-----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, DrD5Q7WhsW1Tj7ljiePbb26jGXcx7mayvDbAsPHKeWcUwN3QmMn4kEH/KpgNX8iq AvsYO4rYQ80QKvlWZv2HiA== 0001001277-96-000023.txt : 19960716 0001001277-96-000023.hdr.sgml : 19960716 ACCESSION NUMBER: 0001001277-96-000023 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960715 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPHTHALMIC IMAGING SYSTEMS INC CENTRAL INDEX KEY: 0000885317 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 943035367 STATE OF INCORPORATION: CA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11140 FILM NUMBER: 96595064 BUSINESS ADDRESS: STREET 1: 221 LATHROP WAY STE 1 CITY: SACRAMENTO STATE: CA ZIP: 95815 BUSINESS PHONE: 9166462020 10QSB 1 FORM 10QSB FOR 5/31/96 - OIS FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1996 Commission File Number: 1-11140 OPHTHALMIC IMAGING SYSTEMS (Exact name of registrant as specified in its charter) CALIFORNIA 94-3035367 (State of Incorporation) (IRS Employer Identification No.) 221 LATHROP WAY, SUITE I, SACRAMENTO, CA 95815 (Address of principal executive offices) (916) 646-2020 (Issuer's telephone number) Check whether the issuer (1) has 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 XX No As of June 30, 1996, 3,307,164 shares of common stock, at no par value, were outstanding. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 1 OPHTHALMIC IMAGING SYSTEMS MAY 31, 1996 (UNAUDITED) ASSETS Current assets: Cash and equivalents $ 1,839,716 Accounts receivable, net 1,683,814 Inventories, net 1,331,431 Prepaid expenses and other current assets 144,492 Total current assets 4,999,453 Furniture and equipment, net of accumulated depreciation and amortization of $608,974 284,868 Other assets 7,041 $ 5,291,362 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Borrowings under line of credit $ 550,000 Accounts payable 1,047,903 Accrued liabilities 1,019,201 Deferred extended warranty revenue 63,557 Customer deposits 43,110 Current portion of notes payable 7,911 Total current liabilities 2,731,682 Notes payable, less current portion 7,894 Commitments Stockholders' equity: Preferred stock, no par value, 20,000,000 shares authorized; none issued or outstanding -- Common stock, no par value, 20,000,000 shares authorized; 3,307,164 issued and outstanding 8,943,900 Accumulated deficit (6,392,114) Total stockholders' equity 2,551,786 $ 5,291,362 SEE ACCOMPANYING NOTES. 2
OPHTHALMIC IMAGING SYSTEMS Ophthalmic Imaging Systems Condensed Statements of Operations (Unaudited) Three months ended May 31, Nine months ended May 31, 1996 1995 1996 1995 Net revenues $ 1,808,632 $ 1,838,806 $ 5,888,311 $ 5,210,022 Cost of sales 1,190,646 1,197,707 3,913,858 3,364,981 Gross Profit 617,986 641,099 1,974,453 1,845,041 Operating expenses: Sales and marketing 403,742 353,206 1,257,492 1,167,082 General and administrative 179,490 112,748 542,351 322,274 Research and development 217,899 165,562 585,747 524,273 Total operating expenses 801,131 631,516 2,385,590 2,013,629 (Loss) income from operations (183,145) 9,583 (411,137) (168,588) Other (expense) income, net (166,321) (5,798) (234,762) 8,797 Net (loss) income $ (349,466) $ 3,785 $ (645,899) $ (159,791) Shares used in the calculation of net (loss) income per share 2,243,533 930,862 1,836,953 875,112 Net (loss) income per share (0.16) $ 0.00 $ (0.35) $ (0.18) See accompanying notes. 3
OPHTHALMIC IMAGING SYSTEMS INCREASE (DECREASE) IN CASH AND EQUIVALENTS (UNAUDITED) NINE MONTHS ENDED MAY 31, 1996 1995 OPERATING ACTIVITIES: Net loss $ (645,899) $ (159,791) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 74,327 77,339 Net increase in current assets other than cash and equivalents (613,160) (733,218) Net increase in current liabilities other than short-term borrowings 397,686 94,411 Net cash used in operating activities (787,046) (721,259) INVESTING ACTIVITIES: Purchases of furniture and equipment (102,257) (70,272) Net (decrease) increase in other assets (2,152) 4,720 Net cash used in investing activities (104,409) (65,552) FINANCING ACTIVITIES: Principal payments on notes payable (5,295) (6,948) Proceeds from line-of-credit borrowings 150,000 300,000 Net proceeds from sale of common stock 2,269,261 - Net cash provided by financing activities 2,413,966 293,052 Net increase (decrease) in cash and equivalents 1,522,511 (493,759) Cash and equivalents at beginning of period 317,205 810,743 Cash and equivalents at end of period $ 1,839,716 $ 316,984 SEE ACCOMPANYING NOTES. 4 Ophthalmic Imaging Systems Notes to Condensed Financial Statements Three and Nine Month Periods ended May 31, 1996 and 1995 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited condensed balance sheet as of May 31, 1996, condensed statements of operations for the three and nine month periods ended May 31, 1996 and 1995 and the condensed statements of cash flows for the nine month periods ended May 31, 1996 and 1995 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the audited financial statements and notes thereto included in the registrant's (the Company's) Annual Report for the Fiscal Year Ended August 31, 1995 on Form 10-KSB. In the opinion of management, the accompanying condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's financial position and results of operations for the periods presented. The results of operations for the period ended May 31, 1996 are not necessarily indicative of the operating results for the full year. Certain amounts in the fiscal 1995 financial statements have been reclassified to conform with the presentation in the fiscal 1996 financial statements. Note 2. Net Income (Loss) Per Share Net income per share is computed using the weighted average number of common and common equivalent shares of common stock outstanding, which common equivalent shares include the dilutive effect from stock options and warrants. Net loss per share is computed using the weighted average number of shares of common stock outstanding. Common equivalent shares from stock options and warrants are excluded from the computation of net loss per share because their effect is antidilutive. 5 Note 3. Line of Credit In April 1995, the Company entered into a revolving line of credit agreement (the "Credit Agreement") with a bank (the "Bank"). The maximum amount available under the terms of the Credit Agreement is $750,000 and is based upon eligible outstanding accounts receivable balances. Borrowings under the Credit Agreement bear interest at the Bank's prime lending rate plus two and one-half percent and are secured by virtually all assets of the Company. The Credit Agreement contains certain restrictive covenants which provide for, among other things, certain working capital and net worth balances and ratios, and limitations on the amount of net loss the Company may incur in a quarter. In connection with the Credit Agreement, the Company also modified a warrant previously issued to the Bank. The modifications included increasing the number of common shares for which the warrant is exercisable to 25,000, changing the per share exercise price to $2.39 and extending the expiration date to April 2000. In November 1995, the Company amended the Credit Agreement. The amendments included extending the maturity date to April 1996, and increasing the amount of the loss the Company may incur in a quarter. As a condition to amending the Credit Agreement, the Company modified the warrant issued to the Bank. The modifications include increasing the number of common shares under the warrant for which the warrant is exercisable to 67,500, reducing the per share exercise price to $1.73 and extending the expiration date to November 2000. The number of shares for which the warrant is exercisable may be reduced to 50,000 upon the occurrence of certain events. In April 1996, the Company again amended the Credit Agreement. The amendments included extending the maturity date to July 1996 and limiting the amount of the net loss the Company may incur in a quarter. In May 1996, the Bank exercised an alternative stock appreciation right available under the warrant. In conjunction with said exercise, the Company has accrued a liability of approximately $220,000 as of May 31, 1996, said amount being the entire amount of the obligation under the warrant. The Company recognized additional interest expense of approximately $151,000 during the quarter ended May 31, 1996 in connection with said exercise. The Company had previously accrued as interest expense approximately $69,000 in connection with a put right under the warrant, which right is foregone in lieu of the Bank exercising its alternative stock appreciation right. The parties have agreed in principal to revise the form of consideration and timing of payment under the alternative stock appreciation right, and are currently negotiating the terms of that agreement. 6 Note 4. Reverse Stock Split On November 30, 1994, the Company's shareholders approved an amendment to the Company's Restated Articles of Incorporation to effect a 1-for-3 reverse stock split of the Company's issued and outstanding common stock. Therefore all common stock share and per share amounts in the accompanying statements have been appropriately adjusted to reflect the reverse stock split. Note 5. Private Placement On November 21, 1995, the Company completed a private placement of 1,368,421 shares of its common stock with detachable warrants. The proceeds from this offering were approximately $1,075,000 (net of issuance costs of approximately $225,000). Along with each share of common stock issued, the purchasers were given an "A Warrant" and a "B Warrant" to purchase shares of the Company's common stock. The A and B Warrants per share exercise prices are $1.25 and $1.75, respectively. The number of shares exercisable as well as the per share exercise prices of the A and B Warrants are subject to adjustment upon the occurrence of certain events. The A and B Warrants expire on November 21, 1996 and November 21, 1997, respectively. In addition, the A and B Warrants are subject to redemption by the Company at $.10 per warrant commencing May 21, 1996 and May 21, 1997 (the "Redemption Dates"), respectively. The A and B Warrant redemption provisions are only available if the Company's common stock price exceeds $2.25 and $2.50, respectively, for the twenty trading days immediately preceding the corresponding Redemption Dates. The placement agent was issued a warrant to purchase 250,000 shares of the Company's common stock at $.95 per share. The number of shares exercisable as well as the per share exercise price are subject to adjustment upon the occurrence of certain events. This warrant expires in November 1999. In addition, the placement agent will receive as a commission, 10% of the proceeds received by the Company upon the exercise of the A and B Warrants described above. In May 1996, 1,052,631 of the A Warrants were exercised. The proceeds from this exercise were approximately $1,184,000 (net of issuance costs of approximately $132,000). 7 Note 6. Subsequent Events In July 1996, the Company amended its Credit Agreement with a bank. The amendments included extending the maturity date to October 1996 and limiting the amount of the net loss the Company may incur in the fourth quarter of fiscal 1996. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW To date, the Company has designed, developed, manufactured and marketed ophthalmic digital imaging systems and has derived substantially all of its revenues from the sale of such products. The Company believes that as the U.S. healthcare system moves toward managed care, however, the needs of the managed care providers are changing the nature and demand for medical imaging equipment and services. New opportunities in telemedicine are emerging that may allow managed care organizations to reduce costs while maintaining their quality of patient care. OIS is currently a market leader in the ophthalmic imaging field and plans to leverage its digital imaging technology and established customer base to develop product features and services targeting telemedicine/managed care applications for the ocular health care industry. Since its inception, the Company's products have addressed primarily the needs of the ophthalmic flourescein angiography market, and more recently the indocyanine green ("ICG") market. The Company believes that the overall angiography market remains limited, however, and that sustaining growth in its traditional angiography equipment business will become increasingly difficult. In recognition of this, the Company is expanding its product capabilities to address the emerging telemedicine market, including remote consultation. While the Company will continue to support its entire line of digital angiography products, it will focus its future efforts on developing product enhancements and pursuing viable opportunities in this market, particularly as they relate to telemedicine/managed care applications. The Company's objective is to become a leading provider of telemedicine products and services in the ocular health care industry, while maintaining its position as a market leader in its existing digital imaging products. In this regard, the Company is also developing a Reading Center, through which it intends to provide descriptive interpretation services of electronically transmitted digital images acquired at remote locations. The Company has secured an agreement to conduct a pilot program with a major managed care provider to evaluate remote image interpretation for diabetic retinopathy screening. At the conclusion of the pilot program, the Company anticipates entering into negotiations with the provider for contracting the Reading Center services. 9 The Company continues to assess potential market opportunities in anticipation of results from clinical validation studies of its Glaucoma-Scope product, an instrument specifically designed for the early diagnosis of glaucoma, a commonly occurring eye disease regularly screened for by eye care practitioners. The Company's results of operations have historically fluctuated from quarter to quarter due to a number of factors and are not necessarily indicative of the results to be expected for any future period or expected for the fiscal year ending August 31, 1996. There can be no assurance that revenue growth or profitability can be achieved or sustained in the future. The following discussion should be read in conjunction with the unaudited interim financial statements and the notes thereto which are set forth elsewhere in this Report on Form 10-QSB. In the opinion of management, the unaudited interim period financial statements include all adjustments, all of which are of a normal recurring nature, that are necessary for a fair presentation of the results of the periods. RESULTS OF OPERATIONS The Company had revenues of $1,808,632 for the third quarter of fiscal 1996 compared to revenues of $1,838,806 for the third quarter of the previous fiscal year. Revenues for the first nine months of fiscal 1996 were $5,888,311 versus $5,210,022 for the comparable period of fiscal 1995. The primary factor contributing to the reduced 1996 third quarter revenue level was a reallocation of the Company's resources to address emerging opportunities in the telemedicine/managed care market. The increased revenue levels for the 1996 nine-month period are principally attributable to strong sales during the first half of the fiscal year of the Company's digital angiography systems incorporating both the ICG interfaces and a family of Windows based products introduced over the past two years. The Company will continue to allocate resources to address the telemedicine/managed care market, as sustaining growth in its traditional angiography equipment business becomes increasingly difficult. As a result, the Company may experience reduced revenue levels from sales of its digital imaging equipment products in the near-term. As anticipated, revenues from sales of Glaucoma-Scope units were below the 1995 levels for both the third quarter and nine- month period as the Company continues to direct the majority of its resources to support the increased demand for its digital angiography products and, more recently, to pursue opportunities in the telemedicine/managed care market. Contributions to revenues from sales of Glaucoma- Scope units have been negligible and management does not anticipate significant near-term sales improvement for the Glaucoma-Scope, recognizing that longer- term sales growth remains dependent upon market acceptance of the system and resolution of healthcare reform and reimbursement issues. 10 Gross margins were approximately 34% during both the third quarter and nine-month period ended May 31, 1996 versus approximately 35% for both the comparable quarter and nine- month period of 1995. These decreases in gross margin percentage were attributable primarily to higher labor and manufacturing support costs. The Company continues to evaluate its expenses in this area consistent with current and anticipated business conditions and management does not anticipate significant, if any, near-term margin improvement. Sales and marketing and general and administrative expenses accounted for approximately 32% of total revenues during the third quarter of fiscal 1996 as compared with approximately 25% during the third quarter of fiscal 1995. For the first nine months of fiscal 1996 such expenses accounted for approximately 31% versus approximately 29% in fiscal 1995. Expense levels also increased to $583,232 during the third quarter of 1996 versus $465,954 during the third quarter of 1995. For the first nine months of 1996, expense levels increased to $1,799,843 from $1,489,356 during the comparable period of 1995. The primary factors contributing to the increase in both the third quarter and the nine-month period were costs associated with hiring additional support personnel, the impact of increased reserves for potential credit losses and marketing, sales and related research and development costs associated with developing the telemedicine/managed care applications and the start-up marketing efforts associated therewith. The Company anticipates expenses in this area will continue to run above historical levels. Research and development expenses, as a percentage of revenues, was approximately 12% in the third quarter of 1996 versus approximately 9% during the same period of 1995. For the first nine months of both fiscal 1996 and 1995, such expenses accounted for approximately 10% of total revenues. Expense levels increased in actual dollar terms to $217,899 during the third quarter of 1996 from $165,562 in 1995. During the first nine months of fiscal 1996, expense levels also increased in actual dollar terms to $585,747 versus $524,273 in 1995. The Company anticipates that it will incur increased expense levels in near-term as it dedicates more resources to the research and development of telemedicine/managed care applications, while continuing to incur expenses with respect to its current products. In this regard, the Company intends to continue research and development efforts on product enhancements and reducing cost configurations for its current products, particularly as they impact telemedicine/managed care applications. 11 Other expense was $166,321 during the third quarter of fiscal 1996 versus $5,798 during the same period of 1995. Other expense during the first nine months of fiscal 1996 was $234,762 as compared to other income of $8,797 during the comparable period of 1995. The primary contributing factor to these changes was a significant increase in interest expense during 1996 versus 1995 associated with additional borrowings under an existing credit line, which was not in place until the third quarter of fiscal 1995, in particular conjunction with an alternative stock appreciation right pursuant to a warrant previously issued to the Company's Bank. In May 1996, the Bank exercised an alternative stock appreciation right available under the warrant. In conjunction with said exercise, the Company recognized additional interest expense of approximately $151,000 during the quarter ended May 31, 1996. The Company had previously recognized as interest expense of approximately $69,000 in connection with a put right under the warrant, which right is foregone in lieu of the Bank exercising its alternative stock appreciation right. During the 1996 nine- month period, the Company recognized as interest expense approximately $208,000 in connection with both the put right and the alternative stock appreciation right. The parties have agreed in principal to revise the form of consideration and timing of payment under the alternative stock appreciation right, and are currently negotiating the terms of that agreement. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities used cash of $787,046 and $721,259 in the first nine months of fiscal 1996 and 1995, respectively. The cash used by operations in the first nine months of both 1996 and 1995 resulted primarily from the net loss during the period and increases in accounts receivable and inventory, which amounts were partially offset by increases in accounts payable and other current liabilities, excluding borrowings under the Credit Agreement. Cash used in investing activities was $104,409 during the first nine months of 1996 as compared to $65,552 during the same period for 1995. The Company's primary investing activities consist of equipment and other capital asset acquisitions. The Company does not currently have any pending material commitments regarding capital expenditures. The Company is, however, evaluating the need to upgrade its existing management information systems, which may result in increased near-term capital expenditures. In addition, the Company anticipates certain capital expenditures to support efforts to expand its technology to telemedicine/managed care applications. The Company anticipates that related expenditures, if any, will be financed from one or more of the following sources: (i) working capital; (ii) borrowings under an existing credit agreement, if available; or (iii) debt, equity or other financing arrangements, if any, available to the Company. 12 The Company generated cash of $2,413,966 from financing activities during the first nine months of fiscal 1996 as compared to $293,052 during the first nine months of fiscal 1995. The sources of cash from financing activities during the 1996 period were principally the net proceeds from a private placement of the Company's common stock in November 1995, the net proceeds from the exercise of certain A Warrants issued pursuant to said private placement in May 1996 and, to a lesser extent, borrowings under the Credit Agreement. Cash generated in 1995 was solely from borrowings under the Credit Agreement. Cash generated from financing activities during both 1996 and 1995 was offset slightly by principal repayments on notes payable. As indicated above, the Company intends to allocate significant resources to the development and marketing of telemedicine/managed care products and services. During this development period, the Company could experience a decrease in revenues and earnings while incurring additional expenses in connection with such activities. Accordingly, the Company anticipates that it could continue to experience negative cash flow from operations in the near-term. In addition, the Credit Agreement, which has been extended, will come due in October 1996, and there can be no assurance that the Company will be able to negotiate further extensions. As also indicated above, although the Company and the Bank have agreed in principal to revise the form of consideration and timing of payment under the alternative stock appreciation right and the Company believes that it will be able to enter into a final agreement with the Bank with regard to such matters, there can be no assurance that it will be able to do so, in which case the entire amount of the obligation would be due. Although the Company believes that it will be able to raise the funds necessary to satisfy its liquidity and capital requirements from alternative sources including extending or refinancing its Credit Agreement, other debt financing, issuing equity securities or entering into other financing arrangements, there can be no assurance that such financing will be available and, if available, that it will be obtained in terms favorable to the Company. Additional capital could also be made available to the Company pursuant to the exercise of additional warrants issued in connection with the November 1995 private placement. However, there can be no assurance that any such warrants will be exercised in the near-term, if at all. 13 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES In November 1995, the Company amended a Credit Agreement with a Bank, pursuant to which the Company modified a warrant previously issued to the Bank, including: (i) increasing the aggregate number of common shares issuable upon exercise of such warrant to 67,500, which number may be reduced to 50,000 upon the occurrence of certain events; (ii) reducing the per share exercise price to $1.73; and (iii) extending the expiration date to November 2000. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The exhibits listed on the accompanying Index to Exhibits below are filed as a part hereof and are incorporated by reference. (b) No reports on Form 8-K were filed during the quarter for which this report was filed. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the undersigned has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OPHTHALMIC IMAGING SYSTEMS (Registrant) By: STEVEN R. VERDOONER Steven R. Verdooner, President and Chief Financial Officer (principal executive officer and principal financial and accounting officer) Dated: July 15, 1996 15 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 3.1* Articles of Incorporation of the Registrant, as amended. 3.2* Amended Bylaws of the Registrant. 4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation, as amended, and the amended Bylaws of the Registrant defining the rights of holders of Common Stock of the Registrant. 4.2* Specimen of Stock Certificate. 10.1* Lease Agreement, dated as of July 10, 1987, between the Registrant (as tenant) and Transamerica/Emkay Income Properties I, as amended on July 23, 1990 and June 11, 1991. 10.1(a)(4) Sixth Amendment to lease effective as of July 1, 1995. 10.2* Employment Agreement, dated March 27, 1992, between the Registrant and Dennis J. Makes. 10.2(a)(1) Amendment dated June 30, 1993 to the Employment Agreement between the Registrant and Dennis J. Makes dated March 27, 1992. 10.3* Confidentiality Agreement, dated March 27, 1992 between the Registrant and Dennis J. Makes. 10.4* Confidentiality Agreement, dated March 27, 1992 between the Registrant and Steven R. Verdooner. 10.5* Confidentiality Agreement, dated March 27, 1992 between the Registrant and Richard Wullaert. 10.6* Consulting Agreement, dated January 23, 1992, between the Registrant and G. Peter Halberg, M.D. 10.7* Assignment dated October 23, 1990 of U.S. Patent Application for Apparatus and Method for Topographical Analysis of the Retina to the Registrant by Steven R. Verdooner, Patricia C. Meade, and Dennis J. Makes (as recorded on Reel 5490, Frame 423 in the Assignment Branch of the U.S. Patent and Trademark Office). 16 10.8* Form of International Distribution Agreement used by the Registrant and sample form of End User Software License Agreement. 10.9* Original Equipment Manufacturer Agreement, dated April 1, 1991, between the Registrant and SONY Medical Electronics, a division of SONY Corporation of America. 10.10* Original Equipment Manufacturer/Value Added Reseller Agreement, dated May 7, 1991, between the Registrant and Eastman Kodak Company. 10.11* The Registrant's 1992 Nonstatutory Stock Option Plan and sample form of Nonstatutory Stock Option Agreement. 10.12* Common Stock and Warrant Purchase Agreement ("Stock Purchase Agreement"), dated as of February 8, 1992, among the Registrant, Jonnie R. Williams, Kathleen M. O'Donnell, as Trustee of Irrevocable Trust No. 6, FBO F.E. O'Donnell, Jr., M.D., Steven R. Verdooner and Dennis J. Makes. 10.12(a)* Amendment No. 1 to Stock Purchase Agreement, dated March 25, 1992, among the Registrant, Jonnie R. Williams, individually, Jonnie R. Williams, as Trustee of Irrevocable Trust No. 1, Rambert Summons, and Kathleen M. O'Donnell, as Trustee of Irrevocable Trust No. 6, FBO F.E. O'Donnell, Jr., M.D. 10.13* Cross-Indemnification Agreement, dated February 14, 1991, among Dennis Makes, Steven Verdooner, and Richard Wullaert. 10.14* Key Man Life Insurance Policies in the amount of $1,000,000 for each of Dennis J. Makes and Steven R. Verdooner, with the Registrant as the named beneficiary. 10.15(1) Warrant dated February 12, 1993 issued by the Registrant to Steven R. Verdooner to purchase 50,000 shares of Common Stock. 10.16(1) Stock Option Plan. 10.17(1) Promissory Note dated January 4, 1993 from the Registrant to Western Financial Savings Bank in the amount of $25,209.83 due in full by January 4, 1998. 10.18(2) Rental Agreement dated May 1, 1994 by and between the Registrant and Robert J. Rossetti. 17 10.19(3) Security and Loan Agreement (with Credit Terms and Conditions) dated April 12, 1995 by and between the Registrant and Imperial Bank. 10.19(a)(3) General Security Agreement dated April 12, 1995 by and between the Registrant and Imperial Bank. 10.19(b)(4) Warrant dated November 1, 1995 issued by the Registrant to Imperial Bank to purchase 67,500 shares of Common Stock. 10.19(c)(4) Amended Loan and Security Agreement (with Credit Terms and Conditions) dated November 1, 1995. 10.19(d)(4) Registration Rights Agreement dated November 1, 1995 between the Registrant and Imperial Bank. 10.19(e) Amended Loan and Security Agreement (with Credit Terms and Conditions) dated April 4, 1996. 10.20(4) Purchase Agreements dated November 21, 1995 between the Registrant, JB Oxford & Company and certain Investors. 10.20(a)(4) Warrant Agreement dated November 21, 1995 between the Registrant, JB Oxford & Company and certain Investors. 10.20(b)(4) Registration Rights Agreement dated November 21, 1995 between the Registrant, JB Oxford & Company and certain Investors. 10.21(4) Employment Agreement dated November 20, 1995 between the Registrant and Steven R. Verdooner. 10.22(4) Employment Agreement dated November 20, 1995 between the Registrant and R. Michael Clark. 10.25(5) The Registrant's 1995 Nonstatutory Stock Option Plan and sample form of Nonstatutory Stock Option Agreement. * Incorporated by reference to the like-numbered exhibits previously filed with Registrant's Registration Statement on Form S-18, number 33-46864-LA. (1) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended August 31, 1993 filed on November 26, 1993. 18 (2) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended August 31, 1994 filed on November 29, 1994. (3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended May 31, 1995. (4) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended August 31, 1995 filed on November 29, 1995. (5) Incorporated by reference to the Registrant's Registration Statement on Form S-8 filed on May 28, 1996, number 333-0461. 19 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-QSB FOR THE PERIOD ENDED MAY 31, 1996 AND THE FORM 10-KSB FOR THE PERIOD ENDED AUGUST 31, 1995 FOR OPHTHALMIC IMAGING SYSTEMS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000885317 OPHTHALMIC IMAGING SYSTEMS 9-MOS YEAR AUG-31-1996 AUG-31-1995 MAY-31-1996 AUG-31-1995 1,839,716 317,205 0 0 1,683,814 1,418,409 0 111,800 1,331,431 1,175,495 4,999,453 2,863,782 893,842 791,585 608,974 536,596 5,291,362 3,125,609 2,731,682 2,172,240 0 0 0 0 0 0 8,943,900 6,674,639 0 0 5,291,362 3,125,609 5,888,311 6,724,339 5,888,311 6,959,239 3,913,858 4,616,322 3,913,858 4,616,322 2,385,590 2,677,993 0 0 0 31,857 (645,899) (356,276) 0 0 (645,899) (356,276) 0 0 0 0 0 0 (645,899) (356,276) (0.35) (0.41) 0 0
EX-10 3 Exhibit 10.19(e) [IMPERIAL BANK LETTERHEAD] April 4, 1996 OPHTHALMIC IMAGING SYSTEMS 221 Lathrop Way, Suite I Sacramento, CA 95815 Attention: Mr. Steven R. Verdooner, President Mr. Steven C. Lagorio, Director of Finance Re: Imperial Bank Loan No. 700000559 Gentlemen: With reference to the Credit Terms and Conditions with Addendum (collectively referred to as the "Loan Agreement") between Imperial Bank ("Bank") and Ophthalmic Imaging Systems ("Borrower") dated April 12, 1995 in connection with the above-referenced loan ("Loan"), and as amended by letters dated October 11, 1995 and November 1, 1995, the Bank and Borrower hereby modify the Loan Agreement as follows: Paragraph 2 of the Addendum to the Loan Agreement, entitled, "Term and Repayment", as previously amended, is deleted in its entirety and is hereby replaced by the following: "The line of credit will require monthly payments of interest through and including July 5, 1996 at which time all outstanding principal, accrued but unpaid interest and other charges thereinafter shall be due and payable in full." Borrower shall be subject to the following covenant in addition to the existing covenants: "Loss not to exceed $150,000 in the quarter ending 5-31-96." Borrower shall pay Bank a $1,100 fee for this modification, which shall be due and payable upon execution hereof by Borrower. Except as modified hereby, the Loan Agreement shall remain unaltered and in full force and effect. Please sign below to show your agreement with the foregoing and return an original to me. Sincerely, (signed) Thomas D. Jorgensen Thomas D. Jorgensen Assistant Vice President Special Markets Group Accepted and agreed to: OPHTHALMIC IMAGING SYSTEMS By: (signed) Steven Verdooner Title: President Date: April 11, 1996 -----END PRIVACY-ENHANCED MESSAGE-----