As filed with the U.S. Securities and Exchange Commission on December 12, 2001
REGISTRATION NO. 333-68942
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT 5
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. CHRISTOPHER DIETERICH, ESQ.
Law Office of Gregory Bartko Law Offices of Dieterich & Associates
3475 Lenox Road, Suite 400 11300 W. Olympic Boulevard, Suite 800
Atlanta, Georgia 30326 Los Angeles, California 90064
(404) 238-0550 (telephone) (310) 312-6888 (telephone)
(404) 238-0551 (facsimile) (310) 312-6680 (facsimile)
------------------------
i
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.
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED(5) 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).......................... 550,000 $6.10 $3,335,000 $833.75
Common stock, $.001 par value
per share, included as a part
of the units offered (3)..... 550,000 --- ---- ---
Redeemable common stock
purchase warrants included as
a part of the units
offered (4).................. 550,000 --- ---- ---
Common stock underlying
redeemable warrants included
in the units (6)............. 550,000 $7.20 $3,960,000 $990.00
ii
---------- ---------
Total.................. --- --- $7,295,000 $1,823.75
========== =========
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act.
(2) Includes 125,000 units beneficially owned by Howard P. Silverman,
selling shareholder, that are registered for resale in this
registration statement.
(3) Includes 125,000 shares of common stock beneficially owned by Howard P.
Silverman, selling shareholder, that are registered for resale in this
registration statement.
(4) 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.
(5) Pursuant to Rule 416, we are registering additional securities as may
become issuable pursuant to the anti-dilution provisions of the redeemable
warrants.
(6) Includes 125,000 shares of common stock underlying the 125,000 redeemable
common stock purchase warrants offered for resale by Howard P. Silverman,
the selling shareholder.
iii
SUBJECT TO COMPLETION, DATED DECEMBER 12, 2001
LASIK AMERICA, INC.
550,000 UNITS
This is an initial public offering by us of 425,000 units of LASIK
America, Inc. and 125,000 units on behalf of the selling shareholder. Each
unit consist of one share of common stock and one redeemable common stock
purchase warrant, with each warrant exercisable to purchase one share of
common stock. This prospectus also covers the offer of shares of our common
stock issuable upon the exercise of the common stock purchase warrants
offered by us and the selling shareholder.
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. The initial public offering price is $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 upon the
termination of this offering, which will occur on January 31, 2002 or 60
days thereafter if the offering is extended by the representative of the
underwriters.
Please see the risk factors beginning on page 6 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 25% 50% 100%
Unit Sold Sold Sold
---- ---- ---- ----
o Price to the public..................... $6.10 $648,125 $1,296,250 $2,592,500
o Underwriting discounts and commissions.. $0.61 $ 64,813 $ 129,625 $ 259,250
o Non-accountable expense allowance....... $0.18 $ 19,444 $ 38,888 $ 77,775
o Proceeds, before expenses,
to LASIK America..................... $5.31 $563,868 $1,127,737 $2,255,475
o Proceeds, before expenses, to the
selling shareholder.................. $5.49 $171,563 $ 343,125 $ 686,250
Delivery of the securities offered by this prospectus will be made
from time to time commencing on the date of this prospectus until the
offering terminates. The underwriters are offering the units on a best
efforts basis, and there is no minimum number of units that must be sold as
a condition of the offering. The underwriters may offer the units for sale
to the public commencing at the date of this prospectus. All funds received
from subscribers of the units will be deposited into an escrow account with
Wells Fargo Bank, N.A., Los Angeles, California.
The information contained 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 it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
WEST AMERICA SECURITIES CORP.
Prospectus dated December 12, 2001
Table of contents
Page No.
--------
Prospectus summary.......................................... 3
Risk factors................................................ 6
Cautionary note regarding forward-looking statements........ 12
Use of proceeds............................................. 13
Dividend policy............................................. 14
Capitalization.............................................. 15
Dilution.................................................... 15
Selected financial data..................................... 16
Management's discussion and analysis of financial condition
and results of operations................................. 18
Business.................................................... 22
Management.................................................. 34
Certain transactions........................................ 39
Principal stockholders and the selling shareholder.......... 39
Description of securities................................... 41
Shares eligible for future sale............................. 44
Underwriting................................................ 45
Plan of distribution for selling shareholder................ 50
Legal matters............................................... 52
Experts..................................................... 52
Index to financial statements............................... F-1
2
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. Since our inception to
July 31, 2001, we have incurred a net loss of $(12,508,837). Accordingly, our
auditors have indicated in their opinion that there is substantial doubt about
our ability to continue as a going concern should we not be able to raise
capital through the offer and sale of the units pursuant to this prospectus.
The offering
The offering does not include any minimum number of units that must be sold
for net proceeds to be received by us from the sale of the units. All funds
received from subscribers for the units will be deposited into a non-interest
bearing escrow account from which net proceeds from the sale of units will be
delivered to us once we accept a subscription for the units. Funds from
subscriptions not accepted will be returned to the subscriber without interest
or other deductions. Accordingly, purchasers of units may hold units sold in the
offering without any liquid market for their common stock and warrants and
even though we may not receive sufficient net proceeds from this offering to
execute our business plan and expand our operations.
Terms of 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;
3
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.
4
March 21, 2001 (inception)
through July 31, 2001
---------------------------
Statement of operations data:
Revenues................................... $ 184,040
Cost of revenues(exclusive of
depreciation included in operating
costs and expenses below)............... 79,353
Operating costs and expenses (including
non-cash compensation of $12,351,387)... 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:
Balance sheet data:
July 31, 2001
actual
-----------
Cash and cash equivalents................ $ 19
Total working capital (deficit).......... (178,032)
Total assets............................. 229,712
Current portion of long
term liabilities....................... 110,263
Long term debt........................... 105,820
Total liabilities........................ 293,791
Total shareholders' (deficit)............ (64,079)
5
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 experienced by
us in establishing our business and operations, such as financing our start-up
costs, forming alliances with ophthalmologists and optometrists and establishing
our patient flow.
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 operating and capital
expenditures and, as a result, we expect net losses in the future. We will need
to generate significant revenues to achieve and maintain profitability, and if
we do not, we anticipate that we will require approximately $1,000,000 in
additional capital in order to effectuate our business plan, expand by
establishing one additional laser vision center and meet our operational
expenses. Without additional capital, our plan to establish one additional laser
vision center will be deferred.
Our auditors have issued their audit report with an emphasis of matter
in their opinion that indicates that our financial statements have been prepared
with the assumption that we will continue as a going concern. Our auditors have
issued a report that accompanies our financial statements for the period ended
July 31, 2001. A paragraph in their report discloses that our financial
statements have been prepared assuming we would continue in business as a going
concern, and that due to our limited capital resources and a large working
capital deficit, our auditors have raised a substantial doubt about our ability
to continue as a going concern.
Since there is no minimum number of units that must be sold in this
offering, purchasers of the units may be investing in a company that will not
receive adequate investment capital in this offering. There is no minimum number
of units that must be sold in this offering before we receive net proceeds from
the sale of any units. As a result, purchasers of the units may own our common
stock and warrants even though we may not receive sufficient investment capital
from this offering to continue our operations. We also may not be able to raise
other investment capital in the future in order to continue our business and
operations.
6
If we do not sell a sufficient number of units in this public offering,
alternate funding will be needed and we will have to modify our business
operations accordingly. Without the receipt of the net proceeds from the sale of
the maximum number of units we are offering, we will not be able to continue
operations and implement of business plan as anticipated. If appropriate
financing is not obtained by us through our public offering, we intend to modify
our operations accordingly. If we raise additional capital through the sale of
equity, including preferred stock, or convertible debt securities, our
stockholders may experience dilution.
If adequate capital was otherwise not available to us on acceptable
terms, we will be unable to fund our expansion, develop or enhance our services
or respond to competitive pressures. Other than through the offer and sale of
the units in our public offering, we currently do not have a credit facility or
any other commitments for additional financing. We cannot be certain that
additional financing will be available when and to the extent required if we do
not sell sufficient units in this public offering. 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. Since no minimum number of units must be purchased as a
condition of this public offering, we can make no prediction on the amount of
net proceeds, if any, that will be available at the conclusion of the offering.
Our management will have broad discretion to allocate the proceeds of this
offering, including 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 how many units are purchased in this
public offering, 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. We intend to allocate the net
proceeds from this offering for working capital and general corporate purposes
and 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;
7
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 payers to reimburse clients 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;
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
8
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.
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
9
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 ophthalmologist who uses our center to enforcement actions, including
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.
Substantial dilution of ownership to shareholders will occur as a
result of the sale of the units in this public offering, and such dilution may
negatively impact the market price of our securities if and when such a market
develops. We are offering for sale approximately 20.4% of the number of shares
of common stock we have outstanding before the offering, and 40.8% of the number
10
of shares of common stock outstanding before the offering if all of the common
stock purchase warrants that are a part of the units, were to be exercised.
Accordingly, there will be substantial ownership dilution to our shareholders as
a result of the sale of the units, and such dilution may negatively affect the
market price of our securities if they are approved for price quotations on the
over-the-counter electronic bulletin board maintained by the NASD.
Providing laser surgery procedures and related eye care services on our
clients 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 clients subjects us to the potential that significant
physical injury will occur to clients 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
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,
11
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.
Although we intend to seek approval for price quotation of the common
stock and common stock purchase warrants on the over-the-counter electronic
bulletin board maintained by the NASD, securities quoted over-the-counter are
often thinly traded, highly volatile in price and not regularly followed by
securities analysts. Even if our securities are approved for price quotations on
the over-the-counter electronic bulletin board maintained by the NASD, such
approval does not mean that our securities will be actively followed or traded,
or that an adequate market for our securities will develop or if developed, be
maintained, as such securities are usually thinly traded and subject to price
volatility.
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 or
maintain a public market for our securities.
The representative of our underwriters may not be able to act as a
market maker in our securities at the conclusion of this public offering, and
we are not certain whether any of the underwriters will make a market in our
securities. We don't know if our underwriters or 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.
12
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
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
$2,255,475 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. However, since there is no minimum number of units that must be sold in
this offering, we can give no assurance that any of the units will be sold or
that we will receive the proceeds from the sale of the maximum number of units
offered. The following table reflects the use of the net proceeds from the sale
of the units offered assuming we sell 100%, 75%, 50% and 25% of the units
offered. Using these four assumptions we intend to use the net proceeds from the
units offered, as follows:
Net Proceeds of Offering
25% of Units 50% of Units 75% of Units 100% of Units
Accounts payable and offering expenses...... $ 250,000 $ 250,000 $ 250,000 $ 250,000
Working capital and general corporate
purposes which includes salaries, cost
of additional personnel, support and
management systems, capital costs for
computers and related equipment........... 93,112 260,566 428,021 595,475
Laser and refractive equipment ............. 93,939 262,626 431,313 600,000
Advertising................................. 11,742 32,828 53,914 75,000
Office build-out expenditures............... 13,308 37,205 61,103 85,000
Expenses of opening new center.............. 101,767 284,512 467,256 650,000
--------- ---------- ---------- ----------
Total................................... $ 563,868 $1,127,737 $1,691,607 $2,255,475
========= ========== ========== ==========
If we do not receive all of the net proceeds described above, we will
prioritize and allocate net proceeds received, first to accounts payable and
13
offering expenses, working capital and general corporate purposes, to laser and
refractive equipment, advertising and lastly to office build-out expenditures
and the expenses of opening a planned new laser vision correction center. We
anticipate that, through this offering or otherwise, we will require a minimum
of $610,000 in available financing over the next 12 months in order to maintain
our business and current operations during that time.
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
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.
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.
14
Capitalization
The following table sets forth our actual capitalization as of July 31,
2001:
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
-----------
Current portion of long term liabilities. $ 110,263
===========
Long term debt........................... $ 105,820
===========
Stockholders' (deficit):
Preferred stock, $.001 par value;
100,000 authorized, no shares issued.. $ 0
-----------
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 stockholders' (deficit)........ (64,079)
-----------
Total capitalization................. $ 152,004
===========
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.
There is no minimum number of units that must be sold in this offering.
The following information has been prepared assuming that we realize the
estimated proceeds from the sale of the maximum number of units being offered by
us. We can give no assurance that any of the units will be sold or that we will
receive the proceeds from the sale of the maximum number of units offered.
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 $2,191,396,
15
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.
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% $2,623,371 100%
========= ==== ========== =======
Selected financial data
The following selected financial data should be read in conjunction
with our audited financial statements for the period March 21, 2001 (inception)
through July 31, 2001 included elsewhere in the prospectus and Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
historical selected financial data as of July 31, 2001 and for the period March
21, 2001 (inception) through July 31, 2001 are derived from and should be read
in conjunction with our audited financial statements included elsewhere in the
prospectus. The results of operations for the period March 21, 2001 (inception)
through July 31, 2001 are not necessarily indicative of results to be expected
for the current fiscal year.
16
March 21, 2001 (inception)
through July 31, 2001
--------------------------
Statement of operations data:
Revenues...................................$ 184,040
Operating costs and expenses:
Cost of revenues (exclusive of
depreciation shown separately below)... 79,353
General and administrative (including non-
cash compensation of $12,351,387)...... 12,594,756
Depreciation............................. 14,884
----------
Total operating costs and expenses..... 12,609,640
----------
Loss from operations....................... (12,504,953)
Interest expense........................... (3,884)
----------
Net loss...................................$(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
==========
The following table includes a summary of our balance sheet at July 31, 2001:
Balance sheet data:
July 31, 2001
-----------
Actual
-----------
Cash and cash equivalents................ $ 19
Total working capital (deficit).......... (178,032)
Total assets............................. 229,712
Current portion of long
term liabilities....................... 110,263
Long term debt........................... 105,820
Total liabilities........................ 293,791
Total shareholders' (deficit)............ (64,079)
17
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. Our affiliated and employed
doctors provide medical care to our clients and we provide the necessary
equipment, technical staff, administrative services and the excimer laser,
needed for the delivery of laser eye surgery to our clients. We do not practice
medicine, rather our affiliated and employed doctors deliver medical care and
treatment to eye surgery patients.
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. Our plan of expansion
includes opening at least one additional laser vision center in Las Vegas,
Nevada.
Our doctors perform laser vision correction surgery procedures in our
New Mexico center office. We provide our ophthalmologist and optometrist with
state-of-the-art equipment and facilities as well as support services necessary
to perform vision correction procedures. At present we have one affiliated
ophthalmologist, one employed ophthalmologist and one employed optometrist in
our center. Our affiliated doctor uses our center to perform laser vision
correction surgery on his own patients. In that case, our affiliated doctor
relies on us only to provide our state-of-the art laser vision surgery center,
equipment and facilities for surgical procedures performed on his own patients.
In contrast, our employed doctor performs surgery on clients of our center,
which includes delivery of pre and post-operative care. We generate our revenue
on the number of surgical procedures we conduct in our center. Currently we
receive $440.00 per eye on procedures performed by our affiliated doctor, which
is paid to us by our affiliated doctor, and $995.00 per eye on procedures
performed by our employed doctor.
Although we have no written agreements with our affiliated or employed
doctors, we have agreed to compensate our employed ophthalmologist at the rate
of $200,000 per year and our employed optometrist at the rate of $105,000 per
year.
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.
18
Our plan of operation
We believe that our New Mexico center now in operation can sustain its
current operations on current revenue and what we believe will be increased
usage of our center by new clients generated from our advertising and marketing
efforts, as well as general client awareness of the laser vision correction
procedure. At current levels, we are generating a net loss from operations, but
we anticipate beginning to generate a net profit at the end of our first full
year of operations. With current revenues, we have experienced a continuing
increase in the number of surgical procedures performed in our center primarily,
by dedicating three of our employees to new client development and advertising
locally through the placement of kiosks in local shopping malls where high
pedestrian traffic exists.
Our plan of expansion includes opening a second laser vision correction
center in Las Vegas, Nevada. We will require the proceeds from this offering in
order to purchase the needed excimer laser, related medical equipment and
working capital necessary for the build out and corporate expenses associated
with opening a second center. If we open a second center, we expect that we will
need to hire staff and technical expertise to operate any new center, and that
the additional cost to us in doing so will come primarily from the proceeds of
this offering. If we do not sell a sufficient number of units in this offering,
our plan is to maintain the current operational level in our New Mexico center
and to develop marketing and sales efforts designed to increase our patient
flow. Our New Mexico center has the capacity to perform approximately 100 eye
surgery procedures each week and at present, we are performing approximately 20
eye surgeries each week.
We currently generate on average approximately $73,000 per month in
gross revenue and believe that we will require approximately $1,200,000 in gross
revenue during the next 12 months to maintain our existing operations. We
believe that our cash requirements during the next 12 months will be satisfied
through an increase in the number of clients and eye surgery procedures,
expected from our advertising and marketing efforts.
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 (exclusive of
depreciation shown separately below. 43.1%
General and administrative expense..... 6,843.5%
Depreciation expense................... 8.1%
Total operating expenses............... 6,851.6%
Loss from Operations................... 6,794.7%
Interest Expense....................... 2.1%
Net (loss)............................. (6,796.8)%
19
Results of operations
Revenues
We derive our revenues directly from the number of laser vision
surgical procedures performed at our center. Procedures performed by our
affiliated doctor generate revenue to us from the physician, who collects a fee
from the patient. Procedures performed by our employed doctor generate revenue
directly to us from the patient. 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, exclusive of depreciation, 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,
exclusive of depreciation, equaled 43.1% of total revenue during the period.
Royalty fees are payable to the licensor of the excimer laser we use for
surgical procedures and is currently $110.00 per eye.
General and administrative expenses
General and administrative expenses consist primarily of compensation
expense related to common stock to be issued, salaries, wages and related costs
for general corporate functions. General and administrative expenses from
inception to July 31, 2001 totaled $12,594,756. As a percentage of revenue,
general and administrative expenses equaled 6,843% of total revenue. We believe
that this current percentage is high during this period as a result of the
non-cash compensation expense related to common stock to be issued and our
accounting, legal and other fees for professional services incurred during our
formation and start-up process. Compensation expense of $12,351,387 related to
common stock to be issued 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,
20
2001 was $12,508,837. This net loss is almost exclusively 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.
We believe that after our first full year of operations, we will be
performing a sufficient number of laser vision surgical procedures to generate a
net profit. Accordingly, without the costs associated with our expansion plans,
we do not anticipate generating a net loss from operations after our first full
year.
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. In order to effectuate our business plan as
structured we will need to raise significant capital from external sources. In
addition, we intend on raising capital internally through the increase in the
number of procedures we perform. We currently do not have a credit facility or
any commitments for additional financing. If we are unable to obtain adequate
financing from internal or external sources we may be unable to fully implement
our business plan and may be forced to modify our operations. 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.
21
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
We are a provider of laser vision correction procedures in New Mexico. In
order to expand and grow our business, we hope to implement the following
strategies:
o Expand our geographic presence by opening additional centers,
with the first expansion center targeted for Las Vegas, Nevada;
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 clients by expanding
22
our services to other selected geographic markets. Currently, all of our
revenues are generated in our New Mexico center by delivering laser vision
correction surgical procedures to clients primarily in the Albuquerque
metropolitan area. Our revenue is based upon the number of laser vision
correction procedures done at our center and is dependent on whether the
procedure is completed by one of our affiliated doctors or our employed doctor.
We believe that as laser vision surgery becomes more accepted to the patient
population and our advertising and marketing effort takes effect, more clients
will have laser vision surgery at our center, and in turn, we expect our
revenues to increase.
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
23
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
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
clients 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.
Clients usually have one eye treated per visit.
24
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 ophthalmologist and optometrist who
perform pre-procedure evaluations, laser vision correction procedures, and
post-procedure follow-ups. Depending on the success of this offering, we plan to
expand our services by opening a second laser vision correction center in Las
Vegas, Nevada.
We strive to meet the needs of our clients as well as our
ophthalmologist and optometrist. 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
ophthalmologist and optometrist with:
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
clients 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 clients with:
o ACCESS TO A HIGHLY CREDENTIALED OPHTHALMOLOGIST AND
OPTOMETRIST. Our ophthalmologist has completed extensive
FDA-mandated training and has met our qualification criteria.
Our center is designed to create a client friendly
environment and reduce any anxiety associated with laser
vision correction procedures. We believe our center has an
aesthetically pleasing and comfortable waiting area and our
center staff is focused on addressing the needs of each
client;
25
o EDUCATIONAL CONSULTATIONS AND MATERIALS. The education
process begins with our initial contact with the patient.
Potential clients 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.
Clients 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 clients 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;
o AFFORDABLE FINANCING ALTERNATIVES. Laser vision correction
procedures are elective and generally not reimbursable by
third-party payers. We offer clients 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 and licenses
In order to provide laser vision corrective surgical procedures to our
clients, we do so by acquiring an excimer laser and related medical equipment
and establishing a facility for the delivery of the surgical procedures. By
sales agreement entered into on May 3, 2001 between Dr. Silverman, our chief
executive officer, and a third-party supplier, Dr. Silverman purchased medical
equipment required to perform laser vision corrective surgery, for a total of
$64,000. The purchase price of the equipment is payable under the terms of a
promissory note executed by Dr. Silverman providing for 18 monthly payments of
$3,423.26 commencing June 1, 2001. The repayment of this amount is
collateralized by a first priority lien on the equipment in favor of the seller.
Dr. Silverman also entered into a loan and security agreement with DVI
Financial, Inc. for the purpose of assuming the balance due on the purchase of
the excimer laser used in our facility, whereby Dr. Silverman agreed to pay a
total of $185,596 in 30 monthly installments of $6,186.55 commencing June 2001
and continuing until the total principal and interest is paid. The repayment of
this amount is collateralized by a first priority lien on the excimer laser in
favor of DVI Financial, Inc.
26
Our ability to use the excimer laser to perform laser vision correction
procedures in our center is derived from a sales and license agreement that
governs the intellectual property rights covering the excimer laser technology.
Under that agreement, wee are able to purchase "key cards" from the manufacturer
of the excimer laser for each surgical procedure using the laser and also 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. The key cards and license fee we
pay to the manufacturer for each surgical procedure is currently $110.00 per
eye. The intellectual property rights we license from the manufacturer of the
excimer laser is protected by one or more patents.
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 $1,990.00 for both eyes. LASIK America-employed doctors deliver
our services and are paid a fixed salary with no additional fees. Our LASIK
America-affiliated ophthalmologist pays us a facility fee for each eye he
performs surgery on at our center, which fee is currently set at $440.00 per
eye. They collect the entire fee from each client.
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
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.
27
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.
Government regulation
As a participant in the health care industry, our operations and the
operations of our affiliated ophthalmologist and optometrist are subject to
extensive and increasing regulation by governmental entities at the Federal,
28
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. Although New Mexico and many other states do not permit the
corporate practice of medicine, we do not engage in the practice of medicine in
New Mexico as our affiliated and employed doctors actually deliver the medical
service required to perform laser vision corrective surgery.
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 clients 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.
29
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
clients 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.
30
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
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.
31
Employees
As of December 12, 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 this total, six employees function as medical or technical employees, two
work in sales functions and two are 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 an affiliate relationship with
a local ophthalmologist who provides medical services to our clients. As of
December 12, 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
32
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 office located at 500 West Madison Street,
Suite 1400, 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
common stock and common stock purchase warrants on the over-the-counter
electronic bulletin board maintained by the NASD.
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.
33
Management
Directors and officers
Our executive officers, directors, and key employees and their ages as of
December 12, 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,
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.
34
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 chief executive officer and chief operating officer were
sold/granted, respectively, shares of our common stock in conjunction with
certain activities associated with our formation and operations. These
individuals did not receive such compensation for their activities as our
directors, rather they received shares and other securities as employee
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
the annual meeting next ensuing. There are no family relationships among any of
35
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 and our chief operating officer, Robert
S. Helmer, from our inception on March 21, 2001 to July 31, 2001, the end of our
most current fiscal year. We have no employment agreements with any executive
officer, although we have agreed with Dr. Silverman, that his annual cash
compensation, including any bonus, will be $150,000 per year, commencing at the
conclusion of our public offering.
36
Summary compensation table
Annual
Compensation Other compensation
------------ -------------------
Salary($) Bonus($) Other annual All other
2001 2001 compensation compensation
---- ---- ------------ ------------
Name and position
- -----------------
Howard P. Silverman, chief
executive officer.......... -0- -0- -0- $6,531,490
Robert S. Helmer, chief
Operating officer.......... $19,152 -0- -0- $900,000
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 $7,470,642. 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 1,240,000 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. The amounts listed
under all other compensation in the above table represent non-cash compensation
delivered to two officers shown in the table, based upon the number of shares of
our common stock granted to each officer valued at the proposed public offering
price of $6.00 per share.
Since the end of our fiscal year on July 31, 2001, specifically 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
exercisable at $7.20 per share. These warrants were partial consideration
granted by our Board of Directors during August 2001 for agreements entered into
on our behalf and for ongoing services provided by Dr. Silverman. See certain
transactions.
Option grants from inception
to the fiscal year ended July 31, 2001
Number of Percent of total options
Securities Granted to ---------------------------
Underlying options employees in Exercise Expiration
Granted fiscal year Price ($/sh) Date
------- ----------- ------------ -------
2001 2001
---- ----
Name and position
- -----------------
Howard P.
Silverman, chief
executive officer..... -0- -0-
- --------------------------------
Through the date of this prospectus, we have not issued any options to purchase
our securities.
37
Aggregated option exercises from inception
to the fiscal year ended July 31, 2001
Number of
Securities Value of
Shares underlying unexercised
Acquired on Value unexercised in-the-money
Exercise realized options options
------- ----------- ------------ -------
2001 2001
---- ----
Name and position
- -----------------
Howard P.
Silverman, chief
executive officer..... -0- -0- -0- -0-
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
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.
38
Certain transactions
As partial consideration for certain agreements entered into by Howard
P. Silverman since our inception on March 21, 2001 and for ongoing services
provided, 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. We valued these warrants at $.10 per warrant,
based on the value of identical warrants being offered as a part of this
registration statement, for a total of $12,500 worth of compensation for Dr.
Silverman's services during our formation and start-up phase. 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.
Dr. Silverman, entered into a sales agreement on our behalf on May 3,
2001 for the purchase of medical equipment we use in performing laser vision
corrective surgery. Dr. Silverman agreed to pay $64,000 for the equipment to a
third-party supplier, TrueVision Medical Associates, Inc., with $57,000 of that
amount being financed over a period of 18 months. The balance of the purchase
price of the equipment is payable under the terms of a promissory note executed
by Dr. Silverman providing for 18 monthly payments of $3,423.26 commencing
June 1, 2001. The repayment of this amount is collateralized by a first priority
lien on the equipment in favor of the seller.
Dr. Silverman also entered into a loan and security agreement with
DVI Financial, Inc. for the purpose of assuming the balance due on the purchase
of the excimer laser used in our facility. Dr. Silverman agreed to pay a total
of $185,596 in 30 monthly installments of $6,186.55, commencing June 2001 and
continuing until the total principal and interest is paid. The payment of this
amount is collateralized by a first priority lien on the excimer laser in favor
of DVI Financial, Inc.
Principal and selling stockholders
The following table sets forth information regarding the beneficial
ownership of our common stock as of December 12, 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;
o each of our directors and executive officers;
39
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
40
outstanding as of December 12, 2001. The percentages after the
offering are based on 2,507,043 shares of common stock outstanding
after the offering.
(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 December 12, 2001, there were 2,082,043 shares of our common
stock issued and outstanding, and no shares of our preferred stock outstanding.
At that date, we had 19 shareholders of record.
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.
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.
41
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 December 12, 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
42
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
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.
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 common stock purchase warrants equal to 10% of the
number of units sold in this offering by the underwriters, or a maximum of
42,500 representative's warrants. These representative's warrants will be issued
to the representative for $.01 per warrant, for a total of up to $42.50. The
representative's warrants are five year warrants exercisable to purchase an
aggregate of up to 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 exercise price of
$10.065 per unit. The units issuable upon exercise of the representative's
43
warrants are identical to those offered to the public. 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
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.
44
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.
45
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
representative of the underwriters, who is acting as the managing placement
agent for the offer and sale of the units, has been in business as a
broker-dealer since 1993, primarily acting as an underwriter for the best
efforts placement of equity securities and as a market maker for
over-the-counter securities. The representative also has on-line trading
capabilities and an investment banking division.
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. There is no minimum number of units that must be sold as a condition
of the offering, although any purchaser of the units must subscribe to at least
100 units as a condition of acceptance of a subscription. The underwriters may
offer the units for sale to the public, commencing at the date of this
prospectus and continuing to January 31, 2002. The offering may be extended for
an additional 60 days at the sole discretion of the underwriters. All funds
received from subscribers of the units will be deposited into an escrow account
with Wells Fargo Bank, N.A., Los Angeles, California.
46
To purchase units in this offering, a prospective investor must
complete and sign a subscription agreement in the form attached to this
prospectus as Exhibit A, and any other documents that we or the representative
may require and deliver the documents, together with payment in an amount equal
to the full purchase price of the units being purchased, to the representative.
Checks for the purchase price should be made payable to "LASIK America, Inc.
Escrow Account" or to "Howard P. Silverman Escrow Account" with respect to
subscriptions accepted by the selling shareholder. Each subscription payment
must be transmitted to the bank escrow agent by 12:00 noon on the business day
next following its receipt by an underwriter.
We will determine, in our sole discretion, to accept or reject
subscriptions within five days following their receipt. Funds of an investor
whose subscription is rejected will be promptly returned directly to such person
by the escrow agent, without interest or deduction, pursuant to the terms of the
escrow agreement. No subscription may be withdrawn, revoked or terminated by the
purchaser after acceptance of the subscription. We also reserve the right to
refuse to sell any units to any person at any time.
The underwriters will receive a discount or sales commission of ten
percent on all sales of units placed in the offering. The underwriters may allow
some dealers concessions of not more than $.71 per unit. The underwriters also
may allow, and those dealers may re-allow, a concession of not more than $.64
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 only for the payment of all expenses
of the sale of the 125,000 units offered for resale, such as all discounts and
commissions. applicable to the 125,000 units offered for resale by this
prospectus. We have agreed to pay all expenses of registration that are
allocable to the units being offered for resale by the selling shareholder,
which we estimate to be no more than $5,000.
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.
In addition to the discount of ten percent to the underwriters, we have
agreed to pay to the representative, a non-accountable expense allowance equal
to three percent of the gross proceeds of this offering. All expenses of the
offering, such as fees of registration, filing fees, printing, blue sky fees,
transfer agent and registrar fees, and fees payable to our auditors, have been
estimated in the amount of approximately $108,000. 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.
47
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, up to 42,500
five-year warrants to purchase in the aggregate, up to 42,500 units. The total
number of units to be sold to the representative will be equal to ten percent of
the number of units placed for sale to the public by the underwriters. The
representative and any other underwriters placing units in the offering will be
entitled to receive underwriter's warrants only on sales of units actually
placed by the representative or the underwriter, as the case may be.
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
of directors. We have already elected Stuart S. Greenberg, a board member
affiliated with the representative to our board of directors, and we intend to
continue to designate this same director as the representative's nominee after
the completion of this public offering. In the event that the representative
elects not to continue to exercise this right, then it may designate one person
to attend all meetings of our board of directors. 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:
48
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.
Stabilization
Until the distribution of the units offered by this prospectus is
completed, rules of the Securities and Exchange Commission may limit the ability
of the underwriters to bid for and to purchase units. As an exception to these
rules, the underwriters may engage in transactions that stabilize the price of
the units. The underwriters may engage in stabilizing transactions, syndicate
covering transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act of 1934.
o Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids
do not exceed a specified maximum;
o Syndicate covering transactions involve purchases of
the common stock and warrants in the open market
after the distribution has been completed in order
to cover syndicate short positions;
o Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when the
units originally sold by the syndicate member are
purchased in a syndicate covering transaction to
cover syndicate short positions.
Short sales involve the sale by the underwriters of a greater number of
shares or warrants than they have in their own account. In determining the
source of shares or warrants to close out the short position, the underwriter
will consider, among other things, the price of shares or warrants available for
purchase in the open market as compared with the price at which they may
purchase shares through the offering. Naked short sales are sales in excess of
the underwriter's ability to cover the short position. A naked short position is
more likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the shares or warrants in the open market
after pricing that could adversely affect investors who purchase in this
offering. Naked short positions taken by our underwriters in this offering may
be covered by either acquiring our common stock and warrants in the open market,
or by purchasing units from us or the selling shareholder at the public offering
price.
49
In general, the purchase of a security to stabilize or to reduce a short
position could cause the price of the security to be higher than it might be
otherwise. These transactions may be effected on the over-the-counter electronic
bulletin board. Neither we nor the underwriters can predict the direction or
magnitude of any effect that the transactions described above may have on the
price of the common stock or the warrants. In addition, neither we nor the
underwriters can represent that the underwriters will engage in these types of
transactions or that these types of transactions, once commenced, will not be
discontinued without notice.
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
bearing no expenses associated with our registration of the 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.
50
The selling shareholder has advised us that, prior to the date of this
prospectus, he has entered into a form of placement agreement that delineates
the facts material to the resale of his 125,000 units through the best efforts
to be undertaken by the representative. The form of placement agreement, which
has been attached as an exhibit to this registration statement, includes terms
and provisions which are similar to the terms and provisions of the underwriting
agreement made by the representative with respect to the 425,000 units offered
by us to the public through this prospectus. Specifically, no non-accountable
expense allowance is payable to the representative on the sale of the units
offered by the selling shareholder, nor will the representative receive any
representative's warrants upon the sale of any of the units offered on behalf of
the selling shareholder.
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
behalf, 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, except as to the non-accountable expense allowance and
the receipt of any representative's warrants from the sale of the selling
shareholder's units.
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 selling expenses associated with the
sale of the 125,000 units offered, such as commissions or discounts payable to
the underwriters for the sale or placement of the units. We are paying, on
behalf of the selling shareholder, and without any reimbursement to us, all
expenses of registration for resale of the 125,000 units being offered by the
selling shareholder, including all expenses of our legal counsel and all
expenses we may pay to qualify the common stock and warrants for registration in
states where the units are offered or sold.
51
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.
52
EXHIBIT "A"
UNIT SUBSCRIPTION AND
PURCHASE AGREEMENT
[To purchase any of the units, you must be a resident of a state where
the sale of units is permitted under the state's securities laws.]
To: LASIK America, Inc.
6646 Indian School Road, N.E.
Albuquerque, New Mexico 87110
Phone: (505) 837-2020
Fax: (505) 837-9111
Enclosed is payment for _____ units (minimum 100 units),at $6.10 per
unit, totaling $________.
Make check payable to "LASIK America, Inc. Escrow Account."
Signature(s)______________________________________ Date___________________
Register the units in the following name(s) and amount(s):
Name(s)_________________________________________ Number of units _________
As (check one): Individual _______ Joint Tenants _____ Trust ____ IRA ____
Tenants in Common ____ Corporation _______ Keogh ___ Other_____
For the person(s) who will be registered owner(s):
Mailing Address:____________________________________________________________
City, State & Zip Code: ____________________________________________________
Business Phone: (_____)___________________ Home Phone: (_____)____________
Social Security or Taxpayer ID Number: _____________________________________
(Please attach any special mailing instructions other than shown above)
NO UNIT PURCHASE AGREEMENT IS EFFECTIVE UNTIL ACCEPTANCE.
(You will be mailed a signed copy of this Agreement to retain for your
records.)
Subscription accepted by LASIK America, Inc.
- ------------------------------- --------------
Howard P. Silverman, President Date
and Chief Executive Officer
53
VIRGINIA SUBSCRIBERS
Virginia subscribers must meet the following suitability requirement:
I certify that I am (initial blank)________ a person who (a) has an annual
income of $60,000 and a net worth of at least $60,000 or (b) has a net worth of
at least $225,000 (in each case excluding home, home furnishings, and personal
automobiles) and that I am not investing more than 10% of my readily marketable
assets in this offering.
CALIFORNIA SUBSCRIBERS
California subscribers must meet the following suitability requirement:
I certify that I am (initial blank)_________(1) be an "accredited investor"
within the meaning of Regulation D under the Securities Act of 1933; or (2) a
person who (a) has an income of $65,000 and a net worth of $250,000 or (b) has a
net worth of $500,000 (in each case excluding home, home furnishings, and
personal automobiles; or (3) a bank, savings and loan association, trust company
registered under the Investment Company Act of 1940, pension or profit-sharing
trust, corporation, or other entity which together with the corporation's or
other entity's affiliates, have net worth on a consolidated basis according to
the most recent regularly prepared financial statement (which shall have been
reviewed but not necessarily audited, by outside accountants of not less than
$14,000,000 and subsidiaries of the foregoing; or (4) a person (other than a
person formed for the sole purpose of purchasing the units offered hereby) who
is purchasing at least $1,000,000 in aggregate amount of the units.
54
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 of $28,549) $ 147,230
Facility Fees 36,810
------------------
Total revenues 184,040
Costs and expenses:
Cost of revenues (exclusive of depreciation
shown separately below) 79,353
General and administrative (including non-cash
compensation of $12,351,387) 12,594,756
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 to be issued
for cash received 1,865,000 1,865 7,420 - - 9,285
Common stock to be issued
to employees 185,000 185 1,109,815 (90,000) - 1,020,000
Common stock to be issued
for cash received 32,043 32 64,054 - - 64,086
Contributed services of
executive officer - - 20,000 - - 20,000
Amortization of deferred
compensation - - - 22,500 - 22,500
Compensation expense
related to common
stock to be issued - - 11,308,887 - - 11,308,887
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. Discounts are negotiated during the evaluation process and are
recorded at the time revenues are recognized and the service is 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 currently generates on average
approximately $73,000 per month in gross revenue and believes that it will
require approximately $1,200,000 in gross revenue during the next 12
months to maintain existing operations. The Company believes that its cash
requirements during the next 12 months will be satisfied through an
increase in the number of clients and eye surgery procedures expected from
advertising and marketing efforts.
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 general and
administrative expenses.
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 general and
administrative expenses.
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 general and administrative expenses.
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 general and administrative
expenses.
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.
F-12
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
For the period 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:
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 by
the CEO to the related entity. The Company orally agreed to acquire the
equipment from the CEO under the same terms.
F-13
LASIK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
For the period March 21, 2001 (Inception) through July 31, 2001
NOTE 7 - RELATED PARTY TRANSACTION (Continued)
- ----------------------------------
This promissory note has been assigned by the related
entity to the Internal Revenue Service. (See Note 3).
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
================================================================================
Table of contents
Page
--------
Prospectus Summary.................... 3
Risk Factors.......................... 6
Cautionary Note Regarding Forward-
Looking Statements.................. 12
Use Of Proceeds....................... 13
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 15
Selected Financial Data............... 16
Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations....................... 18
Business.............................. 22
Management............................ 34
Certain Transactions.................. 39
Principal and Selling Shareholder..... 39
Description Of Securities............. 41
Shares Eligible For Future Sale....... 44
Underwriting.......................... 45
Plan of Distribution for Selling
Shareholder......................... 50
Legal Matters......................... 52
Experts............................... 52
Index To Financial Statements......... F-1
UNTIL January 7, 2002, 25 DAYS AFTER THE
DATE OF THIS PROSPECTUS, ALL DEALERS THAT
BUY, SELL OR TRADE THE UNITS, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAYBE
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.
================================================================================
================================================================================
LASIK AMERICA, INC.
550,000 UNITS CONSISTING OF
ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE COMMON
STOCK PURCHASE WARRANT.
---------------------
PROSPECTUS
---------------------
WEST AMERICA SECURITIES CORP.
December 12, 2001
================================================================================
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
II-1
Blue Sky Fees and Expenses*................................. $ 7,500
Transfer Agent and Registrar Fees*.......................... $ 10,000
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. Of these total number of shares, 1,090,000 shares were issued to our
founder, Howard P. Silverman, and were issued to him as part of our formation.
These shares were priced in the aggregate at $8,510. In addition, 775,000 of the
total number of shares were issued to several persons that were friends,
previous business contacts and others that have had a long standing business
relationship with our founder, Dr. Silverman. The aggregate purchase price for
these shares was $775.00.
With respect to the issuance of the 775,000 shares to persons
previously known to our chief executive officer, we believe that all such
purchasers had a long standing relationship with our management, had all
material information available to them from which an informed investment
decision could be made, and that these shares qualify as exempt from
registration under Section 4(2) of the Securities Act of 1933.
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.
II-2
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. We believe the
issuance of these shares qualify as exempt from registration under the
Securities Act of 1933 due to the fact that the purchasers had a preexisting
relationship with our chief executive officer, had available to them all
material information from which an informed investment decision could be made,
and had the requisite investment intent when acquiring the shares of common
stock.
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
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.
II-3
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
10.8 Unconditional Guarantee of Dr. Howard P. Silverman to DVI
Financial Services, Inc. dated March 17, 2001
10.9 Loan and Collateral Schedule No. 002 dated March 17, 1998
between Dr. Howard P. Silverman and DVI Financial Services,
Inc.
10.10 Landlord's Waiver dated May 15, 2001 among Landlord,
Dr. Howard P. Silverman and DVI Financial Services, Inc.
10.11 Form of Escrow Agreement Between LASIK America, Inc. and Wells
Fargo Bank, N.A.
10.12 Form of Escrow Agreement Between the Selling Shareholder,
Howard P. Silverman and Wells Fargo Bank, N.A.
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
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
II-4
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
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.
II-5
(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 12th day of
December, 2001.
LASIK AMERICA, INC.
By:
----------------------------------------
Howard P. Silverman, president and
chief executive officer
NAME CAPACITY DATE
- ------------------------------- ------------------------ -------------------
- ------------------------------- Chairman, president, December 12, 2001
Howard P. Silverman chief executive officer,
chief financial officer
and director
*
- ------------------------------- Chief Operating Officer December 12, 2001
Robert S. Helmer and Director
- ------------------------------- Principal
Howard P. Silverman accounting officer December 12, 2001
*
- ------------------------------- Director December 12, 2001
Stuart S. Greenberg
*
- ------------------------------- Director December 12, 2001
Steven L. De Vicenzi
* Howard P. Silverman
As Power of Attorney
II-6
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
II-7
10.8 Unconditional Guarantee of Dr. Howard P. Silverman to
Financial Services, Inc. dated March 17, 2001
10.9 Loan and Collateral Schedule No. 002 dated March 17,
1998 Between Dr. Howard P. Silverman and DVI Financial
Services, Inc.
10.10 Landlord's Waiver dated May 15, 2001 among Landlord, Dr.
Howard P. Silverman and DVI Financial Services, Inc.
10.11 Form of Escrow Agreement Between LASIK America, Inc. and
Wells Fargo Bank, N.A.
10.12 Form of Escrow Agreement Between the Selling
Shareholder, Howard P. Silverman and Wells Fargo
Bank, N.A.
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
II-8