SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended June 30, 2005.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Transition period from to
--------- --------
Commission File Number: 0-19671
LASERSIGHT INCORPORATED
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0273162
-------------------------- ----------
(State of Incorporation) (IRS Employer Identification No.)
6848 Stapoint Court., Winter Park, Florida 32792
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(Address of principal executive offices) (Zip Code)
(407) 678-9900
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------ ------
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes X No
------ ------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. The number of shares of the
registrant's common stock outstanding as of August 5, 2005 is 9,997,195.
Transitional Small Business Disclosure Format
Yes No X
------ ------
LASERSIGHT INCORPORATED AND SUBSIDIARIES
Except for the historical information contained herein, the discussion in this
report contains forward-looking statements (within the meaning of Section 21E of
the Securities Exchange Act of 1934) that involve risks and uncertainties.
LaserSight's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in the sections entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Risk Factors and
Uncertainties" in this report and in LaserSight's Annual Report on Form 10-KSB
for the year ended December 31, 2004. LaserSight undertakes no obligation to
update any such factors or to publicly announce the results of any revisions to
any of the forward-looking statements contained herein to reflect any future
events or developments.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet as of June 30, 2005
3
Condensed Consolidated Statements of Operations for the Three- Month
and Six-Month Periods Ended June 30, 2005 and 2004 4
Condensed Consolidated Statements of Cash Flows for the Six-Month
Periods Ended June 30, 2005 and 2004 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation. 13
Item 3. Controls and Procedures. 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 20
Item 3. Defaults Upon Senior Securities. 20
Item 4. Submission of Matters to a Vote of Security Holders. 20
Item 5. Other Information. 21
Item 6. Exhibits. 21
Page 2 of 22
PART 1 - FINANCIAL INFORMATION
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
June 30, 2005
-------------
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 136,604
Accounts receivable - trade, net (including receivables
from related partiies $2,033,074) ............ 2,033,843
Notes receivable - current portion, net ............... 339,001
Inventories, net ...................................... 1,538,393
Prepaid expenses ...................................... 38,363
-------------
Total Current Assets 4,086,204
Property and equipment, net ............................. 97,655
Patents, net ............................................ 433,154
Deposits with suppliers ................................. 254,605
Deferred financing costs, net ........................... 222,674
-------------
Total Assets $ 5,094,292
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note Payable ........................................ $ 736,491
Accounts payable .................................... 185,756
Accrued expenses .................................... 182,818
Accrued license fees ................................ 208,128
Accrued Warranty .................................... 458,000
Deferred revenue .................................... 876,364
-------------
Total Current Liabilities 2,647,557
Note Payable Related party .............................. 1,000,000
Note Payable long term portion .......................... 554,426
Deferred royalty revenue ................................ 4,259,582
Commitments and contingencies
Stockholders' deficit:
Convertible preferred stock, par value $.001 per share;
authorized 10,000,000 shares- none issued -
Common stock - par value $.001 per share; authorized
100,000,000 shares; 9,997,195 shares issued and
outstanding ............................................. 9,997
Additional paid-in capital .............................. 104,625,869
Accumulated deficit ..................................... (108,003,139)
-------------
Total Stockholders' Deficit (3,367,273)
-------------
Total Liabilities and Stockholders' Deficit $ 5,094,292
=============
See accompanying notes to the condensed consolidated financial statements.
Page 3 of 22
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
------------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues:
Products ......................................... $ 1,245,168 $ 938,856 $ 3,152,558 $ 3,005,368
------------ ------------ ------------ ------------
(including revenues from related parties of
$1,143,813, $853,291, $3,023,605, and
$2,730,910, respectively)
Royalties ........................................ 270,707 234,810 531,212 469,620
------------ ------------ ------------ ------------
1,515,875 1,173,666 3,683,770 3,474,988
Cost of revenues:
Product cost ..................................... 680,759 938,994 1,676,040 2,027,428
------------ ------------ ------------ ------------
Gross profit ......................................... 835,116 234,672 2,007,730 1,447,560
Research and development and regulatory expense....... 47,066 39,922 99,818 92,604
Other general and administrative expenses ............ 591,477 898,235 1,264,594 1,518,236
Selling-related expenses ............................. 14,105 133,915 273,497 354,703
Amortization of intangibles .......................... 8,379 8,379 16,758 16,758
------------ ------------ ------------ ------------
613,961 1,040,529 1,554,849 1,889,697
------------ ------------ ------------ ------------
Income (loss) from operations ........................ 174,089 (845,779) 353,063 (534,741)
Other income and expenses:
Interest and other income ........................ 1,373 51,588 2,412 55,642
Interest expense ................................. (82,414) (178,921) (171,292) (229,822)
------------ ------------ ------------ ------------
Income (loss) before income tax benefit .............. 93,048 (973,112) 184,183 (708,921)
Income tax benefit ................................... - - - -
------------ ------------ ------------ ------------
Net income (loss) before extinguishment
of debt .............................................. 93,048 (973,112) 184,183 (708,921)
Gain of extinguishment of debt ....................... - 15,287,634 - 15,287,634
------------ ------------ ------------ ------------
Net Income ........................................... $ 93,048 $ 14,314,522 $ 184,183 $ 14,578,713
============ ============ ============= ============
Income per common share
Basic: ............................................... $ 0.01 $ 0.52 $ 0.02 $ 0.53
============ ============ ============= ============
Diluted: ............................................. $ 0.01 $ 0.31 $ 0.02 $ 0.32
============ ============ ============= ============
Weighted average number of shares outstanding
Basic: ............................................... 9,997,000 27,644,000 9,997,000 27,743,000
============ ============ ============= ============
Diluted: ............................................. 9,997,000 45,999,000 9,997,000 46,201,000
============ ============ ============= ============
See accompanying notes to the condensed consolidated financial statements
Page 4 of 22
LASERSIGHT INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005 and 2004
(unaudited)
June 30, 2005 June 30, 2004
------------- -------------
Cash flows from operating activities
Net income ............................................................ $ 184,183 $ 14,578,713
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ......................................... 31,025 67,730
Amortization of discount on note payable and deferred financing
costs ................................................................. 52,316 -
Issuance of stock options ............................................. 7,800 -
Additions to notes payable for fees and penalities .................... - 305,211
Gain on extinguishment of debt ........................................ - (15,287,634)
Changes in assets and liabilities:
Accounts and notes receivable, net ................................. (579,905) (744,075)
Inventories ........................................................ 177,531 655,325
Accounts payable ................................................... 21,913 141,124
Accrued expenses ................................................... (30,820) 140,322
Deferred revenue ................................................... 333,245 (469,620)
Other .............................................................. 132,623 (234,411)
------------ ------------
Net cash provided by (used in) operating activities ..................... 329,911 (847,315)
Cash flows from investing activities
Purchases of property and equipment, net ............................. (2,573) (109,689)
------------ ------------
Net cash used in investing activities ................................... (2,573) (109,689)
Cash flows from financing activities
Payments on debt financing ............................................ (568,246) (59,701)
Proceeds from DIP Financing ........................................... - 1,250,000
------------ ------------
Net cash provided by (used in) financing activities ..................... (568,246) 1,190,299
------------ ------------
Change in cash and cash equivalents ..................................... (240,908) 233,295
Cash and cash equivalents, beginning of period .......................... 377,512 564,973
------------ ------------
Cash and cash equivalents, end of period ................................ $ 136,604 $ 798,268
============ ============
See accompanying notes to the condensed consolidated financial statements
Page 5 of 22
LASERSIGHT INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three-Month and Six-Month Periods Ended June 30, 2005 and 2004
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited, condensed consolidated financial statements
of LaserSight Incorporated and subsidiaries ("LaserSight" or the
"Company") as of June 30, 2005, and for the three-month and six-month
periods ended June 30, 2005 and 2004 have been prepared in accordance
with accounting principles generally accepted in the United States,
except as disclosed herein, and the rules and regulations of the United
States Securities and Exchange Commission for interim financial
information. Accordingly, they do not include all of the information
and footnotes necessary for a comprehensive presentation of financial
position and the results of operations.
The Company's business is subject to various risks and uncertainties,
which contemplates the realization of assets and the discharge of
liabilities in the normal course of business for the foreseeable
future. The Company has suffered recurring losses from operations and
has a significant accumulated deficit that raises substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described below. The condensed
consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Accounts receivable due from the China Group as of June 30, 2005 was
$2,033,074, virtually all of the accounts receivable balance at June
30, 2005. As of August 5, 2005 $1,696,941 of the accounts receivable
balance remains unpaid. While we have verbal promises from the China
Group to pay the accounts receivable balance we have no guarantee that
payment will be made on time. Management continues to believe that it
will fully realize the balance due but the ultimate realization thereof
cannot be assured. The loss of the China Group as a customer or the
non-payment or slow payment of monies owed to the Company would have a
significant adverse effect on the Company's ability to continue as a
going concern.
The condensed consolidated financial statements have been prepared in
accordance with the requirements for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include
all of the information and note disclosures required by accounting
principles generally accepted in the United States of America for
complete financial statements. These condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in LaserSight's annual
report on Form 10-KSB for the year ended December 31, 2004. In the
opinion of management, the condensed consolidated financial statements
include all adjustments necessary, consisting only of normal, recurring
adjustments, for a fair presentation of consolidated financial position
and the results of operations and cash flows for the periods presented.
There are no other components of comprehensive income other than the
Company's consolidated net income for the three-month and six-month
periods ended June 30, 2005 and 2004. The results of operations for the
three-month and six-month periods ended June 30, 2005 are not
necessarily indicative of the operating results for the full year.
Page 6 of 22
NOTE 2 CRITICAL ACCOUNTING POLICIES
The Company's condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America. Preparation of these statements requires
management to make judgments and estimates that affect the amounts and
disclosures in the financial statements. Actual results could differ
from these estimates. Some accounting policies have a significant
impact on amounts reported in these financial statements. A summary of
significant accounting policies and a description of accounting
policies that are considered critical may be found in our 2004 Annual
Report on Form 10-KSB, filed in March 2005, in the Critical Accounting
Policies and Estimates section of "Item 7. - Management's Discussion
and Analysis or Plan of Operation."
NOTE 3 PER SHARE INFORMATION
Basic income per common share is computed using the weighted average
number of common shares and contingently issuable shares (to the extent
that all necessary contingencies have been satisfied). Diluted income
per common share is computed using the weighted average number of
common shares, contingently issuable shares, and common share
equivalents outstanding during each period. Common share equivalents,
including options and warrants to purchase Common Stock, are included
in the computation using the treasury stock method. Convertible
preferred stock using the if-converted method, are included if they
would have a dilutive effect. For the period ended June 30, 2005
596,000 shares attributable to outstanding stock options and warrants
were excluded from the calculation of diluted earnings per share
because the exercise prices of the stock options and warrants were
greater than or equal to the average price of common shares, and
therefore inclusion would have been antidilutive. As a result of the
September 5, 2003 Chapter 11 filing, all common and preferred shares
outstanding at and prior to June 30, 2004, including options and
warrants, were cancelled and new shares were distributed, effective
June 30, 2004, as follows:
Creditors of LaserSight Incorporated 1,116,000
Creditors of LaserSight Technologies 1,134,000
Old preferred stockholders 360,000
Old common stockholders 539,997 (1)
Cancel treasury stock (2,802)
Conversion of $1 million DIP
Financing 6,850,000
---------
9,997,195
=========
(1) The old common stock was converted at a 51.828 to 1 ratio.
The following table presents earnings per share figures as if this
reorganization of the capital structure had taken place as of the
beginning of the first period presented:
Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
------------- -------------
Net income per common share - basic and diluted $1.43 $1.46
========= =========
Weighted average number of common shares outstanding -
basic and diluted 9,997,000 9,997,000
========= =========
Page 7 of 22
NOTE 4 INVENTORIES
Inventories, which consist primarily of excimer and erbium laser
systems and related parts and components, are stated at the lower of
cost or market. Cost is determined using the standard cost method,
which approximates cost determined on the first-in first-out basis. The
components of inventories at June 30, 2005 are summarized as follows:
June 30, 2005
-------------
Raw material $ 1,043,247
Work in Process 565,874
Finished Goods 79,272
Reserve (150,000)
-----------
$ 1,538,393
===========
NOTE 5 AMENDED LOAN AGREEMENT
The Company signed a three-year note with Heller Healthcare Finance,
Inc ("Heller") and GE Healthcare Financial Services, Inc., as
successor-in-interest to Heller (collectively "GE") on August 30, 2004.
The note expires on June 30, 2007. The note bears interest of 9%.
Certain covenants were modified such that the Company is required to
maintain a net worth of $750,000, a tangible net worth of $1,000,000
and minimum quarterly revenues of $1,000,000. GE was issued a warrant
to purchase 100,000 shares of common stock at $0.25 per share, or $0.40
per share if the New Industries Investment Group (the "China Group"),
see Note 6, converts its DIP loan to equity. The warrant expires June
30, 2008. The Company was not in compliance with certain covenants of
the amended loan agreements and a waiver was obtained on May 23, 2005.
The revised agreement removed the net worth and tangible net worth
covenants and added an annual net income provision. For the year ended
December 31, 2005 and any subsequent trailing twelve month periods, as
measured on the last day of each calendar quarter, the Company's
earnings before interest, taxes, depreciation and amortization cannot
fall below $550,000.
NOTE 6 CHINA BACKGROUND
Shenzhen New Industries Medical Development Co., Ltd. ("NIMD") was
founded and incorporated by the Medical Investment Department of the
People's Republic of China in 1995 by its parent company, New
Industries Investment Group ("NII"). It specializes in marketing and
distribution of LASIK surgery devices and equipment, as well as in
investment and operation of LASIK clinical centers in Chinese market.
In the past decade, NIMD invested and operated PRK/LASIK excimer laser
refractive surgery centers in joint venture with hospitals and medical
institutes in China. NIMD is the largest business in Mainland China, as
measured by the amount of investment in refractive surgery centers.
Page 8 of 22
New Industries Investment Consultants (H.K.) Ltd ("NIIC") specializes
in hi-tech business investment and consulting services. It is
registered in Hong Kong. It was incorporated in 1994 by its principal
investor Mr. Xianding Weng (a major shareholder of NII, NII's CEO and
the Company's Chairman of the Board of Directors). NIIC, NII and NIMD
are collectively referred to herein as the "China Group".
In 2003 and 2004, the China Group provided $2 million of
debtor-in-possession ("DIP") financing to the Company. On June 30,
2004, $1 million of the DIP financing was converted into 6,850,000
shares of common stock. As of June 30, 2005, the China Group controlled
approximately 72% of the Company's common stock. Company revenues from
the China Group were approximately $3.0 million and $2.7 million in the
six months ended June 30, 2005 and 2004, respectively. Accounts
receivable due from the China Group as of June 30, 2005 was $2,033,074,
virtually all of the accounts receivable balance at June 30, 2005. As
of August 5, 2005 $1,696,941 of the accounts receivable balance remains
unpaid. See Note 1.
NOTE 7 STOCK BASED COMPENSATION
The Company accounted for stock-based employee compensation plans using
the intrinsic value method under Accounting Principles Board Opinion
No. 25 and related interpretations. Accordingly, stock-based employee
compensation cost was not reflected in net earnings, as all stock
options granted under the plans had an exercise price equal to the
market value of the underlying common stock on the date of grant. No
stock options were awarded in 2004 and the Company had no pro forma
stock based compensation.
As previously announced, as a result of the Chapter 11 filing, the
Company cancelled all of the common and preferred shares, options and
warrants outstanding at June 30, 2004. Effective January 1, 2005 the
Company adopted the fair value recognition provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, using retroactive restatement method
described in SFAS 148, Accounting for Stock-Based Compensation -
Transition and Disclosure. There was no effect to the financial
statements from the implementation of the retroactive restatement
method. In May 2005 the Board of Directors approved the issuance of
496,000 options on the Company's Common Stock with an estimated fair
value of approximately $119,000. The options were issued to employees
and Directors and have various vesting schedules but all are valid for
ten years. Amortization of unearned stock-based compensation for the
six months ended June 30, 2005 and 2004 was $7,800 and $0,
respectively.
NOTE 8 BANKRUPTCY
On September 5, 2003 LaserSight and two of its subsidiaries filed for
Chapter 11 bankruptcy protection and reorganization in the United
States Bankruptcy Court, Middle District of Florida, Orlando Division.
The cases filed were LaserSight Incorporated, ("LSI") Case No.
6-03-bk-10371-ABB; LaserSight Technologies, Inc., ("LST") Case No.
6-03-bk-10370-ABB; and LaserSight Patents, Inc., Case No.
6-03-bk-10369-ABB.
On April 28, 2004, the Bankruptcy Court confirmed the Re-organization
Plan. The effective date of the Plan was June 30, 2004. On December 22,
2004 a final decree of bankruptcy was issued.
Page 9 of 22
In June of 2004, the effective date of the re-organization plan, the
following liabilities were relieved:
Accounts Payable $ 2,905,814
Accrued TLC license fee 825,500
Accrued salaried/severance 235,367
Accrued warranty 6,125,730
Accrued Ruiz license fees 3,471,613
Deposits/service contracts 720,399
Other accrued expenses 1,331,711
------------
$ 15,616,134
Stock issued to creditors ( 328,500)
------------
Gain on forgiveness of debt $ 15,287,634
============
The new common stock issued to the creditors was valued at $0.146 per
share, or $328,500, which was deducted from the forgiven liabilities.
The stock value is the same amount as the $1,000,000 of DIP financing
converted to equity.
NOTE 9 CONTINGENCIES
Liquidity
---------
The Company had incurred significant losses and negative cash flows
from operations in each of the years in the three-year period ended
December 31, 2003, and had an accumulated deficit of $108 million at
June 30, 2005. Cash flows were negative during the six-month period
ended June 30, 2005. The substantial portion of these losses is
attributable to the Company's continued lack of adequate funding and
working capital, and additional administrative and professional
expenses attributed to the Chapter 11 filing, have also contributed to
these losses. In past years the substantial portion of these losses
were attributable to an inability to sell certain products in the U.S.
due to delays in Food and Drug Administration (FDA) approvals, various
procedures using the Company's excimer laser system in the U.S. and
continued development efforts to expand clinical approvals of the
Company's excimer laser and other products. The Company's new focus is
on China and is no longer pursuing additional FDA approvals.
In 2004, the Company had net income of $14.7 million, which included
$15.3 million of gain on forgiveness of debt. In 2004 the Company
incurred $398,000 of bankruptcy related expenses for legal services,
financial advisor fees, printing and postage, priority claims and new
stock certificates.
Contractual obligations with GE require that one third of the payments
received from WaveLight Technologie AG for licensing our patents be
used for additional principal payments. During the first two quarters
of 2005 additional principal payments were $200,000.
The Company's ability to continue as a going concern is uncertain and
dependent upon continuing to achieve improved operating results and
cash flows or obtaining additional equity capital and/or debt
financing.
Litigation
----------
Italian Distributor. In February 2003, an Italian court issued an order
restraining LaserSight Technologies from marketing our AstraPro
software at a trade show in Italy. This restraining order was issued in
favor of LIGI Tecnologie Medicali S.p.a. (LIGI), a distributor of our
products, and alleged that our AstraPro software product infringes
certain European patents owned by LIGI. We had retained Italian legal
Page 10 of 22
counsel to defend us in this litigation, and we were informed that the
Italian court had revoked the restraining order and ruled that LIGI
must pay our attorney's fees in connection with our defense of the
restraining order. In addition, our Italian legal counsel informed us
that LIGI had filed a motion for a permanent injunction. We believe
that our AstraPro software does not infringe the European patents owned
by LIGI, but due to limited cash flow the Company has not defended its
position. Management believes that the outcome of this litigation will
not have a material adverse impact on LaserSight's business, financial
condition or results from operations. Since the Chapter 11 petition
does not apply to foreign courts, this action is still pending.
Routine Matters. In addition, we are involved from time to time in
routine litigation and other legal proceedings incidental to our
business. Although no assurance can be given as to the outcome or
expense associated with any of these proceedings, we believe that none
of such proceedings, either individually or in the aggregate, will have
a material adverse effect on the financial condition of LaserSight.
NOTE 10 SEGMENT INFORMATION
The Company's operations principally include refractive products.
Refractive product operations primarily involve the development,
manufacture and sale of ophthalmic lasers and related devices for use
in vision correction procedures. Patent services involve the revenues
and expenses generated from the ownership of certain refractive laser
patents.
Operating profit is total revenue less operating expenses. In
determining operating profit for operating segments, the following
items have not been considered: general corporate expenses,
non-operating income and expense and income tax expense. Identifiable
assets by operating segment are those that are used by or applicable to
each operating segment. General corporate assets consist primarily of
cash and income tax accounts.
The table below summarizes information about reported segments as of
and for the three and six months ended June 30, 2004 and 2005:
Page 11 of 22
SEGMENT INFORMATION
Three months ended June 30,
Operating Operating Profit Depreciation and Capital
Revenues (Loss) Assets Amortization Expenditures
-------- ------ ------ ------------ ------------
2005
----
Operating segments:
Refractive products $1,245,168 $ 123,825 $4,871,618 $ 17,024 $ 923
Patent services 270,707 270,707 - - -
General corporate - (220,443) 222,674 26,558 -
----------------------------------------------------------------------------
Consolidated total $1,515,875 $ 174,089 $5,094,292 $ 43,582 $ 923
============================================================================
2004
----
Operating segments:
Refractive products $ 938,856 $ (889,359) $4,963,123 $ 28,680 $ 109,689
Patent services 234,810 234,810 - - -
General corporate - (191,230) 610,172 - -
----------------------------------------------------------------------------
Consolidated total $1,173,666 $ (845,779) $5,573,295 $ 28,680 $ 109,689
============================================================================
Six months ended June 30,
Operating Operating Profit Depreciation and Capital
Revenues (Loss) Assets Amortization Expenditures
-------- ------ ------ ------------ ------------
2005
----
Operating segments:
Refractive products 3,152,558 311,753 4,871,618 31,025 2,573
Patent services 531,212 531,212 - - -
General corporate - (489,902) 222,674 52,316 -
----------------------------------------------------------------------------
Consolidated total 3,683,770 353,063 5,094,292 83,341 2,573
============================================================================
2004
----
Operating segments:
Refractive products 3,005,368 (840,326) 4,963,123 67,730 109,689
Patent services 469,620 469,620 - - -
General corporate - (164,035) 610,172 - -
----------------------------------------------------------------------------
Consolidated total 3,474,988 (534,741) 5,573,295 67,730 109,689
============================================================================
Page 12 of 22
Item 2. Management's Discussion and Analysis or Plan
of Operation.
Forward-Looking Statements and Associated Risks
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS THAT
HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT'S
CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS, BELIEFS AND ASSUMPTIONS. WORDS
SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", "BELIEVES", "SEEKS",
"ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THOSE DISCUSSED IN "PART I -
ITEM 1 - DESCRIPTION OF BUSINESS - RISK FACTORS" AND PART II - ITEM 6 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS" CONTAINED IN THE COMPANY'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 2004, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. UNLESS REQUIRED
BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE. INVESTORS SHOULD REVIEW THIS QUARTERLY REPORT IN
COMBINATION WITH THE COMPANY'S ANNUAL REPOR TON FORM 10-KSB IN ORDER TO HAVE A
MORE COMPLETE UNDERSTANDING OF THE PRINCIPAL RISKS ASSOCIATED WITH AN INVESTMENT
IN THE COMPANY'S STOCK.
Overview
LaserSight is principally engaged in the manufacture and supply of
narrow beam scanning excimer laser systems, topography-based diagnostic
workstations, and other related products used to perform procedures that correct
common refractive vision disorders such as nearsightedness, farsightedness and
astigmatism. Since 1994, we have marketed our laser systems commercially in over
30 countries worldwide. We are currently focused on selling in selected
international markets; primarily China.
We have significant liquidity and capital resource issues relative to
the timing of our accounts receivable collection and the successful completion
of new sales compared to our ongoing payment obligations and our recurring
losses from operations and net capital deficiency raises substantial doubt about
our ability to continue as a going concern. We have experienced significant
losses and operating cash flow deficits, and we expect that operating cash flow
deficits will continue without improvement in our operating results.
Bankruptcy
On September 5, 2003 we filed for Chapter 11 bankruptcy protection and
reorganization. We operated in this manner from September 5, 2003 through June
10, 2004, when a final bankruptcy release was obtained. As a result of the
bankruptcy re-structuring, we have recorded credits for debt forgiveness of
approximately $15.3 million during the three months ended June 30, 2004.
Additionally, we recognized charges of approximately $8.0 million during 2003
for patent impairment, accounts receivable and inventory write offs. We
cancelled all of its outstanding common and preferred stock, including warrants
and options, and issued 9,997,195 new common shares on June 30, 2004. We emerged
from bankruptcy with approximately $0.7 million in unsecured liabilities,
approximately $2.1 million in secured debt to GE, approximately $5.3 million in
deferred revenue and approximately $1.0 million of DIP financing provided by
NIIC, as part of the approved bankruptcy plan. NIIC converted $1.0 million of
the DIP financing for additional 6,850,000 common shares.
China Transaction
In February 2004, we received a commitment from a related party
purchaser to purchase at least $12.0 million worth of our products during the
12-month period ending February 2005, to distribute our products in Mainland
Page 13 of 22
China, Hong Kong, Macao and Taiwan. The purchase agreement provides for two
one-year extensions. From February 2004 through June 2005, approximately $9.2
million worth of products were sold under this agreement. Product issues reduced
shipments during the third and fourth quarter of 2004 and the first and second
quarters of 2005. These issues have been resolved through revisions to product
crating for shipment, software modifications and revised shipper instructions.
An extension has not been signed, but the parties have continued to conduct
business under similar terms as set forth in the purchase agreement.
WaveLight Transaction
In March 2005 we executed a worldwide non-exclusive license agreement
with WaveLight Laser Technologie AG ("WaveLight") to use and reproduce the Lin
Scanning Patents for products to be used in ophthalmic surgery, which became
effective on March 3, 2005, and an option to acquire a license to the Company's
Apple Patents. Both the non-exclusive license and the option include certain
WaveLight co-enforcement rights. As consideration for the license, we have
received payments totaling $600,000 and are due to receive additional payments
totaling $300,000 prior to October 15, 2005. Payments received are on schedule
per the license agreement. $45,000 in broker fees were paid to PCE Investments
for their assistance in closing this transaction. The agreement terminates when
the patents expire, or earlier in the event of the occurrence of certain events
of default, including the failure of WaveLight to make required payments.
Results of Operations
The following table sets forth for the periods indicated information
derived from our statements of operations for those periods expressed as a
percentage of net sales, and the percentage change in such items from the
comparable prior year period. Any trends illustrated in the following table are
not necessarily indicative of future results.
As a Percentage of Net Sales Percent Increase (Decrease)
---------------------------- ---------------------------
Over Prior Periods
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004 2005 vs. 2004 2005 vs. 2004
---- ---- ---- ---- ------------- -------------
Statement of Operations Data:
Net Revenues:
Refractive products 82.1% 80.0% 85.6% 86.5% 32.6% 4.9%
Patent services 17.9% 20.0% 14.4% 13.5% 15.3% 13.1%
----- ----- ----- ----- ------ ------
Net Revenues 100.0% 100.0% 100.0% 100.0% 29.2% 6.0%
Cost of Revenue 44.9% 80.0% 45.5% 58.3% -27.5% -17.3%
----- ----- ----- ----- ------ ------
Gross Profit (1) 55.1% 20.0% 54.5% 41.7% 255.9% 38.7%
Research, development and 17.9% 7.8%
regulatory expenses (2) 3.1% 3.4% 2.7% 2.7%
Other general and administrative -16.7%
expenses 39.0% 76.5% 34.3% 43.7% -34.2%
Selling-related expenses (3) 0.9% 11.4% 7.4% 10.2% -89.5% -22.9%
Amortization of intangibles 0.6% 0.7% 0.5% 0.5% 0.0% 0.0%
----- ----- ----- ----- ------ ------
Net Income from operations 11.5% -72.1% 9.6% -15.4% -120.6% -166.0%
Page 14 of 22
(1) As a percentage of net revenues, the gross profit for refractive
products only for the three months ended June 30, 2005 and 2004 were
45% and 0%, respectively and for the six months ended June 30, 2005 and
2004 were 47% and 33%, respectively.
(2) As a percentage of refractive product net sales, research, development
and regulatory expenses for the three months ended June 30, 2005 and
2004, were 4% and 4%, respectively and for the six months ended June
30, 2005 and 2004 were 3% and 3%, respectively.
(3) As a percentage of refractive product net sales, selling-related
expenses for the three months ended June 30, 2005 and 2004 were 1% and
14%, respectively and for the six months ended June 30, 2005 and 2004
were 9% and 12%, respectively.
Three Months Ended June 30, 2005, Compared to Three Months Ended June 30, 2004
Our consolidated revenues totaled $1.5 million for the three months ended
June 30, 2005, an increase of approximately $0.3 million or 29% compared to
revenues for the three months ended June 30, 2004 of $1.2 million. The increase
was primarily attributable to increased sales of laser systems. Five lasers
systems were sold in the second quarter of 2005 and three were sold in the
second quarter of 2004. For the three months ended June 30, 2005, parts revenues
were $0.1 million compared to $0.1 million for the three months ended June 30,
2004. This was offset by a $0.1 million reduction in sales of our AstraMax(R)
diagnostic workstation; no AstraMax sales were recorded in the three months
ended June 30, 2005 compared to four for the comparable period in 2004. Our 2005
budget projected laser sales at twelve per quarter, or forty-eight for the year.
Delayed cash payments have necessitated reducing the annual forecast for 2005 to
thirty two lasers.
Net revenues from patent services increased by $36,000, or 15%, from
$235,000 for the three months ended June 30, 2004 to $271,000 for the three
months ended June 30, 2005. During the first quarter of 2005, the Company
licensed its Lin scanning patent for $855,000, net of expenses of $45,000. This
deferred revenue is being amortized over the remaining life of the patent,
approximately seven years.
Geographically, China has become our most significant market with $1.1
million in revenue during the three months ended June 30, 2005, as compared to
$0.9 million for the three months ended June 30, 2004.
Consolidated cost of sales includes direct material costs,
manufacturing wages, inbound freight, rework, scrap and standard cost variances.
For the three months ended June 30, 2005, consolidated cost of sales of $0.7
million was approximately 45% of net revenues of $1.5 million, compared to the
same period in 2004 when our cost of sales was approximately 80 % of net
revenues. Going forward into 2005, the emphasis will be continued unit cost
reductions driven by efficient purchasing and limited re-design of the product.
Our goal is to maintain a 47% consolidated cost of sales.
Selling-related expenses consist of those items directly related to
sales activities, including commissions on sales, royalty or license fees,
warranty expenses, and costs of shipping and installation. Selling-related
expenses for the three months ended June 30, 2005 decreased $120,000, or 89%, to
$14,000 from $134,000 during 2004. This decrease was primarily attributable to a
review of the warranty reserve and the reduction of the reserve of $118,000. The
warranty reserve was adjusted to remove reserves for lasers out of warranty. Our
2005 operating plan projected our selling-related expense ratio to be 11% of net
revenues. For the three months ended June 30, 2005 selling related expenses were
1% of revenues due to the reduction in the warranty reserve. Our current plan
projects our selling related expense ratio to be 9% of net revenues for the
remainder of 2005.
General and administrative expenses decreased by $307,000 to $591,000 in the
three months ended June 30, 2005, from $898,000 for the same period in 2004. The
decrease was primarily due to lower legal fees and salary reductions. Our
operating plan for fiscal 2005 projected business levels that will require
Page 15 of 22
general and administrative expenses to be lower due to reduced professional fees
relating to the bankruptcy filing. The current plan projects our general and
administrative expenses ratio to be 28% of net revenues. This is a higher
percentage than our original budget but is caused by general and administrative
expenses remaining similar to projections with revenues forecast lower.
Research, development and regulatory expenses increased by $7,000 to
$47,000 for the three months ended June 30, 2005 from $40,000 for the three
months ended June 30, 2004. Even though our resources are limited, we continue
to offer improvements to our product. Our operating plan for fiscal 2005
projects business levels that will require research, development and regulatory
expenses to be similar to 2004.
In the three months ended June 30, 2005, amortization of intangibles
remained unchanged at $8,400. In accordance with our operating plan,
amortization of intangibles will be at a rate of approximately $33,000 per year.
Other income and expense for the three months ended June 30, 2005
consisted of the following:
o We received $1,400 of interest income on notes receivable.
o In the three months ended June 30, 2005, we paid $83,000 in
interest to GE, the DIP financier and the tax assessor. The
interest expense includes $27,000 of amortized financing costs
including the fair value of a warrant issued to GE. The
amortization of financing costs is $8,600 per month and will
continue until June of 2007.
For the three months ended June 30, 2005 and 2004, we had no income tax
expense.
Net income for the three months ended June 30, 2005 was approximately
$93,000 compared to $14.3 million for the same period in 2004, a decline of
approximately $14.2 million. This $14.2 million decline in the current quarter
was comprised approximately of:
o decrease of $15.3 million due to forgiveness of debt income in
2004.
o increased annual meeting expenses of $42,000.
o decreased interest expense of $46,000.
o decreased professional expenses of $209,000 for legal fees.
o increased gross profit of $600,000.
o decreased selling related expenses of $120,000 related to
reduced warranty estimates and unit shipping charges.
o reduced salaries of $68,000.
Six Months Ended June 30, 2005, Compared to Six Months Ended June 30, 2004
Our consolidated revenues totaled $3.7 million for the six months ended
June 30, 2005, an increase of approximately $0.2 million or 6% compared to
revenues for the six months ended June 30, 2004 of $3.5 million. The increase
was primarily attributable to increased sales of laser systems. Thirteen lasers
systems were sold in the first half of 2005 and eleven were sold in the first
half of 2004. For the six months ended June 30, 2005, parts revenues were $0.2
million compared to $0.4 million for the six months ended June 30, 2004. This
Page 16 of 22
was offset by $0.06 million in reduced sales of our AstraMax(R) diagnostic
workstation; four AstraMax sales were recorded in the six months ended June 30,
2005 compared to six for the comparable period in 2004. Our 2005 budget
projected laser sales at twelve per quarter, or forty-eight for the year.
Delayed cash payments have necessitated reducing the annual forecast for 2005 to
thirty two lasers.
Net revenues from patent services increased by $62,000, or 13%, from
$470,000 for the six months ended June 30, 2004 to $531,000 for the six months
ended June 30, 2005. During the first quarter of 2005, we licensed our Lin
scanning patent for $855,000, net of expenses of $45,000. This deferred revenue
is being amortized over the remaining life of the patent, approximately seven
years.
Geographically, China has become our most significant market with $3.0
million in revenue during the six months ended June 30, 2005, as compared to
$2.7 million for the six months ended June 30, 2004.
Consolidated cost of sales includes direct material costs,
manufacturing wages, inbound freight, rework, scrap and standard cost variances.
For the six months ended June 30, 2005, consolidated cost of sales of $1.7
million was approximately 45% of net revenues of $3.7 million, compared to the
same period in 2004 when our cost of sales was approximately 58 % of net
revenues. This improvement was caused by the reduction of costs for inventory
adjustments, rework and cost variances. Going forward into 2005, the emphasis
will be continued unit cost reductions driven by efficient purchasing and
limited re-design of the product. Our goal is to maintain a 47% consolidated
cost of sales.
Selling-related expenses consist of those items directly related to
sales activities, including commissions on sales, royalty or license fees,
warranty expenses, and costs of shipping and installation. Selling-related
expenses for the six months ended June 30, 2005 decreased $81,000, or 23 %, to
$273,000 from $355,000 during 2004. This decrease was primarily attributable to
a decrease in warranty costs, due to a review of the warranty reserve. The
warranty reserve was adjusted to remove reserves for lasers out of warranty. Our
2005 operating plan projected our selling-related expense ratio to be 11% of net
revenues. For the three months ended June 30, 2005 selling related expenses were
1% of revenues due to the reduction in the warranty reserve. Our current plan
projects our selling related expense ratio to be 9% of net revenues for the
remainder of 2005.
General and administrative expenses decreased by $200,000 to $1.3 million in the
six months ended June 30, 2005, from $1.5 million for the same period in 2004.
The decrease was primarily due to reductions of legal fees and salary expense.
Our operating plan for fiscal 2005 projected business levels that will require
general and administrative expenses to be lower due to reduced professional fees
relating to the bankruptcy filing. The current plan projects our general and
administrative expenses ratio to be 28% of net revenues. This is a higher
percentage than our original budget but is caused by general and administrative
expenses remaining similar to projections with revenues forecast lower.
Research, development and regulatory expenses increased $7,000 to
$100,000 for the six months ended June 30, 2005 to $93,000 for the six months
ended June 30, 2004. Even though our resources are limited, we continue to offer
improvements to our product. Our operating plan for fiscal 2005 projected
business levels that will require research, development and regulatory expenses
to be similar to 2004.
In the six months ended June 30, 2005, amortization of intangibles
remained unchanged at $16,800. In accordance with our operating plan,
amortization of intangibles will be at a rate of approximately $33,000 per year.
Other income and expense for the six months ended June 30, 2005
consisted of the following:
o We received $2,400 of interest income on notes receivable.
o In the six months ended June 30, 2005, we paid $171,000 in
Page 17 of 22
interest to GE, the DIP financier and the tax assessor. The
interest expense includes $52,000 of amortized financing costs
and the fair value of a warrant issued to GE. The amortization
of financing costs is $8,600 per month and will continue until
June of 2007.
For the six months ended June 30, 2005 and 2004, we had no income tax
expense.
Net income for the six months ended June 30, 2005 was approximately
$184,000 compared to $14.6 million for the same period in 2004, a decline of
approximately $14.4 million. This $14.4 million decline for the first half of
2005 was comprised approximately of:
o decrease of $15.3 million due to forgiveness of debt income in
2004.
o increased gross profit of $560,000.
o reduced salaries of $64,000.
o decreased selling related expenses of $81,000 related to reduced
warranty estimates.
o decreased professional expenses of $195,000 for legal and
accounting fees and printing fees due to the Company's
bankruptcy filing.
Inflation and Currency Fluctuation
Inflation and currency fluctuations have not previously had a material
impact upon the results of operations and are not expected to have a material
impact in the near future.
Liquidity and Capital Resources
On September 5, 2003 we filed for Chapter 11 bankruptcy protection and
reorganization. We operated in this manner from September 5, 2003 through June
10, 2004, when the re-organization was approved by the bankruptcy court. A final
decree of bankruptcy was obtained on December 22, 2004. We cancelled all of our
outstanding common and preferred stock, including warrants and options, and
issued 9,997,195 new common shares on June 30, 2004. We emerged from bankruptcy
with approximately $0.7 million in unsecured liabilities, approximately $2.1
million in secured debt to GE, approximately $5.3 million in deferred revenue
and approximately $1.0 million of DIP financing provided by NIIC. NIIC converted
$1.0 million of the DIP financing for additional equity.
With the new revenues being generated from the China Group and
projected sales to other customers, management expects that our cash and cash
equivalent balances and funds from operations (which are principally the result
of sales and collection of accounts receivable) will be sufficient to meet its
anticipated operating cash requirements for the next several months. This
expectation is based upon assumptions regarding cash flows and results of
operations over the next several months and is subject to substantial
uncertainty and risks beyond our control. If these assumptions prove incorrect,
the duration of the time period during which we could continue operations could
be materially shorter. We continue to face liquidity and capital resource issues
relative to the timing of the successful completion of new sales compared to our
ongoing payment obligations. To continue our operations, we will need to
generate increased revenues, collect them and reduce our expenditures relative
to our recent history. While we are working to achieve these improved results,
we cannot assure you that we will be able to generate increased revenues and
collections to offset required cash expenditures. Our revenues from the China
Group were approximately $3.0 million in the six- months ended June 30, 2005.
Accounts receivable due from the China Group as of June 30, 2005 was $2,
033,074, virtually all of the accounts receivable balance at June 30, 2005. As
of August 5, 2005 $1,696,941 of the accounts receivable balance remains unpaid.
While we have verbal promises from the China Group to pay the accounts
Page 18 of 22
receivable balance and management continues to believe that it will fully
realize the balance due, the ultimate realization thereof can not be assured.
The loss of the China Group as a customer or the non-payment or slow payment of
monies owed to us could have a significant adverse effect on our ability to
continue as a going concern.
On August 30, 2004 we signed a three-year note with GE, which will
expire on June 30, 2007. The note bears interest of 9%. Certain covenants were
modified such that we are required to maintain a net worth of $750,000, a
tangible net worth of $1,000,000 and minimum quarterly revenues of $1,000,000.
GE was issued a warrant to purchase 100,000 shares of common stock at $0.25 per
share, or $0.40 per share if the China Group converts their DIP loan to equity.
The warrant expires on June 30, 2008. We were not in compliance with certain
covenants of the amended loan agreements and a waiver was obtained on May 23,
2005. The revised agreement removed the net worth and tangible net worth
covenants and added an annual net income provision. For the year ended December
31, 2005 and any subsequent trailing twelve month periods, as measured on the
last day of each calendar quarter, earnings before interest, taxes, depreciation
and amortization cannot fall below $550,000.
There can be no assurance as to the correctness of the other
assumptions underlying our business plan or our expectations regarding our
working capital requirements or our ability to continue operations.
Our ability to continue operations is based on factors including the
success of our sales efforts in China and in other foreign countries where our
efforts will initially be primarily focused, increases in accounts receivable
and inventory purchases when sales increase, the uncertain impact of the market
introduction of our AstraMax diagnostic workstations, and the absence of
unanticipated product development and marketing costs.
Our expectations regarding future working capital requirements and our
ability to continue operations are based on various factors and assumptions that
are subject to substantial uncertainty and risks beyond our control, and no
assurances can be given that these expectations will prove correct. The
occurrence of adverse developments related to these risks and uncertainties or
others could result in our incurring unforeseen expenses, being unable to
generate additional sales, to collect new and outstanding accounts receivable,
to control expected expenses and overhead, or to negotiate payment terms with
creditors, and we would likely be unable to continue operations.
Item 3. Controls and Procedures.
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
for timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
We carry out a variety of on-going procedures, under the supervision and with
the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer, to evaluate the effectiveness of the design and
operation of our disclosure controls and procedures. Our Chief Executive Officer
and Chief Financial Officer have concluded that such controls and procedures are
currently effective at the reasonable assurance level.
Page 19 of 22
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.
Certain legal proceedings against LaserSight are described in Item 3 (Legal
Proceedings) of LaserSight's Form 10-KSB for the year ended December 31, 2004,
and in Note 9 to the Financial Statements in Part I, Item 1 of this report,
which are incorporated herein by this reference.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3 Defaults Upon Senior Securities.
On September 5, 2003 the Company filed a Chapter 11 bankruptcy
petition. The Company had been in default under its loan agreements with GE. On
August 30, 2004 the Company signed a three-year note expiring on June 30, 2007.
The note bears interest of 9%. Certain covenants were modified such that the
Company is required to maintain a net worth of $750,000, a tangible net worth of
$1,000,000 and minimum quarterly revenues of $1,000,000. The Company issued GE a
warrant to purchase 100,000 shares of common stock at $0.25 per share, or $0.40
per share if the China Group converts their DIP loan to equity. The warrant
expires on June 30, 2008. The Company was not in compliance with certain
covenants of the amended loan agreements and a waiver was obtained on May 23,
2005. The revised agreement removed the net worth and tangible net worth
covenants and added an annual net income provision. For the year ended December
31, 2005 and any subsequent trailing twelve month periods, as measured on the
last day of each calendar quarter, the Company's earnings before interest,
taxes, depreciation and amortization cannot fall below $550,000.
Item 4 Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders was held in our Company's offices at
6848 Stapoint Court, Winter Park, Florida 32792 on Tuesday, April 26, 2005. As
of the record date of March 23, 2005, there were 9,997,195 shares of Common
Stock issued, outstanding and eligible to vote. In the meeting the shareholders
voted on and approved the following:
1) To elect Xian Ding Weng, Ying Zhi Gu and Guy Numann as Directors for one
year terms to expire at the Annual Shareholders' Meeting in 2006
Name For % For Against Abstain
Xian Ding Weng 8,646,741 86.49% 1 67,467
Ying Zhi Gu 8,711,243 87.14% 0 2,966
Guy Numann 8,647,615 86.50% 0 66,594
2) To ratify the appointment of Moore Stephens Lovelace, P.A. as auditors of
the Company for the 2005 fiscal year
For % For Against Abstain Broker Non Vote
8,709,373 87.12% 2,574 2,626 0
3) To approve our Company's 2005 Stock Option Plan and reserve 1,000,000
shares of common stock
For % For Against Abstain Broker Non Vote
8,318,849 83.21% 69,537 3,997 321,826
No other business was brought before the Annual Meeting.
Page 20 of 22
Item 5 Other Information.
Not applicable.
Item 6 Exhibits.
Exhibit
Number Description
------ --------------------------------------------------------------
3.1 Certificate of Incorporation, as amended (filed as Exhibit 3.1 to
the Company's Form 10-Q filed on November 14, 2002, and
incorporated herein by this reference).
3.2 Bylaws, as amended (filed as Exhibit 3.2 to the Company's Form
10-Q/A filed on November 21, 2002, and incorporated herein by
this reference).
3.3 Certificate of Amendment to Certificate of Incorporation, as
amended on March 2, 2005 (filed as Exhibit 10.11 to the Company's
Form 10-KSB filed on March 23, 2005 and incorporated herein by
this reference).
4.1 Rights Agreement, dated as of July 2, 1998, between the
Company and American Stock Transfer & Trust Company, as Rights
Agent, which includes (i) as Exhibit A thereto the form of
Certificate of Designation of the Series E Junior Participating
Preferred Stock, (ii) as Exhibit B thereto the form of Rights
Certificate (separate certificates for the Rights will not be
issued until after the Distribution Date), and (iii) as Exhibit C
thereto the Summary of Stockholder Rights Agreement (filed as
Exhibit 99.1 to the Company's Form 8-K filed on July 8, 1998, and
incorporated herein by this reference).
10.1 Non-Exclusive License Agreement between the Company and
WaveLight Laser Technologie AG, dated February 24, 2005, and
effective March 3, 2005 (filed as Exhibit 10.1 to the Company's
Form 10-QSB filed on April 25, 2005 and incorporated herein by
this reference).
10.2 Amendment Number One to the Third Amended and Restated
Secured Term Note between the Company and GE dated May 23, 2005
(filed herewith).
11 Statement Re: Computation of Per Share Earnings (included in
Financial Statements in Part I, Item 1, of this report).
31.1 Certifications of Chief Executive Officer pursuant to Rule
13a-14(a) (filed herewith).
31.2 Certifications of Chief Financial Officer pursuant to Rule
13a-14(a) (filed herewith).
32.1 Certifications of Chief Executive Officer pursuant to Section 1350
(filed herewith).
32.2 Certifications of Chief Financial Officer pursuant to Section 1350
(filed herewith).
Page 21 of 22
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LaserSight Incorporated
Dated: August 5, 2005 By: /s/ Danghui ("David") Liu
----------------------------
Danghui ("David") Liu, President,
Chief Executive Officer and Director
Dated: August 5, 2005 By: /s/ Dorothy M. Cipolla
----------------------------
Dorothy M. Cipolla,
Chief Financial Officer
Page 22 of 22