-----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, RGHjkXZ+klNk9pXPRUbW2m1EOvzAUgZJAjuaBBd5IIZ94e0qsHydw8ppAkaMrpm8 VDW10uPkOweVZDQpWrXeiQ== 0001001277-97-000001.txt : 19970115 0001001277-97-000001.hdr.sgml : 19970115 ACCESSION NUMBER: 0001001277-97-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 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: 97505625 BUSINESS ADDRESS: STREET 1: 221 LATHROP WAY STE 1 CITY: SACRAMENTO STATE: CA ZIP: 95815 BUSINESS PHONE: 9166462020 10QSB 1 FORM 10QSB FOR 11/30/96 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 November 30, 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 November 30, 1996, 3,336,264 shares of common stock, at no par value, were outstanding. 1 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 2 OPHTHALMIC IMAGING SYSTEMS CONDENSED BALANCE SHEET NOVEMBER 30, 1996 (UNAUDITED) ASSETS Current assets: Cash and equivalents $ 459,404 Accounts receivable, net 876,337 Inventories, net 1,582,766 Prepaid expenses and other current assets 68,277 --------------- Total current assets 2,986,784 Furniture and equipment, net of accumulated depreciation and amortization of $665,899 434,241 Other assets 63,173 --------------- $ 3,484,198 =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Borrowings under line of credit $ 281,000 Accounts payable 905,577 Accrued liabilities 753,748 Accrued warrant appreciation right 235,160 Deferred extended warranty revenue 79,881 Customer deposits 150,980 Current portion of notes payable 5,002 --------------- Total current liabilities 2,411,348 Notes payable, less current portion 2,096 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; 3,336,264 issued and outstanding 9,025,687 Accumulated deficit (7,954,933) --------------- Total stockholders' equity 1,070,754 --------------- $ 3,484,198 =============== SEE ACCOMPANYING NOTES. 3 OPHTHALMIC IMAGING SYSTEMS CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 1996 1995 ------------------------------- NET REVENUES $ 884,246 $ 1,909,926 COST OF SALES 650,173 1,236,194 ------------------------------- GROSS PROFIT 234,073 673,732 OPERATING EXPENSES: SALES AND MARKETING 468,337 487,861 GENERAL AND ADMINISTRATIVE 282,768 154,213 RESEARCH AND DEVELOPMENT 264,781 197,016 ------------------------------ TOTAL OPERATING EXPENSES 1,015,886 839,090 ------------------------------ LOSS FROM OPERATIONS (781,813) (165,358) OTHER EXPENSE, NET (13,722) (33,001) ------------------------------ NET LOSS $ (795,535) $ (198,359) ============================== SHARES USED IN THE CALCULATION OF NET LOSS PER SHARE 3,320,969 1,010,450 ============================== NET LOSS PER SHARE $ (0.24) $ (0.20) ============================== SEE ACCOMPANYING NOTES. 4 OPHTHALMIC IMAGING SYSTEMS CONDENSED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND EQUIVALENTS (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 1996 1995 ------------------------------- OPERATING ACTIVITIES: Net loss $ (795,535) $ (198,359) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 31,622 23,224 Net decrease (increase) in current assets other than cash and equivalents 190,107 (469,989) Net increase in current liabilities other than short-term borrowings 247,986 313,373 ----------------------------- Net cash used in operating activities (325,820) (331,751) INVESTING ACTIVITIES: Purchases of furniture and equipment (104,668) (39,865) Net decrease (increase) in other assets 23,462 (6,541) ----------------------------- Net cash used in investing activities (81,206) (46,406) FINANCING ACTIVITIES: Principal payments on notes payable (1,386) (5,826) Net (repayments of) proceeds from line-of-credit borrowings (269,000) 50,000 Net proceeds from sale of common stock 85,491 1,068,488 ----------------------------- Net cash (used) provided by financing activities (184,895) 1,112,662 ----------------------------- Net increase (decrease) in cash and equivalents (591,921) 734,505 Cash and equivalents at beginning of period 1,051,325 317,205 ----------------------------- Cash and equivalents at end of period $ 459,404 $ 1,051,710 ============================= SEE ACCOMPANYING NOTES. 5 Ophthalmic Imaging Systems Notes to Condensed Financial Statements Three Month Periods ended November 30, 1996 and 1995 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited condensed balance sheet as of November 30, 1996, condensed statements of operations for the three month periods ended November 30, 1996 and 1995 and the condensed statements of cash flows for the three month periods ended November 30, 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, 1996 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 November 30, 1996 are not necessarily indicative of the operating results for the full year. Certain amounts in the fiscal 1996 financial statements have been reclassified to conform with the presentation in the fiscal 1997 financial statements. Note 2. Net Loss Per Share 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. 6 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 (10.75% as of November 30, 1996). 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 and the Bank 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 included 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 was reduced to 50,000 due to the occurrence of certain events set forth in the Credit Agreement. In April 1996, the Company and the Bank 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. 7 Note 3. Line of Credit (continued) 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, but have not as yet agreed to the definitive terms thereof. In November 1996, the Company and the Bank again amended the Credit Agreement. Then amendments included, among other things, extending the maturity date to March 1997, subject to the occurrence of certain equity transactions, and limiting the amount of the net loss the Company may incur in the first and second quarter of fiscal 1997. As of November 30, 1996, borrowings in the amount of $281,000 were outstanding against the Credit Agreement. The Company was not in compliance with certain of the restrictive covenants for the quarter ending November 30, 1996 and the Company has requested from the Bank a waiver with respect to such non-compliance. The potential impact of not receiving a waiver from the Bank is that the Bank could demand payment of the balance owing against the Credit Agreement. Note 4. 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 net proceeds from this offering were approximately $1,075,000. 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 February 19, 1997, as amended, and November 21, 1997, respectively. 8 Note 4. Private Placement (continued) 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 net proceeds from this exercise were approximately $1,184,000. Note 5. Subsequent Events In December 1996, the Company received proceeds of approximately $225,000 (net of anticipated issuance costs of approximately $25,000) for the exercise of certain of the B Warrants issued pursuant to the Private Placement referred to in Note 4 above. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE STATEMENTS BELOW INCLUDE STATEMENTS THAT ARE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 21A OF THE SECURITIES ACT OF 1933, AS AMENDED, IN SECTION 21E OF THE SECURITIES ACT OF 1934, AS AMENDED, AND IS SUBJECT TO THE SAFE HARBOR CREATED THEREBY. FUTURE OPERATING RESULTS MAY BE ADVERSELY EFFECTED AS A RESULT OF A NUMBER OF FACTORS ENUMERATED IN THE COMPANY'S PUBLIC REPORTS. 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 has a reputation within the ophthalmic community for producing high quality, reliable, easy to use equipment and believes itself to be an acknowledged industry leader in the sales of digital ophthalmic imaging systems for instant fluorescein angiography. The Company believes, however, that as the U.S. healthcare system moves toward managed care 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. The Company 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, in fiscal 1996 the Company developed a Reading and Documentation Center, through which it intends to provide documentation services of electronically transmitted digital images acquired at remote locations. 10 During fiscal 1996, the Company also 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, if successful, the Company anticipates entering into negotiations with the provider, and others, for contracting the Reading Center services. The Company currently has several initial commitments to purchase its Reading and Documentation Center services. There can be no assurance, however, that the pilot program will prove a success or that these negotiations or commitments will result in contracts for these services. During the recently completed fall meeting of the American Academy of Ophthalmology, the Company introduced a lower-priced digital imaging system incorporating telemedicine features and targeting the general ophthalmology market. The majority of orders received in conjunction with this introduction are projected for delivery during the second and third quarters of fiscal 1997. 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, 1997. 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. 11 RESULTS OF OPERATIONS The Company's revenues for the first quarter of fiscal 1997 were $884,246, representing a decrease of approximately 54% from revenues of $1,909,926 for the first quarter of fiscal 1996. A primary factor contributing to the reduced 1997 first quarter revenue level was the reallocation of the Company's resources to address emerging opportunities in the telemedicine/managed care market. In addition, the 1996 first quarter revenue levels were largely attributable to strong sales of the Company's digital angiography systems incorporating ICG and Windows features introduced over the previous 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. Based on its backlog of current orders, however, the Company believes that its revenues will improve during the remainder of the year. Nonetheless, in comparison to previous years, the Company may experience reduced revenue levels from sales of its digital imaging equipment products in the near- term. 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. Gross margins were approximately 26% during the first quarter ended November 30, 1996 versus approximately 35% for the comparable quarter of 1996. This decrease in gross margin percentage was attributable primarily to the fixed manufacturing and support costs relative to the significantly decreased revenue levels during 1997. The Company continues to evaluate its expenses in this area consistent with current and anticipated business conditions and management anticipates that near- term margin improvement, if any, would result principally from reduced material costs associated with current deliverable system configurations, economies of scale from increased unit production and other manufacturing efficiencies. Sales and marketing and general and administrative expenses accounted for approximately 85% of total revenues during the first quarter of fiscal 1997 as compared with approximately 34% during the first quarter of fiscal 1996. Expense levels also increased to $751,105 during the first quarter of 1997 versus $642,074 during the first quarter of 1996. The primary factors contributing to the increase were costs associated with hiring additional support personnel, the impact of increased reserves for potential credit losses and marketing, sales and related costs associated with the telemedicine/managed care start-up marketing efforts. The Company anticipates expenses in this area will continue to run above historical levels. 12 Research and development expenses, as a percentage of revenues, was approximately 30% in the first quarter of 1997 versus approximately 10% during the same period of 1996. Expense levels increased in actual dollar terms to $264,781 during the first quarter of 1997 from $197,016 in 1996. 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. Other expense was $13,722 during the first quarter of fiscal 1997 versus $33,001 during the same period of 1996. The primary contributing factor to this change was a decrease in interest expense during 1997 versus 1996 associated with an existing credit line, including a reduction in borrowings against said credit line and in particular conjunction with interest expense recognized during the 1996 first quarter in connection with a put right under a warrant previously issued to the Company's Bank, which right was foregone in lieu of the Bank exercising its alternative stock appreciation right available under said warrant in May 1996. The parties have agreed in principal to revise the form of consideration and timing of payment under the alternative stock appreciation right, but have not as yet agreed to the definitive terms thereof. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities used cash of $325,820 and $331,751 in the first quarter of fiscal 1997 and 1996, respectively. The cash used by operations in the 1997 first quarter resulted primarily from the net loss during the period and the decrease in accounts receivable associated with significantly reduced revenue levels during the period, which amount was partially offset by increases in customer deposits from orders generated at the AAO meeting and other current liabilities, excluding borrowings under the Credit Agreement. Cash used by operations in the first quarter of fiscal 1996 resulted primarily from the net loss during the quarter and increases in accounts receivable and inventory, offset in part by increases in accounts payable. 13 Cash used in investing activities was $81,206 during the first quarter of 1997 as compared to $46,406 during the same period for 1996. 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, however, will continue 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. The Company used cash of $184,895 in financing activities during the first quarter of fiscal 1997 as compared to generating cash in the amount of $1,112,662 during the same period of fiscal 1996. The use of cash from financing activities during the 1997 period was principally repayments of borrowings under the Credit Agreement, which amount was partially offset by net proceeds from the exercise of stock options issued to employees. 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, and, to a lesser extent, borrowings under the Credit Agreement. Principal repayments on notes payable was negligible in both 1997 and 1996. 14 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 anticipates that it could experience a decrease in revenues and an increase in operating losses as a result of incurring additional expenses in connection with activities relating to the development and marketing of telemedicine/ managed care products and services. Accordingly, the Company anticipates that it could continue to experience negative cash flow from operations in the near-term. In addition, while the Credit Agreement has been extended to March 1997, there can be no assurance that the Company will be able to negotiate further extensions. As indicated in Note 3 of the Notes to Condensed Financial Statements, the Company was not in compliance with certain of the restrictive covenants for the quarter ending November 30, 1996 and the Company has requested from the Bank a waiver with respect to such non-compliance. While the Bank has favorably responded to all previous such requests and the Company believes the Bank will so respond to its current request for a waiver, there can be no assurance that said waiver will be granted. The potential impact of not receiving a waiver from the Bank is that the Bank could demand payment of the balance owing against the Credit Agreement, which amount was $281,000 as of November 30, 1996. 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, which amount at November 30, 1996, including accrued interest thereon, was approximately $235,000, would be due. Although the Company believes that it will be able to raise the funds necessary to satisfy its liquidity and capital requirements during the next twelve months 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, as well as from other outstanding options and warrants. In this regard, the Company has received a commitment to exercise a significant number of these warrants from certain of the warrant holders, and while the Company is currently in active discussions with such warrant holders regarding said exercise, there can be no assurance that any such warrants will be exercised in the near-term, if at all. 15 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES In November 1996, the expiration date for the unexercised A Warrants issued pursuant to the Private Placement of the Company's Common Stock effective November 21, 1995, were extended from November 21, 1996 to February 19, 1997. ITEM 3. DEFAULTS UPON SENIOR SECURITIES As indicated in Note 3 of the Notes to Condensed Financial Statements, the Company was not in compliance with certain of the restrictive covenants of a Credit Facility with its Bank for the quarter ending November 30, 1996 and the Company has requested from the Bank a waiver with respect to such non- compliance. 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. 16 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: January 14, 1997 17 INDEX TO EXHIBITS Exhibit NUMBER Footnote DESCRIPTION OF EXHIBIT REFERENCE 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) Seventh Amendment to lease effective as of (7) July 18, 1996. 10.2 Employment Agreement, dated March 27, 1992, * between the Registrant and Dennis J. Makes. 10.2(a) Amendment dated June 30, 1993 to the Employment (1) 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. 18 10.7 Assignment dated October 23, 1990 of U.S. Patent * Application for Apparatus and Method for Topo- graphical 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). 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 Simmons, 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. 19 10.15 Warrant dated February 12, 1993 issued by the (1) Registrant to Steven R. Verdooner to purchase 50,000 shares of Common Stock. 10.16 Stock Option Plan. (1) 10.17 Promissory Note dated January 4, 1993 from the (1) Registrant to Western Financial Savings Bank in the amount of $25,209.83 due in full by January 4, 1998. 10.18 Rental Agreement dated May 1, 1994 by and between (2) the Registrant and Robert J. Rossetti. 10.19 Security and Loan Agreement (with Credit Terms (3) and Conditions) dated April 12, 1995 by and between the Registrant and Imperial Bank. 10.19(a) General Security Agreement dated April 12, 1995 (3) by and between the Registrant and Imperial Bank. 10.19(b) Warrant dated November 1, 1995 issued by the (4) Registrant to Imperial Bank to purchase 67,500 shares of Common Stock. 10.19(c) Amended Loan and Security Agreement (with Credit (4) Terms and Conditions) dated November 1, 1995. 10.19(d) Registration Rights Agreement dated November 1, (4) 1995 between the Registrant and Imperial Bank. 10.19(e) Amended Loan and Security Agreement (with Credit (6) Terms and Conditions) dated April 4, 1996). 10.19(f) Amended Loan and Security Agreement (with Credit (7) Terms and Conditions) dated July 12, 1996). 10.19(g) Amended Loan and Security Agreement (with Credit (7) Terms and Conditions) dated November 21, 1996). 10.20 Purchase Agreements dated November 21, 1995 (4) between the Registrant, JB Oxford & Company and certain Investors. 10.20(a) Warrant Agreement dated November 21, 1995 between (4) the Registrant, JB Oxford & Company and certain Investors. 10.20(b) First Amendment Warrant Agreement dated November (7) 21, 1996 between the Registrant, JB Oxford & Company and certain Holders. 20 10.20(c) Registration Rights Agreement dated November 21, (4) 1995 between the Registrant, JB Oxford & Company and certain Investors. 10.21 Employment Agreement dated November 20, 1995 (4) between the Registrant and Steven R. Verdooner. 10.22 Employment Agreement dated November 20, 1995 (4) between the Registrant and R. Michael Clark. 10.25 The Registrant's 1995 Nonstatutory Stock Option (5) 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. (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 filed on July 14, 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. (6) Incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended May 31, 1996 filed on July 15, 1996. (7) Incorporated by reference to the Registrant's Annual Report on Form 10- KSB for the fiscal year ended August 31, 1996 filed on November 29, 1996. EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB FOR THE PERIOD ENDED NOVEMBER 30, 1996 FOR OPHTHALMIC IMAGING SYSTEMS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS AUG-31-1997 SEP-01-1996 NOV-30-1996 459,404 0 876,337 0 1,582,766 2,986,784 1,100,140 665,899 3,484,198 2,411,348 0 0 0 9,025,687 0 3,484,198 884,246 884,246 650,173 650,173 1,015,886 0 13,722 (795,535) 0 (795,535) 0 0 0 (795,535) (.24) (.24)
-----END PRIVACY-ENHANCED MESSAGE-----