0000950144-95-002297.txt : 19950815 0000950144-95-002297.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950144-95-002297 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VECTOR AEROMOTIVE CORP CENTRAL INDEX KEY: 0000830664 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 330254334 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10559 FILM NUMBER: 95562551 BUSINESS ADDRESS: STREET 1: 400 N MARINE AVE CITY: WILMINGTON STATE: CA ZIP: 90744 BUSINESS PHONE: 310-522-5500 MAIL ADDRESS: STREET 1: 7601 CENTURION PKWY SOUTH CITY: JACKSONVILLE STATE: FL ZIP: 32256 10-Q 1 VECTOR AEROMOTIVE CORPORATION FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Six Months Ended Commission File Number June 30, 1995 00-17303 VECTOR AEROMOTIVE CORPORATION (Exact name of registrant as specified in its charter) NEVADA 33-025-4334 (State of Incorporation) (I.R.S. Employer Identification No.) 7601 CENTURION PARKWAY JACKSONVILLE, FLORIDA 32256 (Address of principal executive offices) (904) 645-0505 (Issuer's telephone number) 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 [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Common Stock, $.01 par value per share; 42,379,699 shares outstanding as of August 10, 1995 2 Vector Aeromotive Corporation Condensed Balance Sheets (Unaudited)
June 30, December 31, 1995 1994 ----------- ------------ Assets --------------------------------------- Current assets: Cash and cash equivalents $ 2,536,460 $ 7,809 Inventories 464,527 286,347 Prepaid expenses 35,913 12,789 Accounts receivable 32,306 50,000 Other receivable 7,228 232,804 ----------- ----------- Total current assets 3,076,434 589,749 Property and equipment 794,951 567,861 Other assets 137,180 137,180 ----------- ----------- $ 4,008,565 $ 1,294,790 =========== =========== Liabilities and Stockholders' Equity --------------------------------------- Current liabilities: Accounts payable $ 449,282 $ 528,170 Accrued expenses 274,459 114,886 Interest payable 47,207 47,207 Note payable to related party 178,200 178,200 Customer deposits 48,900 65,000 ----------- ----------- Total current liabilities 998,048 933,463 ----------- ----------- Contingencies (Note 6) ----------- ----------- Total liabilities 998,048 933,463 Stockholders' Equity Common stock, par value $.01 per share, 423,796 240,463 600,000,000 shares authorized; issued and outstanding: 42,379,699 in 1995 and 24,046,366 in 1994 Capital in excess of par value 31,619,315 26,211,740 Accumulated deficit (29,032,594) (26,090,876) ----------- ----------- Total stockholders' equity 3,010,517 361,327 ----------- ----------- $ 4,008,565 $ 1,294,790 =========== ===========
See accompanying notes to unaudited condensed financial statements. 1 3 Vector Aeromotive Corporation Condensed Statements of Operations (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 ----------------------------- --------------------------- Automobile sales - - - - Other sales - $ 48,420 - $ 48,420 Cost of sales - 26,730 - 26,730 --------------------------- -------------------------- Gross profit - 21,690 - 21,690 Costs and expenses Salaries and wages $ 100,442 158,767 $ 212,100 253,443 Rental expense 34,276 17,348 70,935 101,002 Utilities 848 4,543 1,693 13,093 Research and development 948,588 863,054 1,733,769 946,223 Depreciation and amortization 58,516 115,523 88,106 146,285 Advertising and promotion 3,956 31,020 7,109 73,452 Professional fees 194,538 136,302 388,815 451,907 General and administrative 379,072 144,583 627,405 538,113 --------------------------- -------------------------- Total costs and expenses 1,720,236 1,471,140 3,129,932 2,523,518 --------------------------- -------------------------- Operating loss (1,720,236) (1,449,450) (3,129,932) (2,501,828) Other income (expense) Interest and other income 107,467 17,197 188,214 51,964 Other expense - (11,390) - (25,787) --------------------------- -------------------------- Net loss ($1,612,769) ($1,443,643) ($2,941,718) ($2,475,651) =========================== ========================== Net loss per share ($0.04) ($0.06) ($0.07) ($0.10) =========================== ========================== Weighted average common shares outstanding 42,379,699 24,526,629 40,851,921 24,526,629 =========================== ==========================
See accompanying notes to unaudited condensed financial statements. 2 4 Vector Aeromotive Corporation Condensed Statement of Shareholders' Equity (Unaudited)
Common Stock ------------------- Capital in Excess Accumulated Shares Amount of Par Value Deficit Total ------------------------------------------------------------------ Balance, December 31, 1994 24,046,366 $240,463 $26,211,740 ($26,090,876) $ 361,327 Issuance of shares for cash 18,333,333 183,333 5,316,667 5,500,000 Issuance of option to purchase common stock 500,000 500,000 Stock offering costs (409,092) (409,092) Net loss (2,941,718) (2,941,718) ------------------------------------------------------------------- Balance, June 30, 1995 42,379,699 $423,796 $31,619,315 ($29,032,594) $3,010,517 ===================================================================
See accompanying notes to unaudited condensed financial statements. 3 5 Vector Aeromotive Corporation Condensed Statements of Cash Flows (Unaudited)
Six Months Six Months Ended Ended June 30, 1995 June 30, 1994 ------------- -------------- Cash flows from operating activities: Net loss ($2,941,718) ($2,475,650) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 88,106 108,737 Increase (decrease) from changes in Inventories (178,180) - Other receivable 225,576 (24,763) Prepaid expenses and other assets (5,430) (87,492) Accounts payable (78,888) 207,847 Settlement payable - (260,000) Accrued expenses 159,573 (329,480) Customer deposits (16,100) - ----------- ----------- Net cash from operating activities (2,747,061) (2,860,801) Cash flows used in investing activities: Acquisition of property and equipment (315,196) (156,853) Net cash used in investing activities (315,196) (156,853) Cash flows from financing activities: Proceeds from issuance of common stock and warrants 6,000,000 2,380,500 Stock offering costs (409,092) - ----------- ----------- Net cash from financing activities 5,590,908 2,380,500 Net increase (decrease) in cash and cash equivalents 2,528,651 (637,154) Cash and cash equivalents, beginning of period 7,809 2,378,012 Cash and cash equivalents, ----------- ----------- end of period $ 2,536,460 $ 1,740,858 =========== ===========
See accompanying notes to unaudited condensed financial statements. 4 6 NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of the Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Notes to Financial Statements contained in the Company's Annual Report on form 10-K for the year ended September 30, 1994. On October 3, 1994 the Company changed its fiscal year-end from September 30 to December 31. A transition report as filed on Form 10-Q for the period ended December 31, 1994. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. 2. Inventories The components of inventory consist of the following:
June 30, Dec. 31, 1995 1994 -------- -------- Raw Material $284,527 $286,347 Finished Goods $180,000 - -------- -------- Total $464,527 $286,347 ======== ========
During the first quarter of 1995, the Company repurchased one of its Vector W8 automobiles from Lamborghini USA for cash. 5 7 3. Stock Offering Effective as of January 5, 1995, the Company entered into a Share Purchase Agreement and Option Agreement with V'Power Corporation (VPC). Pursuant to these agreements, the Company issued VPC on January 15, 1995, 18,333,333 shares of Common Stock for $5.5 million and on April 17, 1995 sold to VPC for $500,000 a twelve-month option to acquire an additional 50 million shares of Common Stock for $.43 per share. Fees for legal, investment banking, consulting and advisory services incurred for the stock offering totaling $409,092 were charged against capital in excess of par. 4. Other Receivable In January, 1995, a settlement was reached for $125,385 regarding the 1992 complaint against the Company for breach of contract. The balance of the $357,000 appeal bond was returned to the Company. 5. Commitments In November 1994, the Company and automobili Lamborghini, S.p.A. (Lamborghini) entered into an agreement whereby Lamborghini would develop and sell to the Company a suitable engine to power the Avtech which will be completed during 1995 in exchange for certain consideration. In addition, the Company shall pay to Lamborghini the cost of tooling used to manufacture the engine. Upon successful development of the engine suitable for installation and operation, the Company also agreed to purchase a minimum number of engines through 1997 for a pre-determined price (subject to increases in cost of production). The Company may, upon prior written notice to Lamborghini, terminate the agreement at any time. 6. Contingencies On March 22, 1993, the Company's Board of Directors (The Board) determined that Gerald A. Weigert's (the former President of the Company) employment as an officer and employee of the Company should be terminated. Mr. Weigert disputed the Board's authority to terminate his employment and refused to relinquish control over the Company's assets and operations. This dispute between the Company, acting through its Board and certain executive officers, and Mr. Weigert is the subject of an ongoing civil lawsuit which was commenced by the Company on March 24, 1993. 6 8 On September 14, 1993, the Company obtained a court order confirming the validity of Mr. Weigert's termination, and control of the Company's assets and business affairs has been returned to the Board. Significant claims made by the Company against Mr. Weigert, and by Mr. Weigert against the Company, seeking monetary damages, are pending. In the opinion of management, these claims will not have a material adverse effect on the Company's financial condition. Mr. Weigert also alleges that the Company has failed to pay principal and accrued interest under two promissory notes allegedly payable by the Company to Vector Car, a partnership controlled by Mr. Weigert. At March 31, 1994, the Company had recorded amounts due relating to the promissory notes mentioned above totaling $178,200 plus accrued interest of $47,207. This claim is being disputed by the Company. In June 1994, an individual both in his name and under his dba, (the Plaintiff), filed a complaint against the Company in the Los Angeles County Superior Court. The complaint sets forth six claims for breach of contract, fraud, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, restitution and quantum merit. The complaint alleges that Plaintiff performed services with respect to a public offering and that under the terms of a finder's agreement, the Plaintiff is entitled to compensation for services allegedly rendered in connection with the public offering. The Plaintiff is seeking special damages of $155,000 plus interest from August 19, 1991. The Company believes that it will prevail in its defense of this action. In 1994, Mr. Weigert, as general partner of Vector Car, filed an action alleging that the Company assumed a Vector Car debt to him, in the approximate sum of $325,000. Vector Car has also alleged that the Company has a promissory note due in the amount of $250,000 to Vector Car. The Company will vigorously defend this action believing that it has performed on all agreements with Vector Car. Mr. Weigert has filed an application with the United State Patent and Trademark Office to register Avtech as a trademark. The Company is opposing Mr. Weigert's application. 7 9 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General Development of the Avtech SC Coupe has continued on plan during the first six months of 1995. Preliminary bumper and roof crush testing has been successfully completed. In addition, engine development to satisfy emission requirements has been undertaken through the design and development contract with automobili Lamborghini in Italy and the Company is now preparing for the submission of a vehicle for EPA certification. Testing at the high speed test facility at Nardo in southern Italy has verified satisfactory engine cooling performance as well as satisfactory high speed stability. Based on the Company's plan to establish a national network of 12 dealers by year-end to support the marketing of the Avtech, there has been considerable dealer development activity. This has generated serious interest from approximately 40 suitable outlets. Based on the plan established at the start of the year, the Company is still in compliance with the prototype build program, leading to a start of production next quarter. Results of Operations The Company recorded no automobile sales during the six months ended June 30, 1995 and 1994. Revenues for 1994 consisted of service and repair work. Total costs and expenses for the second quarter of 1995 increased $249,096, or approximately 17% compared to the second quarter of 1994, and $606,414 or 24% year-to-date in 1995 compared to 1994, due to the increased research and development activity and general and administrative expenses. Total costs spent on research and development for the second quarter of 1995 were $948,588 as compared to $863,054 in 1994, an increase of $85,534. Total costs spent on research and development year-to-date in 1995 were $1,733,769 compared to $946,223 year-to-date in 1994. Salaries and wages for the second quarter of 1995 decreased by $58,325 or 37% from the second quarter of 1994 and decreased $41,343 or 16% for the six months ended June 30, 1995 compared to 1994. The sole reason for these decreases was severance costs paid during the second quarter of 1994. Professional fees have increased $58,236 or 43% from the second quarter of 1995 compared to the second quarter of 1994 due primarily to timing of payment of legal fees incurred in connection with the Company's litigation with its former President in 1994. Year-to-date these costs were $63,092 lower than last year. General and administrative expenses increased by $234,489 or 162% in the second quarter of 1995 compared to the second quarter of 1994 as a result of 8 10 the reduction in workforce and related expenses which occurred during the second quarter of 1994 in anticipation of the Company's relocation in 1994 to Jacksonville, Florida. Liquidity and Capital Resources As previously reported, the Company entered into an agreement in January 1995 from which $5.5 million, net of stock offering costs, was received. As of June 30, 1995, the balance of the Company's cash and equivalents is approximately $2.5 million. Cash used during the first six months of 1995 has been primarily for engineering research and development and tooling and payment of legal costs related to the ongoing litigation with the Company's former President. The Company continues to progress towards planned production launch and sale of the Avtech SC in the fall of this year. However, to insure the quality of the product is not compromised, a reduction in the previously forecast rate of production versus plan will most likely occur during the start-up phase of production, resulting in lower than expected revenues in the fourth quarter of 1995. In this event, additional funding of up to approximately $1 million will be needed to sustain the Company's operations until early 1996 when it is anticipated that car sales will create positive cash flow. The Company is in the process of investigating several alternative sources of financing. However, there is no assurance that such financing will be available. Exhibits 27.01 Financial Data Schedule (for SEC use only) 9 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VECTOR AEROMOTIVE CORPORATION Date: August 11, 1995 By: /S/ D. Peter Rose ------------------------- ------------------- D. Peter Rose President Date: August 11, 1995 By: /S/ Janna L. Connolly ------------------------- ----------------------- Janna L. Connolly Chief Accounting Officer 10 EX-27.01 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 2,536,460 0 39,534 0 464,527 3,076,434 1,500,849 705,898 4,008,565 988,048 0 423,796 0 0 2,586,721 4,008,565 0 0 0 0 3,129,932 0 0 (2,941,718) 0 (2,941,718) 0 0 0 (2,941,718) (.07) 0