<PAGE>
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934)
For the transition period from___________ to ____________
Commission File Number 1-14160
HelpMate Robotics Inc.
(Exact name of small business issuer as
specified in its charter)
<TABLE>
<S> <C>
Connecticut 06-1110906
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
Shelter Rock Lane; Danbury, Connecticut; 06810
(Address of principal executive offices)
(203) 798-8988
(Issuer's telephone number)
_________________________________________________________________
(Former name, former address and formal fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No__
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes __ No__
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the registrant's common stock as of October
21, 1996 is 6,333,971 shares.
Transitional Small Business Disclosure Format (Check One) Yes____ No X<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HelpMate Robotics Inc.
Balance Sheet (Unaudited)
September 30, 1996
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,530,659
Accounts receivable, net of allowance for
doubtful accounts of $41,481 457,222
Inventory, net 2,020,699
Prepaid expenses and other 253,512
-----------
Total current assets 4,262,092
Equipment leased to others, net of accumulated
depreciation of $1,101,177 1,986,234
Property and equipment, net of accumulated
depreciation of $593,016 517,720
-----------
$ 6,766,046
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 856,461
Current portion long term debt 126,335
Customer advances 43,080
-----------
Total current liabilities 1,025,876
Long term debt, less current portion 1,599,341
Stockholders' equity:
Common stock, no par value; 10,000,000 shares authorized;
6,335,205 shares issued and outstanding 16,785,548
Capital surplus 5,128,525
Accumulated deficit (17,773,244)
-----------
Total stockholders' equity 4,140,829
-----------
$ 6,766,046
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES
2
<PAGE>
HelpMate Robotics Inc.
Statements of Operations (Unaudited)
Nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Nine months ended September 30
1996 1995
<S> -------- --------
Revenues: <C> <C>
Sales revenues $ 789,618 $ 1,215,573
Rental revenues 910,186 705,191
Research and development contracts 174,550 136,475
----------- -------------
Total revenues 1,874,354 2,057,239
Cost of revenues:
Cost of sales 549,431 970,703
Cost of rental revenues 612,390 458,738
Cost of research and development contracts 162,175 162,137
----------- -------------
Total costs of revenues 1,323,996 1,591,578
----------- -------------
Gross profit 550,358 465,661
Selling, general and administrative expenses 3,155,428 2,028,674
Non cash compensation expense 45,938 120,000
----------- -------------
3,201,366 2,148,674
Operating loss (2,651,008) (1,683,013)
Interest expense, net (136,897) (200,650)
Non cash financing expense - (17,276)
Other expense, net (20,333) (27,842)
----------- -------------
(157,230) (245,768)
----------- -------------
Net loss (2,808,238) (1,928,781)
Preferred stock dividends paid 57,147 584,415
Net loss applicable to common stock $ (2,865,385) $ (2,513,196)
----------- -------------
----------- -------------
Per share amounts:
Net loss applicable to common stock $(.49) $(1.55)
----------- -------------
----------- -------------
Weighted average number of shares of
common stock outstanding 5,865,721 1,622,406
----------- -------------
----------- -------------
Supplemental net loss applicable
to common stock $(.46)
----------- -------------
----------- -------------
Supplemental weighted average number
of shares of common stock outstanding 6,043,989
----------- -------------
----------- -------------
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
HelpMate Robotics Inc.
Statements of Operations (Unaudited)
Three months ended September 30, 1996 and 1995
<TABLE>
Three months ended September 30
1996 1995
----------- ----------
<S> <C> <C>
Revenues:
Sales revenues $ 226,056 $ 679,247
Rental revenues 353,381 239,089
Research and development contracts - 74,317
----------- -----------
Total revenues 579,437 992,653
Cost of revenues:
Cost of sales 200,763 617,428
Cost of rental revenues 234,910 148,658
Cost of research and development contracts - 82,557
----------- -----------
Total costs of revenues 435,673 848,643
----------- -----------
Gross profit 143,764 144,010
Selling, general and administrative expenses 1,262,687 601,475
----------- -----------
Operating loss (1,118,923) (457,465)
Interest expense, net (46,799) (84,727)
Non cash financing expense - (17,276)
Other expense, net (2,088) (11,571)
----------- -----------
(48,887) (113,574)
----------- -----------
Net loss (1,167,810) (571,309)
Preferred stock dividends paid - 203,319
----------- ------------
Net loss applicable to common stock $(1,167,810) $ (774,358)
----------- ------------
----------- ------------
Per share amounts:
Net loss applicable to common stock $(.18) $(.48)
----------- ------------
----------- ------------
Weighted average number of shares
of common stock outstanding 6,373,758 1,625,282
----------- ------------
----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
HelpMate Robotics Inc.
Statements of Cash Flows (Unaudited)
Nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Nine months ended September 30
1996 1995
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(2,808,238) $(1,928,781)
Adjustments to reconcile net loss
to net cash used by operating activities:
Rent - 104,220
Compensation 45,938 120,000
Financing - 17,276
Interest 195,304 49,923
Depreciation and amortization 517,309 398,275
Provision for doubtful accounts 47,413 24,904
Other 44,547 -
Changes in operating accounts:
(Increase) in accounts receivable (265,620) (342,427)
(Increase) in inventory (857,046) (161,387)
(Increase) in prepaid expenses and other (256,548) (33,004)
Increase in accounts payable and
accrued expenses 350,870 392,230
(Decrease) increase in customer advances (76,833) 227,103
------------ ------------
Total adjustments (254,666) 897,113
------------ ------------
Net cash used in operating activities (3,062,904) (1,031,668)
------------ ------------
INVESTING ACTIVITIES
Proceeds from sale of property & equipment - 1,045
Purchase of equipment leased to others (1,112,730) (211,873)
Purchase of property and equipment (258,728) (44,047)
------------ -------------
Net cash used in investing activities (1,371,458) (254,875)
------------ -------------
FINANCING ACTIVITIES
Repayments of notes payable (328,354) (203,523)
Proceeds from exercise of stock options 1,829 -
Redemption of common stock issued for rent (210,000) -
Proceeds from issuance of common stock,
net of expenses 6,138,941 -
Proceeds from issuance of notes payable - 961,532
Preferred stock dividends paid (57,147) -
------------ -------------
Net cash provided by financing activities 5,545,269 758,009
------------ -------------
Net increase (decrease) in cash and
cash equivalents 1,110,907 (528,534)
Cash and cash equivalents at
beginning of period 419,752 549,252
------------ -------------
Cash and cash equivalents at
end of period $ 1,530,659 $ 20,718
------------ -------------
------------ -------------
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
HelpMate Robotics Inc.
Notes to Condensed Financial Statements (Unaudited)
September 30, 1996
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310
of Regulation S-B. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, considered necessary for a fair
presentation have been included in the accompanying unaudited financial
statements. In addition, certain amounts for prior periods have been
reclassified to be comparable with the current period presentation.
Operating results for the three and nine month periods ended September 30,
1996 are not necessarily indicative of the results that may be expected for
the full year ending December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1995.
INITIAL PUBLIC OFFERING
The Company completed an initial public offering on January 31, 1996 of
1,449,918 units with each unit consisting of two shares of common stock, no
par value per share, and one redeemable common stock purchase warrant,
whereby 1,252,996 units were sold by the Company and 196,922 units were sold
by certain lenders who provided interim financing to the Company (the
"Selling Bridge Securityholders"). The Company received proceeds of
approximately $6.1 million net of expenses of approximately $1.7 million and
is using such proceeds for, among other things, the expansion of its sales
and marketing activities, and expansion of its fleet of units being rented.
Further, $210,000 of the proceeds were used to redeem certain common shares
issued for rent.
Immediately prior to the closing of the initial public offering, the
following became effective: (i) all outstanding shares of preferred stock of
the Company were converted into common stock, (ii) certain convertible notes
issued to the Selling Bridge Securityholders in the original principal amount
of $800,000 were converted into 196,622 units, (iii) the Company's
certificate of incorporation was amended to increase the authorized common
stock of the Company to 10,000,000 shares, (iv) the Company's certificate of
incorporation was amended to eliminate the class of preferred stock, and (v)
a 4.93599 - to - 1 stock split with respect to common stock was effected.
Accordingly, all common share amounts have been restated to give effect to
the 4.93599 - to - 1 stock split.
EARNINGS PER SHARE AND SUPPLEMENTAL NET LOSS PER SHARE
Earnings per common share is computed using the treasury stock method
based on the weighted average number of common shares and common stock
equivalent shares outstanding during the period, as adjusted retroactively
for the aforementioned stock split. Shares from the assumed exercise of
options and warrants granted by the Company and shares issuable in connection
with the Company's convertible preferred stock have been included in the
computations of earnings per share for all periods unless their inclusion
would be anti-dilutive. However, for purposes of computing net loss per
share, options and warrants granted by the Company during the 12 months
preceding the initial public offering date, including those shares issuable
in connection with the anti-dilution provisions of certain warrant
agreements, have been included in the calculation of common stock and common
stock equivalent shares outstanding as if they were outstanding for all
periods presented using the treasury stock method and the public offering
price of $6.25 per unit or $3.00 per share and $0.25 per warrant.
Supplemental net loss per share of common stock for the nine month period
ended September 30, 1996 was ($0.46). Supplemental net loss per share of
common stock is computed using the if-converted method based on the pro forma
weighted average number of shares of common stock and common stock equivalent
as defined above, and convertible preferred shares that were converted into
common stock on a 1-4.55 basis upon the closing of the initial public
offering, adjusted retroactively for the aforementioned stock split. Net
loss per share used in the supplemental loss per share calculation was
decreased for dividend requirements on preferred shares.
6
<PAGE>
HelpMate Robotics Inc.
Notes to Condensed Financial Statements (Unaudited)
September 30, 1996
(continued)
ADOPTION OF NEW ACCOUNTING STANDARD
In March, 1995 the Financial Accounting Standards Board (FASB) issued
Statement No.121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
LONG-LIVED ASSETS TO BE DISPOSED OF. Accordingly, the Company adopted the
accounting treatment prescribed by this statement for its fiscal year
beginning after December 15, 1995. Consequently, in the event that
circumstances indicate that the carrying value of the Company's long lived
assets may be impaired, an evaluation of the recoverability would be
performed. If such an evaluation is required, the estimated future
undiscounted cash flow associated with the asset would be compared to the
carrying value of the asset to determine if a write-down to net realizable
value is required. To date, such write-downs have not been material.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company was founded in 1984 to perform consulting services, provide
seminar leadership and undertake, on a contract basis, engineering and
research and development projects related to robotics and robotics
applications. These activities subsequently branched into product
development, culminating in the development of several products having
commercial applications, and ultimately, in the Company's flagship product,
the HelpMate-Registered Trademark- robotics courier system. The Company
historically has derived revenue from three principal sources: rentals of
HelpMates, sales of HelpMates and to a lesser extent research and development
contracts. The Company also has derived revenues from the sale of other
robotic components such as LabMate, LightRanger and BiSight.
The Company's near-term objective is to attain profitability by establishing
the HelpMate robotics system as a flexible, cost-efficient and preferred
method for transporting materials within hospitals and other healthcare
facilities. The Company's business strategy has been to (a) build a marketing
and customer service staff that will implement its marketing program for the
rental and sale of HelpMates to hospital users within North America, and (b)
enhance its HelpMate robotics systems through product improvement, cost
reduction and new feature development. To that end, during the first nine
months of 1996, the Company has hired seven sales individuals in various
regions of the United States, conducted presentations of the HelpMate robot
at five trade shows and contracted with a health care equipment
manufacturer's representative to sell the product in the greater New York area.
The Company's cash requirements and overall
profitability are, among other things, highly dependent upon the Company's
mix of robot rentals and robot sales While the cost of producing and
installing a unit is recouped immediately when a unit or its related revenue
stream is sold, it currently takes approximately 18 months (at current rental
rates) for the Company to recoup such costs when a unit is rented. This
payback period has been reduced from 23 months at the beginning of the fiscal
year due to the Company's efforts to reduce costs in the manufacturing and
installation process. During the nine month period ended September 30, 1996,
the Company has expended approximately $1.1 million to produce and install
robots rented during the period.
INITIAL PUBLIC OFFERING
The Company completed an initial public offering on January 31, 1996 of
1,449,918 units with each unit consisting of two shares of common stock, no
par value per share, and one redeemable common stock purchase warrant,
whereby 1,252,996 units were sold by the Company and 196,922 units were sold
by certain lenders who provided interim financing to the Company (the
"Selling Bridge Securityholders"). The Company received proceeds of
approximately $6.1 million net of expenses of approximately $1.7 million and
to date has used such proceeds for, among other things, expanding its sales
and marketing staff, increasing promotional activities (trade shows, product
literature, etc.), broadening its fleet of rental units and providing value
engineering and manufacturing and installation cost reduction. Further,
$210,000 of the proceeds were used to redeem certain common shares issued for
rent.
REVENUES
Total revenues decreased by $182,885 or 9% from the nine months ended
September 30, 1995 compared to the nine month period ended September 30,
1996. Rental revenues however increased by $204,995 or 29% and sales revenues
decreased by $425,955 or 35%.
Total revenues decreased by $413,216 or 42% from the three months ended
September 30, 1995 compared to the three months ended September 30, 1996.
Rental revenues increased by $114,292 or 48% while sales revenues decreased
by $453,191 or 67% for the same period.
The increase in rental revenues is reflective of the Company's expanded
fleet of rental units which is currently 46, a 70% increase from the 27 units
under rent at September 30, 1995. The decrease in sales revenues was
attributable to Yaskawa Electric Corporation purchasing a significant amount
of component parts in the first nine months of 1995 (none purchased in 1996)
so that it could begin to manufacture and distribute HelpMates in Japan and
the Far East in accordance with the Company's distribution agreement with
Yaskawa. The increase in research and development contract revenues is
primarily attributable to the completed contract for the first phase of a
NASA sponsored program entitled "Two Armed, Mobile, Sensate Research Robot."
8
<PAGE>
COST OF REVENUES
Cost of revenues decreased by $267,582 or 17% from the nine months ended
September 30, 1995 compared to the nine months ended September 30, 1996.
Cost of revenues decreased by $412,970 or 49% from the three months ended
September 30, 1995 compared to the three months ended September 30, 1996.
The decrease in cost of revenues generally reflects the decrease in revenues
discussed above coupled with the Company's ongoing efforts in reducing the
cost associated with manufacturing and installing its HelpMate robots.
GROSS PROFIT
Gross profit increased by 18% or $84,697 from the nine months ended
September 30, 1995 compared to the nine months ended September 30, 1996.
Gross profit was flat for the three months ended September 30, 1995 compared
to the three months ended September 30, 1996. The increase in gross profit
dollars for the nine month period reflects the the Company's on-going
strategy to reduce costs (as discussed above) and also reflects the Company's
decision to only accept research and development contracts that are
fully-funded. Further, the increase is partially attributable to the fact
that the sales made in the nine month period in 1995 were reflective of
discounts required to be granted to the Company's distributors in the Far
East and Europe. Further, gross profit as a percentage of sales increased by
30% to 29% in the nine months ended September 30, 1996 from the nine months
ended September 30, 1995 and increased by 71% to 25% in the three months
ended September 30, 1996 from the three months ended September 30, 1995. The
increase in gross profit as a percentage of sales is further reflective of
the Company's on going strategy to reduce costs and only accept research and
development contracts that are fully funded.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, General and Administrative
Expenses increased by $1,126,754 or 56% from the nine months ended September
30, 1995 compared to the nine months ended September 30, 1996. Selling,
General and Administrative Expenses increased by $661,212 or 110% from the
three months ended September 30, 1995 compared to the three months ended
September 30, 1996. The increase reflects an increase in staffing (including
the hiring of seven sales executives) and the development of a marketing and
public relations program associated with promoting the HelpMate robot. The
aforementioned increases have resulted in a significant number of rental
orders being recently received by the Company (6 in September and 6 more in
October). Further, the Company also incurred costs required to enhance the
Company's HelpMate robotics systems through improved product reliability,
manufacturing and installation cost reduction, and value engineering, which
also contributed to the increase in selling, general and administrative
expenses. In addition, in light of the Company's not receiving orders until
the third quarter, (see "Liquidity and Capital Resources" below) it shifted
its planned production and installation of HelpMate robots to later in the
year. This caused a reduction of direct labor hours and therefore a
requirement for more overhead to be unabsorbed resulting in an increase in
selling, general and administrative expenses.
INTEREST EXPENSE
Interest expense decreased by $63,753 or 32% from the nine months ended
September 30, 1995 compared to the nine months ended September 30, 1996.
Interest expense decreased by $37,928 or 45% from the three months ended
September 30, 1995 compared to the three months ended September 30, 1996.
The decrease in interest expense reflects interest income earned on the
proceeds from the Company's initial public offering offset by interest
expense related to loans received by the Company in the latter half of 1995.
Such declines are not expected to continue as the Company's use of cash in
expanding its fleet of rental units will result in a decrease in the amount
of interest income earned.
9
<PAGE>
LOSSES
The Company incurred a net loss from continuing operations of $2,651,008
and $1,618,013 for each of the nine month periods ending September 30, 1996 and
September 30, 1995, respectively and incurred a net loss from continuing
operations of $1,118,923 and $457,465 for each of the three month periods ending
September 30, 1996 and September 30, 1995, respectively. These losses were
sustained primarily because the Company has not achieved the volume of sales and
rentals of HelpMates required to cover the overhead expenses associated with the
commercialization of its HelpMate systems and due to the increase in staffing
and sales and marketing expenses noted above. It should further be mentioned
that while the Company's order load continued to increase it increased
substantially on the rental side of the business not on the sale side, thereby
resulting in increased losses and a more rapid depletion of cash than originally
anticipated. The Company anticipates that such losses will continue until the
volume of sales and rentals of HelpMates necessary to cover overhead expenses is
achieved. As noted above, the overall profitability and cash flow of the
Company is highly dependent upon its mix of robot rentals and robot sales,
(i.e.; more robot rentals than sales results in larger losses and a quicker
depletion of cash in the short run.)
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share of common stock for the nine months ended
September 30, 1996 and 1995 was ($0.49) and ($1.55), respectively. Earnings per
share of common stock for the three months ended September 30, 1996 and 1995 was
($0.18) and ($.48), respectively. The reduction in the net loss per share is
attributable to the increase in number of shares outstanding from the
aforementioned initial public offering. Earnings per common share is computed
using the treasury stock method based on the weighted average number of common
shares and common stock equivalent shares outstanding during the period, as
adjusted retroactively for the aforementioned stock split. Shares from the
assumed exercise of options and warrants granted by the Company and shares
issuable in connection with the Company's convertible preferred stock have been
included in the computations of earnings per share for all periods unless their
inclusion would be anti-dilutive. However, for purposes of computing net loss
per share, options and warrants granted by the Company during the 12 months
preceding the initial public offering date, including those shares issuable in
connection with the anti-dilution provisions of certain warrant agreements, have
been included in the calculation of common stock and common stock equivalent
shares outstanding as if they were outstanding for all periods presented using
the treasury stock method and the public offering price of $6.25 per unit or
$3.00 per share and $0.25 per warrant.
Supplemental net loss per share of common stock for the nine months ended
September 30, 1996 was ($0.46). Supplemental net loss per share of common stock
is computed using the if-converted method based on the pro forma weighted
average number of shares of common stock and common stock equivalent as defined
above, and convertible preferred shares that were converted into common stock on
a 1-4.55 basis upon the closing of the initial public offering, adjusted
retroactively for the aforementioned stock split. Net loss per share used in
the supplemental loss per share calculation was decreased for dividend
requirements on preferred shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has been dependent upon sources other than
operations to finance its working capital requirements. These sources include
loans from its principal securityholders and their affiliates, private
placements of its debt and equity securities, its initial public offering
(discussed above) and certain financing transactions with Hospital Transporters
Limited Partnership ("Transporters") (an entity in which the Company's Chairman
and President are limited partners) and Center Capital Corporation ("CCC")
pursuant to which the Company assigned the revenue stream to certain HelpMate
robots, assigned the existing rental agreements related thereto in exchange for
lump sum payments to the Company.
As of September 30, 1996, the Company's capital requirements in connection
with the design, development and commercialization of its HelpMate system
continue to be signficant. During the quarter ended June 30, 1996 the Company
had determined that the results that it expected to experience had varied from
the Company's estimates in that (i.) Otis Elevator had reduced its forecast of
purchases from 26 units to 6 units (and to date has only purchased 3 units);
(ii.) the distribution agreement established with Bell & Howell Mailmobile
Company had resulted in no placements of HelpMates and was consequently
terminated (See Item 5); (iii.) the mix of robot rentals versus robot sales was
significantly weighted to the rental side, resulting in a slower replenishment
of cash, and (iv.) the time by which the Company was able to fully train its
sales force and establish its marketing program was delayed by three months
until June 30, 1996. Accordingly, the Company then anticipated that the
10
<PAGE>
proceeds of its initial public offering and cash flow from operations would be
sufficient to satisfy the Company's cash requirements to early 1997.
As of October 15, 1996, the Company has a backlog to install 17 rental
units. However, the manufacture and installation of the units required to
satisfy this backlog will utilize a substantial portion of the Company's
remaining cash on hand and cash generated from operations. If the Company's
trend of rapid rental order receipt continues, it will put significant pressure
on the Company's limited cash liquidity.
In light of the foregoing liquidity issues, the Company has taken the
following action: Effective November 1, 1996 the Company terminated ten
employees from all of its departments. Moreover nine senior executives of the
Company, including the Company's Chairman, its President, Vice President of
Engineering and Controller agreed to partial salary deferrals for a period of up
to six months. (The Chairman has elected to receive no pay and the President has
elected to receive 25% of his pay.) If not then repaid, it is anticipated that
the salary deferred by these executives would be exchanged sometime in the
Spring of 1997 for non-qualified options to purchase the Company's Common Stock.
The terms of such options have not yet been finalized, although it is
anticipated that they will have a below market exercise price and will be
exercisable for no more than 100,000 shares of the Company's Common Stock in the
aggregate, and that their issuance would require the approval by the Company's
stockholders of an amendment to the Company's existing Amended and Restated 1995
Stock Option Plan. In addition, the Company's Chairman agreed to a grace period
of up to six months for which principal and interest due on outstanding
obligations owed him be waived until such time as the Company is better able to
satisfy such obligations. Also, the Company has postponed research and
development related to new products until such time and the Company would be
better able to finance the projects.
The foregoing actions were made with the objective of ensuring that the
Company's cash on hand and cash generated from operations would be sufficient to
satisfy its contemplated cash requirements into early 1997 at which time the
Company believes it will be able to obtain additional financing. (The preceding
was a forward looking statement and the Company's actual results may differ if
(a.) Otis further changes its forecast of units to be purchased; (b.) the mix of
robot rentals versus sales changes; (c.) existing orders get canceled; (d) the
Company's own order / installation forecast changes and (e.) the Company is
unable to obtain additional financing.).
The Company has been and continues to actively seek additional financing
alternatives in order to strengthen its liquidity situation in the short term.
Such alternatives include, but are not limited to transactions similar in nature
to that entered into with HTLP; private placement of the Company's securities
in the United States or abroad; and / or mezzanine type financing (including
senior or subordinated debt). Although the Company has identified some
potential sources of such financing, the Company has no current commitments or
agreements with respect to such additional financing and there can be no
assurance that any additional financing will be available to the Company on
acceptable terms, or at all. Additional equity financing may involve
substantial dilution of the stock ownership currently enjoyed by the Company's
existing stockholders. Moreover, financial or other covenants imposed by future
financing sources might further adversely affect the Company 's ability to pay
dividends and management's ability to control the Company. Additionally, by
transferring the title and rental agreements to a third party for an immediate
cash payment, the Company could lose all or a portion of its opportunity to
benefit from ongoing rentals in the future. Finally, no assurances can be given
that any such financing will provide sufficient cash required for the Company to
attain an operating revenue stream of cash sufficient to support the Company's
continued operations on a long-term basis.
In addition, the Company's liquidity is also affected by its royalty
obligations to Connecticut Innovations, Incorporated ("CII"). Pursuant to its
original agreements with CII, the Company must pay royalties aggregating
$2,205,000 to CII. As of September 30 1996, the Company had paid approximately
$270,000 in such royalties. In January 1996, the Company and CII agreed that
during the two-year period commencing on the closing of the Company's initial
public offering , the obligation to pay a royalty at a rate of five percent of
sales of sponsored products would be reduced so that the payment with respect
thereto would not exceed the greater of (i) one and one-half percent of the net
sales of sponsored products or (ii) twenty percent (20%) of the Company's
pre-tax profits (but in no event would such payment be more than five percent of
net sales of sponsored products). Concurrently, with the rate reduction, the
Company received a credit of $300,000 against the $2,205,000 royalty obligation
and as consideration issued to CII 50,000 shares of common stock and a warrant
to purchase 25,000 additional shares exercisable at $5.75 per share. In
addition, the Company, at its option, may extend the period permitting reduced
royalty payments for an additional two years and receive another $300,000 credit
by issuing to CII an additional
11
<PAGE>
50,000 shares of common stock and another warrant to purchase 25,000 additional
shares exercisable at $5.75 per share. Further, the Company must continue to
pay royalties for a period equal to the period of time taken to satisfy this
$2,205,000 royalty obligation, except that the royalty rate on the Company's net
sales of sponsored products shall be reduced to one half of one percent during
such period.
For the foreseeable future, the Company does not anticipate paying
dividends and the Company anticipates retaining any earnings to fund its
operations. Moreover, the ability of the Company to pay dividends is subject to
contractual restrictions through September 2001. Specifically, during that
period, the Company may not, unless otherwise approved by one of its lenders,
directly or indirectly declare, order, pay or reserve any sum or property for
the payment of any dividend or other distribution on the Company's capital stock
until such time as the Company has achieved a net profit for three consecutive
fiscal quarters.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
The Company completed an initial public offering on January 31, 1996 of
1,449,918 units with each unit consisting of two shares of common stock, no par
value per share, and one redeemable common stock purchase warrant, whereby
1,252,996 units were sold by the Company and 196,922 units were sold by certain
lenders who provided interim financing to the Company (the "Selling Bridge
Securityholders"). In connection with the aforementioned initial public
offering, the Company's common stock split at a rate of 4.93599 to 1, all of the
Company's preferred stock was converted into common stock, a $120,000
obligation to the Company's Chairman was converted into 19,200 Units, 50,000
shares of common stock were issued in connection with the January 1996 amendment
to the Company's 1987 Development Contract with Connecticut Innovations,
Incorporated, the Company's treasury stock was canceled and the 34,552 shares
of common stock owned by Westinghouse Electric Corporation were redeemed.
The Company's Units, Common Stock and warrants were quoted on the
NASDAQ - Small Cap Market System and listed on The Philadelphia Stock Exchange
on January 31, 1996 and February 9, 1996, respectively. Effective April 8,
1996, the Units were no longer quoted on the NASDAQ - Small Cap Market System
but are quoted on the NASDAQ - Bulletin Board System.
The Company has not paid nor does it anticipate paying cash dividends on
the Common Stock in the foreseeable future since it currently intends to retain
any earnings for use in its business. In addition, in connection with certain
financing provided to the Company by Connecticut Innovations, Incorporated
("CII") in September 1995, the Company agreed that for a period of six years, it
would not directly or indirectly declare, order, pay or reserve any sum or
property for the payment of any dividend or other distribution on the Company's
capital stock until such time as the Company has achieved a net profit for three
consecutive fiscal quarters.
SAFE HARBOR STATEMENT
Statements which are not historical facts in this report are forward
looking statements, made on a good faith basis. Such forward looking
statements, including those concerning the Company's expectations all involve
risk and uncertainties. The Company's actual results may differ if (a.) Otis
further changes its forecast of units to be purchased; (b.) the mix of robot
rentals versus sales changes; (c.) existing orders get canceled; (d) the
Company's own order / installation forecast changes and (e.) the Company is
unable to obtain additional financing.).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
On August 30, 1996, the Company, by mutual agreement, terminated its
distribution agreement with Bell & Howell Mailmobile Company. However Bell &
Howell Mailmobile Company will continue to provide service for HelpMates in the
southwest and in California. The Company will directly distribute its product
in the areas previously covered by Bell & Howell Mailmobile Company.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the third quarter of
1996.
<TABLE>
<CAPTION>
NO. DESCRIPTION OF EXHIBIT
<S> <C>
3.01 Amended and Restated Certificate of Incorporation of Registrant as
filed on December 28, 1995 (Incorporated by reference to Form SB2 No.
33-99348 filed January 31, 1996, Exhibit No. 3.02)
3.02 Form of By-Laws of the Registrant, as amended .(Incorporated by reference
to Form SB2 No, 33-99348 filed January 31, 1996, Exhibit No. 3.03)
4.01* Form of Common Stock Certificate
4.02* Form of Warrant Certificate
4.03* Form of Unit Certificate
4.04* Form of Warrant Agreement
4.05* Form of Underwriters' Unit Purchase Option
4.06* Pages of the Registrant's Certificate of Incorporation that
define the rights of holders of the securities being registered hereby
are incorporated herein by reference to pages 3, 4, 6 and 7 of Exhibit
3.01
4.07* Pages of the Registrant's By-Laws that define the rights of
holders of the securities being registered hereby are incorporated
herein by reference to pages 1, 2, 3, 4, 5, 6, 12 and 13 of Exhibit
3.02
10.01* Loan Agreement dated November 20, 1990 with Connecticut Innovations,
Incorporated ("CII").
10.02* $500,000 Promissory Note dated November 20, 1990 in favor of CII.
10.03* Security Agreement dated November 20, 1990 in favor of CII.
10.04* Loan Agreement May 26, 1995 with Joseph F. Engelberger ("Mr.
Engelberger").
10.05* $320,000 Promissory Note dated May 26, 1995 in favor of Mr.
Engelberger.
10.06* Financing Agreement dated June 14, 1995 with CII.
10.07* $500,000 Senior Note dated June 14, 1995 in favor of CII.
10.08* Security Agreement dated June 14, 1995 in favor of CII.
10.09* Subordination Agreement dated June 14, 1995 among the Registrant, Mr.
Engelberger and CII.
10.10* First Amendment to Financing Agreement dated September 20, 1995 with
CII.
10.11* $300,000 Senior Convertible Note dated September 20, 1995 in favor of
CII.
10.12* First Amendment to Security Agreement dated September 20, 1995 with
CII.
10.13* Amendment to Subordination Agreement dated September 20, 1995 with
CII.
10.14* Loan Agreement dated October 3, 1995 with Minnesota Mining and
Manufacturing Company ("3M").
10.15* $250,000 Note dated October 3, 1995 in favor of 3M.
10.16* Loan Agreement dated September 28, 1995 with Landmark Partners Inc.
("Landmark").
10.17* $150,000 Note dated September 28, 1995 in favor of Landmark.
10.18* Loan Agreement dated September 27, 1995 with Connecticut Financial
Developments, L.P. ("CFD").
10.19* $100,000 Note dated September 27, 1995 in favor of CFD.
10.20* Sales and Maintenance Agreement with Hospital Transporters,
Limited Partnership dated as of August 19, 1994, with letter agreement
dated October 14, 1994, and letter agreement dated August 4, 1995.
10.21* Program Agreement dated May 30, 1995 with Center Capital
Corporation.
10.22* Employment Agreement with Mr. Engelberger dated June 1, 1995 and
amended as of November 1, 1995.
10.23* Employment Agreement with John M. Evans, Jr. dated April 17, 1987
and amended as of February 1, 1995 and as of November 1, 1995.
10.24* Employment Agreement dated April 17, 1987 with Carl Weiman.
10.25* Employment Agreement dated April 17, 1987 with Bala Krishnamurthy.
10.26* Employment Agreement dated as of November 1, 1995 with Thomas K.
Sweeny ("Mr. Sweeny")
10.27* Stock Option Agreement dated as of November 1, 1995 with Mr. Sweeny.
10.28* Service Agreement dated February 1, 1995 with Landmark (terminated
pursuant to Exhibit 10.29)
10.29* Termination Agreement with Landmark dated as of November 1, 1995
10.30* Amended and Restated Buy and Sell Agreement dated April 17, 1987, as
amended on June.
10.31* Development Agreement dated May 1985 with Aktiebolaget Electrolux
("Electrolux").
10.32* Development Agreement dated April 15, 1987 with Electrolux.
10.33* Development Agreement dated May 1986 between Consolidated
Controls Corporation and Connecticut Product Development Corporation
(assumed by the Registrant and CII, respectively).
10.34* Royalty Reduction Agreement with CII.
14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.35* Joint Venture Agreement, date[cad 220]d July 1, 1988 with Thrift Drug
Company, Automated Prescription Systems, Inc. ("APS") and Retired
Persons Services, Inc.
10.36* Agreement for Representation of Manufacturer/Licensee dated August,
1988 with APS.
10.37* Distributor Agreement, dated August 14, 1991, with Yaskawa
Electric Manufacturing Company, Ltd. ("Yaskawa").
10.38* Technology Transfer and License Agreement with Yaskawa dated as of May
15, 1992.
10.39* License Agreement Dated as of December 21, 1992 with Electrolux.
10.40* Distribution Agreement dated on or about December 1, 1994 with a
subsidiary of Otis Elevator Company ("Otis").
10.41* Agreement for Sales with Bell & Howell Mailmobile dated October 18,
1995.
10.42* Lease dated as of November 1, 1992 with Westinghouse Electric
Corporation ("Westinghouse") for premises located at Shelter Rock Lane
in Danbury, Connecticut.
10.43* Letter Agreement dated October 21, 1992, with Westinghouse.
10.44* Directors and Officers Liability Insurance Policy.
10.45* Product Liability Insurance Policy.
10.46* Stock Purchase Agreement dated July 29, 1987 with Transitions
Two, Limited Partnership ("Transitions Two").
10.47* Stock Purchase Agreement, dated July 29, 1987 with 3M.
10.48* Stock Purchase Agreement dated February 24, 1989 with 3M, White
Consolidated Industries, Inc. ("White"), which is a subsidiary of
Electrolux, and Transitions Two, as amended by Amendment to Stock
Purchase Agreement, dated March 9, 1989.
10.49* Stock Purchase Agreement, dated August 14, 1991 with Yaskawa.
10.50* Preferred Stock Purchase Agreement dated as of May 28, 1993 with CFD.
10.51* Registration Rights Agreement dated as of May 28, 1993 with CFD.
10.52* Co-Sale Agreement among the Registrant, Mr. Engelberger, Margaret
Engelberger, Technology Transitions, Inc., 3M, White, Transitions Two,
Yaskawa and CFD.
10.53* Stock Purchase Agreement dated December 1, 1994 with Otis.
10.54* Warrant dated November 20, 1990, as amended on June 14, 1995,
issued to CII for 5,000 shares of the Registrant's Common Stock,
expiring on July 1, 2000.
10.55* Warrant dated January 16, 1991, issued to 3M for 3,000 shares of
the Registrant's Common Stock, expiring on February 1, 1997.
10.56* Warrant dated January 16, 1991, issued to Mr. Engelberger for
3,000 shares of the Registrant's Common Stock, expiring on February 1,
1997.
10.57* Warrant dated January 16, 1991, issued to White for 3,000 shares
of the Registrant's Common Stock, expiring on February 1, 1997.
10.58* Warrant dated January 16, 1991, issued to Transitions Two for
3,000 shares of the Registrant's Common Stock, expiring on February 1,
1997.
10.59* Warrant dated July 6, 1992, issued to Mr. Engelberger for 2,000
shares of the Registrant's Common Stock, expiring on August 1, 1998.
10.60* Warrant dated July 6, 1992, issued to Transitions Two for 2,000
shares of the Registrant's Common Stock, expiring on August 1, 1998.
10.61* Warrant dated March 22, 1993, issued to Transitions Two for 5,000
shares of the Registrant's Common Stock, expiring on March 21, 1999.
10.62* Warrant dated July 1, 1993, issued to Electrolux for 4,300 shares
of the Registrant's Common Stock, expiring on June 30, 1999.
10.63* Warrant dated May 26, 1995, issued to Mr. Engelberger for 4,000
shares of the Registrant's Common Stock, expiring May 25, 2005.
10.64* Stock Subscription Warrant dated June 14, 1995, issued to CII for
10,000 shares of the Registrant's Common Stock, expiring June 14,
2005.
10.65* Warrant and Stock Put Agreement dated June 14, 1995 between the
Registrant and CII.
10.66* Stock Subscription Warrant dated September 20, 1995, issued to
CII for 6,000 shares of the Registrant's Common Stock, expiring
September 20, 2005.
10.67* Warrant and Stock Put Agreement dated September 20, 1995 with CII.
10.68* Stock Subscription Warrant dated October 3, 1995, issued to 3M
for 5,000 shares of the Registrant's Common Stock, expiring September
30, 2005.
10.69* Stock Subscription Warrant dated September 28, 1995, issued to
Landmark for 3,000 shares of the Registrant's Common Stock, expiring
September 30, 2005.
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
10.70* Stock Subscription Warrant dated September 27, 1995, issued to
CFD for 2,000 shares of the Registrant's Common Stock, expiring
September 30, 2005.
10.71* 1984 Nonqualified Stock Option Plan dated September 21, 1984.
10.72* 1988 Nonqualified Stock Option Plan dated October 27, 1988.
10.73 Amended and Restated 1995 Stock Option Plan (Incorporated by reference
to the Company's Proxy Statement for its 1996 Annual Meeting of
Stockholdrers)
11.1 Statement Re: Computation of Primary Per Share Earnings.
11.2 Statement Re: Computation of Fully Diluted Per Share Earnings
27. Financial Data Schedule for the nine months ended September 30, 1996
* Incorporated by reference to Form SB2 Number 33-99348 filed January 31, 1996
under the same exhibit number as filed therein.
16
</TABLE>
<PAGE>
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned , thereunto duly
authorized.
HelpMate Robotics Inc.
/s/ Joseph F. Engelberger
Date: November 9, 1996 ________________________________
Joseph F. Engelberger,
Chairman and Director
/s/ Thomas K. Sweeny
Date: November 9, 1996 ________________________________
Thomas K. Sweeny,
President, and Chief Executive Officer,
Director, Treasurer and PRINCIPAL FINANCIAL
OFFICER
17
<PAGE>
Exhibit 11.1
<TABLE>
<CAPTION>
HELPMATE ROBOTICS INC.
CALCULATION OF NET LOSS PER COMMON SHARE
-------------------------------------------------------
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
Primary Earnings per Share 09/30/96 09/30/95 09/30/96 09/30/95
-------------------------------------------------------
<S> <C> <C> <C> <C>
Historical
Net Loss $(2,808,238) $(1,928,781) $(1,167,810) $(571,309)
Preferred Dividends (57,147) (584,415) - (203,319)
------------- ------------ ----------- ---------
Net Loss Applicable to Common Shareholders $(2,865,385) $(2,513,196) $(1,167,810) $(774,358)
------------ ------------ ----------- ---------
------------ ------------ ----------- ---------
Weighted Average Common Shares Outstanding 5,827,168 1,583,853 6,335,205 1,586,729
Incremental Shares Issuable Pursuant to SAB Topic 4D 38,553 38,553 38,553 38,553
----------- ----------- ---------- ---------
Total Shares 5,865,721 1,619,406 6,373,758 1,625,282
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Historical Net Loss per Common Share $(.49) $(1.55) $(.18) $(.48)
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
<PAGE>
Exhibit 11.2
<TABLE>
<CAPTION>
HELPMATE ROBOTICS INC.
CALCULATION OF NET LOSS PER COMMON SHARE
--------------------------------------------------------
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
SUPPLEMENTAL EARNINGS PER SHARE 09/30/96 09/30/95 09/30/96 09/30/95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Historical
Net Loss Applicable to Shareholders $(2,808,238) $(1,928,781) $(1,167,810) $(571,309)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Weighted Average Common Shares Outstanding 5,827,168 1,583,853 6,335,205 1,586,729
Incremental Shares Issuable Pursuant to SAB Topic 4D 38,553 38,553 38,553 38,553
Shares Applicable to Convertible
Preferred Stock 178,268 1,476,461 - 1,505,770
----------- ----------- ----------- ----------
Total Shares 6,043,989 3,098,867 6,373,758 3,131,052
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Historical Net Loss Per Common Share $(.46) $(.62) $(.18) $(.18)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,530,659
<SECURITIES> 0
<RECEIVABLES> 457,222
<ALLOWANCES> (41,481)
<INVENTORY> 2,020,699
<CURRENT-ASSETS> 4,262,092
<PP&E> 2,503,954
<DEPRECIATION> (1,694,193)
<TOTAL-ASSETS> 6,766,046
<CURRENT-LIABILITIES> 1,025,876
<BONDS> 0
0
0
<COMMON> 16,785,548
<OTHER-SE> (12,644,719)
<TOTAL-LIABILITY-AND-EQUITY> 6,766,046
<SALES> 789,618
<TOTAL-REVENUES> 1,874,354
<CGS> 549,431
<TOTAL-COSTS> 1,323,996
<OTHER-EXPENSES> 3,201,366
<LOSS-PROVISION> 47,413
<INTEREST-EXPENSE> 136,897
<INCOME-PRETAX> (2,808,238)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,808,238)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,808,238)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> 0
</TABLE>
