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February
11, 2003
Undervalued Special Situation
(OTC BB: SRGL)
Shares Outstanding: 28.9 Mil SurgiLight, Inc.
Active Float: 16.8 Mil 12001 Science Dr., Ste. 140
Recent Price: $0.30 Orlando, FL 32826
52 Week Bid Range: $0.10 - $0.55 Bus. Phone: (407) 482-4555
Capitalization: $8,670,000 Website: www.surgilight.com
BUSINESS SUMMARY:
SurgiLight, Inc. (OTC BB: SRGL) is a leader in the acquisition
and development of new laser technologies for ophthalmic applications,
including lasers not only for “Presbyopia Reversal”
and treatment, but also cataract removal and treatment of
glaucoma, with 16 patents granted and 23 patents pending.
Currently the Company's specific focus is on developing markets
for its proprietary OptiVision™ system for the treatment
and reversal of presbyopia, a condition affecting multi-millions
of individuals worldwide over the age of 40. SurgiLight operates
2 U.S. centers - Surgilight Laser Center, Plantation, Florida
and the Cosmetic Mobile Laser Center.
Lasers for vision correction have been the most important
and largest market for all medical applications utilizing
lasers. According to the Wall Street Journal (March, 2001),
more than 90 million Americans over the age of 40 suffer from
presbyopia. The market for Presbyopia, according to “Opththalmology
Management”, may be 2 -3 times larger than that for
LASIK. Within this vision correction market, SurgiLight owns
a patented technology for presbyopia correction and the Company
expects to capitalize on their proprietary technology in a
major way.
PRESBYOPIA --- A CONDITION AFFECTING MULTI-MILLIONS WORLDWIDE
Presbyopia, also known as the“short arm syndrome”,
is a term used to describe an eye in which the natural lens
can no longer accommodate. “Accommodation” is
the eye’s way of changing its focusing distance. Typically,
when one focuses on something close-up, the lens thickens
(accommodates) so that the subject is seen clearly. However,
at about the age of 40, the lens becomes less flexible and
accommodation is gradually lost. It is a normal process that
everyone eventually experiences.
Most people first notice difficulty reading very fine print
such as the phone book, a medicine bottle, or the stock market
page. Print seems to have less contrast and the eyes become
easily fatigued when reading a book or computer screen. Early
on, holding reading material further away helps many patients.
But eventually, reading correction in the form of reading
glasses, bifocals, or contact lenses is needed for close work.
However, nearsighted people can simply take their glasses
off because they see best close-up.
Signs and Symptoms:
? Difficulty seeing clearly for close work
? Print seems to have less contrast
? Brighter, more direct light required for reading
? Reading material must be held further away to see (for some)
? Fatigue and eyestrain when reading
Treatment:
If the patient has good distance vision and only has difficulty
seeing close-up, the easiest solution has generally been reading
glasses. For others, bifocals or separate pairs of reading
and distance glasses are necessary. Another option has been
monovision: adjusting one eye for distance vision and the
other eye for reading vision. This could be done with contact
lenses or permanently with refractive surgery, but creates
problems with depth perception. Perhaps in the not too distant
future, many people may be opting for SurgiLight’s patented,
proprietary OptiVision™ “Presbyopia Reversal”
technology. To date, global clinical trials are showing great
success with SurgiLight’s new method of laser presbyopia
reversal (LAPR) using a laser for surgical correction. The
OptiVision™ state-of-the-art, infrared laser is less
complicated, more stable, and may provide less regression
than mechanical, non-laser methods.
Preliminary GLOBAL OptiVision™ Clinical Trials are VERY
ENCOURAGING
In June, 2002, CEO Colette Cozean, Ph.D. announced that the
Company is "very encouraged" with preliminary results
obtained to date from the series of clinical trials outside
the U.S. in which the OptiVision system was employed to reverse
presbyopia. Eight out of every ten patients continued to exhibit
improved vision -- many without further need for glasses --
even after a year and a half. Overall results were judged
by participating clinicians to be superior to traditional
techniques now used. At the same time, Vice Chairman Joseph
Allen stated, "We've turned the corner. We recently reported
a return to profitability in the last quarter, successful
overseas clinical results for presbyopia reversal and the
addition of key major distributors in Italy, Mexico and the
Caribbean. The Board/management team intends to capitalize
on that progress to build toward undisputed leadership in
our medical device industry sector, especially in light of
documented significant interest by ophthalmologists throughout
the nation in adopting our OptiVision™ system."
Significant Interest in OptiVision™ at June, 2002 ASCR
Meeting
SurgiLight, Inc. reported "significant interest"
in its proprietary OptiVision(TM) laser for presbyopia procedures
at the annual conclave of the American Society of Cataract
and Refractive Surgeons (ASCRS) held in Philadelphia.
The Company's demonstration, offering attendees
hands-on experience with the system, drew a full house. The
course was chaired by Sandra Belmont, M.D., of Weill Cornell
Medical Center. Also participating were Spencer Thornton,
M.D., a Nashville-based distinguished lecturer and researcher;
Nick Mamalis, M.D., a researcher and faculty member at the
University of Utah; Gregory Pamel, M.D., from Manhattan (NY)
Eye, Ear and Throat and slated to be a U.S. clinical investigator;
and Oscar Mallo, M.D., an Argentinean clinical investigator.
At the
same time, Drs. Mamalis, Mallo and 11 other clinical investigators
from around the globe presented data reflecting the overall
efficacy of the OptiVision™ procedure. Eight of those
presentations represented results of several overseas clinical
trials wherein definite presbyopia reversal was demonstrated
in more than eight of every ten cases, even after 18 months.
In his discussion, Dr. Mallo reported on the treatment of
92 eyes, with an 18-month follow-up. Those patients showed
a mean correction from J5 to J2 (20/20 vision), with almost
no regression in the condition and with negligible changes
in the patients' overall distance vision.
Dr. Mamalis
cited histological (cell) analyses of eye tissue taken from
animals that had undergone the OptiVision™ procedure.
Those studies clearly indicated that during the healing process
the laser incisions were filled with healthy fibrous tissue,
increasing the circumference of the sclera, thus enabling
the lens to regain normal function.
OptiVision™ FEATURES:
• Compact and portable, the solid-state system boasts
a small footprint, which makes it well suited for private
clinic uses
• Self-calibrating for easy maintenance
• Stable energy for consistent operation
• Reliable, well-proven design
• Patented conical contact tip for precise scleral ablation
• Three micron wavelength for maximum tissue absorption
and minimal thermal effects. Precise, minimal thermal tissue
ablation reduces scarring and enhances healing
• Replaceable fiber tips for multi-purpose use with
controlled laser energy
• User-friendly software for managing clinical records
Canada’s Ministry of Health authorized Investigational
Testing of OptiVision™
On Aug. 27, 2002, SurgiLight and Vancouver, B.C.-based EnVision
Technologies, Inc., jointly announced authorization by the
Canadian Ministry of Health to proceed with Investigational
Testing of SurgiLight's OptiVision™ laser system with
a total of as many as 240 presbyopia patients at five sites,
the maximum site number permitted under this authorization.
In addition to acting as exclusive Canadian distributor, EnVision
agreed to oversee the on-site testing of OptiVision™
as a primary ophthalmic tool for the successful treatment
of presbyopia. EnVision also received electrical system approval
from Canadian Standards Association for the Canadian study.
Ann Marie Hipsley, Vice President, Research and Business Development,
EnVision, stated that the MOH decision "provides the
opportunity to test again, with new subjects and under the
same controlled conditions, the highly positive results recorded
in earlier trials. Dr. Pop and the other clinical sites are
eager to be part of the worldwide clinical trials, seeking
to determine whether indeed OptiVision™ can take its
place as a valuable addition to the ophthalmologist's armamentarium,
by providing superior treatment and an alternative to glasses
to Canadian citizens."
SurgiLight Chairwoman and CEO Colette Cozean, Ph.D., commented,
"This authorization is a milestone for SurgiLight not
only because of a go-ahead by the health regulatory agency
of another major country, particularly one in North America,
but because the MOH action is one more validation of OptiVision's
performance as demonstrated in several overseas clinical trials.
"More than 275 eyes have been treated to date in the
on-going clinical trials," she continued, "and when
examined after 12 months, these patients showed no significant
complications or regression. Instead, all recent participants
showed significant overall sight improvement including the
ability to read, in almost all cases, without further need
for optical aids.
"Canada has taken the lead over the years in ultimately
approving a number of other medical equipment advances prior
to U.S. regulatory action," Dr. Cozean said. "Hopefully,
OptiVision™ will join that list, based on what we trust
will be solid clinical data from the five selected sites."
POSITIVE TESTIMONIALS FROM SEPTEMBER, 2002 ESCRS CONCLAVE
Attendees from around the world at September’s 2002
European Society of Cataract and Refractive Surgeons (ESCRS)
conclave heard four separate papers describing measurable
clinical success with presbyopia patients using the Company's
OptiVision(TM) infrared system. Two of the presentations were
made in general sessions at the request of the sponsoring
committee of the conference, held in Nice, France.
Vivek Kadambi, M.D., who heads the Kadambi Laser Vision Clinic
and Research Foundation in Bangalore, India, commented, "This
laser technique has enabled us to cross the last frontier
in refractive surgery. With positive data on safety and efficacy
from four continents and with 90 percent of presbyopia patients
indicating post- operative stability in their condition's
reversal, I am personally convinced that this new procedure
will experience significant clinical acceptance and success."
Unlike other surgical presbyopia treatments, in LAPR there
is no need for suturing any type of implants to the sclera,
thus avoiding their potential complications or side effects.
In his report, Dr. Kadambi cited data showing that in most
cases, regression was absent after a one-year follow-up and
present in relatively few cases after almost two years. Patients'
visual acuity improved from an average of J6 to J2, with no
further use for glasses.
Professor Umberto Merlin, noted Italian practitioner and educator,
told the international audience of the use of OptiVision™
in a new procedure performed under the scleral flap of the
eye, resulting both in vision correction and a positive cosmetic
effect.
CANADIAN TESTIMONIALS AND POSITIVE RESULTS, OCTOBER 2002
On Oct. 30, 2002, SurgiLight and Vancouver, B.C.-based EnVision
Technologies, Inc. jointly announced positive results in the
initial group of presbyopia patients at the first two of the
five clinical sites sanctioned by the Canadian Ministry of
Health for Investigational Testing of SurgiLight's OptiVision(TM)
laser system..
Participating clinicians said that the first cases treated
with OptiVision™ demonstrated measurable vision improvement
with little discomfort from the procedure. Dr. Michel Pop,
who is heading testing at his Montreal clinic, commented,
"our patients are already reading magazines without glasses.
As one might guess, they are very satisfied with results.
"These tests are also significant in that they are providing
a quantitative method of measuring clinical results,"
he added. Dr. Pop had earlier played an important role in
the development of the overall laser procedure with OptiVision™
as the primary surgical tool.
Dr. James Miller reported "very encouraging" results
from the first patient group treated in September at his Vancouver,
B.C. clinic.
"The patients are already reading nicely," he said,
"and we look forward to performing more cases in the
weeks ahead. Thus far, our results have been highly successful."
According to Ann Marie Hipsley, EnVision's Vice President,
Research and Business Development, the Ministry's test program
approval and the initial results have created "major
interest" among leading Canadian ophthalmologists.
NINE MONTH PROFITABILITY AND 58% SALES INCREASE ---
FINANCIAL DATA
For the third quarter ended September 30, 2002, over-all sales
decreased as expected to $599,000 from $801,000 in the prior
year third quarter, including the traditionally slow summer
months, primarily because of the Company's specific focus
on developing markets for its proprietary OptiVision™
system.
However, sales for the nine months of fiscal 2002 reached
$3,101,000, compared to $1,964,000 for the same period in
2001, a 58 percent jump.
For the 2002 third quarter, the Company reported a net loss
of $90,000 or $0.00 per share, compared with a net loss of
$1,574,000, or $(0.07) per share, for the year-earlier period
of 2001. For the nine months ended September 30, 2002, the
Company continued to show profitable net income of $678,000,
compared to a loss of $1,988,000 for the same period of 2001.
The over-all increase in net income was primarily attributed
to the increase in clinical sales of OptiVision™ outside
the U.S. in the face of declining revenues from its business
at overseas laser treatment centers.
While the Company recorded increased costs associated with
contract labor required to assist with clinical trials and
advertising and selling expenses, it effected substantial
decreases in administrative expenses and depreciation and
amortization primarily associated with its center business.
In addition, professional fees decreased significantly during
the past year as litigation was resolved.
The Company's total assets increased to $8,635,000 from $7,972,000
as of December 31, 2001. This increase in total assets is
mainly attributed to the increased accounts receivables generated
from the sales of the OptiVision™ laser systems. Total
current liabilities at the end of the third quarter increased
to $2,429,000 as the Merrill Lynch line-of-credit and certain
Premier Laser Systems payments came due. This change was also
reflected retroactively into the second quarter as the Company's
new auditors reviewed the second quarter with the knowledge
that Merrill Lynch had now declared the loan in default. The
Company is currently in default on a $500,000 line-of-credit
with Merrill Lynch, but has recently received a commitment
letter for a $10 million line-of-credit which would replace
the $500,000 Merrill Lynch line. The Company’s founder,
who is no longer associated with SurgiLight in any manner,
had problems with the SEC and FDA and consequently incurred
fines and sanctions. SurgiLight is potentially liable for
$1.2 million if the founder does not pay the SEC. The Company's
working capital is $880,000. During the first quarter of 2003,
the Company is expected to settle various financial obligations,
payments, and convertible debenture commitments, which will
have the effect of approximately doubling the current number
of outstanding shares from 29 million to about 60 million.
SurgiLight Chairwoman & CEO, Colette Cozean, Ph.D., commented,
"We expected a difficult third quarter since a majority
of our sales are from Europe and around the world, where long
summer vacations are the norm. The Company's management team
did an excellent job of limiting expenses during the third
quarter resulting in a relatively small loss for the period.
I was particularly impressed by the enthusiasm shown by ophthalmic
surgeons at the American Academy of Ophthalmic Surgery meeting
in November as they evaluated our two-year clinical results,
which show almost no regression (1/4 Diopter) after OptiVision™
treatment and with the vast majority of patients reading without
glasses."
FDA HAS NOW CLEARED OptiVision™ FOR U.S. CLINICAL
TRIALS
On December 19, 2002, SurgiLight, Inc. began the launch of
the first U.S. clinical trial for laser reversal and treatment
of presbyopia, using the Company's proprietary OptiVision™
system. The first trial was cleared by the Food & Drug
Administration (FDA) under an Investigational Device Exemption
(IDE).
The Company presented data to the FDA demonstrating measurable
clinical successes over as long as two years at sites overseas
and most recently in Canada, where that government's FDA equivalent
has also sanctioned trials. Overall, trials outside the U.S.
have indicated almost no regression after OptiVision™
surgery with more than 80 percent of patients reading without
glasses post-operatively.
The first U.S. patients have been treated at the state-of-the-art
Las Vegas clinic of Jon L. Siems, M.D., considered a pioneer
in refractive surgery techniques, and principal investigator
in a number of previous major trials for ophthalmic applications
unrelated to SurgiLight. Among Dr. Siems' prior posts was
the directorship of UCLA's Inland Laser Center.
Dr. Siems said the presbyopia reversal procedure was "easy
to learn and very controllable. The improvement in reading
immediately following surgery and the next day was astonishing."
He described the procedure as "eight tiny laser cuts
in the white of the eye in order to expand the lens globe
and enable the eye to again focus at different distances."
JANUARY 6, 2003 RESULTS FROM U.S. EARLY CLINICAL TRIALS
After one to two weeks, all of the 10 patients treated in
total at two U.S. sites demonstrated the ability to read the
daily newspaper without the aid of glasses, while six of the
10 showed successful accommodation -- optimal overall eyesight
at varying distances (increased accommodation of one to three
diopters). The trials were conducted at the Weill Cornell
Medical Center at New York Presbyterian Hospital and at the
Las Vegas clinic of Dr. Jon Siems.
According to Colette Cozean, Ph.D., both clinicians and patients
"were unanimous in citing the procedure as simple, relatively
painless and, most important, successful in the immediate
post-operative period. In effect, the average patient regained
from five to 15 years of reading ability that had been lost."
JANUARY 24, 2003 PRIVATE PLACEMENT CONCLUDED
On January 24, 2003, SurgiLight announced that it had consummated
a previously announced private placement agreement with a
group of four accredited investors, including ophthalmic-knowledgeable
doctors, and that a total of $500,000 had been received. The
agreement had originally stipulated $450,000.
Under the agreement terms, investors purchased for approximately
$.29 each a unit consisting of one share of SurgiLight restricted
common stock and a warrant with an exercise price of $.42
per share. The stock purchase price was at fair market value,
based on the average closing price for the ten days prior
to the offering.
CEO Colette Cozean, Ph.D. said that the successful closing
of the agreement "represents renewed investor confidence
in the Company's management. That confidence is based on published
results of longer-term clinical trials overseas of our OptiVision™
system to reverse presbyopia together with similar patient
outcomes from recently initiated trials in the U.S., Mexico
and Canada, all underscoring OptiVision's unique applicability
and generating measurable overall interest within the ophthalmic
community."
MAJOR GROWTH WILL COME FROM THREE DISTINCT AND IMPORTANT SOURCES
OF REVENUE:
1. Sales of OptiVision™ Units – At this time each
OptiVision™ unit is projected to sell for approximately
$180,000 in the United States and $190,000 internationally.
The cost per unit (300+ purchased from Premier Laser Systems
in bankruptcy) is about $20,000, which leaves an excellent
profit margin. When clinical trials are concluded both in
the U.S. and abroad, the Company expects major demand for
the units and an explosion of sales. At this time and until
global clinical trials are concluded with success and regulatory
approvals, sales of the units are being controlled by the
Company and are strictly limited to the various clinical trials.
2. Royalty Payments – In order to receive an on-going
income stream after the OptiVision™ units are sold,
SurgiLight will receive royalty payments, which are currently
estimated at $150 per eye for U.S. operations and approximately
10% of the surgical cost outside of the United States.
3. New Distributors’ License Fees – Exclusive
Distribution Agreements are and will continue to be a large
and growing source of income. For example, in June, 2001,
the Company signed an Exclusive Distribution Agreement with
EnVision Technologies of Canada (the first is an $8 million
three year agreement). In November, 2001, SRGL signed a $5.7
million Exclusive Agreement for Korea with Yeomyung Technology,
Inc. In February, 2001, an Exclusive Distribution Agreement
to sell the OptiVision™ laser in Mexico and the Caribbean
was signed with TVMS, LLC. Recently in May, 2002, the Company
signed a $4 Million Exclusive Distribution Agreement with
InPro Vision to sell the OptiVision™ in Italy.
DISTINQUISHED, ACCOMPLISHED & DEDICATED MANAGEMENT TEAM
Timothy J. Shea, Vice President, COO and Secretary. He has
almost two decades of experience in the medical laser industry.
Previously he was the President of the Medical and Research
and Development divisions and a Director of Laser Analytics,
Director of Business Development and Director of the Solid
State Laser Division at Schwartz Electro-Optics.
Richard Reffner, VP Laser Centers and Clinical Director of
Plantation Laser Center. He has over 37 years experience in
the ophthalmic industry and is responsible for the day-to-day
operations of the U.S. center. Previously he was Director
of Technical Services for the Hawaiian Eye Center.
Ming-Yi Hwang, Ph.D., has served as R&D Director. He has
more than 15 years experience in laser systems (hardware and
software). Dr. Hwang is responsible for all software aspects
and system control of the Company's products and develops
new IR Lasers utilizing the Company's proprietary technologies.
DIRECTORS
Colette Cozean, Ph.D. CEO and Chairwoman of the board appointed
as CEO in June 2002, Chairwoman in July 2001. Dr. Cozean is
currently the General Manager of EnOVision, an ophthalmic
incubator company, a position she has held since 1999. She
also serves as CEO of two private laser companies and as a
business and regulatory consultant involved in structuring
small, entrepreneurial companies with proprietary and unique
technologies. She was a founder of Premier Laser Systems and
has held many roles, including Chairwoman of the Board of
Directors, CEO, President, CTO and Director of Research from
its founding (1991-1999).
Louis P. (Dan) Valente, CPA was appointed to the board of
directors, July 2001. Mr. Valente has been the Chief Executive
Officer and Chairman of Palomar Medical Technologies, Inc.
(Nasdaq: PMTI) since 1997. Currently, Mr. Valente serves as
a director of MKS Instruments, Inc., a publicly held company,
and several private companies.
Stuart E. Michelson, Ph.D.CFO and board member. Appointed
CFO in June 2002, board member in July 2001. Dr. Michelson
is currently a Professor at Stetson University (2001-present).
He was on the faculty of University of Central Florida (UCF)
(1997-2001) and was a faculty member at Eastern Illinois University
(1994-97). He obtained his Ph.D. in Finance from the University
of Kansas in 1991 and an MBA from the University of Missouri
in 1978. He was the Vice President Membership, Academy of
Financial Services (1999 - 2001).
Robert J. Freiberg, Ph.D. was appointed to the board of directors,
July 2001: Dr. Freiberg has held numerous senior management
positions in engineering, new business development, R &
D, marketing, program management, quality assurance, and manufacturing
operations. He served as Vice President of Engineering for
Leap Frog, Inc., a high tech educational products provider
for schools and adults in the Silicon Valley (2000 - 2001)
prior to his retirement.
Joseph Allen was appointed to the board of directors, July
2001. Mr. Allen has spent the majority of his career implementing
strategic communications and investor relations programs,
and in assisting client companies with financing issues. He
has been the Chairman and CEO of Allen & Caron Inc. (A&C)
since 1981; the Company was reincorporated as South Coast
Communications Group in 1988 and eventually renamed Allen
& Caron in 1996.
J.S.Yuan, PhD was appointed to the board of directors, Oct
1999. Since obtaining his doctorate in electrical engineering
from the University of Florida, he is an associate professor
at the University of Central Florida and consults with many
high tech companies. Doctor Yuan has more than 100 publications
in the areas of semiconductor, device and modeling, digital
and analog IC design and analysis.
Lee Chow, PhD is currently a professor of physics at the University
of Central Florida, joining the company as Director in March
2000. He obtained his PhD in physics from Clark University
and was previously on the faculty of the University of North
Carolina. Dr. Chow is a member of the American Physical Society,
Material Research Society, and the American Association for
the Advancement of Science. He has served as technical consultant
for KEI, Inc., Quantum Nuclearnic, Inc., and is a published
author.
Michael C. Galluchio was appointed to the board of directors,
November 2002. Mr. Balluccio has spent the majority of his
career in various management capacities and has a strong background
in accounting practice and financial stewardship. He is currently
a corporate strategic consultant both at domestic and international
levels. Previously he was Executive Vice President of John
Crane, Inc.
SUMMATION:
Global clinical trials are going extremely well for SurgiLight’s
unique and patented technology, OptiVision™ for the
treatment and potential reversal of presbyopia. With the growing
and aging “Baby-Boomer” population, demand for
SRGL’s proprietary technology should be enormous, not
only in the United States, but internationally as well. The
Company has completed a turn-around following the founder’s
early regulatory problems and the “new” management
team is absolutely committed to attaining great success with
SurgiLight’s patented technology.
Current management is operating with integrity, dedication,
professionalism, and full disclosure and we are very impressed
with their credentials and focused commitment. The Company
has been profitable for nine months of fiscal 2002, and with
the stock trading at approximately 30 cents and a market “cap”
of less than $9 million, SRGL could obviously trade at significantly
higher levels based on the eventual approval and acceptance
of this technology throughout the world.
? Company has 16 patents granted and 23 patents pending and
is currently receiving positive data on safety and efficacy
in human clinical trials for its unique, proprietary OptiVision™
technology.
? Global demand, after successful clinical trials and regulatory
approvals, for SurgiLight’s patented technology should
increase revenues and earnings dramatically.
? Multiple sources of revenue and royalty payments insure
continual growing revenues.
? Presbyopia affects visual acuity of countless millions of
individuals worldwide who are 40 or older. More than 90 million
Americans over the age of 40 suffer from presbyopia. Company
has huge market potential!
? Company has impressive and committed management team and
Board of Directors focused on major global success.
? $10 Million credit line has been issued by a lending source
and a commitment letter has been issued.
? SRGL is profitable for fiscal nine months of 2002.
? Lasers for vision correction have been the most important
and largest market for all medical applications utilizing
lasers.
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