FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of NOVEMBER , 1997
-------------
TURBODYNE TECHNOLOGIES INC.
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(Translation of registrant's name into English)
SUITE 1550, WARNER CENTER, 21700 OXNARD ST, WOODLAND HILLS, CA 91367
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---------- ---------
[Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--------- ---------
[If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):82
------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TURBODYNE TECHNOLOGIES INC.
---------------------------
(Registrant)
Date: DECEMBER 1, 1997 By: /s/ Andrew Lee
---------------- -----------------------
Andrew Lee
Corporate Secretary and Controller
*Print the name and title of the signing officer under his signature
<PAGE>
FORM 61
QUARTERLY REPORT
INCORPORATED AS PART OF: X SCHEDULE A
________
ISSUER DETAILS:
NAME OF ISSUER: TURBODYNE TECHNOLOGIES INC.
ISSUER ADDRESS: #510 - 1090 West Pender Street
Vancouver, B.C.
V6E 2N7
CONTACT PERSON: Leon E. Nowek
CONTACT'S POSITION: Director/C.F.O.
CONTACT TELEPHONE NUMBER: 682-8854
FOR QUARTER ENDED: September 30, 1997
DATE OF REPORT: November 28, 1997
CERTIFICATE
THE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A
COPY OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS
IT. PLEASE NOTE THAT THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED
FILING OF SCHEDULE A AND SCHEDULES B AND C.
LEON E. NOWEK LEON E. NOWEK 97/11/28
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN DATE SIGNED
EUGENE A. HODGSON EUGENE A. HODGSON 97/11/28
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN DATE SIGNED
<PAGE>
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(STATED IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
SEPTEMBER 30 SEPTEMBER 30
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $10,980 $ 2,778
Accounts receivable 10,251 5,903
Advances receivable 496 155
Inventories 9,415 4,780
Prepaid expenses and deposits 2,506 1,142
Deferred tax assets 345 388
------------------------
33,993 15,146
CAPITAL ASSETS 20,061 13,307
PRODUCT DEVELOPMENT COSTS 14,888 7,373
GOODWILL 20,417 21,507
OTHER 96 358
------------------------
$89,455 $57,691
======================================================================
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 7,815 $ 5,603
Notes payable 115 5,860
Current portion of long term debt 1,729 1,004
------------------------
9,659 12,467
LONG TERM DEBT 13,099 1,447
DEFERRED INCOME TAX 1,473 1,356
SHARE SUBSCRIPTIONS RECEIVED - 150
------------------------
24,231 15,420
------------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL - COMMON 57,240 28,664
- PREFERENCE 13,351 -
SPECIAL WARRANTS 3,951 18,135
DEFICIT (9,525) (4,543)
CUMULATIVE TRANSLATION ADJUSTMENT 207 15
------------------------
65,224 42,271
------------------------
$89,455 $57,691
======================================================================
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
9 Months Ended 9 Months Ended
September 30, September 30,
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 39,410 $ 9,315
COST OF GOODS SOLD 31,479 7,839
-------------------------
GROSS PROFIT 7,931 1,476
OPERATING EXPENSES 10,204 2,751
-------------------------
OPERATING LOSS (2,273) (1,275)
-------------------------
NON OPERATING ITEMS
Interest income 46 185
Interest expense (829) (247)
Other - (31)
Amortization of goodwill (817) (272)
-------------------------
(1,600) (365)
-------------------------
LOSS BEFORE PROVISION FOR INCOME TAXES (3,873) (1,640)
PROVISION FOR INCOME TAXES 159 -
-------------------------
NET LOSS FOR THE PERIOD (4,032) (1,640)
DEFICIT, BEGINNING OF PERIOD (5,461) (2,903)
-------------------------
$ (9,493) $ (4,543)
DIVIDENDS 32 -
-------------------------
DEFICIT, END OF PERIOD (9,525) (4,543)
======================================================================
LOSS PER SHARE (0.16) (0.09)
========================
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
9 Months 9 Months
Ended Ended
September 30, September 30,
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Loss for the period $ (4,032) $ (1,640)
Add non cash items
Amortization of goodwill 817 272
Depreciation 1,799 618
-------------------------
(1,416) (750)
Change in non cash working capital items (6,704) 1,416
-------------------------
(8,120) 666
-------------------------
FINANCING ACTIVITIES
Proceeds from debt obligations 6,231 3,221
Repayment of debt obligations (1,181) (2,897)
Issue of common shares 8,825 21,747
Issue of preference shares 13,351 -
Issue of special warrants - 18,135
Dividends (32) -
Shares subscriptions received - 150
-------------------------
27,194 40,356
-------------------------
INVESTING ACTIVITIES
Acquisition of subsidiary operations - (32,370)
Capital assets (net of depreciation
allocated to product development costs) (6,320) (2,453)
Product development costs (6,020) (3,372)
Other (58) (358)
-------------------------
(12,398) (38,553)
-------------------------
NET INCREASE IN CASH 6,676 2,469
CASH, BEGINNING OF PERIOD 4,304 309
-------------------------
CASH, END OF PERIOD $ 10,980 $ 2,778
======================================================================
</TABLE>
<PAGE>
FORM 61
QUARTERLY REPORT
INCORPORATED AS PART OF X SCHEDULES B & C
-----
ISSUER DETAILS:
NAME OF ISSUER: TURBODYNE TECHNOLOGIES INC.
ISSUER ADDRESS: #510 - 1090 West Pender Street
Vancouver, B.C.
V6E 2N7
CONTACT PERSON: Leon E. Nowek
CONTACT'S POSITION: Director/C.F.O.
CONTACT TELEPHONE NUMBER: 682-8854
FOR QUARTER ENDED: September 30, 1997
DATE OF REPORT: November 28, 1997
CERTIFICATE
THE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A
COPY OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS
IT. PLEASE NOTE THAT THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED
FILING OF SCHEDULE A AND SCHEDULES B AND C.
LEON E. NOWEK LEON E. NOWEK 97/11/28
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN DATE SIGNED
EUGENE A. HODGSON EUGENE A. HODGSON 97/11/28
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN DATE SIGNED
<PAGE>
SCHEDULE B
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
1. For the current fiscal year-to-date:
Supplementary schedules -Consolidated Schedule of Deferred Product
Development Costs
-Consolidated Schedule of Operating Costs
(a) Aggregate amount of expenditures made to parties not at arm's length
to issuer:
Project management fees $336,000
Consulting fees $503,000
Rent (Ensenada facility) $186,000
(b) The following amounts are due from related parties:
Advances receivable from directors,
interest free and payable on demand $361,000
2. For the quarter under review:
(a) Summary of securities issued during the third quarter:
Common Shares:
<TABLE>
<CAPTION>
Type of
Date Type of Issue # Price Gross Consideration
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jul-97 Special Warrants
converted 4,013,000 17,446,917.50 Conversion
Jul-97 Warrants exercised 625,000 5.50 3,437,500.00 Cash
Jul-97 Options exercised 15,333 4.66 71,451.78 Cash
Aug-97 Options exercised 53,667 4.66 250,088.22 Cash
Sep-97 Options exercised 6,500 4.66 30,290.00 Cash
--------- -------------
TOTAL ISSUED 4,713,500 21,236,247.50
========= =============
</TABLE>
* Note:
Company's prospectus dated June 24, 1997 to qualify the Series "A" Special
Warrants was receipted effective June 27, 1997.
112,000 Series "A" Special Warrant holders tendered their warrants for
conversion before the June 30 month-end and the July 2, 1997 automatic
conversion date.
The remaining 4,013,000 Series "A" Special Warrants were automatically
converted on July 2, 1997.
625,000 ordinary share purchase warrants attached to the Special Warrants
were exercised and the remainder expired at 4:00 pm July 2, 1997.
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
2. (Continued)
(b) Summary of options granted during the quarter:
<TABLE>
<CAPTION>
Date Shares Price Expiry
----------------------------------------------
<S> <C> <C> <C>
None
</TABLE>
3. As at the end of the quarter:
(a) Issued and outstanding:
Authorized:
100,000,000 Common shares without par value
100,000,000 Class A preference shares without par value (none
issued)
100,000,000 Class B preference shares without par value (none
issued)
10,000 Series A convertible Class A preference shares
without par value
(i) Issued and Outstanding Common Shares:
<TABLE>
<CAPTION>
September 30, 1997
-------------------------------
Number
of Shares Amount
-------------------------------
<S> <C> <C>
Balance, beginning of the period 23,580,098 $ 30,438,092
Issued for cash
Private Placements (net of share
issue costs and finders fees of
$ nil (1996 - $164,060) - -
Exercise of Warrants 1,002,014 5,679,180
Exercise of incentive stock options 752,500 3,324,825
Conversion of Series "A" Special
Warrants (net of share issue
costs $179,098) 4,125,000 17,797,517
-----------------------------
Balance, end of the period 29,459,612 $ 57,239,614
=============================
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
3. (Continued)
(ii) Issued and Outstanding Series A convertible Class A Preference
Shares:
<TABLE>
<CAPTION>
September 30, 1997
-------------------------------
Number
of Shares Amount
-------------------------------
<S> <C> <C>
Balance, beginning of the period - $ -
Issued for cash
Private Placement (net of share
issue costs $91,577) 10,000 13,350,983
--------------------------
Balance, end of the period 10,000 $13,350,983
==========================
</TABLE>
(b) Summary of warrants outstanding:
<TABLE>
<CAPTION>
Exercised Subsequent to Sept 30/97
----------------------------------
Exercise
# Expiry Date Price # Gross
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
33,333 December 1, 1998 4.50 US$ - -
</TABLE>
Summary of options outstanding:
<TABLE>
<CAPTION>
Exercised Subsequent to Sept 30/97
----------------------------------
Exercise
# Expiry Date Price # Gross
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
107,000 December 27, 1997 4.66 2,000 9,320
231,000 February 27, 1998 7.13 - -
475,000 September 3, 1998 9.00 - -
305,000 September 12, 1998 9.00 - -
480,000 January 6, 1999 9.85 - -
230,000 August 17, 1999 4.75 - -
1,511,500 March 2, 2002 4.50 US$ - -
- ---------
3,339,500
=========
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
3. (Continued)
Summary of Series "C" special warrants outstanding:
<TABLE>
<CAPTION>
Exercised Subsequent to Sept 30/97
----------------------------------
Exercise
# Expiry Date Price # Gross
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
500,000 For holders resident 4.50 US$ - -
in Ontario, June 30,
1998. For all other
holders December 31,
1997
</TABLE>
The Company has agreed to reduce the exercise price of the ordinary
warrants to be issued on deemed exercise of the Series "C" Special
Warrants from $9.50 (Cdn.) per share to $4.50 (U.S.) per share. In
addition, the Company has agreed to extend the exercise date of the Series
"C" Special Warrants and Series "C" Ordinary Warrants to December 31, 1997
for holders resident in jurisdictions other than Ontario. In the case of
holders resident in Ontario, the expiry date will be June 30, 1998 to
reflect the longer hold period required in Ontario.
(c) Total number of shares held in escrow: 4,150,000
Total number of shares subject to pooling: nil
(d) List of directors:
Edward M. Hallmi
Daniel Geronazzo
Leon E. Nowek
Wendell R. Anderson
Eugene A. Hodgson
Robert F. Taylor
Dr. S.K. Durairaj
Bruno Steinhauser
<PAGE>
SUPPLEMENTARY SCHEDULE 1
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED SCHEDULE OF OPERATING EXPENSES
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
9 Months 9 Months
Ended Ended
September 30 September 30
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Advertising and trade shows $ 494,000 $ 57,000
Bad debts 145,000 -
Bank charges, interest and exchange, net (21,000) 50,000
Consulting fees 1,808,000 238,000
Customs 101,000 30,000
Depreciation 277,000 48,000
Filing and transfer fees 57,000 66,000
Fiscal agency fees 211,000 123,000
Insurance 400,000 62,000
Investor relations 544,000 96,000
Management fees - 23,000
Occupancy 310,000 299,000
Office administration and sundry 655,000 58,000
Printing 63,000 19,000
Professional fees 765,000 422,000
Salaries and employee benefits 2,974,000 840,000
Telephone 165,000 49,000
Travel and business development 1,097,000 246,000
Vehicle 159,000 25,000
----------------------------
Total Operating Expenses $10,204,000 $2,751,000
========================================================================
</TABLE>
<PAGE>
SUPPLEMENTARY SCHEDULE 2
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED SCHEDULE OF DEFERRED PRODUCT DEVELOPMENT COSTS
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
9 Months 9 Months
Ended Ended
September 30 September 30
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Project consulting $105,000 $271,000
Depreciation of equipment used in development 163,000 116,000
Project management fees 336,000 62,000
Office expenses related to project space 151,000 124,000
Project space rent and occupancy costs 274,000 178,000
Project development (testing R&D,
evaluations) 2,544,000 1,531,000
Project staff salaries and benefits 2,471,000 1,257,000
Telephone and fax 87,000 36,000
Travel related to product testing and
evaluation 52,000 27,000
----------------------------
Deferred Product Development Costs
for the period 6,183,000 3,602,000
PRODUCT DEVELOPMENT COSTS, BEGINNING
OF PERIOD 8,705,000 3,771,000
----------------------------
PRODUCT DEVELOPMENT COSTS, END OF PERIOD $14,888,000 $7,373,000
========================================================================
</TABLE>
<PAGE>
SCHEDULE C
TURBODYNE TECHNOLOGIES INC.
MANAGEMENT DISCUSSION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(ALL REFERENCES IN CANADIAN DOLLARS)
Please find enclosed our consolidated financial results for the third quarter
of 1997. The Company continues to make very positive progress in both our
Turbodyne related technology as well as our auto parts and aluminum castings
divisions.
Turbodyne completed a three year $10 million U.S. Series One convertible Class
"A" Preference share (the "Class A Preferred") financing with GEM Advisors
Inc., a member of the London based Global Emerging Markets Group. Commission
paid to the brokers was 3% of the gross proceeds. The Class A Preferred accrue
cumulative dividends at a rate of 7% per annum and carry a conversion right
into common shares based on a conversion price determined by a conversion
formula. The holders of the Class A Preferred may convert into common shares
at any time after January 8, 1998 and prior to September 8, 2000. After
September 8, 2000, the outstanding shares of Series A Preferred automatically
convert to common shares.
The EPA published Turbodyne and Detroit Diesel's joint Urban Bus retrofit kit
application in October. This initiated a 45 Day comment period which will run
until December 21, 1997. The Company anticipates the formal certification of
this kit will now be granted in early January, 1998.
Joint testing of the urban bus retrofit kit by Detroit diesel and Turbodyne
continues to expand and now includes such transit companies as Milwaukee
Wisconsin, Toledo, Ohio, Washington, DC, Riverside, CA and Baltimore, MD. Test
results have not been published but appear to meet or exceed expectations in
both the pollution reduction and fuel economy areas. In addition the company
is working with the Gardner Group in England on a testing program with their
engines in both double decker buses and taxicabs.
The Company continues active discussion with a number of OEM's and fully
expects to finalize a supply agreement prior to the end of 1997. The addition
of Mr. Walter Ware as Chief Operating Officer, has had a significant impact on
the negotiating process with the various OEM's and is positively affecting the
Companies operational capabilities and its ability to produce large quantities
product on time to meet the demand of our customers. In addition, Mr. Ware is
currently recruiting the management expertise he requires to move forward in
both the production and sales areas.
Pacific Baja recorded sales of $39,410,000 Cdn ($28,558,000 U.S.) during the
nine months ending September 30th, 1997, which is on budget for year to date.
Third quarter sales were down from the prior two quarters due to the seasonal
decline in wheel sales throughout North America.
The costs of sales continued to be higher than budgeted due to the additional
cost of ramping up for the Navistar order during the first and second quarter.
In addition, the production group experienced a higher level of scapping and
recasting for the new product lines than was originally expected in order to
obtain the necessary quality levels for the new product lines.
<PAGE>
TURBODYNE TECHNOLOGIES INC.
MANAGEMENT DISCUSSION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(ALL REFERENCES IN CANADIAN DOLLARS)
Operating expenses were lower than budgeted during the third quarter, however
increased debt loads on the operating lines of credit resulted in a higher than
expected interest cost. Overall operating expenses of $4.6 million Cdn ($3.4
million U.S.) are slightly higher than the budgeted amount of $4.4 million Cdn
($3.2 million U.S.).
The September 30, 1996 comparative figures reflect the acquisition of the U.S.
subsidiary on July 2, 1996, hence, the 1996 results incorporate only three
months of Pacific Baja's financial operations from July 2, 1996 to September
30, 1996.
The immediate future for Baja, however, looks extremely positive. The Company
will soon close on the acquisition of a 120,000 square foot production facility
in Ensenada, Mexico which will double our capacity. The Navistar order will
also be in full production by the first quarter of 1998, which will have a very
positive effect on our cash flow for next year.
As well, the Mexican Government recently announced a 40% content law for all
vehicles produced in Mexico. Baja management has already been approached by a
number of auto markers to discuss the manufacturing of various aluminum casted
parts. We should feel the full impact of this new legislation by mid 1998.
The Company continues an active investor relations program in both North
America and Europe. In September senior management met with EQSDAQ officials
in Brussels including many senior European officials from both business and
government. The Company then participated in a European investor roadshow
sponsored by Investmentbank Austria and the Bayerische Vereinsbank, both of
whom are our market makers on EASDAQ.
Company officials continued to present at a variety of industry forums
including the American Public Transit Association in Nashville, the Society of
Automotive Engineers in San Diego and the American Trucking Show in Las Vegas.
At September 30, 1997, the Company maintained 3 individuals, in-house, for
investor relations services at a combined cost of $13,500 per month for no
fixed term.
During the quarter, the Company expended $1,851,000 on project development
costs related to the development and commercialization of the 1200, 2200, 2500
and 3000 series Turbopac products. To date the Company expended a cumulative
of $14,888,000 on product development costs.
The working capital of the Company at September 30, 1997 is a positive
$24,334,000.
No stock options were granted during the quarter.
<PAGE>
TURBODYNE TECHNOLOGIES INC.
MANAGEMENT DISCUSSION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(ALL REFERENCES IN CANADIAN DOLLARS)
Effective July 18, 1997, the Company formally delisted its shares from trading
on the Vancouver Stock Exchange. The Company continues to trade on NSADAQ
Small Capital Market under the symbol "TRBDF". In addition due to the
increased European business opportunities, the Company listed on EASDAQ July
30, 1997 where the Company's shares commenced trading under the symbol "TRBD".
The Company's Series "C" Special Warrant unit holders have agreed to a proposal
to reduce the exercise price of the ordinary warrants to be issued on deemed
exercise of the Series "C" Special Warrants from $9.50 (Cdn) per share to $4.50
(U.S.) per share in exchange for the unit holder waiving the Company's
obligation to qualify the issuance of shares. In addition, the Company has
agreed to extend the exercise date of the Series "C" Special Warrants and
Series "C" ordinary Warrants. For holders resident in jurisdiction other than
Ontario, the expiry date will be December 31, 1997. In the case of holders
resident in Ontario, the expiry date will be June 30, 1998 to reflect the
longer hold period required in Ontario.
Our corporate focus in the near term continues to be on both formalizing our
relationship with a significant OEM partner and improving our production
expertise to meet increased anticipated customer demand once the Turbopac 2500
is certified by the EPA in early January 1998.
