UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
or
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1994
For the transition period from to
Commission file number 0-28236
InVision Technologies, Inc.
Delaware 94-3123544
-------- ----------
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
3420 East Third Avenue
Foster City, California 94404
(415) 578-1930
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 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 No X
--- ---
The number of shares of the Registrant's Common Stock, $0.001 par value,
outstanding as of May 31, 1996 was 4,150,199.
This quarterly report on Form 10-Q consists of 11 pages of which this is
page 1.
<PAGE>
INVISION TECHNOLOGIES, INC.
INDEX TO FORM 10-Q
For the quarter ended March 31, 1996
Part 1: FINANCIAL INFORMATION
- -----------------------------------------------------
Item Page
- ------- --------
1. Financial Statements (unaudited)
a. Condensed Balance Sheets - December 31, 1995 and
March 31, 1996 3
b. Condensed Statements of Operations - Three months
ended March 31, 1995 and 1996 4
c. Condensed Statements of Cash Flows - Three months
ended March 31, 1995 and 1996 5
d. Notes to Condensed Financial Statements 6-7
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
- ---------------------------------------------------
1. Legal Proceedings 10
2. Changes in Securities 10
3. Defaults Upon Senior Securities 10
4. Submission of Matters to a Vote of Security Holders 10
5. Other Information 10
6. Exhibits and Reports on Form 8-K 10
Signature Page 11
<PAGE>
PART 1. FINANCIAL INFORMATION
<TABLE>
Item 1. Financial Statements
INVISION TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS - Unaudited
(in thousands except per share data)
<CAPTION>
March 31 December 31
1996 1995
--------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 470 $ 1,927
Accounts receivable 1,327 735
Inventories (Note 3) 3,299 3,413
Prepaid expenses 293 252
--------- --------
Total current assets 5,389 6,327
Property and equipment, net 971 914
Other assets 343 75
--------- --------
$ 6,703 $ 7,316
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,975 $ 3,181
Accrued expenses 1,314 1,115
Short-term debt (Note 4) 3,618 2,260
Advances from stockholders 200 200
Deferred revenue 2,630 3,082
--------- --------
Total current liabilities 9,737 9,838
--------- --------
Commitments
Stockholders' deficit:
Convertible preferred stock, $.001 par
value; 5,000 shares authorized;
2,619 shares issued and outstanding 12,212 12,212
Common stock, $.001 par value; 20,000
shares authorized; 69 and 62 shares
issued and outstanding
Additional paid-in capital 2,517 1,885
Deferred stock compensation (621) (692)
Accumulated deficit (17,142) (15,927)
--------- ---------
Total stockholders' deficit (3,034) (2,522)
--------- ---------
$ 6,703 $ 7,316
========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
INVISION TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS - Unaudited
(in thousands except per share data)
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Product sales $ 3,922 $ 892
Contract revenues 547 98
--------- --------
Total revenues 4,469 990
--------- --------
Operating expenses:
Cost of product sales 2,453 658
Cost of contract revenues 537 91
Research and development 595 342
Selling, general and administrative 1,069 532
--------- --------
Total operating expenses 4,654 1,623
--------- --------
Operating loss (185) (633)
Interest expense (1,040) (125)
Interest income 10 12
--------- --------
Net loss $(1,215) $ (746)
========= ========
Net loss per share $(.39) $(.23)
========= ========
Weighted average shares outstanding 3,121 3,306
========= ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
INVISION TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS - Unaudited
(in Thousands)
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,215) $ (746)
--------- --------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 79 52
Amortization of bridge loan warrant 949 -
Compensation expense from stock options 99 -
Changes in assets and liabilities:
Accounts receivable (592) (908)
Inventories 114 (460)
Prepaid expenses (41) (111)
Other assets (268) -
Accounts payable (1,206) (221)
Accrued expenses 199 50
Deferred revenue (452) 828
-------- --------
Net cash used in operating activities (2,334) (1,516)
Cash flows from investing activities:
Acquisition of property and equipment (136) (81)
-------- --------
Net cash used in investing activities (136) (81)
-------- --------
Cash flows from financing activities:
Proceeds from short-term debt 1,000 -
Proceeds from issuance of common stock 13 2
-------- -------
Net cash provided by financing activities 1,013 2
-------- -------
Net (decrease)in cash for the period (1,457) (1,595)
Cash at beginning of period 1,927 2,241
-------- --------
Cash at end of period $ 470 $ 646
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
INVISION TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - Unaudited
Summary of Significant Accounting Policies
1. Interim Unaudited Financial Information
The accompanying interim unaudited condensed financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
contain all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, (consisting only of normal
recurring adjustments) considered necessary for a fair presentation of
the Company's financial position as of March 31, 1996 and December 31,
1995, the results of its operations for the three month periods ended
March 31, 1996 and 1995, and its cash flows for the three month periods
ended March 31, 1996 and 1995. These financial statements should be read
in conjunction with the audited financial statements of the Company as
of December 31, 1995 and 1994 and for each of the three years in the
period ended December 31, 1995, including notes thereto, included in the
Company's Registration Statement on Form S-1 (Commission File No. 333-
380).
Operating results for the three month period ended March 31, 1996 may
not necessarily be indicative of the results that may be expected for
the year ended December 31, 1996 or any other future period.
2. Net Loss Per Share
Net loss per share is computed using the weighted average number of
common and common equivalent shares outstanding during the periods.
Common equivalent shares consist of stock options and warrants(using the
treasury stock method). Common equivalent shares from stock options are
excluded from the computation if their effect is antidilutive, except that
pursuant to the Securities and Exchange Commission Staff Accounting Bulletin,
common and common equivalent shares issued from January 1, 1995 through the
effective date of the Company's initial public offering on April 23, 1996
(see Note 5 below) have been included in the computation using the treasury
stock method as if they were outstanding for all periods prior to March 31,
1996.
3. Inventories
The components of inventory consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Raw materials $ 1,238 $ 1,853
Work-in-process 1,339 779
Finished goods 722 781
--------- ---------
$ 3,299 $ 3,413
========= =========
</TABLE>
<PAGE>
INVISION TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - Unaudited -- Continued
4. Short-term Debt
In December 1995, the Company entered into a $2,000,000 Bridge Loan
Agreement ("Agreement," or the "Bridge Loan") with a lender. Under the
agreement, the Company had drawn $1,000,000 as of December 31, 1995. In
February, 1996 the Company borrowed the remaining $1,000,000 available
under the bridge loan. Principal outstanding under the agreement
is secured by all assets of the Company. The Bridge Loan is due on the
earlier of the closing of the Company's initial public offering (see Note 5,
below), or June 28, 1996 and bears interest at 10% per annum. The Company is
restricted from declaring dividends until the Bridge Loan is repaid.
In connection with the Bridge Loan, the lender received three-year
warrants (the "Bridge Loan Warrants") to purchase 31,818 and 227,272 shares
of the Company's Common Stock at a price per share equal to the initial public
offering price ($11.00 per share) and $8.80 per share, respectively. The
aggregate fair value of the Bridge Loan Warrants is $1,330,000. Such value
represents a discount that is being amortized as a financing cost over the
period that the Bridge Loan is outstanding.
5. Subsequent Events
On April 23, 1996, the Company's initial public offering (the IPO) of
900,000 shares of its Common Stock at $11.00 per share became effective.
The Company received net proceeds of $8,211,000.
On May 23, 1996, the Company's Managing Underwriter, Donald and Co.
Securities, Inc., under the terms of the over-allotment option provided
in the IPO, completed the sale of an additional 135,000 shares of the
Company's common stock, at $11.00 per share. The Company received net
proceeds of $1,321,000.
In accordance with the terms of the Bridge Loan Agreement the entire
$2,000,000 bridge loan balance was repaid on May 1, 1996 from the gross
proceeds of the IPO.
<PAGE>
INVISION TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Except for the historical information contained herein, the following
discussion contains forward looking statements that involve risks or
uncertainties. The Company's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this
section.
Product Sales in the first quarter of 1996 increased to $3.9 million
from $0.9 million in the first quarter of 1995. The increase was due to
an increase in the number of units sold to five in the first quarter of
1996 from one in the first quarter of 1995.
Contract Revenues in the first quarter of 1996 increased to $547,000
from $98,000 primarily due to billings under a new FAA contract in the
first quarter of 1996 which did not exist in the first quarter of 1995.
The Company's FAA contracts do not include a significant margin as they
primarily represent a reimbursement of costs incurred.
Product Gross Margins increased to 37% in the first quarter of 1996
from 26% in the first quarter of 1995. The increase is primarily due to
better efficiencies and overhead absorption based on the increased
number of units produced and sold.
Research and Development expenses increased to $595,000 in the first
quarter of 1996, as compared to $342,000 in the first quarter of 1995.
The increase in the dollar amount of Research and Development expense
primarily reflects the increased personnel and prototype development
costs required as the Company makes enhancements to its CTX 5000
systems and as the early stages of its long-term development plans are
initiated.
The Company expects to continue to increase the dollar amount of its
Research and Development expenses as it makes improvements to its
current products and develops new systems for the future.
Selling, General and Administrative Expenses increased to $1,069,000 in
the first quarter of 1996 from $532,000 in the first quarter of 1995. The
increase is primarily due to increased selling costs related to the larger
number of units sold in 1996.
Interest Expense increased to $1,040,000 in the first quarter of 1996
from $125,000 in the first quarter of 1995. Over $900,000 of the
increase represents a non-cash charge for the amortization of the value
of the Bridge Loan Warrants in the first quarter of 1996. In accordance
with generally accepted accounting principles, the value of these
warrants is amortized as financing expense over the life of the Bridge
Loan, which was repaid on May 1, 1996.
<PAGE>
INVISION TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Continued
Liquidity and Capital Resources
The Company's cash balance at March 31, 1996 was $470,000, a decline
of $1,457,000 from the cash balance of $1,927,000 at December 31, 1995.
The Company's working capital deficit at March 31, 1996 was $4,348,000,
an increase of $837,000 from the working capital deficit of $3,511,000 at
December 31, 1995.
Cash provided from financing activities primarily represents a draw
of $1,000,000 under the Bridge Loan credit facility in February, 1996.
The Company's IPO was completed on April 30, 1996 resulting in net
proceeds to the Company (after underwriting discounts and expenses) of
approximately $8.2 million. $2,000,000 of such proceeds were immediately
used to repay the Bridge Loan. Additional funds were used to reduce the
Company's outstanding balance in accounts payable. The Company also plans to
repay the $2,000,000 outstanding balance under its Line-of-Credit agreement
with San Paolo Bank on or before June 30, 1996. On May 23, 1996 the Company's
Underwriter exercised its over-allotment option for an additional 135,000
shares of InVision Common Stock resulting in additional net proceeds of
$1.3 million.
In February, 1996 the Company entered into a subcontract with Imatron Federal
Systems, Inc. (IFS) to perform activities under a Federal Aviation
Administration (FAA) grant which was awarded to IFS. Such subcontract will
provide up to $2.0 million to the Company during 1996 for use in increasing
throughput and lowering the cost of the CTX 5000. The Company was also
notified that IFS may receive up to an additional $2.1 million from the FAA
in 1997, of which the Company expects to receive $2.0 million for further
throughput enhancement and cost reduction activities in 1997. This most
recent award represents a continuation of FAA funding of new product
development by the Company.
The Company believes that, based on current estimates, the net proceeds
of its IPO, together with its cash balances, FAA funding to be received,
and cash generated from operations, will be sufficient to meet its operating
requirements into the second quarter of 1997.
<PAGE>
Part II: OTHER INFORMATION
Item 1: Legal Proceedings - Not Applicable.
Item 2: Changes in Securities - Not Applicable.
Item 3: Defaults Upon Senior Securities - Not Applicable.
Item 4: Submission of Matters to a Vote of Security Holders -
Not Applicable.
Item 5: Other Information - Not Applicable.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INVISION TECHNOLOGIES, INC.
Registrant
Date: June 5, 1996 /S/ Curtis P. DiSibio
---------------------
Curtis P. DiSibio
Chief Financial Officer and
Duly Authorized Officer
/S/ Dr. Sergio Magistri
-----------------------
Dr. Sergio Magistri
President and
Chief Executive Officer and
Duly Authorized Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 470
<SECURITIES> 0
<RECEIVABLES> 1,327
<ALLOWANCES> 0
<INVENTORY> 3,299
<CURRENT-ASSETS> 5,389
<PP&E> 1,753
<DEPRECIATION> 782
<TOTAL-ASSETS> 6,703
<CURRENT-LIABILITIES> 9,737
<BONDS> 0
0
12,212
<COMMON> 2,517
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,703
<SALES> 3,922
<TOTAL-REVENUES> 4,469
<CGS> 2,453
<TOTAL-COSTS> 4,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,040
<INCOME-PRETAX> (1,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,215)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,215)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> (.39)
</TABLE>
