-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UnD30PekOqVvTyPe8A81edcNFj6jnUDPblggRE8mRnJiMTlReUILFuCJ9eRdPp37 ceM/R1Stae9urS2KgVabbQ== 0000950144-96-005567.txt : 19960816 0000950144-96-005567.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950144-96-005567 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96613695 BUSINESS ADDRESS: STREET 1: 7601 CENTURION PKWY SOUTH CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 904-646-5947 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, 1996 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; 53,609,387 shares outstanding as of August 6, 1996 2 Vector Aeromotive Corporation Condensed Balance Sheets (Unaudited)
June 30, December 31, 1996 1995 ----------- ------------ Assets - --------------------------------------------- Current assets: Cash and cash equivalents $ 3,400 $ 12,370 Inventories 1,207,757 801,560 Prepaid expenses 84,201 279,306 Accounts and other receivable 15,251 - ----------- ----------- Total current assets 1,310,609 1,093,236 Property and equipment 813,345 618,083 Other assets 179,594 195,250 ----------- ----------- $ 2,303,549 $ 1,906,569 =========== =========== Liabilities and Stockholders' Equity - --------------------------------------------- Current liabilities: Accounts payable $ 852,794 $ 1,498,667 Accrued expenses 487,443 632,891 Loans payable to related party 178,200 1,178,200 Customer deposits 25,000 40,000 ----------- ----------- Total current liabilities 1,543,437 3,349,758 ----------- ----------- Contingencies - Note 4 Total liabilities 1,543,437 3,349,758 Stockholders' equity Common stock, par value $.01 per share, 536,179 426,646 600,000,000 shares authorized; issued and outstanding: 53,609,387 in 1996 and 42,664,699 in 1995 Capital in excess of par value 36,778,117 31,873,608 Accumulated deficit (36,554,184) (33,743,443) ----------- ----------- Total stockholders' equity 760,112 (1,443,189) ----------- ----------- $ 2,303,549 $ 1,906,569 =========== ===========
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, 1996 1995 1996 1995 ------------------------ ------------------------ Sales $ 470,891 - $ 620,361 - Cost of sales 458,225 - 625,638 - ------------------------ ------------------------ Gross profit (loss) 12,666 - (5,277) - Costs and expenses: Manufacturing overhead 245,238 440,137 - General and administrative 908,842 771,648 1,521,733 1,396,163 Research and development 449,593 948,588 929,237 1,733,769 ------------------------ ------------------------ Total costs and expenses 1,603,673 1,720,236 2,891,107 3,129,932 ------------------------ ------------------------ Operating loss (1,591,006) (1,720,236) (2,896,384) (3,129,932) Other income (expense) Interest and other income 49,641 107,467 85,643 188,214 ------------------------ ------------------------ Net loss ($1,541,366) ($1,612,769) ($2,810,741) ($2,941,718) ======================== ======================== Net loss per share ($0.03) ($0.04) ($0.05) ($0.07) ======================== ======================== Weighted average common shares outstanding 53,477,754 42,379,699 52,034,578 40,851,921 ======================== ========================
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, 1995 42,664,699 $426,646 $31,873,608 ($33,743,443) ($1,443,189) Issuance of shares for cash 10,000,000 100,000 4,604,733 4,704,733 Exercise of stock options and warrants 603,300 6,033 128,276 134,309 Issuance of common stock as payment of consulting fees 350,000 3,500 171,500 175,000 Net loss (2,810,741) (2,810,741) ----------------------------------------------------------------------- Balance, June 30, 1996 53,617,999 $536,179 $36,778,117 ($36,554,184) $ 760,112 =======================================================================
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, 1996 June 30, 1995 ------------- ------------- Cash flows from operating activities: Net loss ($2,810,741) ($2,941,718) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 235,015 88,106 Increase (decrease) from changes in Inventories (406,197) (178,180) Prepaid expenses and other assets 179,854 220,146 Accounts payable (645,873) (78,888) Accrued expenses (145,448) 159,573 Customer deposits (15,000) (16,100) ----------- ----------- Net cash from operating activities (3,608,390) (2,747,061) Cash flows used in investing activities: Acquisition of property and equipment (239,622) (315,196) ----------- ----------- Net cash used in investing activities (239,622) (315,196) Cash flows from financing activities: Proceeds from issuance of common stock and warrants 4,704,733 6,000,000 Proceeds from exercise of warrants 134,309 (409,092) Repayment of loan payable to related party (1,000,000) - ----------- ----------- Net cash from financing activities 3,839,042 5,590,908 Net increase (decrease) in cash and cash equivalents (8,970) 2,528,651 Cash and cash equivalents, beginning of period 12,370 7,809 ----------- ----------- Cash and cash equivalents, end of period $ 3,400 $ 2,536,460 =========== ===========
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 December 31, 1995. 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, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. 2. Inventories The components of inventory consist of the following:
June 30, December 31, 1996 1995 ---------- ----------- Raw Material $ 644,314 $447,167 Work-in-Progress 214,136 254,393 Finished Goods 349,307 100,000 ---------- -------- Total $1,207,757 $801,560 ========== ========
5 7 3. Stock Offerings On January 24, 1996, the Company completed a Share Purchase Agreement with V'Power Corporation which provided for the Company's issuance of 10,000,000 common shares to V'Power Corporation at a price of $.45 per share. The Share Purchase Agreement also provided that the Company, in exchange for $500,000, enter into an option agreement whereby the Company issued to V'Power Corporation an option to acquire 50,000,000 additional common shares at a price of $.45 per share expiring on January 24, 1997. The Company received cash proceeds under this Share Purchase Agreement of $4,000,000, which was net of the payment of a $1,000,000 note payable to V'Power Corporation that was outstanding at December 31, 1995. V'Power currently owns 37,333,333 shares, or approximately 70%, of the Company's common stock. During 1996, the Company issued 603,300 shares upon exercise of options and warrants outstanding at exercise prices ranging from $.22 to $.38 per share. Pursuant to an agreement entered into in October 1995, with a consulting firm, the Company issued 350,000 shares of common stock to the firm in April 1996. 4. Contingencies As described below, the Company and Gerald A. Wiegert are parties to certain legal proceedings which arose principally in connection with the termination in 1993 of Mr. Wiegert as the Company's Chairman, President and Chief Executive Officer. The Company is also a party to certain legal proceedings against persons who acted with Mr. Wiegert in defiance of the Company's Board of Directors. In order to gain undisputed access and control over the Company's facilities, assets and business operations, on March 24, 1993, the Company filed an action in the Superior Court of California, Los Angeles County captioned as Vector Aeromotive Corporation v. Gerald A. Wiegert, requesting declaratory relief and a temporary restraining order. On September 14, 1993, the court granted the Company's motion for summary judgment on the declaratory judgment contained in the amended complaint. Specifically, the court entered an order (i) declaring that the Board properly exercised its authority to remove Mr. Wiegert as an officer of the Company; (ii) enjoining Mr. Wiegert from any further dealing with the property or interests of the Company; and (iii) calling for an orderly transfer of day-to-day management of the Company to the 6 8 Board. To date, the Company believes that Mr. Wiegert has complied with the September 14, 1993 court order by refraining from participation in Company affairs and by transferring day-to-day management of the Company to the Board. Although the court granted summary judgment in favor of the Company on its claim for declaratory relief and undisputed, physical control of the Company has been returned to the Board, all other claims in the Company's amended complaint are pending. These claims seek monetary damages in an amount to be proven at trial. Mr. Wiegert has asserted various claims against the Company, including claims for unpaid rent on the Company's former principal facility, which was leased by the Company from Mr. Wiegert; breach of employment agreement; and for the return of business assets which Mr. Wiegert alleges are owned by him rather than by the Company. These claims have been asserted in a separate action filed in the Superior Court of California for Los Angeles County on September 27, 1993 captioned Gerald A. Wiegert v. Vector Aeromotive Corporation. Mr. Wiegert's complaint was dismissed by the court because it contained claims which should have been asserted as cross-claims within the Company's original action against Mr. Wiegert. In February 1994, Mr. Wiegert filed a cross-complaint against the Company, its directors, and its outside securities counsel alleging, among other things, breach of employment contract; breach of covenant of good faith and fair dealing; intentional and negligent misrepresentation; interference with contractual advantage and business interest; negligent and intentional infliction of emotional distress; and libel and slander. The Company has challenged the legal sufficiency of the cross-complaint, including subsequent amendments thereof, resulting in elimination of all claims except the claims concerning breach of employment contract by the Company, unpaid rent, conversion, libel and slander. The Company plans to file a motion for summary judgment for the purpose of eliminating Mr. Wiegert's causes of action for conversion, libel, slander and conspiracy. In another action filed by Mr. Wiegert as general partner of Vector Car entitled Vector Car v. Vector Aeromotive Corporation, et al., Mr. Wiegert alleges that the Company assumed a Vector Car debt owed to him of approximately $325,000 and that the Company is obligated to Vector Car under the terms of a $250,000 promissory note payable to Vector Car. The Company intends to vigorously defend this action. The three aforementioned actions between the Company and Mr. Wiegert are expected to be tried in late 1996. 7 9 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General Early in the year, the Company rapidly increased its number of employees to facilitate an aggressive start up in the manufacture of the Vector M12. However, developmental issues threatened product quality. These development issues were overcome, but the Company subsequently needed to implement a plan to increase its production efficiency and reduce operating costs. In July, 1996, the Company reduced its work force from 78 to 30 employees, limiting its production capacity to one car per month. In order to ensure that the M12 continues to meet the Company's strict quality standards, production rates will be increased carefully and may now grow slower than originally planned. The Company currently plans to produce the Ml2 at a rate of 1 car per week in mid 1997; however, no assurances can be given that the Company will be able to meet this targeted rate of build. During the first six months of 1996, the Company has sold four of the newly launched Vector Ml2 exotic sports cars and market interest remains strong. Results of Operations Net loss for the second quarter of 1996 was $1,541,366 compared to a net loss of $1,612,769 for the second quarter of 1995. For the period ended June 30, 1996, the Company had a net loss of $2,810,741 compared to $2,941,718 for the comparable period of 1995. Cost of sales related to the sale of the four M12s was significantly higher than costs per vehicle anticipated later this year when production efficiencies are expected to increase substantially. The Company's manufacturing overhead consists of the costs associated with its purchasing, quality, manufacturing engineering, and operations management departments. Costs related to these departments totaled $245,238 in the second quarter of 1996 and $440,137 year to date. General and administrative expenses for the second quarter of 1996 increased approximately 18% compared to the second quarter of 1995 and increased 9% year to date in 1996, compared to 1995 as a result of new staffing and related costs of the Company's sales and marketing department. Additionally 8 10 compensation expense of $87,500 was recorded in the second quarter relating to the issuance of 350,000 shares of common stock pursuant to an agreement entered into in October, 1995 with a consulting firm. Research and development costs in the second quarter of 1996 for continuing development of the M12, including refining manufacturing and assembly procedures totaled $449,593 and were 53% lower than the second quarter of 1995. Research and development costs for six months ended June 30, 1996, totaled $929,237 and were 46% lower than the previous year. Liquidity and Capital Resources As previously reported, the Company entered into an agreement in January 1996 from which $3.7 million, net of stock offering costs, and the repayment of $1,000,000 previously loaned in 1995 was received. Cash used during the first six months of 1996 was primarily for completion of development and production of the M12s and operating expenses. Although the Company anticipates generating an increasing revenue stream from M12 sales, the Company expects continued losses and negative cash flow through the remainder of 1996. Because of the delay in production start up and the resulting delay in vehicle sales a further cash infusion to sustain operations is necessary. The Company has reached a preliminary agreement with an individual investor for a $1 million equity infusion over the next six months ($100,000 of which was funded in July, 1996) in exchange for newly issued common stock of the Company. The Company is also evaluating various additional financing alternatives, however, there are no other commitments to provide additional capital; and there can be no assurance that such funding will be available when needed, or if available, that its terms will be favorable or acceptable to the Company. Should the Company be unable to obtain additional capital, when and if needed it could be forced to either curtail operations or cease business activities altogether. At June 30, 1996, the Company was not in compliance with the minimum listing standards of the Nasdaq Small Cap Market and faces the possibility of delisting. The Company is, however, in the process of formulating a definitive plan to meet its continued Nasdaq listing requirements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of the Company was held on May 22, 1996. The following matters were voted on and approved by a majority of the Company's shareholders: 1. Election of five board of directors: a. Sudjaswin E.L. - 46,137,509 votes in favor, 134,914 votes withheld b. D. Peter Rose - 46,144,472 votes in favor, 127, 951 votes withheld c. Michael J. Kimberley - 46,136,602 votes in favor, 135,821 votes withheld d. George J. Fencl - 46,140,901 votes in favor, 131,522 votes withheld e. Richard J. Aprahamian - 46,140,387 votes in favor, 132,036 votes withheld; 2. Amend the Company's 1994 Omnibus Stock Plan to increase the total number of Common Shares authorized to be issued thereunder from 1,000,000 to 2,500,000; 45,527,872 shares voted in favor, 380,695 shares voted against, 62,057 shares abstained; 3. Ratify the appointment of BDO Seidman as independent auditors for the Company for fiscal year 1996; 46,103,495 shares voted in favor, 112,410 shares voted against, 56,554 shares abstained. ITEM 6. EXHIBITS AND REPORTS ON THE FORM 8-K The Company filed a Form 8-K on April 18, 1996 reporting under Item 5. 9 11 Exhibits 27.01 Financial Data Schedule (for SEC use only) 10 12 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 14, 1996 By: /s/ D. PETER ROSE -------------------------------------- D. Peter Rose President Date: August 14, 1996 By: /s/ JANNA L. CONNOLLY -------------------------------------- Janna L. Connolly Chief Accounting Officer 11 EX-27.01 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 3,400 0 15,251 0 1,207,757 1,310,609 1,403,983 590,638 2,303,549 1,543,437 0 0 0 536,179 223,933 2,303,549 620,361 620,361 625,638 625,638 2,891,107 0 0 (2,810,741) 0 (2,810,741) 0 0 0 (2,810,741) (.05) 0
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