As filed with the Securities and Exchange Commission on February 9, 2004
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VisiJet, Inc.
(Name of small business issuer in its charter)
Delaware 3841 33-0838660
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of corporation or organization) Classification Code Number) Identification
Number)
192 Technology Drive, Suite Q
Irvine, California 92618
(949) 450-1660
(Address and telephone number of registrant's principal executive offices)
Laurence M. Schreiber
192 Technology Drive, Suite Q
Irvine, California 92618
Ph. (949) 450-1660
Fax:(949) 453-9652
(Name, address and telephone number of agent for service)
Copy of all communications to:
Robert J. Zepfel
Haddan & Zepfel LLP
500 Newport Center Drive, Suite 580
Newport Beach, CA 92660
(949) 706-6000
Fax: (949) 706-6060
Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box: [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Amount to Be Proposed Maximum Proposed Maximum Amount of
Class of Registered Offering Price Aggregate Registration
Securities to Per Share (1) Offering Price Fee
Be Registered (1)
--------------------------------------------------------------------------------
Common Stock 19,110,198 $ 1.07 $20,447,911 $2,590.75
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended
(the "Act"), based on the closing price for the Registrant's common stock
as reported on the Nasdaq OTC Bulletin Board on February 4, 2004.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities, and it is not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated February , 2004
PROSPECTUS
19,110,198 SHARES
VISIJET, INC.
COMMON STOCK
This prospectus relates to the offer and sale of shares of common stock of
VisiJet, Inc. by certain selling stockholders.
Up to 3,150,000 of the shares are offered by SBI Brightline II, LLC ("SBI")
and Trilogy Investment I LLC ("Trilogy"). Of these shares, 2,250,000 are to be
issued within thirty days of the effective date of the Registration Statement of
which this Prospectus is a part, and the remaining 900,000 shares are issuable
upon exercise of certain warrants. We will receive consideration from SBI and
Trilogy in connection with the sale of shares to SBI and Trilogy, and upon the
exercise of warrants by SBI and Trilogy, but we will not receive any of the
proceeds from the resale of shares by SBI or Trilogy.
This prospectus also covers the sale of up to 15,960,198 shares of Common
Stock now owned by other stockholders, of which 7,583,927 shares are issuable
upon exercise of outstanding warrants.
The selling stockholders may sell the shares at fixed prices, prevailing
market prices at the time of sale, varying prices determined at the time of sale
or at negotiated prices.
SBI and Trilogy are "underwriters" within the meaning of the Securities Act
of 1933 in connection with their sales of our common stock.
Our common stock trades on the over-the-counter bulletin board under the
symbol "VJET.OB." The last reported sales price for our common stock on February
4, 2004 was $1.07 per share.
Investment in the common stock offered by this prospectus involves a high
degree of risk. You may lose your entire investment. Consider carefully the
"risk factors" beginning on page 4 of this prospectus, before investing.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANYONE TO TELL YOU
OTHERWISE.
The date of this prospectus is ___________ 2004.
The information in this prospectus is not complete and may be changed
without notice. The selling stockholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities, and the
selling stockholders are not soliciting offers to buy these securities, in any
state where the offer or sale of these securities is not permitted.
You should rely only on the information contained in this prospectus. We
have not, and the selling stockholders have not, authorized anyone to provide
you with different information. If anyone provides you with different
information, you should not rely on it. The selling stockholders are not making
an offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information contained in this
prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
Table of Contents
Page
----
Prospectus Summary 3
Summary Historical Financial Information 4
Risk Factors 4
Use of Proceeds 10
Nature of Trading Market 10
Dividend Policy 10
Capitalization 10
SBI Stock Purchase Agreement 11
Trilogy Stock Purchase Agreement 11
Plan of Operation 13
Business 14
Legal Proceedings 19
Management 20
Executive Compensation 22
Security Ownership of Certain Beneficial Owners and Management 23
Certain Relationships and Related Transactions 24
Description of Securities 25
Shares Eligible for Resale 25
Selling Stockholders 26
Plan of Distribution 30
Legal Matters 32
Experts 32
Where You Can Find Additional Information 32
Financial Statements 33
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PROSPECTUS SUMMARY
This summary is not complete and does not contain all of the information
that you should consider before investing in our common stock. You should read
the entire prospectus carefully, including the more detailed information
regarding our company, the risks of purchasing our common stock discussed under
"risk factors," and our financial statements and the accompanying notes.
VISIJET, INC.
VisiJet, Inc. ("VisiJet" or "the Company") is engaged in the development
and marketing of ophthalmic surgery products, principally based on applications
of waterjet technology, designed to result in faster, safer and more efficacious
surgery in the two largest surgical markets in the world, laser eye surgery and
cataract surgery.
STOCK PURCHASE AGREEMENTS WITH SELLING STOCKHOLDERS
On January 9, 2004, we entered into two stock purchase agreements. Under
the agreement with SBI Brightline II, LLC, SBI will purchase 1,125,000 shares of
our common stock for an aggregate purchase price of $2.25 million, and will
receive warrants to purchase up to 900,000 shares at an average exercise price
of $2.00 per share. Under the agreement with Trilogy Investment I LLC, Trilogy
will purchase 1,125,000 shares of our common stock for an aggregate purchase
price of $2.25 million. Both purchases are to take place in three stages, all
within 30 days after the effective date of a Registration Statement filed by us
with the Securities and Exchange Commission.
This prospectus relates to the resale, by SBI and Trilogy, of the shares of
common stock to be purchased by them from us. It also relates to the resale of
our shares by certain other stockholders who acquired shares in private
offerings.
THE OFFERING
Shares Offered by SBI Up to 1,125,000 shares that will be acquired
by SBI pursuant to the stock purchase
agreement between us and SBI, and up to
900,000 shares of Common Stock that may be
acquired by SBI upon the exercise of
warrants
Shares Offered by Trilogy Up to 1,125,000 shares that will be acquired
by Trilogy pursuant to the stock purchase
agreement between us and Trilogy
Shares Offered by Other
Stockholders Up to 8,376,271 shares held by other
stockholders, and up to 7,583,927 shares
that may be acquired by other stockholders
upon the exercise of outstanding warrants
Use of Proceeds We will not receive any proceeds from the
sale by SBI or by Trilogy of shares in this
offering. We will receive proceeds from the
sale of shares to SBI and Trilogy pursuant
to the stock purchase agreements with each
of them. We may also receive proceeds from
the exercise of warrants to be issued to
SBI, if and to the extent they are
exercised. We may also receive proceeds from
the exercise of warrants held by the other
selling stockholders, if and to the extent
they are exercised.
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We expect to use such proceeds for working
capital and for other general corporate
purposes, including research and product
development and sales and marketing. We will
receive no proceeds from sales of shares by
the other stockholders.
Risk Factors An investment in our common stock involves a
high degree of risk and could result in a
loss of your entire investment.
OTC Symbol VJET.OB
OFFICES
Our offices are located at 192 Technology, Suite Q, Irvine, California
92618. Our telephone number is (949)450-1660 and our website is:
www.visijet.com. The information on our website is not part of this prospectus.
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following table presents summarized financial information as of and for
the nine months ended September 30, 2003 and as of and for the fiscal years
ended December 31, 2002, and 2001. The information is extracted from the
consolidated financial statements presented elsewhere in this prospectus and in
previous filings and should be read in conjunction therewith.
For the Fiscal Year Ended
For the Nine December 31,
Months Ended -----------
September 30, 2003 2002 2001
------------------ ---- ----
(Unaudited)
Operating Data:
Net (loss) per share $ (.15) $ (.16) $ (.26)
Weighted average
shares outstanding 18,707,993 7,811,809 5,784,697
As of As of December 31,
September 30, 2003 2002 2001
------------------ ---- -----
(Unaudited)
Balance Sheet Data:
Current assets $ 224,571 $ 960 $ 4,340
Total assets 323,456 48,403 108,881
Current liabilities 1,772,120 2,687,967 1,224,074
Total liabilities 1,897,376 2,792,134 1,632,423
Stockholders' equity
(deficiency) (1,573,920) (2,743,731) (1,523,542)
RISK FACTORS
Please consider the following risk factors together with the other
information presented in this prospectus, including the financial statements and
the notes thereto, before investing in our common stock. The trading price of
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our common stock could decline due to any of the following risks, and you might
lose all or part of your investment.
WE ARE A NEW BUSINESS WITH A LIMITED OPERATING HISTORY AND NO REVENUES TO DATE
We are a development-stage company with limited prior business operations
and no revenues. We are presently engaged in the development of certain
ophthalmic surgical products. Because of our limited operating history, you may
not have adequate information on which you can base an evaluation of our
business and prospects. To date, our efforts have been allocated primarily to
the following:
* organizational activities;
* developing a business plan;
* obtaining interim funding;
* conducting research and working toward the development of our
products; and
* seeking regulatory approvals for our products
In order to establish ourselves in the ophthalmic surgery device market, we
are dependent upon continued funding and the successful development and
marketing of our products. You should be aware of the increased risks,
uncertainties, difficulties and expenses we face as a research and development
company and that an investment in our shares may be worthless if our business
fails.
WE HAVE GENERATED NO REVENUES AND IF WE ARE UNABLE TO GENERATE SUFFICIENT
REVENUES IN THE FUTURE, WE MAY NOT BE ABLE TO CONTINUE OUR BUSINESS.
We are still in the development stage, and have not yet generated revenues.
As an investor, you should be aware of the difficulties, delays and expenses
normally encountered by an enterprise in its development stage, many of which
are beyond our control, including unanticipated research and developmental
expenses, employment costs, and administrative expenses. We cannot assure our
stockholders that our proposed business plans, as described in this prospectus,
will materialize or prove successful, or that we will ever be able to finalize
development of our products or operate profitably. If we cannot operate
profitably, you could lose your entire investment.
WE ARE DEPENDENT ON RAISING ADDITIONAL CAPITAL. IF WE ARE UNABLE TO RAISE
ADDITIONAL CAPITAL, OUR BUSINESS MAY FAIL OR OUR OPERATING RESULTS AND OUR STOCK
PRICE MAY BE MATERIALLY ADVERSELY AFFECTED.
Because we are a development stage company and have no revenues, we need to
secure adequate funding. If we are unable to obtain adequate funding, we may not
be able to successfully develop and market our products and our business will
most likely fail. The funds that we raise by selling stock to SBI and Trilogy
under the stock purchase agreements may not be sufficient to carry out all of
the plans described in this prospectus or to fund our operating losses until we
are able to generate enough revenues to sustain our business. We do not have
firm commitments for additional financing. To secure additional financing, we
may have to borrow money or sell more stock, which may reduce the market value
of our stock. We may be unable to secure additional financing on favorable terms
or at all.
Selling additional stock, either privately or publicly, could dilute the
equity interests of our stockholders. If we borrow more money, we will have to
pay interest and may also have to agree to restrictions that limit our operating
flexibility. If we are unable to obtain adequate financing, we may have to
curtail business operations, which would have a material negative effect on
operating results and most likely result in a lower stock price.
WE HAVE A HISTORY OF LOSSES AND A LARGE ACCUMULATED DEFICIT AND WE EXPECT FUTURE
LOSSES THAT MAY CAUSE OUR STOCK PRICE TO DECLINE.
For the fiscal years ended December 31, 2002 and 2001, we incurred net
losses of $1,226,676 and $1,475,173, respectively, and for the nine months ended
September 30, 2003 we incurred a net loss of $2,886,090. We expect to continue
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to incur losses as we spend additional capital to develop and market our
technologies and establish our infrastructure and organization to support
anticipated operations. We cannot be certain whether we will ever earn a
significant amount of revenues or profit, or, if we do, that we will be able to
continue earning such revenues or profit. Any of these factors could cause our
stock price to decline and result in you losing all or a portion of your
investment.
OUR INABILITY TO RETAIN AND ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.
We believe that our future success will depend on the abilities and
continued service of certain of our senior management and executive officers,
particularly our president and those persons involved in the research and
development of our products. If we are unable to retain the services of these
persons, or if we are unable to attract additional qualified employees,
researchers and consultants, we may be unable to successfully finalize and
eventually market our ophthalmic surgical devices and other products being
developed, which will have a material adverse effect on our business.
OUR RESEARCH AND DEVELOPMENT EFFORTS MAY NOT RESULT IN COMMERCIALLY VIABLE
PRODUCTS WHICH COULD RESULT IN A DECLINE OF OUR STOCK PRICE AND A LOSS OF YOUR
INVESTMENT.
Our technologies are in the development stage. Further research and
development efforts will be required to develop these technologies to the point
where they can be incorporated into commercially viable or salable products. We
have set forth in this prospectus our proposed research and development program
as it is currently conceived. We cannot assure you, however, that this program
will be accomplished in the order or in the time frame set forth. We reserve the
right to modify the research and development program. We may not succeed in
developing commercially viable products from our technologies. Also, some of our
research and development efforts are aimed at technology that facilitates LASIK
surgery; if LASIK were to be replaced by another technology or procedure,
certain of our products may become obsolete. If we are not successful in
developing commercially viable products or if such products become obsolete, our
ability to generate revenues from our technologies will be severely limited.
This would result in the loss of all or part of your investment.
WE MAY NOT BE ABLE TO DEVELOP A MARKET FOR OUR TECHNOLOGY, WHICH WOULD MOST
LIKELY CAUSE OUR STOCK PRICE TO DECLINE.
The demand and price for our technology and related products will be based
upon the existence of markets for the technology and products and the markets
for products of others, which may utilize our technology. The extent to which we
may gain a share of our intended markets will depend, in part, upon the cost
effectiveness and performance of our technology and products when compared to
alternative technologies, which may be conventional or heretofore unknown. If
the technology or products of other companies provide more cost-effective
alternatives or otherwise outperform our technology or products, the demand for
our technology or products maybe adversely affected. Our success will be
dependent upon market acceptance of our technology and related products. Failure
of our technology to achieve and maintain meaningful levels of market acceptance
would materially and adversely affect our business, financial condition, results
of operations and market penetration. This would likely cause our stock price to
decline.
IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY IN THE COMPETITIVE OPHTHALMIC SURGICAL
DEVICE INDUSTRY, OUR FUTURE GROWTH AND OPERATING RESULTS WILL SUFFER.
Our future success depends on our ability to compete effectively with other
manufacturers of ophthalmic surgical devices, including major manufacturers of
microkeratomes. We are a research and development company engaged exclusively in
developing our initial products. We have not yet brought our first product to
market, and have no revenue from operations. As a result, we may have difficulty
competing with larger, established surgical device companies. Most of our
potential competitors are established, well-known companies that have:
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* substantially greater financial, technical and marketing
resources;
* larger customer bases;
* better name recognition;
* related product offerings; and
* larger marketing areas.
Companies such as VISX, Alcon, Bausch & Lomb, LaserSight, and Nidek are
major international providers of ophthalmic surgical devices relating to LASIK
and cataract surgery. These companies represent a wide array of devices and
products, technologies and approaches. Most of these companies have more
resources than we do and, therefore, a greater opportunity to develop comparable
products and bring those products to market more efficiently than we. If we do
not compete effectively with current and future competitors, our future growth
and operating results will be adversely affected.
WE MAY NOT BE ABLE TO OBTAIN NECESSARY GOVERNMENT APPROVAL TO MARKET OUR
TECHNOLOGY, WHICH WOULD MOST LIKELY CAUSE OUR STOCK PRICE TO DECLINE AND OUR
BUSINESS TO FAIL.
We must obtain the approval of the U.S. Food and Drug Administration in
order to market our products in the United States and certain other countries.
If these approvals are not obtained, or are significantly delayed, our ability
to generate revenues from sales in the United States and these other countries
may be adversely affected and our development and marketing efforts inhibited.
This would most likely cause our stock price to decline and result in the loss
of all or part of your investment.
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS. OUR INABILITY TO PROTECT OUR RIGHTS COULD IMPAIR
OUR BUSINESS AND CAUSE US TO INCUR SUBSTANTIAL EXPENSE TO ENFORCE OUR RIGHTS.
Proprietary rights are critically important to us. Although we have
exclusive licenses to 14 U.S. patents and 3 foreign patents for our waterjet
technology and we intend to aggressively pursue additional patent protection for
our technologies as we continue to develop them, we cannot assure you that any
additional patents will be issued. Although we will seek to defend our licenses
and to protect our other proprietary rights, our actions may be inadequate to
protect our patents and other proprietary rights from infringement by others, or
to prevent others from claiming infringement of their patents and other
proprietary rights.
Policing unauthorized use of our technology is difficult and some foreign
laws do not provide the same level of protection as U.S. laws. Litigation may be
necessary in the future to enforce our intellectual property rights, to protect
our trade secrets or patents that we may obtain, or to determine the validity
and scope of the proprietary rights of others. Such litigation could result in
substantial costs and diversion of resources and have a material adverse effect
on our future operating results.
WE ARE INVOLVED IN LITIGATION WITH SURGIJET, INC., THE OWNER OF THE PATENTS WE
LICENSE, AND WITH CERTAIN PRINCIPALS OF SURGIJET.
We license the technology underlying our principal products from
SurgiJet, Inc. ("SurgiJet"), our former parent company. We are engaged in
litigation with SurgiJet arising out of amounts alleged to be owed to SurgiJet
and its affiliates. These amounts include a $400,000 Promissory Note issued by
us to SurgiJet, as well as certain expenses incurred by our former officers and
directors, some of whom continue in management positions with SurgiJet. SurgiJet
has filed a cross-complaint against us, alleging breach of the merger agreement
between VisiJet and its predecessor, as well as breach of the SurgiJet note and
other payment obligations. The cross-complainants in the action seek damages and
rescission of the merger agreement.
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The litigation could have several serious repercussions on us. First, if
SurgiJet and its affiliates were able to obtain judgments for the amounts
allegedly owed, we might be unable to satisfy the judgments out of our liquid
assets, which could force us to sell assets to satisfy the obligations. Second,
if the plaintiffs were able to succeed in rescinding the merger, it's unclear
how this would affect our company and its stockholders. Third, since SurgiJet is
the owner of the patents covering the technology used in our products, it is
likely that the litigation will adversely affect our overall relationship with
SurgiJet, which could hinder our ability to develop additional products based on
the technology.
THE "PENNY STOCK RULE" COULD MAKE IT DIFFICULT FOR BROKERS AND DEALERS TO TRADE
IN OUR STOCK, WHICH COULD CAUSE THE MARKET FOR OUR STOCK TO BE LESS LIQUID,
WHICH COULD CAUSE THE PRICE OF OUR STOCK TO DECLINE.
Trading of our common stock on the OTC Bulletin Board may be subject to
certain provisions of the Securities Exchange Act of 1934, commonly referred to
as the "penny stock" rule. A penny stock is generally defined to be any equity
security that has a market price less than $5.00 per share, subject to certain
exceptions. If our stock is deemed to be a penny stock, trading in our stock
will be subject to additional sales practice requirements on broker-dealers.
These may require a broker dealer to:
* make a special suitability determination for purchasers of our
shares;
* receive the purchaser's written consent to the transaction prior
to the purchase; and
* deliver to a prospective purchaser of our stock, prior to the first
transaction, a risk disclosure document relating to the penny stock
market.
Consequently, penny stock rules may restrict the ability of broker- dealers
to trade and/or maintain a market in our common stock. Also, prospective
investors may not want to get involved with the additional administrative
requirements, which may have a material adverse effect on the trading of our
shares.
OUR STOCK PURCHASE AGREEMENTS WITH SBI AND TRILOGY, THE ISSUANCE OF SHARES TO
SBI AND TRILOGY AND THE REGISTRATION OF PREVIOUSLY RESTRICTED SHARES HELD BY
OTHER STOCKHOLDERS MAY CAUSE SIGNIFICANT DILUTION TO OUR STOCKHOLDERS AND MAY
HAVE AN ADVERSE IMPACT ON THE MARKET PRICE OF OUR COMMON STOCK.
The resale by SBI and Trilogy of the common stock that they purchase from
us, or by the other stockholders of their previously restricted shares,
including any shares issuable upon exercise of the warrants, will increase the
number of our publicly traded shares, which could depress the market price of
our common stock. Moreover, as all the shares we sell to SBI and Trilogy
(including the warrant shares) will be available for immediate resale, the mere
prospect of our sales under the stock purchase agreements could depress the
market price for our common stock. The issuance of shares to SBI and Trilogy
will dilute the percentage of our shares held by existing stockholders and could
have an adverse effect on the market price of our common stock.
The perceived risk of dilution may cause our stockholders to sell their
shares, which would contribute to a decline in the price of our common stock.
Moreover, the perceived risk of dilution and the resulting downward pressure on
our stock price could encourage investors to engage in short sales of our common
stock. By increasing the number of shares offered for sale, material amounts of
short selling could further contribute to progressive price declines in our
common stock.
OUR COMMON STOCK HAS EXPERIENCED IN THE PAST, AND IS EXPECTED TO EXPERIENCE IN
THE FUTURE, SIGNIFICANT PRICE AND VOLUME VOLATILITY, WHICH SUBSTANTIALLY
INCREASES THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE
PRICE THAT YOU PAY FOR THE SHARES.
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Because of the limited trading market for our common stock, and because of
the possible price volatility, you may not be able to sell your shares of common
stock when you desire to do so. During 2003, and through the date of this
prospectus, our common stock was sold and purchased at prices that ranged from a
high of $2.41 to a low of $0.94 per share. The inability to sell your shares in
a rapidly declining market may substantially increase your risk of loss because
of such illiquidity and because the price for our common stock may suffer
greater declines because of its price volatility.
The price of our stock that will prevail in the market after this offering
may be higher or lower than the price you pay. Certain factors, some of which
are beyond our control, that may cause our share price to fluctuate
significantly include, but are not limited to, the following:
* variations in our quarterly operating results;
* our ability to complete the research and development of our
technologies;
* the development of a market for our products;
* changes in market valuations of similar companies;
* announcement by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
* loss of a major customer or failure to complete significant
transactions;
* additions or departures of key personnel; and
* fluctuations in stock market price and volume.
Additionally, in recent years the stock market in general, and the
Over-the-Counter Bulletin Board and technology stocks in particular, have
experienced extreme price and volume fluctuations. In some cases, these
fluctuations are unrelated or disproportionate to the operating performance of
the underlying company. These market and industry factors may materially and
adversely affect our stock price, regardless of our operating performance.
In the past, class action litigation often has been brought against
companies following periods of volatility in the market price of those
companies' common stock. If we become involved in this type of litigation in the
future, it could result in substantial costs and diversion of management
attention and resources, which could have a further negative effect on your
investment in our stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. These include statements about our expectations, plans,
objectives, assumptions or future events. In some cases, you can identify
forward-looking statements by terminology such as "anticipate," "estimate,"
"plans," "potential," "projects," "continuing," "ongoing," "expects,"
"management believes," "we believe," "we intend" and similar expressions. These
statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed for the reasons
described in this prospectus. You should not place undue reliance on these
forward-looking statements.
You should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors such as:
* continued development of our technology;
* dependence on key personnel;
* competitive factors;
* the operation of our business; and
* general economic conditions.
The forward-looking statements speak only as of the date on which they are
made, and, except to the extent required by federal securities laws, we
undertake no obligation to update any forward-looking statement to reflect
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events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events. In addition, we cannot assess
the impact of each factor on our f actual results to differ materially from
those contained in any forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares in this offering
by the selling stockholders, including SBI and Trilogy. We will receive proceeds
from the sale of shares to SBI and Trilogy pursuant to the stock purchase
agreements. We will also receive proceeds from the exercise of the warrants to
be issued to SBI, if and to the extent they are exercised. We may also receive
proceeds from the exercise of warrants held by other selling stockholders. We
expect to use such proceeds for working capital, for repayment of outstanding
accounts payable and for other general corporate purposes, including research,
product development and sales and marketing.
NATURE OF TRADING MARKET
Our stock is quoted on the OTC Bulletin Board under the symbol "VJET.OB."
Until February 2003 the public entity was an inactive, "shell" company, and so
prices before that date may not be indicative of value. The following table sets
forth, for the fiscal quarters indicated, the high and low bid prices. These
quotations reflect inter-dealer prices, without mark- up, mark-down or
commission, and may not represent actual transactions.
Quarter Ended High Low
------------- ---- ---
2002:
First Quarter $ .85 $ .85
Second Quarter $ 1.78 $ .86
Third Quarter $ 1.45 $ .77
Fourth Quarter $ 1.45 $ 1.12
2003:
First Quarter $ 2.41 $ 1.22
Second Quarter $ 1.71 $ .94
Third Quarter $ 1.60 $ 1.05
Fourth Quarter $ 1.65 $ 1.10
Our shares are held by approximately 174 stockholders of record.
DIVIDEND POLICY
We have never paid cash dividends and have no plans to do so in the
foreseeable future. Our future dividend policy will be determined by our Board
of Directors and will depend upon a number of factors, including our financial
condition and performance, our cash needs and expansion plans, income tax
consequences, and the restrictions that applicable laws and our credit
arrangements then impose.
CAPITALIZATION
The following table sets forth our capitalization (unaudited) as of
September 30, 2003. You should read this information in conjunction with our
financial statements and the accompanying notes, and the other financial
information appearing elsewhere in this prospectus.
10
Long-term debt $ 125,256
=============
Stockholders' deficit:
Common stock, $.001 par value
Authorized, 50,000,000 shares
Issued and outstanding,
21,087,670 shares $ 21,088
Additional paid-in capital 7,108,148
Accumulated deficit (8,703,156)
-------------
Total Stockholders' Deficit ($ 1,573,920)
=============
STOCK PURCHASE AGREEMENTS
On January 9, 2004, we entered into two stock purchase agreements. Under
the agreement with SBI Brightline II, LLC, SBI will purchase 1,125,000 shares of
our common stock for an aggregate purchase price of $2.25 million, and will
receive warrants to purchase up to 900,000 shares at an average exercise price
of $2.00 per share. Under the agreement with Trilogy Investment I LLC, Trilogy
will purchase 1,125,000 shares of our common stock for an aggregate purchase
price of $2.25 million. Both purchases are to take place within thirty days
after the effective date of the Registration Statement filed by us with the
Securities and Exchange Commission.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We were formerly known as Ponte Nossa Acquisition Corp. ("PNAC"), a
Delaware corporation incorporated in 1997. Ponte Nossa was originally organized
for the purpose of acquiring an interest in a suitable operating business. In
February 2003, Ponte Nossa merged with VisiJet, Inc. and changed its name to
VisiJet, Inc. As a result of this transaction, we succeeded to all the assets
and operations of VisiJet, and we are continuing the business of VisiJet. Since
this transaction was in substance a recapitalization, similar to a reverse
acquisition, of VisiJet and not a business combination, a valuation was not
performed and no goodwill was recorded.
NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2002
We had no sales revenues to report for the nine months ended September 30,
2003 and 2002. The net loss year to date for 2003 was $2,886,090, compared to
$811,563 during the same period for 2002. The significantly larger loss in 2003
resulted principally from increased general, administrative and salary expenses
associated with operating the business immediately after the merger, higher
legal and consulting expenses incurred in completing the merger, and increased
research and development expenses as we move to commercialize our products
following the merger.
General and administrative expenses increased to $2,054,912 for the nine
months of 2003, compared to $452,029 during the same period for 2002. The
increase is due principally to administrative and salary expenses, legal and
accounting fees, and costs associated with the merger.
Research and development expenses totaled $876,878 for the first nine
months of 2003, compared to $296,896 for the same period last year. The increase
is primarily due to additional research and development activity that had been
deferred for lack of funding, but has resumed with the funding available
immediately after the merger and associated financing.
We reported a gain on debt restructuring of $90,303, as a result of the
modification of terms for the interest on a note payable to SurgiJet, our former
parent company. The accrued interest on the old note at February 11, 2003 was
$139,955. As a result of the replacement note, VisiJet recorded a $90,303 gain
on the difference between total interest expense of $49,652 on the new note and
11
total accrued interest of $139,955 from the old note. We will continue to
amortize the remaining $49,652 of the accrued expense as the note is paid down
according to the new terms.
FISCAL YEAR 2002 COMPARED TO FISCAL YEAR 2001
We had no sales revenues to report for 2002 or 2001, as our operations
consisted primarily of financing activities and research, development and
testing activities related to our ophthalmic surgery products. Our net loss in
2002 decreased to $1,226,676, from $1,475,173 in 2001. The decreased net loss in
2002 occurred through a combination of lower research and development expenses
and increased general and administrative expenses.
Research and development expenses decreased to $294,736 during 2002,
compared to $957,665 during 2001. This decrease is primarily due to the deferral
of research and development activities that occurred in 2002 as a result of
limited financial resources, and increased focus by management on financing and
corporate restructuring activities.
General and administrative expenses increased to $751,717 in 2002, from
$458,773 in 2001. This increase is primarily due to increased legal, accounting,
administrative and consulting fees incurred in connection with continued
financing and corporate restructuring efforts.
Other expense in 2002 totaled $179,423, and included $131,319 of interest
expense and $48,104 related to a loss on disposal of asset. In 2001 other
expense, which consisted solely of interest totaled $57,935. The increase in
interest expense during 2002 occurred as a result of additional note payable
agreements entered into during the 2002 period.
LIQUIDITY AND CAPITAL RESOURCES
The principal source of liquidity has been the sale of securities and the
issuance of notes payable. As of September 30, 2003, VisiJet had cash and cash
equivalents of $119,904.
During 2002 VisiJet entered into various note payable agreements with PNAC,
in the aggregate principal amount of $643,358, to provide funding to VisiJet in
anticipation of the pending merger agreement between the two companies. Upon
consummation of the merger in February 2003, the notes payable were cancelled.
During 2002 VisiJet entered into a note payable agreement with DentaJet,
Inc., a corporation related through common stockholders, under which the company
received a net amount of $133,518. According to the terms of the note, principal
plus interest at an annual rate of 10% was due and payable upon completion of
the merger between VisiJet and PNAC. Currently, the balances due in connection
with this note are being contested by VisiJet and are a component of the pending
litigation between the parties.
During 2002 the Company received advances from a stockholder in the
aggregate amount of $19,000. Based on an agreement with the Company, interest on
these advances is accruing at an annual rate of 10%. Currently, the balances due
in connection with this note are being contested by the Company and are a
component of the pending litigation between the parties.
During 2003 we raised an aggregate of $4,275,000, less offering expenses of
$213,700, resulting in net private placements of $4,061,300.
In January 2004, VisiJet entered into two stock purchase agreements, under
which we expect to receive gross proceeds of $4,500,000. If warrants to be
issued under those agreements are exercised, we could receive additional
proceeds of up to $1,800,000. These funds will be used for working capital, to
repay outstanding accounts payable and for other general corporate purposes,
including research, product development and sales and marketing.
12
PLAN OF OPERATIONS
VisiJet is engaged in the research and development of ophthalmic surgery
products, principally based on applications of waterjet technology. We plan to
continue in the development and eventual marketing of ophthalmic surgery
products based on applications of the waterjet technology, designed to result in
faster, safer and more efficacious surgery in the two of the largest surgical
markets in the world, laser eye surgery and cataract surgery.
During the next twelve months, we plan to conduct research and development
activities related to the following products:
1). HydroKeratome
- a corneal cutting device that produces a bladeless flapcut
for the LASIK procedure resulting in a safer more accurate
cut.
2). Pulsatome
- an emulsification device for the quick and safe removal of a
full range of cataract hardnesses, with a lower cost per
procedure and requiring minimal technical expertise.
3). HydroRefractor
-a potential replacement for the excimer laser, to produce
lamellar flaps and "power cuts" for vision correction using
waterjet technology.
4). New Products/Product Extensions
-we plan to continue research and development efforts on
other medical applications of our waterjet technology, and
to identify and license/acquire other technology and/or
products that offer complements and extensions to our
ophthalmic surgery product line.
In addition, during this period, we plan to increase sales and
marketing activities in connection with the anticipated product launch of
HydroKeratome.
PROPERTY, PLANT AND EQUIPMENT
The planned research and development activities and the expansion of
marketing and administrative support will require additional expenditures for
property, plant and equipment within during the next twelve months.
The following is a schedule of anticipated purchases of property, plant and
significant equipment, along with estimated expenditures:
1). Lab, inspection, test equipment $ 176,000
2). Furniture & fixtures 389,000
3). Facilities Equipment 97,500
4). Computers 250,000
5). Software 263,000
------------
Total anticipated capital expenditures: $ 1,175,000
EMPLOYEE ADDITIONS
We anticipate hiring approximately 30 additional employees during the next
twelve months to support anticipated company growth and increased emphasis on
sales, marketing, distribution and customer training/support. All such planned
additions are contingent on obtaining sufficient funding.
13
BUSINESS
COMPANY BACKGROUND AND SUMMARY
VisiJet was incorporated on February 2, 1996, to develop and distribute
medical products.
In December 2002 VisiJet entered into a merger agreement with Ponte Nossa
Acquisition Corp., a Delaware corporation ("the Merger") that had been
incorporated as a blank check company in 1997. The agreement called for the
merger of the two companies into a single company through the merger of an
acquisition subsidiary, VisiJet Acquisition Corporation, into VisiJet. The
merger was consummated on February 11, 2003, and immediately thereafter, VisiJet
was merged into Ponte Nossa Acquisition Corp., and the surviving company's name
was changed to "VisiJet, Inc."
We are engaged in the development and marketing of ophthalmic surgery
products based initially upon applications of waterjet technology, designed to
result in faster, safer and more efficacious surgery in the two largest surgical
markets in the world, laser eye surgery and cataract surgery.
We have focused our efforts toward bringing to market two products, with
different applications and markets. First, the HydroKeratome(R) is a device that
utilizes waterjet technology to cut the corneal flap immediately prior to
applying an excimer laser in laser eye surgery to correct myopia, hyperopia and
astigmatism. Second, the Pulsatome(R) utilizes waterjet technology to remove the
cataractous human crystalline lens in the eye during cataract surgery. We
believe our proprietary waterjet surgical devices will result in a highly
effective method for surgical procedures, with a potentially significant impact
on the ophthalmic market. Microsurgery and minimally invasive surgery were
pioneered in ophthalmology, and cataracts are now removed in minutes utilizing
microscopes, with minimally invasive products and techniques that are constantly
being refined and upgraded. More recently, the refractive surgery market has
experienced a growth phase with the advent of vision correction through the
LASIK procedure, which involves cutting a corneal flap with a microkeratome
prior to ablation of stromal tissue with an excimer laser.
WATERJET TECHNOLOGY
Waterjet technology is an established method for precision cutting of
materials in a variety of industrial applications. It uses the principle of
pressurizing water to extremely high levels, and allowing the water to escape in
a controlled manner through a very small opening, or orifice. Water jets use the
high pressure beam of water exiting the orifice to cut various materials,
including tile, wood, plastic, metal, and stone. In general, industrial
applications of waterjet technology are used in place of a laser or other device
when the "cut" needs to be quicker, cleaner, and with minimum distortion and
temperature increase.
Until recently, medical applications of waterjet technology have been
limited. VisiJet plans to implement a proven industrial technology in the
surgical environment, with added precision, control, miniaturization, and
safety.
VisiJet holds an exclusive license with respect to the ophthalmic
applications of a series of U.S. and foreign patents relating to the waterjet
technology. The technology uses a pneumatic-hydraulic pressure intensifier to
produce a collimated high pressure water beam that is approximately the diameter
of a human hair. This self-cleaning, eversharp "hydro-laser" can cut through
tissue at 12mm (.5 inch) per second. The hydraulics are controlled by an
embedded central processing unit with displays, gauges, controls, aspiration and
irrigation fluidics familiar to ophthalmic surgeons.
14
MARKETS
THE REFRACTIVE SURGERY MARKET
Our products assist in surgical procedures relating to the cornea. The
cornea is the clear window that provides most of the focusing power of the
vision system of the eye, as well as allowing light into the eye. The anterior
surface of the cornea is covered with a thin layer called the epithelium. The
epithelium is covered with a liquid tear film.
Physicians generally treat vision disorders by prescribing eyeglasses or
contact lenses or through ophthalmic surgery, all of which compensate for or
correct the vision error. The principal surgical techniques available to treat
vision disorders are radial keratotomy ("RK"), Photo Refractive Keratectomy
("PRK")/LASIK and Refractive Lamellar Keratoplasty ("RLK"). In RK, PRK/LASIK and
RLK, the object of the surgery is to change the shape of the anterior corneal
surface and to eliminate or reduce refractive error. An additional objective is
to minimize lens aberrations to improve visual acuity, which is not possible
with eyeglasses or contact lenses.
The refractive surgery market in its current form began in late 1995 when
the FDA approved the first excimer laser for PRK. Before 1995 refractive surgery
was conducted by various manual, non-laser techniques, the most popular of which
was RK. In RK, the surgeon uses a diamond knife to make radial incisions in the
cornea to flatten it. This technique, and others like it, is highly dependent on
the surgeon's skill, and often produces mixed results.
By contrast, in PRK utilizing the excimer laser, the computer-controlled
laser is programmed to remove the specified amount of corneal tissue with
precision, delivering a consistent outcome. In spite of its inherent accuracy
and predictability, PRK was not widely accepted by patients, because it uses the
laser to burn away the most sensitive top layers of the cornea. Patients
undergoing PRK often experienced considerable pain, and were left with a
persistent cloudiness of the cornea for days or weeks. PRK generally met the
clinical expectations of the surgeon, but failed to satisfy the patient's desire
for comfort and rapid recovery. For this and other reasons, PRK failed to attain
broad market acceptance.
In late 1996 many ophthalmic surgeons started utilizing a new procedure,
Laser In Situ Keratomileusis ("LASIK"), which addressed many of the negative
aspects of PRK from the patient's standpoint, while preserving the accuracy of
PRK. LASIK utilizes a microkeratome, which is a mechanically driven razor to
create a flap in the surface of the cornea. After creation of the flap, the
excimer laser is used on the exposed internal tissue, called the stroma,
underneath the flap. The excimer laser emits ultraviolet light in very short,
high-energy pulses and ablates part of the corneal surface according to a
prescribed spatial pattern, changing the curvature of the anterior corneal
surface. The laser removes a predetermined amount of tissue to achieve the
desired correction, and the hinged flap is reset as closely as possible to its
original position, where it adheres to the underlying stroma. The adherence
increases over a period of many months. The patient's vision is significantly
improved within minutes of surgery.
Because the laser energy is used on the less sensitive inner tissue of the
cornea, the patient experiences very little pain after surgery and there is
generally no clouding of the corneal surface. The patient is usually able to
return to normal function the next day with immediate vision improvement.
The LASIK procedure gained broad market acceptance very quickly. Currently,
over 90% of refractive laser procedures in the U.S. are LASIK procedures. The
success of LASIK in meeting both surgeon and patient needs has been the
principal factor in the dramatic growth in the refractive surgery market in
recent years. By the end of 2002 there were an estimated 1,210 excimer lasers in
service in the United States and at least 1,500 lasers outside of the U.S.
15
THE CATARACT SURGERY MARKET
The U.S. cataract surgery market is a relatively mature market. However,
the general aging of the population is a positive demographic trend, as
cataracts are a condition that generally afflicts older persons. Currently,
there are approximately 2.4 million surgical procedures for cataracts performed
each year, making it the largest volume procedure in all of surgery. The
worldwide cataract market is about 165% of the U.S. market and growing at over
twice the U.S. rate. This growth outside of the U.S. is due primarily to a later
start and slower adoption of modern surgical techniques developed in the U.S. In
addition, health insurance or governmental reimbursement for cataract surgery
has not been common outside the United States. In the Third World, cataracts are
the leading cause of blindness, a completely curable condition with current
technology. We believe that our products for cataract surgery may overcome some
of the barriers to expanded cataract surgery for this potential market.
THE COMPANY'S PRODUCTS
Although each of our waterjet products has a different application, they
share certain basic characteristics. Each of the waterjet products consists of a
modular console with an intensifier and a hand piece. The modular unit is
attached to a delivery tube, which is in turn attached to a hand piece. The hand
piece delivers the water jet to the tissue and its integral aspirator removes
any debris tissue and water through a disposable tube that returns to the
console.
HYDROKERATOME(R) CORNEAL CUTTING DEVICE. The HydroKeratome is a corneal
cutting device for use in the LASIK procedure. We believe the HydroKeratome will
eventually replace the automated lamellar keratotomy instrument, or
microkeratome, currently used in the LASIK refractive procedure. The
HydroKeratome is simple, easy to use and should reduce the risk of human and
instrument error associated with the MICROKERATOME. IN GENERAL, THE CUTS FROM A
HYDROKERATOME ARE SMOOTHER AND CLEANER THAN THOSE OF A CONVENTIONAL
MICROKERATOME, LEAVING NO DEBRIS.
The HydroKeratome works by using a high-pressure micro beam of water to
force a blunt dissection of tissue in the path of the water beam. Since it will
compete directly with products already on the market from several other
companies, VisiJet plans to position the HydroKeratome(R) in the market as a
replacement for the microkeratome. We anticipate that the HydroKeratome will be
priced comparably to existing products, with the disposable component to be
priced at a slight premium.
The HydroKeratome is designed to address many of the problems that are
common with mechanical "blade" microkeratomes, such as poor visualization,
inconsistent thickness of flaps, hazing, loose flaps, off center cuts, and
lashes caught in gears. The HydroKeratome uses an embedded CPU controlled
pneumatic-hydraulic pressure intensifier to make the corneal flap for the LASIK
procedure. The suction ring and applanation plate on the hand piece allow
holding the eye centered while the corneal flap is cut underneath the
applanation plate. The water jet traverses perpendicular to the visual axis,
driven by a precision miniature Swiss motor with gear box and encoder. A foot
switch controls the start of the transverse water jet motion, and the travel
distance pre-programmed by the surgeon stops the travel and shuts off the water
jet beam. Approximate travel time is one-half second.
PULSATOME(R) CATARACT EMULSIFIER. The Pulsatome(R) Cataract Emulsifier is
an emulsification device for quick and safe removal of the cataractous human
crystalline lens in the eye, a necessary procedure before installing a new
intraocular lens ("IOL"). The device creates a pulsating stream of saline
solution, and the impact from the pulsating fluid emulsifies the cataractous
human lens and breaks the lens into small pieces. The Pulsatome simultaneously
aspirates the emulsified tissue and removes it from the interior of the eye.
Once introduced to the marketplace, we believe the Pulsatome will be easier
to learn to use and will require less skill than that required by current
ultrasound phaco emulsification devices. The Pulsatome should be attractive not
16
only to established phaco surgeons but also to surgeons who have not mastered
ultrasound or simply cannot afford the device. With the Pulsatome, many more
surgeons, should be able to perform the state of the art, "no stitch, foldable
lens" procedure.
The Pulsatome and its disposable package will be priced in the low range of
current ultrasound devices, which will make it attractive in underdeveloped
markets, and also attractive in the U.S. and other nations where cost
containment is critical.
The Pulsatome requires minimal technical skill, as it functions like a
hydraulic eraser or paint brush. No sculpting or lens elevation or rotation is
necessary. The balanced irrigation/aspiration fluidics complement the embedded
CPU controlled micro pulses. The foot switch initiates the mode activity
selected by surgeon for the balanced and ergonomically shaped hand piece.
HYDROREFRACTOR(R) CORNEAL SHAPER. We are developing the HydroRefractor in
order to complete the entire LASIK procedure without the need for an excimer
laser. Once completed, this device will not only create the lamellar flap
required to access the cornea's stromal bed but will also create a "power cut"
(or series of cuts) which will remove tissue in minute quantities so as to
change the refractive power of the patient's eyes to the desired level. This
technology uses a high pressure water beam to precisely cut away corneal tissue
just as the excimer laser would ablate tissue to create the desired refraction.
Ultimately, this would mean that a one step procedure could be accomplished in
the doctor's office without the need for an excimer laser. The relatively low
cost of the HydroRefractor should permit each ophthalmologist the opportunity to
conduct the entire procedure in his office, without the need for expensive
equipment.
The HydroRefractor will be positioned as a single, in-office unit for
performing the LASIK procedure. We believe that it will eventually replace both
the microkeratome and the excimer laser.
COMPETITION
The medical technology industry for ophthalmologic surgery products is
highly competitive. Many other companies are engaged in refractive surgery
research and development activities, and many of these have substantially
greater financial, technical and human resources. As such, they may be better
equipped to develop, manufacture and market their technologies. In addition,
many of these companies have extensive experience in clinical testing and human
clinical studies. Certain of these companies may develop and introduce products
or processes competitive with or superior to our products and processes.
Furthermore, with respect to any other products we may, in the future, be
permitted to commercially sell, we will also be competing with respect to
manufacturing efficiency and marketing capabilities, areas in which we have no
experience.
We expect to encounter direct competition from other companies developing
water-jet type devices applicable to ophthalmic surgery.
COMPETITION IN THE MICROKERATOME MARKET. There are approximately ten
companies that offer mechanical microkeratomes to the market. However, with
about 60% of the installed base and 70% market share of sales, Chiron Vision,
now a division of Bausch & Lomb, is the clear market leader.
Currently there is only one competitor, Intralase, that offers "bladeless"
LASIK surgery. This laser product creates a lamellar flap for LASIK using tiny
laser "explosions" within the cornea to separate the tissue. It is highly
accurate, approaching that of the HydroKeratome, and also avoids many of the
serious problems associated with microkeratomes. However, we believe that the
Intralase product is slower, more expensive, and less effective than the
HydroKeratome.
COMPETITION IN THE CATARACT EMULSIFICATION MARKET. The dominant instrument
in modern cataract surgery is the ultrasonic phacoemulsifier. The phaco, as it
is commonly called, utilizes an ultrasonic generator, which vibrates the tip of
17
the phaco hand piece 40,000 times per second. When the tip is introduced into
the eye and placed in contact with the cataractous lens, the lens is gradually
reduced to smaller pieces until it can be aspirated out of the eye.
Coopervision developed and brought to market dominance the modern
phacoemulsifier during the period from 1975 to 1989. With its acquisition of
Coopervision in 1989, Alcon, a division of the Swiss food giant Nestle, became
the leader in the phaco market, with an estimated market share of 60% of the
phaco equipment and associated disposable packs. Bausch & Lomb is a distant
second, with an estimated 20% market share. There are another fifteen phaco
manufacturers who split up the remaining 20% of the global market, including
Advanced Medical Optics.
COMPETITION IN THE CORNEAL SHAPING MARKET. There are several competing
technologies in the area of reshaping the cornea to change refractive power. The
most prevalent products are the excimer lasers used in the LASIK procedure,
which has been very well accepted by the public. The major player in this area
is VISX, which has placed more lasers than any other company. Alcon, Bausch and
Lomb, Nidek follow VISX. In addition, there are competing companies using
intraocular technologies to change the refractive index of the eye. Staar
Surgical is developing the ICL for placement between the iris and lens capsule.
Other companies are developing intraocular lenses, which would require a clear
lensectomy followed by a lens implant. Other than the excimer laser, none of the
other technologies have reached significant market acceptance.
MANUFACTURING
VisiJet plans to outsource manufacturing of its products to an ISO 9001
approved local contract manufacturing facility. This contractor will purchase
and stock parts, assemble, test and burn-in units, and will stock finished goods
and ship as required from its bonded warehouse.
GOVERNMENT REGULATION
UNITED STATES. VisiJet's products are medical devices. As such, we are
subject to the relevant provisions and regulations of the Federal Food, Drug and
Cosmetic Act, under which the FDA regulates the manufacture, labeling,
distribution, and promotion of medical devices in the United States. The Act
provides that, unless exempted by regulation, medical devices may not be
commercially distributed in the United States unless they have been approved or
cleared by the FDA for marketing. There are two review procedures by which
medical devices can receive such approval or clearance. Some products may
qualify for clearance under a 510(k) notification. Under the 510(k) procedure,
the manufacturer submits to the FDA a pre-market notification that it intends to
begin marketing its product. The notification must demonstrate that the product
is substantially equivalent to another legally marketed product (i.e., it has
the same intended use, is as safe and effective, and does not raise different
questions of safety and effectiveness than does a legally marketed device).
A successful 510(k) notification results in the issuance of a letter from
the FDA in which the FDA acknowledges the substantial equivalence of the
reviewed device to a legally marketed device and clears the reviewed device for
marketing. VisiJet has received successful 510(k) notification with respect to
its initial filing for the HydroKeratome, and has filed a 510K submission with
the FDA for upgrades to the product. Before commencement of marketing the
HydroKeratome, we will obtain 510K approval from the FDA for the product
enhancements.
In addition to laws and regulations enforced by the FDA, our products may
also be subject to labeling laws and regulations enforced by the Federal Trade
Commission.
OTHER COUNTRIES. Sales of medical devices outside the United States are
subject to foreign regulatory requirements that vary widely from country to
country. The time required to obtain approvals required by foreign countries may
be longer or shorter than that required for FDA approval, and requirements for
18
licensing may differ from FDA requirements. Export sales of investigational
devices that have not received FDA marketing clearance generally are subject to
FDA export permit requirements.
VisiJet plans to distribute its products internationally. Distribution of
our products in countries other than the United States may be subject to
regulation in those countries. In some countries, the regulations governing such
distribution are less burdensome than in the United States, and we may pursue
marketing our products in such countries prior to receiving permission to market
from the FDA. We will endeavor to obtain the necessary government approvals in
those foreign countries where we decide to manufacture, market and sell our
products.
PATENTS AND TRADEMARKS
The technology utilized by VisiJet in its products is covered by patents
owned by SurgiJet, Inc., a developer of waterjet technology for a variety of
medical and dental applications. We have been granted an exclusive worldwide
license to these patents for ophthalmological applications for the life of the
patents. It intends to protect its development work by means of licensing
additional patents and trademarks as necessary and to protect its own inventions
with additional patent applications. VisiJet has licensed thirteen issued United
States patents, two United States patent applications pending, two issued
international patent and twelve foreign patent applications pending. VisiJet has
also exclusive licenses to certain non-patented technology developed by SurgiJet
related to ophthalmic applications, and holds exclusive licenses for certain
registered trademarks, including VisiJet(R), HydroKeratome(R), and Pulsatome(R).
Under the terms of the license agreements with SurgiJet, Inc., VisiJet pays
a royalty of 7% of revenues received from sales of the products, up to $400
million of revenues over the course of the Agreements, and 5% of revenues
thereafter. The license agreements with SurgiJet also call for a minimum royalty
of $60,000 per year.
EMPLOYEES
As of December 31, 2003, we had 14 full-time employees, none of whom is
covered by any collective bargaining agreement. We consider our relationship
with our employees to be good.
DESCRIPTION OF PROPERTY
We lease an office/research facility in Irvine, California. Our lease,
which expires in April 2004 is for approximately 4,800 square feet which we
lease for an aggregate of $7,600 per month.
LEGAL PROCEEDINGS
VisiJet is engaged in litigation with SurgiJet, Inc., its former parent
company, and certain directors, officers and stockholders of SurgiJet. The
action was initially filed by VisiJet for a judicial determination that a
$400,000 Promissory Note issued by VisiJet and payable to SurgiJet is not
enforceable, and for recovery of payments previously made on the SurgiJet note.
SurgiJet and its principals filed a cross-action against VisiJet, and its
directors and certain officers, seeking damages of approximately $1,032,000,
rescission of the Merger Agreement, other specified damages, interest and
attorney's fees.
In the cross-complaint, SurgiJet and members of the Doherty family
(including Lance Doherty, former President of VisiJet and beneficial owner of
more than 5% of its outstanding Common Stock) allege breach of the Merger
Agreement between VisiJet and SurgiJet, an Assumption Agreement entered into in
connection with the Merger Agreement, and the SurgiJet Note, along with fraud
and unfair business practices.
Our management believes that the cross-complaint is merely a diversionary
effort by SurgiJet and the Doherty family to draw attention away from the main
19
action. We believe the allegations to the cross-complaint are wholly without
merit and plans to vigorously pursue its claims and contest the cross-complaint.
VisiJet is also a defendant in an action filed by an individual claiming
entitlement to a finder's fee arising out of the merger between Ponte Nossa and
Visijet. The complaint alleges that the plaintiff is entitled to 105,000 shares
of VisiJet common stock. In January of 2004 we reached a settlement in this
matter whereby we agreed to issue the plaintiff 45,000 shares of VisiJet common
stock.
We are also a defendant in a breach of contract claim from an outside
consultant for accounting services performed through February 2003 for $43,500,
plus interest. We have denied the allegations of the complaint and are
vigorously contesting the action.
MANAGEMENT
The officers and directors of VisiJet are as follows:
Director
Name Age Position Since
---- --- -------- -----
Richard H. Keates, M.D.(1)(2) 71 Chairman of the Board 2003
of Directors
Randal A. Bailey 59 President, Chief Executive
Officer and a Director 2003
Laurence M. Schreiber 62 Chief Operating Officer, 2003
Secretary, Treasurer and
a Director
Adam Krupp(1)(2) 43 Director 2003
Norman Schwartz(1)(2) 60 Director 2003
(1) Member of the Executive Committee
(2) Member of the Audit Committee
Dr. Keates has been Chairman of the Board of Directors since February 2003.
He is an ophthalmologist, consultant, and professor, and has been a Professor of
Ophthalmology at New York Medical College since 1997. Dr. Keates has served on
various boards of directors, including Frigitronics (NYSE), Med Chem (NYSE),
Autonomous Technologies (NASDAQ) and Chiron Vision. Dr. Keates has consulted for
leading health care companies including IO Lab, Alcon, and Bausch & Lomb. He is
a founding partner of Intelligent Biocides, and has published over 100 articles
in ophthalmology. Among his many faculty appointments, Dr. Keates has been a
professor at Ohio State University, Professor and Chairman of the Ophthalmology
Department at the University of California, Irvine. He is the President of the
New York Introcular Lens Society and recently completed his term as the
President of the New York Keratorefractive Society. Dr. Keates graduated from
the University of Pennsylvania and from the Jefferson Medical College. He
completed his Ophthalmology training at Harvard Basic Sciences in Ophthalmology
and The Manhattan Eye, Ear & Throat Hospital.
Mr. Bailey has served as President of VisiJet since February 2003, and was
appointed to the Board of Directors in September 2003. Between 1995 and 2003 he
had been affiliated with VisiJet's predecessors in an executive management
capacity. He has more than twenty-five years experience in management roles at
both medical device and pharmaceutical companies. From 1991 to 1995, Mr. Bailey
was the leader of the sales organization of Pharmacia Ophthalmics, Inc. Between
1989 and 1991, Mr. Bailey was the Vice President of Sales and Marketing for
Novoste, Inc. (NASDAQ) a start up cardiovascular company. Mr. Bailey was a
20
co-founder and Vice President of Sales and Marketing for Chiron Vision, Inc.,
which was acquired by Bausch & Lomb in 1997. Chiron Vision, now Bausch & Lomb
Surgical, is a leader in the manufacturing and sales of ophthalmic devices
worldwide. From 1980 to 1986 Mr. Bailey was the initial Vice President of Sales
and Marketing for Allergan Medical Optics, Inc., a leader in the ophthalmic
field.
Mr. Schreiber has served as Chief Operating Officer, Secretary and
Treasurer of VisiJet since February 2003, and was appointed to the Board of
Directors in September 2003. Prior to February 2003, Mr. Schreiber was an
executive officer and a member of the Board of Directors of Ponte Nossa
Acquisition Corporation, where he played an integral role in the merger between
Ponte Nossa and VisiJet that was finalized in February 2003. Prior to joining
Ponte Nossa in 2001, he founded Diversified International, a multilevel
marketing system, and served as Chief Executive Officer of Learn America, a
multimedia productions company combining advanced computer technology and
educational systems. Mr. Schreiber also served as President and a director of
Philibus Systems, a private educational system, and was President of Advanced
Nutritional Associates, which distributed health care products in the United
Kingdom and Europe. He has developed an independent sales distribution system
for Herbalife, and pioneered markets in the United Kingdom, Spain and Israel.
Mr. Krupp has over eighteen years of business experience with emerging
growth companies. He is currently a Managing Director and a member of the
Executive Committee of CS Technology, Inc, a New York based technology
consulting firm. CS Technology provides "mission critical" technology support
services for a myriad of companies from small start-ups to large financial
institutions. Prior to joining CS Technology, Inc., Mr. Krupp spent ten years in
the real estate industry working for several organizations in development,
construction, and leasing. Mr. Krupp holds a B.A. from the University of
Michigan and an M.S. from New York University.
Mr. Schwartz has been a member of the board of directors since February
2003, and served as VisiJet's in-house counsel since March 2003. Mr. Schwartz
has over thirty years of experience in providing legal and financial advice to
individuals and companies. He has acted as Chief Financial Officer and president
of several companies, both public and private, including Acubid International,
Ameritrust, and Farm Energy Corp. He served on the Board of International
Acuvision Systems, a public company that developed and patented vision training
equipment. He is an active member of the Arizona Bar Association. Mr. Schwartz
graduated from Arizona State University, completed his JD at the University of
Arizona, and received his LLM in taxation from New York University.
Directors hold office until a successor is elected and qualified or until
their earlier resignation in the manner provided in the Bylaws.
Scientific Advisors
Richard Lindstrom, M.D. is the Chief Ophthalmic Consultant to VisiJet, and
is in charge of assisting and advising us in connection with product development
in the ophthalmic surgical arena. Dr. Lindstrom is a recognized leader in
corneal, cataract, refractive and laser surgery. After serving as Clinical
Professor of Ophthalmology at the University of Minnesota from 1980 to 1990, Dr.
Lindstrom entered private practice and now directs an outpatient clinic adjacent
to the Phillips Eye Institute in Minneapolis. He conceptualized the Phillips Eye
Institute Center for Teaching and Research, a state-of-the-art ophthalmic
research and surgical skills education facility, where he currently serves as
Medical Director. Dr. Lindstrom plays an active role in the teaching program at
the Phillips Eye Institute and at the University of Minnesota Hospital. He also
serves as an Associate Director of the Minnesota Lions Eye Bank. Dr. Lindstrom
holds 27 patents in ophthalmology in intraocular lens implant technology,
corneal preservation, irrigation solutions, viscoelastic solutions, intracorneal
lenses, and associated surgical instruments. Dr. Lindstrom serves on the editing
board of a variety of medical journals, including Journal of Cataract and
Refractive Surgery, Ophthalmic Surgery, European Journal of Implant and
Refractive Surgery, Implants in Ophthalmology, Ocular Surgery News,
21
Ophthalmology Times, and Journal Review of Ophthalmology. He is Chief Medical
Advisor to Laser Vision Centers and Vision 21 Centers.
EXECUTIVE COMPENSATION
The following table summarizes the annual compensation paid to our named
executive officers during the two years ended December 31, 2002:
Long-Term Compensation
----------------------------------
Annual Compensation Awards Payouts
----------------------------------- ----------------------------------
Other All
Annual Securities Other
Compen- Stock Underlying Compen-
Name and Fiscal Salary (1) Bonus sation (2) Awards Options (#) sation
Principal Position Year ($) ($) ($) ($) (3) ($)
-------------------------- --------- ---------- --------- ------------ --------- ----------- ---------
Randal A. Bailey(1) 2002 $0 $0 $0 0 0 0
President and 2001 $0 $0 $0 0 0 0
Chief Executive Officer
Laurence M. Schreiber(2) 2002 $0 $0 $0 0 0 0
Vice President, Chief 2001 $0 $0 $0 0 0 0
Financial Officer and
Secretary
(1) During 2003, VisiJet issued 164,319 shares of common stock, and issued
a two year promissory note in the amount of $150,000, to Mr. Bailey in
satisfaction of an aggregate of $500,000 of unpaid compensation
accrued between 1999 and 2002. Of the total unpaid compensation,
$180,000 was accrued in 2002 and $144,000 was accrued in 2001.
(2) Mr. Schreiber became Chief Operating Officer in February 2003, and did
not receive compensation from VisiJet in either 2002 or 2001.
Stock Options
On November 10, 2003, the Board of Directors adopted the VisiJet, Inc. 2003
Stock Option Plan. The Option Plan provides for the grant of incentive and
non-qualified stock options to selected employees, the grant of non-qualified
options to selected consultants and to directors and advisory board members. The
Option Plan is administered by the Compensation Committee of the Board of
Directors and authorizes the grant of options for 3,000,000 shares. The
Compensation Committee determines the individual employees and consultants who
participate under the Plan, the terms and conditions of options, the option
price, the vesting schedule of options and other terms and conditions of the
options granted pursuant thereto.
As of December 31, 2003, we had granted options to purchase 1,165,000
shares of Common Stock under the Option Plan, none of which have been exercised.
The following table summarizes information concerning stock options granted
to the named executive officers:
Percent of
Total
Number of options/SARs
Securities granted
underlying to Exercise
options/SARs employees or base
granted in fiscal price Expiration
Name (#) year ($/Sh) date
--------------------------------------------------------------------------------
Randal A. Bailey 200,000 17.17% $1.10 November 10, 2014
Laurence M. Schreiber 200,000 17.17% $1.10 November 10, 2014
22
No named executive officer exercised options in the fiscal year ended
December 31, 2002. The following table presents the number and values of
exercisable and unexercisable options as of December 31, 2003:
Number of
securities Value of
underlying unexercised in-
unexercised the-money
options/SARS at options/SARs at
FY-end (#) FY-end ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
--------------------------------------------------------------------------------
Randal A. Bailey 25,000/175,000 $6,000/$42,000
Laurence M. Schreiber 25,000/175,000 $6,000/$42,000
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below lists the beneficial ownership of our common stock, as of
December 31, 2003, by each person known by us to be the beneficial owner of more
than 5% of our common stock, by each of our directors and officers, and by all
of our directors and officers as a group.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned(1)(2) of Class
-------------------------------------------------------------------------------
Financial Entrepreneurs, Inc. 4,633,001(3) 19.94%
300 South 4th Street
Las Vegas, Nevada 89101
Richard H. Keates, M.D.** 400,000(3) 1.82%
20 Sutton Place South
New York, NY 10022
Randal A. Bailey ** 416,879(3) 1.92%
192 Technology, Suite Q
Irvine, CA 92618
Laurence Schreiber** 150,000(3) *
192 Technology, Suite Q
Irvine, CA 92618
Adam Krupp** 25,000(3) *
535 Eighth Avenue, 14th Floor
New York, NY 10018
Norman Schwartz** 81,100(3) *
192 Technology, Suite Q
Irvine, CA 92618
Lance Doherty 4,706,037(3) 20.93%
9342 Jeronimo Road
Irvine, CA 92618
David E. Eisenberg Trust 2,975,000(3) 12.70%
520 Madison, 38th Floor
New York, NY 10022
PCL Associates, LLC 1,975,000(3) 8.81%
520 Madison, 38th Floor
New York, NY 10022
23
All directors and executive
officers as a group (5 persons) 1,072,979(3) 4.84%
--------------------------------------------------------------------------------
* Denotes less than one percent.
(1) Except as set forth, the persons named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
(2) Applicable percentage of ownership is based on shares outstanding as of
December 31, 2003, together with applicable warrants and options for such
stockholder. Beneficial ownership is determined in accordance with the rules of
the SEC and includes voting and investment power with respect to shares. Shares
subject to options or warrants currently exercisable or exercisable within 60
days after December 31, 2003 are included in the number of shares beneficially
owned and are deemed outstanding for purposes of computing the percentage
ownership of the person holding such options or warrants, but are not deemed
outstanding for computing the percentage of any other stockholder.
(3) Includes shares issuable upon exercise of currently exercisable options or
warrants.
** Denotes Member of the Board of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2002, VisiJet issued a promissory note for $345,000 to Financial
Entrepreneurs Incorporated ("FEI"), one of our principal stockholders. In
February of 2003, in connection with the merger, FEI converted the promissory
note held by it, plus accrued interest, into 378,997 shares of Common Stock at a
conversion rate of $1.00 per share. Also in February 2003, under an agreement
entered into in connection with the merger, we agreed to assume a promissory
note originally issued to FEI by PNAC prior to the merger in the amount of
$193,163. As of September 30, 2003 the outstanding principal amount was $193,163
and accrued interest was $23,365.
In February of 2003, VisiJet issued 164,319 shares of Common Stock to
Randal A. Bailey, its President and Chief Executive Officer, in cancellation of
$350,000 of unpaid salary. VisiJet also issued Bailey a two year promissory note
for $150,000 in satisfaction of unpaid salary. The note bears interest at a rate
of 3.5% per annum, and calls for twenty-four equal monthly installments. At
November 30, 2003, the unpaid balance of the note was $147,915, including unpaid
interest of $5,132.
In February of 2003, pursuant to an agreement entered into in connection
with the merger between Ponte Nossa Acquisition Corp. and VisiJet, FEI cancelled
7,957,000 shares of VisiJet Common Stock owned by it, and VisiJet issued FEI a
five year warrant to purchase 1,500,000 shares of Common Stock at an exercise
price of $5.00 per share. Also, pursuant to the same agreement, VisiJet issued
to Laurence M. Schreiber, its Secretary, Treasurer and Chief Operating Officer,
a five-year warrant to purchase 25,000 shares of its Common Stock at an exercise
price of $3.00 per share, and issued to Thomas F. DiMele, its former President,
a five year warrant to purchase 25,000 shares of its Common Stock at an exercise
price of $3.00 per share.
In March of 2003, we began making consulting payments of $2,500 per month
to M & N Consulting, a corporation owned by Norman Schwartz, a director of
VisiJet, for consulting services provided by Mr. Schwartz. In June of 2003, the
payments were increased to $5,000 per month. Through September 30, 2003 a total
of $26,250 was paid to M & N Consulting pursuant to this arrangement. In
addition, in September 2003, VisiJet issued 150,000 shares of common stock to M
& N Consulting for services provided by Mr. Schwartz in connection with the
finalization of the merger with Ponte Nossa. In connection with the issuance of
these shares, VisiJet recorded consulting expenses of $225,000, based on the
fair market value of the common stock at the date of issuance. Subsequent to the
24
issuance of these shares, beneficial ownership with respect to 100,000 shares
was transferred by M & N Consulting to Laurence Schreiber.
In February of 2003, VisiJet entered into a consulting agreement with
Richard H. Keates, M.D., a director. Pursuant to this agreement, Dr. Keates
receives a monthly retainer of $5,000 per month plus a fee of $1,500 per day for
consulting work performed. Through September 30, 2003 a total of $30,000 was
paid to Dr. Keates pursuant to this agreement.
In April of 2003, VisiJet entered into a consulting agreement with Wharton
Capital Holding Corporation, a corporation controlled by the principals of PLC
Associates, Inc., and by David Eisenberg, owner of the David Eisenberg Trust.
Pursuant to this agreement, Wharton is entitled to receive a monthly fee of
$15,000, provided however that payment of accrued fees is not payable by VisiJet
until such time as we have a cash balance of $2.5 million. Through December 31,
2003 a total of $135,000 in fees has been accrued.
DESCRIPTION OF SECURITIES
The following summary is a description of our common stock and certain
provisions of our Certificate of Incorporation, Bylaws and Delaware law.
GENERAL
Our authorized capital consists of 50,000,000 shares of common stock, par
value $.001 per share.
As of December 31, 2003, we had 21,691,163 shares of common stock
outstanding. Each share is entitled to one vote at all meetings of our
stockholders. All shares of our common stock are equal to each other with
respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional shares of our common stock. In the event of
our liquidation, dissolution or winding up, holders of our common stock will be
entitled to receive, on a pro rata basis, all of our assets remaining after
satisfaction of all liabilities and preferences of outstanding preferred stock,
if any. Neither our Certificate of Incorporation nor our Bylaws contain any
provisions which limit or restrict the ability of another person to take over
our company.
OPTIONS AND WARRANTS
As of December 31, 2003, we had outstanding options to purchase an
aggregate of 1,165,000 shares of our common stock pursuant to our 2003 Stock
Option Plan at a weighted-average exercise price of $1.10 per share. These
options are held by directors, officers, key employees and consultants, and as
of December 31, 2003, options to purchase 390,000 shares were exercisable.
We also have outstanding warrants to purchase 12,111,712 additional shares
of our common stock, with a weighted-average exercise price of $2.54 per share.
TRANSFER AGENT
The transfer agent for our common stock is Nevada Agency and Trust Company,
Reno, Nevada.
SHARES ELIGIBLE FOR RESALE
Future sales of a substantial number of shares of our common stock in the
public market could adversely affect market prices prevailing from time to time.
Under the terms of this offering, the shares of common stock offered may be
resold without restriction or further registration under the Securities Act of
1933, except that any shares purchased by our "affiliates," as that term is
defined under the Securities Act, may generally only be sold in compliance with
Rule 144 under the Securities Act.
25
Certain shares of our outstanding common stock were issued and sold by us
in private transactions in reliance upon exemptions from registration under the
Securities Act and have not been registered for resale. Additional shares may be
issued pursuant to outstanding warrants and options. Such shares may be sold
only pursuant to an effective registration statement filed by us or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act.
In general, under Rule 144 as currently in effect, a stockholder, including
one of our affiliates, may sell shares of common stock after at least one year
has elapsed since such shares were acquired from us or our affiliate. The number
of shares of common stock which may be sold within any three-month period is
limited to the greater of: (i) one percent of our then outstanding common stock,
or (ii) the average weekly trading volume in our common stock during the four
calendar weeks preceding the date on which notice of such sale was filed under
Rule 144. Certain other requirements of Rule 144 concerning availability of
public information, manner of sale and notice of sale must also be satisfied. In
addition, a stockholder who is not our affiliate, who has not been our affiliate
for 90 days prior to the sale, and who has beneficially owned shares acquired
from us or our affiliate for over two years may resell the shares of common
stock without compliance with many of the foregoing requirements under Rule 144.
SELLING STOCKHOLDERS
The securities are being offered by SBI Brightline II, LLC, Trilogy
Investment I LLC, and certain other selling stockholders. SBI and Trilogy may
from time to time offer and sell pursuant to this prospectus up to an aggregate
of 3,150,000 shares of our common stock that may be acquired by SBI and Trilogy
pursuant to stock purchase agreements in transactions that are exempt from the
registration requirements of the Securities Act of 1933. The other selling
stockholders may offer and sell up to 15,960,198 shares now owned by them or
issuable to them upon the exercise of warrants.
The selling stockholders may from time to time offer and sell any or all of
the shares that are registered under this prospectus. Because the selling
stockholders are not obligated to sell their shares, and because the selling
stockholders may also acquire publicly traded shares of our common stock, we
cannot estimate how many shares the selling stockholders will own after the
offering.
Pursuant to the stock purchase agreements with SBI, Trilogy and certain
other selling stockholders, all expenses incurred with respect to the
registration of the common stock will be borne by us, but we will not be
obligated to pay any underwriting fees, discounts, commissions or other expenses
incurred by them in connection with the sale of such shares.
The following table sets forth, with respect to the Selling Stockholders
(i) the number of shares of common stock beneficially owned as of December 31,
2003 and prior to the offering contemplated hereby, (ii) the maximum number of
shares of common stock which may be sold by the selling stockholder under this
prospectus, and (iii) the number of shares of common stock which will be owned
after the offering by the selling stockholder.
Prior to Offering After Offering (1)
--------------------------- ------------------------
Shares
Name Shares Percent Offered Shares Percent
---- ------ ------- ------- ------ -------
Financial Entrepreneurs, Inc. 4,633,001 19.98% 3,914,004 718,997 3.11%
SBI Brightline II, LLC (2) 2,025,000 8.54% 2,025,000 - 0.00%
26
Trilogy Investment I LLC (3) 1,125,000 4.93% 1,125,000 - 0.00%
Wyatt Landesmann 2,000,000 8.44% 2,000,000 - 0.00%
Stan Chessed 1,417,000 6.13% 1,417,000 - 0.00%
Eran Ostfeld 1,000,000 4.41% 1,000,000 - 0.00%
Mallos Living Trust 900,000 4.06% 900,000 - 0.00%
Randal A. Bailey (4) 416,879 1.92% 202,246 214,633 0.98%
Fridolin Fackelmayer 400,000 1.83% 400,000 - 0.00%
Dana Marshall Cook 400,000 1.83% 400,000 - 0.00%
UBS Financial Services FBO
Richard H. Keates MD Inc. Pension Plan 400,000 1.82% 200,000 200,000 0.94%
Celthron Property Management Inc. 350,000 1.60% 350,000 - 0.00%
Stephen & Kathleen Guarino 250,000 1.14% 250,000 - 0.00%
Larry L. Hood (5) 246,948 1.14% 46,948 200,000 0.92%
Asher Gottesman 200,000 0.92% 200,000 - 0.00%
Transcontinental Financial Resources 200,000 0.92% 200,000 - 0.00%
Wachovia Securities C/F Charles
Pierce IRA 200,000 0.92% 200,000 - 0.00%
Elizabeth Wheeler 200,000 0.92% 200,000 - 0.00%
Mark Wheeler 200,000 0.92% 200,000 - 0.00%
Mark M. Wheeler IRA 200,000 0.92% 200,000 - 0.00%
Zorina Bennett 200,000 0.92% 200,000 - 0.00%
Charles E. Blair 200,000 0.92% 200,000 - 0.00%
John P. Dempsey 200,000 0.92% 200,000 - 0.00%
Sattinwood Inc. 160,000 0.73% 160,000 - 0.00%
Westcap Securities 150,000 0. 69% 150,000 - 0.00%
Laurence M. Schreiber (6) 150,000 0.69% 100,000 50,000 0.14%
27
Shipman & Goodwin LLP Profit
Sharing Plan FBO James T. Betts 100,000 0.46% 100,000 - 0.00%
James T. Betts, Trustee U/A T.J.
and H.M. Betts Dated May 26, 1983 100,000 0.46% 100,000 - 0.00%
Roman Feldman & Irina Krym, JTTEN 100,000 0.46% 100,000 - 0.00%
One Six Partners 100,000 0.46% 100,000 - 0.00%
Goren Brothers LP 100,000 0.46% 100,000 - 0.00%
Alan Gray 100,000 0.46% 100,000 - 0.00%
J. Charles Pierce 100,000 0.46% 100,000 - 0.00%
Olen C. Wilson 100,000 0.46% 100,000 - 0.00%
Richard L. Tuch 100,000 0.46% 100,000 - 0.00%
Richard Payne & Sherry Payne 100,000 0.46% 100,000 - 0.00%
Jon Bolker 100,000 0.46% 100,000 - 0.00%
Porter Family Trust 100,000 0.46% 100,000 - 0.00%
Brooke Niemi 100,000 0.46% 100,000 - 0.00%
Douglas G. May 100,000 0.46% 100,000 - 0.00%
James V. May 100,000 0.46% 100,000 - 0.00%
Martin A. Benowitz 75,000 0.35% 75,000 - 0.00%
Smedly Hendrickson 70,000 0.32% 70,000 - 0.00%
M & N Consulting, Inc. (7) 56,100 0.26% 50,000 6,100 0.02%
Zach Alcyone & Anne Alcyone 50,000 0.23% 50,000 - 0.00%
Felix Aronsky 50,000 0.23% 50,000 - 0.00%
Daniela Brabner-Smith 50,000 0.23% 50,000 - 0.00%
Robert M. Campbell Jr. 50,000 0.23% 50,000 - 0.00%
Hoa Le Duong 50,000 0.23% 50,000 - 0.00%
28
Vallery Dubovikov 50,000 0.23% 50,000 - 0.00%
Steven Efman 50,000 0.23% 50,000 - 0.00%
Fred Efman 50,000 0.23% 50,000 - 0.00%
Marvin Schwartz 50,000 0.23% 50,000 - 0.00%
Vladamir Lieberman 50,000 0.23% 50,000 - 0.00%
Richard Monka 50,000 0.23% 50,000 - 0.00%
Mikhail Nemets 50,000 0.23% 50,000 - 0.00%
Alexander Onik 50,000 0.23% 50,000 - 0.00%
Roslyn Pinkus and Frank Pinkus 50,000 0.23% 50,000 - 0.00%
Van S. Bohne 50,000 0.23% 50,000 - 0.00%
Michael Bergman 50,000 0.23% 50,000 - 0.00%
Alan Stone & Co., Ltd. 27,000 0.12% 27,000 - 0.00%
Robert F. Krull 25,000 0.12% 25,000 - 0.00%
Ranchers Management Service Inc.
Profit Sharing Plan 25,000 0.12% 25,000 - 0.00%
Asher & Danielle Weinfeld, JTTEN 19,200 0.09% 19,200 - 0.00%
Kenneth D. & Ethne S. Katz, JTTEN 16,000 0.07% 16,000 - 0.00%
Mordechai & Melanie Smith, JTTEN 16,000 0.07% 16,000 - 0.00%
Hershel & Lara Goulson, JTTEN 16,000 0.07% 16,000 - 0.00%
Simon & Eva Weinfeld, JTTEN 12,800 0.06% 12,800 - 0.00%
Rand Brenner 9,000 0.04% 9,000 - 0.00%
Tafkid Ltd. 9,000 0.04% 9,000 - 0.00%
(1) For purposes of this table, we have assumed that the Selling Stockholders
will sell in this offering all shares offered.
(2) The shares offered represent the number of shares to be issued by us to SBI
pursuant to the stock purchase agreement, and the shares issuable upon exercise
of warrants. No such shares have been issued as of the date of this prospectus.
(3) The shares offered represent the number of shares to be issued by us to
Trilogy pursuant to the stock purchase agreement. No such shares have been
issued as of the date of this prospectus.
29
(4) Mr. Bailey is an officer and director of VisiJet.
(5) Mr. Hood is VisiJet's Chief Engineer.
(6) Mr. Schreiber is an officer and director of VisiJet
(7) M & N Consulting, Inc. is owned by Norman Schwartz, a director of VisiJet.
PLAN OF DISTRIBUTION
GENERAL
Shares of common stock offered through this prospectus may be sold from
time to time directly by the selling stockholders or, alternatively, through
underwriters, broker- dealers or agents. If the shares are sold through
underwriters, broker- dealers or agents, SBI will be responsible for
underwriting discounts or commissions or agents' commissions. Shares may be sold
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. Sales may be effected in transactions (which may involve block
transactions) (i) in the over-the-counter market, (ii) on any securities
exchange or quotation service on which the shares may be listed or quoted at the
time of sale, (iii) in transactions otherwise than in the over-the- counter
market or on such exchanges or services, or (iv) through the writing of options.
In connection with sales of shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares in the course of hedging positions they assume. The
selling stockholders may also sell our common stock short and deliver shares to
close out short positions, or loan or pledge shares to broker-dealers that in
turn may sell such securities.
The selling stockholders will act independently from us in making decisions
with respect to the manner, timing, price and size of each sale. The selling
stockholders may sell the shares in any manner permitted by law, including one
or more of the following:
* a block trade in which a broker-dealer engaged by a selling
stockholder will attempt to sell the Shares as agent, but may
position and resell a portion of the block as principal to facilitate
the transaction;
* purchases by a broker-dealer as principal and resale by such broker-
dealer for its account under this prospectus;
* an over-the-counter distribution in accordance with the rules of
the OTC Bulletin Board;
* ordinary brokerage transactions in which the broker solicits
purchasers; and
* privately negotiated transactions.
In the event that the sale of any shares covered by this prospectus
qualifies for an exemption from the registration requirements of the Securities
Act, such shares may be sold pursuant to that exemption rather than pursuant to
this prospectus.
USE OF UNDERWRITERS, BROKERS, DEALERS OR AGENTS
If the selling stockholders effect sales of shares through underwriters,
brokers, dealers or agents, such underwriters, brokers, dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
30
the selling stockholders or commissions from purchasers of common stock for whom
they may act as agent (which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents may be in excess of those
customary in the types of transactions involved). Any brokers, dealers or agents
that participate in the distribution of the shares may be deemed to be
underwriters, and any profit on the sale of common stock by them and any
discounts, concessions or commissions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
If a selling stockholder sells shares through an underwriter, broker,
dealer or agent, it may agree to indemnify such underwriter, broker, dealer or
agent against certain liabilities arising from such sale, including liabilities
arising under the Securities Act. We have been informed by SBI and Trilogy that
there are no existing arrangements between them and any underwriter, broker,
dealer or agent relating to the distribution of the shares.
TREATMENT OF SBI AND TRILOGY AS STATUTORY UNDERWRITERS
SBI and Trilogy are statutory underwriters within the meaning of the
Securities Act of 1933 in connection with their resale of shares pursuant to
this prospectus. We will not receive any of the proceeds from the resale of
shares, although we will receive the consideration payable by SBI and Trilogy
for the shares at the time we sell the shares to SBI and Trilogy pursuant to the
stock purchase agreement. SBI and Trilogy have agreed that they will comply with
applicable state and federal securities laws and the rules and regulations
promulgated thereunder in connection with their sale of the shares. SBI and
Trilogy will pay all commissions and their own expenses, if any, associated with
the sale of the shares, other than the expenses associated with preparing this
prospectus and the registration statement of which it is a part. Pursuant to the
stock purchase agreements, we have agreed to indemnify SBI and Trilogy against
certain liabilities including liabilities under the Securities Act and SBI has
agreed to indemnify us against certain liabilities including liabilities under
the Securities Act.
SBI and Trilogy will purchase shares from us under the stock purchase
agreements at fixed prices. The difference between what SBI and Trilogy pays to
us for the shares and the amount for which SBI and Trilogy sell the shares may
be viewed as underwriting discounts or commissions. Because we do not know when
or the price at which they will sell the shares, it is not possible to quantify
these potential discounts or commissions.
We have advised SBI and Trilogy that they are subject to the applicable
provisions of the Securities Exchange Act of 1934, including without limitation,
Rule 10b-5 and Regulation M thereunder. Under Registration M, SBI and Trilogy,
and their respective affiliates and anyone participating in a distribution of
the shares may not bid for, purchase, or attempt to induce any person to bid for
or purchase, shares of our common stock while SBI or Trilogy is distributing
shares covered by this prospectus.
REGISTRATION OBLIGATIONS
Under the stock purchase agreements, we have agreed to register the shares
for resale by SBI and Trilogy under the Securities Act and to maintain the
effectiveness of that registration until the earliest date, after the date on
which all of the shares have been purchased pursuant to the stock purchase
agreement or SBI's or Trilogy's obligation to purchase shares pursuant to the
stock purchase agreement has been terminated, on which:
* all the shares acquired under the stock purchase agreement have been
disposed of pursuant to the registration statement,
* all shares acquired the stock purchase agreements that are then held
by SBI or Trilogy may be sold under the provisions of Rule 144 without
limitation as to volume, whether pursuant to Rule 144(k) or otherwise,
or
31
* we have determined that all shares under the stock purchase agreements
that are then held by SBI may be sold without restriction under the
Securities Act and we have removed any stop transfer instructions
relating to such shares.
The status of SBI and Trilogy as underwriters may limit their sale of shares to
qualify for an exemption from applicable securities registration requirements.
We will pay the costs of registering the shares as contemplated by the
stock purchase agreement, including the expenses of preparing this prospectus
and the related registration statement of which it is a part.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for us by Haddan & Zepfel LLP, Newport Beach, California.
EXPERTS
The financial statements of VisiJet as of and for the years ended December
31, 2002, appearing in this prospectus have been audited by Peterson & Co., LLP,
Certified Public Accountants, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
VisiJet files current, quarterly and annual reports with the SEC on forms
8-K, 10-QSB and 10-KSB. VisiJet has filed with the SEC under the Securities Act
of 1933 a registration statement on Form SB-2 with respect to the shares being
offered in this offering. This prospectus does not contain all of the
information set forth in the registration statement, certain items of which are
omitted in accordance with the rules and regulations of the SEC. The omitted
information may be inspected and copied at the Public Reference Room maintained
by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
You can obtain information about operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at http://www.sec.gov.
Copies of such material can be obtained from the public reference section of the
SEC at prescribed rates. Statements contained in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are not necessarily complete and in each instance
reference is made to the copy of the document filed as an exhibit to the
registration statement, each statement made in this prospectus relating to such
documents being qualified in all respect by such reference.
For further information with respect to VisiJet and the securities being
offered hereby, reference is hereby made to the registration statement,
including the exhibits thereto and the financial statements, notes, and
schedules filed as a part thereof.
32
FINANCIAL STATEMENTS
VISIJET, INC.
(A Development Stage Company)
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
AND
UNAUDITED CONSOLIDATED FINACIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003
INDEX
-----
Page
----
Independent Auditor's Report 34
Consolidated Balance Sheets, December 31, 2002 and 2001 35
Consolidated Statements of Operations for the years ended
December 31, 2002 and 2001 and for the period February 2,
1996 (inception) to December 31, 2002 36
Consolidated Statements of Changes in Stockholders' Deficit,
February 2, 1996 (inception) to December 31, 2002 37
Consolidated Statements of Cash Flows for the years ended
December 31, 2002 and 2001 and for the period February 2,
1996 (inception) to December 31, 2002 38
Notes to Consolidated Financial Statements, December 31, 2002 39-49
Unaudited Consolidated Balance Sheets, September 30, 2003 and 2002 50
Unaudited Consolidated Statements of Operations
for the Three Months and Nine Months Ended September 30, 2003
and 2002 51
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2003, and for the
period February 2, 1996 (inception) to September 30, 2003. 52
Notes to Unaudited Consolidated Financial Statements 53-62
33
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
VISIJET, INC.
(A Development Stage Company)
Irvine, California
We have audited the accompanying balance sheet of VisiJet, Inc. (a development
stage company) as of December 31, 2002, and the related statements of
operations, stockholders' deficit and cash flows for the year then ended and for
the period from February 2, 1996 (inception) to December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of VisiJet, Inc. for the period from
February 2, 1996 (inception) to December 31, 2001, before the restatement
described in Note 10 of the 2002 financial statements, were audited by other
auditors whose report dated October 25, 2002, except Note 10, which is November
12, 2002, expressed an unqualified opinion.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VisiJet, Inc. (a development
stage company) as of December 31, 2002, and the results of its operations and
its cash flows for the year then ended and for the period from February 2, 1996
(inception) to December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
We also audited the adjustments described in Note 10 that were applied to
restate the financial statements for the period from February 2, 1996
(inception) to December 31, 2001. In our opinion, such adjustments are
appropriate and have been properly applied.
As discussed in Note 1 to the financial statements, VisiJet, Inc. (a development
stage company) has reported accumulated losses during the development stage
aggregating $5,817,067 and without additional financing, lacks sufficient
working capital to fund operations beyond May 2003, which raises substantial
doubt about its ability to continue as a going concern. Management's plans as to
these matters are described in Note 1. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
April 22, 2003 PETERSON & CO., LLP
San Diego, California
34
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31,
-------------------------------
ASSETS Restated
2002 2001
------------- -------------
Current assets:
Cash $ 960 $ --
Notes receivable -- 4,340
------------- -------------
Total current assets 960 4,340
Property and equipment, net of accumulated depreciation 47,443 104,541
------------- -------------
Total assets $ 48,403 $ 108,881
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Overdraft $ -- $ 3,781
Accounts payable 196,985 58,571
Accrued liabilities 130,469 298,274
Accrued interest payable 160,837 118,448
Royalties payable 60,000 --
Compensation settlement agreement - current portion 595,833 --
Notes payable - related parties 1,543,843 745,000
------------- -------------
Total current liabilities 2,687,967 1,224,074
------------- -------------
Compensation settlement agreement, net of current portion 104,167 408,349
------------- -------------
Shareholders' deficit
Common stock, no par value; 10,000,000 shares authorized;
7,997,735 and 7,673,401 shares issued and outstanding
as of December 31, 2002 and 2001, respectively 615,248 608,761
Preferred stock, no par; 5,000,000 shares authorized;
140,306 Series A shares authorized, issued and outstanding
as of December 31, 2002 and 2001 550,000 550,000
636,364 Series B shares authorized; 363,946 issued and outstanding
as of December 31, 2002 and 2001 1,908,088 1,908,088
Deficit accumulated during development stage (5,817,067) (4,590,391)
------------- -------------
Shareholders' deficit (2,743,731) (1,523,542)
------------- -------------
Total liabilities and shareholders' deficit $ 48,403 $ 108,881
============= =============
The accompanying notes are an integral part of these financial statements.
35
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Restated
Years Ended December 31, For the period
------------------------------- February 2, 1996
Restated (inception) to
2002 2001 December 31, 2002
------------- ------------- -----------------
Operating expenses:
General and administrative expenses $ 751,717 $ 458,773 $ 1,859,262
Research and development expenses 294,736 957,665 3,600,877
------------- ------------- -----------------
Total operating expenses 1,046,453 1,416,438 5,460,139
------------- ------------- -----------------
Loss from operations (1,046,453) (1,416,438) (5,460,139)
------------- ------------- -----------------
Other expense
Interest expense (131,319) (57,935) (281,741)
Loss on judgment -- -- (21,483)
Loss on disposal of asset (48,104) -- (48,104)
------------- ------------- -----------------
Total other expense (179,423) (57,935) (351,328)
------------- ------------- -----------------
Loss before provision for income taxes (1,225,876) (1,474,373) (5,811,467)
Provision for income taxes 800 800 5,600
------------- ------------- -----------------
Net loss $ (1,226,676) $ (1,475,173) $ (5,817,067)
============= ============= =================
Net loss per share (0.16) (0.26) (1.71)
============= ============= =================
Weighted average shares outstanding 7,811,809 5,784,697 3,410,283
============= ============= =================
The accompanying notes are an integral part of these financial statements.
36
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' DEFICIT
Deficit
Accumulated
Common Stock Preferred A Preferred B during the Restated
------------------------ ------------------- --------------------- Development Shareholders'
Shares Amount Shares Amount Shares Amount Stage Deficit
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Inception, February 2, 1996 -- $ -- -- $ -- -- $ -- $ -- $ --
Net loss -- -- -- -- -- -- -- --
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 1996 -- -- -- -- -- -- -- --
Net loss -- -- -- -- -- -- -- --
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 1997 -- -- -- -- -- -- -- --
Issuance of stock for cash 5,125,500 25,500 127,550 500,000 -- -- -- 525,500
Net loss -- -- -- -- -- -- (580,192) (580,192)
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 1998 5,125,500 25,500 127,550 500,000 -- -- (580,192) (54,692)
Cancelled stock (5,100,000) (25,500) -- -- -- -- -- (25,500)
Spin-off from affiliated entity 4,133,195 -- -- -- -- -- -- --
Issuance of stock for cash 26,834 107,334 12,756 50,000 57,911 318,500 -- 475,834
Issuance of stock for services 62,227 12,383 -- -- -- -- -- 12,383
Exercise of stock options 927,382 184,549 -- -- -- -- -- 184,549
Net loss -- -- -- -- -- -- (1,198,506) (1,198,506)
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 1999 5,175,138 304,266 140,306 550,000 57,911 318,500 (1,778,698) (605,932)
Issuance of stock for cash 55,252 221,008 -- -- 147,315 756,000 -- 977,008
Issuance of stock for services 17,842 3,551 -- -- -- -- -- 3,551
Net loss -- -- -- -- -- -- (1,336,520) (1,336,520)
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 2000 5,248,232 528,825 140,306 550,000 205,226 1,074,500 (3,115,218) (961,893)
Issuance of stock for cash -- -- -- -- 158,720 833,588 -- 833,588
Issuance of stock for
assets and services 2,425,169 79,936 -- -- -- -- -- 79,936
Net loss (restated) -- -- -- -- -- -- (1,475,173) (1,475,173)
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 2001,
(restated) 7,673,401 608,761 140,306 550,000 363,946 1,908,088 (4,590,391) (1,523,542)
Issuance of stock for services 324,334 6,487 -- -- -- -- -- 6,487
Net loss -- -- -- -- -- -- (1,226,676) (1,226,676)
----------- ---------- -------- --------- -------- ----------- ------------ ------------
Balance, December 31, 2002 7,997,735 $ 615,248 140,306 $550,000 363,946 $1,908,088 $(5,817,067) $(2,743,731)
=========== ========== ======== ========= ======== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
37
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Restated
Years Ended December 31, For the period
------------------------------- February 2, 1996
Restated (inception) to
2002 2001 December 31, 2002
------------- ------------- -----------------
Cash flows from operating activities:
Net loss $ (1,226,676) (1,475,173) $ (5,817,067)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation 13,627 70,846 288,362
Loss from disposition of fixed assets 48,104 -- 48,104
Non cash compensation 6,487 -- 102,357
Changes in assets and liabilities:
Accounts payable 134,633 (41,399) 196,985
Accrued expenses (167,805) (16,356) 800
Accrued judgment -- -- 129,669
Accrued interest 42,389 40,898 160,837
Royalties payable 60,000 -- 60,000
Compensation settlement agreement 291,651 -- 700,000
------------- ------------- -----------------
Net cash used in operating activities (797,590) (1,421,184) (4,129,953)
------------- ------------- -----------------
Cash flows from investing activities:
Acquisition of property and equipment (4,633) (47,000) (383,909)
------------- ------------- -----------------
Net cash used in investing activities (4,633) (47,000) (383,909)
------------- ------------- -----------------
Cash flows from financing activities:
Advance from shareholders and related parties 830,665 528,880 1,571,325
Repayment of advance from shareholders and related parties (27,482) -- (27,482)
Proceeds from issuance of common stock, net -- 48,152 512,891
Proceeds from issuance of preferred stock -- 833,588 2,458,088
------------- ------------- -----------------
Net cash provided by financing activities 803,183 1,410,620 4,514,822
------------- ------------- -----------------
Net increase (decrease) in cash 960 (57,564) 960
Cash, beginning of period -- 57,564 --
------------- ------------- -----------------
Cash, end of period $ 960 $ -- $ 960
============= ============= =================
The accompanying notes are an integral part of these financial statements.
38
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
-----------------------------
VisiJet, Inc. (the Company), a California corporation in the
development stage, was incorporated on February 2, 1996, to develop and
distribute medical products. The Company is developing a line of
surgical equipment for use in the field of ophthalmology based on
waterjet technology. Potential customers include physicians, surgical
centers and hospitals.
Prior to 1999, the Company was a wholly owned subsidiary of SurgiJet,
Inc. In May 1999, the Company spun its operations off from SurgiJet,
Inc. SurgiJet, Inc. distributed shares of VisiJet, Inc. common stock to
its shareholders. Upon the completion of this distribution, SurgiJet,
Inc. had no ownership interest in VisiJet, Inc. Certain operating
assets and liabilities were assumed by VisiJet, Inc. in connection with
this spin-off.
The Company is in the development stage and its efforts through
December 31, 2002, have been principally devoted to organizational
activities, raising capital and research and development efforts.
Management intends to continue developing and testing its waterjet
technologies. The Company received approval in October 2000 from the
Food and Drug Administration (FDA) for one of its products. To date,
the Company has not received any revenues from product sales.
GOING CONCERN
The Company has incurred net operating losses since inception, has
generated no revenue, and has working capital and stockholders'
deficits. The Company is likely to incur substantial and increasing
operating losses as it continues its research and development efforts
until such time, if ever, as product sales, royalties, license and
development and other fees can generate sufficient revenue to fund its
continuing operations. The Company's future capital requirements will
depend on many factors, including but not limited to the Company's
ability to successfully market its waterjet technology to third
parties, overall product development costs including the cost of
clinical trials and competing technological and market developments.
MERGER
On February 11, 2003, the Company completed its pending merger with
Ponte Nossa Acquisition Corp., (`PNAC"). As a result of this
transaction, the Company became a wholly owned subsidiary of PNAC.
Since this transaction resulted in the shareholders of the Company
acquiring control of PNAC, for financial reporting purposes the
business combination was accounted for as a recapitalization of PNAC (a
reverse acquisition with the Company as the accounting acquirer).
Subsequently, PNAC changed its name to VisiJet, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense as incurred.
Certain corporate overhead expenses, such as professional fees,
salaries, rent and travel are allocated to research and development
based on estimates made by management.
39
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
---------------------------------------------------
STOCK-BASED COMPENSATION
The Company accounts for equity instruments issued to employees for
services based on the fair value of the equity instruments issued and
accounts for equity instruments issued to other than employees based on
the fair value of the consideration received or the fair value of the
equity instruments, whichever is more reliably measurable. The Company
accounts for stock based compensation in accordance with SFAS 123,
"Accounting for Stock-Based Compensation." The provisions of SFAS 123
allow companies to either expense the estimated fair value of stock
options or to continue to follow the intrinsic value method set forth
in APB Opinion 25, "Accounting for Stock Issued to Employees" (APB 25)
but disclose the pro forma effects on net income (loss) had the fair
value of the options been expensed. The Company has elected to continue
to apply APB 25 in accounting for its stock option incentive plans.
DEPRECIATION
Depreciation of property and equipment is computed using the
straight-line method over estimated useful lives ranging from three to
five years.
USE OF ESTIMATES
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements of
the prior year and for the period February 2, 1996 (inception) to
December 31, 2001 in order to conform to current year presentation.
40
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
---------------------------------------------------
INCOME TAXES
The Company utilizes the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, BUSINESS COMBINATIONS and SFAS No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS. SFAS No. 141 provides guidance on the accounting for
a business combination at the date a business combination is completed.
The statement requires the use of the purchase method of accounting for
all business combinations initiated after June 30, 2001, thereby
eliminating the use of the pooling-of-interests method. The Company
adopted SFAS No. 141 on July 1, 2001. The adoption did not have an
effect on the financial statements. SFAS No. 142 provides guidance on
how to account for goodwill and intangible assets after an acquisition
is completed. The most substantive change is that goodwill will no
longer be amortized but instead will be tested periodically for
impairment. The Company adopted SFAS No. 142 as of the beginning of
fiscal 2002 and the effect of adoption did not have an effect on the
financial statements.
In June 2001, the Financial Accounting Standards Board issued SFAS No.
143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS. SFAS No. 143
addresses financial accounting and reporting for obligations associated
with the retirement of tangible long lived assets and the associated
asset retirement costs. The Company is currently analyzing this
statement and has not yet determined its impact on the financial
statements. This Statement will be effective for fiscal 2003.
In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS, which replaces SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. Although
SFAS No. 144 retains the basic requirements of SFAS No. 121 regarding
when and how to measure an impairment loss, it provides additional
implementation guidance. SFAS No. 144 also supercedes the provisions of
APB Opinion No. 30, Reporting Results of Operations, pertaining to
discontinued operations. Separate reporting of discontinued operations
is still required, but SFAS No. 144 expands presentation to include a
component of an entity, rather than strictly a business segment. The
Company is currently analyzing this statement and has not yet
determined its impact on the financial statements. This statement will
be effective for fiscal 2003.
In April 2002, the Financial Accounting Standards Board issued SFAS No.
145, RESCISSION OF FASB STATEMENTS NO.4, 44, 64, AMENDMENT OF FASB NO.
13, AND TECHNICAL CORRECTIONS. Among other provisions, SFAS No. 145
rescinds SFAS No.4, REPORTING GAINS AND LOSSES FROM
41
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
---------------------------------------------------
EXTINGUISHMENT OF DEBT. Accordingly, gains or losses from
extinguishment of debt shall not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the
criteria of APB No. 30. Gains or losses from extinguishment of debt
that do not meet the criteria of APB No. 30 should be reclassified to
income from continuing operations in all prior periods presented. This
statement will be effective for fiscal 2003. The Company does not
expect the adoption of SFAS 145 to have a material impact on its
financial position or results of operations.
In June 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. SFAS No. 146 requires
companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs covered by
the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activities. SFAS
No. 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged.
The Company elected not to adopt the provisions of SFAS No. 146 until
the adoption date and since there are no planned exit or disposal
activities for the periods after the adoption date, management does not
believe that the adoption of SFAS No. 146 will have a material impact
on the financial statements.
The Emerging Issues Task Force "EITF" recently reached a consensus on
its tentative conclusions for EITF 00-21, REVENUE ARRANGEMENTS WITH
MULTIPLE DELIVERABLES. EITF 00-21 provides accounting guidance for
customer solutions where delivery or performance of products, services
and/or performance may occur at different points in time or over
different periods of time. Companies are required to adopt this
consensus for fiscal periods beginning after June 15, 2003. The Company
believes the adoption of EITF 00-21 will not have a material impact on
the Company's financial position, results of operations, or liquidity.
In November 2002, FASB issued FASB Interpretation No. 45 GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS ("FIN 45"). FIN 45
elaborates on the disclosures to be made by a guarantor in its interim
and annual financial statements about its obligations under certain
guarantees that it has issued. FIN 45 also clarifies that a guarantor
is required to recognize a liability for the fair value, or market
value, of the obligation undertaken in issuing a guarantee at the
inception of the guarantee. The provisions of FIN 45 relating to
liability recognition do not apply to certain obligations such as
product warranties and guarantees accounted for as derivatives. The
initial recognition and measurement provisions apply on a prospective
basis to guarantees issued or modified subsequent to December 31, 2002.
The disclosure requirements of FIN 45 are effective for interim or
annual financial statement periods ending after December 15, 2002. The
Company does not expect the adoption of the recognition and measurement
provisions of FIN 45 will have a significant impact on its financial
position or results of operations.
In December 2002, FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION, TRANSITION AND DISCLOSURE ("SFAS 148"). SFAS 148 amends
the disclosure requirements of SFAS No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123") to require prominent
42
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
---------------------------------------------------
disclosures in both interim and annual financial statements about the
method of accounting for stock-based employee compensation and the
effect of the method used on reported results. SFAS 148 also amends
SFAS 123 to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based
employee compensation. The Company will commence quarterly footnote
disclosure of the fair value based method of accounting for stock-based
employee compensation beginning in the first quarter ending March 31,
2003. As the Company has decided not to voluntarily adopt the SFAS 123
fair value method of accounting for stock-based employee compensation,
the new transition alternatives of SFAS 148 will not have a material
impact on its financial position or results of operations.
On January 17, 2003, the FASB issued FASB Financial Interpretation No.
46, CONSOLIDATION OF VARIABLE INTEREST Entities which requires
extensive disclosures (including disclosures that are applicable to
December 31, 2002 financial statements) and will require companies to
evaluate variable interest entities created after January 31, 2003 and
existing entities to determine whether to apply the Interpretation's
consolidation approach to them. Companies must apply the Interpretation
to entities with which they are involved if the entity's equity has
specified characteristics. If it is reasonably possible that a company
will have a significant variable interest in a variable interest entity
at the date the Interpretation's consolidation requirements become
effective, the company must disclose the nature, purpose, size and
activities of the variable interest entity and the consolidated
enterprise's maximum exposure to loss resulting from its involvement
with the variable interest entity in all financial statements issued
after January 31, 2003 (as well as December 31, 2002 financial
statements) regardless of when the variable interest entity was
created. Since the Company has no interest in any variable interest
entity, the Company believes that the adoption of this interpretation
will not have a material impact on its financial position or results of
operations.
NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------
At December 31, property and equipment consist of:
2002 2001
---------- ----------
Computer and test equipment $ 21,833 $ 316,207
Furniture and fixtures 16,067 16,067
Trade show equipment 47,002 47,002
---------- ----------
84,902 379,276
Less: Accumulated depreciation (37,459) (274,735)
---------- ----------
$ 47,443 $ 104,541
========== ==========
Depreciation expense for the years ended December 31, 2002 and 2001
amounted to $13,627 and $70,846, respectively . Depreciation expense
for the period from February 2, 1996 (inception) to December 31, 2002
was $288,362.
43
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - NOTES PAYABLE - RELATED PARTIES
----------------------------------------
PONTE NOSSA ACQUISITION CORPORATION
During 2002, the Company entered into various loan agreements with
Ponte Nossa Acquisition Corporation ("PNAC") to provide funding to
facilitate transactions contemplated by the pending merger with PNAC.
Principal and accrued interest on the notes are due on the earlier of
i) the date on which the closing of the transactions of the merger
agreement by and between the Company and PNAC, ii) termination of the
merger agreement, iii) sale of the Company or iv) the maturity date.
The notes are collateralized by a security interest in certain assets
and common stock of the Company.
At December 31, 2002, notes payable to PNAC consist of the following:
Note payable - PNAC
Senior secured promissory notes,
interest at 3% per annum, due May 2003 $ 236,000
Note payable - PNAC
Working capital note, interest at 10% per annum,
due August 2003 309,752
Note payable - PNAC
Milestone note payable,
interest at 10% per annum, due August 2003 97,606
--------------
$ 643,358
==============
At December 31, 2002, accrued interest payable on the above notes is
$12,354. As a result of the merger (see Note 11), these notes payable
eliminate during the consolidation with PNAC.
SURGIJET, INC.
On October 23, 1998, in connection with a Trademark, Technology and
Patent License Agreements entered into with SurgiJet, Inc., a company
related through common shareholders, the Company issued a demand
promissory note in the amount of $400,000 in favor of SurgiJet, Inc.,
in connection with the reimbursement of expenses incurred by SurgiJet
in the development of the related technology. The terms of the note
were amended on February 3, 2003 to establish payment requirements and
to increase the interest rate to 10% per annum. Under the amended note,
the first payment, in the amount of $30,000, is payable on February 11,
2003, the date of merger with PNAC. Thereafter, the note is payable in
equal monthly installments of $15,000, including interest on the first
of each month until paid in full. As of December 31, 2002 and 2001, no
payments had been made on the note.
Until the note is paid in full, interest on this note accrues on the
unpaid principal at a variable interest rate based on the prime rate,
which was 4.25% at December 31, 2002. Accrued interest on the note at
December 31, 2002 and 2001, was $137,149 and $118,448, respectively.
Pursuant the merger agreement, the loan is due and payable upon
successful completion of an independent audit of the Company's 2002
financial statements. At April 24, 2003, the balances are under
negotiation with the involved parties.
44
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - NOTES PAYABLE - RELATED PARTIES (CONTINUED)
----------------------------------------
DENTAJET, INC.
During 2002, the Company entered into a promissory note for a principal
sum of $91,000, plus interest at the rate of 10% per annum with
DentaJet Inc., a Nevada corporation ("DentaJet"), related through
common shareholders. DentaJet continued to provide funding in 2002
totaling an aggregate loan amount of $161,000. Loan payments were made
against this note in 2002 totaling $27,482 leaving an outstanding
principal balance at December 31, 2002 of $133,518. Accrued interest of
$9,567 was incurred during the year bringing the outstanding balance to
$143,086. Pursuant to the merger agreement, the loan is due and payable
upon successful completion of an independent audit of the Company's
2002 financial statements. At April 24, 2003, the balances are under
negotiation with the involved parties.
DUE TO AND FROM AFFILIATE
The Company shares its facility, operating equipment and personnel with
SurgiJet, Inc. Rent, equipment and personnel expenditures are allocated
to each entity based on the nature of the expense, current operations
and square footage of the facility. Certain expenses incurred by the
Company are paid for by SurgiJet, Inc. At December 31, 2001, the
Company had $4,430 in notes receivable from SurgiJet, Inc. related to
these expenditures.
SHAREHOLDERS
During 2002, the Company entered into a promissory note with Lance
Doherty, a shareholder of the Company, for a principal sum of $19,000
plus interest to accrue at a rate of 10% per annum. Total accrued
interest on the note is $1,767 at December 31, 2002. In addition, the
Company recorded as a note payable with no interest certain expenses
paid by Rex Doherty, the principal shareholder of the Company, in the
amount of $2,967 due and payable as of December 31, 2002.
FINANCIAL ENTREPRENEURS, INC. ("FEI")
Pursuant to an agreement entered into in connection with the merger
with PNAC, the Company entered into a note agreement with FEI, a
significant investor of PNAC. The note is due on demand and bears no
interest. The total amount due at December 31, 2002 and 2001 is
$345,000. As a result of the merger, in February 2003, FEI converted
the promissory note held by it into 378,997 shares of the Company's
common stock at a conversion rate of $1.00 per share. There was no
beneficial conversion feature on this note.
NOTE 5 - COMMITMENTS
--------------------
OPERATING LEASES
The Company's primary facility is leased through a property management
group. Rent expense was $62,160 and 94,250 for the years ended December
31, 2002 and 2001, respectively. Rent expense for the period from
February 2, 1996 (inception) to December 31, 2002 was $293,848.
45
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - COMMITMENTS (CONTINUED)
--------------------
The minimum annual lease payments as of December 31, 2002 are as
fo1lows:
Year Ending December 31,
2003 $ 94,188
2004 36,736
------------
$ 130,924
============
NOTE 6 - CONTINGENCY
--------------------
During 2001, judgments totaling $129,669 were entered against the
Company's former parent, SurgiJet, Inc. for failure to make scheduled
payments on equipment capital leases. These capital leases were
transferred and assumed by the Company as of January 1, 1999. The
Company provided SurgiJet, Inc with monthly payments of approximately
$8,000, including interest ranging from 19% to 30%. SurgiJet, Inc.
defaulted on two of the leases due to the Company's failure to make
payments. The Company's management has committed to pay the judgment on
SurgiJet's behalf. At December 31, 2002 and 2001, $129,669 is recorded
as an accrued liability.
NOTE 7 - SHAREHOLDERS' DEFICIT
------------------------------
COMMON STOCK - RELATED PARTIES
The Company issued 140,000 and 1,629,430 shares of common stock to
officers and directors valued at $2,800 and $32,589, respectively, for
commissions and consulting services for the years ended December 31,
2002 and 2001, respectively.
PREFERRED STOCK
During 1998, the Company raised $500,000 from the sale of 127,550
shares of Series A Preferred Stock priced at $3.92 per share to a small
group of private investors. In 1999, the Company raised an additional
$50,000 from the sale of 12,756 shares of Series A Preferred Stock.
During 1999, the Company raised $318,500 from the sale of 57,911 shares
of Series B Preferred Stock priced at $5.50 per share to a small group
of private investors.
During 2000, the Company issued 147,315 shares of Series B Preferred
Stock in exchange for services valued at $756,000.
During 2001, the Company raised $833,588 (net of issuance costs) from
the sale of 158,720 shares of Series B Preferred Stock priced at $5.50
per share to a small group of private investors.
Dividends, when declared are payable at a rate of $0.196 and $0.275 per
share per annum on each outstanding share of Series A and Series B
Preferred Stock, respectively, payable quarterly. Such dividends are
not cumulative.
46
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
---------------------------------------
Each share of Series A and B Preferred Stock shall be convertible into
Common Stock as determined by dividing $3.92 and $5.50 for each share
of Series A and B Preferred Stock, respectively, surrendered for
conversion. Each share of Preferred Stock will automatically be
converted at the conversion price upon the earlier of a) a public
offering which results in gross proceeds of at least $5,000,000, b) the
consent of a majority of Preferred Stockholders.
The Series A and B Preferred Stock have the right to one vote for each
share of common stock into which they can be converted. The Series A
and B Preferred Stock have certain liquidation and conversion price
adjustments for certain dilutive issuances, splits and combinations and
are not redeemable.
STOCK OPTIONS
In 1998, the Board of Directors approved the adoption of a stock option
plan ("1998 Plan") pursuant to which directors, officers, key
employees, consultants or associates are eligible to receive stock
options for common stock as defined in the 1998 Plan. The Company is
authorized to issue up to 500,000 shares of common stock under the 1998
Plan. All unexercised options terminate five years from the adoption
date of the 1998 Plan.
In 1999, the Board of Directors approved the adoption of a stock option
plan ("1999 Plan") pursuant to which directors, officers, key
employees, consultants, and scientific advisors and other personnel
working directly with the Company are eligible to receive stock options
for common stock as defined in the 1999 Plan. The Company is authorized
to issue up to 796,132 shares of common stock under the 1999 Plan. All
unexercised options terminate five years from the adoption date of the
1999 Plan.
During 1999, the Company has granted 927,382 common stock options to
employees and consultants. Of these grants, 927,382 stock options have
been exercised at their exercise price of $0.20 per share as of
December 31, 1999. The weighted average fair value of options granted
during 1999 is $0.20. There were no stock options granted after 1999.
NOTE 8 - INCOME TAXES
---------------------
The provision for income taxes consist of the following for the years
ended December 31:
2002 2001
--------- ---------
Current:
Federal $ -- $ --
State 800 800
--------- ---------
Total provision $ 800 $ 800
========= =========
47
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES (CONTINUED)
---------------------
The components of the net deferred income tax assets are as follows as
of December 31:
2002 2001
------------ ------------
Deferred income tax assets:
Net operating loss carry forward $ 2,398,000 $ 1,908,000
Other temporary timing adjustments 257,000 212,000
------------ ------------
2,655,000 2,120,000
Deferred tax liability:
State taxes (191,000) (149,000)
------------ ------------
Deferred income tax asset, net before
Valuation allowance 2,464,000 1,971,000
Less: valuation allowance (2,464,000) (1,971,000)
------------ ------------
Deferred income tax asset, net $ -- $ --
============ ============
Since 1996, the company has generated a net operating loss (NOL) of
approximately $5,674,000. The total carry forward amounts are available
to offset future taxable income and expire in various years through
2022. The ability to use some or all of this carryforward is limited by
future events such as a failure to generate positive taxable income or
a change in ownership as stated under the rules of Internal Revenue
Code Section 382.
The net deferred tax asset is primarily associated with its net
operating loss carryforwards, state taxes and other timing adjustments.
The Company has recorded a valuation allowance for the entire amount
due to the uncertainty surrounding the likelihood of the Company
generating sufficient taxable income in the future.
NOTE 9 - SETTLEMENT AGREEMENTS AND LOAN PAYABLE
-----------------------------------------------
On November 4, 2002, the Company entered into settlement agreements
with two consultants for past due consulting services. The total
amounts due at December 31, 2002 and 2001 were $700,000 and $408,349,
respectively.
The amounts due related to these settlements will be payable as
follows: $250,000 will be payable over one to two years at a 3.5%
annual interest rate, with the remaining $450,000 convertible to shares
of the merged company based upon the closing price of the merged
Company's stock on the day the merger with Ponte Nossa Acquisition
Corp. is completed (Note 11).
NOTE 10 - RESTATEMENT
---------------------
During the 2002 audit, it was discovered that certain accounting
matters related to the financial statements for the year ended December
31, 2001 required restatement. The Company's prior management
overstated expenses in 2001 by recording $93,595 of accrued personal
expense of the Company's prior management, as general and
administrative and research and development
48
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - RESTATEMENT (CONTINUED)
---------------------
expenses. The financial statements for the year ended December 31, 2001
have been restated to decrease operating expenses by $93,595. In
addition, it was discovered that certain general and administrative
expenses and research and development expenses related to the period
ended December 31, 2001 were included in the financial statements for
the year ended December 31, 2002. The financial statements for the year
ended December 31, 2001 have been restated for this error by increasing
operating expenses by $129,166. The net effect of these adjustments was
to increase net loss $35,571 for the year ended December 31, 2001.
As Reported As Restated
----------- -----------
General and administrative expenses $ 436,122 $ 458,773
Research and development expenses 944,745 957,665
----------- -----------
Total operating expenses $1,380,867 $1,416,438
=========== ===========
Net loss $1,439,602 $1,475,173
=========== ===========
NOTE 11 - SUBSEQUENT EVENTS
---------------------------
MERGER
On December 20, 2002, the Company entered into a Second Amended and
Restated Agreement and Plan of Merger with Ponte Nossa Acquisition
Corp., ("PNAC") a Delaware corporation, for the merger of the two
companies into a single company. The merger was consummated as a
reverse merger on February 11, 2003.
Under the terms of the agreement and Plan of Merger, 12,128,491 shares
of PNAC common stock were issued to the shareholders of the Company. In
addition, warrants to purchase an additional 4,528,481 shares or common
stock were issued to certain investors for cash concurrently with the
consummation of the merger.
As a result of this transaction, the Company became a wholly owned
subsidiary of PNAC. The transaction resulted in the shareholders of the
Company acquiring control of PNAC. For financial reporting purposes,
the business combination was accounted for as a recapitalization of the
PNAC (a reverse acquisition with the Company as the accounting
acquirer), whereby PNAC changed its name to VisiJet, Inc.
LITIGATION
On February 5, 2003, a claim was filed against the Company by an
outside consultant stating that the consultant is entitled to a
commission arising out of the merger between PNAC and the Company. The
complaint alleges that the plaintiff is entitled to 105,000 shares of
the Company's common stock. The Company denies the material
allegations of the complaint and plans to vigorously contest the
action.
49
UNAUDITED CONSOLIDATED FINACIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, December 31,
2003 2002
-------------- --------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 119,904 $ 960
Prepaid expenses 104,667 --
-------------- --------------
Total current assets 224,571 960
Property and equipment, net 98,885 47,443
-------------- --------------
Total assets $ 323,456 $ 48,403
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 725,239 $ 196,985
Compensation settlement agreement - current portion 111,043 595,833
Accrued interest 106,043 160,837
Accrued expenses 130,469 130,469
Royalty payable (see note 4) 45,000 60,000
Notes payable to related parties (see note 4) 617,265 1,543,843
Notes payable - current portion (see note 4) 37,061 --
-------------- --------------
Total current liabilities 1,772,120 2,687,967
Compensation settlement agreement, net of current portion 36,872 104,167
Notes payable to related parties, net of current portion (see note 4) 88,384 --
-------------- --------------
Total liabilities 1,897,376 2,792,134
-------------- --------------
Shareholders' deficit:
Common stock, 50,000,000 shares authorized, $.001 par value,
21,087,670 shares issued and outstanding as of September 30, 2003, 21,088 615,248
and 7,997,735 shares issued and outstanding as of December 31, 2002
Preferred stock, no par; 5,000,000 shares authorized;
140,306 Series A shares issued and outstanding as of December 31,2002 -- 550,000
636,364 Series B shares authorized; 363,946 shares issued and
outstanding as of December 31, 2002 -- 1,908,088
Additional paid in capital 7,108,148
Deficit accumulated during development stage (8,703,156) (5,817,067)
-------------- --------------
Shareholders' deficit (1,573,920) (2,743,731)
-------------- --------------
Total liabilities and stockholders' deficit $ 323,456 $ 48,403
============== ==============
The accompanying notes are an integral part of these financial statements.
50
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the period
Three months Three months Nine months Nine months February 2, 1996
ended ended ended ended (inception) to
Sept 30, 2003 Sept 30, 2002 Sept 30, 2003 Sept 30, 2002 Sept 30, 2003
-------------- -------------- -------------- -------------- --------------
Interest income $ -- $ -- $ 455 $ -- $ 455
-------------- -------------- -------------- -------------- --------------
Operating expenses:
General and administrative expenses 680,639 186,551 2,054,912 452,029 3,887,044
Research & development expenses 559,098 67,022 876,878 296,896 4,478,628
-------------- -------------- -------------- -------------- --------------
Total operating expenses 1,239,737 253,573 2,931,790 748,925 8,365,672
-------------- -------------- -------------- -------------- --------------
Loss from operations (1,239,737) (253,573) (2,931,335) (748,925) (8,365,217)
Other expense:
Interest expense (5,944) (21,940) (45,058) (62,638) (353,055)
Gain on Debt Restructure 90,303 -- 90,303 -- 90,303
Loss on judgment -- -- -- -- (21,483)
Loss on disposal of assets -- -- -- -- (48,104)
-------------- -------------- -------------- -------------- --------------
Total other expense 84,359 (21,940) 45,245 (62,638) (332,339)
-------------- -------------- -------------- -------------- --------------
Loss before provision for taxes (1,155,378) (275,513) (2,886,090) (811,563) (8,697,556)
Provision for Income taxes -- -- -- -- 5,600
-------------- -------------- -------------- -------------- --------------
Net loss $ (1,155,378) $ (275,513) $ (2,886,090) $ (811,563) $ (8,703,156)
============== ============== ============== ============== ==============
Net loss per common share - basic and diluted $ (0.56) $ (0.04) $ (0.154) $ (0.10)
Basic and diluted weighted average
number of common shares outstanding 20,468,856 7,817,735 18,707,993 7,776,423
The accompanying notes are an integral part of these financial statements
51
VISIJET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the period
Nine months Nine months February 2, 1996
ended ended (inception) to
September 30, September 30, September 30,
2003 2002 2003
---------------- ---------------- ----------------
Cash flows from operating activities
Net loss $ (2,886,090) $ (811,563) $ (8,703,156)
Adjustment to reconcile net loss to net
cash used by operating activities:
Depreciation 13,992 32,795 219,313
Loss from disposal of fixed assets -- 9,813 48,104
Common stock issued for finders fees 1,201 -- 103,558
Gain from Debt Restructure (90,303) -- (90,303)
Changes in assets and liabilities:
Prepaid expenses (104,667) -- (104,667)
Accounts payable and other accrued expenses 528,254 18,380 725,239
Income taxes payable -- -- 800
Compensation settlement agreement (102,085) 190,623 147,915
Royalties payable (15,000) -- 45,000
Accrued judgment -- -- 129,669
Accrued interest 36,922 (84,001) 197,759
---------------- ---------------- ----------------
Net cash used by operating activities (2,617,776) (643,953) (7,280,769)
---------------- ---------------- ----------------
Cash flows from investing activities
Acquisition of property and equipment (65,434) (4,633) (387,944)
---------------- ---------------- ----------------
Net cash used in investing activities (65,434) (4,633) (387,944)
---------------- ---------------- ----------------
Cash flows from financing activities
Advance from related party 231,725 303,751 1,823,022
Repayment of advances from related parties (166,156) (27,482) (193,638)
Proceeds from issuance of common stock, net 2,641,881 377,119 3,606,442
Proceeds from issuance and conversion of preferred stock, net -- -- 2,458,088
Cash acquired in reverse merger 30,693 -- 30,693
Interest converted to equity 33,997 -- 33,997
Merger adjustments to notes payable 30,013 -- 30,013
---------------- ---------------- ----------------
Net cash provided by financing activities 2,802,153 653,388 7,788,617
---------------- ---------------- ----------------
Net increase in cash 118,943 4,802 119,904
Cash and cash equivalents, beginning of period 960 (3,781) --
---------------- ---------------- ----------------
Cash and cash equivalents, end of period $ 119,903 $ 1,021 $ 119,904
================ ================ ================
Supplemental disclosures of cash flow information
Conversion of Debt to Equity 1,398,677
Conversion of Series A preferred stock to common stock 550,000
Conversion of Series B preferred stock to common stock 1,908,088
Fair value of net liabilities assumed at date of reverse merger 189,458
The accompanying notes are an integral part of these financial statements
52
VisiJet, Inc.
(A development stage company)
Notes to financial statements
NOTE 1 - NATURE OF OPERATIONS
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that are based on our
beliefs as well as assumptions made by and information currently available to
us. When used in this report, the words "believe," "plan," "expect,"
"anticipate," "estimate," "intends," and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks, uncertainties and assumptions. Should one or more of those risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, or
projected. We caution potential investors not to place undue reliance on any
such forward-looking statements, all of which speak only as of the date made.
BASIS OF PRESENTATION
The accompanying financial statements are unaudited and do not include
certain information and disclosures required by accounting principles generally
accepted in the United States of America for complete financial statements.
However, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments considered necessary to present fairly VisiJet,
Inc.'s ("the Company") financial position and results of operations, have been
included. These interim financial statements should be read in conjunction with
the financial statements and related notes for the year ended December 31, 2002
included in Amendment #2 to the Company's report on Form 8-K, filed on February
9, 2004. Results for interim periods are not necessarily indicative of trends or
of results for a full year.
BACKGROUND
VisiJet, Inc. develops and markets surgical devices for the field of
ophthalmology. Its initial products are based on the application of waterjet
technology to LASIK and cataract surgery. Potential customers include
physicians, surgical centers and hospitals.
VisiJet's predecessor ("Old VisiJet") was incorporated on February 2,
1996, to develop and distribute medical products.
In 1998, Old VisiJet, then a wholly owned subsidiary of SurgiJet, Inc.
was spun off from SurgiJet, Inc. and SurgiJet, Inc. distributed the shares of
Old Visijet common stock to its shareholders. Upon the completion of this
distribution, SurgiJet, Inc. had no further ownership interest in Old Visijet.
Certain operating assets and liabilities were assumed by Old Visijet in
connection with this spin-off.
In December 2002 Old VisiJet entered into a merger agreement with Ponte
Nossa Acquisition Corp., a Delaware corporation that had been incorporated as a
blank check company in 1997. The agreement called for the merger of the two
companies into a single company through the merger of an acquisition subsidiary,
6
VisiJet Acquisition Corporation, into Old VisiJet. The merger was consummated on
February 11, 2003, and immediately thereafter, Old VisiJet was merged into Ponte
Nossa Acquisition Corp., and the surviving company's name was changed to
"VisiJet, Inc."
Under the terms of the Merger Agreement, 8,600,000 shares of the
Company's Common Stock were issued to the shareholders of Old Visijet. Also,
3,528,481 shares of Common Stock, and warrants to purchase an additional
4,528,481 shares of Common Stock, were issued to certain investors for cash
concurrently with the consummation of the merger. Since this transaction
resulted in the shareholders of Old VisiJet acquiring a majority of the
outstanding shares of the Company, for financial reporting purposes the business
combination was accounted for as a reverse acquisition (i.e. a recapitalization
in which Old VisiJet is treated as the acquiror for financial accounting
purposes). As a result of the merger, the Company is continuing the business of
Old Visijet. Reference is made to the Company's Report on Form 8-K dated
February 11, 2003, as amended on April 23, 2003, and the Exhibits thereto.
The amounts reflected in the statement of operations and statement of
cash flows for the period ended September 30, 2003 have been restated to account
for the merger transactions between Ponte Nossa and VisiJet, Inc. that occurred
on February 11, 2003, as a reverse acquisition. The restated amounts, accounting
for the transaction as a reverse merger, reflect the operations and cash flows
of Old VisiJet and those of Ponte Nossa as if the acquisition had occurred
during the first business day of the operating period reported.
GOING CONCERN
The Company has incurred net operating losses since inception, has
generated no revenue, and has working capital and shareholders' equity deficits.
The Company is likely to incur substantial operating losses as it continues its
research and development efforts until such time, if ever, as product sales,
royalties, license and other fees can generate sufficient revenue to fund its
continuing operations. The ability of the Company to continue as a going concern
is dependent on obtaining additional capital and financing until it is operating
at a profitable level. The Company intends to seek additional capital through
debt or equity offerings. There can be no assurance that any of these fundings
will be consummated in the necessary time frames needed for continuing
operations on terms favorable to the Company. If adequate funds are not
available in the future, the Company will be required to significantly curtail
its operating plans. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense as incurred.
Certain corporate overhead expenses, such as professional fees, salaries, rent
and travel are allocated to research and development based on estimates made by
management.
7
DEPRECIATION
Depreciation of property and equipment is computed using the
straight-line method over estimated useful lives ranging from three to five
years.
USE OF ESTIMATES
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash, prepaid
expenses, accounts payable, and notes payable. The Company believes the fair
value of financial instruments approximate book value as of September 30, 2003.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2002, FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation, Transition and Disclosure" ("SFAS 148"). SFAS 148 amends the
disclosure requirements of SFAS No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123") to require prominent disclosures in both interim and
annual financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
SFAS 148 also amends SFAS 123 to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. The Company will commence quarterly footnote disclosure
of the fair value based method of accounting for stock-based employee
compensation beginning at such time that a plan for such compensation is
implemented. As the Company has decided not to voluntarily adopt the SFAS 123
fair value method of accounting for stock-based employee compensation, the new
transition alternatives of SFAS 148 will not have a material impact on its
financial position or results of operations.
NOTE 3 - PROPERTY AND EQUIPMENT
At September 30, 2003, property and equipment consist of:
Computer and test equipment $ 47,651
Furniture and fixtures 48,744
Trade show equipment 47,002
Assets under construction 6,938
------------
150,335
Less: Accumulated depreciation (51,450)
------------
$ 98,885
============
Depreciation expense for the nine months ended September 30, 2003
amounted to $13,992 and amounted to $219,313 between inception and September 30,
2003. Assets under construction are comprised of tooling equipment for
Hydrokeratome production.
8
NOTE 4 - NOTES PAYABLE
OTHER
Three individuals who performed services for the Company accepted
promissory notes for those services. As of September 30, 2003, the aggregate
principal amount outstanding for these notes was $37,061. Accrued interest on
these notes totaled $1,712 at September 30, 2003.
ROYALTY PAYABLE
During October 1998, the Company entered into certain Trademark,
Technology and Patent License Agreements with SurgiJet, Inc. for the exclusive
rights to pursue development, regulatory approval, and manufacture of waterjet
technologies in the ocular filed. These agreements require minimum payments of
$60,000 and royalties earned on Net Sales as follows: 7% of the Net Sales until
such time as cumulative Net Sales have equaled $400 million over the term of
this Agreement and 5% of Net Sales thereafter, all for such period of time equal
to the duration of the license contemplated under this Agreement. All Running
Royalties shall be paid by the Company on or before 45 days after March 31st,
June 30th, September 30th and December 31st of each calendar year.
The Company incurred $60,000 in royalty expenses for the year ended
December 31, 2002 and has accrued $45,000 as of September 30, 2003.
SHAREHOLDERS
During 2002, Old Visijet entered into a promissory note with Lance
Doherty, a shareholder of Old Visijet, for a principal sum of $19,000, plus
interest to accrue at a rate of 10% per annum. Total accrued interest on the
note is $5,253 at September 30, 2003. Pursuant to the merger agreement, the loan
is due and payable upon successful completion of an independent audit of Old
VisiJet's 2002 financial statements, verifying the amount due. The actual amount
due to Mr. Doherty is currently the subject of negotiation with the involved
parties.
In addition, the Company recorded as a liability certain expenses paid
by Rex Doherty in the amount of $2,967 plus interest accrued at a rate of 10%
per annum. Total accrued interest as of September 30, 2003 was $218. The actual
amount due to Mr. Doherty is currently the subject of negotiation with the
involved parties.
FINANCIAL ENTREPRENEURS, INC. ("FEI")
Pursuant to an agreement entered into in connection with the merger,
the Company entered into a note agreement with FEI, a significant shareholder of
the Company. The note is due on demand and bears no interest. The total amount
due at December 31, 2002 was $345,000. At the time of the merger, FEI converted
the promissory note held by it into 378,997 shares of the Company's common stock
at a conversion rate of $1.00 per share. There was no beneficial conversion
feature on this note.
9
FEI also funded certain expenditures of the Company prior to the
acquisition period. The Company entered into a promissory note agreement with
FEI on April 14, 2002 for such loan amounts, bearing an interest rate of 7.5%
per annum. As of September 30, 2003, the aggregate loan amount was $193,163 and
accrued interest was $23,365.
SURGIJET, INC.
On October 23, 1998, Old Visijet issued a demand promissory note in the
amount of $400,000 in favor of SurgiJet, Inc., a company then related through
common shareholders. Interest accrued on the unpaid principal at a variable
interest rate based on the prime rate totaling $139,955 on February 11, 2003. A
replacement note was executed on February 11, 2003 to establish payment
requirements and to increase the interest rate to 10% per annum. Under the new
note, both the payment schedule and interest rate were modified which resulted
in $449,652 of combined debt and interest payable. The first payment of $30,000
was due on February 11, 2003 with equal monthly installments of %15,000,
including interest on the first of each month, until paid in full. As a result
of the modifications from the replacement note, the Company recorded a $90,303
gain on the difference between the total interest expense on the new note of
$49,652 and the total accrued interest of $139,955 from the old note. The
Company will continue to amortize the remaining $49,652 of accrued interest
expense as payments are made on the note. At September 30, 2003 the principal on
this note was $355,000 as a result of payments made as described above. A
portion of these notes, $88,384, is classified as long-term debt.
The validity of the underlying note, as well as the replacement note,
is disputed by the Company, which has commenced negotiations with SurgiJet, Inc.
on the disposition of the matter.
DENTAJET, INC.
During 2002, Old Visijet entered into a promissory note for a principal
sum of $91,000, plus interest at the rate of 10% per annum with DentaJet Inc., a
Nevada corporation ("DentaJet"), then related through common shareholders.
DentaJet continued to provide funding in 2003 and 2002 of $2,000 and
$70,000, respectively, totaling an aggregate loan amount of $163,000. Loan
payments were made against this note in 2002 totaling $27,482 leaving an
outstanding principal balance at September 30, 2003 of $135,518. Accrued
interest on this note totaled $20,710 at September 30, 2003. Pursuant to the
merger agreement, the loan is due and payable upon successful completion of an
independent audit of Old VisiJet's 2002 financial statements, verifying the
amount due. The actual amount due to DentaJet is currently the subject of
negotiation with the involved parties.
NOTE 5 - COMMITMENTS
OPERATING LEASES
The Company's primary facility is leased through a property management
group. Rent expense was $59,597 for the nine months ended September 30, 2003.
10
On April 20, 2003, the Company expanded its facility to include an area
in the proximity to the rear of the building, increasing the leased area to
approximately 5,127 square feet. The Company moved its administrative staff to
this area, freeing up space in its existing facility to house R&D and
operations. Monthly rent increased by $2,420, for a total of $7,600 per month.
Rent amounts include common area charges.
On May 12, 2003 the Company entered into a 5 year lease agreement for a
copy machine with monthly payments of $264.
NOTE 6 - SHAREHOLDERS' EQUITY
On February 11, 2003, as a result of the merger with Old Visijet,
12,128,481 shares of the Company's common stock were issued in exchange for all
the shares of Old VisiJet's common stock, including shares of Series A and B
Preferred Stock that were converted into common stock immediately prior to the
merger. In addition, warrants to purchase an additional 4,528,481 shares of
common stock were issued to certain investors concurrently with the consummation
of the merger.
Pursuant to an agreement entered into in connection with the merger,
FEI converted a promissory note held by it into 378,997 shares of common stock
at a conversion rate of $1.00 per share. Also, FEI agreed to cancel 7,957,000
shares of the Company's common stock owned by it, and the Company issued FEI a
five year warrant to purchase 1,500,000 shares of common stock at an initial
exercise price of $5.00 per share. Also, pursuant to the same agreement, the
Company issued to Laurence M. Schreiber, its Secretary, Treasurer and Chief
Operating Officer, a five-year warrant to purchase 25,000 shares of its common
stock at an exercise price of $3.00 per share, and issued to Thomas F. DiMele,
its former President, a five year warrant to purchase 25,000 shares of its
common stock at an exercise price of $3.00 per share.
In February 2003, the Company issued 211,267 shares of common stock to
Randal A. Bailey, its President and Chief Executive Officer, and Larry L. Hood,
its Chief Engineer, in satisfaction of unpaid salary. See Note 7 below for
further details.
During the post-merger period of the quarter ending March 31, 2003,
private placements by the Company raised $1,016,000 net of offering expenses and
the investors received 2,104,511 shares of common stock and five year warrants
to purchase 2,104,511 shares of common stock at varying prices ranging from
$2.50 to $3.25 per share depending upon date of issuance. The number of shares
issuable and the exercise price of the warrants may be subject to adjustment to
reflect changes in the market price of the common stock during the offering
period.
During the quarter ended June 30, 2003 the Company completed private
placement offerings with several investors. The private placements raised
$725,000 net of offering expenses, and the investors received 758,333 shares of
common stock and five year warrants to purchase 758,333 shares of common stock
at varying prices ranging from $2.25 to $3.25 per share, depending upon date of
issuance. The number of shares issuable and the exercise price of the warrants
may be subject to adjustment to reflect changes in the market price of the
common stock during the offering period.
11
On June 1, 2003, the Company adjusted prior private placements that
were placed at rates higher than $1.00 per share for common stock and greater
than $2.25 per warrant based on the average market price preceding those
placements. This adjustment affected seven investors, resulting in an additional
182,500 shares purchased through private placements during 2003 and an
additional 182,500 warrants priced at $2.25. If this change had occurred during
the quarter ended March 31, 2003, the basic and diluted weighted average shares
would have increased to 14,236,714 from 14,171,631 or an increase of 65,083
shares. This change in stock ownership did not materially impact the earnings
per share for first quarter 2003.
During the quarter ended September 30, 2003, the Company completed
private placement offerings with several investors netting $900,880 for 932,500
shares of common stock and five year warrants to purchase 932,500 shares of
common stock at an exercise price of $2.25 per share. The number of shares
issuable and the exercise price of the warrants may be subject to adjustment to
reflect changes in the market price of the common stock during the offering
period.
For the nine months ended September 30, 2003, private placements raised
$2,641,881 net of offering expenses, which includes $564,000 provided by private
venture capital investors completing their initial round of financing of
$1,125,000. The private placements received 2,205,000 shares of common stock and
five year warrants to purchase 2,205,000 shares of common stock at an exercise
price of $2.25. The investors received 3,528,480 shares of common stock and five
year warrants to purchase 4,528,480 shares of common stock at an exercise price
$1.00 per share increasing by $0.50 per year. The number of shares issuable and
the exercise price of the warrants may be subject to adjustment to reflect
changes in the market price of the common stock during the offering period.
NOTE 7 - COMPENSATION SETTLEMENT AGREEMENTS
On November 4, 2002, Old Visijet entered into agreements with Randal A.
Bailey, its President and Chief Executive Officer, and Larry Hood, its Director
of Engineering, to pay for consulting services previously rendered by them. The
total amount due related to these agreements at November 4, 2002 was $700,000,
and is to be paid as follows: $250,000 is payable over one to two years in
installments, at a 3.5% annual interest rate, and the remaining $450,000 was
converted into 211,267 shares of common stock of the Company, effective on the
date of the merger. At September 30, 2003, the balance on these notes was
$147,915, including $5,132 of accrued interest. A portion of these notes,
$36,872, is classified as long-term debt.
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The certificate of incorporation and the by-laws of the registrant provide
that the registrant shall indemnify its officers, directors and certain others
to the maximum extent permitted by the General Corporation Law of the State of
Delaware.
Section 145 of the General Corporation Law of the State of Delaware
provides in relevant part as follows:
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative) other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interest of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
58
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
The General Corporation Law does not allow for the elimination or
limitation of liability of a director: (i) for any breach of a director's duty
of loyalty to the corporation or its stockholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) arising under Section 174 thereof; or (iv) for any transaction from
which the director derived an improper personal benefit. The General Corporation
Law provides further that the indemnification permitted thereunder shall not be
deemed exclusive of any rights to which the directors and officers may be
entitled under the corporation's bylaws, any agreement, a vote of stockholders
or otherwise.
In addition, pursuant to our certificate of incorporation and by-laws, we
shall indemnify our directors and officers against expenses (including judgments
or amounts paid in settlement) incurred in any action, civil or criminal, to
which any such person is a party by reason of any alleged act or failure to act
in his capacity as such, except as to a matter as to which such director or
officer shall have been finally adjudged not to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 25. Other Expenses of Issuance and Distribution.
SEC registration fee $ 2,591
Printing and duplication expenses $ 2,000
Legal fees and expenses $ 25,000
Accounting Fees $ 15,000
Miscellaneous $ 1,409
-----------
TOTAL $ 46,000
============
Item 26. Recent Sales of Unregistered Securities.
The securities of the Company that were issued by it within the past three
years and were not registered with the SEC are described below.
In April 2002, the Company issued 300,000 shares of restricted Common stock
to an investor in consideration for the investor's cancellation of an
outstanding warrant to purchase 5,500,000 shares of the Company's Common Stock
for an exercise price of $100,000.
In May 2002, the Company issued 135,000 shares of restricted Common Stock,
and a five-year warrant to purchase an additional 135,000 shares of Common Stock
at an exercise price of $2.50 per share, to a single private investor. The
purchase price was $150,000.
In August 2002, the Company issued an additional 100,000 shares of
restricted Common Stock, and a five year warrant to purchase an additional
100,000 shares of Common Stock, at an exercise price of $2.50 per share, to a
single private investor. The purchase price was $100,000.
The Company believes that the foregoing transactions were exempt from the
registration requirements of the Securities Act of 1933, as amended, by reason
of Section 4(2) thereof and Regulation D thereunder.
59
In February 2003 the Company issued 12,128,481 shares of Common Stock to
217 persons upon the acquisition of its predecessor, VisiJet, Inc. through a
statutory merger. The Company believes the transaction was exempt from the
registration requirements of the Securities Act of 1933, as amended, by reason
of Section 3(a)(10) thereof.
During 2003 the Company received gross proceeds of $4,575,000 from the sale
of 5,749,987 shares and warrants to purchase 6,249,986 shares of Common Stock to
47 private investors. The Company believes that the transaction was exempt from
the registration requirements of the Securities Act of 1933, as amended, by
reason of Section 4(2) thereof and Regulation D thereunder.
Item 27. Exhibits.
Exhibit No. Exhibit Description
----------- -------------------
2.1 Second Amended and Restated Agreement and Plan of Merger, dated
December 20, 2002 among Ponte Nossa Acquisition Corp., VisiJet,
Inc., and VisiJet Acquisition Corporation (1)
2.2 Amendment No. 1, dated January 15, 2003, to Second Amended and
Restated Agreement and Plan of Merger (3)
3.1 Restated Certificate of Incorporation of the Company (filed
herewith)
3.3 Agreement of Merger, filed February 11, 2003 (3)
3.4 Certificate of Ownership and Merger, filed February 12, 2003 (3)
3.5 Amended and Restated Bylaws (3)
5.1 Opinion of Haddan & Zepfel LLP (filed herewith)
10.1 Patent License Agreement between SurgiJet, Inc. and VisiJet, Inc.,
dated October 23, 1998 (3)
10.2 Amendment No. 1 to Patent License Agreement, dated November 6,
2002 (4)
10.3 Technology License Agreement between SurgiJet, Inc. and VisiJet,
Inc., dated October 23, 1998 (3)
10.4 Amendment No. 1 to Technology License Agreement, dated November 6,
2002 (4)
10.5 Trademark License Agreement between SurgiJet, Inc. and VisiJet,
Inc., dated October 23, 1998 (3)
10.6 Amendment No. 1 to Trademark License Agreement, dated November 6,
2002 (4)
10.7 Warrant, dated February 11, 2003, issued to PCL Associates (3)
10.8 Warrant, dated February 11, 2003, issued to David E. Eisenberg
Trust (3)
10.9 Warrant, dated February 11, 2003, issued to Laurence Schreiber (3)
10.10 Warrant, dated February 11, 2003, issued to Financial
Entrepreneurs Incorporated (3)
10.11 Stock Purchase Agreement, dated January 9, 2004, between the
Company and SBI Brightline II, LLC
10.12 Stock Purchase Agreement, dated January 9, 2004, between the
Company and Trilogy Investment Fund I LLC
60
23.1 Consent of Peterson & Co. LLP, Certified Public Accountants
23.2 Consent of Haddan & Zepfel LLP (included in Exhibit 5.1)
____________
(1) Incorporated by reference from Report on Form 8-K of the Company,
filed on January 7, 2003
(2) Incorporated by reference from Registration Statement on Form
10-SB of the Company, filed on March 22, 1999
(3) Incorporated by reference from Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2002
(4) Incorporated by reference from Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2003
Item 28. Undertakings.
The undersigned registrant hereby undertakes that:
(1) It will file, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) For the purpose of determining any liability under the Securities Act
of 1933, treat each such post-effective amendment as a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time to be the initial bona fide offering thereof; and
(3) It will remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
61
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on February 5, 2004.
VISIJET, INC.
By: /s/ Randal A. Bailey
----------------------------------------
Randal A. Bailey,
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Randal A. Bailey his true and lawful
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign any and all
amendments (including post- effective amendments) to this registration statement
and to sign a registration statement pursuant to Section 462(b) of the
Securities Act of 1933, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Randal A. Bailey President and a Director February 5, 2004
------------------------- (Principal Executive Officer)
Randal A. Bailey
/s/ Laurence M. Schreiber Vice President, CFO and a Director February 5, 2004
------------------------- (Principal Financial and
Laurence M. Schreiber Accounting Officer)
Directors:
/s/ Richard H. Keates Chairman of the Board of Directors February 6, 2004
-------------------------
Richard H. Keates
/s/ Adam Krupp Director February 6, 2004
-------------------------
Adam Krupp
/s/ Norman Schwartz Director February 5, 2004
-------------------------
Norman Schwartz
62