee, are
estimated.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL"), inter
alia, empowers a Delaware corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right of
the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. Similar
indemnity is authorized for such persons against expenses (including attorneys'
fees) actual and reasonably incurred in connection with the defense or
settlement of any such threatened, pending or completed action or suit by or in
the right of the corporation if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the shareholders or disinterested
directors or by independent legal counsel in a written opinion that
indemnification is proper because the indemnitee has met the applicable standard
of conduct. The Charter provides that directors and officers shall be
indemnified as described above in this paragraph to the fullest extent permitted
by the DGCL; provided, however, that any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person shall be
indemnified only if such proceeding (or part thereof) was authorized by the
board of directors of LaserSight.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in such capacity,
or arising out of his status as such, whether or not the corporation would
otherwise have the power to indemnify him under Section 145.
The Charter provides that, to the fullest extent permitted by the DGCL,
no director of LaserSight shall be personally liable to LaserSight or its
stockholders for monetary damages for breach of fiduciary as a director. Section
102(b)(7) of the DGCL currently provides that such provisions do not eliminate
the liability of a director (i) for a breach of the director's duty of loyalty
to LaserSight or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL (relating to the declaration of dividends and
purchase or redemption of shares in violation of the DGCL), or (iv) for any
transaction from which the director derived an improper personal benefit.
II-1
Reference is made to the Charter and By-laws filed as Exhibits 4.1 and 4.2
hereto, respectively.
LaserSight maintains directors' and officers' liability insurance
policies covering certain liabilities of persons serving as officers and
directors and providing reimbursement to LaserSight for its indemnification of
such persons.
Item 16. Exhibits
The exhibit index set forth on page II-5 of this Registration Statement
is hereby incorporated herein by reference.
Item 17. Undertakings.
(a) Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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.
II-2
(c) Acceleration of Effectiveness.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 to be filed on its behalf by the undersigned, thereunto duly
authorized, in the City of Winter Park, State of Florida, this 21st day of
November, 2002.
LASERSIGHT INCORPORATED
By: /s/ Gregory L. Wilson
--------------------------
Gregory L. Wilson, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on the dates indicated.
/s/ Michael R. Farris* November 21, 2002
------------------------------------------------
Michael R. Farris, President, Chief Executive
Officer and Director
/s/ Francis E. O'Donnell, Jr., M.D.* November 21, 2002
------------------------------------------------
Francis E. O'Donnell, Jr., M.D., Chairman of the
Board and Director
/s/ Guy W. Numann* November 21, 2002
------------------------------------------------
Guy W. Numann, Director
/s/ David T. Pieroni* November 21, 2002
------------------------------------------------
David T. Pieroni, Director
/s/ Steven Shi* November 21, 2002
------------------------------------------------
Steven Shi, Director
/s/ Xianding Weng* November 21, 2002
------------------------------------------------
Xianding Weng, Director
/s/ Ying Zhi Gu* November 21, 2002
------------------------------------------------
Ying Zhi Gu, Director
/s/ Gregory L. Wilson November 21, 2002
------------------------------------------------
Gregory L. Wilson, Chief Financial Officer
(Principal financial and accounting officer)
----------------------
*/ By: /s/ Gregory L. Wilson
- ------------------------------------
(Gregory L. Wilson, as Attorney-in-Fact)
II-4
INDEX TO EXHIBITS
Exhibit
No. Description
----- ----------------------
4.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1
to the Form 10-Q filed by the Company on November 14, 2002).
4.2 By-laws, as amended (incorporated by reference to Exhibit 3.2 to the
Company's Form 10-Q/A filed on November 21, 2002).
4.3 Rights Agreement, dated as of July 2, 1998, between LaserSight
Incorporated and American Stock Transfer & Trust Company, as Rights
Agent, which includes (i) as Exhibit A thereto the form of Certificate
of Designation of the Series E Junior Participating Preferred Stock,
(ii) as Exhibit B thereto the form of Right certificate (separate
certificates for the Rights will not be issued until after the
Distribution Date) and (iii) as Exhibit C thereto the Summary of
Stockholder Rights Agreement. (incorporated by reference to Exhibit
99.1 to the Form 8-K filed by the Company on July 8, 1998).
4.4 First Amendment to Rights Agreement, dated as of March 22, 1999,
between LaserSight Incorporated and American Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit 2 to
Form 8-A/A filed by the Company on March 29, 1999).
4.5 Second Amendment to Rights Agreement, dated as of January 28, 2000,
between LaserSight Incorporated and American Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit 99.6 to
Form 8-K filed by the Company on February 8, 2000).
4.6 Third Amendment to Rights Agreement, dated as of June 29, 2001, between
LaserSight Incorporated and American Stock Transfer & Trust Company, as
Rights Agent (incorporated by reference to Exhibit 99.5 to Form 8-K
filed by the Company on July 18, 2001).
4.7 Fourth Amendment to Rights Agreement, dated as of August 15, 2002,
between LaserSight Incorporated and American Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit 3.3 to
Form 10-Q filed by the Company on November 14, 2002).
5.1 Opinion of Sonnenschein Nath & Rosenthal.
15 Acknowledgment of Independent Accountants Regarding Independent
Accountants' Review Report.
23.1 Consent of KPMG LLP.
23.2 Consent of Sonnenschein Nath & Rosenthal (included in Exhibit 5.1).
24.1 Powers of Attorney.
II-5