-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JwZdhjnh65eK+ySMbk/Jhgq+WSRn76hj+kt86xn7dS0JHWUf5IsdaxP0eSNiQgpF 2dTFKJrqzVq0wIOTlaQ55g== 0001077357-99-000217.txt : 19991123 0001077357-99-000217.hdr.sgml : 19991123 ACCESSION NUMBER: 0001077357-99-000217 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SURGICAL SAFETY PRODUCTS INC CENTRAL INDEX KEY: 0001063530 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 650565144 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24921 FILM NUMBER: 99762069 BUSINESS ADDRESS: STREET 1: 2018 OAK TERRACE CITY: SARASOTA STATE: FL ZIP: 34231 BUSINESS PHONE: 9419277874 MAIL ADDRESS: STREET 1: 2018 OAK TERRACE CITY: SARASOTA STATE: FL ZIP: 34231 10QSB 1 QUARTERLY REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1999 Commission file no. 0-24921 Surgical Safety Products, Inc. -------------------------------------------- (Name of small business issuer in its charter) New York 65-0565144 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2018 Oak Terrace Sarasota, Florida 34231 - ------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number (941) 927-7874 Securities registered under Section 12(b) of the Exchange Act: Name of each exchange on Title of each class which registered None - ----------------------------- ------------------------ Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value ----------------------------------- (Title of class) Copies of Communications Sent to: Mercedes Travis, Esq. Mintmire & Associates 265 Sunrise Avenue, Suite 204 Palm Beach, FL 33480 Tel: (561) 832-5696 Fax: (561) 659-5371 Indicate by Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of September 30, 1999, there are 11,811,373 shares of voting stock of the registrant issued and outstanding. PART I Item 1. Financial Statements Condensed Balance Sheets as of September 30, 1999 and December 31, 1998 F-2 Condensed Statements of Operations for the Three and Nine Months Ended September 30, 1999 and 1998 F-3 Statements of Cash Flows for the Nine Months Ended September 30, 1999 and 1998 F-4 Notes to the Condensed Financial Statements F-6
SURGICAL SAFETY PRODUCTS, INC. CONDENSED BALANCE SHEETS (Unaudited) September December 30 31, 1999 1998 -------------- --------------- Assets Current Assets Cash $ 12,970 $ 41,191 Accounts receivable 16,500 1,941 Deposits 750 58,700 Inventory 5,901 6,555 -------------- --------------- Total current assets 36,121 108,387 -------------- --------------- Property and equipment, net 201,151 112,772 -------------- --------------- Other Assets Intangible assets, net 44,139 49,232 Software development costs, net 131,444 92,873 Other assets 10,250 10,250 -------------- --------------- Total other assets 185,833 152,355 -------------- --------------- Total Assets $ 423,105 $ 373,514 ============== =============== Liabilities and Stockholders' Equity Current Liabilities Line of credit $ 50,000 $ Notes payable - related parties 52,500 Deferred revenue 6,874 Accounts payable and accrued expenses 72,005 55,331 Total current liabilities 181,379 55,331 Stockholders' Equity Common stock, $.001 par value, 20,000,000 shares authorized; 11,798,373 and 10,746,973 shares issued and outstanding in 1999 and 1998 11,799 10,787 Additional paid-in capital 2,422,420 1,998,242 Accumulated deficit (2,192,493) (1,690,846) Total stockholders' equity 241,726 318,183 Total Liabilities and Stockholders' Equity $ 423,105 $ 373,514
The accompanying notes are an integral part of these financial statements. F-2
SURGICAL SAFETY PRODUCTS, INC. CONDENSED STATEMENTS OF OPERATIONS 9 Months ended Three Months Ended September 30, September 30, 1999 1998 1999 1998 Revenue Net sales $ 720 $ 797 $ 240 $ 355 Leasing and other fees 162,577 38,007 111,264 Other 1,924 6,910 984 6,059 income Total revenue 165,221 45,714 112,488 6,414 Costs and expenses Cost of medical products sold 14,271 1,966 5,866 687 Operating expenses 602,555 497,649 207,321 174,867 Research and development expenses 40,287 20,202 Interest expense 9,755 13,639 2,315 186 Total costs 666,868 513,254 235,704 175,740 Net loss before income taxes (501,647) (467,540) (123,216) (169,326) Provision for income taxes Net loss $ (501,647) $(467,540) $(123,216) $(169,326) Net loss per share $ (0.045) $ (0.045) $ (0.010) $ (0.016)
The accompanying notes are an integral part of these financial statements. F-3
SURGICAL SAFETY PRODUCTS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended September 30, 1999 1998 Cash Flows From Operating Activities Net loss $ (501,647) $(467,540) Adjustments to reconcile net loss to cash used in operating activities Depreciation and amortization 86,680 24,562 Common stock issued for services and employee compensation 41,303 141,875 Stock option compensation expense (91,113) Decrease (increase) in operating assets Receivables (14,559) 248,487 Inventory 654 (6,885) Increase (decrease) in operating liabilities Deferred revenue 6,874 Accounts payable and accrued expenses 16,674 (45,161) Total adjustments 46,513 362,878 Net cash used in operating activities (455,134) (104,662) Cash Flows From Investing Activities Furniture and equipment purchased (93,239) (61,195) Software development additions (57,348) (67,528) Net cash used in investing activities (150,587) (128,723) Cash Flows From Financing Activities Proceeds from related party loans 77,500 Advances/(repayments) on line of credit, 50,000 (100,000) net Repayment of stockholder loans (25,000) (233,720) Proceeds from issuance of common stock 475,000 939,000 Net cash provided by financing activities 577,500 605,280 Net increase (decrease) in cash (28,221) 371,895 Cash at beginning of period 41,191 - Cash at end of period $ 12,970 $ 371,895 Supplemental Cash Flow Information: Cash paid for interest $ 5,474 $ 31,678
The accompanying notes are an integral part of these financial statements. F-4 For purposes of the statement of cash flows, management considers all deposits and financial instruments with original maturities of less than three months to be cash and cash equivalents. Material non-cash transactions not reflected in the statement of cash flows include: For the Nine Months Ended September 30, 1999 The Company received fixed assets in the amount of $58,700 for which it had recorded deposits of such amount at December 31, 1998. For the Nine Months Ended September 30, 1998 TheCompany issued common stock for prepaid legal and public relations services in the amount of $47,500 as of September 30, 1998 The accompanying notes are an integral part of these financial statements. F-5 Notes to the Condensed Financial Statements Note 1 - Account Policies Basis of Presentation The condensed financial statements of Surgical Safety Products, Inc. (Company) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the financial statement and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1998. The results of operations for the nine month period ended September 30, 1999 are not necessarily indicative of the results to be expected for any other period or for the full year. In the opinion of Company's management the accompanying unaudited financial statements contain all adjustments, consisting of only normally recurring adjustments, necessary to present fairly the financial position as of September 30, 1999, the results of operations and cash flows for the three and nine months ended September 30, 1999 and September 30, 1998. Net Loss Per Share Net loss per share has been computed in accordance with Statement of Financial Accounting Standards (FASB) no. 128, "Earnings Per Share," by dividing net loss by the weighted average number of shares outstanding during the period. Common stock equivalents have not been include in the computation of weighted average number of shares outstanding since the effect would have been anti-dilutive. Reclassifications Certain reclassifications have been made in the prior year's financial statements to conform to the current period presentations. Note 2 - Stock Compensation Expense During fiscal year 1998, the Company issued stock options with an exercise price that was below market to certain of its employees. Accordingly, the Company recorded $91,113 of compensation expense related to the issuance for the year ended December 31, 1998. In the first quarter of 1999, the Company canceled these stock options and issued options with an exercise price above that of market. Accordingly, the Company decreased its payroll expenses by $91,113 for the cancellation of these options for the nine months ended September 30, 1999. In addition, during the nine months ended September 30, 1999, the Company issued common stock valued at $39,053 to certain of its employees and $7,500 to certain consultants in lieu of cash compensation for services. The common stock was valued based on the fair market value for the shares on the dates the compensation would have been paid F-6 Item 2. Management's Discussion and Analysis of Results of Operations. General On July 30, 1999, the Company entered into a long term agreement with US Surgical which is a private partner network agreement (the "Long Term Agreement"). Under the Long Term Agreement, Surgical agreed to sell four hundred (400) licenses for the use of one or more OASiS systems and US Surgical agreed to nominated four hundred (400) hospitals for such licenses. Each license is for a term of three (3) years commencing with "substantial installation" of such unit. "Substantial installation" is defined as delivery of the OASiS unit to the hospital and connection to the Internet. Under the terms of the Long Term Agreement, US Surgical must purchase two hundred (200) licenses within the first year, and subject to certain obligations on the part of Surgical to license units to third parties, must purchase an additional two hundred (200) licenses by the end of the second year. Hospital s with units installed under the Short Term Agreement are counted toward the minimum number of hospitals required. On August 10, 1999 US Surgical paid Surgical $100,000.00 as a non-refundable down payment for such licenses. The first 200 licenses are an additional $1,500 each and subsequent licenses are $1,000 each. The Long Term Agreement further provides that neither Surgical, nor any third party other than US Surgical, may place OASiS units in any of the "protected departments" of the hospitals, unless it is installed prior to receipt of a purchase order from US Surgical or unless US Surgical does not exercise its right of first refusal after notice from Surgical for such hospital. The Long Term Agreement defines "protected departments" as Operating Room, Labor and Delivery, Emergency Room, Ambulatory/Same Day Surgery / Outpatient, Nuclear Medicine, Intensive Care, Orthopedic / Ortho Casting Room, and Dialysis. US Surgical is required to have each hospital bear the entire risk of loss and damage to any OASiS system except if such is caused by the negligence or willful misconduct of Surgical. US Surgical must maintain casualty insurance in amounts and with companies acceptable to Surgical on the OASiS units and its related amenities with Surgical as the loss payee. US Surgical may elect to have the OASiS systems installed in hospitals it nominates co-branded with its name. Surgical has the discretion to select the content, related services and in- service products for the OASiS systems installed under this agreement; however, during the term of the agreement, US Surgical is required to pay for and maintain a minimum of one hundred forty (140) product in-services modules in an average of at least 80% of all OASiS systems installed in the United States whether or not covered by this agreement and 100% on those that are covered by the agreement. US Surgical's product-based modules produced by Surgical become the property of US Surgical. Surgical retains the right to display such modules on other OASiS units. All other modules remain the property of Surgical. Surgical receives a fee for production of the modules. If Surgical installs additional OASiS units in a designated hospital, US Surgical receives a 10% commission. Surgical receives a monthly maintenance fee for each unit, of $149, unless paid a year in advance in which case it may be discounted up to 10%. In July 1999, the Company executed a Consulting and Assistance Agreement with Triton Capital, Inc., a Florida corporation ("Triton"). Under the terms of this agreement, Triton has been engaged to identify sources of capital or potential business relationships and to assist the Company in (i) raising equity or debt financing in the amount of $6,000,000 (ii) arranging for trade financing for production, sale, lease, rental or other disposal of the Company's products; and (iii) arranging for the sale, merger, or consolidation of the Company or for joint ventures or strategic alliances with other appropriate business. This agreement is non-exclusive. In the event Investment Financing is secured, the Company was to pay compensation equal to 8% for any investment financing to the person or entity placing such investment; provided such person or entity is qualified to receive such compensation in the state of residence of the investor and will issue warrants to purchase restricted Common Stock in the Company in an amount equal to 100,000 for every $1 million funded, exercisable for a period of five (5) years at a price equal to the closing bid price of the Company's shares on the date of such funding and which warrants are to have piggy-back registration rights and cashless exercise provisions. The Company is free to reject any offered financing or arrangements; however, in the event that the Company enters any arrangement within 180 days of its written rejection, on terms less favorable to the Company, Triton is to receive a flat fee. In the event the Company "shops" any offer of financing presented to it to other potential sources and accepts such other financing, Triton is entitled to a success fee. Triton is to be reimbursed pre-approved disbursements and expenses. The agreement provides for confidentiality and cross-indemnification . The agreement is subject to cancellation by either party with five (5) days written notice. Any disputes under the agreement are required to be submitted to arbitration, with costs payable by the losing party. No funding under this agreement has been received as of the date hereof. Discussion and Analysis The Company was founded in 1992 to combat the potential spread of bloodborne pathogenic infections such as HIV and hepatitis. It has broadened its mission to research, develop, manufacturing, marketing and selling medical products and services to the healthcare community. The Company was in the development stage until 1993 when it began commercial shipments of SutureMate(R), its first product. From inception in June, 1992 through December 31, 1998, the Company generated revenues of approximately $1,100,000 from a limited number of customers. Since inception through December 31, 1998, the Company has generated cumulative losses of approximately $1,690,000. Although the Company has experienced a significant percentage growth in revenues from fiscal 1992 to fiscal 1998, the Company does not believe prior growth rates are indicative of future operating results, especially in light of the contract with US Surgical to assist in the introduction of OASiS. Due to the Company's operating history and limited resources, among other factors, there can be no assurance that profitability or significant revenues on a quarterly or annual basis will occur in the future. Moreover, the Company expects to continue to incur operating losses through at least the first half of 2000, and there can be no assurance that losses will not continue after such date. The Company had commitments for installations in a total of 12 hospitals on or before June 30, 1999, ten of which related to the agreement with US Surgical and two are a result of the Company's sales department. As of the date hereof the Company has completed installations of fourteen (14) units in seven (7) hospitals, five (5) of which are under the original agreement with US Surgical. Installation of the remaining units under the US Surgical initial agreement have been merged into the Long Term Agreement. With the implementation of its agreement with US Surgical and in the event of the reactivation of its various distribution agreements and/or with the establishment of one or more strategic alliances in addition to US Surgical, the Company expects to experience a period of growth, which requires it to significantly increase the scale of its operations. This increase will include the hiring of additional personnel in the areas of (i) customer service to provide technical support for the hospitals where installations are located and (ii) technical staff to make changes requested by those hospitals. This will result in significantly higher operating expenses. The increase in operating expenses is expected to be partially funded by an increase in revenues. However, the Company's net loss may continue to increase. Expansion of the Company's operations may cause a significant strain on the Company's management, financial and other resources. The Company's ability to manage recent and any possible future growth, should it occur, will depend upon a significant expansion of its sales and marketing, research and development, accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. There can be no assurance that significant problems in these areas will not occur. Any failure to expand these areas and implement and improve such systems, procedures and controls in an efficient manner at a pace consistent with the Company's business could have a material adverse effect on the Company's business, financial condition and results of operations. As a result of such expected expansion and the anticipated increase in its operating expenses, as well as the difficulty in forecasting revenue levels, the Company expects to continue to experience significant fluctuations in its revenues, costs and gross margins, and therefore its results of operations. The Company's plan of operations for the next twelve months is to focus on building revenue from the installation of the OASiS system in the hospitals designated by US Surgical and to install additional OASiS systems in hospitals not under the US Surgical agreement but with whom the Company has begun negotiations and in some cases reached a commitment. Additionally, the Company intends to install the inservice modules from US Surgical and other medical product manufacturers at both the US Surgical and the other hospitals. The Company also is aggressively seeking strategic alliances with targeted industry partners such as manufacturers of devices, manufacturers of pharmaceuticals, professional organizations such as nursing associations and hospital group purchasing organizations and integrated health networks. The Company estimates that revenues will be sufficient to fund ongoing operations at the current level when the number of OASiS installations reaches approximately 100 to 125 and the total number of inservice modules reaches approximately 150. The Company has purchased 20 OASiS units from Kiosk Information Systems, Inc., of which eleven (11) were installed under the US Surgical agreements and at St. Francis Hospital. The Company already has 32 inservice modules under the US Surgical agreement and is in discussion with various manufacturers interested in using OASiS to inservice more than 50 of their products. The Company believes that each of the initial installations should have a position as to long term acceptance within three (3) to six (6) months and that this initial time is the test period to determine the potential for market acceptance at that hospital. In the case of US Surgical hospitals under the initial agreement, this period was nine (9) months by contract. At the end of such test period, the Company believes it will be in a position to execute three (3) year leases and finance such leases through a leveraged leasing arrangement with Rockford or a similar funding source. In the short term, to fund operations through the fourth quarter, 1999, the Company will be required to seek additional funds from strategic alliances with potential clients, its shareholders, from additional third party financing or seek third party debt or equity financing other than those planned by the current anticipated private placement. Currently, the Company has exhausted its existing lines of credit. Therefore, the Company has begun to scale back operations. The Company is exploring a program to substitute stock for cash in in its compensation program. In addition, immediate focus is being placed on other methods to reduce its breakeven point, such as staffing cuts, or the licensing or sale of some of the Company's assets or product lines to third parties. Provided that additional funding or its scale back is successful, the Company believes that it can meet its capital needs through year end. There can be no assurance that the Company will be successful in these efforts. In 2000, the Company will require between $8 and $9 million in additional capital in the form of debt or equity to fund the continued expansion of the OASiS system and its development to meet increased demand and to implement its plans for increased marketing of its medical device products. The Company has met with several venture capital firms, investment bankers, factoring companies and traditional lending sources, each of whom have expressed early interest and many of whom are awaiting the conclusion of the testing period. The Company has accepted no definite offer, with the exception of the short term funding being sought through Triton. There can be no assurance that such long-term financing will be available to the Company or that it will be on terms that the Company may seek. Results of Operations for the Three and Nine Months Ended September 30, 1999 and 1998 Overview From its inception, the Company has incurred losses from operations. As of September 30, 1999, the Company had cumulative net losses totaling approximately $2,192,493. Through fiscal 1998, the Company focused primarily on the design and development of its propriety products, as well as providing consulting services. During fiscal 1999, management shifted its focus to aggressively marketing its proprietary products. Financial Position Working capital as of September 30, 1999 was a deficit of $145,258, as compared to working capital of $53,056 at December 31, 1998. This decrease is primarily due to additional borrowings on the Company's line of credit and increases in Notes payable-related parties, the transfer of deposits to property and equipment and the reduction in cash. Revenues For the three months ended September 30, 1999 and 1998, the Company had total revenues of $112,488 and $6,414, respectively. For the three months ended September 30, 1999, revenues were comprised primarily of the initial payments received from US Surgical associated with the Long Term Agreement and for Oasis unit rentals. For the nine months ended September 30, 1999, total revenues were $165,221 compared to $45,741 in the same period last year. The increase of $119,507 or 261% is due to revenue from the 1999 launch of Oasis. In 1998, Oasis was still under development. Selling, General, and Administrative Expenses For the nine months ended September 30, 1999, operating expenses increased by $104,906 or 21% from $497,649 for the nine months ended September 30, 1998. This increase is primarily related to marketing support expenditures to sustain the launch of the Company's Oasis system. In accordance with the Company's marketing plan for fiscal 1999, expenses related to promotion, trade shows, and conventions were increased to enhance the industry awareness of the company's products and services. In the past, the Company has focused on the design and development of proprietary products. For fiscal 1999, the Company has launched an aggressive marketing plan that is designed to increase worldwide sales of its products. Surgical believes that the increased operating expenses incurred during the nine months ended September 30, 1999 will position the Company to generate increased revenue in the 2000 fiscal year. Liquidity and Capital Resources The Company's operations have been funded primarily from the $475,000 proceeds of the private placement completed in the second quarter 1999 and from cash flow of $107,500 from shareholder loans and advances on the line of credit during the nine months ended September 30, 1999. This allowed the Company to purchase capital assets, enhance its OASiS software and fund current operations. At September 30, 1999, the Company has a $12,970 cash position. The Company has a line of credit in the amount of $100,000 that expires in May 2017 and is guaranteed by Dr. Swor and his wife. The line of credit also has been used to fund operations on a short-term basis and $100,000 is currently outstanding. Net cash used for investing for the nine months ended September 30, 1999 was approximately $150,587, representing primarily OASiS units purchased and costs related to the new version of OASiS which have been capitalized. In the short term, to fund operations through the fourth quarter, 1999, the Company will be required to seek additional funds from strategic alliances with potential clients, its shareholders, from additional third party financing or seek third party debt or equity financing other than those planned by the current anticipated private placement. Currently, the Company has exhausted its existing lines of credit. Therefore, the company has begun to scale back operations. The company is exploring programs to substitute stock for cash in its compensation programs. In addition, immediate focus is being placed on other methods to reduce its breakeven point, such as staffing cuts or the licensing or sale of some of the Company's assets or product lines to third parties. Provided that additional funding is secured and its scale back is successful, the Company believes that it can meet its capital needs through year end. There can be no assurance that the Company will be successful in these efforts. Impact of the Year 2000 Issue The Year 2000 Issue is the result of potential problems with computer systems or any equipment with computer chips that use dates where the date has been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock or date recording mechanism including date sensitive software which uses only two digits to represent the year, may recognize the date using 00 as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruption of operations, including among other things, a temporary inability to process transactions, send invoices, or engage in similar activities. Management has reviewed its current internal systems and is in the process of upgrading its accounting system to be Year 2000 compliant. The Company purchased new hardware in 1998 that is Year 2000 compliant. Its internal systems are Year 200 compliant and the Company expects the testing of such systems to be completed in the fourth quarter of 1999. Management does not anticipate any significant additional costs that would relate to upgrading its systems to support the Year 2000. Further, management does not believe the Year 2000 will impact the operation of the OASiS system since the software for this system does not rely on legacy applications or subsystems. OASiS is designed to handle dates in the form of a two digit month and day and a four digit year, thus avoiding the Year 2000 problem The Company believes that it has disclosed all required information relative to Year 2000 issues relating to its business and operations. However, there can be no assurance that the systems of other companies on which the Company's systems rely also will be converted in a timely manner or that any such failure to convert by another company would not have an adverse affect on the Company's business, operations or financial condition. Forward-Looking Statements This Form 10-QSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-QSB which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), demand for the Company's products and services, expansion and growth of the Company's business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this Form 10-QSB are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements. PART II Item 1. Legal Proceedings. The Company knows of no legal proceedings to which it is a party or to which any of its property is the subject, which are pending, threatened or contemplated or any unsatisfied judgments against the Company. Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults in Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted during the quarter ending September 30, 1999, covered by this report to a vote of the Company's shareholders, through the solicitation of proxies or otherwise. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated herein by reference, as follows: Exhibit No. Description - ------------------------------------------------------------------------------- 3.(I).1 Articles of Incorporation of Surgical Safety Products, Inc., a Florida corporation filed May 15, 1992 3.(I).2 Articles of Amendment filed December 9, 1992 3.(I).3 Articles of Amendment filed July 19, 1994 3.(I).4 Articles of Amendment filed October 11, 1994 3.(I).5 Articles of Incorporation of Sheffeld Acres, Inc., a New York Corporation filed May 7, 1993 3.(I).6 Articles of Merger filed in the State of Florida October 12, 1994 3.(I).7 Certificate of Merger filed in the State of New York February 8, 1995 3.(I).8 Certificate to Do Business in the State of Florida filed April 11,1995 3.(I).9 Certificate of Amendment filed May 1, 1998 3.(II). Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety Products, Inc. 3.(II). Amended Bylaws of Surgical Safety Products, Inc. 10.1 Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE dated December 8, 1997 10.2 Prepaid Capital Lease Agreement with Community Health Corporation relative to Sarasota Medical Hospital OASiS Installation dated January 30, 1998 10.3 Letter of Intent with United States Surgical Corporation dated February 12, 1998 10.4 Form of Rockford Industries, Inc. Rental Agreement and Equipment Schedule to Master Lease Agreement 10.5 Ad-Vantagenet Letter of Intent dated June 19, 1998 10.6 Distribution Agreement with Morrison International Inc. dated September 30, 1996 10.7 Distribution Agreement with Hospital News dated August 1, 1997 10.8 Clinical Products Testing Agreement with Sarasota Memorial Hospital dated January 30, 1998 10.9 Real Estate Lease for Executive Offices effective June 1, 1998 10.10 Employment Agreement with Donald K. Lawrence dated April 1, 1997 10.11 Employment Agreement with G. Michael Swor dated June 15, 1998 10.12 Employment Agreement with Frank M. Clark dated June 15, 1998 10.13 Agreement for Consulting Services with Stockstowatch.com Inc. dated March 30, 1988 10.14 Form of Employee Option Agreement dated July 1994 10.15 Form of Employee Option Agreement dated 1998 10.16 Form of Consultants Option Agreement dated July 1994 10.17 Form of Consultants Option Agreement dated 1998 10.18 Confidential Private Offering Memorandum dated May 30, 1995 10.19 Supplement to Private Offering Memorandum dated October 30, 1995 10.20 Stock Option Agreement with Bay Breeze Enterprises LLC dated April 9, 1998 10.21 Revolving Loan Agreement, Revolving Note, Security Agreement with SouthTrust Bank dated May 2, 1997 10.22 Agreement between the Company and T. T. Communications, Inc. dated October 15, 1998 10.23 Agreement between the Company and U.S. Surgical Corporation dated October 28, 1998. 10.24 Collaborative Agreement between the Company and Dr. William B. Saye dated November 16, 1998. 10.25 Kiosk Information System, Inc. Purchase Order dated November 3, 1998 10.26 Surgical Safety Products 1999 Stock Option Plan adopted January 1999 10.27 Form of the Employee Option Agreement under the Surgical Safety Products 1999 Stock Option Plan dated January 1999 10.28 Form of the Director, Consultant and Advisor Option Agreement under the Surgical Safety Products 1999 Stock Option Plan dated January 1999 10.29 Verio, Inc. Access Service Agreement dated February 16, 1999. 10.30 Form of Investor Subscription Documents and Agreements relative to the April 1999 Self Directed Private Placement Offering under Rule 506 of Regulation D. 10.31 Form of the Warrant issued pursuant to the April 1999 Self Directed Private Placement Offering under Rule 506 of Regulation D. 10.32 onsulting Agreement dated April 1999 with Koritz Group, LLC. 10.33 Agreement dated April 1999 with KJS Investment Corporation. 10.34 Agreement dated May 1999 with Ten Peaks Capital Corp. 10.35 Private Partner Network Agreement dated July 30, 1999 with US Surgical 10.36 Staff/Client Leasing Agreement dated October 16, 1999, as amended September 15, 1999 10.37 * Agreement dated July 15, 1999 with Triton Capital Inc. 23.2 Publisher's Consent and Article - Michael W. Bebbington, MD, MHSc and Mark J. Treissman, MD. The Use of a Surgical Assist Device to Reduce Glove Perforations in Postdelivery Vaginal Repair: A Randomized Controlled Trial. American Journal of Obstetrics and Gynecology, Vol. 175, No. 1, Part I, October 1996 23.3 Author's Consent and Abstract - Donna J. Haiduven, BSN, MSN, CIC and Maria D. Allo, MD. Evaluation of a One-Handed Surgical Suturing Device to Decrease. Intraoperative Needlestick Injuries and Glove Perforations: Phases I & II, Conference on Prevention of Transmission of Bloodborne Pathogens in Surgery and Obstetrics Sponsored by the American College of Surgeons and the Center for Disease Control and Prevention, February 13-15, 1994, Atlanta, GA. 23.4 Publisher's Consents and Article -Mark S. Davis, MD. Sharps Management in Surgery. Infection Control & Sterilization Technology, Vol. 1, No. 4, April 1995. 27.1 * Financial Data Street - ---------------- (* Filed herewith, all other exhibits previously filed as exhibits to the Company's Form 10-SB, Form 10-SB Amendment No. 1, Form 10SB Amendment No. 1, Form 10KSB, Form 10KSB Amendment No. 1, its Form 10QSB for the quarter ended March 31, 1999 or its Form 10QSB for the quarter ended June 30, 1999 or its Form 10QSB Amendment No. 1 for the quarter ended June 30, 1999.) (b) No Reports on Form 8-K were filed during the quarter ended September 30, 1999. SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized. Surgical Safety Products, Inc. (Registrant) Date: November __, 1999 By:/s/ Frank M. Clark ---------------------- Frank M. Clark, President and CEO By:/s/ Donald K. Lawrence ----------------------- Donald K. Lawrence Vice President and Secretary By:/s/ G. Michael Swor ----------------------- G. Michael Swor Treasurer By:/s/ David Collins ----------------------- David Collins Acting Chief Financial Officer [sign page SSP 10QSB 9.30.99] EX-10 2 MATERIAL CONTRACT EXHIBIT 10.37 CONSULTING AND ASSISTANCE AGREEMENT THIS AGREEMENT dated this 15th day of July, 1999 by and between SURGICAL SAFETY PRODUCTS, INC., a Florida corporation with a principal place of business at 2018 Oak Terrace, Sarasota, Florida 34231 (hereinafter the "Company"), and Triton Capital, Inc., a Florida corporation with a principal place of business at 2898 University Drive, Coral Springs, FL. 33065 (hereinafter "Consultant"). WITNESSETH: WHEREAS, Consultant is, inter alia, engaged in the business of identifying, reviewing, analyzing, structuring and implementing various and diverse business and financial relationships and transactions on behalf of its clients; WHEREAS, the Company has expressed an interest in retaining Consultant, on a non-exclusive basis, to provide consulting services in connection with the review, analysis, structure and, if feasible, implementation of various and diverse business and financial relationships and transactions; and WHEREAS, Consultant is prepared to use its best efforts, expertise and network of clients and contacts to provide said consultation services to the Company. NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: 1. Engagement 1.1 The Company hereby engages Consultant, and Consultant hereby accepts to become engaged by the Company, as a Consultant to seek to "assist" (as such term is hereinafter defined) the Company in accomplishing the following tasks: 1.1.1 initially raise equity or debt financing in an amount up to Six Million ($6,000,000.00) Dollars, either in lump sum or in staged financing, as the case may be, and to thereafter raise equity or debt financing as the Company may request ("Investment Financing"); 1.2 For the Purpose of this Agreement, as it concerns Consultant's activities, "assist" will mean the introduction of a party to the Company, as evidenced in a writing from Consultant, from whom the Company has not previously obtained investment or trade financing, with whom the Company is not presently in negotiation for such financing or with whom the Company otherwise has not done business and, at the request and direction of the Company, to assist the Company in structuring and negotiating an arrangement with such a party. If the Company obtained or obtains financing from, is or was in negotiation with any party introduced by Consultant or otherwise has done or is doing business with such a party, the Company will provide evidence of such prior business to Consultant upon its written notification to the Company. 1.3 Scope of Services and Non-Exclusivity. It is understood and agreed between the parties that: 1.3.1 Consultant will work in concert with the Company and, at each time at the Company's request, to identify sources of capital and potential business relations, with the objective of arranging meetings and thereafter, at the Company's request and expense, participate in such meetings, for: 1.3.1.1 Investment Financing by such parties as venture capital firms, institutional and strategic investors, investment banks and others potentially interested in effecting or facilitating an investment into the Company; 1.3.2 The Company will use its best efforts to assist and cooperate with Consultant in the performance of its duties hereunder, including promptly providing all information and documentation reasonably requested by Consultant; 1.3.3 Consultant may provide its services at those times (day or evening) and from those locations (via telephone, telefax and/or e-mail) as mutually agreed between Consultant and the Company; and 1.3.4 The Company may engage other third parties to assist it in raising and/or providing investment or trade financing and arranging business arrangements. 2. Success Fee: 2.1 The Company will be free to accept or reject any prospective Business Arrangement Consultant proposes by so notifying Consultant in writing. 3. Investment Financing Success Fee: 3.1 In the event Investment Financing is secured, the Company will pay compensation equal to eight percent (8%) of the amount of equity or debt raised as a Success Fee to the person or entity placing such equity or debt; provided that such person or entity is qualified to receive such compensation in the state of residence, incorporation or principal place of business, as applicable, of the investor and in addition, if warrants are granted to the investor, the Company will grant warrants to purchase 100,000 shares of the Company's Common Stock for each $1 million funded, exercisable at any time up to the last business day of the sixtieth (60th) month from the date of issue which will provide that such person or entity will have the right to acquire restricted common stock of the Company at an exercise price equal to that of the closing bid price of the Company's shares on the date of the completion of the transaction, which warrants shall contained provisions for "piggy-back" registration rights and rights for cashless exercise. The said warrants and underlying securities will be issued to such person or entity subject to usual and standard restrictions, such as restrictions pursuant to Rule 144 under the Securities Act of 1933, as amended (the "Act"), and will contain the same rights and privileges as granted to the investor. 3.2 The Company will be free to accept or reject any prospective Investment Financing Consultant proposes by so notifying Consultant in writing. Notwithstanding anything to the contrary contained herein, if the Company enters into an arrangement for Investment Financing within one hundred eighty (180) days following its written notice of rejection on terms and conditions less favorable to the Company (excluding computation of the Success Fee), the Company will pay the person or entity to whom compensation would have been paid the sum of _____________ Dollars ($_________) at each such closing thereon. 4. Conflict. The Company expressly understands that Consultant and/or its managers, partners, shareholders, officers, directors, affiliates or representatives may have an ownership interest in, be a director or officer of, or otherwise be in a contractual relationship with a party (i) from whom the Company may obtain Investment Financing or Trade Financing, (ii) with whom the Company may enter into a Business Arrangement, or (iii) from whom Consultant may receive compensation independent of, and in addition to, the Success Fee due and payable pursuant to this Agreement. The Company hereby expressly waives any and all direct or indirect conflict that may arise from any such relationships; provided that in each instance the Company has been informed of its existence. 5. Expenses. Forthwith upon its submission of an invoice therefor to the Company, the Company will reimburse Consultant for any pre-approved disbursements or expenses advanced by Consultant on behalf of the Company in the performance of this Agreement. 6. Confidentiality and Non-Circumvention. 6.1 Each party will treat information provided by the other party pursuant to this Agreement as confidential ( as it relates to the Company, the "Confidential Information"; as it relates to Consultant, the "Confidential Contacts"). The recipient thereof will not, directly or indirectly (a) transfer or disclose any Confidential Information or Confidential Contacts, as the case may be, to any third party (other than its representatives as hereinafter provided or otherwise as required by law), (b) use any Confidential Information or Confidential Contacts, as the case may be, for any purpose other than for its representatives' information and assessment without the prior written approval of the disclosing party. 6.2 As used herein: 6.2.1 as it relates to the Company, "Confidential Information" will include, regardless of the medium, all confidential and proprietary information so marked when disclosed, including financial data, research, know-how, test data, technology, and other trade secrets relating to the Company, furnished or made available by the Company. Notwithstanding the foregoing, the Company's Confidential Information will not include information which Consultant can evidence was prior to its receipt (i) in the public domain (other than as a result of a breach of this Agreement), (ii) in Consultant's possession, or (iii) independently known through a party other than the Company, which party has no duty of confidentiality and otherwise has the right to disclose same; and 6.2.2 as it relates to Consultant, "Confidential Contacts" will include any person, firm or entity with whom Consultant has contact or done business, except any Confidential Contact from whom the Company can evidence it has previously obtained Investment Financing or Trade Financing or with whom it has otherwise done business, as the case may be, prior to the date Consultant makes such Confidential Contact available to the Company. 6.3 Except as specifically agreed to in writing between the parties, the Company agrees it will not, directly or indirectly, without first having obtained Consultant' written consent, which consent shall not be unreasonably withheld: (i) negotiate or enter into, or attempt to negotiate or enter into, any agreement, covenant or understanding, written or oral, with any Confidential Contacts in regard to Investment Financing, Trade Financing or Business Arrangements; or (ii) advise others to utilize Confidential Contacts for investment or trade finance or business arrangements; or (iii) interfere with, circumvent, frustrate or otherwise impede in any manner the relationship of Consultant with any Confidential Contacts. 6.4 The permitted recipient of any Confidential Information and Confidential Contacts, as the case may be: 6.4.1 will take all necessary or appropriate action to (i) protect the Confidential Information or the Confidential Contacts, as the case may be, which standard of protection will be no less stringent than it takes to protect its own proprietary and confidential information, and (ii) prevent its employees, agents and/or representatives from acting in a manner inconsistent with the terms of this Agreement; and 6.4.2 may disclose same to its employees, agents and/or representatives having a need for access thereto by virtue of his/its employment or engagement by recipient, and who/which have been instructed as to, and have agreed to be bound by, the terms and conditions of this Agreement prior to the disclosure of the Confidential Information or Confidential Contacts, as the case may be. 7. Equitable Relief. Each party hereto agrees that any violation of this Agreement by one party may result in irreparable injury to the other party, because the Confidential Information, as it concerns the Company, and the Confidential Contacts, as it concerns Consultant, and the fruits thereof, are valuable in ways not susceptible to full and accurate valuation or have an adequate remedy at law in the event the other party breaches the provisions of this Agreement. Accordingly, the Company and Consultant, as the case may be, may be entitled to injunctive relief or other equitable remedy to prevent, curtail or enforce any such breach, threatened or actual, or the performance of this Agreement. The foregoing will be in addition, and without prejudice, to such other rights as the Company and Consultant may have at law or in equity. The parties each acknowledge and agree that the covenants contained herein are necessary for the protection of the other party's legitimate business interest, and are reasonable in scope. 8. Indemnification. The Company and Consultant will indemnify and hold each other and their respective directors, employees, agents and controlled and controlling persons, harmless from and against any and all losses, claims, damages, liabilities and expenses, joint or several, including all reasonable fees and expenses of counsel, whether or not resulting in any liability relating to or arising from any acts taken by Consultant and the Company, as the case may be, for the other pursuant to this Agreement; provided, however, that neither the Company no Consultant will be responsible for any losses, claims, damages, liabilities or expenses relating to or arising from the other's negligence or wrongdoing. Nothing in this Agreement will be interpreted to create an agency between the Company and Consultant, nor will Consultant or the Company act in any manner to bind the other vis-a-vis third parties without first having obtained the other party's written consent. 9. Termination. 9.1 Either party may terminate this Agreement upon five (5) days prior written notice to the other party. As of the date that termination of this Agreement becomes effective: 9.1.1 Consultant will forthwith cease to perform its duties hereunder; 9.1.2 The Company will continue to be obligated to pay, or to complete the payment, when due of each Success Fee; to grant warrants due or to become due and owing to Consultant or other person or entity for it services rendered prior to termination of this Agreement and to pay any outstanding invoices for approved expenses; and 9.1.3 Notwithstanding anything to the contrary contained herein, the provisions of this Agreement relating to the payment of fees, the granting of warrants, the payment of expenses, confidentiality, and each of their enforcement, indemnification and evidence of transactions will survive termination of this Agreement. 10. Evidence of Transactions. The Company will provide Consultant with evidence of any potential or completed transaction relating to this Agreement forthwith and will keep Consultant appraised of all communications relating to such transaction. 11. Arbitration. 11.1 Any controversy or dispute arising out of or in connection with this Agreement, or the breach thereof ("Dispute"), will be settled by binding arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect at that time. Any such arbitration will take place in Florida before (1) arbitrator; however, if the parties hereto disagree as to such appointment, the arbitration will be before three (3) arbitrators, one of whom is to be designated by the Company, one by Consultant and the third by the two arbitrators so designated. All of the arbitrators so designated will be from any list or panel published by the AAA. The decision by the arbitrators will state the reasons for the award, and will be binding and conclusive upon the parties, their successors and assigns, all of whom will comply with such decision in good faith as if it were a final decision of a court. Each party hereby submits itself to the jurisdiction of the appropriate courts in the city designated for the arbitration for the entry of judgment with respect to the decision of the arbitrators hereunder. Notwithstanding the foregoing, judgment upon the award may be entered in any court having jurisdiction thereof. 11.2 The arbitrators will have the power to (i) order the production of documents under the AAA Rules by one party for inspection and reproduction by the other party, (ii) in addition to damages and other remedies available at law, grant preliminary and/or permanent injunctive relief, and (iii) order specific performance and/or other equitable relief. 12. Costs. 12.1 In the event of a Dispute leading to arbitration as set forth hereinabove, the losing party will reimburse the prevailing party its "Costs" (as hereinafter defined). As used herein, the term "Costs" will include reasonable attorneys' fees and costs of arbitration, recovery of a money award and other relief (including, but not limited to, settlement negotiations). The arbitrators will, in the first instance, include Costs of the arbitration in the award, and the arbitrators will adjudge any other Costs on the basis of the Dispute as a whole. 12.2 If the arbitrators determine that: (i) neither party prevailed, each party will bear its own Costs; or (ii) if a party only partially prevailed, such partially prevailing party will be awarded a pro-rata portion of its Costs. 13. Notice. Any notice or other communication required or authorized to be given by either party to the other hereunder will be deemed given by either party to the other hereunder when received in writing, either personally or by registered mail, telex, telegraph, cable or telefax (postage or other charges prepaid), addressed as first above written or to such other address as a party has given notice under this paragraph. 14. Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and merges and supercedes all prior discussions and writings with respect hereto. No modifications or alterations of this Agreement or waiver of any of its provisions will be effective unless made in writing, and signed by each party hereto. 15. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Florida. 16. Cooperation. Each party hereto agrees to execute all documents and take such actions as are appropriate or may be reasonably requested by the other party so as to effectuate the terms and discharge the responsibilities of such party under this Agreement. 17. Miscellaneous. This Agreement may be executed in counterparts. No representations relating to the subject matter of this Agreement have been made or relied upon by any party that is not set forth herein. This Agreement may not be assigned by either party without the prior written consent of the other party. The invalidity or unenforceability of any particular provision of this Agreement will not affect the other provisions, and this Agreement will be construed in all respects as if such invalid or unenforceable provision were omitted. WHEREFORE, the parties hereto have executed this Agreement as of the date first above written. SURGICAL SAFETY PRODUCTS, INC. By: /s/ Frank Clark - -------------------------------- Frank Clark, President & CEO TRITON CAPITOL, INC., Consultant By: /s/Neil Grossman - ------------------------------ Neil Grossman President EX-27 3 FDS --
5 0001063530 Surgical Safety Products, Inc. 1 U.S. Currency 9-mos DEC-31-1998 JAN-1-1999 SEP-30-1999 1 12,970 0 16,500 0 5,901 36,121 201,151 0 423,105 50,000 0 0 0 11,799 241,726 423,105 720 165,221 14,271 666,868 642,842 0 9,755 (501,647) 0 0 0 0 0 (501,647) (0.045) 0
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