Filed pursuant to 424(b)(3)
Registration Number 333-82010
ATLANTIC TECHNOLOGY VENTURES, INC.
PROSPECTUS SUPPLEMENT NO. 1
dated June 19, 2002
(To the Prospectus dated February 14, 2002)
This prospectus supplement no. 1 supplements and amends the prospectus
dated February 14, 2002, relating to the sale of shares of common stock by the
selling shareholders named in the prospectus. Atlantic's common stock is traded
in the over-the-counter ("OTC") market and quoted through the OTC Bulletin Board
under the symbol "ATLC.OB".
The prospectus, together with the prospectus supplements, constitutes the
prospectus required to be delivered by Section 5(b) of the Securities Act of
1933, as amended, with respect to offers and sales of the shares of our Class A
common stock. All references in the prospectus to "this prospectus" are hereby
amended to read "this prospectus (as supplemented and amended)."
YOU SHOULD READ THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT CAREFULLY
BEFORE YOU INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 2 OF THE
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2002
--------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to
___________.
Commission file number 0-27282
---------
ATLANTIC TECHNOLOGY VENTURES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 36-3898269
--------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 Fifth Avenue, Suite 5507, New York, New York 10118
------------------------------------------------------
(Address of principal executive offices)
(212) 267-2503
--------------
(Issuer's telephone number)
150 Broadway, Suite 1110, New York, New York 10038
--------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No _____
-----
Number of shares of common stock outstanding as of May 14, 2002: 16,004,599
Transitional Small Business Disclosure Format (check one): Yes____ No X
INDEX
Page
----
PART I-- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (unaudited)
as of March 31, 2002 and December 31, 2001 3
Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 2002 and 2001,
and the period from July 13, 1993 (inception) to March 31, 2002 4
Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 2002 and 2001, and the
period from July 13, 1993 (inception) to March 31, 2002 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
PART II-- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 20
2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
ATLANTIC TECHNOLOGY VENTURES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 2002 2001
------------ --------------
Current assets:
Cash and cash equivalents $ 933,225 1,591,761
Prepaid expenses 20,074 38,593
------------ ------------
Total current assets 953,299 1,630,354
Property and equipment, net 93,942 105,153
Other assets 22,838 22,838
------------ ------------
Total assets $ 1,070,079 1,758,345
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 484,706 508,613
Stockholders' equity:
Preferred stock, $.001 par value. Authorized 10,000,000
shares; 1,375,000 shares designated as Series A
convertible preferred stock -- --
Series A convertible preferred stock, $.001 par value
Authorized 1,375,000 shares; 356,039 and 346,357 shares issued and
outstanding at March 31, 2002 and December 31, 2001, respectively
(liquidation preference aggregating $4,628,507 and $4,502,641 at
March 31, 2002 and December 31, 2001, respectively) 356 346
Convertible preferred stock warrants, 112,896 issued and outstanding at
March 31, 2002 and December 31, 2001 520,263 520,263
Common stock, $.001 par value. Authorized 50,000,000
shares; 16,004,599 and 15,965,359 shares issued and outstanding
at March 31, 2002 and December 31, 2001, respectively 16,005 15,965
Common stock to be issued, $.001 par value. 899,998 and 0 shares
at March 31, 2002 and December 31, 2001, respectively 900 --
Common stock subscribed. 182 shares at March 31, 2002
and December 31, 2001 -- --
Additional paid-in capital 27,400,871 27,442,106
Deficit accumulated during development stage (27,352,480) (26,728,406)
------------ ------------
585,915 1,250,274
Less common stock subscriptions receivable (218) (218)
Less treasury stock, at cost (324) (324)
------------ ------------
Total stockholders' equity 585,373 1,249,732
------------ ------------
Total liabilities and stockholders' equity $ 1,070,079 1,758,345
============ ============
See accompanying notes to unaudited consolidated financial statements.
3
ATLANTIC TECHNOLOGY VENTURES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
Cumulative
period from
July 13, 1993
(inception) to
Three months ended March 31, March 31,
--------------------------------
2002 2001 2002
------------ ------------ ------------
Revenues:
Development revenue $ -- $ 2,461,922 $ 8,713,720
License revenue -- -- 2,500,000
Grant revenue -- 250,000 616,659
------------ ------------ ------------
Total revenues -- 2,711,922 11,830,379
------------ ------------ ------------
Costs and expenses:
Cost of development revenue -- 2,082,568 7,084,006
Research and development 201,842 306,767 10,593,468
Acquired in-process research and development -- -- 2,653,382
General and administrative 429,223 681,948 19,103,856
Compensation expense (benefit) relating to stock
warrants (general and administrative), net (1,469) 11,971 1,098,007
License fees -- -- 173,500
------------ ------------ ------------
Total operating expenses 629,596 3,083,254 40,706,219
------------ ------------ ------------
Operating loss (629,596) (371,332) (28,875,840)
Other (income) expense:
Interest and other income (5,522) (20,018) (1,298,668)
Gain on sale of Optex assets -- (2,809,451) (2,569,451)
Loss on sale of Gemini assets -- -- 334,408
Interest expense -- -- 625,575
Equity in loss of affiliate -- 3,721 146,618
Distribution to minority shareholders -- 767,514 837,274
------------ ------------ ------------
Total other income (5,522) (2,058,234) (1,924,244)
------------ ------------ ------------
Net (loss) income $ (624,074) $ 1,686,902 $(26,951,596)
Imputed convertible preferred stock dividend -- 600,000 5,931,555
Dividend paid upon repurchase of Series B -- 167,127 400,884
Preferred stock dividend issued in preferred shares 39,162 64,144 1,429,674
------------ ------------ ------------
Net (loss) income applicable to common shares $ (663,236) $ 855,631 $(34,713,709)
============ ============ ============
Net (loss) income per common share:
Basic $ (0.04) $ 0.13
Diluted $ (0.04) $ 0.13
============ ============
Weighted average shares of common stock outstanding:
Basic 16,893,650 6,384,613
============ ============
Diluted 16,893,650 8,237,212
============ ============
See accompanying notes to unaudited consolidated financial statements.
4
ATLANTIC TECHNOLOGY VENTURES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
Cumulative
period from
July 13, 1993
Three months ended March 31, (inception) to
------------------------------- March 31,
2002 2001 2002
------------ ----------- --------------
Cash flows from operating activities:
Net (loss) income $ (624,074) 1,686,902 (26,951,596)
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Acquired in-process research and development -- -- 1,800,000
Expense relating to issuance
of common stock and warrants -- -- 786,302
Expense relating to the issuance of options -- -- 81,952
Expense related to Channel merger -- -- 657,900
Change in equity of affiliate -- 3,721 146,618
Compensation expense relating to
stock options and warrants (1,469) 11,971 1,306,052
Discount on notes payable - bridge financing -- -- 300,000
Depreciation 11,211 26,943 583,942
Gain on sale of Optex assets -- (2,809,451) (2,569,451)
Distribution to Optex minority shareholders -- 767,514 837,274
Loss on sale of Gemini assets -- -- 334,408
Loss on disposal of furniture and equipment -- -- 73,387
Changes in assets and liabilities:
Decrease in accounts receivable -- 192,997 --
Decrease (increase) in prepaid expenses 18,519 (6,721) (20,074)
Decrease in deferred revenue -- (1,294,615) --
Decrease in accrued expenses (23,907) (169,592) (142,452)
Increase (decrease) in accrued interest -- -- 172,305
Increase in other assets -- (19,937) (22,838)
----------- ----------- -----------
Net cash used in operating activities (619,720) (1,610,268) (22,626,271)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment -- (86,660) (921,331)
Investment in affiliate -- -- (146,618)
Proceeds from sale of Optex assets -- 3,000,000 3,000,000
Proceeds from sale of furniture and equipment -- -- 6,100
----------- -----------
Net cash provided by investing activities -- 2,913,340 1,938,151
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from exercise of warrants -- -- 5,500
Proceeds from exercise of stock options -- -- 397,098
Proceeds from issuance of demand notes payable -- -- 2,395,000
Repayment of demand notes payable -- -- (125,000)
Proceeds from the issuance of notes payable -
bridge financing -- -- 1,200,000
Proceeds from issuance of warrants -- -- 300,000
Repayment of notes payable - bridge financing -- -- (1,500,000)
Repurchase of common stock -- -- (324)
Preferred stock dividend paid (512) (577) (1,817)
Net proceeds from the issuance of common stock (38,304) -- 9,449,205
Proceeds from issuance of convertible preferred stock -- -- 11,441,672
Repurchase of convertible preferred stock -- (617,067) (1,128,875)
Distribution to Optex minority shareholders -- (767,514) (811,114)
----------- ----------- -----------
Net cash provided (used in) by financing activities (38,816) (1,385,158) 21,621,345
----------- ----------- -----------
Net decrease in cash and cash equivalents (658,536) (82,086) 933,225
Cash and cash equivalents at beginning of period 1591761 2663583 --
----------- ----------- -----------
Cash and cash equivalents at end of period $ 933,225 2,581,497 933,225
=========== =========== ===========
Supplemental disclosure of noncash financing activities:
Issuance of common stock in exchange for
common stock subscriptions $ -- -- 7,027
Conversion of demand notes payable and the related
accrued interest to common stock -- -- 2,442,304
Cashless exercise of preferred warrants -- -- 49,880
Conversion of preferred to common stock 40 336 2,889
Preferred stock dividend issued in shares 39,162 64,144 1,272,491
=========== =========== ===========
See accompanying notes to unaudited consolidated financial statements.
5
ATLANTIC TECHNOLOGY VENTURES, INC. and SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2002
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, the financial statements
do not include all information and footnotes required by accounting principles
generally accepted in the United States of America for complete annual financial
statements. In the opinion of management, the accompanying consolidated
financial statements reflect all adjustments, consisting of only normal
recurring adjustments, considered necessary for fair presentation. Interim
operating results are not necessarily indicative of results that may be expected
for the year ending December 31, 2002 or for any subsequent period. These
consolidated financial statements should be read in conjunction with the Annual
Report on Form 10-KSB of Atlantic Technology Ventures, Inc., and its
subsidiaries ("Atlantic") as of and for the year ended December 31, 2001.
(2) LIQUIDITY
Atlantic has reported net losses of $1,734,945, $5,802,478, and $2,446,515
for the years ended December 31, 2001, 2000 and 1999, respectively. Atlantic has
reported a net loss of $624,074 for the three months ended March 31, 2002. The
loss from date of inception, July 13, 1993, to March 31, 2002 amounts to
$26,951,596. Also, Atlantic has $933,225 in cash and cash equivalents as of
March 31, 2002. This is primarily a result of a private placement of its common
stock in December 2001; Atlantic currently has no revenue-generating activities.
Atlantic anticipates that its current resources will be sufficient to finance
for the next few months, its currently anticipated needs for operating and
capital expenditures. Atlantic plans to achieve this by continuing to reduce
expenses, including by means of voluntary salary reductions and postponement of
certain development expenses. As a result of these changes, Atlantic expects
that its average monthly cash outlay will be approximately $129,000. Atlantic
does not currently have any committed sources of financing, and due to the
trading price of its common stock it is not currently able to access funding
under its agreement with Fusion Capital. These factors raise substantial doubt
about its ability to continue as a going concern. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of reported asset amounts or the amounts or classification of
liabilities which might result from the outcome of this uncertainty.
Atlantic's continued operations will depend on its ability to raise
additional funds through various potential sources such as equity and debt
financing, collaborative agreements, strategic alliances and its ability to
realize the full potential of its technology in development. During December
2001, Atlantic received net proceeds of approximately $1,848,000 from the
private placement of securities with various individual investors and $100,000
from Fusion Capital. Additional funds are currently not available on acceptable
terms and may not become available, and there can be no assurance that any
additional funding that Atlantic does obtain will be sufficient to meet
Atlantic's needs in the short and long term. To date, a significant portion of
Atlantic's financing has been through private placements of common stock and
warrants, the issuance of common stock for stock options and warrants exercised,
and debt financing. Until Atlantic's operations generate significant revenues,
Atlantic will continue to fund operations from cash on hand and through the
sources of capital previously described.
Atlantic's common stock was delisted from the Nasdaq SmallCap Market
effective at the close of business August 23, 2001 for failing to meet the
minimum bid price requirements set forth in the NASD Marketplace Rules. As of
August 23, 2001, Atlantic's common stock trades on the Over-the-Counter Bulletin
Board under the symbol "ATLC.OB". Delisting of Atlantic's common stock from
Nasdaq could have a material adverse effect on its ability to raise additional
capital, its stockholders' liquidity and the price of its common stock.
6
(3) COMPUTATION OF NET LOSS PER COMMON SHARE
Basic net (loss) income per common share is calculated by dividing net
(loss) income applicable to common shares by the weighted-average number of
common shares outstanding for the period. Diluted net (loss) income per common
share for the three months ended March 31, 2002 equals basic net (loss) income
per common share, as common stock equivalents from stock options, stock
warrants, stock subscriptions and convertible preferred stock would have an anti
dilutive effect because Atlantic incurred a net loss for the three months ended
March 31, 2002. Diluted net (loss) income per common share for the three months
ended March 31, 2001 is calculated by dividing net (loss) income applicable to
common shares plus the impact of the assumed preferred stock conversions
totaling $231,271 by the weighted-average common shares outstanding for the
period plus 1,888,599 common stock equivalents from assumed conversions of the
Series A and Series B preferred stock, if dilutive. The common stock equivalents
from stock options, stock warrants and stock subscriptions, which have not been
included in the diluted calculations since their effect is antidilutive were
$17,496,305 and $2,412,200 for the three months ended March 31, 2002 and 2001,
respectively.
(4) INCOME TAXES
Atlantic incurred a net loss for the three months ended March 31, 2002. In
addition, Atlantic does not expect to generate book income for the year ended
December 31, 2002. Therefore, no income taxes have been reflected for the three
months ended March 31, 2002. Atlantic generated book income in the quarter ended
March 31, 2001 solely as a result of the sale of Optex assets to Bausch & Lomb
as described further in note 10. However, Atlantic did not generate book income
for the year ended December 31, 2001; therefore, no income taxes have been
reflected for the three months ended March 31, 2001.
(5) PREFERRED STOCK DIVIDEND
On February 7, 2002 and January 16, 2001, Atlantic's board of directors
declared a payment-in-kind dividend of 0.065 of a share of Series A convertible
preferred stock for each share of Series A convertible preferred stock held as
of a specified record date. The estimated fair value of these dividends of
$39,162 and $64,144 was included in Atlantic's calculation of net (loss) income
per common share for the three months ended March 31, 2002 and 2001,
respectively.
(6) ISSUANCE OF OPTIONS AND STOCK WARRANTS
On March 8, 2001, Atlantic entered into an agreement with The Investor
Relations Group, Inc. ("IRG") under which IRG will provide Atlantic investor
relations services. Pursuant to this agreement, Atlantic issued to Dian Griesel,
the principal of IRG, warrants to purchase 120,000 shares of its common stock at
an exercise price of $0.875 per share. These warrants vest monthly in 5,000
share increments over a 24-month period. In addition, should Atlantic's stock
price reach $2.50, Atlantic will grant Dian Griesel warrants to purchase an
additional 50,000 shares of its common stock, and should Atlantic's stock price
reach $5.00, Atlantic will grant Dian Griesel warrants to purchase a further
50,000 shares of its common stock. As a result, Atlantic recorded compensation
expense relating to the issuance of the stock warrants to purchase 120,000
shares of $11,971 for the three months ended March 31, 2001 pursuant to EITF
Issue No. 96-18. As a result of a decline in Atlantic's common stock price
during the three months ended March 31, 2002, the cumulative expense associated
with these warrants was reduced. The reduction in the estimated fair value of
the warrants previously recorded and the current quarter expense resulted in a
net reversal of compensation expense of $1,469 which is recorded as a benefit
during the three months ended March 31, 2002. Atlantic will remeasure the
compensation expense at the end of each reporting period until the final
measurement date is reached 24 months after issuance. These warrants are
outstanding as of March 31, 2002.
Compensation for these warrants relates to investor relations services and
represents a general and administrative expense (benefit).
During the first quarter of 2002, Atlantic granted employees an aggregate
of 2,000,000 options outside of the Plan, of which 475,000 options represent the
annual issuance of stock options to Atlantic employees on terms similar to those
of prior year. They vest 25% upon issuance and the remaining vest in 25%
increments on an annual
7
basis. In addition, 950,000 of these options were issued as incentive options
and will vest upon the earlier of the achievement of certain milestones by
Atlantic or 5 years. The remaining 575,000 options were issued at the end of the
quarter as partial consideration for the significant voluntary salary reductions
taken by these employees.
(7) REDEEMABLE SERIES B PREFERRED SHARES
As described further in Atlantic's Form 10-KSB for the year ended December
31, 2001, Atlantic entered into a convertible preferred stock and warrants
purchase agreement (the "Purchase Agreement"), with BH Capital Investments, L.P.
and Excalibur Limited Partnership (together, the "Investors"), for the issuance
of Atlantic's Series B convertible preferred stock and warrants.
Pursuant to Atlantic's subsequent renegotiations with the Investors, the
conversion price per share of the Series B preferred stock on any given day was
amended to be the lower of (1) $1.00 or (2) 90% of the average of the two lowest
closing bid prices on the principal market of the common stock out of the
fifteen trading days immediately prior to conversion. The change in conversion
price upon the renegotiations on January 9, 2001 resulted in a difference
between the conversion price of the Series B preferred stock and the market
price of the common stock on the effective date of the renegotiation. This
amount, estimated at $600,000, was recorded as an imputed preferred-stock
dividend within equity and is deducted from net (loss) income to arrive at net
(loss) income applicable to common shares during the three months ended March
31, 2001.
On January 19, 2001, 41,380 shares of Series B preferred stock were
converted by the Investors into 236,422 shares of Atlantic's common stock. On
March 9, 2001, Atlantic and the Investors entered into a second stock repurchase
agreement pursuant to which Atlantic repurchased from the Investors, for an
aggregate purchase price of $617,067, all 165,518 shares of Atlantic's Series B
preferred stock held by the Investors on March 9, 2001. The carrying amount of
the 165,518 shares is equal to $480,000; therefore the amount in excess of the
carrying amount, plus the estimated fair value of the warrants retained by the
Investors, which equals $167,127, was recorded as a dividend upon repurchase of
shares of Series B preferred stock and is deducted from net (loss) income to
arrive at net (loss) income applicable to common shares.
(8) DEVELOPMENT REVENUE
In accordance with a now-terminated license and development agreement,
Bausch & Lomb Surgical paid Atlantic's subsidiary, Optex Ophthalmologics, Inc.
("Optex"), for developing its Catarex technology. For the three months ended
March 31, 2002, this agreement provided no development revenue and no related
cost-of-development revenue as compared to $2,461,922 of development revenue
(including $1,067,345 in project-completion bonuses paid out and recognized at
the completion of the project in March 2001) and related cost of development
revenue of $2,082,568 for the three months ended March 31, 2001. The decrease in
revenues and related expenses from Bausch & Lomb over last year was due to the
fact that there were no revenues and related expenses since termination of the
agreement in March 2001. With termination of the above agreement at the
conclusion of the sale of substantially all of Optex's assets (mostly intangible
assets with no book value) in March 2001, as described in note 10 below,
Atlantic will no longer have the revenues or profits associated with that
agreement.
(9) SALE OF OPTEX ASSETS
Pursuant to an asset purchase agreement dated January 31, 2001, among
Bausch & Lomb, a Bausch & Lomb affiliate, Atlantic, and Optex, on March 2, 2001,
Optex sold to Bausch & Lomb substantially all of its assets (mostly intangible
assets with no book value), including all those related to the Catarex
technology. The purchase price was $3 million paid at closing (of which
approximately $564,000 has been distributed to Optex's minority shareholders).
In addition, Optex is entitled to receive additional consideration, namely $1
million once Bausch & Lomb receives regulatory approval to market the Catarex
device in Japan, royalties on net sales on the terms stated in the original
development agreement dated May 14, 1998, between Bausch & Lomb and Optex, as
amended, and minimum royalties of $90,000, $350,000, and $750,000 for the first,
second, and third years, respectively, starting on first commercial use of the
Catarex device or January 1, 2004, whichever is earlier. Optex also has the
option to repurchase the acquired assets from Bausch & Lomb at fair value if it
ceases developing the Catarex technology.
8
Upon the sale of Optex assets, Bausch & Lomb's development agreement with
Optex was terminated and Optex has no further involvement with Bausch & Lomb. As
a result of this transaction, Atlantic recorded a net gain on the sale of Optex
assets of $2,809,451 for the three month period ended March 31, 2001. The
purchase price of $3,000,000 is nonrefundable and upon the closing of the asset
purchase agreement in March 2001, Optex had no further obligation to Bausch &
Lomb or with regard to the assets sold. In the asset purchase agreement, Optex
agreed to forgo future contingent payments provided for in the earlier
development agreement. Pursuant to Atlantic's agreement with the minority
shareholders of Optex, Optex has recorded a profit distribution for the three
months ended March 31, 2001 of $767,514 representing the minority shareholders'
percentage of the cumulative profit from the Bausch & Lomb development and asset
purchase agreements up to and including proceeds from the sale of Optex' assets.
(This figure includes the $564,000 referred to above.)
On May 9, 2001, Atlantic's board of directors, after consideration of all
the relevant facts and circumstances, including recommendation of counsel,
agreed to authorize an aggregate payment of $240,000 to three former employees
of Optex (who are now employed by Bausch & Lomb). The payments were made on May
11, 2001, and represented the settlement of claims made by the employees
subsequent to the asset purchase agreement referred to above for severance
monies allegedly due under their employment agreement. Atlantic did not believe
these monies were due pursuant to the terms of the transaction itself and the
respective employment agreements. The board of directors elected to acquiesce to
the demands of the former employees and resolve the matter in light of the
potential future royalties from Bausch & Lomb and the importance of these
individuals to the ongoing development activities. The payment was recorded as
an expense netted against the gain on sale of Optex assets during the second
quarter of 2001.
(10) PRIVATE PLACEMENT OF COMMON SHARES
On November 6, 2001, Atlantic entered into an agreement with Joseph
Stevens & Company, Inc. in which Joseph Stevens agreed to act as placement agent
for a private placement of shares of Atlantic's common stock. In that private
placement, the price of each share of Atlantic's common stock was $0.24 and the
minimum and maximum subscription amounts were $2,000,000 and $3,000,000,
respectively. In addition, each investor received a warrant to purchase one
share of Atlantic's common stock for every share of Atlantic's common stock
purchased by that investor. The warrants have an exercise price of $0.29 and are
exercisable for five years from the closing date. On December 3, 2001, Atlantic
issued to certain investors an aggregate of 8,333,318 shares of common stock for
the minimum subscription of $2,000,000. In connection with the private
placement, Atlantic paid Joseph Stevens a placement fee of $140,000, equal to 7%
of the aggregate subscription amount plus a warrant to purchase 833,331 shares
of Atlantic's common stock, which represented 10% of the number of shares issued
to the investors. The term of this warrant is five years and the per share
exercise price is $0.29. In conjunction with this private placement, Atlantic
received net proceeds of approximately $1,848,000 in December 2001. Atlantic
also agreed to issue to Joseph Stevens as placement shares 833,331 shares of
common stock; as of March 31, 2002, it had not yet done so. These shares are
classified as common stock to be issued on the accompanying consolidated balance
sheet as of March 31, 2002 and are included in the weighted average shares of
common stock outstanding as of March 31, 2002 used to arrive at net (loss)
income per common share.
(11) SERIES A ANTIDILUTION PROVISION
The conversion price and conversion rate of the Series A preferred stock
is subject to adjustment upon the occurrence of certain events, including the
issuance of common stock at a per-share price less than either the conversion
price or the then market price. Recent issuances of stock, options and warrants,
including in connection with Atlantic's recent private placement, have
necessitated that Atlantic adjust the conversion rate and conversion price of
the Series A preferred stock. Accordingly, the conversion price of the Series A
preferred stock has been decreased from $3.058 to $1.22, and the conversion rate
has been increased from 3.27 to 8.21. These changes will have retroactive
effect, so Atlantic expects that it will be issuing approximately 66,666 make-up
shares of common stock to certain former Series A preferred stock holders as of
March 31, 2002. These shares are classified on the accompanying consolidated
balance sheet as of March 31, 2002 as common stock to be issued and are included
in the weighted average shares of common stock outstanding as of March 31, 2002
used to arrive at net (loss) income per common share.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
You should read the following discussion of our results of operations and
financial condition in conjunction with our Annual Report on Form 10-KSB for the
year ended December 31, 2001. This discussion includes "forward-looking"
statements that reflect our current views with respect to future events and
financial performance. We use words such as we "expect," "anticipate,"
"believe," and "intend" and similar expressions to identify forward-looking
statements. Investors should be aware that actual results may differ materially
from our expressed expectations because of risks and uncertainties inherent in
future events, particularly those risks identified in the "Risk Factors" section
of our most recent Annual Report on Form 10-KSB, and should not unduly rely on
these forward looking statements.
RESULTS OF OPERATIONS
THREE-MONTH PERIOD ENDED MARCH 31, 2002 VS. 2001
In accordance with a now-terminated license and development agreement,
Bausch & Lomb Surgical paid our subsidiary, Optex Ophthalmologics, Inc.
("Optex"), for developing its Catarex technology. For the three months ended
March 31, 2002, this agreement provided no development revenue and no related
cost of development revenue as compared $2,461,922 of development revenue
(including $1,067,345 in project-completion bonuses paid out and recognized at
the completion of the project in March 2001) and related cost of development
revenue of $2,082,568 for the three months ended March 31, 2001. The decrease in
revenues and related expenses from Bausch & Lomb over last year was due to the
fact that there were no revenues and related expenses since termination of the
agreement in March 2001.
For the quarter ended March 31, 2002, research and development expense was
$201,842 as compared to $306,767 for the first quarter of 2001. This decrease is
primarily due to the cessation of research and development activities on the
antisense technology as a result of the sale of the assets of Gemini.
For the quarter ended March 31, 2002, general and administrative expense
was $429,223 as compared to $681,948 for the quarter ended March 31, 2001. This
decrease is principally due to a decrease in legal expenses of approximately
$120,000 and a finders fee of $120,000 incurred in conjunction with a common
stock purchase agreement entered into during the first quarter of 2001 with
Fusion Capital Fund II, LLC. Fusion's obligation to purchase our shares under
this agreement is subject to certain conditions. A material contingency that may
affect our ability to raise funds under this agreement is our stock price.
Currently, our stock price is below the floor price of $0.68 specified in the
Fusion Capital agreement and as a result we are currently unable to draw funds
pursuant to that agreement. As the Fusion Capital agreement is currently
structured, we cannot guarantee that we will be able to draw any funds.
For the quarter ended March 31, 2002, we had a reduction in compensation
expense relating to stock warrants of $1,469 as compared to an expense relating
to stock warrants of $11,971 in the prior year. This expense is associated with
warrants issued to Dian Griesel during March 2001 as partial compensation for
investor relations services. The reduction of compensation expense associated
with the warrants issued to Dian Griesel is a result of a decrease in our stock
price during the quarter. Additional expense associated with these warrants will
continue to be incurred over the remainder of the two-year term of the
agreement. As long as these warrants continue to vest, that expense will be
directly affected by the movement in the price of our common stock. Compensation
expense relating to these investor relations and investment banking services
represent a general and administrative expense.
For the first quarter of 2002, interest and other income was $5,522,
compared to $20,018 for the first quarter of 2001. The decrease in interest
income is primarily due to the decline in our cash reserves.
Net loss applicable to common shares for the quarter ended March 31, 2002,
was $662,236 as compared to net income applicable to common shares of $855,631
for the quarter ended March 31, 2001. This decrease in net loss applicable to
common shares is primarily attributable to a gain on the sale of the assets of
our subsidiary, Optex recognized during the first quarter of 2001 in the amount
of $2,809,451, partially offset by a distribution to the minority shareholders
of Optex of $767,514. In addition, with the termination of our agreement with
Bausch
10
& Lomb, we no longer have available to us the revenue or profits associated with
that agreement; as a result, we had no profit from this agreement for the
quarter ended March 31, 2002 as compared with $379,354 of profit for the quarter
ended March 31, 2001. We recorded grant revenue of $250,000 for the quarter
ended March 31, 2001 which we did not have in the first quarter of 2002. The
loss differential is partially offset by reductions of research and development
expenses and general and administrative expenses of $104,925 and $252,725,
respectively for the quarter ended March 31, 2002 as compared with the quarter
ended March 31, 2001.
Net (loss) income applicable to common shares in 2001 also included a
beneficial conversion on our Series B preferred stock in the amount of $600,000
and a dividend of $167,127 paid upon the repurchase of the outstanding Series B
preferred stock recorded during the first quarter of 2001. We also issued
preferred stock dividends on our Series A preferred stock for which the
estimated fair value of $39,162 and $64,144 was included in the net (loss)
income applicable to common shares for the first quarter of 2002 and 2001,
respectively. The decrease in the estimated fair value of these dividends as
compared to the prior year is primarily a reflection of a decline in our stock
price and a reduction of the number of preferred shares issued.
LIQUIDITY AND CAPITAL RESOURCES
From inception to March 31, 2002, we incurred an accumulated deficit of
$27,352,480, and we expect to continue to incur additional losses through the
year ending December 31, 2002 and for the foreseeable future. The loss has been
incurred through primarily research and development activities related to the
various technologies under our control.
Pursuant to an asset purchase agreement dated January 31, 2001, among
Bausch & Lomb, a Bausch & Lomb affiliate, Atlantic, and Optex, on March 2, 2001,
Optex sold to Bausch & Lomb substantially all its assets (mostly intangible
assets with no book value), including all those related to the Catarex
technology. As a result of this sale, Atlantic and Optex no longer have any
obligations to Bausch & Lomb in connection with development of the Catarex
technology. The purchase price was $3 million paid at closing (approximately
$564,000 of which was distributed to the minority shareholders). In addition,
Optex is entitled to receive additional consideration, namely $1 million once
Bausch & Lomb receives regulatory approval to market the Catarex device in
Japan, royalties on net sales on the terms stated in the original development
agreement dated May 14, 1998, between Bausch & Lomb and Optex, as amended, and
minimum royalties of $90,000, $350,000, and $750,000 for the first, second, and
third years, respectively, starting on first commercial use of the Catarex
device or January 1, 2004, whichever is earlier. Optex also has the option to
repurchase the acquired assets from Bausch & Lomb if it ceases developing the
Catarex technology at fair value. Upon the sale of Optex assets, Bausch & Lomb's
development agreement with Optex was terminated. In the asset purchase agreement
Optex agreed to forgo future contingent payments provided for in the earlier
development agreement. As a result of this transaction, we recorded a gain on
the sale of Optex assets of $2,569,451. We made a profit distribution of
$837,274 to Optex's minority shareholders, representing their share of the
cumulative profit from the development agreement with Bausch & Lomb and the
proceeds from the sale of Optex' assets.
On November 6, 2001, we entered into an agreement with Joseph Stevens &
Company, Inc. in which Joseph Stevens agreed to act as placement agent for a
private placement of shares of our common stock. In that private placement, the
price of each share of our common stock was $0.24 and the minimum and maximum
subscription amounts were $2,000,000 and $3,000,000, respectively. In addition,
each investor received a warrant to purchase one share of our common stock for
every share of our common stock purchased by that investor. The warrants have an
exercise price of $0.29 and are exercisable for five years from the closing
date. On December 3, 2001, we issued to certain investors an aggregate of
8,333,318 shares of common stock for the minimum subscription of $2,000,000. In
connection with the private placement, we paid Joseph Stevens a placement fee of
$140,000, equal to 7% of the aggregate subscription amount plus a warrant to
purchase 833,331 shares of Atlantic's common stock, which represented 10% of the
number of shares issued to the investors. The term of this warrant is five years
and the per share exercise price is $0.29. In conjunction with this private
placement, we received net proceeds of approximately $1,848,000 in December
2001. We also agreed to issue to Joseph Stevens as placement shares 833,331
shares of common stock; as of March 31, 2002, it had not yet done so. These
shares are classified as common stock to be issued on the accompanying
consolidated balance sheet as of March 31, 2002 and are included in the weighted
average shares of common stock outstanding as of March 31, 2002 used to arrive
at net (loss) income per common share.
11
We have financed our operations since inception primarily through equity
and debt financing, and collaborative arrangements with Bausch & Lomb which
terminated during 2001. During the quarter ended March 31, 2002, we had a net
decrease in cash and cash equivalents of $658,536.
This decrease primarily resulted from net cash used in operating
activities of $619,720. Total cash resources as of March 31, 2002 were $933,225
compared to $1,591,761 at December 31, 2001.
Our available working capital and capital requirements will depend upon
numerous factors, including progress of our research and development programs,
our progress in and the cost of ongoing and planned pre-clinical and clinical
testing, the timing and cost of obtaining regulatory approvals, the cost of
filing, prosecuting, defending, and enforcing patent claims and other
intellectual property rights, competing technological and market developments,
changes in our existing collaborative and licensing relationships, the resources
that we devote to developing manufacturing and commercializing capabilities,
technological advances, the status of our competitors, our ability to establish
collaborative arrangements with other organizations and our need to purchase
additional capital equipment.
Our current liabilities as of March 31, 2002 were $484,706 compared to
$508,613 at December 31, 2001, a decrease of $23,907. The decrease was primarily
due to reduced spending due to an increased effort to conserve cash. As of March
31, 2002, our working capital was $468,593, primarily as a result of receiving
$1,948,000 in net proceeds from two private placements of our common stock
during December 2001.
Our continued operations will depend on our ability to raise additional
funds through various potential sources such as equity and debt financing, other
collaborative agreements, strategic alliances and our ability to realize the
full potential of our technology candidate. Such additional funds may not become
available as we need them or be available on acceptable terms. To date, a
significant portion of our financing has been through private placements of
common and preferred stock and warrants, the issuance of common stock for stock
options and warrants exercised, and debt financing. Until our operations
generate significant revenues, we will continue to fund operations from cash on
hand and through the sources of capital previously described. No assurances can
be provided that the additional capital will be sufficient to meet the Company's
needs. We anticipate that our current resources (including the $2 million
proceeds of the first closing of our recent private placement in December 2001)
will be sufficient to finance for the next few months our currently anticipated
needs for operating and capital expenditures. We plan to achieve this by
continuing to reduce expenses, including by means of voluntary salary reductions
and postponement of certain development expenses.
We expect that after implementing these cost-saving measures, our cash
utilized for operations for the next year will be approximately $129,000 per
month (including approximately $35,000 per month for research and preclinical
development expenses and approximately $94,000 for general and administrative
expenses). Our major outstanding contractual obligations relate to our operating
(facilities) leases. Our facilities lease expense in future years extends
through May 2003 at an aggregate rate of $7,675 per month, net of monthly
sublease income of $750 per month commencing March 2002. In addition, we had a
monthly obligation of $1,026 under the lease for another facility. That lease
expired on January 31, 2002.
The report of our independent auditors on our consolidated financial
statements includes an explanatory paragraph which states that our recurring
losses, and limited liquid resources raise substantial doubt about our ability
to continue as a going concern. Our consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Subsequent to an oral hearing before a Nasdaq Listing Qualifications
Panel, on August 23, 2001, our securities were delisted from the Nasdaq Stock
Market for failing to meet the minimum bid price requirements set forth in the
NASD Marketplace Rules, as our common stock had traded for less than $1.00 for
more than 30 consecutive business days. Our common stock trades now on the OTC
Bulletin Board under the symbol "ATLC.OB". Delisting our common stock from
Nasdaq could have a material adverse effect on our ability to raise additional
capital, our stockholders' liquidity and the price of our common stock.
12
Critical Accounting Policies
In December 2001, the SEC requested that all registrants discuss their
most "critical accounting policies" in management's discussion and analysis of
financial condition and results of operations. The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the company's financial condition and results and requires management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. Our
significant accounting policies are described in Note 1 to our consolidated
financial statements included in our annual report filed on Form 10-KSB for the
year ended December 31, 2001, however, we believe that none of them are
considered to be critical.
RESEARCH AND DEVELOPMENT ACTIVITIES
Optex and the Catarex(TM) Technology
Our majority-owned (81.2%) subsidiary, Optex, is entitled to royalties and
other revenues in connection with commercialization of the Catarex technology.
Bausch & Lomb, a multinational ophthalmics company, is developing this
technology under the new trade name "Avantix" to overcome the limitations and
deficiencies of traditional cataract extraction techniques. Optex had been the
owner of this technology and was developing it pursuant to a development
agreement with Bausch & Lomb, but on March 2, 2001, Optex sold to Bausch & Lomb
substantially all of its assets (mostly intangible assets with no book value),
including those related to the Catarex technology, and delivered 2,400
"First-Generation" Catarex handpieces to Bausch & Lomb for use in Human
Feasibility Studies and Clinical Trials.
Bausch & Lomb, which has committed over $15 million on the project to
date, has assumed full responsibility for developing and marketing the
technology and will pay Optex royalties on sales of the device and associated
system. Under the agreement governing Bausch & Lomb's purchase of Optex's
assets, Bausch & Lomb is required to meet certain development milestones. The
next such milestone is completion by December 31, 2002, of a clinical study
designed by Bausch & Lomb to assess the functionality of the Catarex handpiece
in human cataract surgery. We continue to work closely with Bausch & Lomb to
monitor their progress in developing this technology, and, to the extent
permitted by our agreement with Bausch & Lomb, we will report achievement of any
development milestones.
CT-3 Anti-inflammatory/Analgesic Compound
We are developing our proprietary compound CT-3, a patented synthetic
derivative of carboxylic tetrahydrocannabinol (THC-7C), as an alternative to
nonsteroidal anti-inflammatory drugs, or "NSAIDs," such as aspirin and
ibuprofen. Over 130 million Americans suffer from chronic pain and 40 million
suffer from arthritis. Worldwide prescription sales of
analgesic/anti-inflammatory drugs exceeded $9 billion in 1999. Preliminary
studies have shown that CT-3 demonstrates analgesic/anti-inflammatory properties
at microgram doses without central nervous system or gastrointestinal side
effects and also reduces joint damage caused by rheumatoid arthritis.
Since CT-3 appears to possess a wide range of therapeutic activity, we are
carefully choosing an indication that we feel CT-3 would be most efficacious for
and one that will strategically allow us to increase the licensing value of CT-3
in the most timely and cost-effective manner. We are continuing our efforts by
conducting additional preclinical tests to study the analgesic activity of CT-3,
particularly with reference to neuropathic pain (pain caused by an abnormal or
degenerative state of the nervous system). Preliminary results show that CT-3
dramatically reduces allodynia (a painful response to typically non-painful
stimulus) in neuropathic rats with a partial sciatic nerve ligation (an animal
model for pain induced by neuropathic nerve injury induced pain). We have
initiated a Phase I/II pilot clinical trial of safety, tolerability, and
efficacy to determine the upper limits of safe dosing with CT-3 and to measure
the potential for CT-3 to act as a pain reliever in patients with neuropathic
pain. In addition, we have recently initiated a development plan for CT-3 to
test its efficacy in multiple-sclerosis. In an animal model for multiple
sclerosis, CT-3 induced a significant decrease in spasticity, demonstrated a
rapid inhibition of limb stiffness and the effect was relatively long-lived. The
results of the study validated spasticity as a potential indication for CT-3
use. We are also preparing to conduct Phase II clinical trials to evaluate the
efficacy of CT-3 in multiple-sclerosis-associated tremors and spasticity.
13
RECENT DEVELOPMENTS
The conversion price and conversion rate of the Series A preferred stock
is subject to adjustment upon the occurrence of certain events, including the
issuance of common stock at a per-share price less than either the conversion
price or the then market price. Recent issuances of stock, options and warrants,
including in connection with Atlantic's recent private placement, have
necessitated that Atlantic adjust the conversion rate and conversion price of
the Series A preferred stock. Accordingly, the conversion price of the Series A
preferred stock has been decreased from $3.058 to $1.22, and the conversion rate
has been increased from 3.27 to 8.21 These changes will have retroactive effect,
so Atlantic expects that it will be issuing approximately 66,666 make-up shares
of common stock to certain former Series A preferred stock holders as of March
31, 2002. These shares are classified on the accompanying consolidated balance
sheet as of March 31, 2002 as common stock to be issued and are included in the
weighted average shares of common stock outstanding as of March 31, 2002 used to
arrive at net (loss) income per common share.
14
PART II -- OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
Exhibits
The following documents are referenced or included in this report.
Exhibit No. Description
---------- ------------
3.1(1) Certificate of incorporation of Atlantic, as amended to date.
3.2(1) Bylaws of Atlantic, as amended to date.
3.3(5) Certificate of designations of Series A Convertible Preferred Stock.
3.4(6) Certificate of increase of Series A Convertible Preferred Stock.
3.5(9) Certificate of designations, preferences and rights of Series B
convertible preferred stock of Atlantic, filed on September 28,
2000.
3. 6(9) Certificate of amendment of the certificate of designations,
preferences and rights of Series B convertible preferred stock of
Atlantic, filed on November 17, 2000.
3.7(10) Certificate of amendment of the certificate of designations,
preferences and rights of Series B convertible preferred stock of
Atlantic, filed on January 9, 2001.
3.8(10) Certificate of amendment of the certificate of designations,
preferences and rights of Series B convertible preferred stock of
Atlantic, filed on January 19, 2001.
4.2(1) Form of unit certificate.
4.3(1) Specimen common stock certificate.
4.4(1) Form of redeemable warrant certificate.
4.5(1) Form of redeemable warrant agreement by and between Atlantic and
Continental Stock Transfer & Trust Company.
4.6(1) Form of underwriter's warrant certificate.
4.7(1) Form of underwriter's warrant agreement by and between Atlantic
and Joseph Stevens & Company, L.P.
4.8(1) Form of subscription agreement by and between Atlantic and the
Selling Stockholders.
4.9(1) Form of bridge note.
4.10(1) Form of bridge warrant.
4.11(2) Investors' rights agreement by and among Atlantic, Dreyfus Growth
and Value Funds, Inc. and Premier Strategic Growth Fund.
4.12(2) Common stock purchase agreement by and among Atlantic, Dreyfus
Growth and Value Funds, Inc. and Premier Strategic Growth Fund.
10.2(1) Employment agreement dated July 7, 1995, between Atlantic and Jon
D. Lindjord.
10.3(1) Employment agreement dated September 21, 1995, between Atlantic
and Dr. Stephen R. Miller.
15
10.4(1) Employment agreement dated September 21, 1995, between Atlantic
and Margaret A. Schalk.
10.5(1) Letter agreement dated August 31, 1995, between Atlantic and Dr.
H. Lawrence Shaw.
10.6(1) Consulting agreement dated January 1, 1994, between Atlantic and
John K. A. Prendergast.
10.8(1) Investors' Rights agreement dated July 1995, between Atlantic,
Dr. Lindsay A. Rosenwald and VentureTek, L.P.
10.9(1) License and assignment agreement dated March 25, 1994, between
Optex Ophthalmologics, Inc., certain inventors and NeoMedix
Corporation, as amended.
10.10(1) License agreement dated May 5, 1994, between Gemini Gene
Therapies, Inc. and the Cleveland Clinic Foundation.
10.11(1)+ License agreement dated June 16, 1994, between Channel
Therapeutics, Inc., the University of Pennsylvania and certain
inventors, as amended.
10.12(1)+ License agreement dated March 28, 1994, between Channel
Therapeutics, Inc. and Dr. Sumner Burstein.
10.13(1) Form of financial advisory and consulting agreement by and between
Atlantic and Joseph Stevens & Company, L.P.
10.14(1) Employment agreement dated November 3, 1995, between Atlantic and
Shimshon Mizrachi.
10.15(3) Financial advisory agreement between Atlantic and Paramount dated
September 4, 1996 (effective date of April 15, 1996).
10.16(3) Financial agreement between Atlantic, Paramount and UI USA dated
June 23, 1996.
10.17(3) Consultancy agreement between Atlantic and Dr. Yuichi Iwaki dated
July 31, 1996.
10.18(3) 1995 stock option plan, as amended.
10.19(3) Warrant issued to an employee of Paramount Capital, LLC to purchase
25,000 shares of Common Stock of Atlantic.
10.20(3) Warrant issued to an employee of Paramount Capital, LLC to purchase
25,000 shares of Common Stock of Atlantic.
10.21(3) Warrant issued to an employee of Paramount Capital, LLC to purchase
12,500 shares of Common Stock of Atlantic.
10.22(4) Letter agreement between Atlantic and Paramount Capital, Inc.
dated February 26,1997.
10.23(4) agreement and plan of reorganization by and among Atlantic,
Channel Therapeutics, Inc. and New Channel, Inc. dated February
20, 1997.
10.24(4) Warrant issued to John Prendergast to purchase 37,500 shares of
Atlantic's Common Stock.
10.25(4) Warrant issued to Dian Griesel to purchase 24,000 shares of
Atlantic's Common Stock.
10.26(7) Amendment No. 1 to development & license agreement by and between
Optex and Bausch & Lomb Surgical, Inc. dated September 16, 1999.
10.27(8) Financial advisory and consulting agreement by and between
Atlantic and Joseph Stevens & Company, Inc. dated January 4, 2000.
16
10.28(8) Warrant No. 1 issued to Joseph Stevens & Company, Inc. to
purchase 150,000 shares of Atlantic's Common Stock exercisable
January 4, 2000.
10.29(8) Warrant No. 2 issued to Joseph Stevens & Company, Inc. to
purchase 150,000 shares of Atlantic's Common Stock exercisable
January 4, 2001.
10.30(8) Warrant No. 3 issued to Joseph Stevens & Company, Inc. to
purchase 150,000 shares of Atlantic's Common Stock exercisable
January 4, 2002.
10.31(9) Preferred stock purchase agreement dated May 12, 2000, between
Atlantic and TeraComm Research, Inc.
10.32(9) Warrant certificate issued May 12, 2000, by Atlantic to TeraComm
Research, Inc.
10.33(9) Stockholders agreement dated May 12, 2000, among TeraComm
Research, Inc., the common stockholders of TeraComm, and Atlantic.
10.34(9) Registration rights agreement dated May 12, 2000, between Atlantic
and TeraComm Research, Inc. with respect to shares of TeraComm
preferred stock issued to Atlantic.
10.35(9) Registration rights agreement dated May 12, 2000, between Atlantic
and TeraComm Research, Inc. with respect to shares of Atlantic
common stock issued to TeraComm.
10.36(9) Employment agreement dated as of April 10, 2000, between Atlantic
and A. Joseph Rudick.
10.37(9) Employment agreement dated as of April 3, 2000, between Atlantic
and Frederic P. Zotos.
10.38(9) Employment agreement dated as of April 10, 2000, between Atlantic
and Nicholas J. Rossettos, as amended.
10.39(9) Employment agreement dated as of May 15, 2000, between Atlantic and
Walter Glomb.
10.40(9) Employment agreement dated as of April 18, 2000, between Atlantic
and Kelly Harris.
10.41(10) Amendment dated as of July 18, 2000, to the Preferred Stock Purchase
agreement dated May 12, 2000, between Atlantic and TeraComm
Research, Inc.
10.42(10) Convertible preferred stock and warrants purchase agreement dated
September 28, 2000, among Atlantic, BH Capital Investments, L.P.
and Excalibur Limited Partnership.
10.43(10) Registration rights agreement dated September 28, 2000, among
Atlantic, BH Capital Investments, L.P., and Excalibur Limited
Partnership.
10.44(10) Escrow agreement dated September 28, 2000, among Atlantic, BH
Capital Investments, L.P., and Excalibur Limited Partnership.
10.45(10) Form of stock purchase warrants issued on September 28, 2000, to
BH Capital Investments, L.P., exercisable for shares of common
stock of Atlantic.
10.46(10) Form of stock purchase warrants issued on September 28, 2000, to
Excalibur Limited Partnership, exercisable for shares of common
stock of Atlantic.
10.47(10) Amendment No. 1 dated October 31, 2000, to convertible preferred
stock and warrants purchase agreement dated September 28, 2000,
among Atlantic, BH Capital Investments, L.P., and Excalibur
Limited Partnership.
10.48(12) Stock repurchase agreement dated December 4, 2000, among
Atlantic, BH Capital Investments, L.P., and Excalibur Limited
Partnership.
17
10.49(14) Letter agreement dated December 28, 2000, among Atlantic and BH
Capital Investments, L.P., and Excalibur Limited Partnership.
10.50(11) Amendment No. 2 dated January 9, 2001, to convertible preferred
stock and warrants purchase agreement dated September 28, 2000,
among Atlantic, BH Capital Investments, L.P., and Excalibur
Limited Partnership.
10.51(14) Amendment No. 1 dated January 9, 2001, to registration rights
agreement dated September 28, 2000, among Atlantic and BH Capital
Investments, L.P. and Excalibur Limited Partnership.
10.52(11) Amendment No. 3 dated January 19, 2001, to convertible preferred
stock and warrants purchase agreement dated September 28, 2000,
among Atlantic, BH Capital Investments, L.P., and Excalibur
Limited Partnership.
10.53(14) Letter agreement dated January 25, 2001, among Atlantic and BH
Capital Investments, L.P., and Excalibur Limited Partnership.
10.54(13) Stock repurchase agreement No. 2 dated March 9, 2001, among
Atlantic, BH Capital Investments, L.P., and Excalibur Limited
Partnership.
10.55(15) Common stock purchase agreement dated March 16, 2001, between
Atlantic and Fusion Capital Fund II, LLC.
10.56(15) Warrant certificate issued March 8, 2001 by Atlantic to Dian
Griesel.
10.57(16) Common stock purchase agreement dated as of May 7, 2001, between
Atlantic and Fusion Capital Fund II, LLC.
10.58(16) Form of registration rights agreement between Atlantic and Fusion
Capital Fund II, LLC.
10.59 Asset purchase agreement dated as of January 31, 2001, between
Bausch & Lomb Incorporated, Bausch & Lomb Surgical, Inc., Optex
Ophthalmologics, Inc. and Atlantic (the "January 31 Asset
Purchase Agreement).
10.60 Amendment No. 1 dated March 2, 2001, to the January 31 Asset
Purchase Agreement.
10.61 Asset purchase agreement dated as of April 23, 2001, between
Atlantic, Gemini Technologies, Inc., and IFN, Inc.
21.1(1) Subsidiaries of Atlantic.
------------------
+ Confidential treatment has been granted as to certain portions of
these exhibits.
* Filed herewith.
(1) Incorporated by reference to exhibits of Atlantic's registration
statement on Form SB-2, Registration #33-98478, as filed with the
Securities and Exchange Commission (the "SEC") on October 24,
1995 and as amended by Amendment No. 1, Amendment No. 2,
Amendment No.3, Amendment No. 4 and Amendment No. 5, as filed
with the SEC on November 9, 1995, December 5, 1995, December 12,
1995, December 13, 1995 and December 14, 1995, respectively.
(2) Incorporated by reference to exhibits of Atlantic's Current Report
on Form 8-K, as filed with the SEC on August 30, 1996.
(3) Incorporated by reference to exhibits of Atlantic's Form 10-QSB
for the period ended September 30, 1996.
18
(4) Incorporated by reference to exhibits of Atlantic's Form 10-QSB
for the period ended March 31, 1996.
(5) Incorporated by reference to exhibits of Atlantic's Current Report
on Form 8-KSB, as filed with the SEC on June 9, 1997.
(6) Incorporated by reference to exhibits of Atlantic's Registration
Statement on Form S-3 (Registration No. 333-34379), as filed with
the Commission on August 26, 1997, and as amended by Amendment
No. 1 as filed with the SEC on August 28, 1997.
(7) Incorporated by reference to exhibits of Atlantic Form 10-QSB for
the period ended September 30, 1999.
(8) Incorporated by reference to exhibits of Atlantic's Form 10-KSB
for the period ended December 31, 1999.
(9) Incorporated by reference to exhibits of Atlantic's Form 10-QSB
for the period ended June 30, 2000.
(10) Incorporated by reference to exhibits of Atlantic's Form 10-QSB
for the period ended September 30, 2000.
(11) Incorporated by reference to exhibits of Atlantic's Form 8-K
filed on January 24, 2001.
(12) Incorporated by reference to exhibits of Atlantic's Form 8-K
filed on December 11, 2000.
(13) Incorporated by reference to exhibits of Atlantic's Form 8-K
filed on March 14, 2001.
(14) Incorporated by reference to exhibits of Atlantic's Form 10-KSB
filed on April 17, 2001.
(15) Incorporated by reference to exhibits of Atlantic's Form 10-QSB
for the period ended March 31, 2001.
(16) Incorporated by reference to exhibits of Atlantic's Registration
Statement on Form SB-2 (Registration No. 333-61974), as filed
with the Commission on May 31, 2001, and as amended by Amendment
No. 1 as filed with the SEC on June 29, 2001.
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
19
SIGNATURES
In accordance with the requirements of the Exchange Act, Atlantic caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ATLANTIC TECHNOLOGY VENTURES, INC.
Date: May 14, 2002 /s/ Fredric P. Zotos
---------------------------------
Frederic P. Zotos
President, Chief Executive Officer,
and Director
Date: May 14, 2002 /s/ Nicholas J. Rossettos
---------------------------------
Nicholas J. Rossettos
Chief Financial Officer
20