FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the six months ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] for the transition period from to Commission file number 0-17303 VECTOR AEROMOTIVE CORPORATION (Exact name of registrant as specified in its charter) NEVADA 33-0254334 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 975 MARTIN AVENUE GREEN COVE SPRINGS, FLORIDA 32043 (Address of principal executive offices, including Zip Code) Registrant's telephone number, including area code (904) 529-0092 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 No X APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value per share; 53,609,387 shares outstanding as of June 30, 1997 Vector Aeromotive Corporation Condensed Balance Sheets (Unaudited) June 30, June 30, 1997 1996 -------------------------------------------------------- Assets Current Assets: Cash and cash equivalents $ 7,382 $ 3,400 Inventories 556,612 1,207,757 Prepaid Expenses - 84,201 Accounts and other receivables - 15,251 ------------------------------------------------------- Total current assets 563,994 1,310,609 Property & Equipment 115,952 813,345 Other Assets 1,850 179,594 -------------------------------------------------------- Total assets $ 681,796 $ 2,303,549 ======================================================== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 728,218 $ 852,794 Accrued expenses 198,994 487,443 Other payables 315,138 - Loans payable to related parties 423,407 178,200 Customer deposits 25,000 25,000 ------------------------------------------------------- Total current liabilities 1,690,757 1,543,437 ------------------------------------------------------- Long term liabilities Loans payable to related parties 1,199,130 - Notes payable 250,000 - ------------------------------------------------------- Total long term liabilities 1,449,130 - ------------------------------------------------------- Total liabilities 3,139,887 1,543,437 ------------------------------------------------------- Stockholders' equity Common stock, par value $ 536,395 $ 536,179 $.01 per share, 600,000,000 shares authorized; issued and outstanding: 53,609,387 in 1997 and 53,609,387 in 1996 Capital in excess of par value 36,786,109 36,778,117 Accumulated deficit (39,780,595) (36,554,184) -------------------------------------------------------- Total stockholders' equity (2,458,091) 760,112 -------------------------------------------------------- Total liabilities and stockholders' equity $ 681,796 $ 2,303,549 ====================================================== See accompanying notes to unaudited condensed financial statements. Vector Aeromotive Corporation Condensed Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 --------------------------------------------------------- Sales $ - $ 470,891 $ - $ 620,361 Cost of sales - 458,225 - 625,638 --------------------------------------------------------- Gross profit (loss) - 2,666 - (5,277) --------------------------------------------------------- Costs and expenses Manufacturing overhead - 245,238 - 440,137 General and administrative 173,972 908,842 423,515 1,521,733 Research and development - 449,593 - 929,237 --------------------------------------------------------- Total costs and expenses 173,972 1,603,673 423,515 2,891,107 --------------------------------------------------------- Operating profit (loss) (173,972) (1,591,006) (423,515) (2,896,384) --------------------------------------------------------- Other income (expense) Interest and other income - 49,641 - 85,643 Interest expense (9,352) - (18,705) - ----------------------------------------------------------- Net profit (loss) $ (183,325) (1,541,366) (442,220) (2,810,740) ========================================================= Net profit (loss) per share ($0.00) ($0.03) ($0.01) ($0.05) Weighted average common shares outstanding 53,609,387 53,477,754 53,609,387 52,034,578 =========================================================== See accompanying notes to unaudited condensed financial statements. Vector Aeromotive Corporation Condensed Statement of Shareholders' Equity (Unaudited) Capital in Common Stock Excess Of Accumulated Shares Amount Par Value Deficit Total ----------------------------------------------------------- Balance, December 31, 1996 53,639,599 $536,396 $36,786,109 $(39,338,376) $(2,015,871) Net Profit (loss) (442,220) (442,220) ----------------------------------------------------------- Balance,June 30, 1997 53,639,599 $536,396 $36,786,109 $(39,780,595) $(2,458,091) =========================================================== See accompanying notes to unaudited condensed financial statements. Vector Aeromotive Corporation Condensed Statements of Cash Flows (Unaudited) Six Months Six Months Ended Ended June 30, 1997 June 30, 1996 ---------------------------------------------------------- Cash flows from operating activities: Net profit (loss) $ (442,220) $(2,810,741) Adjustments to reconcile net profit (loss) to net cash used in operating activities Depreciation and amortization 8,046 235,015 (Increase) decrease in Accounts receivable 155,000 - Inventories - (406,197) Prepaid expenses and other assets 15,628 179,854 Increase (decrease) in Accounts payable 18,007 (645,873) Accrued expenses (1,020) (145,448) Other payables 13,646 - Customer deposits - 15,000 ---------------------------------------------------------- Net cash used in operating activities (232,913) (3,608,390) ---------------------------------------------------------- Cash flows used in investing activities: Acquisition of property and equipment - (239,622) ---------------------------------------------------------- Net cash used in investing activities - (239,622) ---------------------------------------------------------- Cash flows from financing activities: Proceeds from issuance of common stock and warrants - 4,704,733 Proceeds from exercise of warrants - 134,309 Repayment of loan payable to related party - (1,000,000) Loan payable American Dream Int'l 206,430 - ---------------------------------------------------------- Net cash from financing activities 206,430 3,839,042 ---------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (26,483) (8,970) Cash and cash equivalents, beginning of period 33,864 12,370 ---------------------------------------------------------- Cash and cash equivalents, end of period 7,38 3,400 ========================================================== See accompanying notes to unaudited condensed financial statements. Vector Aeromotive Corporation 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 Notes to Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 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, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. 2. Inventories The components of inventory consist of the following: June 30, June 30, 1997 1996 ------------------------------------------- Raw Material $ 223,666 $ 644,314 Work-in Progress 48,666 214,136 Finished Goods 284,280 349,307 ------------------------------------------- Total $ 556,612 $1,207,757 =========================================== 3. Payables to Related Parties As of June 30, 1997, the Company owed a total of $847,229 to Automobili Lamborghini S.p.A., $568,577 to Automobili Lamborghini U.S.A., Inc., and $206,430 to American Dream International Limited. 4. Notes Payable to Unrelated Parties As of June 30, 1997, the Company had borrowed a total of $250,000 uncollateralized, from an unrelated party accruing interest at 9%. No principle or interest payments have been made. PART 1 - FINANCIAL INFORMATION ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General Vector Aeromotive Corporation (the "Company") ceased operations November 1996 due to a lack of funds. In January 1997, a letter of intent was exchanged among the Company, V'Power Corporation, Automobili Lambourghini U.S.A., Inc., Automobili Lambourghini S.p.A. and American Dream International Limited (formally Tradelink International Limited)("American Dream"). Based upon the letter of intent American Dream commenced funding a loan to the Company pending preparation and signing of final agreements. By June 30, 1997 American Dream had loaned $206,429 to the Company of which $94,077 was loaned in the 2nd quarter of 1997. Results of Operations For the three months ended June 30, 1997, the Company had a net loss of $183,325 compared to a net loss of $1,541,366 for the comparable period of 1996. For the period ended June 30, 1997, the Company had a net loss of $442,220 compared to a net loss of $2,810,741 loss for the comparable period of 1996. The Company was not in operation during this period in 1997 except to negotiate with American Dream. Liquidity and Capital Resources During the second quarter the Company borrowed $ 94,077 from American Dream. This was the only source of cash for the quarter. The Company did not have any other sources available to it to raise additional capital. The Company was negotiating with American Dream for the possibility of additional funding. The lack of liquidity and capital resources raised substantial doubt about the Company's ability to continue as a going concern. 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 By: /s/ Timothy J. Enright Timothy J. Enright, President Date: March 27, 1998 By: /s/ Lily Beter Lily Beter, Chief Financial Officer Date: March 27, 1998