<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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
------------------------------------------
Commission File Number: 033-302068
--------------------------------------------------
AUTONOMOUS TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2554729
- ------------------------------- ------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 N. SEMORAN BLVD., SUITE 180, ORLANDO, FL 32807
- ----------------------------------------------------------------------------
(Address of principal executive offices)
(407) 282-1262
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicated 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 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.
[X] Yes [ ] No
On June 3, 1996, there were 6,749,950 shares of the registrant's $.01 par
value Common Stock outstanding.
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
(A Development Stage Company)
Index to Form 10-Q
For The Quarter Ended March 31, 1996
PAGE
PART I. FINANCIAL INFORMATION ------
Item 1. Financial Statements
Balance Sheets as of March 31, 1996, 3
and December 31, 1995
Statements of Operations for the three
months ended March 31, 1996 and 1995,
and for the cumulative period from 4
inception to March 31, 1996
Statement of Stockholders' Deficit for
the three months ended March 31, 1996 5
Statements of Cash Flows for the three
months ended March 31, 1996 and 1995,
and for the cumulative period from 6
inception to March 31, 1996
Notes to Financial Statements 7
Item 2. Management's Discussion and 9
Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a 12
Vote of Security Holders
Item 5. Other Information 12
Item 6. Exhibits and Reports of Form 12
8-K
SIGNATURES 13
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
------------------------------------------
(A Development Stage Company)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ----------- -------------
(Unaudited) (Note 1)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,339,397 $ 492,326
Current portion of note receivable -
employee 5,186 6,000
Stock issuance costs 364,432 -
Prepaid expenses and other assets 41,527 41,527
----------- -----------
Total current assets 1,750,542 539,853
PROPERTY AND EQUIPMENT, net 313,542 235,640
NOTE RECEIVABLE - EMPLOYEE, less
current portion 23,581 24,000
----------- -----------
Total assets $ 2,087,665 $ 799,493
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 137,023 $ 326,527
Accrued expenses 559,375 230,281
Current portion of obligation under
capital leases 4,469 4,469
Advance from shareholder 1,000,000 1,000,000
----------- -----------
Total current liabilities 1,700,867 1,561,277
OBLIGATION UNDER CAPITAL LEASES, less
current portion 31,008 22,832
OBLIGATION UNDER STRATEGIC ALLIANCE
AGREEMENT 525,000 375,000
CONVERTIBLE NOTE PAYABLE 2,405,000 2,405,000
----------- -----------
Total liabilities 4,661,875 4,364,109
----------- -----------
STOCKHOLDERS' DEFICIT:
Convertible preferred stock, $1 par value-
Series A, 3,354 shares authorized, 3,354 3,354
issued and outstanding a
March 31, 1996, and December 31, 1995
Series B, 1,483 shares authorized,
issued and outstanding at
March 31, 1996, and December 31, 1995 1,483 1,483
Series C, 13,163 shares
authorized; 2,927 shares issued
and outstanding at March 31,
1996, and December 31, 1995 2,927 2,927
Series D, 6,000 shares authorized;
6,819 and 2,456 shares issued and
outstanding at March 31, 1996,
and December 31, 1995,
respectively 6,819 2,456
Common stock $.01 par value
15,000,000 shares authorized;
1,245,000 shares issued and
outstanding at March 31, 1996, and
December 31, 1995 12,450 12,450
Additional paid-in capital 7,014,002 4,673,362
Deficit accumulated during the
development stage (9,615,245) (8,260,648)
----------- ----------
Total stockholders' deficit (2,574,210) (3,564,616)
------------ -----------
$ 2,087,665 $ 799,493
============ ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
-3-
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A Development Stage Company)
STATEMENTS OF OPERATIONS
------------------------
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from Inception
Three Months Ended (July 23, 1985) to
March 31, March 31,
1996 1995 1996
-------- ------- -----------------
<S> <C> <C> <C>
REVENUES FROM RESEARCH GRANTS $ - $ - $ 3,450,517
OPERATING EXPENSES:
Costs of revenues from research grants - - 3,465,596
Clinical trials 195,272 116,979 1,369,737
Research and development 457,750 505,501 4,290,125
Selling and marketing 180,805 2,064 951,840
General and administrative 381,869 140,914 2,556,167
Other expenses 150,000 - 525,000
------------ ------------ ------------
OPERATING LOSS (1,365,696) (765,458) (9,707,948)
OTHER INCOME (EXPENSE):
Interest income 11,757 15,271 135,394
Interest expense (658) - (37,919)
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (1,354,597) (750,187) (9,610,473)
INCOME TAXES - - 4,772
------------ ------------ ------------
NET LOSS $(1,354,597) $ (750,187) $(9,615,245)
============ ============ ============
LOSS PER SHARE:
Net loss per share $(.36) $(.20)
============ ============
Weighted average common and common
equivalent shares used in computing
net loss per share 3,741,303 3,669,153
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
----------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1996
-----------------------------------------
<TABLE>
<CAPTION>
Deficit
Convertible Accumulated
Preferred Stock Common Stock Additional During the
---------------- ------------------ Paid-In Development
Shares Amount Shares Amount Capital Stage
------- ------- --------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 10,220 $10,220 1,245,000 $12,450 $4,673,362 $(8,260,648)
Issuance of Series D 4,363 4,363 - - 2,177,137 -
convertible preferred stock
In-kind services provided by CIBA - - - - 91,343 -
Compensation under stock option plan - - - - 72,160 -
Net loss - - - - - (1,354,597)
------- ------- --------- ------- ---------- ------------
BALANCE, March 31, 1996 14,583 $14,583 1,245,000 $12,450 $7,014,002 $(9,615,245)
======= ======= ========= ======= ========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from Inception
Three Months Ended (July 23, 1985) to
March 31, March 31,
---------------------
1996 1995 1996
---------- --------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $(1,354,597) $ (750,187) $(9,615,245)
Adjustments to reconcile net loss to
net cash used in operating
activities-
In-kind services provided by
shareholder 91,343 - 311,491
Compensation expense related to
employee stock options 72,160 - 452,786
Compensation expense related to
common stock placed in escrow
for future services - - 24,050
Convertible preferred stock
issued for services - - 162,500
Depreciation and amortization 12,904 7,709 217,985
Changes in assets and
liabilities-
Increase in prepaid expenses
and other assets - (69,214) (41,527)
(Decrease) increase in
accounts payable (189,504) (15,134) 137,023
Increase in accrued expenses 329,094 91,965 559,375
Increase in obligation under
strategic alliance agreement 150,000 - 525,000
------------ ----------- ------------
Net cash used in operating
activities (888,600) (734,861) (7,266,562)
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (81,958) (3,231) (494,365)
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of
convertible preferred stock 2,181,500 - 6,002,708
Net proceeds from issuance of common
stock - - 87,500
Payment of obligation under capital
leases (672) - (1,685)
Advance from shareholder - - 1,000,000
Proceeds from issuance of convertible
note payable - - 2,405,000
Proceeds from long-term debt - - 200,000
Repayment of long-term debt - - (200,000)
Stock issuance costs incurred (364,432) - (364,432)
(Loan to) payment received from
employee, net 1,233 - (28,767)
------------ ----------- ------------
Net cash provided by
financing activities 1,817,629 - 9,100,324
------------ ----------- ------------
NET INCREASE (DECREASE) IN CASH 847,071 (738,092) 1,339,397
CASH, beginning of year 492,326 1,713,520 -
------------ ----------- ------------
CASH, end of year $ 1,339,397 $ 975,428 $ 1,339,397
============ =========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Noncash transaction-
Equipment acquired under a
capital lease $ 8,848 $ - $ 37,162
Interest paid $ 658 $ - $ 37,919
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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-Q and Article 10
of Regulation S-X. 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 of normal recurring accruals and adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1996, are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Autonomous Technologies
Corporation ("Company") Prospectus dated May 1, 1996.
Fully diluted loss per share is not presented due to the anti-dilutive
effect of the Company's convertible preferred stock.
2. FINANCING TRANSACTIONS
Series D Preferred Stock
------------------------
On February 26, 1996, the Company closed it's offering of Series D
Preferred Stock. That offering, which had begun in November 1995, closed
with a total of 6,819 shares being sold at $500 per share (equivalent to
1,022,850 common shares being sold at $3.33 per share after giving effect
to the 150-for-1 split of common stock on February 14, 1996) with
net proceeds to the Company of approximately $3,400,000. Each such share
was sold with a detachable warrant that permits the holder to buy an
additional share of the Company's common stock for $3.33 up to its
expiration date of February 28, 1999.
Common Stock
------------
On May 7, 1996, the Company completed its initial public offering of common
stock. The Company sold 2,500,000 shares of common stock at $8.00 per
share with net proceeds to the Company of approximately $18,100,000, after
underwriter's discount of $1.4 million and related offering expenses of
approximately $500,000. Concurrent with this event, all of the outstanding
convertible preferred stock and certain debt of the Company were converted
to common shares.
In conjunction with the aforementioned initial public offering,
approximately $364,000 of stock issuance costs have been capitalized on the
Company's balance sheet as of March 31, 1996. Those stock issuance costs,
plus additional costs incurred after March 31, 1996, have been charged
against the proceeds of the initial public offering during the second
quarter.
-7-
<PAGE>
The following table sets forth, as of March 31, 1996, the unaudited pro forma
capitalization of the Company after giving effect to the conversions of the
preferred stock outstanding at March 31, 1996, the note payable to CIBA, the
CIBA advance (credit) to additional paid-in capital and the sale by the Company
of 2,500,000 shares of common stock under the initial public offering:
Pro Forma
March 31, March 31,
1996 1996
----------- -----------
Advance from CIBA $ 1,000,000 $ -
Obligation under capital leases 35,477 35,477
Obligation under Strategic Alliance 525,000 525,000
Convertible note payable 2,405,000 -
----------- -----------
3,965,477 560,477
Stockholders' equity (deficit):
Convertible preferred stock 14,583 -
Common stock 12,450 67,500
Additional paid-in capital 7,014,002 28,478,535
Deficit accumulated during the
development stage (9,615,245) (9,615,245)
----------- -----------
Total stockholders' deficit (2,574,210) 18,930,790
----------- -----------
$ 1,391,267 $19,491,267
=========== ===========
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I -- Item 1 of this
Quarterly Report and the audited financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's registration statement on Form S-1 filed
with the Securities Exchange Commission on May 1, 1996.
OVERVIEW
Autonomous Technologies Corporation is engaged in the design and development of
the next generation of excimer laser instruments for surgically correcting
myopia and other refractive errors of the human eye such as hyperopia and
astigmatism. The Company's T-PRK(R) System combines high speed, laser radar eye
tracking with precisely scanned narrow beam shaping, with the objective of
improving refractive surgical outcomes for these conditions over those achieved
with radial keratotomy and earlier generation PRK systems.
From its founding in 1985 until late in 1992, the Company worked under various
research grants from the Strategic Defense Initiative, or "Star Wars," and under
a grant to develop laser radar tracking technology. The Company has applied this
technology to eye tracking and developed its LADARVision(R) eye tracking
capability which allows the T-PRK System to track and compensate for any sudden
involuntary eye movement (saccadic eye movement) during the PRK procedure.
The Company is a development stage enterprise. Since inception, the Company has
experienced significant operating losses, and, as of March 31, 1996, had an
accumulated deficit of approximately $9.6 million. To date, the Company has had
revenues relating only to research grants, which is an endeavor no longer
pursued by the Company. The Company anticipates that its operating losses will
continue for the foreseeable future because it plans to expend substantial
resources in funding clinical trials, sales and marketing activities, commercial
manufacturing, and research and development. The Company expects that research
and development expenses will remain at relatively high levels for the
foreseeable future due to continued development of the system and algorithms for
higher indications. Additionally, it expects that both clinical trial costs and
sales and marketing costs will escalate as those programs expand to meet the
Company's business goals. The foregoing forward looking statements could be
affected by certain risks and uncertainties, including: ongoing results from
clinical trials; foreign market acceptance of the T-PRK System; and the ability
of the Company to ramp up production to adequate levels.
-9-
<PAGE>
RESULTS OF OPERATIONS
Operating Expenses
Clinical trials expenses were $195,272 and $116,979 in the quarters ended March
31, 1996 and 1995, respectively. These expenses increased 67% due to the
Company's addition of staff in the clinical department and the opening of its
U.S. clinical trials program in mid-March 1996, which was permitted with the
granting of the Company's investigational device exemption by the U.S. Food and
Drug Administration on January 3, 1996.
Research and development expenses were $457,750 and $505,501 in the quarters
ended March 31, 1996 and 1995, respectively. The decrease of 9% is due to the
fact that R&D staffing has remained approximately stable over these time periods
and there was less R&D travel during the first quarter of 1996 than there had
been during the first quarter of 1995. In the first quarter of 1995 the
Company's R&D staff was traveling heavily in order to support the opening of
foreign clinical trials.
Selling and marketing expenses of $180,805 in the quarter ended March 31, 1996,
increased from $2,064 in the quarter ended March 31, 1995. This significant
increase reflects the fact that the Company had no sales and marketing function
during the 1995 quarter. In mid-1995, with the signing of a Strategic Alliance
Agreement with CIBA Vision, the company received a commitment of $1,000,000
worth of contributed sales and marketing services over three years. In the 1996
quarter, approximately half of the selling and marketing expenses were from this
contributed services agreement and the remainder were direct costs incurred by
the sales and marketing staff at the Company.
General and administrative expenses were $381,869 and $140,914 in the quarters
ended March 31, 1996 and 1995, respectively. This increase of 171% is due to
increased staffing, including the hiring of an Executive Vice President, Chief
Operating Officer and a Vice President, Chief Financial Officer, neither of
which were employed by the Company in the 1995 quarter. Additionally, the
Company incurred higher levels of travel, legal and other infrastructure costs
as the business prepares for commercial activity.
Other expense of $150,000 for the quarter ended March 31, 1996 related entirely
to the accrual being made for the shares that may be issuable in May 1999 to
CIBA Vision under the terms of the 1995 Strategic Alliance Agreement. The
shares are to be issued unless certain requirements, relating to the accumulated
6% commission on revenues the Company will pay to CIBA Vision, are satisfied.
-10-
<PAGE>
Interest income and interest expense
Interest income was $11,757 and $15,271 in the quarters ended March 31, 1996 and
1995, respectively. The decline was due to lower average cash balances in the
1996 quarter. Interest expense was $658 in the quarter ended March 31, 1996
compared with none in the 1995 quarter. This new interest expense is due to a
capital lease obligation that originated in September 1995 for a telephone
system.
Operating and Net Losses
The net effect of the foregoing expense items was that the Company's operating
loss increased to $1,365,696, or 78%, in the quarter ended March 31, 1996, from
$765,458 in the quarter ended March 31, 1995. The Company's net loss increased
to $1,354,597 or 81%, in the quarter ended March 31, 1996, from $750,187 in the
quarter ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $1,339,397 and $492,326 at March
31, 1996, and December 31, 1995, respectively. The company incurred expenditures
of $888,600 to support operations and $81,958 for capital expenditures for the
quarter ended March 31, 1996.
As of March 31, 1996, the Company did not have any commitments for material
capital expenditures. In June of 1996, however, the Company committed to a lease
for a main office and production facility of 25,000 square feet. The Company
anticipates occupying the facility in early 1997. The lease term is ten (10)
years with two five year renewal options and termination opportunities at years
five and seven in the lease. Base rent under this lease for the first year is
$237,500, with annual 3% increases in subsequent years. The lease payments will
include rent on up to $500,000 of tenant improvements, including certain
outfitting of production areas.
In May 1996, the Company completed an initial public offering of 2,500,000
shares of common stock. The net proceeds to the Company from the public offering
was approximately $18,100,000. The proceeds from the initial public offering
have been invested since receipt in overnight repurchase agreements
collateralized with U.S. Treasury instruments, coupon interest strips on U.S.
Treasury instruments, and U.S. Treasury bills in accordance with the Company's
Cash Investment and Management Policy. The Company's common stock is quoted on
NASDAQ under the symbol "ATCI".
With the proceeds of the initial public offering, the Company believes that
sufficient liquidity is available to satisfy its working capital needs at least
through mid-1998.
-11-
<PAGE>
EXHIBIT 11
AUTONOMOUS TECHNOLOGIES CORPORATION
STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE
(PRIMARY)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
Primary Loss Per Share March 31, 1996 March 31, 1995
<S> <C> <C>
Net loss........................... $(1,354,597) $(750,187)
Weighted average common shares
outstanding during the periods..... 1,197,150 1,125,000
Series D convertible preferred
shares issued from November
1995 to February 1996, as if
outstanding for the entire
periods in accordance
with Staff Accounting Bulletin
No. 83............................... 1,022,850 1,022,850
Common stock warrants issued in
connection with Series D convertible
preferred shares, on the treasury
stock method, as if outstanding
for the entire periods in accordance
with Staff Accounting Bulletin
No. 83............................... 594,038 594,038
Stock options, on the treasury stock
method, in accordance with Staff
Accounting Bulletin No. 83........... 594,370 594,370
Future shares issuable to CIBA,
on the treasury stock method, as if
outstanding for the entire periods in
accordance with Staff Accounting
Bulletin No. 83...................... 295,125 295,125
Common shares issued under the terms
of an Executive Stock Agreement,
on the treasury stock method,
as if outstanding for the
entire periods in accordance
with Staff Accounting Bulletin
No. 83............................... 37,770 37,770
--------------------------------
Shares used in computation........... 3,741,303 3,669,153
================================
Primary loss per share............... $(0.36) $(0.20)
======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,339,397
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,774,123
<PP&E> 522,679
<DEPRECIATION> 209,137
<TOTAL-ASSETS> 2,087,665
<CURRENT-LIABILITIES> 4,661,875
<BONDS> 0
0
14,583
<COMMON> 12,450
<OTHER-SE> (2,681,243)
<TOTAL-LIABILITY-AND-EQUITY> 2,087,665
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,365,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 658
<INCOME-PRETAX> (1,354,597)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,354,597)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,354,597)
<EPS-PRIMARY> (.44)
<EPS-DILUTED> (.34)
</TABLE>
