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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 quarter ended Commission file number
March 31, 1995 000-17303
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 May 12, 1995
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TABLE OF CONTENTS
PAGE
PART I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation 8
PART II
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
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Vector Aeromotive Corporation
Condensed Balance Sheets
(Unaudited)
March 31, December 31,
1995 1994
----------- -------------
Assets
- --------------------------------------------------
Current assets:
Cash and cash equivalents $ 4,080,966 $ 7,809
Inventories 466,347 286,347
Prepaid expenses 60,913 12,789
Accounts receivable 15,388 50,000
Other receivable 10,281 232,804
----------- -----------
Total current assets 4,633,895 589,749
Property and equipment 650,132 567,861
Other assets 137,180 137,180
----------- -----------
$ 5,421,207 $ 1,294,790
=========== ===========
Liabilities and Stockholders' Equity
- ---------------------------------------------------
Current liabilities:
Accounts payable $ 432,206 $ 528,170
Accrued expenses 99,619 114,886
Interest payable 47,207 47,207
Note payable to related party 178,200 178,200
Customer deposits 30,000 65,000
----------- -----------
Total current liabilities 787,232 933,463
----------- -----------
Contingencies (Note 6)
----------- -----------
Total liabilities 787,232 933,463
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 31,630,004 26,211,740
Accumulated deficit (27,419,825) (26,090,876)
----------- -----------
Total stockholders' equity 4,633,975 361,327
----------- -----------
$ 5,421,207 $ 1,294,790
=========== ===========
See accompanying notes to unaudited condensed financial statements.
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Vector Aeromotive Corporation
Condensed Statements of Operations
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1995 March 31, 1994
-------------- --------------
Sales - -
Cost of sales - -
Gross profit - -
Costs and expenses
Salaries and wages $ 111,658 $ 94,676
Rental expense 36,659 83,654
Utilities 845 8,550
Research and development 785,181 83,169
Depreciation and amortization 29,590 30,762
Advertising and promotion 3,153 42,432
Professional fees 194,277 315,605
General and administrative 248,333 393,530
----------- -----------
Total costs and expenses 1,409,696 1,052,378
----------- -----------
Operating loss (1,409,696) (1,052,378)
Other income (expense)
Interest and other income 80,747 34,767
Other expense 0 (14,397)
----------- -----------
Net loss ($1,328,949) ($1,032,008)
=========== ===========
Net loss per share ($0.03) ($0.05)
=========== ===========
Weighted average common shares
outstanding 39,324,144 24,526,629
=========== ===========
See accompanying notes to unaudited condensed financial statements.
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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 (398,403) (398,403)
Net loss (1,328,949) (1,328,949)
------------------------------------------------------------------------------------
Balance, March 31, 1995 42,379,699 $423,796 $31,630,004 ($27,419,825) $4,633,975
====================================================================================
See accompanying notes to unaudited condensed financial statements.
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Vector Aeromotive Corporation
Condensed Statements of Cash Flows
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1995 March 31, 1994
-------------- --------------
Cash flows from operating activities:
Net loss ($1,328,949) ($1,032,008)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 29,590 54,611
Increase (decrease) from changes in
Inventories (180,000)
Other receivable 222,523
Prepaid expenses and other assets (13,512) (114,234)
Accounts payable (95,964) (113,315)
Accrued expenses (15,267) (360,980)
Customer deposits (35,000)
----------- -----------
Net cash from operating activities (1,416,579) (1,565,926)
Cash flows used in investing activities:
Acquisition of property and equipment (111,861) (134,672)
----------- -----------
Net cash used in investing activities (111,861) (134,672)
Cash flows from financing activities:
Proceeds from issuance of common stock
and warrants 6,000,000 2,380,500
Stock offering costs (398,403)
----------- -----------
Net cash from financing activities 5,601,597 2,380,500
Net increase (decrease) in cash and cash
equivalents 4,073,157 679,902
Cash and cash equivalents, beginning of period 7,809 2,378,012
----------- -----------
Cash and cash equivalents, end of period $ 4,080,966 $ 3,057,914
=========== ===========
See accompanying notes to unaudited condensed financial statements.
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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 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 was 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
three months ended March 31, 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:
March 31, Dec. 31,
1995 1994
--------- --------
Raw material $286,347 $286,347
Finished goods 180,000 -
-------- --------
Total $486,347 $286,347
======== ========
During the first quarter of 1995, the Company repurchased one of its
Vector W8 automobiles from Lamborghini USA for cash.
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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 $398,403, were charged against capital in excess of par.
4. Other Receivable
In January, 1995, a settlement was reached for $125,385 regarding the
March, 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 in exchange
for certain consideration of which will be completed during 1995. 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. Wiegert's (the former President of the Company) employment
as an officer and employee of the Company should be terminated. Mr.
Wiegert 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. Wiegert is the subject of an ongoing civil
lawsuit which was commenced by the Company on March 24, 1993.
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On September 14, 1993, the company obtained a court order confirming the
validity of Mr. Wiegert'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. Wiegert, and by Mr. Wiegert 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. Wiegert 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. Wiegert. 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 and a company (the "Plaintiffs") 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
Plaintiffs performed services with respect to a public offering and that
under the terms of a finder's agreement, the Plaintiffs are entitled to
compensation for services allegedly rendered in connection with the public
offering. The Plaintiffs are seeking special damages of $155,000 plus
interest from August 19, 1991 and general damages in the sum of $500,000
plus interest from August 19, 1991. The Company believes that it will
prevail in its defense of this action.
In 1994, Mr. Wiegert, 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. Wiegert has filed an application with the United States Patent and
Trademark Office to register "Avtech" as a trademark. The Company is
opposing Mr. Wiegert's application.
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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 been the focus of activities during the
past quarter. Engine development to satisfy emission and other performance
requirements has been continuously undertaken through the design and
development contract with automobili Lamborghini in Italy. This work will be
concluded on a new prototype vehicle, "EPA2", which will be delivered to Italy
on schedule in late May.
Chassis and body prototypes have been built to validate the photometric
compliance of the lighting systems, the installation of the various sub-systems
in the car, and the deployment of the driver and passenger air bag systems.
Goals were set at the start of the year to increase the torsional stiffness and
simultaneously reduce the weight of the chassis. These goals have been
achieved.
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
in August with the first vehicles available for sale in October.
Results of Operations
The Company recorded no automobile sales during the quarter ended March 31,
1995 and 1994.
Total costs and expenses for the first quarter of 1995 increased $357,318 or
approximately 34% compared to the first quarter of 1994, due to the increased
research and development activity.
Total costs spent on research and development for the first quarter of 1995
were $785,181 as compared to $83,169 in 1994, an increase of $702,012.
Salaries and wages increased by 16,982 or 18% due to recent staffing increases
in the administrative department. Rental expense and utilities have decreased
$54,700 or 59% in total due to lower costs as a result of relocating the
Company's facilities to Florida.
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Professional fees have decreased $121,328 or 38% from the first quarter of 1994
due to the significant amount of legal fees incurred in connection with the
Company's litigation with its former President in 1994.
General and administrative expenses have decreased by $145,197 or 37% compared
to 1994 due to Director's fees totaling approximately $125,000 paid in the
first quarter of 1994 to the Company's former Board of Directors.
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
March 31, 1995, the balance of the Company's cash and equivalents is
approximately $4 million. Cash used during the first quarter of 1995 was
primarily for engineering research and development and tooling.
The Company remains on target for production and sale of the Avtech SC Coupe in
the fall of this year, and believes that the remaining funds are sufficient to
support its planned operations during the remainder of this year.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the registrant was held on March 29,
1995. At the meeting, the shareholders approved by a vote of 15,329,300 for,
82,490 against and 21,310 abstaining the amendment of the registrant's Articles
of Incorporation to increase the number of authorized Common Shares of the
registrant from 60 million shares to 600 million shares.
ITEM 5. OTHER INFORMATION
Effective April 18, 1995, pursuant to the previously reported Share Purchase
Agreement with V'Power Corporation ("VPC") dated January 5, 1995, the
registrant completed the issuance to VPC of a twelve-month option to purchase
50 million of the registrant's Common Shares at a price of $.43 per share. As
a result of this transaction, VPC currently beneficially owns approximately 85%
of the registrant's outstanding Common Shares.
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ITEM 6, EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
3.01 Amendment effective April 13, 1995 to the registrant's Articles of
Incorporation.
10.01 Agreed contract between Vector Aeromotive Corporation and automobili
Lamborghini, S.p. A. for Engine Development Program and Engine
Purchase Agreement.
27.01 Financial Data Schedule.
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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/ D. Peter Rose
--------------------------------
D. Peter Rose
President
/s/ Sultaman G. Lubis
---------------------------------
Sultaman G. Lubis
Chief Financial Officer, Treasurer