<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
For the quarterly period ended MARCH 31, 1998
--------------------------------------------------
Commission File Number: 0-28278
---------------------------------------------------------
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)
2800 DISCOVERY DRIVE, ORLANDO, FLORIDA 32826
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 384-1600
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 April 30, 1998, there were 10,564,918 shares of the registrant's $.01
par value Common Stock outstanding.
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Index to Form 10-Q
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Balance Sheets as of March 31,1998 and December 31, 1997 3
Statements of Operations for the three months ended March 31, 1998 and 1997, and
for the cumulative period from inception to March 31, 1998 4
Statements of Cash Flows for the three months ended March 31, 1998 and 1997, and
for the cumulative period from inception to March 31, 1998 5
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3. Quantitative And Qualitative Disclosures About Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A Development Stage Company)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
______ ____ ____
(UNAUDITED)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 1,471,649 $ 109,245
Investments (note 1) 2,129,503 7,191,827
Inventories, net (note 1) 2,552,916 2,358,934
Prepaid expenses and other assets 642,405 356,892
--------------------------------------
Total current assets 6,796,473 10,016,898
PROPERTY AND EQUIPMENT, net 1,169,406 1,155,718
LADARVISION SYSTEMS-IN-SERVICE, net 589,951 400,584
ADVANCE LICENSING FEES 743,322 747,470
OTHER ASSETS 66,994 95,479
--------------------------------------
Total assets $ 9,366,146 $ 12,416,149
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 608,082 $ 743,898
Accrued expenses 1,346,314 835,324
Current portion of obligation under capital leases 100,640 97,108
--------------------------------------
Total current liabilities 2,055,036 1,676,330
OBLIGATION UNDER CAPITAL LEASES, less current portion 156,821 185,007
OBLIGATION UNDER STRATEGIC ALLIANCE AGREEMENT - 1,575,000
--------------------------------------
Total liabilities 2,211,857 3,436,337
--------------------------------------
STOCKHOLDERS' EQUITY:
Undesignated series, $.01 par value; 1,000,000 shares
authorized; 0 shares issued and outstanding at March 31,
1998 and December 31, 1997, respectively - -
Common stock $.01 par value 25,000,000 shares authorized,
10,540,056 and 9,986,755 shares issued and outstanding at March
31, 1998 and December 31, 1997, respectively; 105,400 99,868
Additional paid-in capital 39,761,325 37,787,991
Deficit accumulated during the development stage (32,712,436) (28,908,047)
--------------------------------------
Total stockholders' equity 7,154,289 8,979,812
--------------------------------------
$ 9,366,146 $ 12,416,149
======================================
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
Cumulative from
Inception (July
March 31, March 31, 23, 1985) to
1998 1997 March 31, 1998
--------------------------------------- -------------------
<S> <C> <C> <C>
REVENUES FROM LADARVision Systems $ 59,270 $ - $ 96,335
REVENUES FROM RESEARCH GRANTS - - 3,450,517
OPERATING EXPENSES:
Costs of revenues- LADARVision System 167,048 - 272,940
Costs of revenues- research grants - - 3,465,596
Clinical trials 654,029 589,282 6,524,223
Research and development 1,025,623 774,049 11,333,938
Selling and marketing 752,247 296,041 4,207,249
General and administrative 615,043 509,822 6,969,914
Other expenses 721,450 576,884 4,735,796
----------------------------------------------------------
OPERATING LOSS (3,876,170) (2,746,078) (33,962,804)
OTHER INCOME (EXPENSE):
Interest income 83,394 156,809 1,371,116
Interest expense (11,613) (8,571) (115,976)
----------------------------------------------------------
LOSS BEFORE INCOME TAXES (3,804,389) (2,597,840) (32,707,664)
INCOME TAXES - - 4,772
----------------------------------------------------------
NET LOSS $(3,804,389) $(2,597,840) $(32,712,436)
==========================================================
LOSS PER SHARE:
Basic net loss per share $(0.38) $(0.38)
===================================
Weighted average common and common
equivalent shares used in computing
basic net loss per share 10,039,042 6,852,814
===================================
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
------------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
From Inception
(July 23, 1985) to
March 31, March 31, Mar. 31,
1998 1997 1998
--------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,804,389) $(2,597,840) $(32,712,436)
Adjustments to reconcile net loss to
net cash used in operating activities:
In-kind services provided by
shareholder............................................... 165,399 125,001 1,306,558
Compensation expense related to
employee stock options.................................... 46,073 48,912 1,131,526
Compensation expense related to
common stock placed in escrow for
future services........................................... - 43,779 24,050
Convertible preferred stock issued
for services.............................................. - - 162,500
Loss on disposal of property and equipment................. - - 85,167
Depreciation and amortization.............................. 124,801 55,469 818,660
Changes in assets and liabilities:
(Increase) in inventories................................. (193,982) (85,927) (2,552,916)
(Increase) in prepaid expenses
and other assets......................................... (257,028) (185,215) (709,399)
(Increase) decrease in advance licensing fees............. 4,148 - (743,322)
(Decrease) increase in accounts payable................... (135,816) (451,252) 608,082
Increase (decrease) in accrued expenses................... 510,990 (21,555) 1,346,314
Increase in obligation under
strategic alliance agreement............................. 150,000 150,000 1,725,000
--------------------------------------------------------
Net cash used in operating activities (3,389,804) (2,918,628) (29,510,216)
----------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures......................................... (109,356) (70,118) (1,592,606)
Investments in LADARVision Systems-in-Service................ (218,500) - (655,500)
Decrease in restricted cash investment....................... - 25,283 -
Investments made............................................. - (2,261,274) (23,788,250)
Investment proceeds.......................................... 5,062,324 3,603,431 21,658,747
----------------------------------------------------------
Net cash from (used in) investing activities 4,734,468 1,297,322 (4,377,609)
----------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of convertible preferred stock.... - - 6,002,708
Net proceeds from issuance of common stock................... - - 25,995,496
Proceeds from exercise of stock options and warrants......... 42,394 45,899 113,887
Payment of obligations under capital leases.................. (24,654) (13,549) (127,617)
Payment on note payable...................................... - (27,418) -
Advance from stockholder..................................... - - 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)
</TABLE>
(Continued)
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<PAGE>
AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
Continued
<TABLE>
<S> <C> <C> <C>
Other, net................................................... - - (30,000)
Net cash provided by financing activities 17,740 4,932 35,359,474
--------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 1,362,404 (1,616,374) 1,471,649
CASH, beginning of period 109,245 2,980,036 -
--------------------------------------------------------
CASH, end of period $1,471,649 $ 1,363,662 $ 1,471,649
========================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Noncash transactions -
Equipment acquired under
capital leases - - $ 206,833
Stockholder advance converted to common stock - - $ 1,000,000
Convertible note converted to common stock - - $ 2,405,000
Strategic alliance obligation converted to common stock $1,725,000 - $ 1,725,000
Cash transactions -
Interest paid $ 9,796 $ 8,571 $ 69,915
</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, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance 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, 1998, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer to
the Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Financial Statements and Footnotes thereto included in the
Autonomous Technologies Corporation ("Company" or "Autonomous") Annual Report on
Form 10-K for 1997 as filed with the Securities and Exchange Commission ("SEC")
on March 31, 1998.
The Company's investments consist of U.S. Treasury and Agency securities with
maturities beyond three months at the time of purchase. These investments are
being accounted for as "available-for-sale securities" under Statement of
Financial Accounting Standards No. 115. At March 31, 1998, the investments are
stated at amounts which approximate quoted market value.
Inventories are stated at the lower of cost or market, net of a valuation
allowance. Cost is determined on the first-in, first-out method. At March 31,
1998, the Company's components and purchased sub-assemblies inventory was
$1,992,704 and work-in-progress LADARVision(R) Systems totaled $560,212.
Diluted net loss per share is not presented due to the anti-dilutive effect
(i.e. the effect of reducing basic net loss per share) of the Company's stock
options and warrants in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128, "EARNINGS PER SHARE."
2. ISSUANCE OF SHARES TO CIBA VISION
On March 30, 1998, the Company agreed to the issuance of 438, 821 shares of
common stock to its alliance partner, CIBA Vision Group Management, Inc.
("CIBA"), under an amendment to the 1995 Strategic Alliance Agreement ("SAA").
These shares are a portion of certain additional shares ("Additional Shares")
due to CIBA under provision of the SAA. Concurrent with this issuance, the
Company's Obligation under Strategic Alliance Agreement of $1,725,000 was
reclassified to common stock and additional paid-in capital. The remaining
portion of the Additional Shares to be issued in 1999 (171,713 shares) is still
governed by the terms of the original SAA.
3. NEWLY ISSUED ACCOUNTING STANDARD - COMPREHENSIVE INCOME
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income," in the
first quarter of 1998. There was no impact on the March 31, 1998 financial
statements as a result of the implementation of this Statement.
4. SUBSEQUENT EVENT
On April 16, 1998, the Company entered into a Convertible Preferred Stock
Purchase Agreement (the "Stock Purchase Agreement") and a Registration Rights
Agreement with OZ Master Fund, Ltd. (the "Investor"). The Investor is managed
by the Och-Ziff Capital Management Group. Under the Stock Purchase Agreement,
the Investor has agreed to purchase 500 shares of Series I Convertible Preferred
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<PAGE>
Stock (the "Preferred Stock"), with an option to purchase an additional 400
shares of Preferred Stock and a Stock Purchase Warrant for 300,000 shares of
common stock (the "Option"). That is, if the Option is exercised, the Investor
will purchase an additional 400 shares of Preferred Stock along with the Stock
Purchase Warrant for 300,000 shares of common stock (the "Warrant") with an
exercise price of 125% of the closing Nasdaq price on the date of the closing of
the initial 500 shares of Preferred Stock. The purchase price for the initial
500 shares of Preferred Stock is $5,000,000, and the exercise price for the
Option is $4,000,000. The closing on the purchase and sale of 500 shares of
Preferred Stock is subject to a resale registration statement being declared
effective by the SEC within 70 days from April 16, 1998. The resale registration
statement on Form S-3 was filed with the SEC on April 29, 1998. On May 11, 1998,
the SEC informed The Company that the resale registration statement would be
subject to a full review. The Option has a term of 55 days following the
effective date of the resale registration statement. The Preferred Stock is
convertible into shares of common stock upon the election of the holder, but
generally at no more than $1,150,000 per month, based on a formula whereby the
conversion price is set at the time of the notice of conversion as a function of
the recent trading prices of the Company's common stock. By way of example, if
the entire Preferred Stock issue, including the shares (but not the warrant)
included in the Option, had been converted to common in accordance with the
aforementioned formula at March 31, 1998, the number of common shares that would
have been issued would be approximately 1,900,000.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Statements containing terms such as
"believes," "does not believe," "no reason to believe," "expects," "plans,"
"intends," "estimates," "anticipated," "or "anticipates" are considered to
contain uncertainty and are forward looking statements. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a number of important factors. For a discussion of important factors
that could affect the Company's results, please refer to the Overview section,
the Management's Discussion and Analysis of Financial Condition and Results of
Operations, and the Risk Factors section contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
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 in conjunction with 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 Annual Report on Form 10-K
for 1997 filed with the SEC on March 31, 1998.
OVERVIEW
Autonomous, 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.
Clinical results obtained on the LADARVision System during 1997 for myopia and
myopic astigmatism demonstrate clinical superiority over any label data from
such earlier LVC systems.
Vision correction is one of the largest medical markets, with over 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 on eyeglasses, contact lenses and
other vision correction products and services each year.
The Company is a development stage enterprise. Since inception, the Company has
experienced significant operating losses, and, as of March 31, 1998, had an
accumulated deficit of approximately $32.7 million. To date, the Company has had
significant revenues relating only to research grants, which is an endeavor no
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<PAGE>
longer pursued by the Company. Despite the fact that LADARVision System
placements have begun outside the U.S., the Company anticipates that its
operating losses will continue for the foreseeable future because it plans to
expend substantial resources in funding clinical trials, U.S. sales and
marketing activities, commercial manufacturing, and research and development.
Additionally, the Company is funding, and expects to continue to fund, a legal
action against a patent pooling partnership that operates in the U.S. LVC
industry. The Company expects that research and development expenses will remain
at relatively high levels for the foreseeable future due to continued
development of the Company's LADARVision System and the development of
complementary technologies such as the Company's CustomCornea project. The
foregoing forward looking statements could be affected by certain risks and
uncertainties, including: the ability to complete research and development
projects (and register their capabilities with the FDA) that the Company judges
to be necessary to be a viable competitor in the future LVC marketplace; the
ongoing results from past and future clinical trials; the U.S. market acceptance
of the LADARVision System; the ability of the Company to demonstrate the
adequacy of its adherence to the Quality System Regulations ("QSR") to achieve
PMA approval; the ability of the Company to ramp up production to adequate
levels to meet demand and generate net revenues to cover the overhead of the
business; and the ability of the Company to operate commercially in the U.S. LVC
marketplace in scenarios that include either the continued operation of the
aforementioned patent pooling partnership or its dissolution by operation of law
or otherwise.
RESULTS OF OPERATIONS
Operating Expenses
Clinical trials expenses were $654,029 and $589,282 in the quarters ended March
- ------------------------
31, 1998 and 1997, respectively. The increase of 11% is attributable to the
increase of staff in the clinical function. The Company's clinical trial
expenses are expected to continue to increase as the Company expands its work
toward other clinical indications such as higher levels of myopia and
astigmatism, hyperopia and begins it's CustomCornea clinical trials in 1998. A
clinical training organization for commercial site training will also be an
additional expense in 1998. Additionally, the cost of the compliance
organization grouped here will also increase as the full impact of operating
under FDA, QSR and ISO9001 regulations is felt in a commercial setting.
Research and development expenses were $1,025,623 and $774,049 in the quarters
- ---------------------------------
ended March 31, 1998 and 1997, respectively. The increase of 33% is due to an
increase in R&D materials usage and materials obsolescence and the fact that
research and development staffing has been increased since first quarter 1997,
primarily to add systems integration and other engineers for continued
LADARVision System improvements. R&D expense reflects true research and
engineering costs since the production organization is now charged to either the
product or other expenses.
Selling and marketing expenses were $752,247 and $296,041 in the quarters ended
- ------------------------------
March 31, 1998 and 1997, respectively. The 154% increase in expenses for sales
and marketing include accruals for concluding the Company's obligations to its
former sales and marketing consultant as described on page 48 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. The Company
expects to increase staff and activities significantly to address the U.S.
market upon achieving its initial PMA on the LADARVision System from the FDA.
CIBA in-kind services reached $165,359 for the first quarter of 1998. In June
1998, the CIBA in-kind services agreement will expire and some of those costs
will be borne by the Company on a cash expenditure basis.
General and administrative expenses were $615,043 and $509,822 in the quarters
- -----------------------------------
ended March 31, 1998 and 1997, respectively. This increase of 21% was due
largely to increased costs of the Company's new office and plant facilities. The
Company's move more than doubled its occupied square footage in the second
quarter of 1997. It is anticipated that general and administrative expenses will
increase at a slower rate in the future.
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<PAGE>
Other expenses were $721,450 and $576,884 in the quarters ended March 31, 1998
- --------------
and 1997, respectively. There are three major components of this expense
category:
1) An accrual which is being made for the remaining 171,713 shares that may be
issuable to CIBA Vision in May 1999 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. The Company anticipates
that the shares will be issued in May 1999. The balance sheet accrual at
March 31, 1998, was reduced to zero in accordance with an agreement to
issue some of the CIBA 1999 shares. See the Company's Annual Report on Form
10-K for December 31, 1997, page 47.
2) Legal expenses that relate to the Company's pursuit, beginning in the
latter half of 1996, of legal actions having to do with alleged
infringement, unenforceability and invalidity of certain LVC patents held
in various jurisdictions by other participants in the LVC industry. In the
first quarter of 1997, two of the three suits were settled. The Company is
still pursuing, as the plaintiff, one remaining case in the U.S. The legal
expenses will be unpredictable as to their size and timing due to various
phases that the trial may proceed through. There can be no assurance that
the continued pursuit of this remaining case will result in any change in
commercial terms for the Company's LADARVision System in the U.S. Further,
there can be no assurances that other legal matters will not be opened that
the Company cannot presently foresee.
3) The Company's production organization is not yet producing units as
efficiently as will be required to be in commercial production. The
unabsorbed labor and overhead costs still being incurred have been charged
to other expense since the Company has not yet reached a continuous
production state. It is expected that such unabsorbed labor and overhead
will continue to be charged here for a part of 1998 until such time as
production rates increase to match the size of the production organization.
The Company has experienced delays in manufacturing and placing commercial
systems while it resolves quality system matters and implements engineering
changes.
Interest income and interest expense
Interest income was $83,394 and $156,809 in the quarters ended March 31, 1998
and 1997, respectively. The 47% decrease in the quarters is due to lower average
cash and investment balances in the 1998 quarter as compared to the 1997
quarter. In the 1998 and 1997 quarters, the Company's cash and investments
balance averaged approximately $4.15 million and $8.34 million, respectively.
Interest expense was $11,613 and $8,571 in the quarters ended March 31, 1998 and
1997, respectively. This increase in interest expense is due primarily to the
occurrence of capital lease obligations for systems furniture for the Company's
new facility.
Operating and Net Losses
The net effect of the foregoing expense items was that the Company's operating
loss increased to $3,876,170, or by 41%, in the quarter ended March 31, 1998,
from $2,746,078 in the quarter ended March 31, 1997. The Company's net loss
increased to $3,804,389 or by 46%, in the quarter ended March 31, 1998, from
$2,597,840 in the quarter ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and available-for-sale investments were
$3,601,152 at March 31, 1998 and $7,301,072 at December 31, 1997. The company
used cash of $3,389,804 to support operations and $109,356 for capital
expenditures during the quarter ended March 31, 1998. With the prospective
addition of approximately $8.7 million, net of expenses, assuming exercise of
the option (see note 4 in the Notes to the Unaudited Financial Statements), the
Company's cash resources will be sufficient to fund operations until late in
1998. The Company anticipates seeking additional equity financing before that
time.
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<PAGE>
The Company's common stock is quoted on NASDAQ under the symbol "ATCI."
STATUS OF FDA APPROVAL PROCESS
In February 1998, the FDA's Ophthalmic Devices Advisory Panel unanimously
recommended approval of the LADARVision system within certain parameters. In the
ordinary course, the FDA follows a panel's recommendation and grants the PMA
after product labeling is established and an audit finds that the manufacturer
is in compliance with the FDA Quality System Regulations (QSR). The Company had
an initial audit for compliance with the QSR in January 1998. Various
deficiencies were noted, and the Company has submitted data it believes supports
that it has corrected the identified deficiencies. The Company had anticipated a
re-audit on May 11, 1998; however, because the Company had not completed all of
the QSR process validation procedures, the audit was postponed to a later,
undetermined date. The Company believes that the process validation procedures
will be completed in less than three months.
YEAR 2000 COMPUTER PROGRAMMING
The Company believes that its network programs as well as its LADAR Vision
System software are fully Year 2000 compliant. In early 1998, the Company's
accounting and MRP software vendor produced, and the Company installed, a Year
2000-specific update.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NOT APPLICABLE.
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PART II -- OTHER INFORMATION AUTONOMOUS TECHNOLOGIES CORPORATION
-----------------------------------
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Reports on Form 8-K
(a) Report on Form 8-K filed April 27, 1998. The Company filed this Form 8-K to
report that it had entered into a Convertible Stock Purchase Agreement and a
Registration Rights Agreement with OZ Master Fund, Ltd. OZ Master Fund, Ltd. is
managed by Och-Ziff Capital Management Group. Attached to the Form 8-K as
Exhibits were four related agreement documents. On April 29, 1998, the Company
filed a registration statement on Form S-3 for the shares that OZ Master Fund,
Ltd. has the right to acquire upon conversion of the Convertible Preferred Stock
and the exercise of a related stock purchase warrant.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page
27 Financial Data Schedule (for SEC use only). 14
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AUTONOMOUS TECHNOLOGIES CORPORATION
May 14, 1998
By: /s/ Monty K. Allen
----------------------------
Monty K. Allen
Vice President and Chief Financial Officer
(Principal Financial Officer and Chief Accounting Officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,471,649
<SECURITIES> 2,129,503
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2,552,916
<CURRENT-ASSETS> 6,796,473
<PP&E> 1,863,771
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0
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