AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1999
REGISTRATION NO. 333-68923
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PLC SYSTEMS INC.
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA 04-3153858
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
JENNIFER MILLER, ESQ.
PLC SYSTEMS INC.
10 FORGE PARK
FRANKLIN, MASSACHUSETTS 02038
(508) 541-8800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COPY TO:
STEVEN S. SIEGEL
BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
410 SEVENTEENTH STREET, 22ND FLOOR
DENVER, COLORADO 80202
(303) 534-6335
Approximate date of commencement of proposed sale to public: as soon as
practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earliest 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Title of each class of Proposed maximum Amount of
securities aggregate offering price Registration Fee
- --------------------------------------------------------------------------------
Common Stock, no par $12,000,000 (1) $3,336.00(1)(2)
================================================================================
(1) The maximum aggregate offering price of the Common Stock registered
hereunder will not exceed $12,000,000. Pursuant to Rule 457(o), the
registration fee is calculated on the aggregate maximum offering price
of the Common Stock, and the table does not specify information about
the amount of shares to be registered or the proposed maximum offering
price per share.
(2) Registration fee previously paid.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
will thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION. DATED JANUARY 27, 1999.
$12,000,000
PLC SYSTEMS INC.
Common Stock
This Prospectus is part of a Registration Statement we filed with the
Securities and Exchange Commission which will allow us to issue common stock
over time. This means:
- we may issue up to $12,000,000 of common stock from time to time.
- we will provide a prospectus supplement each time we issue common
stock.
- the prospectus supplement will inform you about the specific terms of
that offering and also may add, update or change information contained
in this document.
- you should read this document and any prospectus supplement carefully
before you invest.
Our common stock is traded on the American Stock Exchange under the symbol
"PLC". On February , 1999, the last reported sale price for the common
stock on the American Stock Exchange was $ per share.
SEE "HIGHLIGHTS OF OUR COMPANY" BEGINNING ON PAGE 2 AND "RISK FACTORS"
BEGINNING ON PAGE 3 TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE
BUYING SHARES OF THE COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February , 1999.
QUESTIONS AND ANSWERS ABOUT THIS OFFERING
Q. WHAT IS THE PURPOSE OF THIS OFFERING?
A. The purpose of this offering is to provide us with additional capital from
the sale of common stock. For information on how we intend to use the
proceeds from the offering, see "Use of Proceeds" beginning on page 9.
Q. ARE WE REQUIRED TO SELL ALL $12,000,000 OF THE COMMON STOCK WE ARE
REGISTERING?
A. No. Although we are registering up to $12,000,000 of common stock, we:
- may only sell a portion of the amount registered; or
- may not sell or be able to sell any common stock.
Q. HOW LONG DO WE PLAN TO USE THIS PROSPECTUS?
A. We plan to use this prospectus from time to time over the next two years,
through February of 2001.
HIGHLIGHTS OF OUR COMPANY
OUR PRINCIPAL PRODUCT -- THE HEART LASER SYSTEM
We develop and market one principal product: a patented high-powered carbon
dioxide laser system known as The Heart Laser System. The Heart Laser is a
trademark of our company. The Heart Laser System is designed for use in the
treatment of coronary artery disease in a surgical laser procedure we pioneered
known as transmyocardial revascularization. Transmyocardial revascularization
is commonly referred to in our industry as "TMR." We believe that TMR using The
Heart Laser System may:
- be used to treat patients who cannot be helped by conventional
treatments;
- provide an additional or alternative therapy to conventional
treatments of coronary artery disease, such as coronary artery bypass
graft surgery and balloon angioplasty; and
- lead to lower treatment costs, decreased hospital stays, quicker
recovery, reduced trauma and side effects, and improved quality of
life for patients who suffer from severe heart disease.
HOW THE HEART LASER SYSTEM WORKS
TMR using The Heart Laser System creates new channels in the heart. These
channels are believed to permit oxygenated blood to flow from the inside of the
heart to areas of the heart muscle that are not fully functional because of
coronary artery disease. Through a small incision between a patient's ribs, a
heart surgeon uses The Heart Laser System to make 20 to 40 tiny channels from
the outside of the heart muscle into the cavity of the heart holding oxygenated
blood. Because we designed The Heart Laser System to be used on a beating
heart, it does not require the use of a heart-lung machine or a blood
transfusion. The Heart Laser System also utilizes patented technology to
synchronize the firing of the laser with the patient's heartbeat. The laser
fires when the heart is relatively still, reducing the risk of harm that has
occurred when TMR is performed without synchronization.
2
OUR PRODUCT AND SURGICAL PROCESS ARE PATENTED
Since April 1992, we have received 17 United States patents, including 12
which relate to TMR using The Heart Laser System and its related technologies.
Twelve additional United States patent applications are pending. We have also
received eight patents internationally and have a number of patent applications
pending in international patent offices. We expect to continue to file domestic
and foreign patent applications on various enhancements of The Heart Laser
System.
WE HAVE RECEIVED APPROVAL FROM THE FDA AND THE EUROPEAN COMMUNITY
We first submitted a request for pre-market approval of The Heart Laser
System to the U.S. Food and Drug Administration in 1995. In August 1998, we
became the first company to receive FDA approval to market a laser
revascularization system to treat patients who suffer from severe, stable heart
disease and are not amenable to conventional treatments.
In 1995, we received approval for The Heart Laser System by the European
Community. The CE Mark, which is similar to FDA approval, allows us to market
The Heart Laser System in all European Community countries except France due to
restrictions placed on The Heart Laser System by the French regulatory
authority.
We have begun marketing The Heart Laser System to hospitals and heart
treatment centers for treatment of the estimated 120,000 patients worldwide who
suffer from severe heart disease but who cannot be treated with conventional
therapies.
GENERAL INFORMATION AND WEB SITE ADDRESS
We incorporated pursuant to the Company Act of British Columbia, Canada on
March 3, 1987. Our principal offices are located at 10 Forge Park, Franklin,
Massachusetts 02038. Our telephone number is (508) 541-8800. For more
information, please refer to our web site at WWW.PLCMED.COM.
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. This prospectus and information incorporated by
reference contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of different factors, including
those discussed in "Risk Factors" or incorporated by reference into this
prospectus.
OUR COMPANY HAS A LIMITED OPERATING HISTORY AND A HISTORY OF LOSSES
PLC Systems Inc. was founded in 1987 and is still developing its principal
product. We have incurred operating losses in every year of our existence except
1995. We incurred net losses of $1,540,000 million for the year ended December
31, 1996 and $14,404,000 million for the year ended December 31, 1997. For the
nine months ended September 30, 1998, we incurred a net loss of $13,344,000. As
of September 30, 1998, we have an accumulated deficit of $64,877,000. We have
not achieved profitability and expect to continue to incur net losses for at
least the next fiscal year. Moreover, although our business is not seasonal in
nature, our revenues tend to vary significantly from fiscal quarter to fiscal
quarter.
OUR COMPANY IS DEPENDENT ON ONE PRINCIPAL PRODUCT
Currently, The Heart Laser System is our principal product.
Approximately 93.2% of our revenue in the fiscal year ended December 31, 1997
and 83.4% in the nine month period ended September 30, 1998 was derived from The
Heart Laser System.
3
IN ORDER TO COMPETE EFFECTIVELY, WE NEED TO GAIN COMMERCIAL ACCEPTANCE
TMR using The Heart Laser System is a new technology that is only recently
becoming known. We may never achieve widespread commercial acceptance. To be
successful, we need to:
- demonstrate to the medical community in general, and to heart surgeons
and cardiologists in particular, that TMR using The Heart Laser System
is effective, relatively safe and cost effective; and
- train heart surgeons to perform TMR using The Heart Laser System
To date, we have trained only a limited number of heart surgeons and will need
to expand our marketing and training capabilities.
Over 4,000 patients have been treated with TMR using the Heart Laser System
in the United States and overseas. As of September 30, 1998, we have shipped
The Heart Laser System to 36 sites in the United States and 71 sites overseas.
Although a number of research studies, including one conducted by the Texas
Heart Institute, have reported favorably on The Heart Laser System, we have not
yet received widespread commercial acceptance. If we are unable to maintain
regulatory approvals or to achieve widespread commercial acceptance of TMR using
The Heart Laser System, our business, financial condition and results of
operations will be materially and adversely affected.
RESULTS OF LONG-TERM CLINICAL STUDIES MAY ADVERSELY AFFECT OUR BUSINESS
Patients have only been treated with TMR using The Heart Laser System since
January 1990, and, as a result, there have been few long-term follow-up studies.
If patients suffer harmful, long-term consequences from TMR using The Heart
Laser System, our business, financial condition and results of operations will
be materially and adversely affected.
OUR INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND INTENSE COMPETITION
Our industry is characterized by rapid technological change and intense
competition. New technologies and products and new industry standards will
develop at a rapid pace. They could make The Heart Laser System obsolete. The
advent of new devices and procedures and advances in new drugs and genetic
engineering are especially threatening. Our future success will depend upon our
ability to develop and introduce a variety of product enhancements to address
the increasingly sophisticated needs of our customers. Material delays in
introducing product enhancements may cause customers to forego purchases of our
product and purchase those of our competitors.
Many of our competitors have substantially greater financial resources and
are in a better financial position to exploit marketing and research and
development opportunities. Most of our direct competitors are using a different
type of laser than ours, including holmium and excimer lasers. Several of the
companies that have entered the market are developing less invasive methods of
TMR which may eliminate the need to make an incision in the patient's chest,
reducing costs and speeding recovery.
WE MUST RECEIVE GOVERNMENT APPROVAL BEFORE WE MARKET OUR PRODUCT
GENERAL
The Heart Laser System and our manufacturing activities are subject to
extensive, rigorous and changing federal and state regulation in the United
States and to similar regulatory requirements in other major markets, including
the European Community and Japan. To date, we have received regulatory approval
in the United States and the European Community, but not in Japan. Without
regulatory approval, we cannot market The Heart Laser
4
System in Japan. Even if granted, regulations may significantly restrict the
use of The Heart Laser System. The process of obtaining and maintaining
required regulatory approval is lengthy, expensive and uncertain.
UNITED STATES
In August 1998, we became the first company to receive FDA approval to
market a laser system for TMR. However, the FDA:
- has not allowed us to market the Heart Laser System to treat patients
whose condition is amenable to conventional treatments, such as heart
bypass surgery and angioplasty; and
- could reverse its ruling and prohibit use of The Heart Laser System at
any time.
EUROPE
Although we have received the CE Mark in the European Community, the French
Ministry of Health instituted a commercial moratorium on TMR in October 1997.
In its opinion, the procedure is considered to be experimental and should only
be performed within the context of a clinical study. An evaluation of the
safety of TMR using The Heart Laser System is currently under review by a panel
of French experts. We have provided our clinical results to the panel and are
actively working to have this moratorium lifted. There is no assurance when or
if we will be successful.
ASIA
We believe that Japan represents the largest potential market for TMR using
The Heart Laser System in Asia. Prior to marketing The Heart Laser System in
Japan, we must receive approval from the Japanese Ministry of Health and
Welfare. This approval requires a clinical study in Japan with at least 60
patients. We submitted the results of this study to the Japanese Ministry of
Health and Welfare in December 1998. We do not know whether the clinical study
will be sufficient or when, if ever, we will receive approval from the Japanese
Ministry of Health.
Additional regulatory applications are pending in China, Taiwan and South
Korea. We cannot be sure when, if at all, we will obtain regulatory approval in
any particular country.
ASSERTING AND DEFENDING INTELLECTUAL PROPERTY RIGHTS MAY IMPACT RESULTS OF
OPERATION REGARDLESS OF SUCCESS
In our industry, competitors often assert intellectual property
infringement claims against one another. The success of our business depends on
our ability to successfully defend our intellectual property. Future litigation
may have a material impact on our financial condition even if we are successful
in marketing The Heart Laser System. We may not be successful in defending or
asserting our intellectual property rights.
WE MAY BE SUBJECT TO PRODUCT LIABILITY LAWSUITS; OUR INSURANCE MAY NOT BE
SUFFICIENT TO COVER DAMAGES
We may be subject to product liability claims. A recent United States
Supreme Court decision held that compliance with FDA regulations will not shield
a company from common-law negligent design claims or manufacturing and labeling
claims based on state rules. Although we have product liability insurance with
an yearly aggregate maximum of $10 million, we cannot be sure that our insurance
is adequate to cover any product liability law suits. Our insurance is
expensive and in the future may not be available on acceptable terms, if at all.
If a successful product liability claim or series of claims exceeded our
insurance coverage, it would divert the attention of our key personnel, degrade
the reputation and marketability of our technology and products, and could have
a material adverse effect on our business, financial condition and results of
operations.
5
WE HAVE BEEN SUED FOR ALLEGED VIOLATIONS OF SECURITIES LAW
In July 1997, an FDA advisory panel recommended against approval of our
application to market The Heart Laser System. Following this recommendation, we
were named as defendant in 21 purported class action lawsuits filed between
August 1997 and November 1997 in the United States District Court for the
District of Massachusetts. The lawsuits seek an unspecified amount of damages
in connection with alleged violations of the federal securities laws based on
our failure to obtain a favorable FDA panel recommendation in 1997. Nineteen of
these complaints have been consolidated by the court into a single action for
pretrial purposes and two suits have been dismissed. We have filed motions to
dismiss all of the remaining claims. However, our motions to dismiss these
claims may not be successful. We have also been named as a defendant in a
lawsuit filed in Massachusetts Superior Court in September 1998. This suit
seeks over $2 million in damages for alleged negligent misrepresentations and
fraud arising from our failure to obtain a favorable FDA recommendation in 1997.
We cannot make a meaningful estimate of the amount or range of loss that could
result from an unfavorable outcome of these lawsuits, but an unfavorable outcome
could have a material adverse affect on our business, financial position and
results of operations. We may not be able to pay the amount of any judgment
against us. We believe that we have valid defenses to these litigation matters
and intend to conduct a vigorous defense.
We Will Have Broad Discretion in Using the Proceeds of this Offering
Our management can spend most of the proceeds from this offering in ways
with which you may not agree. We cannot predict that the proceeds will be
invested to yield a favorable return.
WE ARE SUBJECT TO RESTRICTIONS OF BRITISH COLUMBIA LAW
We are incorporated under the laws of British Columbia. We plan to change
our place of incorporation from British Columbia, Canada, to the Yukon
Territory, Canada, by May of 1999 to eliminate the restrictions on who may be a
director. Our stockholders have already approved the change in our place of
incorporation.
YOU MAY NOT BE ABLE TO ENFORCE JUDGMENTS AGAINST US AND OUR CANADIAN
DIRECTORS
Under Canadian law, you may not be able to enforce a judgment issued by
courts in the United States against us or our Canadian directors. The status of
the law in Canada is unclear as to whether a U.S. citizen can enforce a judgment
from a U.S. court in Canada for violations of U.S. securities laws. A separate
suit may need to be brought directly in Canada. You will still be subject to
this risk even after we change the place of our incorporation to the Yukon
Territory.
YOU ARE RESTRICTED IN ELECTING DIRECTORS
Under British Columbia law, a majority of our directors must be residents
of Canada and at least one director must be a resident of British Columbia. As
a result, you may be limited with respect to the persons that you can nominate
and elect as directors until we change our place of incorporation to the Yukon
Territory. In addition, our Articles provide for three classes of directors,
with one-third elected each year for a three year term. These provisions may
have the effect of delaying or preventing a corporate takeover or a change in
our management. This could adversely affect the market price of your common
stock.
ANTITAKEOVER PROVISIONS MAY PREVENT YOU FROM REALIZING A PREMIUM RETURN
Provisions of British Columbia law could make it more difficult for a third
party to acquire us, even if the acquisition would be beneficial to you.
Specifically, British Columbia law requires any person who makes a tender offer
that would increase the person's stock ownership to more than 20% of our
outstanding common stock to make a tender offer for all of our common stock.
These provisions could prevent you from realizing the premium return that
stockholders may realize in conjunction with corporate takeovers. You will
still be subject to this risk even after we change the place of our
incorporation to the Yukon Territory.
6
MARKET PRICE OF OUR STOCK MAY FALL IF OTHER STOCKHOLDERS SELL THEIR STOCK
If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could fall. Such sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a price we deem appropriate.
As of January 26, 1999 and before this offering, we have 19,739,647 shares
of common stock outstanding. Of these shares, approximately 18,550,000 shares
are eligible for sale in the public market. An undetermined number of shares
may be issued as part of this offering.
THE VALUE OF YOUR COMMON STOCK MAY DECREASE IF OTHER SECURITY HOLDERS EXERCISE
THEIR OPTIONS AND WARRANTS OR CONVERT THEIR DEBT INTO COMMON STOCK
As shown in the table below, we have reserved an additional 3,126,291
shares of common stock for future issuance upon exercise or conversion of
outstanding options, redeemable warrants and convertible debt.
Weighted Average Shares Reserved
Range of Exercise/ Exercise/ for Future
Conversion Prices Conversion Price Issuance
------------------ ---------------- ---------------
Options $3.69 - $8.88 $5.26 2,808,162
Redeemable Warrants $15.78 - $27.81 $21.33 154,864
Convertible Debt $6.125 $6.125 163,265
---------------
Total 3,126,291
===============
We plan to issue additional options and warrants in the future. If any of these
securities are exercised or converted, you may experience significant dilution
in the market value and earnings per share of your common stock.
WE MAY NEED ADDITIONAL FUNDING TO MEET OUR CASH REQUIREMENTS
We believe that the proceeds from this offering and existing revenues will
be sufficient to meet our cash requirements for the next 12 months. However, we
may be unable to raise the total amount of proceeds covered by this prospectus.
Furthermore, we may have unforeseen problems in obtaining government approval
and commercial acceptance of The Heart Laser System or we may incur
unanticipated decreases in operating revenues or increases in expenses. Any of
these events may adversely impact our capital resources, requiring us to raise
additional funds to finance continued research and development, production, and
sales efforts. In such an event, we will need to obtain financing through sale
of debt or equity securities, bank financing, joint ventures or other means. We
may not be able to raise additional capital upon satisfactory terms and our
business, financial condition and results of operations could be materially and
adversely affected.
WE HAVE NO INTENTION TO PAY DIVIDENDS
We have never paid any cash dividends on our common stock. We currently
intend to retain all future earnings, if any, for use in our business and do not
expect to pay any dividends in the foreseeable future.
THE YEAR 2000 PROBLEM COULD CAUSE US TO EXPERIENCE MANUFACTURING DELAYS
The Year 2000 problem is the result of computer programs that use two
digits rather than four to define the applicable year. On January 1, 2000,
computer equipment and programs that have time-sensitive software may not be
able to distinguish whether "00" means 1900 or 2000. This could cause a major
system failure or could create
7
erroneous results. We could be unable to process transactions, send invoices,
or engage in similar business activities. We may also be vulnerable to other
companies' Year 2000 issues.
In the last two months, we formed a task force to determine what if any
Year 2000 compliance issues we face. The task force has developed and
implemented a Year 2000 readiness plan that defines compliance and sets critical
milestones to identify any deficiencies and correct them. We identified three
basic operational areas that have been and will continue to be examined:
- Products -- products we sell, products we have sold previously, and
products of our most significant suppliers;
- Business Systems -- computer hardware and software we use to operate
our business, including purchasing, manufacturing, sales and finance;
and
- Peripherals -- our telephone, e-mail, security and shipping systems.
In 1998, we tested The Heart Laser System and believe that it is Year
2000 compliant. In addition, we spent approximately $200,000 on new
enterprise resource planning system software that the vendor has represented
is Year 2000 compliant. This new software system replaced substantially all
of our previous financial software system. Our current estimates of the
impact of the Year 2000 problem on our operations and financial results do
not include costs and time that may be incurred as a result of our vendors'
or customers' failure to become Year 2000 compliant.
Despite investigation and testing by us and our business partners, our
products may contain errors or defects associated with Year 2000 date
functions. We believe that our new enterprise resource planning software
substantially addresses our material Year 2000 risks; however, we are
continuing to test our secondary systems and continuing to investigate third
party compliance efforts. We are unable to predict the extent to which our
business will be adversely affected if our products, software or related
computer systems experience a material Year 2000 failure. However, even on a
worse case basis, we do not believe that a failure of our products, software
and computer systems will have a material adverse effect on our business.
Known and unknown errors and defects that affect the operation of our
products or software could result in delay or loss of revenue, cancellation
of customer contracts, diversion of product development resources, damage to
our reputation, increased service and warranty costs, and litigation costs.
Furthermore, we have not developed a Year 2000 contingency plan to address
any failure of our Year 2000 compliance review to identify and correct
significant Year 2000 risks. Development of contingency plans is in progress
and will continue during calendar year 1999. Such plans could include
accelerating replacement of affected equipment or software, using back-up
equipment and software, developing temporary manual procedures to compensate for
system deficiencies, and identifying alternative Year 2000 capable suppliers.
We cannot be sure that our contingency plans will adequately address the year
2000 problem. Any of these occurrences could have a material adverse effect on
our business, financial condition and results of operations.
RECENT DEVELOPMENTS
FAVORABLE SETTLEMENT OF PATENT LITIGATION
In January 1999, we settled all outstanding litigation between our company
and a competitor. Under the settlement, CardioGenesis Corporation agreed that
patents covering our heart-synchronized laser system are valid and enforceable.
The United States patent and related international patents cover our
synchronization technology, a critical factor in ensuring the safety of TMR
procedures. As part of the settlement, CardioGenesis must pay:
- a minimum of $2.5 million to us over the next 42 months; and
- so long as the patents remain valid, license fees and ongoing
royalties through at least 2009.
8
INSURANCE REIMBURSEMENT OF TMR PROCEDURES
HCFA RECOMMENDS MEDICARE COVERAGE FOR TMR
On January 26, 1998, the Health Care Financing Administration (HCFA)
released a draft decision memorandum recommending that Medicare provide coverage
for TMR performed with FDA approved devices. The Heart Laser System is the only
device that has obtained FDA approval for commercial use. Although HCFA's
recommendation is a significant step that will lead to Medicare reimbursement of
TMR procedures, there may be a delay before hospitals and other health care
providers actually receive reimbursement for TMR procedures. Moreover, there is
no assurance that Medicare reimbursement, when provided, will be adequate to
cover the cost of TMR procedures.
BLUE CROSS/BLUE SHIELD PASSES FAVORABLE TECHNOLOGY REVIEW FOR TMR
On January 25, 1999, Blue Cross and Blue Shield Association's Technology
Evaluation Center completed a favorable assessment of TMR. Although the Blue
Cross and Blue Shield finding does not guarantee reimbursement by third-party
payers, it is a significant step that could eventually lead to reimbursement of
TMR procedures by third-party payers.
USE OF PROCEEDS
We plan to use the net proceeds from the sale of the common stock for
general corporate purposes, including working capital, capital expenditures and
the repayment or refinancing of debt. Each time we sell the common stock, we
will provide a prospectus supplement that will contain information about how we
intend to use the net proceeds from the common stock sold at that time.
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
- the identity of any underwriters, dealers, agents or institutional
investors who purchase the common stock;
- the material terms of the distribution, including the number of shares
sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be
received by the underwriters, dealers, or agents;
- the terms of any indemnification provisions, including indemnification
from liabilities under the federal securities laws; and
9
- the nature of any transaction by an underwriter, dealer or agent
during the offering that is intended to stabilize or maintain the
market price of the common stock.
LEGAL MATTERS
Certain legal matters with respect to the common stock offered hereby will
be passed upon for us by Brownstein Hyatt Farber & Strickland, P.C. of Denver,
Colorado, and DuMoulin Black of Vancouver, British Columbia.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1997, as set forth in their report, which is
incorporated in this prospectus by reference. Our consolidated financial
statements are incorporated by reference in reliance on their report, given on
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
internet at the SEC's web site at www.sec.gov. You may also read and copy any
document we file at the SEC's Public Reference Rooms in Washington, D.C., New
York, New York and Chicago, Illinois. The Public Reference Room in Washington,
D.C. is located at 450 Fifth Street, N.W. Please call the SEC at 1-800-SEC-0330
for further information on the Public Reference Rooms.
Our common stock is listed on the American Stock Exchange, 86 Trinity
Place, New York, New York 10006. Reports, proxy statements and other
information concerning our Company can be reviewed at the American Stock
Exchange.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the common stock:
- Annual Report on Form 10-K for the year ended December 31, 1997;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 1998;
- Current Reports on Form 8-K, filed August 21, and January 13, 25, and
26, 1999; and
- The description of our common stock contained in our registration
statement on Form 8-A, filed August 21, 1992, and amended September 11
and October 19, 1992.
We have also filed a registration statement on Form S-3 with the SEC under the
Securities Act of 1933. This prospectus does not contain all of the information
set forth in the registration statement. You should read the registration
statement for further information about our company and the common stock. You
may request a copy of these filings at no cost. Please direct your requests to:
10
Jennifer Miller, Esq.
General Counsel
PLC Systems Inc.
10 Forge Park
Franklin, Massachusetts 02038
(508) 541-8800
You may also want to refer to our web site at WWW.PLCMED.COM.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of the common stock in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front page of those documents.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements involve known and
unknown risks and uncertainties. Forward-looking statements deal with our
current plans and expectations. Statements containing terms such as:
- believes
- does not believe
- plans
- expects
- intends
- estimates
- anticipates
and other phrases of similar meaning are considered to contain uncertainty and
are forward-looking statements.
We make cautionary statements in certain sections of this prospectus,
including under "Risk Factors." You should read these cautionary statements as
being applicable to all related forward-looking statements wherever they appear
in this prospectus, in the materials referred to in this prospectus, in the
materials incorporated by reference into this prospectus, or in our press
releases.
No forward-looking statement is a guarantee of future performance. You
should not place undue reliance on any forward-looking statement.
11
TABLE OF CONTENTS
Page
----
Questions and Answers About This Offering. . . . . . . . . . . . . . . . . . . 2
Highlights of Our Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Recent Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . . .10
Note Regarding Forward-Looking Statements. . . . . . . . . . . . . . . . . . .11
COMMON STOCK,
NO PAR VALUE
PLC SYSTEMS INC.
PROSPECTUS
FEBRUARY __, 1999
12
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered will be borne by the Registrant. Other than the SEC
registration fee, the amounts stated are estimates.
SEC Registration Fee........................... $ 10,008.00
AMEX Filing Fee................................ 17,500.00
Legal Fees and Expenses........................ 40,000.00
Accounting Fees and Expenses................... 5,000.00
----------
TOTAL.......................................... $72,508.00
==========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The British Columbia Company Act (the "Company Act"), Section 128, enables
a corporation, with the approval of the British Columbia court, to indemnify a
director or a former director of the Registrant, or a director or a former
director of a corporation of which the Registrant is or was a shareholder, and
his heirs and personal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or to satisfy a judgment, actually
and reasonably incurred by him, including an amount paid to settle an action or
satisfy a judgment in a civil, criminal or administrative action, or proceeding
to which he is made a party by reason of being or having been a director,
including an action brought by the Registrant or corporation if:
(a) he acted honestly and in good faith with a view to the best interest
of the corporation of which he is or was a director; and
(b) in the case of a criminal or administrative action or proceeding, he
had reasonable grounds for believing that his conduct was lawful.
The Company Act also provides that a company may purchase and maintain
insurance for a director or former director of the Registrant, or a director or
former director of a corporation of which it is or was a shareholder, and his
heirs and personal representatives, against liability incurred by him as a
director or officer.
The Memorandum and Articles of the Registrant provide that the Registrant
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or proceeding whether or
not brought by the Registrant or by a corporation or other legal entity or
enterprise whether civil, criminal or administrative, because he is or was a
director, officer, employee or agent of the Registrant, or is or was serving at
the request of the Registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise in
accordance with Section 128 of the Company Act.
The Memorandum and Articles of the Registrant also provide that the
Registrant shall indemnify any person other than a director with respect to any
loss, damage, costs or expenses whatsoever incurred by him while acting as an
officer, employee or agent for the Registrant unless such loss, damage, cost or
expense shall arise out of failure to comply with instructions, willful act, or
default or fraud by such person in any of which events the Registrant shall only
indemnify such persons if the directors in their absolute discretion so decide,
or the Registrant by ordinary resolutions shall so direct.
II-1
The indemnification provided by the Memorandum and Articles of the
Registrant shall continue as to a person who has ceased to be a director,
officer, employee or agent, and shall benefit such person's heirs, executors
and administrators.
The Memorandum and Articles of the Registrant authorize the directors from
time to time to cause the Registrant to give indemnities to any director,
officer, employee, agent or other person who has undertaken or is about to
undertake any liability on behalf of the Registrant or any corporation
controlled by it.
The Memorandum and Articles of the Registrant further provide that, subject
to the Company Act, no director, officer or employee for the time being of the
Registrant shall be liable for the acts, receipts, neglects or defaults of any
other director, officer, or employee or for joining in any receipt or act for
conformity, or for any loss, damages or expense happening to the Registrant
through insufficiency or deficiency of title to any property acquired by order
of the board for the Registrant, or for the insufficiency or deficiency of any
security in or upon which any monies of or belonging to the Registrant shall be
invested or for any loss or damages arising from the bankruptcy, insolvency or
tortuous act of any person, firm or corporation with whom or which any monies,
securities or effects shall be lodged or deposited or for any loss occasioned by
any error of judgment or oversight on his part, or for any loss, damage or
misfortune whatever which may happen in the execution of the duties of his
respective office or trust or in relation thereto unless the same shall happen
by or through his own willful act of default, negligence, breach of trust or
breach of duty.
The Memorandum and Articles of the Registrant provide that the directors of
the Registrant may rely upon the accuracy of any statement of fact represented
by an officer of the Registrant to be correct, or upon statements in a written
report of the auditor of the Registrant, and shall not be reasonable or held
liable for any loss or damage resulting in the paying of any dividends or
otherwise acting in good faith upon any such statement.
The Memorandum and Articles of the Registrant permit the directors to cause
the Registrant to purchase and maintain insurance for the benefit of any person
who was or is a director, officer, employee or agent of the Registrant or is or
was serving at the request of the Registrant as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability incurred by him as a director, officer,
employee or agent.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant,
the Registrant has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. No dealer, salesman or any other person has been
authorized in connection with this Offering to give any information or to make
any representations other than those contained in this prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Registrant. This prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such an offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the circumstances of the Registrant or the facts herein set
forth since the date hereof.
II-2
ITEM 16. EXHIBITS.
EXHIBIT
- -------
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
3.1 Certificate of Incorporation, incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 33-48340),
as previously filed with the Securities and Exchange Commission.
3.2 Memorandum and Articles (Bylaws), incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 33-48340),
as previously filed with the Securities and Exchange Commission.
4.1 Form of Common Stock Certificate, incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 333-37335)
and amendments thereto, as previously filed with the Securities and
Exchange Commission.
5.1 Opinion of DuMoulin Black.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of DuMoulin Black (included in Exhibit 5.1).
24.1 Power of Attorney (included in Part II of this registration statement
under the caption "Signatures").
27.1 Financial Data Schedule, incorporated by reference to the Registrant's
Quarterly Report on Form
10-Q for the Quarter ended September 30, 1998 (File No. 1-11388), as
previously filed with the Securities and Exchange Commission.
99.1 Convertible Debenture Purchase Agreement dated as of April 23, 1998
between Southbrook International Investment, Ltd., Brown Simpson
Strategic Growth Fund, L.P. and Brown Simpson Strategic Growth Fund,
Ltd. and the Registrant, incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998 (File
No. 1-11388), as previously filed with the Securities and Exchange
Commission.
99.2 Form of Convertible Debenture, incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the Quarter ended March
31, 1998 (File No. 1-11388), as previously filed with the Securities and
Exchange Commission.
99.3 Form of Redeemable Warrant, incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the Quarter ended March
31, 1998 (File No. 1-11388), as previously filed with the Securities and
Exchange Commission.
99.4 Registration Rights Agreement dated as of April 23, 1998 between
Southbrook International Investment, Ltd., Brown Simpson Strategic
Growth Fund, L.P. and Brown Simpson Strategic Growth Fund, Ltd. and the
Registrant, incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the Quarter ended March 31, 1998 (File No. 1-
11388), as previously filed with the Securities and Exchange Commission.
* To be filed by amendment or as an exhibit to a document to be incorporated
by reference herein.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
II-3
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.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the 1934 Act)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Franklin, state of Massachusetts, on January 27,
1999.
PLC SYSTEMS INC.
a British Columbia corporation
By: /s/ WILLIAM C. DOW
-------------------------
Name: William C. Dow
Title: President, Chief Executive Officer and
Director (PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement and Power of Attorney has been signed below by the
following persons in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
/s/ WILLIAM C. DOW President, Chief Executive Officer January 27, 1999
- -------------------------- and Director (PRINCIPAL EXECUTIVE
William C. Dow OFFICER)
/s/ ROBERT SVIKHART Chief Financial Officer and January 27, 1999
- -------------------------- Treasurer (PRINCIPAL FINANCIAL
Robert Svikhart OFFICER AND PRINCIPAL ACCOUNTING
OFFICER)
/s/ EDWARD PENDERGAST* Chairman of the Board of Directors January 27, 1999
- --------------------------
Edward Pendergast
/s/ HAROLD P. CAPOZZI* Director January 27, 1999
- --------------------------
Harold P. Capozzi
/s/ H.B. BRENT NORTON* Director January 27, 1999
- --------------------------
H.B. Brent Norton,
M.D.
/s/ KENNETH J. Director January 27, 1999
PULKONIK*
- --------------------------
Kenneth J. Pulkonik
/s/ ROBERT I. RUDKO* Director January 27, 1999
- --------------------------
Robert I. Rudko, Ph.D
II-5
NAME TITLE DATE
---- ----- ----
/s/ ROBERTS A. SMITH* Director January 27, 1999
- --------------------------
Roberts A. Smith, Ph.D
* By William C. Dow, attorney-in-fact.
II-6
EXHIBIT INDEX
EXHIBIT
- -------
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
3.1 Certificate of Incorporation, incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 33-48340),
as previously filed with the Securities and Exchange Commission.
3.2 Memorandum and Articles (Bylaws), incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 33-48340),
as previously filed with the Securities and Exchange Commission.
4.1 Form of Common Stock Certificate, incorporated by reference to the
Registrant's registration statement on Form S-1 (SEC File No. 333-37335)
and amendments thereto, as previously filed with the Securities and
Exchange Commission.
5.1 Opinion of DuMoulin Black.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of DuMoulin Black (included in Exhibit 5.1).
24.1 Power of Attorney (included in Part II of this registration statement
under the caption "Signatures").
27.1 Financial Data Schedule, incorporated by reference to the Registrant's
Quarterly Report on Form
10-Q for the Quarter ended September 30, 1998 (File No. 1-11388), as
previously filed with the Securities and Exchange Commission.
99.1 Convertible Debenture Purchase Agreement dated as of April 23, 1998
between Southbrook International Investment, Ltd., Brown Simpson
Strategic Growth Fund, L.P. and Brown Simpson Strategic Growth Fund,
Ltd. and the Registrant, incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998 (File
No. 1-11388), as previously filed with the Securities and Exchange
Commission.
99.2 Form of Convertible Debenture, incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the Quarter ended March
31, 1998 (File No. 1-11388), as previously filed with the Securities and
Exchange Commission.
99.3 Form of Redeemable Warrant, incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the Quarter ended March
31, 1998 (File No. 1-11388), as previously filed with the Securities and
Exchange Commission.
99.4 Registration Rights Agreement dated as of April 23, 1998 between
Southbrook International Investment, Ltd., Brown Simpson Strategic
Growth Fund, L.P. and Brown Simpson Strategic Growth Fund, Ltd. and the
Registrant, incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the Quarter ended March 31, 1998 (File No. 1-
11388), as previously filed with the Securities and Exchange Commission.