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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, 1997
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934)
For the transition period from to
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Commission File Number 1-14160
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HelpMate Robotics Inc.
(Exact name of small business issuer as
specified in its charter)
Connecticut 06-1110906
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Shelter Rock Lane; Danbury, Connecticut; 06810
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(Address of principal executive offices)
(203) 798-8988
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(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
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APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the registrant's common stock as of July 31,
1997 is 6,294,031 shares.
Transitional Small Business Disclosure Format (Check One) Yes No X
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HelpMate Robotics Inc.
Balance Sheet (Unaudited)
September 30, 1997
ASSETS
Current assets:
Cash $ 54,031
Accounts receivable, net of allowance for doubtful
accounts of $60,000 600,897
Inventory, net of reserve for obsolescence of
$100,000 1,341,961
Other 29,491
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Total current assets 2,026,380
Installation costs, net of accumulated amortization
of $650,989 167,564
Equipment leased to others, net of accumulated
depreciation of $864,075 1,228,633
Property and equipment, net of accumulated
depreciation of $704,345 445,605
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$ 3,868,182
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,232,381
Accrued expenses 494,124
Accrued compensation and employee benefits 243,582
Current portion notes payable 463,953
Deferred revenue 224,076
Customer advances 40,269
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Total current liabilities 2,698,385
Deferred revenue 279,665
Notes payable, less current portion 962,095
Stockholders' equity:
Common stock, no par value; 10,000,000 shares
authorized; 6,294,031 shares issued and outstanding 16,964,504
Capital surplus 5,112,225
Accumulated deficit (22,148,692)
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Total stockholders' equity 71,963
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$ 3,868,182
============
SEE ACCOMPANYING NOTES.
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HelpMate Robotics Inc.
Statements of Operations (Unaudited)
Three months ended September 30, 1997 and 1996
Three months ended September 30,
1997 1996
---- ----
Revenues:
Sales revenues $ 366,192 $ 226,056
Rental revenues 531,496 353,381
Research and development contracts 86,330 -
----------------------------
Total revenues 984,018 579,437
Cost of revenues:
Cost of sales 126,062 200,763
Cost of rental revenues 333,111 365,309
Cost of research and development contracts 49,549 -
----------------------------
Total costs of revenues 508,722 566,072
----------------------------
Gross profit 475,296 13,365
Operating expenses:
Selling, general and administrative expenses 759,393 1,262,687
Non cash compensation expense - -
----------------------------
759,393 1,262,687
Operating loss (284,097) (1,249,322)
Other expense - (2,088)
Interest income 1,544 32,814
Interest expense (60,325) (79,613)
----------------------------
(58,781) (48,887)
----------------------------
Net loss applicable to common stock $ (342,878) (1,298,209)
============================
Per share amounts:
Net loss applicable to common stock $ (0.05) $ (0. 20 )
============================
Weighted average number of shares of common
stock outstanding 6,294,031 6,373,758
============================
SEE ACCOMPANYING NOTES.
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HelpMate Robotics Inc.
Statements of Operations (Unaudited)
Nine months ended September 30, 1997 and 1996
Nine months ended September 30,
1997 1996
---- ----
Revenues:
Sales revenues $ 942,638 $ 789,618
Rental revenues 1,450,315 910,186
Research and development contracts 295,522 174,550
----------------------------
Total revenues 2,688,475 1,874,354
Cost of revenues:
Cost of sales 515,525 549,431
Cost of rental revenues 991,836 983,297
Cost of research and development contracts 258,741 162,175
----------------------------
Total costs of revenues 1,766,102 1,694,903
----------------------------
Gross profit 922,373 179,451
Operating expenses:
Selling, general and administrative expenses 2,598,241 3,155,428
Non cash compensation expense 18,021 45,938
----------------------------
2,616,262 3,201,366
Operating loss (1,693,889) (3,021,915)
Other expense - (20,333)
Interest income 11,308 117,934
Interest expense (201,143) (254,831
----------------------------
(189,835) (157,230)
----------------------------
Net loss (1,883,724) (3,179,145)
Preferred stock dividends paid - 57,147
----------------------------
Net loss applicable to common stock $(1,883,724) $(3,236,292)
============================
Per share amounts:
Net loss applicable to common stock $ (0.30) $ (0. 55 )
============================
Weighted average number of shares of common
stock outstanding 6,291,269 5,865,721
============================
SEE ACCOMPANYING NOTES.
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HelpMate Robotics Inc.
Statements of Cash Flows (Unaudited)
Nine months ended September 30, 1997 and 1996
Nine months ended September 30,
1997 1996
---- ----
OPERATING ACTIVITIES
Net loss $(1,883,724) $(3,179,145)
Adjustments to reconcile net loss to net cash
used by operating activities:
Interest 151,990 195,304
Compensation 58,160 45,938
Provision for doubtful accounts 59,241 47,413
Provision for inventory obsolescence 50,000 -
Depreciation 520,967 888,216
Other 6,453 44,547
Changes in operating accounts:
(Increase) decrease in accounts receivable (390,497) (265,620)
(Increase) decrease in inventory 162,713 (857,046)
(Increase) decrease in other assets (16,491) (256,548)
(Decrease) increase in accounts payable and
accrued expenses 450,930 350,870
(Decrease) in deferred revenue (224,792) -
(Decrease) increase in customer advances 3,439 (76,833)
----------------------------
Total adjustments 852,113 116,241
----------------------------
Net cash provided by (used in) operating
activities (1,031,611) (3,113,561)
----------------------------
INVESTING ACTIVITIES
Sale of equipment leased to others 1,958,416 -
Installation costs (144,652) -
Equipment leased to others 1,134,660) (1,112,730)
Purchase of property and equipment (11,241) (258,728)
----------------------------
Net cash provided by (used in) investing
activities 667,863 (1,371,458)
----------------------------
FINANCING ACTIVITIES
Repayments of notes payable (339,404) (328,354)
Proceeds from capital lease 44,012 -
Proceeds from exercise of stock options 3,363 1,829
Redemption of common stock issued for rent - (210,000)
Proceeds from issuance of common stock, net
of expenses - 6,138,941
Preferred stock dividends paid - (57,147)
----------------------------
Net cash provided by (used in) financing
activities (192,029) 5,545,269
----------------------------
Net increase (decrease) in cash and cash
equivalents (555,77) 1,110,907
Cash and cash equivalents at beginning of period 609,808 419,752
----------------------------
Cash and cash equivalents at end of period $ 54,031 $ 1,530,659
============================
SEE ACCOMPANYING NOTES.
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HelpMate Robotics Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1997
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 Rule 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, 1997 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 1997. 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, 1996.
SALE AND LEASEBACK TRANSACTIONS
On February 7, 1997, HelpMate Robotics Inc. ("HRI" or the "Company") entered
into a Purchase, Security and Remarketing Agreement and a Master Lease Agreement
with Leasing Technologies International, Inc. ("LTI") for the sale and leaseback
of fifteen of its robotic courier systems which are currently under rent from
the Company to hospitals across the United States ("sold units"). The total
proceeds obtained from this transaction was $1,230,000. As part of the
transaction, the Company assigned all of its right title and interest in the
underlying rental agreements for the sold units and granted a security interest
in fifteen additional rental agreements for units that were not sold to LTI
("collateral units"). The Purchase, Security and Remarketing Agreement requires
the Company to, among other things, refurbish any sold unit that ceases to be
rented by a hospital and place that sold unit on rent with another hospital
prior to the Company placing one of its own units with another hospital. In
addition, the Company is responsible for the maintenance of both the sold units
and the collateral units. Upon the expiration of the Master Lease Agreement (36
months), the Company shares in residual rental payments from the sold units in
the following manner: a)75% for the Company and 25% for LTI until such time as
the Company receives an additional $372,032 and b) 50% for the Company and 50%
for LTI thereafter. Finally, the Company has no right to repurchase the sold
units from LTI. The Master Lease Agreement will be classified as an operating
lease in accordance with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases". The book value and related depreciation of the sold
units, approximately $937,000 and $321,000, respectively, will be removed from
the accounts and the gain realized on the sale of approximately $614,000 will be
deferred and amortized over the term of the Master Lease Agreement, 36 months.
The maintenance costs expected to be incurred for the sold units during the
lease term will be accrued as of the date of the sale, amortized over the term
of the Master Lease Agreement and correspondingly reduce the gain on the sale.
Such costs are expected to approximate $158,000 thereby reducing the gain to be
deferred and amortized to approximately $456,000. No provision for the
refurbishment of the sold units will be made, as the Company's historical
experience demonstrates that units do not cease being rented. Payments under
the Master Lease Agreement are payable monthly commencing in March, 1997 and
approximate $526,000 annually. Certain amounts have been reclassified at March
31, 1997 to more properly reflect the operating lease transactions described
above. The resulting reclassifications had no effect on net loss for the three
months, six months or the nine months ended September 30, 1997.
Further on May 5, 1997, the Company entered into another Purchase, Security and
Remarketing Agreement and a Master Lease Agreement with LTI for the sale and
leaseback of nine of its robotic courier systems which are currently under rent
from the Company to hospitals across the United States ("sold units"). The
total proceeds obtained from this transaction was $810,000. As part of the
transaction, the Company assigned all of its right, title and interest in the
underlying rental agreements for the sold units and granted a security interest
in three additional rental agreements for units that were not sold to LTI
("collateral units"), and issued to LTI 98,182 warrants to purchase the
Company's common stock at $1.2375. The warrants expire on May 4, 2006.
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The Purchase, Security and Remarketing Agreement requires the Company to, among
other things, refurbish any sold unit that ceases to be rented by a hospital
and place that sold unit on rent with another hospital prior to the Company
placing one of its own units with another hospital.
In addition, the Company is responsible for the maintenance of both the sold
units and the collateral units. Upon the expiration of the Master Lease
Agreement (32 months), the Company shares in residual rental payments from the
sold units in the following manner: a)75% for the Company and 25% for LTI until
such time as the Company receives an additional $225,400 and b) 50% for the
Company and 50% for LTI thereafter. Finally, the Company has no right to
repurchase the sold units from LTI. The Master Lease Agreement will be
classified as an operating lease in accordance with Statement of Financial
Accounting Standards No. 13, "Accounting for Leases". The book value and
related depreciation of the sold units, approximately $548,000 and $26,000,
respectively, will be removed from the accounts and the gain realized on the
sale of approximately $288,000 will be deferred and amortized over the term of
the Master Lease Agreement, 32 months. The maintenance costs expected to be
incurred for the sold units during the lease term will be accrued as of the date
of the sale, amortized over the term of the Master Lease Agreement and
correspondingly reduce the gain on the sale. Such costs are expected to
approximate $46,000 thereby reducing the gain to be deferred and amortized to
approximately $242,000. No provision for the refurbishment of the sold units
will be made, as the Company's historical experience demonstrates that units do
not cease being rented. Payments under the Master Lease Agreement are payable
monthly commencing in June, 1997 and approximate $379,000 annually.
INSTALLATION COSTS
The Company incurs certain direct expenses associated with the installation of
its equipment leased to others. The Company recast its September 30, 1996
statements of operations, cash flows and stockholders' equity to reflect a
change in the period over which the Company's installation costs related to its
equipment leased to others is amortized. The Company previously amortized such
costs over a five year period. Under the new policy such costs are amortized
over the initial term of the lease in accordance with the generally accepted
accounting principles prescribed for leases. In 1996, such costs increased in
significance in relation to the Company's financial statements, which was
attributable to among other things, the Company's increased volume of business
and current market conditions which required the Company to incur more of these
costs. This change affects the financial statements of the Company primarily by
amortizing such costs more rapidly, as typically the initial term of the leases
entered into by the Company range from one to three years. The net loss for nine
month and three month periods ended September 30, 1996 increased by $370,907 or
($0.06 per share) and $130,379 or ($0.02 per share), respectively as a result of
this change.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
HelpMate Robotics Inc. (the "Company"), a Connecticut corporation, was
co-founded in 1984 as a robotics "think-tank" by its chairman, Joseph F.
Engelberger. During its early years, the Company's primary focus was contract
engineering and research and development for third parties. Through the years,
however, the focus of the Company has evolved into the development of products
having commercial applications.
The Company's financial condition continued to deteriorate during the fiscal
quarter ending September 30, 1997. The Company current limits its operations to
the installation and maintenance of HelpMate robotic couriers for which
materials and parts have previously been ordered. No new robot build orders are
contemplated to be placed pending additional financing. The Company is
seeking to work out accommodations with its creditors and lenders and is
actively pursuing financing alternatives. No assurances can be give that such
accommodations can be concluded or that such financing alternatives will be
successful.
The Company designs, manufactures and markets autonomous robot transport systems
for use by the institutional healthcare industry. The Company's flagship
product, called HelpMate-Registered Trademark-, is an intelligent,
self-navigating, battery-powered robot, which travels throughout a hospital free
of fixed tracks or guidewires. HelpMate robots provide repetitive,
around-the-clock transport of meals, medications, lab samples, supplies and
medical records within a hospital environment, relieving staff of unscheduled
"fetch-and-carry" tasks, and thus, the Company believes, reducing labor costs
and improving productivity. Using proprietary sensory technology and a
preprogrammed map of the facility, the HelpMate robot can avoid obstacles and
people, making almost instantaneous stops when
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necessary, and via radio link, can summon elevators to travel between floors.
The HelpMate system's technology allows it to be a more flexible and
cost-effective alternative to systems such as dumbwaiters, pneumatic tubes or
automated guided vehicles. HelpMate development began in 1987, and in 1991,
following extensive testing at Danbury Hospital in Connecticut, the first
HelpMate became operational.
Further, in connection with the development of its HelpMate robots, the Company
also has developed other applications of its robotics technology. The Company
has sold , on a limited basis, components of its autonomous robotics navigation
technology to universities, laboratories and other research facilities.
Moreover, the Company has licensed some of its technologies for use in
floor-cleaning and automated prescription-filling applications.
The Company believes that there are opportunities for expanding its HelpMate
product lines to other uses, both within the hospital environment and for other
healthcare users such as nursing homes, and for developing non-healthcare
related applications and products. Given the Company's current liquidity
limitations, however, the Company is currently restricting all of its efforts to
the installation and maintenance of existing Helpmate robots.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position has continued to deteriorate, and the Company
has experienced difficulties in meeting its cash flow needs. During the month
of July 1997 the Company's President and Chief Executive Officer, Thomas K.
Sweeny loaned the Company $60,000 in the form of a note payable due upon demand
bearing interest at a rate of 8.5% per annum. The efforts of the Company to
obtain additional working capital through further sale/leaseback arrangements,
through borrowing from major investors, and through the sale of new equity to
various investor groups have, to date, been unsuccessful. Past due accounts
payable have mounted to approximately $1.1 million as of November 13, 1997.
Additionally, in early August 1997, Leasing Technologies, Inc. notified the
Company that the Company was in default under its Master Lease Agreement. The
Company is in default with Connecticut Innovations Inc. for a principal amount
of approximately $417,000. The Company was also served an eviction notice by
its landlord due to non-payment of rent. The Company is currently in
negotiations and taking other steps with a view towards remedying the
deficiencies.
In light of the foregoing, the Company continues to implement actions and
measures, including a substantial downsizing of the Company, to ensure that
operations would continue on a significantly reduced basis through 1997 if
additional financing transactions are not consummated. On August 15, 1997, the
Company reduced its staff level to a core of 12 employees with the emphasis on
installation and maintenance of Helpmate robots. The Company has discontinued
its sales and marketing efforts and it will limit its production to fill a
portion of its backlog. The company has 78 Helpmate robots installed in 67
hospitals in the United States and a backlog of 31 rental orders. Management
believes that it will be able to complete and install a portion of those units.
Additionally, management has relocated to smaller office space during the third
quarter to further reduce costs.
The Company is actively pursuing discussions with its creditors and lenders. If
the Company is successful in reaching an accommodation with its creditors and
lenders, then management believes that the Company's downsized operations could
be funded with the revenue streams generated by the current and future rentals
and sales of its Helpmate robots while the Company pursues alternatives for
addressing the long-term capital needs of the business. This plan is predicated
on the basis that the Company's creditors and others will not institute any
action against the Company during this time of restructuring. The Company is
also seeking to meet its short term cash liquidity needs through other sources.
On November 3, 1997, the Company's Chairman, Joseph F. Engelberger, and
Brookehill Equities, Inc. advanced $300,000.00 ($150,000.00 each) to the Company
on a demand basis. The Company has agreed to issue certain warrants to each of
these lenders. Moreover, no assurances can be given that such efforts will be
successful or adequate, the Company is currently actively pursuing other private
debt and equity financing sources.
Any resolution of the Company's short-term and long-term capital issues may have
a material adverse effect on the Company's stockholders, including diluting
their interest in the Company.
REVENUES
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Total revenues increased by $404,581 or 69% from the three months ended
September 30, 1996 compared to the three month period ended September 30, 1997.
Rental revenues increased by $178,115 or 50%; sales revenues increased by
$140,136 or 62%, for the same period.
Total revenues increased by $814,121 or 43% from the nine months ended
September 30, 1996 compared to the nine month period ended September 30, 1997.
Rental revenues increased by $540,129 or 59% and sales revenues increased by
$153,020 or 19%.. Also, revenues from research and development contracts
increased by $120,972 or 69%.
The increase in rental revenues is reflective of the Company's expanded fleet of
rental units which at September 30, 1997 was 78, a 62% increase from the 48
units under rent at December 31, 1996. Research and development contract
revenues result from a NASA SBIR contract which began in January 1997.
COST OF REVENUES
Cost of revenues decreased by $57,350 or 10% from the three months ended
September 30, 1996 compared to the three months ended September 30, 1997. Cost
of revenues increased by $71,199 or 4% from the nine months ended September
30, 1996 compared to the nine months ended September 30, 1997. Overall, cost of
revenues has decreased as a percentage of revenues, which reflects the Company's
ongoing efforts to reduce the cost associated with manufacturing and installing
its HelpMate robots. These costs are partially offset by an increase in
depreciation and amortization of the Company's rental units and related
installation costs, which were attributable to the increase in the rental fleet
discussed above. In addition, the Company increased its reserve for inventory
obsolescence by $50,000 during the second quarter of 1997 to reflect current
economic conditions.
GROSS PROFIT
Gross profit increased by 345% or $461,931 from the three months ended September
30, 1996 compared to the three months ended September 30, 1997. Gross profit
increased by 414% or $742,922 from the nine months ended September 30, 1996
compared to the nine months ended September 30, 1997. The increase in gross
profit percentage and dollars reflects the Company's ongoing strategy to reduce
costs associated with manufacturing and installing its HelpMate Robots coupled
with the fact that several of the Company's rental units are now fully
depreciated.
SELLING GENERAL AND ADMINISTRATIVE EXPENSES
Selling, General and Administrative Expenses decreased by $503,294 or 40% from
the three months ended September 30, 1996 compared to the three months ended
September 30, 1997. Selling, General and Administrative Expenses decreased by
$557,187 or 18% from the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1997. The decrease reflects a significant
reduction in staffing in all departments. In addition, the Company increased
its allowance for doubtful accounts by $20,000 during the second quarter to
reflect current economic conditions.
INTEREST EXPENSE AND INTEREST INCOME
Interest expense, net of interest income increased by $11,982 or 25% from the
three months ended September 30, 1996 compared to the three months ended
September 30, 1997. Interest expense, net of interest income increased by
$52,938 or 39% from the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1997. The increase in net interest expense is
reflective of an increase in financing obligations and a decrease in interest
income earned. As the Company has continued to use available cash for expanding
its fleet of rental units interest income decreased $31,270 or 95% from the
three months ended September 30, 1996 compared to the three months ended
September 30, 1997 and decreased $106,626 or 90% from the nine months ended
September 30, 1996 compared to the nine months ended September 30, 1997.
LOSSES
The Company incurred a net loss from continuing operations of $342,878 and
$1,298,209 for each of the three month periods ending September 30, 1997 and
1996, respectively, and incurred a net loss from continuing operations of
$1,883,724 and $3,179,145 for each of the nine month periods ending September
30, 1997 and 1996,
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respectively. These losses were sustained primarily because the Company has not
achieved the volume of sales and rentals of HelpMates required to cover the
overhead expenses associated with the commercialization of its HelpMate systems.
However, the decrease in staffing and sales and marketing expenses noted
above,.have begun to to stem the losses. It should further be mentioned that
while the Company's order flow continues to increase it has increased
substantially for rentals not for sales, thereby resulting in increased losses
and a more rapid depletion of cash than originally anticipated. The Company
anticipates that such losses will continue until the volume of sales and rentals
of HelpMates necessary to cover overhead expenses is achieved. As noted above,
the overall profitability and cash flow of the Company is highly dependent upon
its mix of robot rentals and robot sales, i.e., more robot rentals than sales
results in larger losses and a quicker depletion of cash in the short run.
EARNINGS (LOSS) PER SHARE
Loss per share of common stock for the three months ended September 30, 1997 and
1996 was ($.05) and ($0.20), respectively. Loss per share of common stock for
the nine months ended September 30, 1997 and 1996 was ($0.30) and ($0.55),
respectively. The reduction in the net loss per share is primarily attributable
to the lower net loss for the nine months ended September 30, 1997. 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 for the stock split that occurred in
conjunction with the initial public offering. 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.
During the first quarter of 1997 the Financial Accounting Standards Board issued
Statement No. 128 EARNINGS PER SHARE, which simplifies the calculation of
earnings per share (EPS) and makes it comparable to international standards
recently issued. The new EPS rules are effective for both interim and annual
periods ending after December 31, 1997. Although management has not yet
determined the impact of adopting this new standard, they do not expect it to be
material.
OTHER
During the second quarter of 1997 the Company was notified by the Philadelphia
Stock Exchange that the Company's stock had been delisted due to a failure to
meet the requirements for net worth and minimum stock price. Further, the
Company has been notified by the NASDAQ the Company's stock has been delisted
for failure to meet the minimum bid price and net worth requirements.
Although no assurances can be given, management intends to continue its efforts
to raise additional financing to continue operations and work towards generating
sufficient cash flow to fund future operations.
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.
SAFE HARBOR STATEMENT
Statements which are not historical facts in this report are forward looking
statements, are made on a good faith basis. Such forward looking statements,
which include those statements made in the paragraphs under Management's
Discussion and Analysis or Plan of Operation, subheadings "LIQUIDITY AND CAPITAL
RESOURCES" and "OTHER," all involve risk and uncertainties. Actual results may
differ materially from forward looking statements for reasons including, but not
limited to, changes in the healthcare industry, mix of robot rentals versus
sales, the Company's ability to finance its ongoing operations, the Company's
ability to relocate to a suitable facility, the Company's ability to cure
defaults and workout other arrangements with respect to its lenders and
creditors, the Company's ability to continue to generate cash flow from
operations, as well as the Company's ability to fulfill a portion of its backlog
and withstand any resulting effects of nonfulfillment.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is in default with its lender Connecticut Innovations Incorporated
("CII") in the principal amount of $417,000. The current amount in arrears at
August 19, 1997 is approximately $40,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 20 , 1997 the
following proposals were adopted by the margins indicated:
1. To elect eight directors for a term to expire at the 1998 Annual
Meeting.
Director For Against
-------- --- -------
Joseph F. Engleberger 3,218,497 21,700
Thomas K. Sweeny 3,218,497 21,700
John M. Evans, Jr. 3,218,497 21,700
John F. Barry 3,218,497 21,700
Nobuo Saita 3,218,497 21,700
Kevin F. Littlejohn 3,218,497 21,700
Theodore Sall 3,218,497 21,700
Sheldon Sandler 3,218,497 21,700
1. To ratify the appointment of Ernst & Young, LLP as the Company's
independent auditors for fiscal 1997.
For 3,219,447
Against 17,450
Abstained 3,300
1. To adopt the Amended and Restated 1995 Stock Option Plan.
For 3,149,684
Against 54,371
Abstained 17,750
ITEM 5. OTHER INFORMATION
On June 30, 1997 Kevin F. Littlejohn tendered his resignation from the Board of
Directors to be effective as soon as the Board could find a replacement. Mr.
Littlejohn was a member of the Audit, Compensation and Stock Option Committees.
Mr. Littlejohn was replaced by Joseph Cote by the Board of Directors on August
1, 1997. Mr. Cote is a former Board member. Additionally, on August 1, 1997
John M. Evans, Jr. - Vice President of Engineering and Matthew Smith - Vice
President of Sales and Marketing, resigned from the Company and the Board of
Directors.
11
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During the quarter the Company was notified by officials of the Philadelphia
Stock Exchange that the Company's stock had been delisted. Further, the Company
has been notified by the NASDAQ that pending appeal the Company's stock will be
delisted for failure to meet the minimum bid price. See further discussion
under Management's Discussion and Analysis or Plan of Operation, subheading
"OTHER."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A Form 8-K was filed on February 21, 1997 describing the sale and leaseback
transactions discussed above.
NO. DESCRIPTION OF EXHIBIT
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 September.
10.31* Development Agreement dated May 1985 with Aktiebolaget Electrolux
("Electrolux").
10.32* Development Agreement dated April 15, 1987 with Electrolux.
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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.
10.35* Joint Venture Agreement, dated 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.
13
<PAGE>
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.
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* Form of 1995 Stock Option Plan.
11.1 Statement Re: Computation of Primary Per Share Earnings.
* Incorporated by reference to Form SB2 Number 33-99348 filed January 31, 1996
under the same exhibit number as filed therein.
14
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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.
Date: November 19, 1997
-----------------------------------
Joseph F. Engelberger,
Chairman and Director
Date: November 19, 1997
-----------------------------------
Thomas K. Sweeny,
President, and Chief Executive
Officer, Director, Treasurer and
PRINCIPAL FINANCIAL OFFICER
15
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FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR15(D) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
30-SEP-97
EXHIBIT 11.1
- ------------
STATEMENT RE: COMPUTATION
OF PRIMARY PER SHARE EARNINGS 3 MONTHS ENDED 9 MONTHS ENDED
30-Sep-97 30-Sep-97
-------------- --------------
SHARES OUTSTANDING 1-1-97 6,288,507 6,288,507
SHARES ISSUED 3-31-97 5,524
WEITGHTED AVERAGE OF SHARES ISSUED
3/31/97 2,762
=========== ===========
SHARES USED TO COMPUTE LOSS PER SHARE 6,294,031 6,291,269
=========== ===========
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