CELL ROBOTICS INTERNATIONAL INC - SB-2 - 19991018 - LEGAL_PROCEEDINGS
Legal Proceedings
We are not engaged in any legal proceedings.
MANAGEMENT
Directors, Executive Officers and Key Employees
The names, positions and ages of our Directors, executive officers and
key employees are as follows:
Name Age Position(1)
---- --- ----------
Dr. Ronald K. Lohrding 58 President, Chief Executive Officer and
Chairman of the Board
Craig T. Rogers 37 Vice-President of Investor Relations,
Secretary, Treasurer and Director
Jean M. Scharf 37 Chief Financial Officer and Controller
H. Travis Lee 40 Vice-President of Sales and Marketing
Richard Zigweid 51 Vice-President Manufacturing
Michael Wolf 57 Vice-President Engineering
Connie Hoy 46 Regulatory Affairs and Quality Manager
Dr. Larry Keenan 52 Product Manager, CR Workstation
Dr. Jerome Conia 39 Product Manager, IVF Workstation(-TM-)
and Chief Scientist
David Costello 40 Product Manager, Professional Lasette(-
Registered Mark-)
Mark T. Waller (2) 49 Director
Dr. Raymond Radosevich (2) 61 Director
Dr. Debra Bryant (2) 48 Director
Ron E. Ainsworth (2) 47 Director
(1) There exists no family relationship between any officer or director.
(2) Independent directors. We will maintain at least two (2) independent
directors on the board of directors.
DR. RONALD K. LOHRDING. Dr. Lohrding has served as our Chief Executive
Officer, President and Chairman of the Board since February 23, 1995. He co-
founded the wholly-owned subsidiary, Cell Robotics, Inc. ("CRI"), in 1988 and
has served as the Chairman, President and CEO since incorporation. He has
over 20 years of management experience. He received his Ph.D. in mathematical
statistics from Kansas State University in 1969. Dr. Lohrding worked at Los
Alamos National Laboratory (LANL) as an R&D manager and as a scientist from
1968 to 1988. He served as LANL's Assistant Director for Industrial and
International Initiatives, Deputy Associate Director for Environment and
Biosystems, as well as Program Director for Energy, Environment and
Technology, among other senior management positions. Concurrently, he has
been a general partner in seven successful real estate partnerships, two of
which are still currently active. Other than for us, Dr. Lohrding does not
currently serve as a director of any other reporting company.
CRAIG T. ROGERS. Mr. Rogers has served as our Secretary, Treasurer and
as a Director since 1995, and as Vice President for Investor Relations since
January 1997. From 1991 until 1995, he served as the Chief Executive Officer,
President and a Director of IFC. As a result of the acquisition by IFC of
Cell Robotics, Inc., Mr. Rogers resigned as the Chief Executive Officer and
President of IFC and, in February 1995, concurrently was appointed Chief
Financial Officer, Secretary and Treasurer of the Company. Mr. Rogers served
as Chief Financial Officer until January 8, 1997. Mr. Rogers served as Chief
Operating Officer of the Rockies Fund, Inc. from July 1993 to October 1, 1996.
The Rockies Fund Inc., a Colorado Springs, Colorado-based business development
company regulated under the Investment Company Act of 1940, makes investments
in and managerial assistance available to, certain eligible portfolio
companies. From April 1988 to June 1991, he also served as Chief Financial
Officer for DMA Computer Solutions, a general partnership operating four
Connecting Point franchise stores. Mr. Rogers received a Bachelor of Arts
Degree in Business/Economics from Colorado College in 1984. Other than for
us, Mr. Rogers does not currently serve as a director of any other reporting
company.
MARK WALLER. Mr. Waller has served as a Director since February 1995.
Since 1990, Mr. Waller has been President and founder of BridgeWorks Capital,
a sole proprietorship which arranges public and private financing for and
provides public relations services to client companies. Mr. Waller was
Interim President and Director of Totem Health Sciences, Inc., a Canadian
medical products and research company, from 1988 to 1990. Other than for us,
Mr. Waller does not currently serve as a director of any other reporting
company.
DR. RAYMOND RADOSEVICH. Dr. Radosevich was elected to the Board of CRI
in 1992. From 1985 to 1989, he was Dean of the Anderson School of Management
at the University of New Mexico. Dr. Radosevich recently retired from active
teaching. Prior to his retirement, he was a Professor of Management,
specializing in business strategy and the management of technology. In
addition, he taught a course in Technology Entrepreneurship and lectured on
the subject nationally and internationally. Dr. Radosevich earned his Ph.D.
from Carnegie-Mellon University, a B.S. in Mechanical Engineering and an M.S.
in Industrial Engineering from the University of Minnesota. Other than for
us, Dr. Radosevich does not currently serve as a director of any other
reporting company.
DR. DEBRA BRYANT. Dr. Bryant was elected to the Board in July 1997. She
is President, CEO and majority stockholder of Humagen Fertility Diagnostics,
Inc., which is the largest manufacturer of micropipets for the worldwide in
vitro fertilization market. In 1984, Dr. Bryant joined Humagen, Inc. as a
Senior Scientist. In 1991, Dr. Bryant purchased the fertility diagnostics
division of Humagen, Inc. and founded Humagen Fertility Diagnostics, Inc. Dr.
Bryant received her Ph.D. in Medical Microbiology from Bowman Gray School of
Medicine, Wake Forest University and completed a NIH postdoctoral fellowship
in molecular biology at the University of Virginia.
RON E. AINSWORTH. Mr. Ainsworth was elected to the board in April 1999
and is a Founder and Managing Partner of The Trenwith Group. Formed in 1981,
The Trenwith Group has been involved in over 300 corporate financing
transactions and in excess of $1 billion dollars in invested capital. Mr.
Ainsworth is also a Managing Director of Trenwith Securities, Inc., a
registered NASD Broker-Dealer. Mr. Ainsworth's duties with Trenwith
Securities, Inc. include management and development of the co-underwriting
programs, initial public offerings, follow-on equity offerings, and high yield
debt offerings. Mr. Ainsworth is also one of three managing partners of
Trenwith Holdings. Ltd, a partnership formed with Rockefeller Trust and
Rockvest Capital, with $100 million of committed capital. Trenwith Holdings
invests in LBOs, MBOs, Relap Mezzanine and Pre IPOs. Mr. Ainsworth's primary
responsibilities with the partnership include developing and investing in
middle market companies. Mr. Ainsworth currently holds equity investments in
25 operating companies and received his degree from the University of
Northridge.
The executive officers of the Company are elected annually at the first
meeting of our Board of Directors held after each annual meeting of
Shareholders. Each director is elected to serve for a term of one (1) year
until the next annual meeting of shareholders or until a successor is duly
elected and qualified. Each executive officer will hold office until his
successor is duly elected and qualified, until his resignation or until he
shall be removed in the manner provided by our ByLaws. There are no family
relationships among directors.
During the fiscal year ended December 31, 1998, outside Directors
received no cash compensation for their services as such, however they were
reimbursed their expenses associated with attendance at meetings or otherwise
incurred in connection with the discharge of their duties as Directors. No
officer receives any additional compensation for his services as a Director,
and we do not contribute to any retirement, pension, or profit sharing plans
covering our Directors. We do, however, maintain a group health insurance
plan and retirement plan for our employees, and those Directors who are also
employees are eligible to participate in each plan.
During fiscal 1998, we had standing Audit, Compensation and Nominating
Committees of the Board of Directors. The only member of the Audit Committee
was Mark Waller. During 1998, the Audit Committee held no formal meetings.
No member of the Audit Committee receives any additional compensation for his
service as a member of that Committee.
During fiscal 1998, the Compensation Committee consisted of Dr. Raymond
Radosevich, Dr. Debra Bryant and Mark Waller. During 1998, the Compensation
Committee held no formal meetings. No member of the Compensation Committee
receives any additional compensation for his service as a member of that
Committee.
During fiscal 1998, the Nominating Committee consisted of Ronald K.
Lohrding, Ph.D. and Craig Rogers. During 1998, the Nominating Committee held
no formal meetings. No member of the Nominating Committee receives any
additional compensation for his services as a member of that Committee.
During fiscal 1998 three (3) meetings of our Board of Directors were
held, which meetings were attended by all members of the Board of Directors.
Significant Employees
JEAN M. SCHARF. Ms. Scharf was appointed Chief Financial Officer and
Controller in August 1997. From April 1995 to August 1997, she served as the
Controller for TPL, Inc., a $7 million defense and private sector contractor.
From April 1984 to September 1994, she was employed by Applied Technology
Associates and with SAIC. She has also owned her own financial software
consulting business since 1994. She has a B.A. degree in business with an
accounting specialty from the University of New Mexico and is currently
working on an M.B.A. degree.
H. TRAVIS LEE. Mr. Lee was appointed Vice-President of Sales and
Marketing in January 1997. During 1996, Mr. Lee was responsible for
International Marketing and Business Development at LaserScope Surgical
Systems, San Jose, CA, a $70 million manufacturer of surgical laser systems.
From February 1994 to September 1996, he was Vice President for Marketing at
Heraeus Surgical Inc., a $30 million manufacturer of surgical lasers and other
medical products. He held senior management, marketing and sales positions
with Medasonics, Inc. and Xintec Corporation from 1991 to 1994. Mr. Lee
received his B.S. degree from San Jose State University in Graphic Design.
RICHARD ZIGWEID. Mr. Zigweid, Vice President of Manufacturing, joined us
in August 1996. Mr. Zigweid was Manufacturing Manager at Olympus America from
May 1994 to August 1996. He served as engineering manager at Bausch & Lomb and
as engineering manager and manufacturing engineer at Baxter Healthcare from
December 1988 to February 1994. He received his B.S. degree from the
University of Wyoming in Mechanical Engineering.
MICHAEL WOLF. Mr. Wolf, Vice President of Engineering, joined us in June
1991, and has been principally responsible for designing the Company's
flagship products. He served as Senior Engineer at Amtech Systems Corp. and
spent 24 years at LANL in various technical positions beginning in 1967. He
has authored over 30 technical papers, holds 13 United States patents, and has
been the lead designer on four projects that were awarded the R&D 100 Award,
signifying one of the 100 most significant technological advances of the year.
CONNIE HOY. Ms. Hoy, Regulatory Affairs and Quality Assurance Manager,
joined us in January 1997. She served as Compliance Officer for Tissue
Technologies, Inc., a skin resurfacing laser manufacturer and wholly-owned
subsidiary of Palomar Medical Technologies, Inc. during 1995 and 1996, where
she achieved FDA Medical Device Quality System compliance, European market
permission, and ISO 9000 registration for Tissue Technologies' skin
resurfacing laser systems. From 1986 to 1995, Ms. Hoy was responsible for
regulatory affairs at the "O" Company, a dental implant company. Ms. Hoy
received her B.A. degree from the University of New Mexico.
DR. LARRY KEENAN. Dr. Keenan, Product Manager, Cell Robotics
Workstation(-TM-) joined us in January 1993 and has been Product Manager for
the Cell Robotics Workstation(-TM-) since July, 1997. Dr. Keenan was the
Regional Sales Manager of BioRad for the confocal microscope product line of
BioRad from 1991 through 1992. He received his Ph.D. in Biological Sciences at
the University of California at Irvine and was an Associate Research Scientist
in Neurobiology at Yale University.
DR. JEROME CONIA. Dr. Conia joined us in May 1992 as a Scientist and has
been the In Vitro Fertilization Workstation Product Manager since May 1996 and
Chief Scientist since November 1998. He has authored several scientific papers
on optical trapping and scissoring and is the principal investigator on
several SBIR grants. He received his M.S. in Embryology, Cellular Biology, and
Physiology from the University of Paris, and his Ph.D. in Specialty Life
Science from the University of Orsay, Paris, France. He also was a
post-doctoral fellow in the Genetics Group at the LANL from March 1989 until
May 1992.
DAVID COSTELLO. Mr. Costello, Product Manager of the Professional
Lasette(-Registered Mark-), joined us in August 1996. From February 1994 to
September 1995, he was founder and Executive Vice-President of Tecnal
Products, Inc. From May 1992 to February 1994, he was Technology Development
Program Manager at Lovelace Scientific Resources. His qualifications include
five patents in medical optics, experience in regulatory development of new
clinical products, and a M.S. degree in Biomedical Engineering from Texas A&M
University.
Technical Advisory Board
We have voluntarily formed a Technical Advisory Board (the "Advisory
Board ") whose members are chosen by the Board of Directors based upon their
individual technical and scientific expertise in areas related to our
business. In consideration of their services as members of the Advisory
Board, each member has been granted non-qualified stock options exercisable to
purchase 6,000 shares of common stock at exercise prices ranging from $1.75
per share to $2.50 per share. Members of the Advisory Board receive no other
compensation for their services, which consist of approximately one day per
year devoted to our business. The following persons currently serve as
members of the Advisory Board:
Dr. Michael Berns is President, Beckman Laser Institute and Professor of
Cell Biology at the University of California.
Dr. Steven Chu is a winner of the 1997 Nobel Prize in Physics and a
Professor of Physics at Stanford University.
Dr. Steven Block is Associate Professor of Molecular Biology at Princeton
University.
Dr. Paul Jackson is a Molecular and Plant Biologist at a national
laboratory.
Dr. Wilfried Feichtinger is at the Institute for Fertility in Vienna,
Austria and was the recent chairman of the IXth World Congress on In vitro
Fertilization and Assisted Reproduction.
Dr. Charles Bracker is the G. B. Cummins Distinguished Professor,
Department of Botany and Plant Pathology, Purdue University.
Dr. Robert Stevenson is a biotech consultant in marketing and
acquisitions.
Dr. Otis Peterson is a laser expert and an inventor of the Alexandrite
Laser.
Director Compensation
During the fiscal year ended December 31, 1998, outside Directors did not
receive any cash compensation or other remuneration for their services.
However, they were reimbursed their expenses associated with attendance at
meetings or otherwise incurred in connection with the discharge of their
duties as our Directors.
Directors who are also executive officers receive no additional
compensation for their services as our Directors.
Executive Compensation
The following table and discussions summarizes all compensation earned by
or paid to our Chief Executive Officer ("CEO") and the other most highly
compensated executive officers for all services rendered in all capacities to
us and our subsidiaries for each of our last three fiscal years. However, no
disclosure has been made for any executive officer, other than the CEO, whose
total annual salary and bonus is less than $100,000.
TABLE 1
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------
Annual Compensation(1) Awards Payouts
-------------------------- --------------------- -------
Other All
Annual Restricted Other
Name and Compen- Stock LTIP Compen-
Principal Year Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($)(2) ($) SARs ($) ($)
--------------- ------- -------- ----- --------- ---------- -------- ------- ------
Ronald K. Lohrding, 1998 $123,125 $-0- $3,843 -0- -0- -0- -0-
President 1997 $123,000 $-0- $3,840 -0- -0- -0- -0-
1996 $115,000 $-0- $3,623 -0- 25,000 -0- -0-
H. Travis Lee,(1) 1998 $109,579 $-0- $3,570 -0- -0- -0- -0-
Vice President 1997 $109,500 $-0- $3,570 -0- 74,174 -0- -0-
Marketing and Sales
------------------------------
(1) Mr. Lee's employment with the Company began in January, 1997.
Employment Agreements
We have entered into written Employment Agreements, having terms of five
(5) years each, with Dr. Lohrding and Craig T. Rogers, the Company's Vice
President of Investor Relations. The Employment Agreement with Dr. Lohrding
provides for Dr. Lohrding to serve the Company as its Chairman, President and
CEO, on a full-time basis, for a minimum base salary of $100,000 per year.
During fiscal 1998, Dr. Lohrding was paid a base salary of $123,125. The
Employment Agreement with Mr. Rogers originally provided for his serving as
Chief Financial Officer, Secretary and Treasurer, on a part-time basis, for a
minimum base salary of $27,000 per year. Effective January 8, 1997, Mr.
Rogers resigned as Chief Financial Officer; however, he remains as our Vice
President of Investor Relations, Secretary and Treasurer on a part-time basis.
Mr. Rogers was paid a base salary of $41,042 during fiscal 1998. We also have
a written employment agreement with Mr. H. Travis Lee, Vice President of
Marketing and Sales. Under Mr. Lee's agreement, he receives a base salary of
$109,500 per year; provided, however, that either we or Mr. Lee may terminate
the employment relationship upon 45 days' prior written notice in the event a
change in control occurs. In such instance, we are obligated to pay Mr. Lee
his then prevailing total annual compensation in 12 monthly installments.
During fiscal 1992, we adopted a Stock Incentive Plan (the "Plan").
Pursuant to the Plan, stock options granted to eligible participants may take
the form of Incentive Stock Options ("ISO's") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or options which do not
qualify as ISO's (Non-Qualified Stock Options or "NQSO's"). As required by
Section 422 of the Code, the aggregate fair market value of our common stock
with respect to ISO's granted to an employee exercisable for the first time in
any calendar year may not exceed $100,000. The foregoing limitation does not
apply to NQSO's. The exercise price of an ISO may not be less than 100% of
the fair market value of the shares of our common stock on the date of grant.
The exercise price of an NQSO may be set by the administrator. An option is
not transferable, except by will or the laws of descent and distribution. If
the employment of an optionee terminates for any reason (other than for cause,
or by reason of death, disability, or retirement), the optionee may exercise
his options within a ninety (90) day period following such termination to the
extent he was entitled to exercise such options at the date of termination.
Either the Board of Directors (provided that a majority of directors are
"disinterested") can administer the Plan, or the Board of Directors may
designate a committee comprised of directors meeting certain requirements to
administer the Plan. The Administrator will decide when and to whom to make
grants, the number of shares to be covered by the grants, the vesting
schedule, the type of award and the terms and provisions relating to the
exercise of the awards. An aggregate of 1,500,000 shares of our common stock
is reserved for issuance under the Plan.
At December 31, 1998, the Company had granted a total of 1,031,820
Incentive Stock Options under the Plan consisting of 680,850 Incentive Stock
Options exercisable at prices ranging from $1.375 per share to $1.875 per
share, and 350,970 Non-Qualified Stock Options ("NQSO's"), which NQSO's have
been issued to members of the Advisory Board and other Company advisors, and
to certain members of the Board of Directors, and are exercisable at prices
ranging from $1.75 per share to $3.563 per share. All options have been
issued with exercise prices at or above market value on the date of issuance.
The following tables set forth certain information concerning the
granting and exercise of incentive stock options during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options on an aggregated basis:
TABLE 2
Option/SAR Grants for Last
Fiscal Year - Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
---------------------- ------------ ------------ ------------ ----------
Ronald K. Lohrding -0- -0- -0- -0-
H. Travis Lee -0- -0- -0- -0-
---------------------
TABLE 3
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
----------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($) (1)
Shares Acquired Value Realized Exercisable Exercisable/
Name on Exercise (#) ($) (Unexercisable) Unexercisable
---------------- --------------- -------------- --------------- -----------------
Ronald K. Lohrding -0- -0- 308,333/ $146,016/
316,667 $198,359
H. Travis Lee -0- -0- 24,725/ $28,582/
49,449 $57,163
------------------------------
(1) Value Realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market
value of the common stock on the date the options are exercised.
(2) The value of unexercised options is determined by calculating the
difference between the fair market value of the securities underlying
the options at fiscal year end and the exercise price of the options.
The closing bid price of our common stock at fiscal year end 1998 was
$2.531.
Indemnification and Limitation on Liability of Directors
Our Articles of Incorporation provide that we shall indemnify, to the
fullest extent permitted by Colorado law, any of our directors, officers,
employees or agents who are made, or threatened to be made, a party to a
proceeding by reason of the former or present official position of the person,
which indemnity extends to any judgments, penalties, fines, settlements and
reasonable expenses incurred by the person in connection with the proceeding if
certain standards are met. At present, there is no pending litigation or
proceeding involving any of our directors, officers, employees or agents where
indemnification will be required or permitted. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and controlling persons pursuant to the foregoing
provisions, or otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission (the "Commission"), such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Our Articles of Incorporation limit the liability of our directors to the
fullest extent permitted by the Colorado Business Corporation Act.
Specifically, our directors will not be personally liable for monetary damages
for breach of fiduciary duty as directors, except for (i) any breach of the
duty of loyalty to us or our stockholders, (ii) acts or omissions not in good
faith or that involved intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions, (iv) violations
of certain laws, or (v) any transaction from which the director derives an
improper personal benefit. Liability under federal securities law is not
limited by the Articles.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transaction with President and CEO
In February 1998, we sold in a public offering units consisting of one share
of Series A Convertible Preferred Stock, each convertible into four common
shares, and two common stock purchase warrants. Each unit was sold at a price
to the public of $8.25. In conjunction with this offering, we granted a stock
option to our President and CEO, Ronald K. Lohrding, Ph.D., pursuant to which
the Company granted to Dr. Lohrding non-qualified stock options exercisable to
purchase, in the aggregate, 450,000 shares of our common stock at an exercise
price equal to 25% of the unit offering price, or $2.0625 per share. 150,000
of Dr. Lohrding's options vested and became exercisable on the closing of the
public offering. The balance of Dr. Lohrding's options will vest on November
30, 2002, subject to the following early vesting criteria:
1. 150,000 options will vest and become exercisable thirty days after the
end of any quarter in which we report pre-tax income of at least
$50,000; and
2. 150,000 options will vest and become exercisable upon reporting our
first fiscal year with net income of at least $500,000.
The foregoing option is exercisable by Dr. Lohrding to purchase shares of
the Company's common stock at an exercise price of $2.0625 per share for a
period of 36 months from each respective vesting date, but in no event later
than February 2, 2003 (the "Expiration Date").
Any transactions between us and our officers, directors, principal
stockholders, or other affiliates have been, and will be, on terms no less
favorable to us than could be obtained from unaffiliated third parties on an
arms-length basis and will be approved by a majority of our independent,
disinterested directors.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the stock
ownership of each person known by us to be the beneficial owner of five (5%)
percent or more of our common stock, all Directors individually and all
Directors and Officers as a group. Each person has sole voting and investment
power with respect to the shares shown, except as noted.
Amount and
Name and Address Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership Class(1)
----- ---------------- ---------- --------
Common Ronald K. Lohrding(2) 616,667 7.60%
Stock c/o Cell Robotics, Inc.
2715 Broadbent Parkway, NE
Albuquerque, NM 87107
" Craig T. Rogers(3) 133,767 1.71%
4465 Northpark Drive
Colorado Springs, CO 80907
" Mark Waller, Director(4) 215,000 2.70%
1820 North Shore Road
Lake Oswego, OR 97304
" Dr. Raymond Radosevich(5) 21,000 .27%
c/o Cell Robotics, Inc.
2715 Broadbent Parkway, NE
Albuquerque, NM 87107
" Dr. Debra Bryant(6) 12,500 .11%
c/o Cell Robotics, Inc.
2715 Broadbent Parkway, NE
Albuquerque, NM 87107
" Ron E. Ainsworth (7) 0 0%
c/o Cell Robotics, Inc.
2715 Broadbent Parkway, NE
Albuquerque, NM 87107
" Mitsui Engineering &(8) 409,406 5.26%
Shipbuilding Company, Ltd.
405 Park Avenue, Suite 501
New York, NY 10022
" All Officers and Directors 1,178,814 13.77%
as a Group (9 persons)
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them within sixty (60) days of the date of
this Prospectus are treated as outstanding when determining the percent
of the class owned by such individual and when determining the percent
owned by the group.
(2) Includes Incentive Stock Options exercisable to purchase 150,000 shares
of common stock at an exercise price of $1.75 per share, and Incentive
Stock Options exercisable to purchase 25,000 shares of common stock at
an exercise price of $1.875 per share, issued under our 1992 Stock
Incentive Plan. Also includes Non-Qualified Stock Options exercisable
to purchase 150,000 shares of common stock at an exercise price of
$2.0625 per share, issued to Dr. Lohrding as part of our registered
public offering of securities which was declared effective by the
Commission in February, 1998 (the "Public Offering"). Does not include
Lohrding Options exercisable to purchase 300,000 shares of our common
stock issued to Dr. Lohrding in anticipation of the Public Offering
which are subject to future vesting.
(3) Mr. Rogers exercises the sole voting and investment power with respect
to 67,100 shares of common stock. Also includes 10,000 shares of common
stock owned of record by Leslie Rogers, Mr. Roger's wife. Also includes
Incentive Stock Options exercisable to purchase 56,667 shares of common
stock at an exercise price of $1.375 per share issued under our 1992
Stock Incentive Plan.
(4) Represents Non-Qualified Stock Options exercisable to purchase, in the
aggregate, 200,000 shares of common stock at $1.75 per share, and Non-
Qualified Stock Options exercisable to purchase 15,000 shares of common
stock at an exercise price of $2.81 per share. Does not include Non-
Qualified Stock Options exercisable to purchase 5,000 shares of common
stock which are subject to future vesting.
(5) Reflects Non-Qualified Stock Options exercisable to purchase 6,000
shares of common stock at an exercise price of $1.75 per share, and Non-
Qualified Stock Options exercisable to purchase 15,000 shares of common
stock at an exercise price of $2.81 per share. Does not include Non-
Qualified Stock Options exercisable to purchase 5,000 shares of common
stock which are subject to future vesting.
(6) Includes Non-Qualified Stock Options exercisable to purchase 7,500
shares of common stock at an exercise price of $3.563 per share. Does
not include Non-Qualified Stock Options exercisable to purchase 7,500
shares of common stock which are subject to future vesting.
(7) Does not include Non-Qualified Stock Options exercisable to purchase
20,000 shares of common stock which are subject to future vesting.
(8) Mitsui Engineering & Shipbuilding Company, Ltd., a Japanese corporation
("Mitsui"), is the record owner and exercises the sole power to vote and
invest 409,406 shares of our common stock.
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the Commission's Public Reference Rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information on the Public Reference Rooms. You can also obtain copies
of our Commission filings by going to the Commission's website at
http://www.sec.gov.
We have filed with the Commission a Registration Statement on Form SB-2 to
register the shares of our common stock and common stock warrants to be sold by
the Selling Securityholders and issued pursuant to the exercise of the
warrants. This Prospectus is part of that Registration Statement and, as
permitted by the Commission's rules, does not contain all of the information
set forth in the Registration Statement. For further information about us or
our common stock, you may refer to the Registration Statement and to the
exhibits filed as part of the Registration Statement. You can review a copy
of the Registration Statement and its exhibits at the public reference rooms
maintained by the Commission and on the Commission's website as described
above.
FORWARD-LOOKING STATEMENTS
This Prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of our
industry, statements about our future business plans and strategies, and most
other statements that are not historical in nature. In this prospectus,
forward-looking statements are generally identified by the words "anticipate,"
"plan," "believe," "expect," "estimate," and the like. Although we believe
that any forward-looking statements we make in this prospectus are reasonable,
because forward-looking statements involve future risks and uncertainties,
there are factors that could cause actual results to differ materially from
those expressed or implied. For example, a few of the uncertainties that could
affect the accuracy of forward-looking statements, besides the specific factors
identified above in the Risk Factors section of this prospectus, include:
* changes in general economic and business conditions affecting our
industry;
* changes in our business strategies; and
* the level of demand for our products.
In light of the significant uncertainties inherent in the forward-looking
statements made in this Prospectus, particularly in view of our early stage of
operations, the inclusion of this information should not be regarded as a
representation by us or any other person that we will achieve our objectives
and plans.
NO SAFE HARBOR
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by certain existing public companies, does
not apply to our offerings.
SELLING SECURITYHOLDERS
The Selling Securityholders are offering to sell 332,500 shares of our
common stock and 148,750 warrants covered by this Prospectus. None of the
Selling Securityholders has, or within the past three years has had, any
position, office or other material relationship with us or any of our
predecessors or affiliates, except as noted.
Of the securities being offered, all 332,500 shares of our common stock
and 71,250 of the warrants were sold to the Selling Securityholders in our
recently completed private offering. We issued the balance of the warrants as
compensation for services.
The following table lists the Selling Securityholders eligible to sell
shares of common stock and warrants under this Prospectus, the number of shares
beneficially owned by each Selling Securityholder prior to this Offering, and
the maximum number of shares and warrants each Selling Securityholder may sell
under this Prospectus. We will not receive any of the proceeds from the sale
of our common stock or warrants by the Selling Securityholders. The number of
shares and warrants owned by each Selling Securityholder after the Offering
will depend upon the number of shares and warrants actually sold by each
Selling Securityholder.
Number of Maximum Maximum Number of
Shares Number of Number of Shares
Beneficially Shares to be Warrants Beneficially
Owned Prior Sold in to be Owned after
to Offering(1) Offering Sold Offering Percent
------------- --------- --------- --------- -------
Paulson Investment
Company, Inc.(2) 1,035,405 210,000 75,000 750,405 11.8%
Paul Bardacke (3) 100,000 70,000 30,000 -0- 0%
Thomas Pennello 42,500 35,000 7,500 -0- 0%
Scott Weber (4) 23,750 17,500 6,250 -0- 0%
GL Investment Group,
Inc. (5) 20,000 -0- 20,000 -0- 0%
Jean Ellen Canavan
(6) 2,000 -0- 10,000 2,000 nil
(1) The number of shares indicated includes shares acquired directly from us
by the Selling Securityholders as well as shares which are issuable upon
the exercise of warrants held by the Selling Securityholders.
(2) Paulson Investment Company, Inc. is an investment banking firm that has
served as our underwriter in both of our public offerings. They have also
served as a placement agent in our private placements. For their services
as our underwriter and placement agent, we have paid to Paulson Investment
Company, Inc. various fees as well as issued to them our securities
including shares of common stock, preferred stock and warrants. Prior to
the recently completed private offering, Paulson Investment Company, Inc.
owned 165,405 shares of our common stock and warrants exercisable to
purchase an additional 585,000 shares of our common stock. It purchased
three units in the private offering, consisting of 210,000 shares of
common stock and 40,000 warrants. Of the warrants being offered, 30,000
warrants were issued to Paulson Investment Company, Inc. for services in
connection with the Company's recently completed private offering.
(3) Mr. Bardacke is an attorney who has provided services for which we have
issued to him an additional 15,000 warrants.
(4) Mr. Weber is an investment banker and broker/dealer who served as one of
our placement agents in our private placement for which we issued to him
2,500 warrants.
(5) GL Investments Group, Inc. served as one of our placement agents in our
private placement for which it received 5,000 warrants and, in addition,
it has provided for us various investment banking services for which we
have issued to it an additional 15,000 warrants.
(6) Ms. Canavan served as a placement agent in our private offering for which
she received 10,000 warrants.
We will pay all expenses to register the shares, except that the Selling
Securityholders will pay any underwriting and brokerage discounts, fees and
commissions, specified attorneys' fees and other expenses to the extent
applicable to them.
We have agreed to indemnify the Selling Securityholders and certain
affiliated parties against specified liabilities, including liabilities under
the Securities Act, as amended, in connection with this Offering. The Selling
Securityholders have agreed to indemnify us and our directors and officers, as
well as any persons controlling our Company, against certain liabilities,
including liabilities under the Securities Act. Insofar as indemnification for
liabilities under the Securities Act may be permitted to our directors or
officers, or persons controlling our Company, we have been advised that in the
opinion of the SEC this kind of indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
USE OF PROCEEDS
We will not receive any proceeds when Selling Securityholders sell shares
of common stock or warrants under this Prospectus. We have received proceeds
from the sale of the common stock and warrants and may receive proceeds from
the exercise of the warrants.
If we receive proceeds from the exercise of warrants, it will be used for
general working capital purposes.
PLAN OF DISTRIBUTION
This Prospectus covers the sale of shares of common stock pursuant to the
exercise of outstanding warrants held by the Selling Securityholders as well as
the resale by those Selling Securityholders of those warrants and additional
shares of our common stock which they have already purchased from us.
Selling Securityholders may sell their shares of common stock and warrants
either directly or through a broker-dealer or other agent at prices related to
prevailing market prices or negotiated prices, in one or more of the following
kinds of transactions:
* Transactions in the over-the-counter market;
* Transactions on a stock exchange that lists our common stock, or
transactions negotiated between Selling Securityholders and
purchasers, or otherwise.
Broker-dealers or agents may purchase shares directly from a Selling
Securityholder or sell shares and warrants to someone else on behalf of a
Selling Securityholder. Broker-dealers may charge commissions to both Selling
Securityholders selling common stock and warrants, and purchasers buying shares
and warrants sold by a Selling Securityholder. If a broker buys shares
directly from a Selling Securityholder, the broker may resell the shares and
warrants through another broker, and the other broker may receive compensation
from the Selling Securityholder for the resale.
To the extent required by laws, regulations or agreements we have made, we
will use our best efforts to file a Prospectus supplement during the time the
Selling Securityholders are offering or selling shares covered by this
Prospectus in order to add or correct important information about the plan of
distribution for the shares.
In addition to any other applicable laws or regulations, Selling
Securityholders must comply with regulations relating to distributions by
Selling Securityholders, including Regulation M under the Securities Exchange
Act of 1934, as amended.
Some states may require that registration, exemption from registration or
notification requirements be met before Selling Shareholders may sell their
common stock and warrants. Some states may also require Selling
Securityholders to sell their common stock only through broker-dealers.
DESCRIPTION OF SECURITIES
We are authorized to issue up to 12,500,000 shares of $.004 par value
common stock and up to 2,500,000 shares of $.04 par value preferred stock. As
of September 30, 1999, 7,888,591 shares of common stock and no shares of
preferred stock were issued and outstanding.
Common Stock
Each holder of our common stock is entitled to one vote for each share
held of record. There is no right to cumulative votes for the election of
directors. The shares of common stock are not entitled to pre-emptive rights
and are not subject to redemption or assessment. Each share of common stock is
entitled to share ratably in distributions to shareholders and to receive
ratably such dividends as may be declared by the Board of Directors out of
funds legally available therefor. Upon liquidation, dissolution or winding up
of the Company, the holders of common stock are entitled to receive, pro rata,
our assets which are legally available for distribution to shareholders. The
issued and outstanding shares of common stock are validly issued, fully paid
and non-assessable.
Preferred Stock
We are authorized to issue up to 2,500,000 shares of $.04 par value
preferred stock. The preferred stock of the corporation can be issued in one
or more series as may be determined from time to time by our Board of Directors
without further stockholder approval. In establishing a series, our Board of
Directors shall give to it a distinctive designation so as to distinguish it
from the shares of all other series and classes, shall fix the number of shares
in such series, and the preferences, rights and restrictions thereof. All
shares of any one series shall be alike in every particular. All series shall
be alike except that there may be variation as to the following: (1) the rate
of distribution, (2) the price at and the terms and conditions on which shares
shall be redeemed, (3) the amount payable upon shares for distributions of any
kind, (4) sinking fund provisions for the redemption of shares, (5) the terms
and conditions on which shares may be converted if the shares of any series are
issued with the privilege of conversion, and (6) voting rights except as
limited by law.
Although we currently do not have any plans to designate a series of
preferred stock, there can be no assurance that we will not do so in the
future. As a result, we could authorize the issuance of a series of preferred
stock which would grant to holders preferred rights to our assets upon
liquidation, the right to receive dividend coupons before dividends would be
declared to common stockholders, and the right to the redemption to such
shares, together with a premium, prior to the redemption of common stock.
Common stockholders have no redemption rights. In addition, our Board could
issue large blocks of voting stock to fend against unwanted tender offers or
hostile takeovers without further shareholder approval.
Warrants
We have issued in the past four different sets or classes of warrants,
each of which is exercisable by the owner to purchase our securities. The
following is a summary of those different classes of warrants:
PLACEMENT AGENT'S WARRANTS. In connection with a private offering that we
did in 1995, we issued to Paulson Investment Company, Inc. warrants to purchase
11.5 private units at a price of $25,000 per unit. Each unit is comprised of
20,000 shares of our common stock and 10,000 Class A Warrants. Warrants to
purchase 6.8 units expire on August 30, 2000 and warrants exercisable to
purchase the remaining 4.7 units expire on September 18, 2000.
REPRESENTATIVE'S WARRANT. In connection with the offering that we
completed in 1998, we issued to Paulson Investment Company, Inc. which served
as our underwriter, another warrant to purchase 40,000 public units at a price
of $9.90 per unit. Each public unit now consists of four shares of our common
stock and two Public Warrants described below. The representative's warrant
expires on February 2, 2003.
CLASS A WARRANTS. In connection with our private placement in 1995, we
issued to investors in that offering Class A Warrants each exercisable to
purchase a share of our common stock at a price of $1.75 per share. The Class
A Warrants expire on December 31, 2000. In 1998, we exercised our right to
call for redemption all of the outstanding Class A Warrants because we had
registered the exercise of those warrants with the Commission and our public
trading price had been more than $3.50 per share for at least ten consecutive
trading days. As a result of a redemption call, a vast majority of the persons
holding the Class A Warrants exercised the warrants and those warrants that
were not exercised were redeemed by the Company. We currently have no Class A
Warrants outstanding; however, we may issue up to 115,000 additional Class A
Warrants in the event Paulson Investment Company, Inc. exercises its Placement
Agent's Warrant described above.
PUBLIC WARRANTS. In connection with the offering in 1998, we issued
1,157,576 public warrants, each exercisable to purchase a share of our common
stock at $2.40 per share. The public warrants expire on February 2, 2003. We
have the right to call the public warrants for redemption in the event our
public stock price equals or exceeds $4.80 per share for at least ten
consecutive trading days and we have in effect a current registration statement
covering the exercise of the warrants. In such event, holders of the public
warrant will have a 30 day notice period in which to exercise the warrants, and
any warrants not exercised will be redeemed by us at a redemption price of $.25
per warrant. The warrants covered by this Prospectus which are owned by the
Selling Securityholders are the same class of warrants as the public warrants.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Corporate Stock
Transfer, Inc., Denver, Colorado.
Reports to Shareholders
We intend to furnish annual reports to shareholders which will include
audited financial statements reported on by our certified public accountants.
In addition, we may issue unaudited quarterly or other interim reports to
shareholders as we deem appropriate. We will comply with the periodic
reporting requirements imposed by the Securities Exchange Act of 1934.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for us by Neuman & Drennen, LLC of Boulder, Colorado. Clifford L.
Neuman, a partner in the firm of Neuman & Drennen, LLC, is the beneficial owner
of 12,150 shares of the Company's common stock.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1997,
and for each of the years in the two year period ended December 31, 1998, have
been included herein in reliance on the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of that firm as experts in auditing and accounting.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
This index relates to the consolidated financial statements set forth in
this Prospectus of Cell Robotics International, Inc.
Independent Auditors' Report of KPMG LLP F-2
Audited Consolidated Financial Statements for
Fiscal Year Ended December 31, 1998 and 1997
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders' Equity (Deficit) F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
Unaudited Consolidated Financial Statements for
Periods Ending June 30, 1999 and December 31, 1998
Consolidated Balance Sheets F-18
Consolidated Statements of Operations for the Three
Months ended June 30, 1999 and June 30, 1998 F-19
Consolidated Statements of Operations for the Six
Months ended June 30, 1999 and June 30, 1998 F-20
Consolidated Statements of Cash Flows F-21
Notes to Consolidated Financial Statements F-22
Independent Auditors' Report
The Board of Directors and Shareholders
Cell Robotics International, Inc.
We have audited the accompanying consolidated balance sheets of Cell Robotics
International, Inc. and subsidiary as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cell Robotics
International, Inc. and subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
Albuquerque, New Mexico
March 24, 1999
CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1997
1998 1997
------------ -----------
Assets
Current assets:
Cash and cash equivalents $ 1,375,575 $ 623,572
Accounts receivable, net of allowance
for doubtful accounts of $1,841 in 1998
and 1997 246,573 223,856
Inventory 526,249 586,033
Other 123,271 36,089
------------ -----------
Total current assets 2,271,668 1,469,550
Property and equipment, net (note 3) 272,894 194,654
Deferred offering costs (note 9) 0 248,372
Other assets, net (note 4) 38,490 67,271
------------ -----------
Total assets $ 2,583,052 $ 1,979,847
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 327,686 $ 603,153
Payroll related liabilities 144,188 149,726
Royalties payable 33,510 193,150
Other current liabilities 27,945 88,941
------------ -----------
Total current liabilities 533,329 1,034,970
Short-term loan refinanced subsequent to
balance sheet date (note 9) 0 500,000
------------ -----------
Total liabilities 533,329 1,534,970
------------ -----------
Stockholders' equity (notes 5 and 9):
Preferred stock, $.04 par value. Authorized
2,500,000 shares, 465,533 and zero shares
issued and outstanding at December 31,
1998 and 1997, respectively 18,622 0
Common stock, $.004 par value.
Authorized 12,500,000 shares, 5,739,248
and 5,245,414 shares issued and
outstanding at December 31, 1998
and 1997, respectively 22,957 20,982
Additional paid-in capital 17,916,565 14,037,243
Accumulated deficit (15,908,421) (13,613,348)
------------ -----------
Total stockholders' equity 2,049,723 444,877
------------ -----------
Commitments (notes 6 and8) $ 2,583,052 $ 1,979,847
============ ===========
See accompanying notes to consolidated financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
For the years ended December 31, 1998 and 1997
1998 1997
------------ ------------
Product sales $ 1,249,703 $ 879,490
Research and development grants 179,298 158,233
------------ ------------
Total revenues 1,429,001 1,037,723
------------ ------------
Product cost of goods sold (848,240) (599,153)
SBIR direct expenses (179,298) (159,052)
------------ ------------
Total cost of goods sold (1,027,538) (758,205)
------------ ------------
Gross profit 401,463 279,518
------------ ------------
Operating expenses:
General and administrative 810,809 681,554
Marketing & Sales 609,288 868,812
Research and development 849,166 1,245,125
------------ ------------
Total operating expenses 2,269,263 2,795,491
Loss from operations (1,867,800) (2,515,973)
------------ ------------
Other income (deductions):
Interest income 85,429 32,004
Interest expense (975) (723)
Other 0 11,800
------------ ------------
Total other income 84,454 43,081
------------ ------------
Net loss (1,783,346) (2,472,892)
------------ ------------
Preferred stock dividends (274,227) 0
------------ ------------
Net loss applicable to common shareholders $ (2,057,573) $ (2,472,892)
============ ============
Weighted average common shares
outstanding, basic and diluted 5,278,347 5,100,032
============ ============
Net loss applicable to common shareholders
per common share, basic and diluted $ (0.39) $ (0.48)
============ ============
See accompanying notes to consolidated financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the years ended December 31, 1998 and 1997
Preferred Stock Common Stock
------------------- ------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------ --------- ------- -------- ---------- -----------
Balance at December 31,
1996 - $ - 5,003,414 $ 20,014 $13,327,672 $(11,140,456)
Issuance of shares at $3.25,
Less costs of offering - - 200,000 800 629,700 -
Exercise of stock options - - 42,000 168 79,871 -
Net loss for 1997 - - - - - (2,472,892)
-------- ------- -------- ------- ---------- -----------
Balance at December 31,
1997 - - 5,245,414 20,982 14,037,243 (13,613,348)
Issuance of units at $8.25,
less costs of offering 460,000 18,400 - - 3,009,104 -
Exchange of outstanding
common shares for units 78,788 3,152 (200,000) (800) 235,148 (237,500)
Options issued for services - - - - 60,688 -
Conversion of series A
preferred stock (73,255) (2,930) 293,020 1,172 1,758 -
Stock dividend paid on
series A preferred stock - - 200,614 803 273,424 (274,227)
Issuance of shares at $1.50 - - 200,000 800 299,200 -
Net loss for 1998 - (1,783,346)
--------- -------- --------- -------- ------------ ------------
Balance at December 31,
1998 465,533 $ 18,622 5,739,248 $ 22,957 $17,916,565 $(15,908,421)
======== ========= ========== ========= ============ =============
See accompanying notes to consolidated financial
statements
CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the years ended December 31, 1998 and 1997
1998 1997
------------ -------------
Cash flows from operating activities:
Net loss $(1,783,346) $(2,472,892)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 115,242 119,914
Amortization of options issued
for service 53,409 0
Increase in accounts receivable (22,717) (154,011)
Decrease(increase) in inventory 59,784 (177,860)
Increase in other current assets (79,903) (16,968)
Increase (decrease) in accounts
payable and payroll related
liabilities (57,633) 239,751
Increase (decrease) in other current
liabilities and royalties payable (220,636) 208,125
----------- -----------
Net cash used in operating activities (1,935,800) (2,253,941)
------------ -----------
Cash flows from investing activities -
purchase of property and equipment (164,701) (32,697)
------------ -----------
Cash flows from financing activities:
Proceeds from sale of units, net of
offering costs 3,052,504 0
Proceeds from (repayment of) loans (500,000) 500,000
Proceeds from issuance of common stock 300,000 730,039
Costs of offering common stock 0 (19,500)
Deferred offering costs 0 (25,000)
------------ ----------
Net cash provided by financing
activities 2,852,504 1,185,539
------------ ----------
Net increase (decrease) in cash and
cash equivalents: 752,003 (1,101,099)
Cash and cash equivalents:
Beginning of year 623,572 1,724,671
------------ ----------
End of year $1,375,575 $ 623,572
============= ===========
Supplemental information:
Stock options issued in exchange
for services $ 60,688 $ 0
============= ===========
Exchange of common stock for units $ 237,500 $ 0
============= ===========
Stock dividends on Series A
Preferred Stock $ 274,227 $ 0
============= ===========
See accompanying notes to consolidated financial statements
CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Business and Activities
The Company has developed and is manufacturing and marketing a series of
laser-based medical devices with applications in the blood sample and glucose
collection and in vitro fertilization markets. Currently, the Company also
develops, produces and markets a line of advanced scientific instruments which
increase the usefulness and importance of the conventional laboratory
microscope. The Company markets its scientific instruments in both domestic and
international markets. In 1998, approximately 61 percent of the Company's
product sales were in the United States, with Germany, Asia, Australia, and
Canada being the Company's principal international markets. The Company's
customers consist primarily of research institutes, universities, fertility
clinics, and distributors.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of Cell
Robotics International, Inc. and its wholly owned subsidiary (the Company). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
(b) Financial Statement Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers
all short-term investments with original maturities of three months or less to
be cash equivalents.
(d) Inventory
Inventory is recorded at the lower of cost, determined by the first-
in, first-out method, or market. Inventory at December 31 consists of the
following:
Property and equipment are stated at cost. Depreciation is calculated
on a straight-line basis over the estimated useful lives of the assets, which
range from five to seven years. Leasehold improvements are amortized over the
life of the lease.
(f) Earnings Per Share
Basic loss per share is computed on the basis of the weighted average
number of common shares outstanding during the year. Diluted loss per share
which is computed on the basis of the weighted average number of common shares
and all potentially dilutive common shares outstanding during the year, is the
same as basic loss per share for 1998 and 1997, as all potentially dilutive
securities were anti-dilutive.
Options to purchase 1,631,820 and 1,000,905 shares of common stock
were outstanding at December 31, 1998 and 1997, respectively. Additionally,
warrants to purchase 1,662,576 and 345,000 shares of common stock were
outstanding at December 31, 1998 and 1997, respectively. These were not
included in the computation of diluted earnings per share as the exercise of
these options and warrants would have been anti-dilutive because of the net
losses incurred in 1998 and 1997.
(g) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable, royalties payable, accrued liabilities and short-
term loan in the consolidated financial statements approximate fair value
because of the short-term maturity of these instruments.
(h) Income Taxes
The Company follows the asset and liability method for accounting for
income taxes whereby deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax basis of existing assets and liabilities.
(i) Revenue
The Company recognizes revenue on sales of its products when the
products are shipped from the plant and ownership is transferred to the
customer.
(j) Research and Development
Research and development costs related to both present and future
products are expensed as incurred. Research and development costs consist
primarily of salaries, materials and supplies.
(k) Warranties
The Company warrants their products against defects in materials and
workmanship for one year. The warranty reserve is reviewed periodically and
adjusted based upon the Company's historical warranty costs and its estimate of
future costs.
(l) Stock Option Plan
The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. As such, compensation
expense is recorded on the date of grant only if the current market price of
the underlying stock exceeds the exercise price. SFAS No. 123, "Accounting for
Stock Based Compensation," permits entities to recognize as an expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995
and future years as if the fair-value-based method defined in SFAS No. 123 had
been applied. The Company has elected to continue to apply the provisions of
APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No.
123.
(m) Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income." The Company adopted the provisions
of SFAS No. 130 during 1998. The Company had no items of other comprehensive
income during 1998 and 1997.
(n) Reclassification
Certain 1997 amounts have been reclassified to conform with the 1998
presentation.
(3) Property and Equipment
Property and equipment consist of the following at December 31:
During 1998 and 1997, the Company recorded $21,247 and $17,706
respectively, of software development costs amortization as cost of goods sold.
(5) Stock Options and Warrants
(a) Stock Options
The Company has adopted a Stock Incentive Plan (the Plan) pursuant to
which the Company's Board of Directors may grant to eligible participants
options in the form of Incentive Stock Options (ISO's) under Section 422 of the
Internal Revenue Code of 1986, as amended, or options which do not qualify as
ISO's (Non-Qualified Stock Options or NQSO's). An aggregate of 1,500,000 shares
of the Company's common stock is reserved for issuance under the Plan.
Generally, stock options granted under the Plan have five-year terms and become
fully exercisable after three or four years from the date of grant. Following
is a summary of activity in the Company's options for employees, directors,
outside consultants, and technical advisors:
Year ended December 31,
-------------------------------------
1998 1997
--------------------------------------
Weighted- Weighted-
average average
exercise exercise
price Number price Number
--------- --------- --------- -------
Outstanding at beginning
of year $2.03 1,000,905 $1.91 885,826
Issued 2.11 745,000 2.59 175,174
Exercised - - 1.91 (42,000)
Forfeited 2.50 (75,000) 2.22 (18,095)
Expired 1.78 (39,085) - -
Repriced 2.16 (500,850) - -
Repriced 1.38 500,850 - -
Outstanding at end of year $1.81 1,631,820 $2.03 1,000,905
Exercisable at end of year $1.72 994,595 $1.83 696,856
The following summarizes certain information regarding outstanding stock
options at December 31, 1998:
During 1998, the Company granted 675,000 options outside of the Plan,
for the purchase of the Company's common stock to an officer and providers of
investment relations services for the Company. Such options are included in the
above table. Of the options, 450,000 options were issued to an officer, of
which 150,000 options vested in 1998 upon the closing of the offering described
in Note 9, and the remaining 300,000 options vest on November 30, 2002,
provided, however, (i) 150,000 options will vest and become exercisable thirty
days after any quarter in which the Company reports pre-tax income of at least
$50,000; and (ii) 150,000 options will vest and become exercisable upon the
Company reporting its first fiscal year with net income of at least $500,000.
The options are exercisable for a period of 36 months from each respective
vesting date, but in no event later than December 31, 2002. The remaining
options of 225,000 were issued to providers of investment relation services, of
which 75,000 options had been forfeited by December 31, 1998. The remaining
150,000 options vest upon the occurrence of certain events and performance of
measure being achieved, and the fair value of these performance based options
will be measured upon vesting and be charged to operations at such time.
At December 31, 1998, there were 416,180 additional shares available
for grant under the Plan. The fair value of stock options granted and modified
during 1998 and 1997 was $403,428 and $257,594, respectively, on the date of
grant or amendment using the Black Scholes option-pricing model with the
following weighted-average assumptions:
1998 1997
--------- ---------
Expected dividend yield 0.0% 0.0%
Risk-free interest rate 4.767% 6.5%
Expected life of option 4 years 4 years
Expected volatility 75.2% 75.2%
The Company applies APB Opinion No. 25 in accounting for its Plan
and, accordingly, no compensation cost has been recognized for its employee
stock options in the consolidated financial statements. Had the Company
determined compensation cost based on the fair value at the date of grant for
its employee stock options under SFAS No. 123, the Company's net loss would
have been increased to the pro forma amounts indicated below:
1998 1997
------------ ------------
Reported net loss applicable
to common shareholders $(2,057,573) $(2,472,892)
Pro forma net loss applicable
to common shareholders (2,461,001) (2,671,309)
Pro forma net loss per share
applicable to common
shareholders - basic and
diluted $ (.47) $ (.52)
============ ============
(b) Warrants
The Company has a Placement Agent's Warrant outstanding that was
granted to an underwriter. The Placement Agent's Warrant is exercisable through
September 30, 2000 to acquire up to 11.5 private units at a price of $25,000
per unit. Each unit consists of 20,000 shares of the Company's common stock.
The Placement Agent's Warrant also includes 115,000 Class A Common Stock
Purchase Warrants exercisable through December 31, 2000 to purchase115,000
shares of common stock for a price of $1.75 per share.
The Company also has a Representative's Warrant outstanding that was
granted to the same underwriter. The Representative's Warrant is exercisable
through February 2, 2002 to purchase 160,000 shares of common stock at a price
of $2.35 per share. The Representative's Warrant also includes 80,000 Common
Stock Purchase Warrants exercisable through February 2, 2003 to purchase 80,000
shares of common stock for a price of $2.40 per share.
Finally, in conjunction with the Offering completed in February 1998,
and the exchange of common shares for Units in February 1998, the Company has
an additional 1,077,576 warrants outstanding exercisable through February 2,
2003 to purchase 1,077,576 shares of common stock for a price of $2.40 per
share.
The board of directors and stockholders have approved an Employee
Stock Purchase Plan (ESPP). As of December 31, 1998 and 1997, no shares of
common stock have been issued under the ESPP and there have been no
subscriptions of employees to participate in the ESPP.
(6) Royalty Agreements
The Company is party to several royalty agreements under which it must
make payments to the original holders of patents on components used in its
products. Such royalties, equal to 1 to 2 percent of the net sales of the
products containing patented components, are generally due upon sale of the
products.
Additionally, one royalty agreement requires a royalty payment equal to 7
percent of revenue generated from sales of the Company's products and pertains
to the Company's worldwide, non-exclusive license agreement which continues
until March 31, 2016. Beginning with the year 1999, the minimum royalty payable
each year is $35,000 payable as follows: $17,500 sixty days after the end of
each semiannual period ending June 30th and December 31st.
(7) Income Taxes
No provision for federal or state income tax expense has been recorded due
to the Company's losses. The Company has net operating loss carryforwards and
temporary differences that give rise to the following deferred tax assets and
liabilities:
December 31,
--------------------------
1998 1997
------------ ------------
Deferred tax assets:
Net operating loss carry- forwards $4,825,000 $4,118,000
Inventory capitalization 97,000 197,000
Vacation and sick leave payable 30,000 28,000
Allowance for doubtful accounts - 625
Depreciation 18,000 -
Accrued expenses 48,000 -
------------ ------------
5,018,000 4,343,625
Less valuation allowance (4,986,000) (4,318,625)
------------ ------------
Net deferred tax asset $ 32,000 25,000
============ ============
Deferred tax liabilities:
Amortization $ 32,000 8,000
Depreciation - 17,000
------------ ------------
Net deferred income taxes $ - -
============ ============
The net deferred taxes have been fully offset by a valuation allowance
since the Company cannot currently conclude that it is more likely than not
that the benefits will be realized. The net operating loss carryforward for
income tax purposes of approximately $14,000,000 expires beginning in 2006
through 2018. Ownership changes resulting from the Company's reorganization in
1995 will limit the use of this net operating loss under applicable Internal
Revenue Service regulations.
(8) Commitments
The Company is obligated under a noncancellable operating lease for
building facilities which is subject to 3 percent annual increases and expires
on November 30, 2002. Rent expense for 1998 and 1997 was $105,987 and $106,893,
respectively. Minimum annual lease commitments for all building facilities at
December 31, 1998 are: $99,129 for 1999; $102,162 for 2000; $105,195 for 2001;
and $98,977 for 2002.
(9) Equity Transactions
In February 1998, the Company sold 460,000 Units (including the
Underwriter's "Over-Allotment Option, which consisted of 60,000 Units), each
Unit consisting of one share of Series A Convertible Preferred Stock (the
"Preferred Stock"), convertible into four common shares, and two common stock
purchase warrants each exercisable to acquire one share of common stock at an
exercise price of $2.40 per share (the "Warrants"), in a registered offering to
the public. Each Unit was sold at a price to the public of $8.25 resulting in
gross proceeds of $3,795,000. The Unit Price of $8.25 per Unit was based on the
public trading price of the four shares of Common Stock issuable upon
conversion of the Preferred Stock, which, on the effective date of the
Registration Statement, was $1.938 per share, or $7.75, with each Warrant being
valued at $0.25 per Warrant, resulting in the Unit price of $8.25. The value of
each Warrant was determined by the underwriter and was based on the difference
between the public trading price of four shares of Common Stock on the Friday
preceding the effective date of the Registration Statement, which was $7.75,
resulting in a Warrant value of $0.25 each. After consideration of the
Underwriter's commission and discount and other offering costs, net proceeds to
the Company were approximately $3.0 million. The Company utilized $500,000 to
repay a short-term loan concurrent with the offering. Accordingly, such short-
term loan has been reclassified from current liabilities at December 31, 1997.
The Preferred Stock was convertible at any time at the option of the
holder. The Preferred Stock converted automatically upon the earlier of
February 2001 or the date upon which the sum of the closing bid prices of the
Preferred Stock and the Warrants included in the Units had been at least
$12.375 for ten consecutive trading dates (See Note 11) The Preferred Stock had
a liquidation preference of $8.25 per share and was entitled to a semiannual
dividend of four-tenths of one share of Common Stock for each share of
Preferred Stock.
Each Warrant entitles the holder thereof to purchase at any time prior to
February 2003, one share of Common Stock at a price of $2.40 per share. The
Warrants may be redeemed by the Company for a redemption price of $0.25 per
Warrant under certain conditions.
In February 1998, the Company allowed a principal shareholder who acquired
200,000 shares of common stock in August 1997 for $650,000 to exchange such
shares for 78,788 Units. In connection herewith, a charge to accumulated
deficit of $237,500 was recognized.
In September 1998, the Company sold 200,000 shares of common stock for
$300,000 to Chronimed, Inc. This investment by Chronimed was made as part of
the exclusive distribution agreement entered into by the companies in August
1998. In March 1999, the Company shipped prototypes of the Personal Lasette to
Chronimed. As part of the exclusive distribution agreement, Chronimed is
obligated to make an additional $150,000 investment in the Company upon
acceptance of the prototypes. An additional equity investment of $150,000 could
be made based on the Company meeting certain future conditions.
(10) Capital Resources
Since inception, the Company has incurred operating losses and other
equity charges which have resulted in an accumulated deficit of $15,908,421 and
operations using net cash of $1,935,800 in 1998.
The Company's ability to improve cash flow and ultimately achieve
profitability will depend on its ability to significantly increase sales.
Accordingly, the Company is manufacturing and marketing a series of laser-based
medical devices which leverage the Company's existing base of patented
technology. The Company believes the markets for these new products are broader
than that of the scientific instrumentation market and, as such, offer a
greater opportunity to significantly increased sales. In addition, the Company
is pursuing development and marketing partners for several of its new medical
products. These partnerships will enhance the Company's ability to rapidly
ramp-up its marketing and distribution strategy, and possibly offset the
products' development costs.
Although the Company has begun manufacturing and marketing its laser-based
medical devices and continues to market its scientific instrument line, it does
not anticipate achieving profitable operations during fiscal 1999. As a result,
the Company's working capital surplus is expected to erode over the next twelve
months. Nevertheless, the Company expects that its present working capital
surplus, increased sales, and the proceeds from the Chronimed stock purchase
and commitment will be sufficient to cover its expected operational deficits
through 1999.
(11) Subsequent Events
In January 1999, the Preferred Stock automatically converted when the sum
of the closing bid prices of the Preferred Stock and two Warrants, which were
included in the Units sold in February 1998, reached $12.375 for ten
consecutive trading dates.
As a result of the automatic conversion of the Preferred Stock in January,
an additional 25,000 options exercisable at $2.00 vested. These options were
issued by the Company during 1998 to obtain an investor relations services
contract. In connection with this service contract, in March 1999, an
additional 15,000 options exercisable at $2.00 vested as a result of continued
representation beyond the initial six month contract term.
Finally, in March 1999, the Company shipped prototypes of the Personal
Lasette to Chronimed. On delivery Chronimed will make an additional $150,000
equity investment in the Company, which will represent the second of three
equity investments that Chronimed could make in the Company as part of the
exclusive distribution agreement entered into by the companies in August 1998.
(12) Operating segments
The Company has two operating segments: scientific research instruments
and laser-based medical devices. The scientific research instruments segment
produces research instruments for sale to universities, research institutes,
and distributors. The laser-based medical devices segment produces medical
devices for sale to fertility clinics and to distributors.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates segment
performance based on profit or loss from operations prior to the consideration
of unallocated corporate general and administration costs. The Company does
not have intersegment sales or transfers.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business utilizes different technologies and marketing strategies.
December 31, 1998
----------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ---------- ---------- ----------
Revenues from customers $895,993 353,710 - 1,249,703
Research and develop-
ment grants 179,298 - - 179,298
Profit (loss) from
operations 226,921 (1,311,430) (783,291) (1,867,800)
Segment assets 465,564 307,258 1,804,230 2,583,052
December 31, 1997
----------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ---------- ---------- ----------
Revenues from customers 879,490 - - 879,490
Research and develop-
ment grants 158,233 - - 158,233
Loss from operations (124,376)(1,713,075) (678,522) (2,515,973)
Segment assets 223,856 - 1,755,991 1,979,847
Segment assets for scientific research instruments and laser-based medical
devices represent accounts receivable and inventory. The remaining assets are
not allocated among the segments, as there is no practical method to allocate
those assets between the segments.
The Company has no foreign operations. However, total export sales,
primarily to Germany, Asia, Australia, and Canada were $490, 892 and $410,483
for the years ended December 31, 1998 and 1997, respectively. Export sales are
attributed to the country where the product is shipped. Sales revenue to
individual customers, each of which accounted for 10 percent or more of total
sales, are as follows for the years ended December 31:
1998 1997
--------- ---------
Customer A, a related party - 112,000
Customer B - 114,623
Customer C - 125,941
Customer D - 93,100
Customer E, a related party 234,800 -
Customer F 195,518 -
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Balance Sheets
As of As of
6-30-99 12-31-98
(UNAUDITED)
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 671,730 $ 1,375,575
Accounts receivable, net of allowance
for doubtful accounts of $1,841
in 1999 and 1998 360,574 246,573
Inventory 603,969 526,249
Other 99,812 123,271
------------ ------------
Total current assets 1,736,085 2,271,668
Property and equipment, net 432,299 272,894
Other assets, net 31,354 38,490
------------ ------------
Total assets $ 2,199,738 $ 2,583,052
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 474,572 $ 327,686
Payroll related liabilities 147,496 144,188
Royalties payable 67,431 33,510
Other current liabilities 91,177 27,945
Total current liabilities 780,676 533,329
------------ ------------
Stockholders' equity:
Preferred stock, $.04 par value.
Authorized 2,500,000 shares, zero
shares and 465,533 shares issued
and outstanding at June 30, 1999
and December 31, 1998, respectively 0 18,622
Common stock, $.004 par value.
Authorized 12,500,000 shares,
7,884,591 and 5,739,248 shares
issued and outstanding at June 30,
1999 and December 31, 1998,
respectively 31,538 22,957
Additional paid-in capital 18,662,701 17,916,565
Accumulated deficit (17,275,177) (15,908,421)
------------ ------------
Total stockholders' equity 1,419,062 2,049,723
------------ ------------
$ 2,199,738 $ 2,583,052
============ ============
See accompanying notes to consolidated financial statements
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Operations
UNAUDITED
Three Months Ended
--------------------------
June 30, 1999 June 30, 1998
------------ ------------
Product sales $ 568,540 $ 244,375
Research and development grants 32,084 83,243
Total revenues 600,624 327,618
------------ ------------
Product cost of goods sold (417,388) (160,093)
SBIR direct expenses (32,084) (83,243)
------------ ------------
Total cost of goods sold (449,472) (243,336)
------------ ------------
Gross profit 151,152 84,282
------------ ------------
Operating expenses:
General and administrative 217,376 216,951
Marketing & Sales 234,938 201,090
Research and development 132,616 219,748
------------ ------------
Total operating expenses 584,930 637,789
------------ ------------
Loss from operations (433,778) (553,507)
------------ ------------
Other income (deductions):
Interest income 4,662 26,889
Interest expense (91) (340)
------------ ------------
Total other income 4,571 26,549
------------ ------------
Net loss (429,207) (526,958)
Preferred stock dividends (0) (0)
------------ ------------
Net loss applicable to
common shareholders $(429,207) $ (526,958)
============ ============
Weighted average common shares
outstanding, basic and diluted 7,803,264 5,089,147
============ ============
Net loss applicable to common shareholders
per common share, basic and diluted $ (0.06) $ (0.10)
============ ============
See accompanying notes to consolidated financial statements
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Operations
UNAUDITED
Six Months Ended
---------------------------
June 30, 1999 June 30, 1998
------------ ------------
Product sales $ 1,065,549 $ 658,650
Research and development grants 51,231 125,062
------------ ------------
Total revenues 1,116,780 783,712
------------ ------------
Product cost of goods sold (755,289) (382,532)
SBIR direct expenses (51,231) (125,062)
------------ ------------
Total cost of goods sold (806,520) (507,594)
------------ ------------
Gross profit 310,260 276,118
------------ ------------
Operating expenses:
General and administrative 551,665 429,606
Marketing & Sales 371,340 358,078
Research and development 253,648 355,512
------------ ------------
Total operating expenses 1,176,653 1,143,196
------------ ------------
Loss from operations (866,393) (867,078)
------------ ------------
Other income (deductions):
Interest income 15,057 45,816
Interest expense (140) (408)
------------ ------------
Total other income 14,917 45,408
------------ ------------
Net loss (851,476) (821,670)
------------ ------------
Preferred stock dividends (515,280) (0)
Net loss applicable to
common shareholders $(1,366,756) $ (821,670)
============ ============
Weighted average common shares
outstanding, basic and diluted 7,245,733 5,192,434
============ ============
Net loss applicable to common shareholders
per common share, basic and diluted $ (0.19) $ (0.16)
============ ============
See accompanying notes to consolidated financial statements
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
UNAUDITED
Six Months Ended
---------------------------
June 30, 1999 June 30, 1998
------------ ------------
Cash flows from operating activities:
Net loss $ (851,476) $ (821,670)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 41,275 62,866
Amortization of options issued for
services 7,279 31,081
Options issued for services 70,815 0
Increase in accounts receivable (114,001) (119,430)
Decrease (increase) in inventory (77,720) 24,767
Decrease (increase) in other current
assets 16,180 (31,562)
Increase (decrease) in current
liabilities 247,347 (190,727)
------------ ------------
Net cash used in operating
activities (660,301) (1,044,675)
------------ ------------
Cash flows from investing activities:
Purchase of fixed assets (193,544) (35,653)
------------ ------------
Net cash used in investing activities (193,544) (35,653)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common
stock 150,000 0
Proceeds from sale of units, net of
offering costs 0 3,052,504
Repayment of short term loan 0 (500,000)
------------ ------------
Net cash provided by financing
activities 150,000 2,552,504
------------ ------------
Net increase (decrease) in cash and
cash equivalents: (703,845) 1,472,176
Cash and cash equivalents:
Beginning of period 1,375,575 623,572
End of period $ 671,730 $ 2,095,748
============ ============
Supplemental information:
Exchange of Units for common stock --
increase to accumulated deficit 0 237,500
Options issued for services to be
rendered 0 46,621
Issuance of preferred dividend $ 515,280 $ 0
============ ============
See accompanying notes to consolidated financial statements
CELL ROBOTICS INTERNATIONAL, INC.
Notes to Unaudited Consolidated Financial Statements
June 30, 1999
(1) Presentation of Unaudited Consolidated Financial Statements
These unaudited consolidated financial statements have been prepared in
accordance with the rules of the Securities and Exchange Commission and,
therefore, do not include all information and footnotes otherwise necessary for
a fair presentation of financial position, results of operations and cash
flows, in conformity with generally accepted accounting principles. However,
the information furnished, in the opinion of management, reflects all
adjustments necessary to present fairly the Company's financial position,
results of operations and cash flows. The results of operations are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
(2) Issuance of Equity Securities
In February 1998, the Company sold 460,000 Units (including the
Underwriter's "Over-Allotment Option, which consisted of 60,000 Units) in a
registered offering to the public. Each Unit consisted of one share of Series
A Convertible Preferred Stock (the "Preferred Stock"), convertible into four
common shares, and two common stock purchase warrants each exercisable to
acquire one share of common stock at an exercise price of $2.40 per share (the
"Warrants"). Each Unit was sold at a price to the public of $8.25 resulting in
gross proceeds of $3,795,000. The Unit Price of $8.25 per Unit was based on the
public trading price of the four shares of Common Stock issuable upon
conversion of the Preferred Stock, which, on the effective date of the
Registration Statement, was $1.938 per share, or $7.75, with each Warrant being
valued at $0.25 per Warrant, resulting in the Unit price of $8.25. The value of
each Warrant was determined by the underwriter and was based on the difference
between the public trading price of four shares of Common Stock on the Friday
preceding the effective date of the Registration Statement, which was $7.75,
resulting in a Warrant value of $0.25 each. After consideration of the
Underwriter's commission and discount and other offering costs, net proceeds to
the Company were approximately $3.0 million.
Each Warrant entitles the holder thereof to purchase at any time prior to
February 2003, one share of Common Stock at a price of $2.40 per share. The
Warrants may be redeemed by the Company for a redemption price of $0.25 per
Warrant under certain conditions.
In February 1998, the Company allowed a principal shareholder who acquired
200,000 shares of Common Stock in August 1997 for $600,000 to exchange these
shares for 78,788 Units. In connection therewith, a charge to accumulated
deficit of $237,500 was recognized.
In September 1998, the Company sold 200,000 shares of Common Stock for
$300,000 to Chronimed, Inc. This investment was made as part of the exclusive
distribution agreement entered into by the companies and Chronimed in August
1998 (the "Chronimed Agreement"). In March 1999, the Company shipped
prototypes of the Personal Lasette to Chronimed. Pursuant to the terms of the
Chronimed Agreement, Chronimed was obligated to make an additional $150,000
investment in the Company upon acceptance of the prototypes. This transaction
was completed on June 14, 1999. The final equity investment of $150,000 could
be made based on the Company meeting certain future conditions.
In January 1999, the Company's Preferred Stock automatically converted
into shares of Common Stock, when the sum of closing bid prices of the
Preferred Stock and two Warrants was at least $12.375 for ten consecutive days.
Due to the automatic conversion, a final dividend in the form of 183,211 shares
of the Company's Common Stock was accrued and subsequently paid with the
issuance of shares of Common Stock to all preferred shareholders of record on
February 2, 1999.
In July 1999, the Company completed a private placement with four
investors. The Company sold 9.5 units, each unit consisting of 35,000 shares of
common stock and 7,500 common stock purchase warrants each exercisable to
acquire one share of common stock at an exercise price of $2.40 per share. Each
unit was sold at a price of $50,000, resulting in gross proceeds of $475,000.
After consideration of the offering costs, net proceeds to the Company were
approximately $460,000.
(3) Earnings Per Share
Basic loss per share is computed on the basis of the weighted average
number of common shares outstanding during the quarter. Diluted loss per
share, is the same as basic loss per share for the periods ended June 30, 1999
and 1998, as all potentially dilutive securities were anti-dilutive.
Options to purchase 1,270,320 and 1,172,820 shares of common stock were
outstanding at June 30, 1999 and 1998, respectively. Warrants to purchase
1,762,576 shares of common stock were outstanding at both June 30, 1999 and
1998. These were not included in the computation of diluted earnings per share
as the exercise of the options would have been anti-dilutive because of the net
losses incurred in the periods ended June 30, 1999 and 1998.
(4) Operating segments
The Company has two operating segments: scientific research instruments
and laser-based medical devices. The scientific research instruments segment
produces research instruments for sale to universities, research institutes,
and distributors. The laser-based medical devices segment produces medical
devices for sale to fertility clinics and to distributors.
The Company evaluates segment performance based on profit or loss from
operations prior to the consideration of unallocated corporate general and
administration costs. The Company does not have intersegment sales or
transfers.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business utilizes different technologies and marketing strategies.
Six Months Ended June 30, 1999
----------------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ----------- ----------- ------------
Revenues from customers $556,244 509,305 - 1,065,549
Research and develop-
ment grants 51,231 - - 51,231
Profit (loss) from
operations 86,764 (411,490) (541,667) (866,393)
Six Months Ended June 30, 1998
----------------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ----------- ----------- ------------
Revenues from customers $578,726 79,924 - 658,650
Research and develop-
ment grants 125,062 - - 125,062
Profit (loss) from
operations 88,950 (547,456) (408,572) (867,078)
For the Three Months Ended June 30, 1999
----------------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ----------- ----------- ------------
Revenues from customers $347,620 220,920 - 568,540
Research and develop-
ment grants 32,084 - - 32,084
Profit (loss) from
operations 34,295 (212,050) (256,023) (433,778)
For the Three Months Ended June 30, 1998
----------------------------------------------------
Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ----------- ----------- ------------
Revenues from customers $237,975 6,400 - 244,375
Research and develop-
ment grants 83,243 - - 83,243
Profit (loss) from
operations 32,349 (383,205) (202,651) (553,507)
(5) Capital Resources
Although the Company has begun manufacturing and marketing its laser-based
medical devices and continues to see market growth in its scientific instrument
line, it does not anticipate achieving profitable operation until some time in
2000. As a result, the Company's working capital surplus is expected to erode
over the next twelve months. Nevertheless, the Company expects that its
present working capital, potential increased future product sales, the
remaining equity investment per the Chronimed Agreement, the July 1999 private
placement, and a possible supplemental equity, line of credit or debt financing
will be sufficient to meet the Company's operational obligations through fiscal
1999.
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This Prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where the
offer or sale is not permitted.
Cell Robotics International, Inc.
481,250 Shares of Common Stock
148,750 Warrants
October ___, 1999
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The only statute, charter provision, bylaw, contract, or other arrangement
under which any controlling person, director or officers of the Registrant is
insured or indemnified in any manner against any liability which he may incur
in his capacity as such, is as follows:
Sections 7-109-101 through 7-109-110 of the Colorado Corporation Code
provide as follows:
7-109-101. Definitions. As used in this article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation,
is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee
benefit plan. A director is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by,
the director to the plan or to participants in or beneficiaries of
the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee benefit plan, or
reasonable expenses.
(5) "Official capacity" means, when used with respect to a director,
the office of director in a corporation and, when used with respect
to a person other than a director as contemplated in section 7-109-
107, the office in a corporation held by the officer or the
employment, fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the corporation.
"Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to a proceeding
because the person is or was a director against liability incurred in
the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best
interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests
of the participants in or beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (II) of paragraph (b) of
subsection (1) of this section. A director's conduct with respect to
an employee benefit plan for a purpose that the director did not
reasonably believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to satisfy the
requirements of paragraph (a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in an official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived an
improper personal benefit.
(5) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors. Unless limited
by its articles of incorporation, a corporation shall indemnify a
person who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the person was a party because the
person is or was a director, against reasonable expenses incurred by
him or her in connection with the proceeding.
7-109-104. Advance of expenses to directors.
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(a) The director furnishes to the corporation a written
affirmation of the director's good faith belief that he or she has
met the standard of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written
undertaking, executed personally or on the director's behalf, to
repay the advance if it is ultimately determined that he or she did
not meet the standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under
this article.
(2) The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the director
but need not be secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments under this section
shall be made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice the court considers necessary, may
order indemnification in the following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonable
entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of
conduct set forth in section 7-109-102 (1) or was adjudged liable in
the circumstances described in section 7-109-102 (4), the court may
order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability
shall have been adjudged in the circumstances described in section 7-
109-102 (4) is limited to reasonable expenses incurred in connection
with the proceeding and reasonable expenses incurred to obtain court-
ordered indemnification.
7-109-106. Determination and authorization of indemnification of
directors.
(1) A corporation may not indemnify a director under section 7-109-
102 unless authorized in the specific case after a determination has
been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct
set forth in section 7-109-102. A corporation shall not advance
expenses to a director under section 7-109-104 unless authorized in
the specific case after the written affirmation and undertaking
required by section 7-109-104 (1) (a) and (1) (b) are received and
the determination required by section 7-109-104 (1) (c) has been
made.
(2) The determinations required by subsection (1) of this section
shall be made:
(a) By the board of directors by a majority vote of those present
at a meeting at which a quorum is present, and only those directors
not parties to the proceeding shall be counted in satisfying the
quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board of directors designated by the board of
directors, which committee shall consist of two or more directors not
parties to the proceeding; except that directors who are parties to
the proceeding may participate in the designation of directors for
the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a)
of subsection (2) of this section, and a committee cannot be
established under paragraph (b) of subsection (2) of this section,
or, even if a quorum is obtained or a committee is designated, if a
majority of the directors constituting such quorum or such committee
so directs, the determination required to be made by subsection (1)
of this section shall be made:
(a) By independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in paragraph
(a) or (b) of subsection (2) of this section or, if a quorum of the
full board cannot be obtained and a committee cannot be established,
by independent legal counsel selected by a majority vote of the full
board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that indemnification
or advance of expenses is permissible; except that, if the
determination that indemnification or advance of expenses is
permissible is made by independent legal counsel, authorization of
indemnification and advance of expenses shall be made by the body
that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and
agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under
section 7-109-103, and is entitled to apply for court-ordered
indemnification under section 7-109-105, in each case to the same
extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the same
extent as to a director; and
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a
greater extent, if not inconsistent with public policy, and if
provided for by its bylaws, general or specific action of its board
of directors or shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain
insurance on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent of the corporation, or who, while a
director, officer, employee, fiduciary, or agent of the corporation,
is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee
benefit plan, against liability asserted against or incurred by the
person in that capacity or arising from his or her status as a
director, officer, employee, fiduciary, or agent, whether or not the
corporation would have power to indemnify the person against the same
liability under section 7-109-102, 7-109-103, or 7-109-107. Any such
insurance may be procured from any insurance company designated by
the board of directors, whether such insurance company is formed
under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock
ownership or otherwise.
7-109-109. Limitation of indemnification of directors.
(1) A provision treating a corporation's indemnification of, or
advance of expenses to, directors that is contained in its articles
of incorporation or bylaws, in a resolution of its shareholders or
board of directors, or in a contract, except an insurance policy, or
otherwise, is valid only to the extent the provision is not
inconsistent with sections 7-109-101 to 7-109-108. If the article of
incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent
not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a time
when he or she has not been made a named defendant or respondent in
the proceeding.
7-109-110. Notice to shareholder of indemnification of director. If
a corporation indemnifies or advances expenses to a director under
this article in connection with a proceeding by or in the right of
the corporation, the corporation shall give written notice of the
indemnification or advance to the shareholders with or before the
notice of the next shareholders' meeting. If the next shareholder
action is taken without a meeting at the instigation of the board of
directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to
such action.
* * *
Article XIII of the Amended and Restated Articles of Incorporation of the
Company provides, in pertinent part:
Section 1. A director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except to the extent
that such exemption from liability or limitation thereof is
not permitted under the Colorado Corporation Code as the same
exists or may hereafter be amended.
Section 2. Any repeal or modification of the foregoing Section 1 by the
stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing
at the time of such repeal or modification.
Article XII of the Amended and Restated Articles of Incorporation of the
Company provides, in pertinent part:
Section 2. Indemnification of Officers, Directors and Others.
(a) All officers and directors of the Corporation shall be
entitled to indemnification to the maximum extent permitted by
law or by public policy.
(b) Any mandate for indemnification, whether by statute or
order of Court, is to be expressly subject to the
Corporation's reasonable capability of paying.
(c) No person will be entitled to be reimbursed for
expenses incurred in connection with a Court proceeding to
obtain Court ordered indemnification unless such person first
made reasonable application to the Corporation and the
Corporation either unreasonably denied such application or
through no fault of the applicant was unable to consider such
application within a reasonable time.
(d) A director who is or was made a party to a proceeding
because he is or was an officer, employee, or agent of the
Corporation is entitled to the same rights as if he were or
had been made a party because he was a director.
(e) To the maximum extent permitted by law or by public
policy, directors of this Corporation are to have no personal
liability for monetary damages for breach of fiduciary duty as
a director.
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering, all of which are to be borne by
the Company, are as follows:
SEC Filing Fee $ 322
Printing Expenses 1,500
Accounting Fees and Expenses 7,500
Legal Fees and Expenses 15,000
Blue Sky Fees and Expenses 2,500
Registrar and Transfer Agent Fee 500
Miscellaneous 2,678
--------
Total $30,000
Item 26. Recent Sales of Unregistered Securities.
1. On September 11, 1998, we sold to one investor 200,000
shares of our common stock at a price of $1.50 per share,
for gross proceeds of $300,000. The investor qualified as
an "accredited investor" within the meaning of Rule 501(a)
of Regulation D under the Securities Act. The securities,
which were taken for investment and were subject to
appropriate transfer restrictions, were issued without
registration under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act.
2. In June, 1999, we sold an additional 100,000 shares of
common stock at a price of $1.50 per share, for gross
proceeds of $150,000. The investor was an "accredited
investor" within the meaning of Rule 501(a) of Regulation D
under the Securities Act. The securities, which were taken
for investment and were subject to appropriate transfer
restrictions, were issued without registration under the
Securities Act, in reliance upon the exemption provided in
Section 4(2) of the Securities Act.
3. In July, 1999, we sold to four investors a total of 9.5
units, each unit consisting of 35,000 shares of our common
stock and 7,500 warrants. Each unit was sold at a price of
$50,000, resulting in gross proceeds of $475,000. The
investors were persons who qualified as "accredited
investors" within the meaning of Rule 501(a) of Regulation
D under the Securities Act. The securities, which were
taken for investment and were subject to appropriate
transfer restrictions, were issued without registration
under the Securities Act in reliance upon the exemption
provided in Section 4(2) of the Securities Act and Rule 506
of Regulation D thereunder.
4. In July, 1999, in connection with our sale to four
investors of 9.5 units, we issued 62,500 warrants to four
persons for services rendered in connection with the
offering. The services were valued at $.40625 per warrant.
The persons receiving the warrants were all qualified
investors in terms of their investment sophistication or
"accredited investors" within the meaning of Rule 501(a) of
Regulation D under the Securities Act. The securities,
which were taken for investment and were subject to
appropriate transfer restrictions, were issued without
registration under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act
and Rule 506 of Regulation D thereunder.
5. In August, 1999, we issued to one person 15,000 warrants in
consideration of services rendered. We valued the services
at $.40625 per warrant. The warrants were issued to one
person who qualified as an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities
Act. The securities, which were taken for investment and
were subject to appropriate transfer restrictions, were
issued without registration under the Securities Act in
reliance upon the exemption provided in Section 4(2) of the
Securities Act and Rule 506 of Regulation D thereunder.
Item 27. Exhibits.
a. The following Exhibits are filed as part of this
Registration Statement pursuant to Item 601 of Regulation S-K:
Exhibit No. Title
** 3.2 Amended and Restated Bylaws
*** 3.3(a) Amended and Restated Articles of Incorporation
** 3.3(b) Amended and Restated Articles of Incorporation dated May 23,
1995
** 4.1 Specimen Certificate of Common Stock
*****4.2 Representatives' Common Stock Purchase Warrant
**** 4.3 Warrant Agreement
**** 4.3.1 Warrant Agreement (revised)
*****4.4 Lohrding Option Agreement
*****4.5 Certificate of Designation of Rights and Preferences of
Series A Convertible Preferred Stock
*****4.6 Specimen Certificate of Series A Preferred Stock
*****4.7 Specimen Unit Certificate
*****4.8 Specimen Common Stock Purchase Warrant Certificate
* 10.1 Agreement and Plan of Reorganization between and among Cell
Robotics, Inc., Intelligent Financial Corporation, MiCel,
Inc., BridgeWorks Investors I, L.L.C., and Ronald K.
Lohrding
* 10.2 Employment Agreement of Ronald K. Lohrding
* 10.3 Employment Agreement of Craig T. Rogers
**** 10.4 Employment Agreement of Travis Lee
* 10.5 Financing and Capital Contribution Agreement between and
among Cell Robotics, Inc., Intelligent Financial
Corporation, MiCel, Inc., and BridgeWorks Investors I,
L.L.C.
* 10.6 Irrevocable Appointment of Voting Rights by Dr. Lohrding to
MiCel, Inc.
* 10.7 Stock Pooling and Voting Agreement
** 10.8 Royalty Agreement dated September 11, 1995 between the
Registrant, Cell Robotics, Inc., and Mitsui Engineering &
Shipbuilding Co., Ltd.
** 10.9 Agreement of Contribution and Mutual Comprehensive Release
dated September 11, 1995 between the Company, Cell Robotics,
Inc. and Mitsui Engineering & Shipbuilding Co., Ltd.
** 10.10 Distribution Agreement dated April 6, 1995, between Carl
Zeiss, Inc. and the Registrant
** 10.11 Distribution Agreement dated December 15, 1994, between
MiCel, Inc. and the Registrant
** 10.12 Revised License Agreement dated January 5, 1996 between the
Registrant and the Regents of the University of California
** 10.13 Purchase Agreement with Tecnal Products, Inc.
** 10.14 License Agreement with NTEC
*** 10.15 License Agreement dated May 13, 1996, between the Registrant
and GEM Edwards, Inc.
*****10.16 Termination Agreement and Release between the Registrant and
GEM Edwards, Inc.
****
*** 10.17 Employment Agreement of Dr. Ronald K. Lohrding dated
February 2, 1998
****
** 10.18 Patent License Agreement between American Telephone and
Telegraph Company and Cell Robotics, Inc.
****
** 10.19 Amendment to AT&T License Agreement
****
** 10.20 Manufacturing Agreement between Big Sky Laser Technologies,
Inc. and Cell Robotics International, Inc. dated May 20,
1998.
** 21.0 Subsidiaries
23.1 Consent of Neuman & Drennen, LLC
23.2 Consent of KPMG LLP
---------------------
* Incorporated by reference from the Registrant's Current Report on Form 8-K
dated February 23, 1995, as filed with the Commission on March 10, 1995.
** Incorporated by reference from the Registrant's Pre-Effective Amendment
No. 1 to Registration Statement on Form SB-2, which was declared effective
by the Commission on February 14, 1996.
*** Incorporated by reference from the Registrant's Post-Effective Amendment
No. 1 to Registration Statement on Form SB-2, filed with the Commission on
July 15, 1996.
**** Incorporated by reference from the Company's Annual Report on Form 10-KSB,
for the fiscal year ended December 31, 1996, as filed with the Commission
on April 15, 1997.
***
** Incorporated by reference from the Company's Pre-Effective Amendment No. 2
to Registration Statement on Form SB-2 which was declared effective by the
Commission on February 2, 1998, SEC File No. 333-40895.
****
** Incorporated by reference from the Company's Pre-Effective Amendment No. 2
to Registration Statement on Form S-3, SEC File No. 333-55951, as filed
with the Commission on November 18, 1998
****
*** Incorporated by reference from the Company's Annual Report on Form 10-
KSB/A-1, for the fiscal year ended December 31, 1997, as filed with the
Commission on September 8, 1998
Item 28. Undertakings.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement;
(iii) Include any additional or changed material information on
the plan of distribution.
2. That, for determining liability under the Securities Act, to treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be available 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 Act 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 and 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 hereby, 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 and will be governed
by the final adjudication of such issue.
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 SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized. In the City of Albuquerque, State of New Mexico, on the 18th of
October, 1999.
CELL ROBOTICS INTERNATIONAL, INC.,
a Colorado corporation
By:/s/ Ronald K. Lohrding
---------------------------------
Ronald K. Lohrding, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with Cell Robotics International, Inc. and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Ronald K. Lohrding President, CEO, Director 10/18/99
------------------------------
Ronald K. Lohrding
/s/ Jean M. Scharf Chief Financial Officer, 10/18/99
------------------------------ Controller
Jean M. Scharf
/s/ Craig T. Rogers Secretary, Director 10/18/99
------------------------------ Vice President of
Craig T. Rogers Investor Relations
/s/ Mark Waller Director 10/18/99
------------------------------
Mark Waller
/s/ Raymond Radosevich Director 10/18/99
------------------------------
Raymond Radosevich
/s/ Debra Bryant Director 10/18/99
------------------------------
Debra Bryant
/s/ Ron E. Ainsworth Director 10/18/99
------------------------------
Ron E. Ainsworth
NEUMAN & DRENNEN, LLC
Attorneys at Law
TEMPLE-BOWRON HOUSE
1507 PINE STREET
BOULDER, COLORADO 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
October 18, 1999
Cell Robotics International, Inc.
2715 Broadbent Parkway N.E.
Albuquerque, New Mexico 87107
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Cell Robotics International, Inc. (the
"Company") in connection with Registration Statement on Form SB-2 (the
"Registration Statement") to be filed with the United Stated Securities and
Exchange Commission, Washington, D.C., pursuant to the Securities Act of 1933,
as amended, covering the registration of an aggregate of 481,250 shares of
Common Stock, $.004 par value ("Common Stock") and 148,750 Common Stock
warrants. In connection with such representation of the Company, we have
examined such corporate records, and have made such inquiry of government
officials and Company officials and have made such examination of the law as
we deemed appropriate in connection with delivering this opinion.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws of
the State of Colorado and is validly existing as a corporation in good
standing under the laws of that state.
2. The Company's authorized capital consists of twelve million five hundred
thousand (12,500,000) shares of Common Stock having a par value of $0.004
each and two million five hundred thousand (2,500,000) shares of
Preferred Stock having a par value of $.04 each.
3. The 481,250 shares of the Company's Common Stock being registered for
sale and offered to the public by the Company as more fully described in
the Registration Statement are lawfully and validly issued, fully paid
and non-assessable securities of the Company.
4. The 148,750 shares of the Company's Warrants being registered for sale
and offered to the public by the Selling Shareholders as more fully
described in the Registration Statement, are duly and validly authorized,
legally issued, fully paid and non-assessable.
Sincerely,
Clifford L. Neuman
CLN:gg
NEUMAN & DRENNEN, LLC
Attorneys at Law
TEMPLE-BOWRON HOUSE
1507 PINE STREET
BOULDER, COLORADO 80302
Telephone: (303) 449-2100
Facsimile: (303) 449-1045
October 18, 1999
Cell Robotics International, Inc.
2715 Broadbent Parkway, N.E.
Albuquerque, New Mexico 87107
Re: S.E.C. Registration Statement on Form SB-2
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Registration Statement to be filed
with the United Stated Securities and Exchange Commission, Washington, D.C.,
pursuant to the Securities Act of 1933, as amended, by Cell Robotics
International, Inc., a Colorado corporation, (the "Company") in connection
with the offering of up to 481,250 shares of its Common Stock, $.004 par
value, and up to 148,750 Common Stock Warrants, as proposed and more fully
described in such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:gg
KPMG LLP
6565 Americas Parkway, N.E.
Suite 700
Albuquerque, New Mexico 87190
telephone: (505) 884-3939
facsimile: (505) 884-8348
The Board of Directors
Cell Robotics International, Inc.
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
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