As filed with the U.S. Securities and Exchange Commission on September 6, 2001
REGISTRATION NO. 333-68942
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT 1
to
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LASIK AMERICA, INC.
(Name of Small Business Issuer in its charter)
NEVADA 8741 88-0490720
---------------------------- ----------------- ----------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Classification Identification
incorporation or organization) Code Number) Number)
-------------------------------
6646 INDIAN SCHOOL ROAD, N.E.
ALBUQUERQUE, NEW MEXICO 87110
505-837-2020
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL
EXECUTIVE OFFICES)
--------------------------------------------------
HOWARD P. SILVERMAN, CHIEF EXECUTIVE OFFICER
LASIK AMERICA, INC.
6646 INDIAN SCHOOL ROAD, N.E.
ALBUQUERQUE, NEW MEXICO 87110
505-837-2020
(Name, Address, And Telephone Number Of Agent For Service)
------------------------------------------------------------------
COPIES TO:
GREGORY BARTKO, ESQ.
Law Office of Gregory Bartko
3475 Lenox Road, Suite 400
Atlanta, Georgia 30326
(404) 238-0550 (telephone)
(404) 238-0551 (facsimile)
------------------------
1
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /__________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /__________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /__________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: / /__________________
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CALCULATION OF REGISTRATION FEE
PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) FEE
- ---------------------------- ------------- -------------- --------------- ---
Units, comprised of one share of common stock, par value $.001 per share and one
redeemable common stock purchase warrant, each warrant to purchase one share of
common stock
(2)(3)...................... 550,000 $6.10 $3,355,000 $833.75
Common stock underlying
redeemable warrants included
in the units (3)............ 550,000 $7.20 $3,960,000 $990.00
Representative's warrants(3). 42,500 $.001 $ --- $ 42.50
2
Common stock issuable upon
exercise of the
representative's warrants(4). 42,500 $9.90 $ 420,750 $105.19
Redeemable warrants issuable
upon exercise of the
representative's warrants(4). 42,500 $.165 $ 7,013 $ 1.75
Common stock issuable on
exercise of redeemable
warrants included in the
representative's warrants(2). 42,500 $9.90 $ 420,750 $105.19
Total................... --- --- $8,163,513 $2,078.38
========== =========
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act.
(2) Includes 125,000 shares of common stock beneficially owned by Howard P.
Silverman, selling shareholder, that are registered for resale in this
registration statement.
(3) Includes 125,000 redeemable common stock purchase warrants beneficially
owned by Howard P. Silverman, selling shareholder, that are registered for
resale in this registration statement.
(4) No registration fee is required pursuant to Rule 457 of the Securities
Act.
(5) Pursuant to Rule 416, we are registering additional securities as may
become issuable pursuant to the anti-dilution provisions of the redeemable
warrants, the representative's warrants and the redeemable warrants
underlying the representative's warrants.
3
SUBJECT TO COMPLETION, DATED SEPTEMBER ___, 2001
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
LASIK AMERICA, INC.
425,000 UNITS
This is an initial public offering by us of 425,000 units of LASIK
America, Inc., each unit consists of one share of common stock and one
redeemable common stock purchase warrant, each warrant exercisable to purchase
one share of common stock. This prospectus also includes the offer and resale of
125,000 units on behalf of a selling shareholder identified in this prospectus.
Proceeds from the units sold on behalf of the selling shareholder will not be
received by us, rather all proceeds from those units will be received by the
selling shareholder, who is our chief executive officer.
Before this offering, there has been no public market for any of our
securities. We anticipate that the initial public offering price will be $6.10
per unit, which consists of $6.00 per share of common stock and $.10 per
warrant. The common stock and the warrants will trade as separate securities
immediately upon the completion of this offering.
Please see the risk factors beginning on page 5 to read about factors
you should consider before buying any of our securities.
Neither the United States 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.
Per Unit Total
-------- --------
o Price to the public..................... $6.10 $2,592,500
o Underwriting discounts and commissions.. $0.79 $ 335,750
o Proceeds, before expenses,
to LASIK America..................... $5.31 $2,256,750
o Proceeds, before expenses, to the
selling shareholder................... $5.31 $ 663,750
Delivery of the securities offered by this prospectus will be made on or
about September , 2001. The underwriters are offering the units on a best
efforts basis.
The information in this prospectus is not complete and may be changed. We
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 we are not soliciting an offer to buy these
securities, in any state where the offer and sale is not permitted.
WEST AMERICA SECURITIES CORP.
Prospectus dated September , 2001
1
Table of contents
Page No.
--------
Prospectus summary.......................................... 2
Risk factors................................................ 5
Cautionary note regarding forward-looking statements........ 10
Use of proceeds............................................. 11
Dividend policy............................................. 12
Capitalization.............................................. 12
Dilution.................................................... 13
Selected financial data..................................... 14
Management's discussion and analysis of financial condition
and results of operations................................. 15
Business.................................................... 18
Management.................................................. 29
Certain transactions........................................ 33
Principal stockholders and the selling shareholder.......... 33
Description of securities................................... 35
Shares eligible for future sale............................. 38
Underwriting................................................ 39
Plan of distribution for selling shareholder................ 43
Legal matters............................................... 44
Experts..................................................... 44
Index to financial statements............................... F-1
1
Prospectus summary
This summary highlights information contained elsewhere in this prospectus.
Investors should read the entire prospectus carefully, including the financial
statements which are a part of this prospectus.
Our business
LASIK America, Inc. provides laser vision correction procedures to
individuals at our center in Albuquerque, New Mexico. Our ophthalmologist and
those with which we are affiliated, provide these services using
state-of-the-art excimer laser technology.
Corporate background
On March 21, 2001, we formed our company as a Nevada corporation. Our
executive office is located at 6646 Indian School Road, N.E., Albuquerque, New
Mexico and our telephone number is (505) 837-2020. In this prospectus, "LASIK
America", "we", "us" and "our" refer to LASIK America, Inc.
The offering
Securities that we are offering.............. 425,000 units, each unit
consisting of one share of
common stock and one common stock
purchase warrant, each warrant
exercisable to purchase one share
of common stock at an exercise
price of $7.20 per share;
Securities offered on behalf of
the selling shareholder.................... 125,000 units offered for resale;
Common stock outstanding before this
offering................................... 2,082,043 shares;
Common stock to be outstanding after
this offering.............................. 2,507,043 shares;
Redeemable common stock purchase warrants
outstanding before this offering........... 125,000 warrants;
Redeemable common stock purchase warrants
to be outstanding after this offering...... 550,000 redeemable common stock
purchase warrants included as a
part of the units offered by this
prospectus;
Use of proceeds.............................. Laser and refractive equipment;
office build-out expenditures;
expenses associated with one new
center; advertising; accounts
payable; working capital and
general corporate purposes, which
includes offering expenses,
salaries, cost of additional
personnel, support and management
systems, capital costs for
computers and related equipment.
Proposed Over-the-Counter
Electronic Bulletin Board symbols
Common stock ........................... "LASK"
Redeemable warrants..................... "LASK W"
Unless stated otherwise, all information in this prospectus assumes:
o an initial public offering price of $6.10 per unit; and
o the exercise of 42,500 representative's warrants and the issuance of
the securities underlying the warrants.
Summary financial data
The following table summarizes the financial data of our business. This
information is qualified by reference to, and should be read together with, the
historical financial data for the period March 21, 2001 (inception) through July
31, 2001 and should be read in conjunction with our audited financial statements
included elsewhere in this prospectus. The historical financial data as of July
31, 2001 is derived from and should be read in conjunction with our audited
financial statements included elsewhere in this prospectus. The data presented
below should also be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and accompanying notes appearing elsewhere in this prospectus.
March 21, 2001 (inception)
through July 31, 2001
---------------------------
Statement of operations data:
Revenues................................... $ 184,040
Cost of revenues........................... 79,353
Operating costs and expenses............... 12,609,640
----------
Loss from operations....................... (12,504,953)
Interest expense........................... (3,884)
----------
Net loss.................................. $(12,508,837)
============
Basic and diluted net loss per share....... $(6.01)
==========
Shares used in computing basic and diluted
net loss per share....................... 2,082,043
==========
The following table includes a summary of our balance sheet at July 31, 2001;
o on an actual basis; and
o on an as adjusted basis giving effect:
3
o to the issuance of 425,000 units, consisting of one share of common
stock and one redeemable common stock purchase warrant , offered by us
at an offering price of $6.10 per unit, or $6.00 per share and $.10
per warrant.
Balance sheet data:
July 31, 2001 As
actual adjusted
----------- ----------
Cash and cash equivalents................ $ 19 $ 2,256,769
Total working capital (deficit).......... (178,032) 2,078,718
Total assets............................. 229,712 2,486,462
Current portion of long
term liabilities...................... 110,263 110,263
Long term debt........................... 105,820 105,820
Total liabilities........................ 293,791 293,791
Total shareholders' (deficit) equity..... (64,079) 2,192,671
4
Risk factors
The purchase of our securities involves a high degree of risk.
Accordingly, each prospective purchaser, before placing an order for any units,
should carefully read this prospectus in its entirety and should consider the
following risks and speculative features inherent in and affecting this offering
and our business, as well as general investment risks. An investment in our
securities should be made only by persons who can afford an investment involving
such risks and is suitable only for persons able to sustain the loss of their
entire investment.
WE BEGAN PROVIDING OUR SERVICES IN MAY 2001 AND HAVE A VERY BRIEF AND
LIMITED OPERATING HISTORY UPON WHICH YOU MAY EVALUATE OUR BUSINESS AND
PROSPECTS. Since we started providing our services in May 2001, we have a
limited operating history. As a result, we have a limited basis upon which you
may evaluate our business and prospects. Our prospects must be considered in
light of the risks, expenses, delays, problems and difficulties frequently
experienced by early stage companies.
WE HAVE INCURRED NET LOSSES SINCE COMMENCING OUR BUSINESS AND EXPECT
LOSSES FROM OPERATIONS IN THE FUTURE. We have not achieved profitability and
expect to continue to incur operating losses for the foreseeable future. For the
period from the commencement of our operations (March 21, 2001) until July 31,
2001, our net loss was $12,508,837 and our accumulated deficit at that same date
was $12,508,837. We expect to continue to incur significant operating and
capital expenditures and, as a result, we expect significant net losses in the
future and we will need to generate significant revenues to achieve and maintain
profitability. We will continue to need additional capital in order to
effectuate our business plan and meet our operational challenges.
IF WE ARE UNABLE TO COMPLETE OUR PUBLIC OFFERING, ALTERNATE FUNDING
WILL BE NEEDED AND WE WILL HAVE TO MODIFY OUR BUSINESS OPERATIONS ACCORDINGLY.
Based on our current operating plan, we anticipate that the net proceeds of this
offering and cash provided by operations will allow us to meet our cash and
capital requirements for at least 12 months following the date of this
prospectus. Our accountants have included in a note in their report that our
financial statements have been prepared assuming we will continue as a going
concern. If appropriate financing is not obtained by us through our public
offering, we intend to modify our operations accordingly. We may require
additional funding sooner than anticipated. If we raise additional capital
through the sale of equity, including preferred stock, or convertible debt
securities, our stockholders may experience dilution.
We currently do not have a credit facility or any commitments for
additional financing. We cannot be certain that additional financing will be
available when and to the extent required. If adequate funds are not available
on acceptable terms, we may be unable to fund our expansion, develop or enhance
our services or respond to competitive pressures.
OUR MANAGEMENT WILL HAVE BROAD DISCRETION TO ALLOCATE THE OFFERING
PROCEEDS AND YOU WILL LIKELY HAVE NO VOICE AS TO HOW OUR MANAGEMENT WILL USE
THESE NET PROCEEDS. We expect to use total net proceeds of approximately
$2,256,750 for the purposes described under "Use of Proceeds." Our management
will have broad discretion to allocate the proceeds of this offering, including
5
proceeds currently specifically allocated as described in this prospectus, and
any other cash resources to such uses as they determine to be in our best
interests. The amounts actually allocated to each expense category and the
source of the cash so allocated, may vary significantly, depending on a number
of factors, including the amount of future revenue growth, the amount of cash
generated or used by our operations and the success of our marketing efforts for
our laser vision correction procedures.
A SIGNIFICANT AMOUNT OF THE NET PROCEEDS OF THIS OFFERING MAY BE USED
TO BENEFIT OUR MANAGEMENT AND OTHER INSIDERS. The allocation of the net proceeds
from this offering includes approximately 26.4% for working capital and general
corporate purposes and 11.1% for the payment of outstanding accounts payable.
Substantial amounts of our working capital will be applied towards the payment
of salaries and related costs of our management personnel. Accordingly,
substantial amounts of the net proceeds we receive from this offering may
ultimately be used to benefit our officers, consultants or other insiders.
SINCE THE LASER REFRACTIVE SURGERY MARKET IS RELATIVELY NEW, WE DO NOT
KNOW IF OUR SERVICES WILL GENERATE WIDE SPREAD MARKET ACCEPTANCE. The commercial
market for laser refractive surgery in the United States is relatively new and
we do not know if these procedures will generate widespread market acceptance.
Several factors may contribute to refractive surgery not achieving broad market
acceptance, which include:
o cost of the procedure;
o effectiveness of conventional eye correction technologies including
eye glasses and contact lenses;
o general resistance to surgery;
o availability of other surgical techniques;
o the short history of laser refractive surgery in the United States;
o side effects; and
o any resistance by third-party payors to reimburse patients for
elective laser vision correction.
POTENTIAL SIDE EFFECTS AND NEGATIVE LONG-TERM RESULTS OF LASER
REFRACTIVE SURGERY COULD DAMAGE THE DEMAND FOR OUR SERVICES. There are concerns
about the safety and efficacy of the performance of laser refractive surgery.
These concerns include:
o the predictability and stability of results;
o complications and side effects including:
o post-operative pain;
o corneal haze during healing;
o glare/halos;
6
o decrease in contrast sensitivity;
o temporary increases in intraocular pressure in reaction to
post-procedure medication;
o modest fluctuations in astigmatism and modest decreases in best
corrected vision;
o loss of fixation during the procedure;
o unintended over-or under-corrections; instability, reversion or
regression of effect; and
o corneal scars, corneal ulcers, and corneal healing disorders.
The occurrence of any of these or any other complications may damage
the demand for the services we offer.
THE TECHNOLOGIES WE USE IN OUR LASER VISION CORRECTION PROCEDURES ARE
SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND COULD CAUSE US TO MAKE SIGNIFICANT
CAPITAL INVESTMENT IN NEW EQUIPMENT. Our market is characterized by rapid
technological changes. Newer technologies, techniques or products for the
treatment of refractive vision disorders, could be developed with better
performance than the excimer lasers that we currently use. The availability of
new and better ophthalmic laser technologies or other surgical or non-surgical
methods for correcting refractive vision disorders could require us to make
significant investments in technology, render our current technology obsolete
and have a significant negative impact on our business and results of
operations.
WE MAY NOT COMPETE EFFECTIVELY WITH OTHER EYE CARE SERVICES COMPANIES
THAT HAVE MORE RESOURCES AND EXPERIENCE THAN WE DO. Many of our competitors have
substantially greater financial, technical, managerial, marketing, and other
resources than we do may compete more effectively than we can. We compete with
Laser Vision Centers, Inc., LCA Vision, Aris Vision, NovaMed Eyecare Management,
LLC, TLC The Laser Center, Inc., Clear Vision Laser Centers, Inc., and other
entities, including other refractive laser center companies, hospitals,
individual ophthalmologists and optometrists, other surgery and laser centers,
eye care clinics and providers of retail optical products in offering our
services and products. Our surgical procedures compete with other surgical and
non-surgical treatments for refractive disorders, including eyeglasses, contact
lenses, other types of refractive surgery, such as radial keratotomy, and
technologies currently under development. If our competitors offer laser vision
correction or other refractive surgery services at lower prices than we do, we
may have to lower the prices we charge, which will adversely affect our results
of operations.
THE DEMAND FOR OUR LASER REFRACTIVE SURGERY PROCEDURES MAY BE ADVERSELY
AFFECTED BY HEALTH CARE REFORM INITIATIVES. The continuing effort of government
regulators of health care services to contain or reduce the costs of health care
may reduce our revenues and profitability by increasing our regulatory burden or
increasing our administrative costs associated with delivering services to our
customers. We cannot predict the effect that health care reforms may have on our
business, and it is possible that any reforms will hurt our business.
7
SIGNIFICANT DECREASES IN EXCIMER LASER PRICES COULD HARM OUR BUSINESS
BY MAKING IT MORE ATTRACTIVE FOR EYE SURGEONS TO BUY THEIR OWN LASERS AND FORCE
US TO LOWER OUR PRICES. significant reduction in the price of excimer lasers
could reduce the demand for our services by making it economically more
attractive for eye surgeons to buy excimer lasers for themselves instead of
utilizing our centers. Also, excimer laser price decreases could force us to
reduce our fees in response to this reduction in demand or as a means to remain
competitive with other laser providers.
WE ARE DEPENDENT UPON A LIMITED NUMBER OF SUPPLIERS FOR OUR LASER
SURGERY EQUIPMENT AND WE DON'T HAVE A CONTINGENCY PLAN FOR ALTERNATIVE
SUPPLIERS, SO IF ANY OF THESE SUPPLIERS WERE UNABLE OR UNWILLING TO MEET OUR
NEEDS, WE MAY NOT BE ABLE TO EQUIP OUR CENTER WITH THE APPROPRIATE TECHNOLOGY.
We are dependent on a small number of manufacturers for our supply of ophthalmic
lasers. To our knowledge, five companies, Bausch & Lomb, Nidek, Summit
Technologies, Inc., Autonomous Technologies Corporation and VISX, Inc. have been
approved by the United States Food and Drug Administration for commercial sale
of excimer lasers in the U. S. If any of these manufactures were for any reason
to discontinue commercial sale of ophthalmic lasers, or be unwilling or unable
to meet our needs, we may not be able to equip our centers with the appropriate
technology.
WE MAY BE FORCED TO ALTER THE WAY WE MARKET OUR SERVICES AND THE MANNER
IN WHICH WE ENTER INTO RELATIONSHIPS WITH OUR EQUIPMENT PROVIDERS, SERVICE
PROVIDERS, OPHTHALMOLOGISTS, OPTOMETRISTS, AND OTHER HEALTH CARE PROVIDERS AS A
RESULT OF GOVERNMENT REGULATIONS. We are subject to extensive federal, state,
local and foreign laws, rules and regulations, including:
o restrictions on the approval, distribution, and use of medical
devices;
o anti-kickback statutes;
o fee-splitting laws;
o corporate practice of medicine and optometric restrictions;
o self-referral laws;
o anti-fraud provisions;
o facility license requirements and certificates of need;
o conflict of interest regulations; and
o sales and use taxes
Many of these laws and regulations are ambiguous, and courts and
regulatory authorities have provided little clarification. Moreover, state and
local laws vary from jurisdiction to jurisdiction. As a result, we may not
always be able to accurately interpret applicable law, and some of our
activities could be challenged.
Failure to comply with applicable FDA requirements could subject us,
and the ophthalmologists who use our centers to enforcement actions, including
8
product seizure, recalls, withdrawal of approvals and civil and criminal
penalties. Further, failure to comply with regulatory requirements, or any
adverse regulatory action could result in limitations or prohibitions on our use
of excimer lasers. See "Business--Government regulation."
OUR MANAGEMENT WILL CONTROL APPROXIMATELY 44.5% OF OUR COMMON STOCK
AFTER THIS OFFERING AND THEIR INTERESTS MAY BE DIFFERENT FROM AND CONFLICT WITH
YOURS AND AS A RESULT, YOU MAY HAVE NO EFFECTIVE VOICE IN OUR MANAGEMENT,
INCLUDING THE ELECTION OF DIRECTORS AND THE APPROVAL OF SIGNIFICANT CORPORATE
TRANSACTIONS. Following this offering, our executive officers and directors will
beneficially own or control a total of approximately 44.5% of our outstanding
common stock, assuming no exercise of the redeemable common stock purchase
warrants. Accordingly, if our management acts together, they have the power to
control the election of all of our directors and the approval of significant
corporate transactions for which the approval of our stockholders is required.
If you purchase our securities, you may have no effective voice in our
management.
PROVIDING LASER SURGERY PROCEDURES AND RELATED EYE CARE SERVICES ON OUR
PATIENTS COULD SUBJECT US TO MALPRACTICE, PRODUCT LIABILITY, AND OTHER CLAIMS
WHICH COULD EXCEED OUR INSURANCE COVERAGE OR FORCE US TO OBTAIN CASUALTY
INSURANCE WHICH MAY NOT BE AVAILABLE AT COMMERCIALLY REASONABLE RATES. Providing
our services to our patients subjects us to the potential that significant
physical injury will occur to patients at our centers and the resulting risk of
malpractice, product liability and other claims. Our insurance may not be
adequate to satisfy claims or protect us or our affiliated providers against
these claims. Furthermore, our insurance coverage may not continue to be
available at acceptable costs and terms.
WE ARE NOT LICENSED TO PRACTICE MEDICINE OR OPTOMETRY, SO IN ORDER FOR
US TO DELIVER OUR EYE CARE SERVICES, WE ARE DEPENDENT, IN PART, UPON OUR
RELATIONSHIPS WITH OUR MEMBER-PHYSICIANS AND OPTOMETRISTS AND OUR ABILITY TO
ENTER INTO AFFILIATIONS WITH LICENSED MEDICAL AND OPTOMETRIC PROFESSIONALS.
Since we do not practice medicine or optometry, our activities are limited to
establishing centers at which ophthalmologists and other eye care professionals
that we employ, and others with whom we've established affiliations, render eye
care services. Accordingly, our success depends upon our ability to attract
talented physicians that we desire to employ and our ability to develop
relationships with affiliated physicians and to enter into agreements with
health care providers, including institutions, independent physicians and
optometrists, to render surgical and other professional services at centers
owned or managed by us. There can be no assurance that we will be able to enter
into these agreements with health care providers on satisfactory terms, if at
all. Our inability to enter into these affiliations would likely limit our
revenues, our services, and our ability to expand our operations.
WE FINANCE THE PURCHASES OF OUR LASER SURGERY EQUIPMENT WHICH INCREASES
OUR LEVERAGE AND FINANCE COSTS AND IF WE DO NOT SATISFY OUR DEBT PAYMENTS WHEN
DUE, WE MAY BE FORCED TO FORFEIT OUR EQUIPMENT. We finance the purchases of our
excimer laser equipment. The use of leverage to finance our equipment increases
our risk of loss as opposed to if we borrowed a smaller portion or none of the
purchase price of this equipment. Our risk is increased because we must satisfy
these obligations on specific dates, regardless of our revenues. If we do not
9
meet our debt service payments when due, we may be forced to forfeit the
equipment securing the debt.
WE NEED THE CONTINUED AVAILABILITY OF THE EXPERTISE AND STRATEGIC
PLANNING OF OUR CHIEF EXECUTIVE OFFICER, HOWARD P. SILVERMAN AND OTHER KEY
PERSONNEL EXPERIENCED IN THE LASER REFRACTIVE SURGERY INDUSTRY. We believe that
the efforts and industry knowledge of our senior management, key employees and
contractors, particularly that of our chief executive officer, Howard P.
Silverman, in the laser refractive surgery industry, are essential to our
operations and growth. Dr. Silverman is responsible for our strategic planning,
and the loss of his services would have an adverse affect on our long-term
operations. We have not, at this date, entered into any employment agreement
with Dr. Silverman, nor have we obtained key man life insurance on Dr.
Silverman's life. If we do not succeed in retaining or motivating our current
personnel or in hiring additional qualified employees, our business will be
materially adversely affected. In addition, competition for personnel in our
industry, including the doctors who perform our services, is intense and there
can be no assurance that we will be able to attract and retain the necessary
personnel.
OUR INABILITY TO LIST OUR SECURITIES ON A NATIONAL SECURITIES EXCHANGE
MAY IMPAIR OUR ABILITY TO DEVELOP A PUBLIC MARKET FOR OUR SECURITIES. We have
not made an application to list the units, our common stock, or the redeemable
common stock purchase warrants on any national securities exchange. Our
inability to list our securities on a national securities exchange may impair
our ability to develop a liquid and orderly market in our securities after this
offering is completed. Further, the prices and volume of trading in our
securities may be adversely affected since our securities will not be listed on
a national securities exchange.
Our underwriter lacks experience as an underwriter of securities in
public offerings, and this lack of experience may impair our ability to develop
a public market for our common stock. The representative of the underwriters has
not conducted, managed or co-managed public underwritings of securities except
only in a limited number of situations involving the public offering of
securities. This lack of experience may impair our ability to develop a public
market for our securities. We can give no assurances that the representative of
the underwriters will be able to act as a market maker or that any broker-dealer
will become a market maker in our securities. If there are no market makers for
our securities, or if only a few market makers choose to act as such for our
securities, then the market price of our common stock and the redeemable common
stock purchase warrants could be adversely affected.
Cautionary note regarding forward looking statements
This prospectus contains forward-looking statements. These
forward-looking statements are not historical facts, but rather are based on our
current expectations, estimates, and projections about our industry, our beliefs
and assumptions. Words including "may," "could," "would," "will," "anticipates,"
"expects," "intends," "plans," "projects," "believes," "seeks," "estimates," and
similar expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
10
those expressed or forecasted in the forward-looking statements. These risks and
uncertainties are described in "Risk Factors" and elsewhere in this prospectus.
We caution you not to place undue reliance on these forward-looking statements,
which reflect our management's view only as of the date of this prospectus. We
are not obligated to update these statements or publicly release the result of
any revisions to them to reflect events or circumstances after the date of this
prospectus or to reflect the occurrence of unanticipated events.
Use of proceeds
We estimate that we will receive net proceeds of approximately
$2,256,750 from our sale of the 425,000 units offered by this prospectus,
assuming an initial public offering price of $6.10 per unit. These amounts are
after deducting estimated underwriting discounts and commissions, and after fees
and expenses of approximately $335,750, payable by us. None of the proceeds of
sale of the 125,000 units offered by the selling shareholder will be received by
us. We intend to use the net proceeds as follows:
Net Percent
proceeds of total
----------- --------
Laser and refractive equipment ........................ $ 600,000 26.6%
Office build-out expenditures.......................... 85,000 3.8%
Expenses of opening new center......................... 650,000 28.8%
Advertising............................................ 75,000 3.3%
Accounts payable and offering expenses................. 250,000 11.1%
Working capital and general corporate purposes which
includes salaries, cost of additional personnel,
support and management systems, capital costs for
computers and related equipment..................... 596,750 26.4%
---------- ------
Total.............................................. $2,256,750 100 %
========== ======
Proceeds allocated to advertising will include the costs of newspaper,
radio, television, and other media spots designed to increase public awareness
of our laser vision correction surgery procedures and the benefits of the
procedures for our customers.
Expenses of opening one additional new center in a location to be
determined, office build-out expenditures and laser and refractive equipment
relate to build out expenses in our Albuquerque center, consisting primarily of
construction costs for up-fitting additional office and patient facilities, and
possibly the cost of mobile excimer laser equipment.
A small portion of our net proceeds will be utilized for expansion of
internal corporate operations, which include expanding our computer network,
equipment for our corporate office facilities, software, and our Web site
development costs.
The remaining net proceeds, or approximately 26.4% of the net proceeds,
will be utilized as working capital for general corporate purposes. These
purposes include salaries, additional personnel, expansion costs of our
11
operations, support and management systems, as well as capital expenses for
computers and related equipment.
The proposed allocation of the net proceeds represents our management's
best estimate of the allocation of the net proceeds of the offering, based upon
the current status of our operations, our current plans and current economic
conditions. Our management may re-allocate the net proceeds among the categories
listed above. We also may, when the opportunity arises, acquire or invest in
complementary businesses, products or technologies. However, we have no present
understandings, commitments or agreements with respect to any acquisition or
investment. Any net proceeds received from the sale of the underwriter's
over-allotment option will be allocated to working capital and general corporate
purposes.
Pending application of the net proceeds in the manner described above,
we intend to invest the net proceeds in short-term, interest bearing investment
grade securities.
Dividend policy
We have never declared or paid any cash or stock dividends on our
capital stock. We intend to reinvest earnings, if any, to fund the development
and expansion of our business and, as a result, we do not anticipate paying cash
dividends on our common stock in the foreseeable future. The declaration of
dividends will be at the discretion of our board of directors and will depend
upon our earnings, capital requirements, financial position, general economic
conditions, and other pertinent factors.
Capitalization
The following table sets forth our:
o actual capitalization as of July 31, 2001;
o our as adjusted capitalization as of July 31, 2001 giving effect to;
o the issuance of 425,000 units, consisting of one share of common stock
and one redeemable common stock purchase warrant offered by us at an
offering price of $6.10 per unit, or $6.00 per share and $.10 per
warrant; and
o the application of the estimated net proceeds from this offering.
The following table should be read in conjunction with our financial
statements, related notes and other financial information included elsewhere in
this prospectus.
July 31, 2001
--------------------------------------
Actual As adjusted
----------- -----------
Current portion of long term liabilities. $ 110,263 $ 110,263
=========== ===========
Long term debt........................... $ 105,820 $ 105,820
=========== ===========
Stockholders' (deficit) equity:
Preferred stock, $.001 par value;
100,000 authorized, no shares issued.. $ 0 $ 0
----------- -----------
12
Common stock, $.001 par value; 25,000,000 shares authorized; 2,082,043 to be
issued, actual, 2,507,043 issued and
outstanding, as adjusted.............. 2,082 2,507
Additional paid in capital............. 12,510,176 14,766,501
Deferred compensation.................. (67,500) (67,500)
Accumulated deficit.................... (12,508,837) (12,508,837)
----------- -----------
Total stockholders' (deficit) equity. (64,079) 2,192,671
----------- -----------
Total capitalization................. $ 152,004 2,408,754
=========== ===========
The preceding table does not include the exercise of:
o the redeemable common stock purchase warrants; and o 42,500
representative's warrants.
Dilution
As of July 31, 2001, our net tangible book value, or deficit, was
$(64,079), or $(0.03) per share of common stock. Net tangible book value, or
deficit, per share represents the amount of our total tangible assets less total
liabilities divided by the number of shares of common stock outstanding.
After giving effect to the sale of the 425,000 units offered by this
prospectus and after deducting the underwriting discounts and estimated offering
expenses, net tangible book value at July 31, 2001, would have been $2,192,671,
or approximately $0.87 per share of our common stock. This represents an
immediate increase in net tangible book value of $0.90 per share of common stock
to our existing stockholders and an immediate dilution in net tangible book
value of $(5.13) per share of common stock, or approximately 85.4%, to new
investors. The following table illustrates this per share dilution:
Assumed initial public offering price....................... $ 6.00
Net tangible book value(deficit) prior to the
offering.................................................. (0.03)
Increase in net tangible book value per share attributable
to this offering.......................................... 0.90
As adjusted, net tangible book value per share
after the offering........................................ 0.87
Dilution of net tangible book value per share to new
investors................................................... $(5.13)
====
The following table summarizes, as of July 31, 2001, on an as adjusted
basis, the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing stockholders
and investors in this offering, and after giving effect to the sale of the
425,000 units offered by this prospectus, assuming an initial offering price of
$6.10 per unit. The calculations are based upon total consideration given by new
investors and existing stockholders before any deduction of underwriting
discounts, offering expenses payable by us, and does not include the purchase of
or any exercise of the redeemable common stock purchase warrants offered by this
prospectus.
13
Shares purchased Total consideration Average
-------------------- --------------------- price per
Number Percent Amount Percent share
--------- -------- ---------- -------- ----------
Existing
stockholders....... 2,082,043 83% $ 73,371 2.80% $0.04
New investors........ 425,000 17% 2,550,000 97.20% $6.00
--------- ---- ---------- -------
Total............ 2,507,043 100% $2,623,371 100%
========= ==== ========== =======
Selected financial data
The following selected financial data should be read in conjunction
with our audited financial statements for the period March 21, 2001 (inception)
through July 31, 2001 included elsewhere in the prospectus and Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
historical selected financial data as of July 31, 2001 and for the period March
21, 2001 (inception) through July 31, 2001 are derived from and should be read
in conjunction with our audited financial statements included elsewhere in the
prospectus. The results of operations for the period March 21, 2001 (inception)
through July 31, 2001 are not necessarily indicative of results to be expected
for the current fiscal year.
March 21, 2001 (inception)
through July 31, 2001
--------------------------
Statement of operations data:
Revenues...................................$ 184,040
Cost of revenues........................... 79,353
----------
Gross profit............................... 104,687
Operating costs and expenses:
General and administrative............... 243,369
Compensation expense related to
common stock...................... 12,351,387
Depreciation............................. 14,884
----------
Total operating costs and expenses..... 12,609,640
----------
Loss from operations....................... (12,504,953)
Interest expense........................... (3,884)
----------
Net loss...................................$(12,508,837)
==========
Basic and diluted net loss per share....... $(6.01)
==========
Shares used in computing basic and diluted
net loss per share....................... 2,082,043
==========
14
The following table includes a summary of our balance sheet at July 31, 2001;
o on an actual basis; and
o on an as adjusted basis giving effect:
o to the issuance of 425,000 shares of our common stock and warrants for
the purchase of 425,000 shares offered by us at an offering price of
$6.10 per unit, or $6.00 per share and $.10 per warrant.
Balance sheet data:
July 31, 2001
------------------------------------
Actual As adjusted
----------- ------------
Cash and cash equivalents................ $ 19 $ 2,256,769
Total working capital (deficit).......... (178,032) 2,078,718
Total assets............................. 229,712 2,486,462
Current portion of long
term liabilities....................... 110,263 110,263
Long term debt........................... 105,820 105,820
Total liabilities........................ 293,791 293,791
Total shareholders' (deficit) equity..... (64,079) 2,192,671
Management's discussion and analysis of financial condition and
Results of operations
The following management's discussion and analysis of financial
condition and results of operations should be read in conjunction with our
financial statements and accompanying notes and the other financial information
included elsewhere in this prospectus.
Overview
We are a medical services company that focuses on delivering laser
vision correction surgical procedures to consumers.
We were incorporated on March 21, 2001 as LASIK America, Inc. In
October 1995 and in March 1996, the United States Food and Drug Administration
approved the use of excimer lasers manufactured by Summit Technology, Inc. and
VISX, Inc., to treat low to moderate nearsightedness. In May, 2001, we opened
our first excimer laser center in Albuquerque, New Mexico.
We perform laser vision correction surgery procedures through
affiliated and employed physicians in our New Mexico Center Office. We provide
our ophthalmologists and optometrists with state-of-the-art equipment and
facilities as well as support services necessary to perform vision correction
procedures. To date, the supply of our excimer laser and related equipment has
come through agreements that we have entered into with DVI Financial, Inc.,
Bausch & Lomb, Inc., and a patent licenses with VISX, Incorporated. In the event
that we would not be able to obtain additional excimer lasers and related
equipment from these providers, we believe that other satisfactory sources of
supply are available now that the FDA has approved additional manufacturers of
excimer lasers.
15
The following table sets forth, for the period March 21, 2001
(inception) through July 31, 2001, operating information expressed as a
percentage of revenue. The results of operations data for the period March 21,
2001 (inception) through July 31, 2001 is not necessarily indicative of the
results to be expected for future periods.
March 21, 2001 (inception)
through July 31, 2001
-------------
Net revenues........................... 100.0%
Cost of revenues....................... 43.1%
Gross margin........................... 56.9%
General and administrative expense..... 132.2%
Compensation expense related to
common stock........................ 6,711.3%
Depreciation expense................... 8.1%
Total operating expenses............... 6851.6%
Loss from Operations................... 6794.7%
Interest Expense....................... 2.1%
Net (loss)............................ 6,796.8%
Results of operations
Revenues
Revenues from inception at March 21, 2001 to July 31, 2001 totaled
$184,040. Total revenue is predicated on the number of procedures of laser
vision correction we performed during the period. Due to the fact that our
operations in performing laser vision correction surgery did not begin until May
2001, the number of procedures performed during the period from inception to
July 31, 2001, we believe to be below what we anticipate will be performed
during subsequent periods.
Cost of revenues
Cost of revenues consists of doctor fees, royalty fees and medical
supplies. The total cost of revenue from inception to July 31, 2001 was $79,353.
As a percentage of revenue, cost of revenue equaled 43.1% of total revenue
during the period.
General and administrative expenses
General and administrative expenses consist primarily of salaries,
wages and related costs for general corporate functions. General and
administrative expenses from inception to July 31, 2001 totaled $243,369. As a
percentage of revenue, general and administrative expenses equaled 132.2% of
total revenue. We believe that this current percentage is high during this
16
period as a result of our accounting, legal and other fees for professional
services incurred during our formation and start-up process.
Compensation expense related to common stock
Compensation expense of $12,351,387 related to common stock is the
result of applying the anticipated initial public offering price of $6.00 per
share to the shares issued upon our formation and common stock sold in a small
private placement since our inception on March 21, 2001.
Depreciation
Depreciation expense amounted to $14,884 from the depreciation of
capital items acquired for use in our operations.
Interest expense
Interest expense of $3,884 results from our financing costs of some of
our capital equipment.
Net loss
Our net loss for the period March 21, 2001 (inception) through July 31,
2001 was $12,508,837. This net loss is primarily due to the $12,351,387
recognized as compensation expense related to common stock for shares issued to
employees and sold to individuals since our inception and prior to the
anticipated sale of the units in this offering.
Liquidity and capital resources
Since our inception, we have financed our operations through revenues
and capital raised through the sale of our common stock. As of July 31, 2001 we
had a cash balance of $19. Cash flows used in operating activities was $54,778
for the period March 21, 2001 (inception) through July 31, 2001. Net cash used
in investing activities was $14,341 during the same period. Net cash flows
provided by financing activities of $69,138 results from the sale of our common
stock in conjunction with our formation.
Recently issued accounting standards
We believe that recently issued financial standards will not have a
significant impact on our results of operations, financial position, or cash
flows.
17
Business
Overview
LASIK America, Inc. provides laser vision correction procedures to
individuals, at our New Mexico Center Office in Albuquerque, New Mexico. Our
ophthalmologist, and those with which we are affiliated, provide these services
using state-of-the-art excimer laser technology. We opened our first LASIK
America center in Albuquerque, New Mexico in May 2001.
Corporate background
We were incorporated in Nevada on March 21, 2001 as LASIK America,
Inc., and since that time have been providing laser vision correction services
using the VISX, Incorporated excimer laser.
Our strategy
Our goal is to be a leading provider of laser vision correction procedures.
In order to achieve this goal, we will implement the following strategies:
o Expand our geographic presence by opening additional centers;
o Equip our centers with state-of-the-art medical technologies;
o Recruit, employ and affiliate talented ophthalmologists and
optometrists and to capitalize on these doctors' relationships within
their local communities; and
o Increase our marketing and sales efforts to further penetrate our
target markets.
Our industry
The laser vision correction industry has experienced dramatic growth
during the past five years. Since 1995, approximately 2.25 million Americans
have had refractive surgery, including more than 1.5 million who have had LASIK
surgery. The American Society of Cataract and Refractive Surgery has forecasted
that in 2001, approximately 1.8 million LASIK procedures, or 900,000 patients
will have LASIK eye surgery. The growth trend in LASIK surgical procedures
during the last five years has been dramatic, with approximately 170,000
procedures occurring in 1997, 440,000 in 1998, 870,000 in 1999 and 1,500,000
procedures in 2000. Total sales for the laser vision correction industry have
been over $1.0 billion since approval of the excimer laser in the U.S. in
October 1995.
We believe that we can take advantage of this growing market through
the opening of our New Mexico Center Office, and plan to selectively expand our
ability to provide laser vision corrective surgery to new patients by expanding
our services to other selected geographic markets.
18
Common refractive vision disorders
Refractive vision disorders typically result from improper curvature of
the cornea relative to the size and shape of the eye. If the curvature of the
cornea is not precisely correct, it cannot properly focus the light passing
through it onto the retina. The result is a blurred image. The three most common
refractive vision disorders are:
o Myopia, also known as nearsightedness--images focus in front of the
retina, resulting in a blurred perception of distant objects;
o Hyperopia, also known as farsightedness--images focus behind the
retina, resulting in a blurred perception of near objects;
o Astigmatism--images do not focus on any point due to the varying
curvature of the eye along different axes.
Corrective laser vision procedures
Currently, eyeglasses and contact lenses are the most common and
traditional means of correcting common vision disorders. Vision correction is
achieved through the use of corrective lenses over the eye. Laser vision
correction procedures are designed to reshape the outer layers of the eye to
correct refractive vision disorders. Changing the curvature of the cornea with
an excimer laser, eliminates or reduces the need for corrective lenses. We use
the excimer laser in our centers which is approved to treat nearsightedness
within parameters of the optical power of the human eye, and is approved to
treat farsightedness and astigmatism within other parameters that measure the
optical power of the eye.
There are currently two outpatient procedures that we offer at our
LASIK-America centers that use the excimer laser to correct common refractive
vision disorders. One is laser in-situ keratomileusis, commonly known as LASIK
and the other is photorefractive keratectomy, commonly known as PRK. Prior to
either LASIK or PRK, an assessment is made of the correction required to program
the excimer laser. Using a specially developed algorithm, the software of the
excimer laser then calculates the optimal number of pulses needed to achieve the
intended correction. The patient reclines in a chair, eyes focused on a fixed
target, while the doctor positions the patient's cornea for the procedure. An
eyelid holder is inserted to prevent blinking and topical anesthetic eye drops
are applied.
The excimer laser emits energy in a series of pulses, with each pulse
lasting only several billionths of a second. High-energy ultraviolet light
produced by the excimer laser creates a non-thermal process known as ablation,
which removes tissue and reshapes the cornea without damaging adjacent tissue.
The amount of tissue removed depends upon the amount of corneal reshaping
required to correct the vision disorder.
The typical procedure takes 15 to 30 minutes from set-up to completion,
while the excimer laser is generally used for less than 40 seconds. The front
surface of the eye is flattened when corrected for nearsightedness and steepened
when corrected for farsightedness. In effect, the change made in the middle or
periphery of the cornea is translated to the front surface of cornea and results
19
in vision correction. Following the procedure, a series of patient follow-up
visits are scheduled in our center, with an ophthalmologist or optometrist, to
monitor the corneal healing process, to verify that there are no complications
and to test the amount of correction achieved by the laser vision correction
procedure.
LASIK. LASIK was approved for commercial use in the U.S. in 1999.
Currently, the majority of laser vision correction procedures are LASIK, since
it is believed that LASIK generally allows for:
o More precise correction than PRK for higher levels of nearsightedness
and farsightedness, with or without astigmatism;
o Greater predictability of results;
o Shorter patient recovery times and less discomfort; and
o Decreased possibility of corneal regression.
In the LASIK procedure, a small flap of the cornea is raised by use of
a microkeratome, a tiny surgical blade with rapid oscillations. The laser is
then applied to the surface of the cornea under the flap and the flap is put
back in place. Generally, no bandage contact lens is required and the patient
experiences minimal discomfort. Generally, LASIK has the advantage of a quicker
recovery as compared to PRK. With LASIK, our experience has been that most
patients see well enough to drive a car the next day and heal completely within
one to three months. LASIK generally allows a doctor to treat both eyes in one
visit.
PRK. In PRK procedures, the doctor removes the thin layer of cells
covering the outer surface of the cornea, by applying the excimer laser pulses
directly to the surface of the cornea. Following the PRK procedure, a contact
lens bandage is placed on the eye to protect it. The patient typically
experiences discomfort for up to 24 hours and blurred vision for up to 72 hours
until the epithelium, the outer surface of the cornea, heals. To alleviate
discomfort and promote corneal healing, a doctor will typically prescribe
topical pharmaceuticals. Although a patient usually experiences improvement in
clarity of vision within a few days following the procedure, it usually takes
one to three months for the full benefit of the PRK procedure to be realized.
Patients usually have one eye treated per visit.
Our laser vision correction center
We operate one laser vision correction center in Albuquerque, New
Mexico and operate it through affiliated and employed doctors. Our center is
supported by our fully credentialed ophthalmologists and optometrists who
perform pre-procedure evaluations, laser vision correction procedures, and
post-procedure follow-ups.
We strive to meet the needs of our patients as well as our
ophthalmologists and optometrists. We recruit our doctors in several ways.
Generally, we first identify and meet with doctors within the community to
demonstrate our technical and marketing capabilities. We provide our
ophthalmologists and optometrists with:
20
o STATE-OF-THE-ART EQUIPMENT AND FACILITIES. We provide our
doctors with the facilities, equipment, support services and
state-of-the-art laser technologies necessary to perform
vision correction procedures. Our doctors focus on treating
patients without the burden of meeting the financial,
management, administrative, maintenance and regulatory
requirements associated with establishing and operating a
laser vision correction center.
Our center has a fully-equipped laser procedure room, three ophthalmic
examination rooms. A post-operative room, a vision screening room, a sales and
business office and a patient waiting area. We are equipped with a VISX Star
laser. We also have corneal topography instruments, ophthalmic examination
equipment, a computer system, and standard office equipment.
o A TRAINED TECHNICIAN AND SUPPORT STAFF. Staffing includes
technicians who assist the doctors during the laser vision
correction procedure. They also provide support services such
as sterilization of surgical instruments. The excimer laser
manufacturer and the microkeratome supplier, certify our
technicians. The center also has a medical support director
who supports our doctors, and assists in developing laser
vision correction programs;
We provide our patients with:
o ACCESS TO HIGHLY CREDENTIALED OPHTHALMOLOGISTS AND
OPTOMETRISTS. Our ophthalmologists have completed extensive
FDA-mandated training and have met our qualification criteria.
Our centers are designed to create a patient friendly
environment and reduce any anxiety associated with laser
vision correction procedures. We believe our centers have an
aesthetically pleasing and comfortable waiting area and our
center staff is focused on addressing the needs of each
patient;
o EDUCATIONAL CONSULTATIONS AND MATERIALS. The education
process begins with our initial contact with the patient.
Potential patients receive a free consultation focused on
educating the patient on vision correction procedures, how the
procedure corrects a specific refractive vision disorder and
the results the patient should expect after the procedure.
Patients are given written materials and can view a video of
the procedure or witness an actual procedure during their
initial visit. We believe that an educated patient has
realistic expectations and should be more satisfied with
procedure results;
o REGULARLY SCHEDULED POST-PROCEDURE FOLLOW-UPS. We strive
towards 100% patient satisfaction. We schedule post-procedure
follow-ups with patients to monitor procedure results. In
those instances when the desired correction is not achieved,
the patient receives a follow up LASIK re-treatment procedure
at no cost to the patient;
21
o AFFORDABLE FINANCING ALTERNATIVES. Laser vision correction
procedures are elective and generally not reimbursable by
third-party payers. We offer patients several financing
alternatives and in some circumstances promotional discounts.
We have multiple payment plans offered by an unaffiliated
finance company. We also provide information regarding
installment plans, insurance coverage and payment through
employer-flexible benefit plans. In the majority of the
procedures financed, we bear no credit risk.
Our intellectual property rights
We purchase or lease our excimer lasers and related laser equipment
from manufacturers of the excimer laser. Our ability to use the excimer laser to
perform laser vision correction procedures in our centers is derived from a
license agreement, that has been filed as an exhibit to our registration
statement, that governs the intellectual property rights covering the excimer
laser technology. We are able to license from the manufacturer all necessary
intellectual property rights associated with the laser and related equipment so
long as we are in conformity with the terms of each license agreement and so
long as we pay the royalty fee included as a part of each license agreement.
Patent rights covering the excimer laser equipment we use in our laser vision
correction procedures have been granted to the manufacturers of our excimer
lasers.
Our sales and marketing strategy
We are developing and implementing direct marketing campaigns. We
believe many of our competitors focus all of their resources on building
affiliations with eye care providers, and rely on doctor relationships to
produce their clients. Although our relationships with doctors is a key
component of our overall strategy, we focus much of our resources directly on
the consumer and attempt to create our own client relationships. Our "integrated
marketing protocol," a consumer oriented marketing program for our services, was
developed to focus our LASIK America staff on existing and prospective clients.
Our laser vision correction surgical procedures currently cost
approximately $2,390 for both eyes. LASIK America-employed doctors deliver our
services and are paid a fixed per diem salary with no additional fees. LASIK
America-affiliated ophthalmologists pay us a facility fee for each eye they
perform surgery on at our center. They collect the entire fee from each patient.
Competition
The market for laser vision correction surgery is subject to intense
competition. We compete with other entities, including refractive laser center
companies, hospitals, individual doctors, other surgery and laser centers and
manufacturers of laser equipment in offering such services and access to related
equipment. In addition, the laser vision correction procedures provided at our
centers compete with more traditional non-surgical treatments for refractive
conditions including eyeglasses and contact lenses.
Eye care professionals interested in deploying excimer laser technology
have formed commercial enterprises in order to support the capital requirements
22
for acquiring the lasers and other necessary equipment. The industry today
remains highly fragmented, with most procedures performed by independent
physician groups. There are also several national laser vision correction
companies. In addition, there are several eye care companies that feature access
to laser vision correction and other refractive surgery services as an
increasingly important component of their ophthalmic practice development
activities.
Our laser vision correction centers compete on the basis of quality of
patient care, reputation and price. Our principal corporate competitors in the
market for laser vision correction and other refractive surgery include:
o TLC The Laser Center, Inc.;
o Laser Vision Centers, Inc.;
o ClearVision Laser Centers, Ltd.;
o LCA-Vision Inc.;
o NovaMed EyeCare, Inc.; and
o ARIS Vision, Inc.
The bases for competition in this market are:
o systems;
o pricing;
o strength of delivery network;
o strength of operational systems;
o the degree of cost efficiencies and surgeries;
o marketing strength;
o information technology systems;
o managed care expertise;
o patient access; and
o quality assessment programs.
Many of our current and potential competitors have significantly
greater financial and human resources than we currently have, and as a result,
we may be at a competitive disadvantage to these current and potential
competitors even though we believe that we can successfully compete on the basis
of our marketing efforts, quality of patient care, our reputation and the price
of our services. Suppliers of conventional vision correction, which includes
eyeglasses and contact lenses, such as optometric chains, may also compete with
us either by marketing alternatives to laser vision correction or other
refractive surgery procedures or by purchasing excimer lasers and offering
refractive surgery to their customers.
23
Government regulation
As a participant in the health care industry, our operations and the
operations of our affiliated ophthalmologists and optometrists are subject to
extensive and increasing regulation by governmental entities at the Federal,
state and local levels. Many of these laws and regulations are subject to
varying interpretations. We believe courts and regulatory authorities have
generally provided little clarification. Moreover, state and local laws and
interpretations vary from jurisdiction to jurisdiction. As a result, we may not
always be able to accurately predict interpretations of applicable law. As a
result, some of our activities, or the activities of our affiliated providers,
could be challenged.
The regulatory environment in which we and our affiliated providers
operate, may change significantly in the future. In response to new or revised
laws, regulations or interpretations, we could be required to:
o revise the structure of our legal arrangements or the structure of our
fees;
o incur substantial legal fees, fines or other costs; or
o curtail our business activities, reducing the potential profit to us
of some of our legal arrangements. Any of these outcomes may have a
material adverse effect on our business, financial condition and
results of operations.
The following is a summary of some of the health care regulatory issues
affecting us, our affiliated eye care providers and our respective operations.
Federal Law
ANTI-KICKBACK STATUTE. The U.S. Federal anti-kickback statute prohibits the
knowing and willful solicitation, receipt, offer or payment of any direct or
indirect remuneration in return for the referral of patients or the ordering or
purchasing of items or services payable under Medicare, Medicaid or other
federal health care programs. Violations of this statute may result in criminal
penalties, including imprisonment or criminal fines of up to $25,000 per
violation, civil penalties of up to $50,000 per violation, and exclusion from
federal programs including Medicare or Medicaid.
SELF-REFERRAL LAW. Subject to limited exceptions, the Federal self-referral
law, known as the "Stark Law," prohibits physicians and optometrists from
referring their Medicare or Medicaid patients for the provision of "designated
health services" to any entity with which they or their immediate family members
have a financial relationship. "Financial relationships" include both
compensation and ownership relationships. "Designated health services" include
clinical laboratory services, radiology and ultrasound services, durable medical
equipment and supplies, and prosthetics, orthotics and prosthetic devices, as
well as seven other categories of services. We do not provide "designated health
services." Our affiliated providers, however, do provide limited categories of
designated health services, specifically, ultrasound services, such as A-scans
and B-scans, and prosthetic devices, such as eyeglasses and contact lenses
furnished to patients following cataract surgery.
24
Violating the Stark Law may result in denial of payment for the designated
health services performed. This may also result in:
o civil fines of up to $15,000 for each service provided in connection
with a prohibited referral,
o a fine of up to $100,000 for participation in a circumvention scheme,
and
o exclusion from the Medicare, Medicaid and other Federal health care
programs.
The Stark Law is a strict liability statute. Any referral made where a
financial relationship exists that fails to meet an exception constitutes a
violation of the law. To the extent that our affiliated professional entities
provide designated health services to Medicare and Medicaid beneficiaries, or
make or receive Medicare or Medicaid referrals for such services, the Stark Law
could be implicated.
State law
ANTI-KICKBACK LAWS. In addition to the Federal anti-kickback law, a number
of states have enacted laws, which prohibit the payment for referrals and other
types of anti-kickback arrangements. These state laws typically apply to all
patients regardless of their source of payment.
SELF-REFERRAL LAWS. In addition to the Federal Stark Law, a number of states
have enacted laws that require disclosure of or prohibit referrals by health
care providers to entities in which the providers have an investment interest or
compensation relationship. In some states, those restrictions apply regardless
of the patient's source of payment.
CORPORATE PRACTICE OF MEDICINE LAWS. A number of states have enacted laws
that prohibit the corporate practice of medicine. Those laws are designed to
prevent interference in the medical decision-making process by anyone who is not
a licensed physician. Many states have similar restrictions in connection with
the practice of optometry. Application of the corporate practice of medicine
prohibition varies from state-to-state. While some states may allow a
corporation to exercise significant management responsibilities over the
day-to-day operation of a physician or optometric practice, other states may
restrict or prohibit various activities.
FEE-SPLITTING LAWS. The laws of some states prohibit providers from dividing
with anyone, other than providers who are part of the same group practice, any
fee, commission, rebate or other form of compensation for any services not
actually and personally rendered. Penalties for violating these fee-splitting
statutes or regulations may include revocation, suspension or probation of a
provider's license, or other disciplinary action. If we expand into a state with
different or more restrictive laws, we may need to amend or restrict some of our
operations in order to ensure compliance with applicable state laws, rules and
regulations.
FACILITY LICENSURE AND CERTIFICATE OF NEED. We may be required to obtain
licenses from the state departments of health in states where we open or acquire
25
eye surgery and laser centers. Some states require a Certificate of Need, or
CON, prior to the construction or modification of an ambulatory surgery center,
such as our eye surgery and laser centers, or the purchase of medical equipment
in excess of an amount set by the state.
Excimer laser regulation
Medical devices, such as the excimer lasers used in our eye surgery and
laser centers, are subject to regulation by the U.S. Food and Drug
Administration. Medical devices may not be marketed for commercial sale in the
U.S. until the FDA grants pre-market approval for the device.
The FDA has not approved the use of an excimer laser to treat both eyes on
the same day, called a bilateral treatment. The FDA has stated that it considers
the use of the excimer laser for bilateral treatment to be a practice of
medicine decision, which the FDA is not authorized to regulate. Physicians,
including our affiliated physicians, widely perform bilateral treatment as an
exercise of professional judgment in connection with the practice of medicine.
Failure to comply with applicable FDA requirements could subject us, our
affiliated providers or laser manufacturers to enforcement action, product
seizures, recalls, withdrawal of approvals and civil and criminal penalties.
Failure to comply with regulatory requirements, or any adverse regulatory
action, could result in a limitation on or prohibition of our use of the excimer
laser.
The marketing and promotion of laser vision correction surgical procedures
in the U.S. is regulated by the FDA and the Federal Trade Commission. The FDA
and FTC have released a joint communique on the requirements for marketing these
procedures in compliance with the laws administered by both agencies. The FTC
staff also issued more detailed staff guidance on the marketing and promotion of
these procedures and has been monitoring marketing activities in this area
through a non-public inquiry to identify areas that may require further FTC
attention.
Although the FDA does not regulate surgeons' use of excimer lasers, the
FDA actively enforces regulations prohibiting the marketing of products for
non-indicated uses and conducts periodic inspections of manufacturers to
determine compliance with good manufacturing practice regulations. We believe
that we conduct our operations in compliance with these laws and regulations.
Insurance
We believe that the insurance coverage for our business is generally in
accordance with industry standards, including adequate coverage for potential
premises liability and malpractice insurance for our employed doctors. We
believe our insurance coverage is adequate in light of our business and the
risks to which we are subject. We intend to obtain officers' and directors'
liability insurance coverage prior to the completion of this offering.
Employees
As of July 31, 2001, we had 10 full-time and part-time employees. Of
our total number of employees, seven are full-time and three are part-time. Of
26
this total, six employees function as medical or technical employees, two work
in sales functions and one is administrative. We have no collective bargaining
agreements covering any of our employees, and our management believes that
relations with our employees is good.
In addition to our employees, we have affiliate relationships with
local ophthalmologists who provide medical services to our patients. As of July
31, 2001, we had one active member-affiliate for our New Mexico Center.
Our facilities
We lease our principal executive office and our medical facilities in
Albuquerque, New Mexico under a three-month temporary lease arrangement. This
temporary facility consists of a total of approximately 2,310 square feet, which
we lease currently at $782.00 per month. We also have made arrangements for a
permanent leased facility for our center, which is located adjacent to our
temporary facility.
Our proposed permanent facility consists of a 4,018 square feet office
area that is the subject of a proposed initial lease term of three years
expiring May 31, 2004, with two three-year renewal options. Although we have not
yet fully executed the lease agreement covering our proposed permanent facility,
we intend to have these arrangements in place in the near term. Base rent for
our permanent facility will be $10.50 per square foot, increasing to $11.50 per
square foot in the third year. This results in proposed monthly rental for our
permanent facility of approximately $3,516 during the initial term of the lease.
Our permanent facility will be adequate for our needs during at least the
initial term.
Legal proceedings
We are not involved in any pending, or to our knowledge threatened,
legal proceedings.
Where you can find additional information about us
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act with respect to the
securities offered by this prospectus. This prospectus, which forms a part of
the registration statement, does not contain all of the information set forth in
the registration statement and the accompanying exhibits and schedules. For
further information with respect to us and the securities offered by this
prospectus, reference is made to the registration statement and the accompanying
exhibits and schedules. Statements contained in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are not necessarily complete and are qualified in their
entirety by reference to the exhibits for a complete statement of their terms
and conditions.
The registration statement, including all amendments, exhibits and
schedules, may be inspected without charge at the offices of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street NW, Washington, D.C.
20549 and the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
27
Chicago, Illinois 60661. Copies of this material may be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street
NW, Washington, DC. 20549. The public may obtain information on the operations
of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Securities and Exchange Commission also maintains a Web site
(http://www.sec.gov) through which the registration statement and other
information can be retrieved.
We have applied for quotation privileges for our securities on the
Over-the-Counter Electronic Bulletin Board maintained by the NASD, and upon
listing, investors can obtain information about us on Over-the-Counter
Electronic Bulletin Board web site, (http://www.otcbb.com)
Upon effectiveness of the registration statement, we will be subject to
the reporting and other requirements of the Securities Exchange Act and intend
to furnish our stockholders annual reports containing financial statements
audited by our independent accountants and to make available quarterly reports
containing unaudited financial statements for each of the first three quarters
of each fiscal year.
28
Management
Directors and officers
Our executive officers, directors, and key employees and their ages as of
September 6, 2001, are as follows.
NAME AGE POSITION
- --------------- ----- -------------------------------------
Dr. Howard P. Silverman...... 60 Chairman of the Board, Chief Executive
Officer, Treasurer and Director
Robert S. Helmer............. 46 Chief Operating Officer and Director
Stuart S. Greenberg.......... 69 Director
Steven D. De Vicenzi ........ 58 Director
Dr. Howard P. Silverman is our founding shareholder, and has been our
chief executive officer, chairman of the board, treasurer and a director, since
our inception. He has been involved in various companies developing products and
methods of delivery from the ophthalmic industry. Such companies include
Precision Contract Lens Labs, Inc., Diversified Health Industries, Inc., Hydro
Optics, Inc., Staar Surgical Company and Vision Science, Inc. From 1991 until
the date we were incorporated, Dr. Silverman has been actively involved in a
private consulting business designed to address the capital and corporate
structural needs of companies in the ophthalmic and vision correction
industries. In addition, from 1994 to 1997, Dr. Silverman served as an
investment banking professional at Rickel & Associates, in New York, New York.
Robert S. Helmer has been our chief operating officer in our
Albuquerque, New Mexico center since we began operations in May, 2001. Prior to
joining us in that capacity, Mr. Helmer served as the clinical support manager
from October, 1998 to April, 2001, for TrueVision International, Inc., another
company that performed eye vision corrective surgical procedures in Albuquerque,
New Mexico. Mr. Helmer is a graduate physician and surgical assistant with 25
years of medical experience in emergency medicine, laser medicine, dermatology,
cosmetic surgery and hair transplant surgery. From May 1998 until October, 1998,
Mr. Helmer was a director and the president of the International College of
Skin-Care Specialists. From October 1991 to October 1995, Mr. Helmer was a
surgical assistant with Qualified Emergency Specialists, Inc., in Cincinnati,
29
Ohio, and from February 1991 to December 1991 was a surgical assistant and
electrologist for Dermatology Associates of Atlanta, Georgia. Mr. Helmer has
been a certified ophthalmic laser technician since September 1998 and a
certified microkeratome technician since June 1999.
Mr. Helmer received his associate of applied science degrees as a physician's
assistant and surgical assistant in 1974 from the Cincinnati Technical College.
He is a member of the American Academy of Physicians Assistants.
Stuart S. Greenberg became one of our directors in May, 2001. Mr.
Greenberg has worked with a number of leading investment banking and securities
firms for over 35 years, having entered the field in 1960 with Merrill Lynch.
From March 2001 to the present, Mr. Greenberg has served as the managing
director of the investment banking division of West America Securities Corp.,
located in Westlake Village, California. From March 1999 to February 2001, Mr.
Greenberg was the managing director of R.H. Investment Corp., an investment
banking firm located in Los Angeles, California. From March 1992 to April 1996,
he served in the capacities of chairman of the board and the chief executive
officer of Baraban Securities. During a portion of that same time frame, Mr.
Greenberg also functioned as the chairman of the board and chief executive
officer of M.A. Investment Corp. out of Los Angeles, California. Mr. Greenberg
has experience as branch manager, regional sales manager, as well as national
sales manager during his tenure in the securities and brokerage industry. He
received his bachelors degree from the City College of New York and a banking
certification from the American Banking Institute of Banking in New York, New
York.
Steven Lee De Vincenzi became one of our directors in May, 2001. From
March 2000 to the present time, Mr. De Vincenzi has served as a senior vice
president of sales and marketing with Medpay, WebCVO and HealthCap. There, he is
responsible for sales, marketing and business development for three pre-public
offering companies that provide internet services to medical solution companies.
From October 1992 to February 2000, Mr. De Vincenzi served as the president and
chief operating officer of Interlink Rehab Services of California. In that
position, Mr. De Vincenzi was responsible for all operations, business
development and marketing for his company, which contracted for therapy services
to 35 nursing facilities and outpatient clinics. Between May, 1991 and October,
1992, Mr. De Vincenzi was the vice president--western region for Monroe Systems
for Business. There he had full profit and loss responsibility for sales,
service and the administration of 40 branch offices in 13 Western states. Mr. De
Vincenzi received his bachelor of science degree in marketing and his masters in
business administration in marketing and finance from California State
University in Long Beach, California.
Directors' compensation
Our non-employee directors receive reimbursement for their
out-of-pocket expenses for attendance at each meeting of the board of directors
or any committee of the board of directors. We anticipate that our directors
will meet at least twice each year. No directors' fees are paid to our
non-employee directors.
Board composition
Our board of directors consists of at least three members who each
serve as directors for one-year terms. Terms for each of our directors expire at
30
the annual meeting next ensuing. There are no family relationships among any of
our directors, officers or key employees. Each director holds office until their
successor is duly elected and qualified. Vacancies in the office of any director
may be filled by a majority vote of the directors then in office. Both of our
outside directors will serve as members of both committees.
Our president and chief executive officer is appointed by our board of
directors, and all of our other executive officers are appointed by the
president and chief executive officer.
We have agreed that for five years from the completion of this
offering, the representative of the underwriters may designate one person for
election to our board of directors. If this election is not exercised, the
representative may designate one person to attend all meetings of our board of
directors. If the representative chooses to designate a person to attend our
directors' meetings, we have agreed to reimburse that person for out-of-pocket
expenses in connection with their attendance.
Committees of the board
Upon completion of this offering, the board of directors will establish
an audit and compensation committee. The committee will:
o recommend to the entire board of directors the independent public
accountants to be engaged by us,
o review the plan and scope of our annual audit,
o review our internal controls and financial management policies with
our independent public accountants;
o review all related party transactions;
o will determine the compensation and benefits to be paid to our
officers and directors;
o will recommend the adoption of a stock option plan;
o will approve the grant of options under any stock option plan that we
may adopt; and
o will establish and review general policies relating to compensation
and benefits of our employees.
Executive compensation
The following table sets forth the total compensation paid to our chief
executive officer, Howard P. Silverman from our inception on March 21, 2001 to
July 31, 2001, the end of our most current fiscal year.
31
Summary compensation table
Annual
Compensation Other compensation
------------ -------------------
Salary($) Bonus($) Other annual All other
2001 2001 compensation compensation
---- ---- ------------ ------------
Name and position
- -----------------
Howard P. Silverman, chief
executive officer.......... -0- -0- -0- -0-
The aggregate compensation paid or delivered to all persons who served in
the capacity of a director or executive officer during the period from inception
(March 21, 2001) to July 31, 2001, 4 persons, was $939,152. Of this total,
$19,152 was paid as salary and the balance was delivered to the officers and
directors as a group, in the form of 150,000 shares of our common stock, valued
at the proposed public offering price of our shares of common stock in this
offering and services contributed by the chief executive officer. These
contributed services are valued at $20,000 during the period.
Option grants from inception(1)
to the fiscal year ended July 31, 2001
Percent of total options(1)
---------------------------
Number of
Securities Granted to
Underlying options employees in Exercise Expiration
Granted fiscal year Price ($/sh) Date(2)
------- ----------- ------------ -------
2001 2001
---- ----
Name and position
- -----------------
Howard P.
Silverman, chief
executive officer.....125,000 125,000 $7.20/share
- --------------------------------
(1) This table includes 125,000 redeemable common stock purchase warrants
granted to Howard P. Silverman, our chief executive officer, on August
24, 2001, which warrants are being registered for resale in this
prospectus, and which warrants are included for resale with the 125,000
units offered by Dr. Silverman as selling shareholder. Through the date
of this prospectus, we have not issued any options to purchase our
securities. This table includes only warrants to purchase our
securities.
(2) These warrants expire five (5) years after the effective date of this
registration statement.
Limitation of liability and indemnification of directors and officers
Our articles of incorporation and our by-laws contain provisions that
eliminate the personal liability of our directors to us or our stockholders for
32
monetary damages for breach of their fiduciary duty as a director to the fullest
extent permitted by the Nevada General Corporation Law, except for liability
for:
o any breach of their duty of loyalty to us or our stockholders;
o acts or omissions not in good faith or which involve intentional
misconduct;
o misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock repurchases or
redemptions;
o any act or omission occurring prior to our incorporation; and
o any transaction from which the director derived an improper personal
benefit.
Our articles of incorporation and by-laws also contain provisions that
require us to indemnify our directors and permits us to indemnify our
incorporators, directors and officers to the fullest extent permitted by Nevada
law, including circumstances where indemnification would be discretionary.
Insofar as indemnification for liabilities arising under the securities Act may
be permitted to directors, officers, and persons controlling us in connection
with the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act, and is unenforceable.
Certain transactions
As partial consideration for the services rendered to us by Howard P.
Silverman since our inception on March 21, 2001, on August 24, 2001, we granted
to Dr. Silverman 125,000 redeemable common stock purchase warrants entitling him
to purchase 125,000 shares of our common stock at $7.20 per share. These
warrants are exercisable commencing six months from the effective date of this
registration statement and have a five year term from the date of issuance. As
further consideration for the services rendered to us by Dr. Silverman, we have
agreed to register the 125,000 redeemable common stock purchase warrants and the
125,000 shares of our common stock underlying those warrants, for resale, on the
first registration statement we file with the United States Securities and
Exchange Commission pursuant to Section 5 of the Securities Act of 1933.
Dr. Silverman's 125,000 redeemable common stock purchase warrants and
the 125,000 underlying shares of our common stock, are being registered for
resale pursuant to this registration statement, of which this prospectus forms a
part.
Principal and selling stockholders
The following table sets forth information regarding the beneficial
ownership of our common stock as of August 31, 2001, and as adjusted to reflect
the sales of the units offered hereby. The information in this table provides
the beneficial ownership for:
o each person known by us to be the beneficial owner of more than 5% of
the outstanding shares of our common stock;
33
o each of our directors and executive officers;
o our executive officers and directors as a group; and
o the selling shareholder.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated, we believe each person
possesses sole voting and investment power with respect to all of the shares of
common stock owned by such person, subject to community property laws where
applicable.
In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options or warrants held by that person that are currently exercisable or
exercisable within 60 days are deemed outstanding. Such shares, however, are not
deemed outstanding for the purposes of computing the percentage ownership of any
other person.
The number of shares beneficially owned by a person and the percentage
ownership of that person includes shares of our common stock issuable upon
exercise of warrants held by that person, but not those held by any other
persons, that are currently exercisable or exercisable within 60 days from the
date of this prospectus.
Shares of our common stock registered for resale under this prospectus
will constitute approximately 21.9% of our issued and outstanding common stock
after giving effect to the common stock registered for resale hereunder.
NUMBER OF SHARES PERCENT BENEFICIALLY OWNED
NAMES AND ADDRESS BENEFICIALLY BEFORE NUMBER OF SHARES AFTER
OF BENEFICIAL OWNER OWNED OFFERING(2) OFFERED OFFERING(2)
- ------------------------ ------------- ------------ ---------- -------------
Howard P. Silverman(3) 1,090,000(1) 52.4% 125,000(1) 38.5%
Robert S. Helmer(3) 150,000 7.2% -0- 6.0%
Stuart S. Greenberg(3) -0- -0- -0- -0-
Steven D. De Vicenzi(3) -0- -0- -0- -0-
All directors and executive
officers as a group
(4 persons).... 1,240,000 59.6% 125,000 44.5%
- ------------------------
(1) Excludes 125,000 redeemable common stock purchase warrants for the
purchase of 125,000 shares of common stock held by Howard P.
Silverman, which are being offered for resale as units along with
125,000 shares of common stock held by Dr. Silverman as a selling
shareholder. Such warrants are not exercisable until six months after
the date of this prospectus.
(2) Based on an aggregate of 2,082,043 shares of common stock issued and
outstanding as of August 31, 2001. The percentages after the offering
are based on 2,507,043 shares of common stock outstanding after the
offering.
34
(3) Unless otherwise noted, the address of these beneficial owners is
6646 Indian School Road, N.E., Albuquerque, New Mexico 87110.
Description of securities
General
Our authorized capital stock consists of (a) 25,000,000 shares of
common stock, $.001 par value per share and (b) 100,000 shares of preferred
stock, $.001 par value per share, the rights and preferences of which may be
established from time to time by our board of directors.
As of August 31, 2001, there were 2,082,043 shares of our common stock
issued and outstanding, and no shares of our preferred stock outstanding.
The description of our securities are summaries and do not contain all
the information that may be important to you. For more complete information, you
should read our certificate of incorporation and all amendments that are all
filed as exhibits to the registration statement of which this prospectus forms a
part.
Common stock
Holders of our common stock are entitled to one vote for each share on
all matters submitted to a vote of stockholders and there are no cumulative
voting rights. Accordingly, holders of a majority of the shares of our common
stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared by our board of directors out
of funds legally available, subject to any preferential dividend rights of any
outstanding shares of preferred stock. Upon the liquidation, dissolution or
winding up of us, holders of our common stock are entitled to share in our
assets remaining after the payment of all liabilities and liquidation
preferences on any outstanding shares of preferred stock. Holders of our common
stock have no:
o preemptive,
o subscription,
o redemption or
o conversion rights, and there are no redemption or sinking fund
provisions applicable to our common stock.
All outstanding shares of common stock are, and the shares offered by
us as units in this offering will be, when issued and paid for, duly authorized,
validly issued, fully paid and non-assessable. The rights, preferences and
privileges of holders of our common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock that we may designate and issue in the future.
35
Preferred stock
Our board of directors has the authority, without stockholder approval,
to issue up to an aggregate of 100,000 shares of preferred stock, in one or more
series. The board may fix the rights, preferences, privileges and restrictions
of the shares of each series, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, and to fix the
number of shares constituting any series and the designations of these series.
These shares may have rights senior to our common stock. The issuance of
preferred stock may have the effect of delaying or preventing a change of
control of us. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of our common
stock or could adversely affect the rights and powers, including voting rights,
of the holders of our common stock. We have no present plans to issue any shares
of preferred stock.
Redeemable common stock purchase warrants
Generally. Each warrant entitles the registered holder to purchase, at
any time commencing six months after the date of this prospectus until 60 months
after the date of this prospectus, one share of common stock at a price equal to
$7.20. As of August 31, 2001, we have issued 125,000 redeemable common stock
purchase warrants, all of which were issued on August 24, 2001 to our chief
executive officer, Howard P. Silverman. Dr. Silverman's redeemable common stock
purchase warrants are not exercisable until the date when the warrants we intend
to issue to the public as registered under this prospectus become exercisable.
Redemption provisions. Commencing six months after the date of this
prospectus, we may redeem the warrants, in whole but not in part, at $.10 per
warrant on 30 days' prior written notice. The warrants may only be redeemed if
the average closing sale price of our common stock as reported on the
Over-the-Counter Electronic Bulletin Board equals or exceeds $9.00 for any 20
consecutive trading days. Since we have the right to redeem the warrants under
these circumstances, this may impact a decision as to if and when to exercise
the warrants. If we decide to redeem the warrants, holders will lose their
rights to purchase the underlying shares of common stock unless the warrant is
exercised before we redeem them. The holder of any warrant may exercise the
warrant by surrendering the certificate representing the warrant to the warrant
agent, with the subscription form properly completed and executed, together with
payment of the exercise price. No fractional shares will be issued upon the
exercise of the warrants. The exercise price of the warrants bears no
relationship to any objective criteria of value and should in no event be
regarded as an indication of any future market price of the securities offered
in this offering.
Adjustments. The exercise price of the warrants and the number of shares of
common stock that may be issued upon the exercise of the warrants will be
adjusted upon the occurrence of specific events, including stock dividends,
stock splits, combinations or reclassifications of the common stock.
Additionally, an adjustment would be made in the case of a reclassification or
exchange of common stock, consolidation or merger of us with or into another
corporation, other than a consolidation or merger in which we are the surviving
36
corporation, or sale of all or substantially all of our assets, in order to
enable warrant holders to acquire the kind and number of shares of stock or
other securities or property receivable in such event by a holder of the number
of the number of shares of common stock that might otherwise have been purchased
upon the exercise of the warrant.
Transfer, exchange and exercise. The warrants are in registered form
and may be presented to the warrant agent for transfer, exchange or exercise at
any time on or prior to their expiration date, at which time they will be void
and have no value. The warrants may not be exercised until six months after the
date of this prospectus. If a market for the warrants develops, the holder may
sell the warrants instead of exercising them. There can be no assurance,
however, that a market for the warrants will develop or, if developed, will
continue.
Modification of warrants. We and the warrant agent may make such
modifications to the warrants as we deem necessary and desirable that do not
adversely affect the interests of the warrant holders. We may, in our sole
discretion, lower the exercise price of the warrants for a period of no less
than 30 days on not less than 30 days' prior written notice to the warrant
holders and the representative. Modification of the number of securities
purchasable upon the exercise of any warrant, the exercise price, other than as
provided in the preceding sentence, and the expiration date with respect to any
warrant requires the consent of at least two-thirds of the warrant holders.
The redeemable common stock purchase warrants included in the units
offered by this prospectus are not exercisable unless, at the time of exercise,
we have a current prospectus covering the shares of common stock issuable upon
exercise of the warrants, and the shares have been registered, qualified or
deemed to be exempt under the securities laws of the state of residence of the
exercising holder of the warrants. Although we have agreed to use our best
efforts to keep a registration statement covering the shares of common stock
issuable upon the exercise of the warrants effective for the term of the
warrants, if we fail to do so for any reason, the warrants may be deprived of
value.
The common stock and warrants included in the units offered by this
prospectus are detachable and separately transferable immediately following
completion of maximum amount of this offering. Purchasers may buy warrants in
the aftermarket or may move to jurisdictions in which the shares underlying the
warrants are not so registered or qualified during the period that the warrants
are exercisable. In that event, we would be unable to issue shares to those
holders desiring to exercise their warrants, and these holders would have no
choice but to attempt to sell the warrants in a jurisdiction where a sale is
permissible or allow the warrants to expire unexercised.
The representative's warrants
We have agreed to issue to the representative and/or its designees, at
the closing of this offering, for a total of $42.50, 42,500 five year warrants
exercisable to purchase an aggregate of 42,500 units, each unit consisting of
one share of common stock and one redeemable common stock purchase warrant. The
representative's warrants are exercisable at any time during a period of four
years commencing at the beginning of the second year after their issuance at an
37
exercise price of $10.065 per unit. The units issuable upon exercise of the
representative's warrants are identical to those offered to the public and the
securities underlying the representatives warrants, including the common stock
and the redeemable common stock purchase warrants are being registered in this
offering. The representative's warrants contain anti-dilution provisions
providing for adjustment of the number of securities issuable upon the exercise
of the warrants under specific circumstances, including stock dividends, stock
splits, mergers, acquisitions and recapitalizations. The holders of the
representative's warrants will have no voting, dividend or other stockholder
rights solely for being a holder of the warrants.
For a period of five years after the completion of our initial public
offering, the holders of the representative's warrants and/or the shares of
common stock underlying the representative's warrants have piggyback
registration rights covering the underlying shares and warrants, at our expense,
except as to fees and expenses of the holders' counsel and selling commissions
applicable to those units. In addition, for a five year period from the
completion of our initial public offering, upon demand by the holders of at
least a majority of the representative's warrants or of the underlying
securities, the holders of the representative's warrants and of the underlying
securities, have a right to demand a one time registration of the securities
underlying the representative's warrants. The cost of these registrations are at
our expense, except as to fees and expenses of the holders' counsel and selling
commissions applicable to the warrants and the underlying securities.
Transfer agent and registrar
We intend to make application to appoint Corporate Stock Transfer, 3200
Cherry Creek Drive South, Suite 430, Denver, Colorado 80209 as our transfer
agent, warrant agent, and registrar. The telephone and facsimile numbers for our
proposed stock transfer agent are 303-282-4800 and 303-282-5800, respectively.
Shares eligible for future sale
Prior to this offering, there has been no public market for any of our
securities and there can be no assurance that a significant public market for
any of our securities will be developed or sustained after this offering. Sales
of substantial amounts of our common stock in the public market after this
offering, or the possibility of those sales occurring could adversely affect the
prevailing market price for our securities and our ability to raise equity
capital in the future.
Upon completion of this offering, there will be 2,507,043 shares of our
common stock outstanding. Including the 125,000 units offered on behalf of the
selling shareholder, there will be 550,000 shares of common stock and 550,000
redeemable common stock purchase warrants being offered by this prospectus that
will be freely tradable without restriction under the Securities Act, unless
purchased by an affiliate of ours, as that term is defined under the rules and
regulations of the Securities Act, which will be subject to the resale
limitations of Rule 144 under the Securities Act.
The remaining 1,957,043 shares of our common stock are considered
"restricted securities" as defined in Rule 144. These shares were issued in
private transactions and have not been registered under the Securities Act and
38
may not be sold unless registered under the Securities Act or sold under an
exemption from registration, such as the exemption provided by Rule 144.
In general, under Rule 144, beginning 90 days after the completion of
this offering, a person, or persons whose shares are aggregated, who has
beneficially owned restricted shares for at least one year, including the
holding period of any prior owner who is not an affiliate of ours, would be
entitled to sell within any three-month period, a number of shares that does not
exceed the greater of:
o one percent, or approximately 25,071 shares following this offering,
of the number of shares of our common stock then outstanding; or
o the average weekly trading volume of our common stock during the four
calendar weeks preceding the sale.
Sales under Rule 144 are also subject to manner of sale provisions,
notice requirements and to the availability of current public information about
us.
Under Rule 144(k), a person who is not deemed to have been an affiliate
of ours at any time during the 90 days preceding a sale, and who has
beneficially owned the shares for at least two years, including the holding
period of any prior owner who is not an affiliate of ours, would be entitled to
sell those shares under Rule 144(k) without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.
We and all of our existing stockholders, except 125,000 shares of our
common stock and 125,000 redeemable common stock purchase warrants that are
included in this prospectus and are being registered on behalf of the selling
shareholder, our executive officers and directors, have agreed that, for a
period of 12 months from the completion of this offering, we and they will not,
without the prior written consent of the representative of the underwriters:
o offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of our common stock or any
securities convertible into or exercisable or exchangeable for our
common stock.
Underwriting
Subject to the terms and conditions of the underwriting agreement, the
form of which is filed as an exhibit to the registration statement filed with
the Commission of which this prospectus is a part, the underwriters named below,
have agreed through West America Securities Corp. as the representative of the
underwriters, to place as our agents, on a best efforts basis, the aggregate
number of units set forth opposite their respective names. The underwriters,
through the representative, have also agreed to offer to the public for resale
on a best efforts basis, 125,000 units on behalf of the selling shareholder. No
units offered for resale on behalf of the selling shareholder will be placed
with investors until all 425,000 units offered directly by us are first placed
by the underwriters. We will not receive any proceeds from the resale of our
common stock by the selling shareholder.
39
UNDERWRITERS NUMBER OF UNITS
- ------------ ---------------
West America Securities Corp................................ 425,000
West America Securities Corp.,
for the selling shareholder............................... 125,000
-------
Total............................................... 550,000
=======
The underwriting agreement provides that the obligations of the several
underwriters under that agreement depend on various conditions, including;
o the absence of any material adverse change in our business;
o the absence of any event that has materially disrupted or in the
representative's opinion will in the immediate future materially
adversely disrupt the financial markets;
o the absence of our default under any of our agreements or contracts;
o the continued truth of the statements made in this prospectus;
o the absence of any event that in the representative's opinion that
would make it inadvisable to proceed with this offering, and
o the receipt of certificates, opinions and letters from us, our counsel
and our independent public accountants.
This section contains the material conditions upon which the
underwriting agreement depends, although we direct you to the underwriting
agreement, the form of which is filed in an exhibit to the registration
statement, of which this prospectus forms a part for a complete list of the
conditions of the underwriters' obligations.
The underwriters are committed only to use their best efforts to place
the units for sale to the public. In the event of a default by any of the
underwriters, the best efforts undertaking of the non-defaulting underwriters
may be increased or the underwriting agreement may be terminated.
The underwriters will offer the units to the public, on a best efforts
basis, at the public offering price set forth on the cover page of this
prospectus. The underwriters may allow some dealers concessions of not more than
$ per unit. The underwriters also may allow, and those dealers may re-allow, a
concession of not more than $ per unit to some other dealers. The public
offering price, concessions, and re-allowances may be changed after the
completion of this offering. The representative of the underwriters has agreed
to use its best efforts to place for resale to the public the 125,000 units
offered by this prospectus on behalf of the selling shareholder. The terms of
underwriting on behalf of the selling shareholder are the same as the terms of
the underwriting on our behalf, except that the selling shareholder is
responsible for the payment of all expense of the resale of the 125,000 units
offered for resale, such as all discounts, commissions and the non-accountable
40
expense allowance applicable to the 125,000 units offered for resale by this
prospectus.
We have agreed to indemnify the underwriters and their controlling
persons against some liabilities, as more fully set forth in the underwriting
agreement, including liabilities under the Securities Act, and to contribute to
payments the underwriters and their controlling persons may be required to make.
We have also agreed to pay to the representative, a non-accountable
expense allowance equal to three percent of the gross proceeds of this offering.
We have also agreed to pay all expenses in connection with qualifying
the securities under the laws of those states that the representative may
designate, including fees and expenses of counsel retained for these purposes by
the representative, and the costs and expenses in connection with qualifying the
offering with the National Association of Securities Dealers, Inc.
The representative of the underwriters has informed us that the underwriters
do not expect sales of the units offered by this prospectus to be made to
discretionary accounts to exceed five percent of the total number of units
offered.
We, and all of our existing stockholders, except the 125,000 units
being offered for resale in this prospectus by the selling shareholder, our
executive officers and directors, have agreed that, for a period of 12 months
from the completion of this offering, we and they will not, without the prior
written consent of the representative of the underwriters:
o offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of our common stock or any
securities convertible into or exercisable or exchangeable for our
common stock.
We have agreed to issue and sell to the representative of the
underwriters and/or its designees, for nominal consideration, 42,500 five-year
warrants to purchase in the aggregate, 42,500 units. The representative's
warrants are exercisable on a cashless basis for a period of four years
commencing one-year after the date of issuance at a price equal to $10.065 per
unit. The representative's warrants contain anti-dilution provisions providing
for adjustments of the exercise price and the number of shares issuable upon
exercise, upon the occurrence of specific events, including stock dividends,
stock splits, and recapitalizations. The representative's warrants contain
demand and piggyback registration rights relating to the shares of common stock
issuable upon exercise of these warrants. For the life of the representative's
warrants, the representative will have the opportunity to profit from a rise in
the market price of our shares of common stock. The representative's warrants
are restricted from sale, transfer, assignment or hypothecation for the one year
period from the date of this prospectus, except to officers or partners of the
underwriters and members of the selling group and/or their officers or partners.
We have agreed that for five years from the completion of this
offering, the representative may designate one person for election to our board
41
of directors. In the event that the representative elects not to exercise this
right, then it may designate one person to attend all meetings of our board of
directors. The representative has not yet exercised this right to designate this
person. We have agreed to reimburse the representative's designee for all
out-of-pocket expenses incurred in connection with the designee's attendance at
meetings of our board of directors. As a result of our agreements with the
representative of the underwriters, the representative will continue to have
influence over us following the completion of this offering.
Prior to this offering, there has been no public market for any of our
securities. The initial public offering price of the units offered by this
prospectus and the terms of redeemable common stock purchase warrants will be
determined by negotiations between the representative and us. Among the factors
considered in determining the price include:
o prevailing market conditions,
o the history of and the prospects for the industry in which we compete,
o an assessment of our management,
o our prospects, and
o our capital structure.
The offering price does not necessarily bear any relationship to our assets,
results of operations or net worth. There can be no assurance that an active
trading market will develop for any of the securities offered by this
prospectus, or that such securities will trade in the public market at or above
the initial public offering price.
The representative, on behalf of the underwriters, may engage in:
o stabilizing transactions,
o syndicate covering transactions; and
o penalty bids.
Stabilizing transactions permit bids to purchase the shares of common
stock and/or warrants being offered so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases of
the shares of common stock or the redeemable common stock purchase warrants in
the open market after the distribution has been completed in order to cover
syndicate short positions.
Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the shares of common stock and warrants originally
sold by the syndicate member are purchased in a syndicate covering transaction
and penalty bids may cause the price of the shares of common stock to be higher
than it would otherwise be in the absence of such transactions. These
transactions may be commenced and may be discontinued at any time. In addition,
the underwriters may engage in passive market making transactions in our
42
securities in accordance with Rule 103 of Regulation M. Neither we nor the
underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the securities offered by this prospectus.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain or otherwise affect the price of our
securities offered in this prospectus. These actions include purchasing the
securities to cover some or all of a short position of any of the securities
maintained by the representative and the imposition of penalty bids.
Plan of distribution
for selling shareholder
We will not receive any proceeds from the resale of the 125,000 units
offered for resale by the selling shareholder. The selling shareholder will be
offering for resale up to 125,000 units. The representative has agreed to be
named as statutory underwriters within the meaning of the Securities Act of 1933
in connection with the resales of these units and they will be acting as an
underwriter in their resales of the units under this prospectus. The selling
shareholder has, prior to any sales, agreed not to effect any offers or sales of
our securities in any manner other than as specified in this prospectus and has
agreed not to purchase or induce others to purchase any of our securities in
violation of any applicable state and federal securities laws, rules, and
regulations and the rules and regulations governing the Over-the-Counter
Electronic Bulletin Board maintained by the NASD.
We have agreed with the selling shareholder that we will prepare and
file this registration statement and such amendments and supplements to the
registration statement and the prospectus as may be necessary in accordance with
the Securities Act of 1933 and the rules and regulations promulgated thereunder
to keep it effective until the date as of which the selling shareholder has sold
all of the 125,000 units offered by this prospectus.
The selling shareholder is subject to the applicable provisions of the
Exchange Act of 1934, including without limitations, Rule 10b-5 thereunder.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of our securities stock may not simultaneously engage
in market making activities with respect to such securities for a period
beginning when such person becomes a distribution participant and ending upon
such person's completion of participation in a distribution, including
stabilization activities in our securities to effect covering transactions, to
impose penalty bids, or to effect passive market making bids. In connection with
the transactions in our common stock, we also will be subject to applicable
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, including, without limitations, the rule set forth above. These
restrictions may affect the marketability of the shares of our common stock and
the redeemable common stock purchase warrants owned by the selling shareholder.
The selling shareholder has advised us that, prior to the date of this
prospectus, he has entered into a form of underwriting agreement that delineates
the facts material to the resale of his 125,000 units through the best efforts
43
to be undertaken by the representative. The form of underwriting agreement,
which has been attached as an exhibit to this registration statement, includes
terms and provisions which are the same as the terms and provisions of the
underwriting commitment made by the representative with respect to the 425,000
units offered by us to the public through this prospectus.
The units have not been registered for resale by the selling
shareholder under the securities laws of any state as of the date of this
prospectus. Brokers or dealers effecting transactions in these securities should
confirm the registration thereof under the securities laws of the states in
which transactions occur or the existence of any exemption from registration.
We expect that the selling shareholder will resell his units covered by
this prospectus through the representative acting as placement agent on his
hehalf, at an expected public offering price of $6.10 per unit, which consists
of $6.00 per share of common stock and $.10 per redeemable common stock purchase
warrant. We further expect that the units offered for resale by the selling
shareholder will be placed for sale by the representative to the public only at
such time as the 425,000 units offered by us have been placed to the public. The
selling shareholder may effect the resale of his units by selling the securities
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of concessions or commissions from the selling shareholder. To the
extent that such broker-dealers receive concessions or commissions from the
selling shareholder, they will be on the same terms of sale as the 425,000 units
offered on our behalf.
The selling shareholder and any broker-dealers that participate with
the selling shareholder in the distribution of units may be deemed to be
underwriters and commissions received by them and any profit on the resale of
securities positioned by them might be deemed to be underwriting discounts and
commissions under the Securities Act. There can be no assurance that the selling
shareholder will sell any or all of the units being registered for resale under
this prospectus.
The selling shareholder will pay all commissions and his own expenses,
if any, associated with the resale of his 125,000 units, other than the expenses
associated with preparing this prospectus and the registration statement of
which it is a part, which we have agreed to pay on behalf of the selling
shareholder.
Legal matters
The validity of the units, the shares of common stock and the
redeemable common stock purchase warrants being offered by this prospectus will
be passed upon for us by Gregory Bartko, Esq., of the Law Offices of Gregory
Bartko, Atlanta, Georgia, our legal counsel.
Experts
Our financial statements as of July 31, 2001 included in this
prospectus have been so included in reliance on the report of Pannell Kerr
Forster, Certified Public Accountants, A Professional Corporation, San Diego,
California, independent auditors, given on the authority of such firm as experts
in auditing and accounting.
44
Table of contents
Page
--------
Prospectus Summary.................... 2
Risk Factors.......................... 5
Cautionary Note Regarding Forward-
Looking Statements.................. 10
Use Of Proceeds....................... 11
Dividend Policy....................... 12
Capitalization........................ 12
Dilution.............................. 13
Selected Financial Data............... 14
Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations....................... 15
Business.............................. 18
Management............................ 29
Certain Transactions.................. 33
Principal and Selling Shareholder..... 33
Description Of Securities............. 34
Shares Eligible For Future Sale....... 38
Underwriting.......................... 39
Plan of Distribution for Selling
Shareholder......................... 43
Legal Matters......................... 44
Experts............................... 44
Index To Financial Statements......... F-1
UNTIL , 2000, 25 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS THAT
BUY, SELL OR TRADE THE UNITS, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY
BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
425,000 UNITS CONSISTING OF
ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE COMMON
STOCK PURCHASE WARRANT.
[LOGO]
---------------------
PROSPECTUS
---------------------
WEST AMERICA SECURITIES CORP.
SEPTEMBER , 2001
45
LASIK AMERICA, INC.
TABLE OF CONTENTS
-----------------
INDEPENDENT AUDITOR'S REPORT F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Operations F-4
Statement of Shareholders' Deficit F-5
Statement of Cash Flows F-6 - F-7
NOTES TO FINANCIAL STATEMENTS F-8 - F-14
F-1
INDEPENDENT AUDITOR'S REPORT
To the Shareholders
Lasik America, Inc.
Albuquerque, New Mexico
We have audited the balance sheet of Lasik America, Inc. (the "Company") as of
July 31, 2001, and the related statements of operations, shareholders' deficit
and cash flows for the period March 21, 2001 (inception) through July 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lasik America, Inc. at July 31,
2001, and the results of its operations and its cash flows for the period March
21, 2001 (inception) through July 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has limited capital resources and a working
capital deficit. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
San Diego, California PANNELL KERR FORSTER
August 13, 2001 (except for Note 8 Certified Public Accountants
as to which the date is August 24, 2001) A Professional Corporation
F-2
LASIK AMERICA, INC.
BALANCE SHEET
July 31, 2001
ASSETS
------
Current assets:
Cash $ 19
Accounts receivable 2,370
Other current assets 7,550
-----------------
Total current assets 9,939
-----------------
Property and equipment, net 219,773
-----------------
Total assets $ 229,712
=================
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 51,537
Patient deposits 11,105
Sales tax payable 12,554
Other liabilities 2,512
Current portion of long-term debt 110,263
-----------------
Total current liabilities 187,971
-----------------
Long-term debt 105,820
-----------------
Total liabilities 293,791
----------------
Commitments (Note 4)
Shareholders' deficit:
Preferred stock, $.001 par value, 100,000
shares authorized; no shares issued and
outstanding -
Common stock, $.001 par value, 25,000,000
shares authorized; 2,082,043 to be issued 2,082
Additional paid-in capital 12,510,176
Deferred compensation (67,500)
Accumulated deficit (12,508,837)
----------------
Total shareholders' deficit (64,079)
-----------------
Total liabilities and shareholders'
deficit $ 229,712
================
The accompanying footnotes are an integral part of the financial statements.
F-3
LASIK AMERICA, INC.
STATEMENT OF OPERATIONS For the period March 21,
2001 (Inception) through July 31, 2001
Revenues:
Patient Fees (net of discounts) $ 147,230
Facility Fees 36,810
-------------------
Total revenues 184,040
Costs and expenses:
Cost of revenues 79,353
General and administrative 243,369
Compensation expense related to
common stock 12,351,387
Depreciation 14,884
------------------
Total costs and expenses 12,688,993
------------------
Loss from operations (12,504,953)
Other expense:
Interest expense 3,884
------------------
Net loss $ (12,508,837)
==================
Basic and diluted net loss per share $ (6.01)
==================
Shares used to compute basic
and diluted net loss per share 2,082,043
==================
The accompanying footnotes are an integral part of the financial statements.
F-4
LASIK AMERICA, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT For the period March
21, 2001 (Inception) through July 31, 2001
Common Stock
------------------------ Additional Deferred Accumulated
Shares Amount Paid in Capital Compensation Deficit Total
----------- ---------- --------------- ------------ ------------ ------------
Balance, March 21, 2001
(Inception) - $ - $ - $ - $ - $ -
Common stock
for cash 1,865,000 1,865 11,188,135 - - 11,190,000
Common stock
to employees 185,000 185 1,109,815 (90,000) - 1,020,000
Common stock
for cash 32,043 32 192,226 - - 192,258
Contributed services of
executive officer - - 20,000 - - 20,000
Amortization of deferred
compensation - - - 22,500 - 22,500
Net loss - - - - (12,508,837) (12,508,837)
---------- --------- ------------ ----------- ------------ -----------
Balance, July 31, 2001 2,082,043 $ 2,082 $ 12,510,176 $ (67,500) $(12,508,837) $ (64,079)
========= ========= ============ =========== ============ ===========
The accompanying footnotes are an integral part of the financial statements.
F-5
LASIK AMERICA, INC.
STATEMENT OF CASH FLOWS For the period March 21,
2001 (Inception) through July 31, 2001
Cash flows from operating activities:
Net loss $ (12,508,837)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 14,884
Contributed services of executive officer 20,000
Compensation expense related to
common stock 12,328,887
Amortization of deferred compensation 22,500
Changes in operating assets and liabilities:
Increase in accounts receivable (2,370)
Increase in other current assets (7,550)
Increase in accounts payable 51,537
Increase in patient deposits 11,105
Increase in sales tax payable and other liabilities 15,066
--------------
Net cash flows used in operating activities (54,778)
--------------
Cash flows from investing activities:
Purchase of property and equipment (14,341)
--------------
Net cash flows used in investing activities (14,341)
--------------
Cash flows from financing activities:
Proceeds from issuance of common stock 73,371
Repayments on long-term debt (4,233)
--------------
Net cash flows provided by financing activities 69,138
--------------
Net increase in cash 19
Cash at beginning of period -
--------------
Cash at end of period $ 19
==============
The accompanying footnotes are an integral part of the financial statements.
F-6
LASIK AMERICA, INC.
STATEMENT OF CASH FLOWS (Continued) For the period March
21, 2001 (Inception) through July 31, 2001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,654
=================
Income taxes $ -
=================
Supplemental disclosure of noncash investing and financing activities:
Equipment obtained through issuance of long-term debt $ 220,316
=================
Deferred compensation for shares to employee $ 90,000
=================
The accompanying footnotes are an integral part of the financial statements.
F-7
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------
Organization and Business
-------------------------
Lasik America, Inc. (the "Company") was incorporated in the state of
Nevada on March 21, 2001. The Company operates an ophthalmic laser vision
correction center in Albuquerque, New Mexico.
Fiscal Year
-----------
The Company's year-end for financial reporting purposes is July 31.
Financial Instruments
---------------------
The carrying amounts reported in the balance sheet for cash, accounts
receivable, accounts payable, sales tax payable and patient deposits
approximate fair value due to the immediate short-term maturity of these
financial instruments.
The fair value of the Company's long-term debt approximates the carrying
amount based on the current rates offered to the Company for debt of the
same remaining maturities with similar collateral requirements.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Depreciation is calculated on
a straight-line basis over the estimated useful lives of the depreciable
assets which range from three to five years.
Deferred Compensation
---------------------
Deferred compensation represents the unamortized value of common stock
granted to an employee. The deferred compensation recorded in the
accompanying balance sheet is being amortized over the service period (one
year) required for the employee to vest in the stock grant.
Revenue Recognition
-------------------
Revenues are generated by the vision correction procedures performed at
the Company's laser center. Follow-up corrective procedures for customer
satisfaction, consisting of retreatment, are performed when necessary.
Facility fees are derived from the use of the Company's equipment by
affiliate doctors who pay the Company a standard fee per procedure. The
Company recognizes revenues when the vision correction procedures are
performed.
F-8
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ---------------------------------------------------------
Concentration Risk
------------------
The Company's revenues are generated by the vision correction procedures
performed at its laser center in Albuquerque, New Mexico. If the demand
for this procedure decreased or if the Company's ability to continue to
provide this service was impaired, the Company's revenue source would be
severely impacted.
The Company is dependent on a small number of manufacturers for the supply
of its excimer laser and related equipment. If any of these manufacturers
were unable to continue to provide this equipment, the Company's revenue
generating ability would be severely impacted.
Earnings Per Share
------------------
In 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for
earnings per share for entities with publicly held common stock. SFAS No.
128 supercedes the provisions of APB No. 15, and requires the presentation
of basic earnings per share and diluted earnings per share. The Company
has adopted the provisions of SFAS No. 128 effective March 21, 2001.
Basic net income (loss) per share excludes dilution and is computed by
dividing net income (loss) by the weighted average number of common shares
outstanding during the reported periods. Diluted net income (loss) per
share reflects the potential dilution that could occur if stock warrants
and other commitments to issue common stock were exercised. During the
period March 21, 2001 (Inception) through July 31, 2001, the Company had
no outstanding warrants to purchase common shares and no warrants were
included in the weighted average share computation. Due to the fact the
initial common shares were issued at a price lower than the anticipated
initial public offering price of $6.00 per share, the initial common
shares have been treated as if they had been outstanding during the entire
period March 21, 2001 (inception) through July 31, 2001. The Company is
presenting its basic and diluted net loss per share as a single line on
the statement of operations.
Income Taxes
------------
The Company accounts for income taxes using the asset and liability
method. Under the asset and liability method, deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences
between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.
F-9
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ---------------------------------------------------------
Management's Plans for Future Operations and Financing
------------------------------------------------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. At present, the Company's
working capital plus limited capital resources will not be sufficient to
meet the Company's objectives as structured. The accompanying financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
The Company estimates it will need additional capital to achieve its
operations as planned. The Company plans to seek up to approximately
$2,600,000 in equity financing via a Form SB-2 offering pursuant to the
Securities Act of 1933. In the event financing is not obtained, the
Company will adjust its corporate infrastructure to reflect current
operations.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment consist of the following as of July 31, 2001:
Medical equipment $ 224,161
Office equipment, furniture and fixtures 10,496
-----------------
234,657
Less accumulated depreciation (14,884)
-----------------
Net property and equipment $ 219,773
=================
F-10
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 3 - LONG-TERM DEBT
- -----------------------
Long-term debt consists of the following as of July 31, 2001:
The Company's CEO has entered into a loan agreement for the acquisition of
the excimer laser used in the operations of the Company. By oral
agreement, the Company is acquiring the laser from the CEO under terms
which mirror the original loan agreement. This loan bears interest at 10%
per annum with interest and principal payable in monthly installments of
approximately $6,200. The note is secured by a first security interest in
the excimer laser and related
equipment. The note is due in November 2003. $ 159,083
Unsecured note payable bearing interest at 10% per annum with interest and
principal payable in monthly installments of approximately $3,400. The
note is due in November 2002. Payments due to the holder of this note have
been assigned to the
Internal Revenue Service. (See Note 7). 57,000
-----------------
216,083
Less: Current portion (110,263)
-----------------
$ 105,820
=================
Aggregate maturities of long-term obligations at July 31 are as follows:
Year ending Amount
----------- -----------------
2002 $ 110,263
2003 81,573
2004 24,247
-----------------
$ 216,083
=================
NOTE 4 - COMMITMENTS
- --------------------
The Company leases its facility on a month to month basis pending the
completion of the new office facility. The monthly rent is $782. The
Company has entered into a one year maintenance agreement for the laser
with monthly payments of $4,375. The Company also leases certain surgical
equipment with expiration dates through November 2001. Approximate minimum
future obligations under these leases and the maintenance agreement as of
July 31, 2002 are $53,875.
Rent expense for the facility was $3,255 for the period March 21, 2001
(inception) through July 31, 2001.
F-11
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 5 - SHAREHOLDERS' EQUITY
- -----------------------------
During March 2001, the Company sold 1,090,000 shares of common stock to
the Company's CEO. As of July 31, 2001 these shares had not been issued.
Proceeds from this transaction amounted to $8,510. Management has valued
these shares at $6.00 per share based on the proximity of the anticipated
initial public offering. As a result of this, the Company has taken a
charge of $6,531,490 relating to this transaction which has been accounted
for in the accompanying statement of operations as compensation expense
related to common stock.
During March 2001, the Company sold 775,000 shares of common stock to
individuals, considered to related parties to the CEO, in conjunction with
the formation of the Company. As of July 31, 2001 these shares had not
been issued. Proceeds from this transaction amounted to $775. Management
has valued these shares at $6.00 per share based on the proximity of the
anticipated initial public offering. As a result of this, the Company has
taken a charge of $4,649,225 relating to this transaction which has been
accounted for in the accompanying statement of operations as compensation
expense related to common stock.
During April 2001, the Company granted 185,000 shares of common stock to
employees. As of July 31, 2001 these shares had not been issued.
Management has valued these shares at $6.00 per share based on the
proximity of the anticipated initial public offering. One employee's stock
award vests over a one year period. Accordingly, this amount is being
amortized over the vesting period. As a result of these stock grants, the
Company has taken a charge of $1,042,500, net of deferred compensation,
which has been accounted for in the accompanying statement of operations
as compensation expense related to common stock.
During April, May and June 2001, the Company sold 32,043 shares of common
stock to individuals considered to be related parties to the CEO. As of
July 31, 2001 these shares had not been issued. Proceeds from these
transactions amount to $64,086. Management has valued these shares at
$6.00 per share based on the proximity of the anticipated initial public
offering. As a result of this, the Company has taken a charge of $128,172
relating to this transaction which has been accounted for in the
accompanying statement of operations as compensation expense related to
common stock.
For the period from March 21, 2001 (inception) through July 31, 2001, the
CEO contributed services with a fair value of $20,000, at no cost. This
amount is included in additional paid in capital and in general and
administrative expenses for the period from March 21, 2001 (inception)
through July 31, 2001.
NOTE 6 - INCOME TAXES
- ---------------------
Deferred income taxes reflect the net tax effects of the temporary
differences between the carrying amounts of assets and liabilities for
financial reporting and the amounts used for income tax purposes. The tax
effect of temporary differences consisted of the following as of July 31,
2001:
F-12
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 6 - INCOME TAXES (Continued)
- ---------------------
Deferred tax assets:
Net operating loss carryforwards $ 102,600
----------------
Gross deferred tax assets 102,600
Less valuation allowance (102,600)
----------------
Deferred tax liabilities -
----------------
$ -
================
Realization of deferred tax assets is dependant upon sufficient future
taxable income during the period that deductible temporary differences and
carryforwards are expected to be available to reduce taxable income. As
the achievement of required future taxable income is uncertain, the
Company recorded a valuation allowance. The valuation allowance increased
by $102,600 during the period March 21, 2001 (inception) through July 31,
2001.
As of July 31, 2001, the Company has net operating loss carryforwards for
both federal and state income tax purposes. Federal net operating loss
carryforwards totaling approximately $258,000 expire in 2021; state net
operating loss carryforwards totaling approximately $258,000 expire in
2006.
A reconciliation of the effective tax rates with the federal statutory
rate is as follows for the period March 21, 2001 (inception) through July
31, 2001:
Income tax benefit at 35% statutory rate $ (90,200)
State income taxes, net (12,400)
Change in valuation allowance 102,600
-----------------
$ -
=================
NOTE 7 - RELATED PARTY TRANSACTION
- ----------------------------------
During April 2001, the Company acquired certain medical and office
equipment from a related entity via the execution of a promissory note to
the related entity. This promissory note has been assigned by the related
entity to the Internal Revenue Service. (See Note 3).
F-13
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS For the period March 21,
2001 (Inception) through July 31, 2001
NOTE 8 - SUBSEQUENT EVENT
- --------------------------
During August 2001, the Company granted 125,000 warrants to purchase
shares of the Company's common stock to the CEO at an exercise price of
120% of the initial public offering price of the common stock. These
125,000 warrants are being offered for resale as part of the 125,000 units
being offered for resale by the selling shareholder. The warrants expire
sixty months from the effective date of the Registration Statement filed
on Form SB-2 by the Company and are exercisable at 120% of the initial
offering price per share of the Common Stock. The warrants are redeemable
by the Company commencing six months after the effective date of the
offering at $0.10 per warrant, provided the average closing bid price for
the Company's common stock equals or exceeds one hundred fifty percent of
the initial public offering price per share for any twenty consecutive
trading days. These warrants have been valued at $0.10 per share based on
the price of similar warrants included in the units offered in the Form
SB-2 offering.
F-14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Business Corporation Act provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of the company. The Nevada
Business Corporation Act provides that Section 78.751 is not exclusive of any
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
The Company's Articles of Incorporation dated March 21, 2001, provides for
indemnification by the Registrant of its directors, officers and employees to
the fullest extent permitted by the Nevada General Corporation Law.
Section 78.751 of the Nevada Business Corporation Act permits a corporation
to provide in its certificate of incorporation that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
eliminates the personal liability of directors to the furthest extent
permissible under the Nevada Business Corporation Act.
Reference is also made to the underwriting agreements filed as Exhibits 1.1
and 1.2 to the Registration Statement for information concerning the
underwriters' obligation to indemnify the Registrant and its officers and
directors as well as the selling shareholder, in certain circumstances, and our
obligation and the obligation of the selling shareholder to indemnify the
underwriters. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant and the selling shareholder have 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.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with this offering are
as follows:
SEC Registration Fee........................................ $ 2,078
NASD Filing Fee............................................. $ 917
Accounting Fees and Expenses*............................... $ 25,000
Printing and Engraving*..................................... $ 20,000
Legal Fees and Expenses*.................................... $ 30,000
Blue Sky Fees and Expenses*................................. $ 7,500
Transfer Agent and Registrar Fees*.......................... $ 10,000
46
Miscellaneous Expenses*..................................... $ 12,500
--------
Total*................................................ $107,995
========
------------------------
* Estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Registrant has sold and issued the
following unregistered securities in transactions which were exempt from
registration under the Securities Act of 1933, pursuant to Section 4(2) of the
Securities Act, as they were transactions not involving a public offering:
In a private placement to accredited investors made by us shortly after
our incorporation in March 2001, which was exempt from registration under the
Securities Act pursuant to the statutory exemption from registration provided by
Section 4(2) of the Securities Act and pursuant to Rule 506 of Regulation D
promulgated thereunder, the Registrant offered and sold 1,865,000 shares of our
common stock at par value, which is $.001 per share. During this same time,
185,000 additional shares of our common stock were issued to employees in lieu
of cash compensation for their services rendered during the start-up of our
operations.
Pursuant to a warrant agreement we entered into with Howard P.
Silverman, our chief executive officer, on August 24, 2001, we granted a
redeemable common stock purchase warrant to Dr. Silverman entitling him to
purchase 125,000 shares of our common stock at an exercise price of $7.20 per
share as a part of his compensation for services rendered to us. Dr. Silverman's
warrant is outstanding, has not been exercised, and is being registered for
resale with his 125,000 units offered for sale by this registration statement
and the prospectus which forms a part thereof. Our grant of the redeemable
common stock purchase warrant to Dr. Silverman was a transaction exempt from
registration pursuant to Section 4(2) of the Securities Act.
Dr. Silverman had full access to our business plans, financial
statements and financial projections. Dr. Silverman also had access to any other
corporate information he requested when he received his warrant.
In a private placement to five accredited investors made by us in April
and May 2001, which was exempt from registration under the Securities Act
pursuant to Rule 506 of Regulation D promulgated thereunder, the Registrant
offered and sold 32,043 shares of our common stock at a price of $2.00 per
share, for total gross aggregate offering proceeds of $64,086.
ITEM 27. EXHIBITS.
a. The following Exhibits are filed as a part of this Registration
Statement pursuant to Item 601 of Regulation S-B:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- --------------- -----------------------------------------------------
1.0 Form of Underwriting Agreement For The Registrant*
47
1.1 Form of Underwriting Agreement For Selling Shareholder*
1.2 Form of Representative's Warrant Agreement, including Form of
Representative's Warrant*
1.3 Form of Public Warrant Agreement
3.1 Articles of Incorporation of Registrant
3.2 By-laws of the Registrant
4.0 Specimen of Common Stock Certificate
4.1 Specimen of Common Stock Purchase Warrant*
4.2 Specimen of Unit Certificate*
5.0 Opinion of Gregory Bartko, Esq.*
10.0 Warrant Agreement Dated August 24, 2001 Between the Registrant
and Howard P. Silverman
10.1 Equipment Purchase Agreement Dated May 3, 2001 Between Howard
P. Silverman and TrueVision Medical Associates, Inc.
10.2 Bill of Sale Dated May 3, 2001 Between TrueVision Medical
Associates, Inc.
10.3 Promissory Note Dated May 3, 2001 by Howard P. Silverman and
TrueVision Medical Associates, Inc.
10.4 Security Agreement Dated May 3, 2001 Between Howard P.
Silverman and TrueVision Medical Associates, Inc.
10.5 Sales Agreement Dated May 10, 2001 Between VISX, Incorporated
and the Registrant
10.6 VISX, Incorporated Patent License to the Registrant, Dated
May 11, 2001
10.7 Equipment Lease Agreement Dated May 23, 2001 Between Bausch &
Lomb and the Registrant
23.0 Consent of Gregory Bartko, Esq. (included in opinion filed as
Exhibit 5.0)*
23.1 Consent of Pannell Kerr Forster, Certified Public Accountants,
A Professional Corporation, San Diego, California, independent
auditors
24.0 Power of Attorney (included in Part II of the Registration
Statement under the caption "Signatures")
------------------------
* To be filed by amendment
48
ITEM 28. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the undersigned 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 undersigned Registrant of expenses incurred or
paid by a director, officer or controlling person of the undersigned 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 undersigned 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.
(b) The undersigned Registrant in all instances will provide to the
Underwriter at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the undersigned Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be part of the registration statement as of the
time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
(d) The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
49
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution;
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with 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 SB-2 and authorized this amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Albuquerque, New Mexico, on the 6th day of
September, 2001.
LASIK AMERICA, INC.
By:
----------------------------------------
Howard P. Silverman, president and
chief executive officer
NAME CAPACITY DATE
- ----------------------------- ------------------------ -------------------
- ----------------------------- Chairman, president, September 6, 2001
Howard P. Silverman chief executive officer
and director
*
- ----------------------------- Chief Operating Officer September 6, 2001
Robert S. Helmer and Director
- ----------------------------- Principal
Howard P. Silverman accounting officer September 6, 2001
*
- ----------------------------- Director September 6, 2001
Stuart S. Greenberg
*
- ----------------------------- Director September 6, 2001
Steven L. De Vicenzi
* Howard P. Silverman
As Power of Attorney
50
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- --------------------- -----------------------------------------------------
1.0 Form of Underwriting Agreement For The Registrant*
1.1 Form of Underwriting Agreement For Selling Shareholder*
1.2 Form of Representative's Warrant Agreement, including
Form of Representative's Warrant*
1.3 Form of Public Warrant Agreement
3.1 Articles of Incorporation of Registrant
3.2 By-laws of the Registrant
4.0 Specimen of Common Stock Certificate
4.1 Specimen of Common Stock Purchase Warrant*
4.2 Specimen of Unit Certificate*
5.0 Opinion of Gregory Bartko, Esq.*
10.0 Warrant Agreement Dated August 24, 2001 Between the
Registrant and Howard P. Silverman
10.1 Equipment Purchase Agreement Dated May 3, 2001 Between
Howard P. Silverman and TrueVision Medical Associates,
Inc.
10.2 Bill of Sale Dated May 3, 2001 Between TrueVision
Medical Associates, Inc.
10.3 Promissory Note Dated May 3, 2001 by Howard P. Silverman
and TrueVision Medical Associates, Inc.
10.4 Security Agreement Dated May 3, 2001 Between Howard P.
Silverman and TrueVision Medical Associates, Inc.
10.5 Sales Agreement Dated May 10, 2001 Between VISX,
Incorporated and the Registrant
10.6 VISX, Incorporated Patent License to the Registrant,
Dated May 11, 2001
10.7 Equipment Lease Agreement Dated May 23, 2001 Between
Bausch & Lomb and the Registrant
51
23.0 Consent of Gregory Bartko, Esq. (included in opinion
filed as Exhibit 5.0)*
23.1 Consent of Pannell Kerr Forster, Certified Public
Accountants, A Professional Corporation, San Diego,
California, independent auditors
24.0 Power of Attorney (included in Part II of the
Registration Statement under the caption "Signatures")
- ------------------------
* To be filed by amendment
52