UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from to
Commission File Number: 0-27598
IRIDEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0210467
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1212 TERRA BELLA AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043-1824
(Address of principal executive offices, including zip code)
(650) 940-4700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes [X] No [ ]; (2) Yes [X ] No [ ]
The number of shares of Common Stock, $.01 par value, issued and outstanding as
of November 5, 2001 was 6,799,100 .
IRIDEX CORPORATION
TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of September 29, 2001
and December 30, 2000 3
Condensed Consolidated Statements of Operations for the three months
and nine months ended September 29, 2001 and September 30, 2000 4
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 29, 2001 and September 30, 2000 5
Condensed Consolidated Statements of Comprehensive Income (Loss) for the
three and nine months ended September 29, 2001 and September 30, 2000 6
Notes to Condensed Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 21
ITEM 5. OTHER INFORMATION 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURE 22
2
IRIDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 29, DECEMBER 30,
------------- ------------
2001 2000
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................... $ 5,723 $ 9,998
Available-for-sale securities ................ 4,496 2,996
Accounts receivable, net ..................... 6,592 8,010
Inventories .................................. 12,057 9,721
Prepaids and other current assets ............ 544 805
-------- --------
Total current assets ..................... 29,412 31,530
Property and equipment, net .................. 1,635 1,903
Deferred income taxes ........................ 1,592 1,592
-------- --------
Total assets ............................. $ 32,639 $ 35,025
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................. $ 1,339 $ 1,408
Accrued expenses ............................. 2,190 3,117
-------- --------
Total liabilities ........................ 3,529 4,525
-------- --------
Stockholders' equity:
Common stock ................................. 69 67
Additional paid-in capital ................... 22,980 22,691
Accumulated other comprehensive income ....... 6 10
Treasury Stock ............................... (356) (315)
Retained earnings ............................ 6,411 8,047
-------- --------
Total stockholders' equity ............... 29,110 30,500
-------- --------
Total liabilities and stockholders' equity $ 32,639 $ 35,025
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
IRIDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30
2001 2000 2001 2000
------------ ------------ ------------ ------------
Sales ............................................................ $ 6,750 $ 8,230 $ 19,573 $ 25,097
Cost of sales .................................................... 3,252 3,788 10,015 10,850
------- ------- -------- --------
Gross profit ............................................ 3,498 4,442 9,558 14,247
------- ------- -------- --------
Operating expenses:
Research and development ..................................... 1,196 1,287 3,684 3,873
Sales, general and administrative ............................ 2,309 2,714 7,731 8,219
------- ------- -------- --------
Total operating expenses ......................................... 3,505 4,001 11,415 12,092
------- ------- -------- --------
Operating income (loss) from continuing operations ............... (7) 441 (1,857) 2,155
Other income, net .......................................... 88 146 348 422
------- ------- -------- --------
Income (loss) before benefit from (provision) for income taxes ... 81 587 (1,509) 2,577
Benefit from (provision) for income taxes ................... 90 (188) 766 (824)
------- ------- -------- --------
Income (loss) from continuing operations ......................... 171 399 (743) 1,753
------- ------- -------- --------
Income (loss) from discontinued operations (net of applicable
income tax benefit (provision) of $-, $(76), $542 and $(111),
respectively) .................................................... -- 162 (893) 235
------- ------- -------- --------
Net income (loss) ................................................ $ 171 $ 561 $ (1,636) $ 1,988
======= ======= ======== ========
Income (loss) from continuing operations per common share-basic .. $ 0.03 $ 0.06 $ (0.11) $ 0.26
Income (loss) from discontinued operations per common share-basic 0.00 0.02 (0.13) 0.04
------- ------- -------- --------
Net income (loss) per common share-basic ......................... $ 0.03 $ 0.08 $ (0.24) $ 0.30
======= ======= ======== ========
Income (loss) from continuing operations per common share-diluted $ 0.02 $ 0.06 $ (0.11) $ 0.24
Income (loss) from discontinued operations per common
share-diluted ............................................... 0.00 0.02 (0.13) 0.03
------- ------- -------- --------
Net income (loss) per common share-diluted ....................... $ 0.02 $ 0.08 $ (0.24) $ 0.27
======= ======= ======== ========
Shares used in per common share basic ............................ 6,771 6,663 6,741 6,627
======= ======= ======== ========
Shares used in per share-assuming dilution ....................... 6,892 7,284 6,741 7,327
======= ======= ======== ========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
IRIDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 29, SEPTEMBER 30,
2001 2000
------------ ------------
Cash flows from operating activities:
Net income (loss) .......................................................... $(1,636) $ 1,988
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Discontinued operations ................................................ 893 (235)
Depreciation and amortization .......................................... 604 661
Provision for inventories .............................................. 4 --
Provision for doubtful accounts ........................................ (31) --
Provision for sales returns ............................................ -- 100
Changes in operating assets and liabilities:
Accounts receivable .................................................. 1,441 (578)
Inventories .......................................................... (3,014) (1,759)
Prepaids and other current assets .................................... 258 (5)
Accounts payable ..................................................... (137) 543
Accrued expenses ..................................................... (1,039) (187)
------- --------
Net cash provided by (used in) operating activities .................... (2,657) 528
------- --------
Cash flows from investing activities:
Purchases of available-for-sale securities ................................ (4,496) (3,856)
Proceeds from maturity of available-for-sale securities ................... 2,992 4,364
Acquisition of property and equipment ..................................... (364) (553)
------- --------
Net cash used in investing activities .................................. (1,868) (45)
------- --------
Cash flows from financing activities:
Issuance of common stock .................................................. 291 522
Purchase of treasury stock ................................................ (41) --
------- --------
Net cash provided by financing activities .............................. 250 522
------- --------
Net increase (decrease) in cash and cash equivalents ................. (4,275) 1,005
Cash and cash equivalents at beginning of period ............................... 9,998 9,645
------- --------
Cash and cash equivalents at end of period ..................................... $ 5,723 $ 10,650
======= ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized (losses) on available-for-sale securities ........... $ (4) $ 5
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
IRIDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30,
2001 2000 2001 2000
------------ ------------ ------------- -------------
Net income (loss) ..................................... $ 171 $ 561 $(1,636) $1,988
Other comprehensive income (loss):
Change in unrealized gain (loss) on
available-for-sale securities ................. (2) 5 (4) 5
----- ------- ------- ------
Comprehensive income (loss)........................ $ 169 $ 566 $(1,640) $ 1,993
===== ======= ======= =======
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
IRIDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
IRIDEX Corporation have been prepared in accordance with generally accepted
accounting principles in the United States of America for interim financial
information and pursuant to the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring adjustments, considered necessary for a fair presentation
have been included. The condensed consolidated financial statements should be
read in conjunction with the audited financial statements and notes thereto,
together with management's discussion and analysis of financial condition and
results of operations, contained in our Annual Report on Form 10-K, which was
filed with the Securities and Exchange Commission on March 30, 2001. The results
of operations for the three month and nine month periods ended September 29,
2001 are not necessarily indicative of the results for the year ending December
29, 2001 or any future interim period.
2. INVENTORIES COMPRISE (IN THOUSANDS) :
SEPTEMBER 29, DECEMBER 30,
2001 2000
------------ ------------
(unaudited)
Raw materials and work in progress......... $ 6,623 $ 6,168
Finished goods............................. 5,434 3,553
------------ ------------
Total inventories.......................... $ 12,057 $ 9,721
=========== ===========
3. COMPUTATIONS OF NET INCOME (LOSS) PER COMMON SHARE AND DILUTED NET INCOME
(LOSS) PER COMMON SHARE
Basic and diluted net income (loss) per share are computed by dividing net
income (loss) for the period by the weighted average number of shares of common
stock outstanding during the period. The calculation of diluted net income
(loss) per share excludes potential common stock if their effect is
anti-dilutive. Potential common stock consists of incremental common shares
issuable upon the exercise of stock options.
7
A reconciliation of the numerator and denominator of net income per
common share and diluted net income per common share is as follows (in
thousands, except per share amounts):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30,
2001 2000 2001 2000
--------- ----------- ---------- ---------
(unaudited) (unaudited) (unaudited) (unaudited)
Numerator
Income (loss) from continuing operations ................... $ 171 $ 399 $ (743) $ 1,753
Income (loss) from discontinued operations ................. -- 162 (893) 235
--------- -------- ---------- ---------
Net income (loss) .......................................... $ 171 $ 561 $ (1,636) $ 1,988
========= ======== ========== =========
Denominator -- Basic
Weighted average common stock outstanding .............. 6,771 6,663 6,741 6,627
========= ======== ========== =========
Basic income (loss) per share from continuing operations ... $ 0.03 $ 0.06 $ (0.11) $ 0.26
Basic income (loss) per share from discontinued operations . 0.00 0.02 (0.13) 0.04
========= ======== ========== =========
Basic income (loss) per share .............................. $ 0.03 $ 0.08 $ (0.24) $ 0.30
========= ======== ========== =========
Denominator -- Diluted
Weighted average common stock outstanding .............. 6,771 6,663 6,741 6,627
Effect of dilutive securities
Weighted average common stock options .................. 121 621 -- 700
--------- -------- ---------- ---------
Total weighted average stock and options outstanding ....... 6,892 7,284 6,741 7,327
========= ======== ========== =========
Diluted income (loss) per share from continuing operations . $ 0.02 $ 0.06 $ (0.11) $ 0.24
Diluted income (loss) per share from discontinued operations 0.00 0.02 (0.13) 0.03
========= ======== ========== =========
Diluted income (loss) per share ............................ $ 0.02 $ 0.08 $ (0.24) $ 0.27
========= ======== ========== =========
During the three months ended September 29, 2001 and September 30,
2000, options to purchase 1,524,166 and 61,044 shares at weighted average
exercise prices of $5.82 and $13.50 per share, respectively, were outstanding,
but were not included in the computations of diluted net income per common share
because the exercise price of the related options exceeded the average market
price of the common shares for the respective periods. For the nine months ended
September 30, 2000 options to purchase 35,282 shares at a weighted average
exercise price of $14.19 per share were outstanding but not included in the
computation of diluted net income per common share because the exercise price of
the related options exceeded the average market price of the common shares for
the period. For the nine months ended September 29, 2001 all options were
excluded as they were deemed antidilutive due to the year to date loss. These
options could dilute earnings per share in future periods.
4. DISCONTINUED OPERATIONS
In April 2001, we discontinued our Laser Research segment. There were no
revenues or costs or operating expenses for this segment for the three month
period ended September 29, 2001. For the three months ended September 30, 2000,
revenues were $285,000 and costs and operating expenses totaled $47,000. The
total loss on discontinued operations of $893,000 (net of a $542,000 income tax
benefit) was recorded in the first quarter of 2001 and consisted primarily of
inventory and sales returns costs. No assets or liabilities of the Laser
Research segment remain and no proceeds are expected from the disposition of
this segment.
8
5. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations," which establishes financial accounting and reporting
for business combinations and supersedes APB Opinion No. 16, Business
Combinations, and FASB Statement No. 38, Accounting for Preacquisition
Contingencies of Purchased Enterprises. It requires that all business
combinations in the scope of this Statement are to be accounted for using one
method, the purchase method. The provisions of this Statement apply to all
business combinations initiated after June 30, 2001, and also applies to all
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001, or later. The Company believes that adoption of
the standard will not have a material effect on the financial position or
results of operations of the Company.
In July 2001, the Financial Accounting Standards Board issued SFAS No. 142
"Goodwill and Other Intangible Assets," which establishes financial accounting
and reporting for acquired goodwill and other intangible assets and supercedes
APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition, after they have been initially recognized in
the financial statements. The provisions of this Statement are effective
starting with fiscal years beginning after December 15, 2001. The Company
believes that SFAS No. 142 will not have a material effect on the financial
position or results of operation of the Company.
In October 2001, the Financial Accounting Standards Board issued SFAS 144
"Accounting for the Impairment or Disposal of Long-Lived Assets" that develops
one accounting model for long lived assets that are to be disposed of by sale
and requires long-lived assets that are to be disposed of by sale be measured at
the lower of book value or fair value less cost to sell. Additionally, SFAS No.
144 expands the scope of discontinued operations to include all components of an
entity with operations that (1) can be distinguished from the rest of the entity
and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. SFAS No. 144 supercedes SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
SFAS No. 144 applies to all long-lived assets (including discontinued
operations) and consequently amends Accounting Principles Board Opinion No. 30
(APB 30), Reporting Results of Operations Reporting the Effects of Disposal of a
segment of a business. Management does not expect the adoption of SFAS 144 to
have a material impact on the Company's financial position and results of
operations.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion in Management's Discussion and Analysis of Financial
Condition and Results of Operations contains trend analysis and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, such as those relating to the level of international sales,
including the impact of the decline in the value of the Euro on international
sales; future sales growth, including potential increased sales of our
ophthalmology products and the Apex 800; resolution of Medicare reimbursement
issues; anticipated increases in manufacturing, research and development and
sales, general and administrative expenses; anticipated decreases and
fluctuations in gross margins; and future liquidity. Actual results could differ
materially from those set forth in such forward-looking statements as a result
of the factors set forth under "Factors That May Affect Future Operating
Results" and other risks detailed in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission and detailed from time to time
in the Company's reports filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
The following table sets forth the percentage of net sales of certain
items in our statement of operations for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30,
2001 2000 2001 2000
------- ------- ------- ------
Sales .................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ............................ 48.2 46.0 51.2 43.2
------- ------- ------- ------
Gross profit ......................... 51.8 54.0 48.8 56.8
------- ------- ------- ------
Operating expenses:
Research and development ............. 17.7 15.6 18.8 15.4
Sales, general and administrative .... 34.2 33.0 39.5 32.8
------- ------- ------- ------
Total operating expenses ......... 51.9 48.6 58.3 48.2
------- ------- ------- ------
Operating income (loss) from continuing
operations ............................... (0.1) 5.3 (9.5) 8.6
Other income, net ........................ 1.3 1.8 1.8 1.7
------- ------- ------- ------
Income (loss) from continuing operations
before provision for income taxes ........ 1.2 7.1 (7.7) 10.3
Benefit (provision) for income taxes ..... 1.3 (2.3) 3.9 (3.3)
------- ------- ------- ------
Income (loss) from continuing operations . 2.5 4.8 (3.8) 7.0
Income (loss) from discontinued operations
(net of tax) ............................. 0.0 2.0 (4.6) 0.9
------- ------- ------- ------
Net income (loss) ........................ 2.5% 6.8% (8.4)% 7.9%
======= ======= ======= ======
Sales. Our sales decreased 18% to $6.8 million for the three months
ended September 29, 2001 from $8.2 million for the three months ended September
30, 2000. For the nine months ended September 29, 2001, sales decreased 22% to
$19.6 million from $25.1 million for the nine months ended September 30, 2000.
The overall decrease in our sales, for both the three and nine month periods,
was due primarily to decreased unit sales of our ophthalmology products, as well
as lower than expected sales of our recently launched Apex 800 hair removal
system, as a result of weakened economic conditions, primarily in the United
States of America. Sales of our OcuLight SLx products were impacted as a result
of uncertainties surrounding Medicare
10
reimbursement for certain procedures to treat age-related macular degeneration
(AMD) using our products. Additionally, during the third quarter of 2000, the
Company made sales of the Oculight 664 in connection with studies evaluating the
effectiveness of photodynamic therapy for the treatment of AMD. In the third
quarter of 2001, we made no such sales. The decreased sales of ophthalmology
products was offset, in part, by sales of our new dermatology product, the Apex
800. Domestic sales of $4.3 million accounted for 63% of sales for the three
months ended September 29, 2001, compared to $4.9 million, or 60% of sales in
the comparable 2000 period. Domestic sales decreased in absolute dollars due to
the reasons stated above for the decrease in ophthalmology product sales, which
decrease was offset, in part, by sales of our new dermatology product, the Apex
800. International sales of $2.5 million accounted for 37% of sales for the
three months ended September 29, 2001, compared to $3.3 million, or 40% of sales
in the comparable 2000 period. The decrease in international sales was primarily
due to decreases in ophthalmology product sales, offset by sales of our new
dermatology product, the Apex 800. The overall decrease in international sales
occurred primarily in the Asian region. We expect revenues from international
sales to continue to account for a substantial portion of our sales. We expect
future growth in sales of both ophthalmology and dermatology products, with the
Apex 800 hair removal laser systems for dermatology generating the most
significant growth.
Gross Profit. Our gross profit decreased 21% to $3.5 million for the
three months ended September 29, 2001 compared to $4.4 million for the three
months ended September 30, 2000. Gross profit as a percentage of net sales for
the three months ended September 29, 2001 decreased to 51.8%, compared to 54.0%
for the three months ended September 30, 2000, primarily due to the decreased
sales volume of the OcuLight SLx, which has a relatively higher gross margin. In
addition, fixed manufacturing costs were spread over a lower sales volume.
Higher initial production costs of our newly introduced Apex 800 hair removal
system also contributed to lower gross margins for the period. For the nine
months ended September 29, 2001, our gross profit decreased 32.9% to $9.6
million as compared to $14.2 million for the comparable period in 2000. Gross
profit as a percentage of net sales for the nine months ended September 29, 2001
decreased to 48.8%, compared to 56.8% for the nine months ended September 30,
2000. The decrease in gross profit for the nine months ended September 29, 2001
was due primarily to a reduction in sales of the OcuLight Slx as well as the
fact that fixed manufacturing costs were spread over a lower sales volume. For
the balance of 2001, we expect manufacturing costs to increase in absolute
dollars to support increasing unit shipment volumes of existing products. We
also expect our gross profit margins to continue to fluctuate due to changes in
the relative proportions of domestic and international sales, mix of sales of
existing products, pricing, product costs and a variety of other factors.
Research and Development. Our research and development expenses
decreased by 7.0% to $1.2 million for the three months ended September 29, 2001
from $1.3 million for the three months ended September 30, 2000. Research and
development expenses increased as a percentage of net sales to 17.7% for the
three months ended September 29, 2001 from 15.6% for the comparable prior year
three-month period. For the nine months ended September 30, 2001, research and
development expenses decreased 4.9% to $3.7 million as compared to $3.9 million
for the nine months ended September 30, 2000. Research and development expenses
as a percentage of net sales increased during the period to 18.8% for the nine
months ended September 29, 2001 from 15.4% for the comparable 2000 period. The
decrease in research and development expense in absolute dollars for the three
and nine month period ended September 29, 2001 was due primarily to completion
of the Apex 800 and cost containment measures. The increase as a percentage of
sales for both the three and nine month periods was driven primarily by the
decrease in sales which exceeded the decrease in research and development
expense. We expect expenses for research and development to increase in absolute
dollars during the remainder of 2001 as compared to the third quarter of 2001 in
connection with activities related to new products and clinical treatment
development, such as the transpupillary thermotherapy (TTT) for AMD study that
commenced in March 2000.
11
Sales, General and Administrative. Our sales, general and
administrative expenses decreased by 14.9% to $2.3 million for the three months
ended September 29, 2001 from $2.7 million for the three months ended September
30, 2000. Sales, general and administrative expenses increased as a percentage
of net sales to 34.2% for the three months ended September 29, 2001 from 33.0%
for the comparable prior year three-month period. For the nine months ended
September 29, 2001, sales, general and administrative expenses decreased by 5.9%
to $7.7 million from $8.2 million for the comparable period in 2000. Sales,
general and administrative expenses as a percentage of net sales increased
during this period to 39.5% for the nine months ended September 29, 2001 from
32.8% for the comparable period in 2000. The decrease in absolute dollars in
sales, general and administrative expenses for both the three and nine month
periods primarily was due to lower commissions and sales personnel and cost
containment measures. The increase as a percentage of net sales for both the
three and nine month periods was due to the decrease in revenue relative to the
increase in sales, general and administrative expenses. We expect sales, general
and administrative expenses in absolute dollars to increase and, as a percentage
of net sales, to decrease, during the balance of 2001, as compared to the third
quarter of 2001, as revenues increase.
Discontinued Operations. In April 2001, we discontinued our Laser
Research segment. There were no revenues or costs or operating expenses for this
segment for the three month period ended September 29, 2001. For the three
months ended September 30, 2000, revenues were $285,000 and costs and operating
expenses of this segment totaled $47,000. The total loss on discontinued
operations of $893,000 (net of a $542,000 income tax benefit) was recorded in
the first quarter of 2001 and consisted primarily of inventory and sales returns
costs. No assets or liabilities of the Laser Research segment remain and no
proceeds are expected from the disposition of this segment.
LIQUIDITY AND CAPITAL RESOURCES
At September 29, 2001, our primary sources of liquidity included cash
and cash equivalents and available-for-sale securities in the aggregate amount
of $10.2 million. In addition, in September 2001, we renewed our unsecured line
of credit and increased available funding to $4 million from $2 million. The
line of credit bears interest at the bank's prime rate and expires in October
2002. As of September 29, 2001, no borrowings were outstanding under this credit
facility.
During the nine months ended September 29, 2001, we used $4.3 million
in cash and cash equivalents. During this period, operating activities used $2.7
million of cash. Uses of cash from operating activities included a net loss of
$1.6 million, a decrease in accounts payable and accrued expenses of an
aggregate of $1.2 million and an increase in net inventories of $3.0 million,
partially offset by sources of cash including a decrease in accounts receivable
of $1.4 million, discontinued operations of $0.9 million, depreciation of $0.6
million and a decrease in prepaids and other current assets of $0.2 million.
We consumed $1.9 million in cash and cash equivalents with investing
activities during the nine months ended September 29, 2001, primarily due to the
acquisition of $0.4 million of property and equipment and net purchases of $1.5
million of available-for-sale securities.
Net cash provided by financing activities during the nine months ended
September 29, 2001 was $0.25 million which consisted of $0.3 million due to the
issuance of common stock offset by $0.05 million in treasury stock repurchases.
12
We believe that, based on current estimates, our cash, cash equivalents
and available-for-sale securities together with operating cash flows will be
sufficient to meet our anticipated cash requirements for the next 12 months.
In December 1998, we instituted a stock repurchase program whereby up
to 150,000 shares of our Common Stock may be repurchased in the open market. We
plan to utilize all of the reacquired shares for reissuance in connection with
employee stock programs. During the nine months ended September 30, 2001 11,000
shares of treasury stock were repurchased. To date, we have purchased 87,000
shares of our Common Stock under this program.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations," which establishes financial accounting and reporting
for business combinations and supersedes APB Opinion No. 16, Business
Combinations, and FASB Statement No. 38, Accounting for Preacquisition
Contingencies of Purchased Enterprises. It requires that all business
combinations in the scope of this Statement are to be accounted for using one
method, the purchase method. The provisions of this Statement apply to all
business combinations initiated after June 30, 2001, and also applies to all
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001, or later. The Company believes that adoption of
the standard will not have a material effect on the financial position or
results of operations of the Company.
In July 2001, the Financial Accounting Standards Board issued SFAS No. 142
"Goodwill and Other Intangible Assets," which establishes financial accounting
and reporting for acquired goodwill and other intangible assets and supercedes
APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition, after they have been initially recognized in
the financial statements. The provisions of this Statement are effective
starting with fiscal years beginning after December 15, 2001. The Company
believes that SFAS No. 142 will not have a material effect on the financial
position or results of operation of the Company.
In October 2001, the Financial Accounting Standards Board issued SFAS 144
"Accounting for the Impairment or Disposal of Long-Lived Assets" that develops
one accounting model for long lived assets that are to be disposed of by sale
and requires long-lived assets that are to be disposed of by sale be measured at
the lower of book value or fair value less cost to sell. Additionally, SFAS No.
144 expands the scope of discontinued operations to include all components of an
entity with operations that (1) can be distinguished from the rest of the entity
and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. SFAS No. 144 supercedes SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets to be Disposed Of." SFAS No. 144 applies to all
long-lived assets (including discontinued operations) and consequently amends
Accounting Principles Board Opinion No. 30 (APB 30), Reporting Results of
Operations Reporting the Effects of Disposal of a segment of a business.
Management does not expect the adoption of SFAS 144 to have a material impact on
the Company's financial position and results of operations.
FACTORS THAT MAY AFFECT FUTURE RESULTS
We Rely on Continued Market Acceptance of Our Products. We currently
market visible and infrared light semiconductor-based photocoagulator medical
laser systems to the ophthalmic market. We also market a visible and infrared
light semiconductor-based photocoagulator medical laser system to the
dermatology market. We believe the continued and increased sales, if any, of
these medical laser systems is dependent upon the following factors:
13
- Product performance, procedures and price;
- Opinions of medical advisors and associates;
- Recommendations by ophthalmologists, dermatologists, clinicians, and
their associated opinion leaders;
- Performance of these laser systems and treatments which are a
beneficial alternative to competing technologies and treatments;
- The level of reimbursement for treatments administered with our
products; and
- Our ability to introduce new products into these markets.
Any significant decline in market acceptance of our products would have a
material adverse effect on our business, results of operations and financial
condition. We commenced revenue shipments of the Apex 800 hair removal laser
system in the third quarter of fiscal 2001. Our stated expectations for future
sales growth depends on market acceptance of this product. If the Apex 800 does
not receive the level of market acceptance that we anticipate, our results of
operations could be materially and adversely effected. See " -- We Depend on
Third Party Coverage and Reimbursement Policies" and " -- We Depend on
Development of New Products and New Applications."
Our Market is Competitive. Competition in the market for devices used
for ophthalmic and dermatological treatments is intense and is expected to
increase. This market is also characterized by rapid technological innovation
and change and our products could be rendered obsolete as a result of future
innovations. Our competitive position depends on a number of factors including
product performance, characteristics and functionality, ease of use,
scalability, durability and cost. Our principal competitors in ophthalmology are
Lumenis (a subsidiary of ESC Medical Systems and formerly a division of
Coherent, Inc.), Nidek, Inc., Carl Zeiss, Inc., Quantel and Alcon International
and our principal competitors in dermatology are Lumenis, Candela Corporation,
Cynosure, Inc., Laserscope and HGM. Some competitors have substantially greater
financial, engineering, product development, manufacturing, marketing and
technical resources than we do. In addition to other companies that manufacture
photocoagulators, we compete with pharmaceutical solutions, other technologies
and other surgical techniques. Some medical companies, academic and research
institutions or others may develop new technologies or therapies that are more
effective in treating conditions targeted by us or are less expensive than our
current or future products. Any such developments could have a material adverse
effect on our business, financial condition and results of operations.
We Face Risks of Manufacturing. The manufacture of our infrared and
visible light photocoagulators and the related delivery devices is a highly
complex and precise process. Although our OcuLight Systems, DioLite 532 and Apex
800 have been successfully introduced, we continue to face risks associated with
manufacturing these products. Various difficulties may occur despite testing.
Furthermore, we depend on third parties to manufacture substantially all of the
components used in our products and have in the past experienced delays in
manufacturing when a sole source supplier was unable to deliver components in
volume and on a timely basis. Such a problem may reoccur. See " -- We Depend on
Sole Source or Limited Source Suppliers." As a result of these factors, we may
not be able to continue to manufacture our existing products or future products
on a cost-effective and timely basis.
We Depend on Sole Source or Limited Source Suppliers. We rely on third
parties to manufacture substantially all of the components used in our products,
although we assemble critical subassemblies and the
14
final product at our facility in Mountain View, California. Some of our
suppliers are relatively small private companies that may discontinue their
operations at any time. There are risks associated with the use of independent
manufacturers, including unavailability of or delays in obtaining adequate
supplies of components, including optics, laser diodes, and crystals and
potentially reduced control of quality, production costs and timing of delivery.
We may experience difficulty identifying alternative sources of supply for
certain components used in our products. For example, we experienced delays in
shipping our green laser systems (such as the DioLite 532 for dermatology and
the OcuLight GL and GLx for ophthalmology) during the first fiscal quarter of
2001 due to a supply shortage of a key component. We qualified additional
sources for this component during the first fiscal quarter of 2001. The key
component supply shortage was resolved in the second quarter of 2001. The
process of qualifying suppliers is ongoing and may be lengthy, particularly as
new products are introduced. However, we have qualified two or more sources for
most of the components used in our products. In addition, the use of alternate
components may require design alterations which may delay installation and
increase product costs. We have some long term or volume purchase agreements
with our suppliers and currently purchase components on a purchase order basis.
These components may not be available in the quantities required, on reasonable
terms, or at all. Financial or other difficulties faced by our suppliers or
significant changes in demand for these components or materials could limit
their availability. Any failures by such third parties to adequately perform may
delay the submission of products for regulatory approval, impair our ability to
deliver products on a timely basis or otherwise impair our competitive position.
Establishing our own capabilities to manufacture these components would be
expensive and could significantly decrease our profit margins. Our business,
results of operations and financial condition would be adversely affected if we
were unable to continue to obtain components as required at a reasonable cost.
We Depend on International Sales. We derive and expect to continue to
derive a large portion of our revenue from international sales. In 2000 and
1999, our international sales were $11.7 million and $10.2 million, or 35% and
38%, respectively, of total sales. For the nine months ended September 29, 2001
and September 30, 2000, our international sales were $8.2 million and $8.8
million, representing 42% and 35%, respectively, of total sales. Therefore, a
large portion of our revenues will continue to be subject to the risks
associated with international sales. None of our international revenues and
costs have been denominated in foreign currencies. As a result, an increase in
the value of the U.S. dollar relative to foreign currencies makes our products
more expensive and thus less competitive in foreign markets. For example, the
current high U.S. dollar relative value to the European currency (the Euro) is
making our products less competitive in Europe when compared to European
competitors and could negatively impact future sales levels from the region. The
factors stated above could have a material adverse effect on our business,
financial condition or results of operations.
We Depend on Third Party Coverage and Reimbursement Policies. Our
products are typically purchased by doctors, clinics, hospitals and other users,
which bill various third-party payors, such as governmental programs and private
insurance plans, for the health care services provided to their patients.
Third-party payors carefully review and are increasingly challenging the prices
charged for medical products and services. Reimbursement rates paid by
third-party payors may vary depending on the procedure performed, the
third-party payor, the insurance plan and other factors. Medicare reimburses
hospitals on a prospectively determined fixed amount for the costs associated
with an in-patient hospitalization based on the patient's discharge diagnosis.
Medicare reimburses physicians a prospectively-determined fixed amount based on
the procedure performed, regardless of the actual costs incurred by the hospital
or physician in furnishing the care and regardless of the specific devices used
in that procedure. Third-party payors are increasingly scrutinizing whether to
cover new products and the level of reimbursement for covered products.
Doctors, clinics, hospitals and other users of our products may not
obtain adequate reimbursement for use of our products from third-party payors.
Payors may deny coverage and reimbursement for our products if they determine
that the device was not reasonable and necessary for the purpose used, was
investigational or was not
15
cost-effective. For example, during July 2000, Medicare advised that claims for
reimbursement for certain AMD procedures that use our OcuLight SLx laser system
would not be reimbursed. In September 2000, Medicare changed its position and
advised that claims for reimbursement for these AMD procedures can be submitted
for reimbursement, with coverage and payment to be determined by the local
Medicare carriers at their discretion. Although one medicare carrier for eleven
U.S. states has published its decision to cover these procedures, a large
percentage of carriers has not. As a result, since July 2000, sales of the
OcuLight SLx laser system have dropped significantly. Sales of the OcuLight SLx
continue, albeit at a lower level, because the OcuLight SLx can also be used for
other ophthalmic procedures with Medicare reimbursement. Furthermore, since
Medicare policies apply only to third party Medicare payors, they are not likely
to affect international sales. We believe domestic sales of the OcuLight SLx
laser system will continue to be negatively impacted by this decision until more
local Medicare carriers elect to cover and reimburse for performing such AMD
procedures or until Medicare advises that claims for these procedures are
covered and reimbursable. If additional medicare carriers do not elect to cover
and reimburse for performing these procedures or if Medicare does not advise
that claims for these procedures are reimbursable, our business, financial
condition and results of operation will be harmed. The Company is supporting a
randomized clinical trial which may further validate Transpupillary
thermotherapy, the most significant of the subject AMD procedures.
We have developed a new laser system with Miravant, the OcuLight 664.
Miravant may not be able to obtain coverage for its use of drugs with our
OcuLight systems, or the reimbursement may not be adequate to cover the
treatment procedure.
Changes in government legislation or regulation or in private
third-party payors' policies toward reimbursement for procedures employing our
products may prohibit adequate reimbursement. Denial of coverage and
reimbursement for our products could have a material adverse effect on our
business, results of operations and financial condition. We are unable to
predict what legislation or regulation, if any, relating to the health care
industry or third-party coverage and reimbursement may be enacted in the future,
or what effect such legislation or regulation may have on us.
Most of the treatment procedures for dermatology using our DioLite 532
laser systems are billed to private-pay customers. Accordingly, reimbursement
issues for our dermatology systems are insignificant.
Our Operating Results Fluctuate from Quarter to Quarter. Our sales and
operating results have varied substantially on a quarterly basis and may
continue to vary in the future. Our operating results are affected by a number
of factors, many of which are beyond our control. Factors contributing to these
fluctuations include the following:
- The timing of the introduction and market acceptance of new products,
product enhancements and new applications;
- The cost and availability of components and subassemblies;
- Changes in our pricing and our competitors;
- Our long and highly variable sales cycle;
- Changes in customers' or potential customers' budgets; and
- Increased product development costs.
16
In addition to these factors, our quarterly results have been and are expected
to continue to be affected by seasonal factors.
Our expense levels are based, in part, on expected future sales. If
sales levels in a particular quarter do not meet expectations, we may be unable
to adjust operating expenses quickly enough to compensate for the shortfall of
sales, and our results of operations may be adversely affected. In addition, we
have historically made a significant portion of each quarter's product shipments
near the end of the quarter. If that pattern continues, any delays in shipment
of products could have a material adverse effect on results of operations for
such quarter. As a result of the above factors, sales for any future quarter are
not predictable with any significant degree of accuracy and operating results in
any period should not be considered indicative of the results to be expected for
any future period. There can be no assurance that we will remain profitable in
the future or that operating results will not vary significantly.
We Depend on Development of New Products and New Applications. Our
future success is dependent upon, among other factors, our ability to develop,
obtain regulatory approval of, manufacture and market, new products, such as the
Apex 800 hair removal laser system. In addition, we must successfully sell and
achieve market acceptance of new products and applications and enhanced versions
of existing products. The extent of, and rate at which, market acceptance and
penetration are achieved by future products is a function of many variables.
These variables include price, safety, efficacy, reliability, marketing and
sales efforts, the development of new applications for these products and
general economic conditions affecting purchasing patterns. Any failure in our
ability to successfully develop and introduce new products, such as the Apex
800, or enhanced versions of existing products, could have a material adverse
effect on our business, operating results and financial condition. We are
seeking to expand the market for our existing and new products by working with
clinicians and third parties to identify new applications and procedures for our
products. Failure to develop and achieve market acceptance of new applications
or new products would have a material adverse effect on our business, results of
operations and financial condition.
We Must Manage Growth. We have experienced, and may continue to
experience growth in production, the number of employees, the scope of our
business, our operating and financial systems and the geographic area of our
operations. This growth has resulted in new and increased responsibilities for
management personnel and our operating, inventory and financial systems. To
effectively manage future growth, if any, we have been required to continue to
implement and improve operational, financial and management information systems,
procedures and controls. We implemented a new enterprise-wide management
information system in 1998. We must also expand, train, motivate and manage our
work force. Our personnel, systems, procedures and controls may not be adequate
to support our existing and future operations. Any failure to implement and
improve our operational, financial and management systems or to expand, train,
motivate or manage employees could have a material adverse effect on our
business, results of operations and financial condition.
We Depend on Collaborative Relationships. We have entered into
collaborative relationships with academic medical centers and physicians in
connection with the research and development and clinical testing of our
products. We plan to collaborate with third parties to develop and commercialize
existing and new products. In May 1996, we executed an agreement with Miravant
Medical Technologies, a maker of photodynamic drugs, to collaborate on a device
that emits a laser beam to activate a photodynamic drug developed by Miravant
for the treatment of wet AMD. The development and support of this new
photodynamic system will require significant financial and other resources. This
collaborative development effort may not continue or it may not result in the
successful development and introduction of a photodynamic system and the amount
and timing of resources to be devoted to these activities are not within our
control. Additionally, our reliance on others for clinical development,
manufacturing and distribution of our products may result in unforeseen
problems. Further, our collaborative partners may develop or pursue alternative
technologies either on their own or in collaboration with
17
others. The failure of any current or future collaboration efforts could have a
material adverse effect on our ability to introduce new products or applications
and therefore could have a material adverse effect on our business, results of
operations and financial condition.
We Rely on Patents and Proprietary Rights. Our success and ability to
compete is dependent in part upon our proprietary information. We rely on a
combination of patents, trade secrets, copyright and trademark laws,
nondisclosure and other contractual agreements and technical measures to protect
our intellectual property rights. We file patent applications to protect
technology, inventions and improvements that are significant to the development
of our business. We have been issued eleven United States patents on the
technologies related to our products and processes. Our patent applications may
not issue as patents, any patents now or in the future may not offer any degree
of protection, or our patents or patent applications may be challenged,
invalidated or circumvented in the future. Moreover, our competitors, many of
which have substantial resources and have made substantial investments in
competing technologies, may seek to apply for and obtain patents that will
prevent, limit or interfere with our ability to make, use or sell our products
either in the United States or in international markets.
In addition to patents, we rely on trade secrets and proprietary
know-how which we seek to protect, in part, through proprietary information
agreements with employees, consultants and other parties. Our proprietary
information agreements with our employees and consultants contain industry
standard provisions requiring such individuals to assign to us without
additional consideration any inventions conceived or reduced to practice by them
while employed or retained by us, subject to customary exceptions. Proprietary
information agreements with employees, consultants and others may be breached,
and we may not have adequate remedies for any breach. Also our trade secrets may
become known to or independently developed by competitors.
The laser and medical device industry is characterized by frequent
litigation regarding patent and other intellectual property rights. Companies in
the medical device industry have employed intellectual property litigation to
gain a competitive advantage. Numerous patents are held by others, including
academic institutions and our competitors. Because patent applications are
maintained in secrecy in the United States until patents are issued and are
maintained in secrecy for a period of time outside the United States, we have
not conducted any searches to determine whether our technology infringes any
patents or patent applications. We have from time to time been notified of, or
have otherwise been made aware of, claims that we may be infringing upon patents
or other proprietary intellectual property owned by others. If it appears
necessary or desirable, we may seek licenses under such patents or proprietary
intellectual property. Although patent holders commonly offer such licenses,
licenses under such patents or intellectual property may not be offered or the
terms of any offered licenses may not be reasonable. This may adversely impact
our operating results.
Any claims, with or without merit, could be time-consuming, result in
costly litigation and diversion of technical and management personnel, cause
shipment delays or require us to develop noninfringing technology or to enter
into royalty or licensing agreements. Although patent and intellectual property
disputes in the medical device area have often been settled through licensing or
similar arrangements, costs associated with such arrangements may be substantial
and could include ongoing royalties. An adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, results of operations and financial condition.
Conversely, litigation may be necessary to enforce patents issued to us, to
protect trade secrets or know-how owned by us or to determine the
enforceability, scope and validity of the proprietary rights of others. Both the
defense and prosecution of intellectual property suits or interference
proceedings are costly and time consuming.
18
We Are Subject To Government Regulation. The medical devices that we
market and manufacture are subject to extensive regulation by the FDA and by
foreign and state governments. Under the FDA Act and the related regulations,
the FDA regulates the design, development, clinical testing, manufacture,
labeling, sale, distribution and promotion of medical devices. Before a new
device can be introduced into the market, the manufacturer must obtain market
clearance through either the 510(k) premarket notification process or the
lengthier premarket approval ("PMA") application process. Obtaining these
approvals can take a long time and delay the introduction of a product. For
example, the introduction of the OcuLight GL in the United States was delayed
about three months from our expectations due to the longer than expected time
period required to obtain FDA premarket clearance. Noncompliance with applicable
requirements, including Quality System Regulations ("QSRs"), can result in,
among other things, fines, injunctions, civil penalties, recall or seizure of
products, total or partial suspension of production, failure of the government
to grant premarket clearance or premarket approval for devices, withdrawal of
marketing approvals, and criminal prosecution. The FDA also has the authority to
request repair, replacement or refund of the cost of any device we manufacture
or distribute. Our failure to obtain government approvals or any delays in
receipt of such approvals would have a material adverse effect on our business,
results of operations and financial condition.
International regulatory bodies often establish varying product
standards, packaging requirements, labeling requirements, tariff regulations,
duties and tax requirements. As a result of our sales in Europe, we are required
to have all products "CE" registered, an international symbol affixed to all
products demonstrating compliance to the European Medical Device Directive and
all applicable standards. In July 1998, we received CE registration under Annex
II guidelines, the most stringent path to CE registration. With Annex II CE
registration, we have demonstrated our ability to both understand and comply
with all applicable European standards. This allows us to register any product
upon our internal verification of compliance to all applicable European
Standards. Currently all released IRIDEX products are CE registered. Continued
registration is based on successful review of the process by our European
Registrar during their annual audit. Any loss of registration would have a
material adverse effect on our business, results of operations and financial
condition.
We Face Product Liability Risks. We may be subject to product liability
claims in the future. Our products are highly complex and are used to treat
extremely delicate eye tissue and skin conditions on and near a patient's face.
Product defects or the improper use of our products could cause blindness,
eyesight damage or skin damage. In addition, although we recommend that our
disposable products only be used once and so prominently label these
disposables, we believe that certain customers may nevertheless reuse these
disposable products. Accordingly, the manufacture and sale of medical products
entails significant risk of product liability claims. Although we maintain
product liability insurance with coverage limits of $11.0 million per occurrence
and an annual aggregate maximum of $12.0 million, our coverage from our
insurance policies may not be adequate. Such insurance is expensive and in the
future may not be available on acceptable terms, if at all. A successful claim
brought against us in excess of our insurance coverage could have a material
adverse effect on our business, results of operations and financial condition.
To date, we have not experienced any product liability claims which would result
in payments in excess of our policy limits.
Our Stock Price is Volatile. The trading price of our Common Stock has
been subject to wide fluctuations in response to a variety of factors since our
initial public offering in February 1996. Volatility in price and volume has had
a substantial effect on the market prices of many technology companies for
reasons unrelated or disproportionate to the operating performance of such
companies. These broad market fluctuations could have a significant impact on
the market price of our Common Stock.
19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
For the three and nine month periods ended September 29, 2001, there
has been no material change to the disclosure made in the 2000 Form 10-K.
20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b Reports on Form 8-K
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRIDEX Corporation
(Registrant)
Date: November 13, 2001 By: /s/ Robert Kamenski
------------------------------
Robert Kamenski
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
22