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SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AUTONOMOUS TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
59-2554729
(I.R.S. Employer Identification No.)
2800 Discovery Drive, Orlando, Florida 32826, (407) 384-1600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Randy W. Frey, 2800 Discovery Drive, Orlando, Florida 32826, (407) 384-1600
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
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Copy to:
William A. Grimm, Esq., Gray, Harris & Robinson, P.A.,
201 East Pine Street, Suite 1200, Orlando, Florida 32801, (407) 843-8880
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Approximate date of commencement of proposed sale to the public: June 28, 1997.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be be offering price per aggregate offering registration fee
registered registered unit (1) price (1)
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<S> <C> <C> <C> <C>
Common Stock, 3,000,000 $3.813 $11,439,000.00 3,467.00
$0.01 par value shares
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
Registrant's Common Stock as reported on the Nasdaq National Market on June 16,
1997.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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Subject to Completion, dated June 18, 1997
PROSPECTUS
3,000,000 Shares
Autonomous Technologies Corporation
This Prospectus relates to the public offering, which is not being
underwritten, of 3,000,000 shares (the "Shares") of Common Stock, par value
$0.01 per share (the "Common Stock") of Autonomous Technologies Corporation (the
"Company"). All of the Shares may be offered by certain stockholders of the
Company or by pledgees, donees, transferees or other successors in interest that
receive such shares as a gift, partnership distribution or other non-sale
related transfer (the "Selling Stockholders"). The Shares were issued to the
Selling Stockholders in a private placement by the Company. See "Recent
Developments." The Shares have been issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof. The Shares are being
registered by the Company pursuant to certain Purchase Agreements between the
Company and the Selling Stockholders.
The Shares may be offered by the Selling Stockholders from time to time in
transactions on the Nasdaq National Market, in privately negotiated
transactions, or by a combination of such methods of sale, at such fixed prices
as may be negotiated from time to time, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
Shares to or through broker-dealers and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares from whom such broker-
dealers may act as agent or to whom they sell as principal or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions). See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by the Selling Stockholders. The Company has agreed to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act.
The Common Stock of the Company is traded on the Nasdaq National Market
tier of the Nasdaq Stock Market under the symbol "ATCI." On June 16, 1997, the
last sale price for the Common Stock as reported by Nasdaq was $3.75 per share.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" herein for a description of
agreements by the Company to indemnify the Selling Stockholders against certain
liabilities.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
THE DATE OF THIS PROSPECTUS IS JUNE __, 1997
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AVAILABLE INFORMATION
This Prospectus, which constitutes a part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the" Securities Act"), omits certain of the information set forth in
the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits thereto for further information with respect to
the Company and the securities offered hereby. Copies of the Registration
Statement and the exhibits thereto are on file at the offices of the Commission
and may be obtained upon payment of the prescribed fee or may be examined
without charge at the public reference facilities of the Commission described
below.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facility maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional office located at 1401 Brickell Avenue, Suite 200,
Miami, FL, 33131. The Commission maintains a website that contains reports,
proxy statements and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
web site is http://www.sec.gov. Copies of such material can be obtained from
the Public Reference Section of the Commission, located at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock
is quoted on the Nasdaq National Market. Reports, proxy statements and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company (File
No. 333-2068) with the Commission are incorporated herein by reference: (a)
Annual Report on Form 10-K for the Fiscal Year ended December 31, 1996; (b)
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (c)
Definitive Proxy Statement dated April 28, 1997, filed in connection with the
Company's 1997 Annual Meeting of Stockholders; and (d) the description of the
Company's Common Stock which is contained in its Form S-1 filed under the
Securities Act on March 8, 1996.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained or incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered a copy of any or all of such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests for copies should be
directed to Roslyn Palmiere, Autonomous Technologies Corporation, 2800 Discovery
Drive, Orlando, Florida 32826, (407) 384-1600.
________________________________________________________________________________
T-PRK and LADARVision are registered trademarks of the Company. T-LASIK
and CustomCornea are trademarks of the Company. Ciba Vision is a registered
trademark of Ciba Vision Corporation. Other trademarks used herein are the
property of their respective owners.
________________________________________________________________________________
In evaluating the Company's business, prospective investors should
carefully consider the following risk factors before purchasing the securities
offered hereby. This Prospectus contains certain forward-looking statements.
Statements of plans, intentions and objectives by the Company and statements of
future economic performance contained in this Prospectus should be deemed to be
forward-looking statements. Cautionary statements are made in certain sections
of this Prospectus. These cautionary statements should be read as being
applicable to all related forward-looking statements wherever they appear in
this Prospectus, the materials referred to in this Prospectus or the materials
incorporated by reference into this Prospectus.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere and incorporated by reference
in this Prospectus. This Prospectus contains, in addition to historical
information, forward looking statements that involve risks and uncertainties.
Investors should carefully consider the information set forth under the heading
"Risk Factors."
THE COMPANY
Autonomous Technologies Corporation (the "Company"), a Florida corporation
formed in 1985, has been engaged since 1993 in the design and development of the
next generation of excimer laser instruments for laser vision correction ("LVC")
to reduce or eliminate a person's dependence on eyeglasses or contact lenses.
The Company's technology combines eye tracking with a narrow beam excimer laser
to treat common refractive vision disorders such as myopia (nearsightedness),
hyperopia (farsightedness) and astigmatism (blurred vision). The Company's
objective is to improve refractive surgical outcomes for these conditions over
those achieved by earlier LVC systems.
Vision correction is one of the largest medical markets, with approximately
136 million people in the United States using eyeglasses or contact lenses.
Within this group, approximately 60 million people are myopic. Industry sources
estimate that Americans spend approximately $13 billion, at retail prices, on
eyeglasses, contact lenses and other vision correction products and services
each year.
The Company's T-PRK/(R)/ (tracker-assisted photorefractive keratectomy)
technology combines high speed, laser radar eye tracking ("LADARVision"/(R)/)
with narrow beam shaping to form its new and proprietary technology platform.
The T-PRK System is designed to address a need for sophisticated eye tracking to
compensate for saccadic eye movement during surgery. Saccadic eye movements are
very rapid, involuntary and random in amplitude and direction and are not
suppressed or reduced by medication used during LVC. These eye movements
degrade LVC predictability and visual quality. The Company believes that the T-
PRK System provides higher accuracy ablation by virtually eliminating
decentration and shaping error caused by eye movement. Additionally, the narrow
beam excimer provides a smooth ablation, and the Company's algorithms and
shaping apparatus offer high speed to minimize surgical duration while retaining
a high degree of pointing accuracy to achieve predictable shaping.
The Company believes the T-PRK System will yield more stable, predictable
results with less post-operative regression, potentially improving visual
quality and clinical outcomes for low to moderate myopia compared to first
generation excimer laser PRK systems manufactured and sold by its competitors.
The Company is currently conducting its Phase III U.S. clinical trials for low
to moderate myopia up to 10 diopters of mean spherical equivalent, including up
to 6 diopters astigmatism. Data from T-PRK clinical trials to date, including
initial Phase III results, are supportive of improved stability and
predictability for low to moderate myopia patients. Further, the Company
believes extensions of its T-PRK technology platform may yield even greater
improvements in patient results for vision disorders that require more complex
corneal reshaping such as the many combinations of hyperopic and myopic sphere
and astigmatism.
In 1994, the Company entered into a strategic alliance with CIBA Vision
Group Management, Inc. ("CIBA"), a wholly-owned subsidiary of Novartis, Ltd.
(formed by the merger of Ciba-Geigy, Ltd. of Basel, Switzerland and Sandoz,
Ltd.). The strategic alliance with CIBA is for the worldwide co-promotion of
the T-PRK System. To date, CIBA has invested an aggregate of approximately $5
million in cash and $795,000 in services in the Company. As a result of this
investment, CIBA owns approximately 18% of the Company's Common Stock, not
including shares that may be issuable to CIBA in 1999. See "Risk Factors -
Commission Obligation to CIBA; Future Dilution" and "Item 13. - Certain
Relationships and Related Transactions" in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 ("Form 10-K"). With experience
in physician and retail marketing and the second largest worldwide market share
for contact lens and
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lens care products, CIBA provides the Company with credibility and awareness in
both the ophthalmic and consumer markets. Under the strategic alliance, the
Company plans to operate its sales force out of CIBA facilities worldwide and to
utilize co-promotion strategies, such as product tie-ins, joint advertising and
shared exhibit space, on a project-by-project basis. The Company retains the
worldwide marketing rights for its T-PRK System.
The Company's marketing strategy is designed to broaden the penetration of
the T-PRK System in the refractive surgery market by significantly reducing the
up-front cost to the ophthalmologist of current PRK systems. This marketing
strategy would allow physicians to utilize the T-PRK System by paying an advance
procedure fee for the equipment and paying a per procedure service fee
thereafter.
RECENT DEVELOPMENTS
PRIVATE PLACEMENT. On June 17, 1997 the Company completed a private
placement with the Selling Stockholders of 3,000,000 shares of the Company's
Common Stock. The Shares were sold to the Selling Stockholders pursuant to an
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof. The Company agreed to file a Registration Statement on
Form S-3 on behalf of the Selling Shareholders covering the resale of the
Shares. This Prospectus forms a part of such Form S-3, pursuant to which all of
the Shares may be offered from time to time by the Selling Stockholders.
VISX SETTLEMENT. On March 31, 1997, the Company entered into a patent
license agreement with VISX, Inc. ("VISX") for the use of certain VISX patents
for laser vision correction outside of the United States. Patent lawsuits
initiated by the Company against VISX in Canada and by VISX against the Company
in the United Kingdom will be dismissed as a result of this license agreement.
The license agreement with VISX grants the Company a non-exclusive, worldwide
license, excluding the United States, for the use of certain VISX patents for
ultraviolet laser vision correction. The license requires payment of equipment
royalties on each machine placed by the Company outside of the United States.
The Company believes that this license agreement will enhance its ability to
commercialize the T-PRK System internationally in the near future by
substantially reducing future litigation risk for the Company and its customers.
The Company's business plan calls for the placement of T-PRK Systems outside of
the United States, primarily in Europe and Canada, beginning in the second
quarter of 1997.
AUTHORIZED SHARES. At the Annual Meeting of Stockholders on June 12, 1997,
the stockholders approved an amendment to the Company's Third Amended and
Restated Articles of Incorporation to increase the authorized number of shares
of Common Stock from 15,000,000 to 25,000,000 shares.
1995 STOCK OPTION PLAN. At the Annual Meeting of Stockholders on June 12,
1997, the stockholders approved an amendment to the Company's 1995 Stock Option
Plan to increase the number of shares available for grant under the Plan from
1,050,000 to 1,750,000 shares.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH
HEREIN IN THE SECTION CAPTIONED "RISK FACTORS" WHICH IMMEDIATELY FOLLOWS THIS
SECTION ON PAGE 3.
_______________________
The Company's executive offices are located at 2800 Discovery Drive,
Orlando, Florida 32826, where it also maintains its primary research and
manufacturing facilities. Its telephone number at that location is (407) 384-
1600.
_______________________
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RISK FACTORS
In evaluating the Company's business, prospective investors should
carefully consider the following risk factors before purchasing the securities
offered hereby. This Prospectus contains certain forward-looking statements.
Statements of plans, intentions and objectives by the Company and statements of
future economic performance contained in this Prospectus should be deemed to be
forward-looking statements. Cautionary statements are made in certain sections
of this Prospectus. These cautionary statements should be read as being
applicable to all related forward-looking statements wherever they appear in
this Prospectus, the materials referred to in this Prospectus or the materials
incorporated by reference into this Prospectus.
ABSENCE OF OPERATING HISTORY AND PROFITABILITY; EXPECTED FUTURE LOSSES.
The Company was founded in 1985 to develop laser tracking technology for the
Department of Defense under the Strategic Defense Initiative and did not pursue
development of the T-PRK System product until 1993. The Company to date has
installed six units for clinical trials and is proceeding with its U.S. Phase
III patient treatments, including post-operative follow-up. The Company has
generated limited revenues to date, none of which relate to its T-PRK System,
and has incurred net losses since 1991. The Company's T-PRK System may require
additional product development, will require additional clinical studies for
indications beyond low and moderate myopia and astigmatism and will require
marketing investment as well as its Pre-Market Approval ("PMA") from the FDA as
a Class III device prior to United States commercialization. There can be no
assurance that any of the Company's product, clinical or market development
efforts will be successfully completed, that regulatory approvals will be
obtained, or that the Company's products will be capable of being produced in
commercial quantities at reasonable cost. Further, it is expected that the
Company will continue to incur substantial losses for some time after it enters
the United States market for laser vision correction, and there can be no
assurance that the Company will attain profitability at any time in the future.
UNCERTAIN MARKET ACCEPTANCE OF LVC. The Company believes that its long-
term growth and ultimate profitability will depend upon acceptance of LVC in the
United States and certain international markets and the Company's ability to
penetrate the LVC market successfully. LVC has only been marketed in the United
States for approximately 18 months and initial market growth has been slower
than anticipated. The degree of eventual acceptance of LVC by ophthalmologists
and persons needing refractive correction as an alternative to existing methods
of treating or correcting vision disorders is still undeterminable. The
acceptance of LVC by the general population may be affected adversely by its
retail price, concerns relating to its safety and efficacy, and the accepted
effectiveness of alternative methods of correcting refractive vision disorders.
Additionally, the current lack of long-term follow-up data, the possibility of
unknown side effects, and the expected lack of third-party reimbursement for the
procedure might also adversely affect demand. Any future reported adverse
events or other unfavorable publicity involving patient outcomes from the use of
legal or illegal LVC systems manufactured by any participant in the LVC market
could also adversely affect consumer acceptance. Ophthalmologist and optometrist
acceptance (the latter for referrals) could also be affected by the high costs
and expenses of excimer laser systems, which might preclude access to such
systems by some professionals. In addition, the Company's marketing strategy
relies, in part, on ophthalmologists who are currently using an existing excimer
laser system to replace their equipment with the Company's T-PRK system.
Emerging new refractive surgery technologies and procedures may also have the
potential to compete with or materially limit the acceptance of LVC. Current
ophthalmic product suppliers whose products, including eyeglasses and contact
lenses, are alternatives to LVC also may adversely affect the market acceptance
of LVC by their retail marketing strategies, including aggressive pricing. The
failure of LVC to achieve broad market acceptance would have a material adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance that there will be demand for the Company's T-PRK
System.
GOVERNMENT REGULATION; FOOD AND DRUG ADMINISTRATION; POSSIBLE FAILURE TO
OBTAIN REGULATORY APPROVAL FOR PRODUCTS. Medical devices are subject, prior to
clearance for marketing, to rigorous pre-clinical and clinical testing mandated
by the FDA and comparable agencies in other countries and, to a lesser extent,
by state regulatory authorities. The Company must file a PMA application with
the FDA for approval of its T-PRK
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System as a Class III device for treating low myopia and other vision disorders.
The process of obtaining approval of a PMA application is lengthy,
expensive and uncertain. It requires the submission of extensive clinical data
and supporting information to the FDA. The PMA process also typically has
required a public hearing before an advisory panel comprised of experts in the
field. However, the FDA is not bound by the advisory panel's recommendations
when it seeks them. In late 1996, the FDA issued a definitive statement
entitled "FDA Guidance for Photorefractive Keratectomy Laser Systems: IDE
Studies and PMA Applications" (the "Guidance Document"). The Guidance Document
offers companies pursuing FDA approval of LVC systems substantially more defined
filing paths, study design and execution requirements, and safety and efficacy
data levels that will have to be achieved in order to be a candidate for
issuance of a PMA. The Company believes that the Guidance Document will make the
process of obtaining PMA approvals for LVC systems less uncertain and more
predictable but will not eliminate the risk that the Company will not be granted
a PMA. The Company believes that its engineering, clinical trials and data
gathering and analysis, including that which was accomplished before the
existence of the Guidance Document, are in substantial compliance with the
Guidance Document.
Products manufactured and distributed by the Company pursuant to a PMA will
be subject to extensive, ongoing regulation by the FDA. The FDA enabling
legislation, the Food, Drug and Cosmetic Act (the "FDC Act") also requires the
Company to manufacture its products in accordance with its current Good
Manufacturing Practices ("GMP") regulations. The Company's facilities will be
subject to periodic, surprise GMP inspections by the FDA. These regulations
impose certain procedural and documentation requirements upon the Company with
respect to manufacturing and quality assurance activities. In October 1996, the
FDA issued its final rule substantially revising the GMP regulations to bring
them into alignment with worldwide quality system requirements. The new Quality
System Regulation ("QSR") is effective June 1, 1997. The goal of QSR is to make
the existing GMP regulations consistent, to the extent possible, with the
requirements for quality systems contained in applicable international
standards, primarily, the International Standards Organization (ISO) 9001.
The Company's manufacturing facilities eventually must comply with current
ISO 9001 qualifications and FDA QSR guidelines before the Company's PMA can be
granted. The Company's facilities currently do not comply with such
requirements and the Company's new facilities will not initially comply with
such requirements. If any noncompliance with these regulations is noted during
facility inspections, the initial or continued marketing of the Company's
products may be adversely affected.
Additionally, product and procedure labeling and all forms of promotional
activities are subject to examination by the FDA, and current FDA enforcement
policy prohibits the marketing of approved medical devices for unapproved uses.
Noncompliance with these requirements may result in warning letters, fines,
injunctions, recall or seizure of products, suspension of manufacturing, denial
or withdrawal of PMAs, and criminal prosecution.
The FDA Quality System Regulation and ISO 9001 require the Company to
maintain a supplier-quality program with major sub-contractors in order for the
Company's product to carry the claim of having been manufactured in a quality
environment. As a result, at least two of the Company's current sub-contractors
will be required to establish documented quality systems. Currently one of
those sub-contractors meets those standards. There can be no assurance that the
remaining sub-contractor can meet the standards in a timely fashion.
Furthermore, there is always the risk that existing sub-contractors who meet the
requirements currently will not meet them at some time in the future. As a
result, it is possible that the Company's commercial capability could be
hindered at some time in the future because it is unable to pass GMP inspections
by the FDA, its subcontractor's documented quality systems fail to be
sufficient, or the Company is unable to obtain the "CE" mark to enable the
Company to distribute products in Europe in 1998 and beyond. (See "Risks
Associated with International Commercial Activities" for a discussion of the
"CE" mark.)
Requirements for regulatory approval relating to the T-PRK System may vary
widely from country to
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country, ranging from simple product registrations to detailed submissions such
as those required by the FDA. No regulatory clearances have been obtained in any
such countries, and there is no assurance that any will be issued.
Changes in existing regulatory requirements or adoption of new requirements
could have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that the Company
will not be required to incur significant costs to comply with laws and
regulations in the future or that laws and regulations will not have a material
adverse effect on the Company's business, financial condition or results of
operations.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY. The Company's success
will depend in part on its ability to obtain patents for its products and
processes, to preserve its trade secrets and to operate without infringing upon
the proprietary rights of third parties. In particular, whether the Company can
protect its proprietary tracking and narrow-beam shaping technology is critical
to its ability to differentiate it from existing LVC systems. The Company has
filed nine patent applications in the United States and several foreign patent
applications related to several features of its eye tracking technology as well
as to its narrow beam delivery, corneal sculpting methods and advanced
topographical analysis. Two of these applications have resulted in the issuance
of United States patents and one additional patent has been allowed. It is
uncertain as to whether any other patents will be issued, whether the scope of
any patent protection will exclude competitors or provide meaningful competitive
advantages to the Company, whether any of the Company's patents will be held
valid if subsequently challenged, or whether others will not claim rights in or
ownership of the patents and other proprietary rights held by the Company.
In both the United States and overseas, there are a number of patents
covering methods, procedures and apparatus for performing corneal surgery with
ultraviolet laser ablation. Furthermore, there are existing patents in eye
tracking and narrow beam excimer shaping. The patent positions of medical
technology are generally uncertain and involve complex legal and factual
questions. Consequently, the Company does not know whether any of its pending
applications will result in the issuance of any patents or whether issued
patents will provide significant proprietary protection or will be circumvented
or invalidated. Since patent applications in the United States are maintained
in secret until patents are granted and since publication of inventions in
scientific or patent literature tend to lag behind patent grants by several
months, the Company cannot be certain that it was the first creator of
inventions covered by its pending patent applications or that it was the first
to file patent applications for such inventions.
PATENT LITIGATION. There has been significant patent litigation in the
medical device industry generally, and in LVC in particular. The defense and
prosecution of patent proceedings is costly and involves substantial commitments
of management time. Adverse determinations in litigation or other patent
proceedings to which the Company may become a party could subject the Company to
significant legal judgments or other liabilities to third parties and could
require the Company to seek licenses from third parties that may or may not be
obtainable and may or may not be economically viable. Patent and other
intellectual property disputes in the medical device industry often are settled
through licensing arrangements. The costs associated with such arrangements may
be substantial, and could include ongoing royalties. Furthermore, there can be
no assurances that a settlement through licensing can be reached, accordingly,
an adverse determination in a judicial or administrative proceeding, or the
Company's failure to obtain necessary licenses, could prevent the Company from
manufacturing and selling its products in one or more markets, which could have
a material adverse effect on the Company's business, financial condition and
results of operations.
Two of the Company's competitors, Summit Technologies, Inc. ("Summit") and
VISX, have formed a United States partnership, Pillar Point Partners ("Pillar
Point"), to pool certain of their respective patents related to corneal
sculpting technologies. In October 1996, the Company filed suit in the U.S.
against Pillar Point alleging non-infringement, unenforceability and invalidity
of certain of the patents of Pillar Point. There can be no assurance that the
Company will prevail in this lawsuit or that other such suits will not arise.
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TECHNOLOGY LICENSES FROM PILLAR POINT AND OTHERS. Pursuant to the Pillar
Point partnership, Summit and VISX, whose products use excimer lasers for PRK,
have agreed to pay royalties and per procedure fees to Pillar Point under
licenses granted by Pillar Point. Depending upon whether the Company's T-PRK
System incorporates patented technology owned by or licensed to Pillar Point and
as may be required by any license agreement that the Company may enter into with
Pillar Point, the Company or its T-PRK System users may be required to pay
royalties and per procedure fees to Pillar Point for all revenues generated in
the United States. The Company has not obtained a license from Pillar Point as
of this date, and the actual per procedure fee and other terms of any license,
if such license is granted, have yet to be determined.
In addition, there may be other United States and foreign patents for which
the Company will need to negotiate licenses in order to sell, lease or use the
T-PRK System in certain markets.
There can be no assurance that the Company will be successful in securing
licenses, including any necessary licenses from Pillar Point, or that if the
Company does obtain licenses, such licenses will be on terms acceptable to the
Company. The failure to either obtain required licenses or to obtain licenses
on terms favorable to the Company could have a material adverse effect on the
business of the Company.
LIMITED HUMAN CLINICAL TRIAL DATA; LACK OF LONG-TERM FOLLOW-UP.
Substantial additional human clinical trials must be completed under rigorous
protocols at multiple sites in order to submit the required outcome data with
the Company's PMA application. The results of the Company's early clinical
trials appear satisfactory, but may not be indicative of results to be expected
in future clinical trials. If the Company's clinical trials do not show
consistently good outcomes, the Company may not be able to secure a PMA for its
products. Moreover, the results of clinical trials are not within the Company's
control, and the Company could experience delays in completing its clinical
trials for a variety of reasons. Any failure to obtain a PMA or delay in
clinical trials would have a material adverse effect on the Company's business,
financial condition and results of operations.
There have been concerns with respect to the safety and efficacy of LVC,
including the predictability and stability of results. Potential complications
and side effects in early LVC systems have included post-operative discomfort
due to re-epithelialization (eye membrane re-growth); corneal haze during
healing (an increase in the light scattering properties of the cornea);
glare/halos (undesirable visual sensations produced by bright lights); decreases
in contrast sensitivity; temporary increases in intraocular pressure in reaction
to topical medication administered during and after the procedure; fluctuations
in refractive capabilities during healing; occasional decreases or permanent
loss in best corrected vision post-operatively (i.e., with corrective eyewear);
unintended over-corrections or under-corrections; regression of operative
effect; disorders of corneal healing; corneal scars; corneal ulcers and
unintentionally induced astigmatism. It is entirely unpredictable as to whether
long-term follow-up data on either clinical or later commercial patients from
any LVC system will reveal additional complications that may have a material
adverse effect on acceptance of LVC and market size which in turn would have a
material adverse effect on the Company's business, financial condition and
results of operations. Concern over the safety of LVC in general could, in
turn, result in adverse regulatory action which could have a material adverse
effect on the Company's business, financial condition and results of operations.
RAPIDLY CHANGING TECHNOLOGY; HIGHLY COMPETITIVE MARKETS. The refractive
surgery market is characterized by rapidly evolving technology and intense
competition. The Company is aware of two companies, Summit and VISX, that have
been granted their PMA's and are actively marketing LVC systems in the United
States for low myopia, and, in the case of VISX, astigmatism. Several
companies, including Chiron/Technolas, Coherent/Schwind, Nidek, Meditek,
Lasersight and Novatec, have introduced PRK systems outside the United States,
where PRK has been commercialized for treating myopia. Such companies either
have begun or may soon begin clinical trials in the United States. LVC
providers who purchase equipment from Summit or VISX may be reluctant to change
to the new T-PRK System because of the significant capital investment they have
made or the familiarity with the equipment and the inconvenience of changing to
a new system. If other providers of PRK systems are able to saturate the United
States market with their equipment before the Company
6
<PAGE>
obtains FDA approval to market the T-PRK System in the United States, the
Company could experience a significantly lower share of the market than
anticipated which would have a material adverse effect on the Company's
business, financial condition and results of operations.
Several of the Company's competitors have allied with or developed their
own vision care centers in Europe and the United States and have entered into
strategic alliances with prominent corporations in the worldwide ophthalmic
industry to promote their PRK excimer lasers. Many of these companies have
substantially greater capabilities than the Company in the areas of capital
resources, research and development resources and regulatory, manufacturing and
marketing experience. There can be no assurance that the Company's competitors
will not succeed in developing or marketing technologies and products that are
more effective and less expensive than those developed or marketed by the
Company or that would render the Company's technology and products obsolete or
noncompetitive.
Non-laser corrective refractive procedures and technologies are under
development, and it is possible that these technologies and procedures will be
successfully developed as competition to the Company's technology.
RELIANCE ON A SINGLE POTENTIAL PRODUCT. Currently the Company's only
significant planned product is the T-PRK System for refractive correction. The
Company's existing plans assume that it will derive substantially all of its
revenues from the T-PRK System. If the Company is unable to make significant
commercial placements of the T-PRK System for vision correction, the viability
of the Company would be jeopardized. Furthermore, if the Company is unable to
successfully design, clinically test and gain FDA approval on additional
indications, such as astigmatism, higher levels of myopia, and hyperopia, the
Company's future growth could be significantly limited.
DEPENDENCE ON AND NEED FOR KEY PERSONNEL; POTENTIAL FAILURE TO MANAGE
GROWTH. Prior to 1995, the Company relied on consultants and contractors to
assist senior management in certain financial, regulatory, marketing and
manufacturing functions. During the latter half of 1995 and in 1996, the
Company attracted senior personnel in marketing, clinical trials management,
finance, research and operations. As the Company continues the clinical
development of the T-PRK System and prepares for regulatory approvals and other
commercialization activities, it will need to continue to implement and expand
its operational, financial and management resources and controls. Particularly
important will be the need of the Company to build a manufacturing and field
service organization. The failure of the Company to attract and retain
experienced individuals for these positions, as well as any inability of the
Company to effectively manage growth in its domestic and international
operations as it transitions from a development stage enterprise to a commercial
entity, could have a material adverse effect on the Company's business,
financial condition and results of operations.
NO SALES AND MARKETING EXPERIENCE; RELIANCE ON STRATEGIC ALLIANCE PARTNER.
The Company's efforts to date have focused on the development and evaluation of
the T-PRK System for treating refractive disorders. As the Company continues
clinical studies with the T-PRK System and prepares for commercialization of the
product internationally and in the United States, it must build a sales and
marketing infrastructure. The Company has no experience in the sales and
marketing of capital equipment for laser vision correction. In 1994 and 1995,
the Company entered into agreements that form a strategic alliance with CIBA for
the worldwide co-promotion of the Company's T-PRK System excimer laser.
Although it has developed a strong reputation in certain ophthalmic markets such
as contact lenses, lens care and ophthalmic pharmaceuticals, CIBA does not have
considerable experience in the sale of ophthalmic equipment or in the refractive
surgery market. It is possible that the Company will not be able to attract the
personnel to develop the infrastructure to effectively market the T-PRK System
or that CIBA will not be able to provide sufficient or effective co-marketing
and business support.
7
<PAGE>
RISKS ASSOCIATED WITH INTERNATIONAL COMMERCIAL ACTIVITIES. International
commercial activities, from which the Company expects to earn its first
commercial revenues from the T-PRK System, may be limited by or disrupted by the
imposition of government controls, unique license requirements, political
instability, trade restrictions, changes in tariffs or taxes, and difficulties
in staffing and managing such complexities.
In order to make commercial placements in Europe, the Company is required
to receive a "CE" mark certification, an international symbol of quality and
compliance with applicable European medical device directives. In order to
receive a CE mark certification, the Company must have obtained an ISO 9001
certification. Failure to receive a CE mark certification will prohibit the
Company from placing the T-PRK System in Europe and would have a material
adverse effect on the business, financial condition, and results of operations
of the Company.
COMMISSION OBLIGATION TO CIBA; FUTURE DILUTION. As part of the strategic
alliance with CIBA, the Company will pay a 6% commission on net revenue
worldwide from all equipment sales and patient procedure fees relating to
ophthalmic refractive surgery. The initial commission is limited to $10,000,000
in the aggregate. In the event the Company has not paid commissions to CIBA
totaling $10,000,000 or more by May 15, 1999, the Company must deliver to CIBA
529,500 shares Common Stock (the "Additional Shares"), and continue to pay
commissions until the $10,000,000 aggregate amount is reached. If the
Additional Shares are issued, the number of such shares must be adjusted so that
the Additional Shares have a market value of at least $2,400,000 on May 15,
1999. The Company's current business plan contemplates that commissions to CIBA
by May 15, 1999 will not total $10,000,000. Therefore, it should be assumed
that the Company will issue the Additional Shares on May 15, 1999. The 6%
commission will reduce the Company's income and margins from its business for
the period it is payable, and the potential future shares are prospectively
dilutive to stockholders in 1999.
POSSIBLE TERMINATION OF STRATEGIC ALLIANCE WITH CIBA. The strategic
alliance provides CIBA and the Company with certain termination rights. CIBA
may, at its sole discretion, terminate the strategic alliance upon 180 days
notice to the Company. In such event, the Company would be obligated to
continue to pay to CIBA for up to three years beyond termination the 6%
commission on procedure fee revenue derived from T-PRK Systems that were
commercially placed at the time of the termination. Additionally, CIBA has the
right to terminate the strategic alliance upon 30 days notice should there be a
change of control of the Company (defined as the transfer of greater than 50% of
the voting stock or substantially all of the assets of the Company in a single
transaction or series of related transactions, excluding a bona fide public
offering). CIBA also has the right to terminate the strategic alliance upon 30
days notice if it determines, in its sole discretion, that the Company's core
technology or the commercial essence of the technology is not patentable, or
that additional licenses (other than that with Pillar Point) are necessary, are
not obtained or would have a material adverse impact upon the commercial value
of the Company's technology. CIBA also has the right to terminate such
agreement (i) if the Company materially breaches such agreement and does not
cure such breach within the cure period, (ii) if the Company becomes insolvent,
or (iii) if the control of the Company falls into the hands of a competitor to
CIBA. In the event that CIBA terminates the strategic alliance, such
termination would have a material adverse effect on the operations, financial
condition and the results of operations of the Company, in that the Company
would be unable to utilize CIBA facilities in Europe, Canada and the United
States, to utilize the CIBA name in connection with marketing the T-PRK System,
or to utilize other planned services as agreed to in the strategic alliance.
LIMITED MANUFACTURING EXPERIENCE; LIMITED MANUFACTURING CAPACITY. The
Company's manufacturing operations consist primarily of the final assembly of
out-sourced parts and components, followed by testing to assure field
performance and quality control. To date, the Company has manufactured six
systems for clinical trials and two systems for other purposes. The Company
must expand its manufacturing capabilities for commercial production of the T-
PRK System in order to meet FDA manufacturing guidelines and to have the
capacity to address the market. However, it is uncertain as to whether the
Company will be able to expand its manufacturing operations in a timely manner
and at a reasonable cost to meet commercial demand.
8
<PAGE>
RELIANCE ON THIRD PARTY AND SOLE SOURCE SUPPLIERS. The Company relies on
third party suppliers to provide the components necessary for the manufacture of
the T-PRK System. The patented laser component of the T-PRK System is currently
supplied by a single source according to the Company's specifications under an
exclusive supply agreement. The Company has the right at any time to seek other
producers of the laser. In addition to the laser device, the most significant
system component is the tracking hardware. Other components of the T-PRK System
such as the stereo microscope, computer hardware and system casing are available
from several sources. The Company may be unable to obtain sufficient quantities
of these components from single-source or other suppliers or it may be unable to
effect a change from a single source supplier to another or other suppliers. In
these instances, reductions in manufacturing capability could occur that could
cause delays in clinical trials, regulatory approvals and commercialization
which would have a material adverse effect on the business, financial condition,
and results of operations of the Company.
NEED FOR ADDITIONAL CAPITAL TO FUND PLACEMENT OF THE T-PRK SYSTEMS AND FOR
OPERATIONS. The Company's business strategy calls for the placement of the T-
PRK Systems with ophthalmologists primarily under procedure fee agreements. As
a result, the Company will be required to fund the cost of manufacturing and
installation of each system. Although the Company intends to receive prepaid
fees for the placement of each machine and to seek financing for additional
balances of capital investment, such prepaid fees and funding may not cover the
initial manufacturing and installation costs of each system. The Company will
be required to obtain financing at some point prior to achieving high volume
commercial use of its T-PRK Systems. There can be no assurance that the Company
will be able to borrow the funds or raise equity capital as needed for the
commercial placement of its T-PRK Systems or, if such funding is obtained, that
the terms of such funding will be favorable to the Company. Until such time as
the cash provided from the cumulative T-PRK System placements is sufficient to
cover the costs of the Company's clinical, research, development and
administrative endeavors, the Company will need additional capital for funding
of such operations.
POTENTIAL PRODUCT LIABILITY CLAIMS AND UNINSURED RISKS. The Company's
business involves the risk of product liability claims. Any inability of the
Company to maintain adequate insurance coverage at any time could, in the event
of product liability or other claims in excess of the Company's insurance
coverage, have a material adverse effect on the Company's business, financial
condition and results of operations. The Company has in the past agreed, and is
likely to in the future agree, to indemnify certain medical institutions and
personnel thereof conducting and participating in the Company's clinical
studies.
VOLATILITY OF STOCK PRICE. The Company's Common Stock has experienced
substantial price volatility, and such volatility may occur in the future.
Additionally, the stock market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock. In addition, the market price of
the shares of Common Stock is likely to be highly volatile. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new products by the Company or its competitors, FDA and
international regulatory actions, developments with respect to patents or
proprietary rights, including lawsuits, public concern as to the safety of
products developed by the Company or its competitors, changes in health care
policy in the United States and internationally, changes in analysts'
recommendations regarding the Company, other LVC or medical device companies or
the medical device industry generally and general market conditions may have a
significant effect on the market price of the Common Stock.
DILUTION. The price of the Common Stock offered hereby is substantially
higher than the pro forma net tangible book value per share of Common Stock.
Investors purchasing shares of Common Stock in this Offering will therefore
incur immediate and substantial dilution. Additional dilution is likely to
occur upon the exercise of outstanding warrants, stock options and the potential
issuance of shares to CIBA in 1999. If the Company finds it necessary to sell
Common Stock in the future at a price lower than in this Offering, the
purchasers in this Offering may suffer dilution in their holding at that time.
9
<PAGE>
CONTROL BY CERTAIN EXISTING STOCKHOLDERS. The directors, executive
officers and certain entities affiliated with directors of the Company
beneficially own approximately 23.7% of the Company's outstanding Common Stock.
Accordingly, these stockholders, individually and as a group, may be able to
influence the outcome of stockholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in the Company's
Third Amended and Restated Articles of Incorporation (the "Articles") and Bylaws
and the approval of certain mergers or other similar transactions. Such control
by existing stockholders could also have the effect of delaying, deferring or
preventing a change in control of the Company.
SHARES ELIGIBLE FOR RESALE. At March 31, 1997, the Company had 6,888,689
shares of Common Stock outstanding. The shares may be freely traded, traded
under certain volume and other restrictions set forth in Rule 144 (as recently
amended), or are restricted in accordance with the table below:
<TABLE>
<CAPTION>
<S> <C>
Shares freely tradable under Rule 144, registered and sold in the Company's IPO, or 4,486,289
registered and sold subsequent thereto
Pre-IPO Shares available for sale under Rule 144 on April 29, 1997 (1) 2,279,400
Pre-IPO Shares available for sale under Rule 144 on June 2, 1997 (2) 120,000
Shares eligible for sale more than 60 days after this offering 3,000
---------
Total outstanding 6,888,689
</TABLE>
(1) Of these shares, 1,256,550 are held by CIBA, an affiliate of the Company,
whose shares are subject to volume and percentage limitations.
(2) Shares held in escrow for Terence Walts under the terms of his employment
agreement with the Company.
Effective April 29, 1997, the SEC's rules concerning the minimum holding
period for sales of restricted Common Stock by non-affiliates in the public
market will be reduced from two years to a one year period, subject to volume
and percentage limitations.
At March 31, 1997, the Company has reserved 984,723 shares of Common Stock
for issuance pursuant to the 1995 Stock Option Plan and the 1996 Employee Stock
Purchase Plan (collectively, the "Stock Plans"). Of this amount, 840,790 shares
were subject to outstanding options at March 31, 1997. Since the Stock Plans
have been registered on Form S-8 with the SEC, Common Stock issued in
conjunction with the Stock Plans are generally eligible for resale in the open
market.
At March 31, 1997, the Company has reserved 1,120,350 shares of Common
Stock for issuance upon the exercise of warrants outstanding. At the current
time, should such warrants be exercised, they would result in restricted Common
Stock being issued. However, if a holder of a warrant "converts" the warrant,
the shares received would be eligible for resale under Rule 144 on April 29,
1997. Of these 1,120,350 warrants, 1,045,350 are "in the money" and exercisable
at March 31, 1997.
Certain holders of the Company's Common Stock and Warrants totaling
3,413,000 shares (together, the "Registrable Securities") have certain rights to
cause the Company to register the sale of such shares under the Securities Act.
If the Company proposes to register any of its securities under the Securities
Act for its own account, holders of the Registrable Securities are entitled to
notice of such registration and are entitled to include Registrable Securities
therein, provided, among other conditions, that the underwriters, if any, of
such offering have the right to limit the number of shares included in such
registration. The 1,256,550 shares owned by CIBA are included in the total of
Registrable Securities. CIBA may require the Company to file additional
registration statements covering shares of Common Stock it owns on Form S-3,
subject to certain conditions and limitations. Registration of such shares
under the Securities Act would result in such shares becoming freely
transferrable under the Securities Act (except for shares held by affiliates of
the Company) immediately upon the effectiveness of such registration. CIBA
10
<PAGE>
has waived its right to have shares registered on this Form S-3.
As described above, a total of 2,279,400 shares became generally eligible
for resale in the open market on April 29, 1997. No prediction can be made as
to the effect, if any, that sales of shares of Common Stock under Rule 144 or
pursuant to the registration rights described above, or the future availability
of such shares for sale, will have on the market price of the Common Stock.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock.
NO FORESEEABLE DIVIDENDS. The Company has never paid cash dividends on its
capital stock and does not anticipate paying cash dividends in the foreseeable
future. The Company intends to retain future earnings for reinvestment in its
business. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such other
factors as the Board of Directors deems relevant.
ANTI-TAKEOVER MEASURES; POTENTIAL ADVERSE EFFECT ON COMMON STOCK PRICE.
The Company's Articles authorize the Company's Board of Directors to issue
shares of the Company's Preferred Stock and to determine the rights,
preferences, privileges and restrictions of such shares without any vote or
action by the stockholders. The issuance of Preferred Stock under such
circumstances could have the effect of delaying or preventing a change in
control of the Company. The rights of the holders of the Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be created and issued in the future.
On April 7, 1997, the Company's Board approved, and on June 12, 1997 the
stockholders approved, an amendment to the Company's Articles, providing that
any action to be taken by written consent in lieu of an annual or special
meeting of the stockholders is prohibited unless the use of written consents is
approved in advance thereof by the Board of Directors. The Company's Board and
stockholders further approved, an amendment to the Articles providing that an
affirmative vote of the holders of not less than two-thirds of the outstanding
voting shares is required to amend such prohibition of use of written consents
by the stockholders set forth above.
In addition, certain provisions of the Florida Business Corporation Act
have anti-takeover effects and may inhibit a non-negotiated merger or other
business combination. These statutory provisions are intended to encourage any
person interested in acquiring the Company to negotiate with and obtain the
approval of the Board of Directors in connection with such a transaction. One
of the effects of the provisions described above may be to discourage a future
attempt to acquire control of the Company that is not presented to and approved
by the Board of Directors, but which a substantial number, and perhaps even a
majority of the Company's stockholders, might believe to be in their best
interests or in which stockholders might receive a substantial premium for their
shares over the current market prices. As a result, stockholders who might
desire to participate in such a transaction may not have an opportunity to do
so.
SELLING STOCKHOLDERS
The Shares covered by this Prospectus were acquired from the Company
pursuant to Purchase Agreements for an aggregate purchase price of $9,000,000.00
($3.00 per share). The offer and sale by the Company of the Common Stock to the
Selling Stockholders pursuant to the Purchase Agreements was made pursuant to an
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof. The Purchase Agreements contain representations and
warranties as to each Selling Stockholder's status as an "accredited investor"
as such term is defined in Rule 501 promulgated under the Securities Act.
EVEREN Securities, Inc. acted as the placement agent in connection with the sale
of the Shares by the Company to the Selling Stockholders pursuant to the
Purchase Agreements.
11
<PAGE>
Pursuant to the Purchase Agreements, each Selling Stockholder has
represented that he, she or it acquired the Shares for investment and with no
present intention of distributing the Shares. The Company agreed, in such
Purchase Agreements, to prepare and file a registration statement as soon as
practicable and to bear all expenses other than fees and expenses of counsel for
the Selling Stockholders and underwriting discounts and commissions and
brokerage commissions and fees. In addition, and in recognition of the fact
that the Selling Stockholders, even though purchasing the Shares without a view
to distribution, may wish to be legally permitted to sell the Shares when each
deems appropriate, the Company filed with the Commission a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to,
among other things, the resale of the Shares as described below under "Plan of
Distribution."
None of the Selling Stockholders has had a material relationship with the
Company within the past three years except as a result of the ownership of the
Shares or other securities of the Company.
The following table sets forth the name of the Selling Stockholders, the
number of shares of Common Stock owned beneficially by the Selling Stockholders
as of June 17, 1997 and the number of shares which may be offered pursuant to
this Prospectus. This information is based upon information provided by the
Selling Stockholders. There are currently no agreements, arrangements or
understandings with respect to the sale of any of the Shares. The Shares are
being registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time.
<TABLE>
<CAPTION>
Number of Shares Owned
Prior to Offering Ownership After Offering
---------------------- Number of ------------------------
Name of Number of Shares Being Number of
Selling Stockholders Shares Percent Offered Shares Percent
- ----------------------------------- ----------- --------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Anvers LP 150,000 1.52% 150,000 0 0%
Lombard Odier & Cie 120,000 1.21 120,000 0 0
Pequot Private Equity Fund, LP 647,960 6.55 647,960 0 0
Pequot Offshore Private Equity 82,040 0.83 82,040 0 0
Fund, Inc.
Faisal Finance (Switzerland) 38,333 0.39 38,333 0 0
S.A
KCM Biomedical LP 36,000 0.36 36,000 0 0
The Seedling Fund,LP 9,000 0.09 9,000 0 0
Lancaster Investment Partners 100,000 1.01 100,000 0 0
LP
Lloyds International Portfolios - 50,000 0.51 50,000 0 0
Smaller Companies Fund
Oppenheimer Enterprise Fund 200,000 2.02 200,000 0 0
Aries Domestic Fund LP 148,750 1.50 148,750 0 0
The Aries Trust 276,250 2.79 276,250 0 0
Porter Partners LP (1) 250,000 2.53 100,000 150,000 1.52
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
The British Life Office Limited 290,000 2.93 290,000 0 0
Schweizerische Treuhand 85,000 0.86 85,000 0 0
Gesellschaft
Veritas SG Investment Trust 600,000 6.07 600,000 0 0
Sonz Partners, LP (2) 68,333 0.69 38,333 30,000 0.30
Leonard Lichter 28,334 0.29 28,334 0 0
</TABLE>
- -------------
(1) Does not include 150,000 shares of Common Stock underlying a stock
purchase warrant, exercisable at $3.33 per share, which expires on
February 28, 1999.
(2) Does not include 30,000 shares of Common Stock underlying a stock
purchase warrant, exercisable at $3.33 per share, which expires on
February 28, 1999.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Stockholders from time to time in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of the sale, at prices related to
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation to a particular broker-dealer
might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and in complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution, in
addition and without limiting the foregoing, each Selling Stockholder will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholder.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Stockholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares
that qualify for sale pursuant to Rule l44 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus.
The Shares were originally issued to the Selling Stockholders pursuant to
an exemption from the registration requirements of the Securities Act provided
by Section 4(2) thereof. The Company agreed to register the Shares under the
Securities Act and to indemnify and hold the Selling Stockholders harmless
against certain liabilities under the Securities Act that could arise in
connection with the sale by the Selling Stockholders of the Shares. The Company
has agreed to pay all reasonable fees and expenses incident to the filing of
this
13
<PAGE>
Registration Statement.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain other
legal matters will be passed upon for the Company by Gray, Harris & Robinson,
P.A., Orlando, Florida.
EXPERTS
The financial statements incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1996, in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in auditing and accounting in giving said report.
14
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling
Stockholders or by any other person. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
shares of Common Stock offered hereby, nor does it constitute an offer to sell
or a solicitation of an offer to buy any of the shares offered hereby to any
person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
TABLE OF CONTENTS
Prospectus Summary............................................................ 1
Risk Factors.................................................................. 3
Selling Stockholders..........................................................11
Plan of Distribution..........................................................13
Legal Matters.................................................................14
Experts.......................................................................14
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Company in connection with the sale of Common Stock being registered. All of
the amounts shown are estimates except the registration fee.
SEC Registration Fee $ 3,467.00
Accounting fees and expenses 10,000.00
Legal fees and expenses 38,000.00
Printing and engraving expenses 3,000.00
Transfer Agent and registrar fees 1,000.00
Miscellaneous 5,000.00
------------
Total $ 60,467.00
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act, provides that a
corporation may indemnify any person who was or is a party (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against liability incurred in connection with such proceeding, including any
appeal thereof, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Section 0850 further provides that a corporation
similarly may indemnify any such person serving in any such capacity who was or
is a party in the right of the corporation to procure a judgment in its favor,
against the estimated expense of litigating the proceeding to conclusion
actually and reasonably incurred in connection with the defense or settlement of
such proceeding if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable unless, and only
to the extent that the court in which such proceeding was brought, or any other
court of competent jurisdiction, shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such other court shall deem proper.
Section 607.0831 of the Florida Business Corporation Act provides that a
director is not personally liable for monetary damages to the corporation or any
other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless (i) the director breached
or failed to perform his duties as a director, (ii) the director's breach or
failure to perform constitutes a violation of criminal law unless the director
had no reasonable cause to believe his conduct was unlawful, the director
derived an improper personal benefit directly or indirectly, (iii) the directors
conduct triggers the liability provisions of Section 0834 (relating to unlawful
distributions), (iv) the director's conduct constitutes a conscious disregard
for the best interest of the corporation, or will misconduct in a proceeding by
or in the right of the corporation or a shareholder, or (v) the director's
conduct constitutes recklessness or an act or omission committed in bad faith or
with malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety, or property in a proceeding by or in the right of someone
other than the corporation or a shareholder.
16
<PAGE>
The Registrant's Articles provide that the Registrant is authorized to
indemnify any director or officer, or former director or officer, in the manner
provided in the Company's bylaws and to the fullest extent permitted by the laws
of the State of Florida. There are no further provisions in the Company's
bylaws for indemnification of directors and officers.
EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Exhibit Table
- -------------- ----------------------------------------------------------------------------------
<C> <S>
3.1 * Amendment to the Third Amended and Restated Articles of Incorporation
4.1 ** The Rights of Securities Holders as set forth in Article IV of the Third Amended
and Restated Articles of Incorporation
5.1 Opinion of Gray, Harris & Robinson, P.A.
10.1 * Amendment to the Autonomous Technologies Corporation 1995 Stock Option Plan
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Gray, Harris & Robinson, P.A. (Included in the opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see p. 19)
</TABLE>
* To be filed by amendment.
** Incorporated by reference to Exhibit 3 in the Quarterly Report on Form 10-Q
for the period ended September 30, 1996 previously filed by the Registrant (file
no. 333-2068).
UNDERTAKINGS
The undersigned registrant hereby undertakes to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement. For purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof. The undersigned registrant further undertakes to remove
from registration, by means of a post-effective amendment, any of the securities
being registered which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such
17
<PAGE>
indemnification is against public policy as expressed in the Act and is,
therefor, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Orlando, State of Florida on this 16 day of June,
1997.
Autonomous Technologies Corporation
By: /s/ Randy W. Frey Date: June 16, 1997
--------------------------------------- -------------
Randy W. Frey
Chairman of the Board, President & Chief Executive Officer
By: /s/ Monty K. Allen Date: June 16, 1997
---------------------------------------- ---------------
Monty K. Allen
Vice President, Treasurer, Chief Financial Officer and Principal Accounting
Officer
18
<PAGE>
SIGNATURE PAGE TO FORM S-3
AUTONOMOUS TECHNOLOGIES CORPORATION
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Autonomous Technologies
Corporation, a Florida corporation, do hereby constitute and appoint jointly and
severally, Randy W. Frey and Monty K. Allen, and each of them, the lawful
attorneys and agents, with power and authority to do any and all acts and things
and to execute any and all instruments which said attorneys and agents determine
may be necessary or advisable or required to enable said corporation to comply
with the Securities Act, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and post-
effective, and supplements to this Registration Statement, and to any and all
instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents or
any of them shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Randy W. Frey President, Chief Executive Officer and June 16, 1997
- ---------------------------------------- Chairman of the Board
Randy W. Frey
/s/ Richard C. Capozza Director, Executive Vice President and Chief June 16, 1997
- ---------------------------------------- Operating Officer
Richard C. Capozza, Ph.D.
/s/ G. Richard Downes Director June 16, 1997
- ----------------------------------------
G. Richard Downes
/s/ G. Arthur Herbert Director June 16, 1997
- ----------------------------------------
G. Arthur Herbert
/s/ Stanley Ruffett Director June 17, 1997
- ----------------------------------------
Stanley Ruffett
/s/ Timothy Barabe Director June 17, 1997
- ----------------------------------------
Timothy Barabe
/s/ Richard H. Keates Director June 16, 1997
- ----------------------------------------
Richard H. Keates, Ph.D., M.D.
19
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
------------
Exhibit Description Numbered Page
- ------- ---------------------------------------------------------------------------- --------------
<C> <S> <C>
3.1 * Amendment to the Third Amended and Restated Articles of
Incorporation............................................................
5.1 Opinion of Gray, Harris & Robinson, P.A.......................................
10.1 * Amendment to the Autonomous Technologies Corporation 1995 Stock
Option Plan..............................................................
23.1 Consent of Arthur Andersen LLP................................................
23.2 Consent of Gray, Harris & Robinson, P.A. (Included in the opinion filed as
Exhibit 5.1).............................................................
24.1 Power of Attorney (see p. 19).................................................
</TABLE>
* To be filed by Amendment.
<PAGE>
[LETTERHEAD OF GRAY, HARRIS & ROBINSON APPEARS HERE]
June 17, 1997
Autonomous Technologies Corporation
2800 Discovery Drive
Orlando, Florida 32826
RE: Registration Statement on Form S-3
Dear Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on June 17, 1997 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 3,000,000 shares of Common Stock of
Autonomous Technologies Corporation (the "Shares"). As your counsel in
connection with this transaction, we have examined the proceedings proposed to
be taken in connection with said sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, the Shares when issued and sold in the manner referred to in the
Registration Statement will be legally issued, fully paid and nonassessable.
<PAGE>
GRAY, HARRIS & ROBINSON
Professional Association
Autonomous Technologies Corporation
Page 2
June 17, 1997
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting part thereof, and
any amendment thereto and any registration statement for the same offering
covered by the Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) and all post-effective amendments thereto.
Very truly yours,
Gray, Harris & Robinson
Professional Association
By: /s/ William A. Grimm
---------------------
William A. Grimm
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 21, 1997, included in Autonomous Technologies Corporation's Form 10-K
(File No. 333-2068) for the year ended December 31, 1996, and to all references
to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
June 17, 1997
Orlando, Florida
