FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, C.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 September , 1997
------------------------------- -------------
TURBODYNE TECHNOLOGIES INC.
- ------------------------------------------------------------------
(Translation of registrant's name into English)
Suite 510, 1090 West Pender Street, Vancouver, BC, Canada, V6E 2N7
- ------------------------------------------------------------------
(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.
September 10, 1997
- ------------------
Date
/s/ Andrew Lee
-----------------------------
Signature
Andrew O.D. Lee
-----------------------------
Name
Secretary
-----------------------------
Title
*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: June 30, 1997
DATE OF REPORT: September 3, 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 97/09/03
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
EUGENE A. HODGSON EUGENE A. HODGSON 97/09/03
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
<PAGE>
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(STATED IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
June 30 June 30
1997 1996
------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash $ 1,060 $ 2,400
Accounts receivable 11,787 82
Advances receivable 551 51
Inventories (Note 3) 9,368 -
Prepaid expenses and deposits 1,298 140
Deferred tax assets 345 -
----------------------
24,409 2,673
CAPITAL ASSETS 18,887 1,412
PRODUCT DEVELOPMENT COSTS 13,037 5,528
GOODWILL 20,689 -
DEFERRED ACQUISITION COSTS - 713
OTHER 227 -
----------------------
$77,249 $10,326
=======================================================================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 10,824 $ 434
Notes payable 199 6
Current portion of long term debt 1,742 34
----------------------
12,765 474
LONG TERM DEBT 13,378 114
DEFERRED INCOME TAX 1,470 -
SHARE SUBSCRIPTIONS RECEIVED 154 -
----------------------
27,767 588
----------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 36,004 13,722
SPECIAL WARRANTS 21,440 -
DEFICIT (8,148) (3,984)
CUMULATIVE TRANSLATION ADJUSTMENT 186 -
----------------------
49,482 9,738
----------------------
$ 77,249 $10,326
=======================================================================
</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>
6 Months 6 Months
Ended June Ended June
30, 1997 30, 1996
------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 27,668 $ -
COST OF GOODS SOLD 21,576 -
----------------------
GROSS PROFIT 6,092 -
OPERATING EXPENSES 7,079 1,081
----------------------
OPERATING LOSS (987) (1,081)
----------------------
NON OPERATING ITEMS
Interest income 35 -
Interest expense (518) -
Other - -
Amortization of goodwill (545) -
----------------------
(1,028) -
----------------------
LOSS BEFORE PROVISION FOR
INCOME TAXES (2,015) (1,081)
INCOME TAXES PROVISION 672 -
----------------------
NET LOSS FOR THE PERIOD (2,687) (1,081)
DEFICIT, BEGINNING OF PERIOD (5,461) (2,093)
----------------------
DEFICIT, END OF PERIOD $(8,148) $(3,984)
======================================================================
LOSS PER SHARE $ (0.11) $ (0.06)
======================
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended June Ended June
30, 1997 30, 1996
------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Loss for the period $(2,687) $(1,081)
Add non cash items
Amortization of goodwill 545 -
Depreciation 1,248 7
----------------------
(894) (1,074)
Change in non cash working capital items (4,055) 167
----------------------
(4,949) (907)
----------------------
FINANCING ACTIVITIES
Proceeds from debt obligations 6,551 129
Repayment of debt obligations (1,125) (228)
Issue of common shares 5,078 6,121
Shares subscriptions received 154 -
----------------------
10,658 6,022
----------------------
INVESTING ACTIVITIES
Capital assets (net of depreciation allocated
to product development costs (4,536) (722)
Product development costs (4,228) (1,816)
Deferred acquisition costs - (486)
Other (189) -
----------------------
(8,953) (3,024)
----------------------
NET (DECREASE) INCREASE IN CASH (3,244) 2,091
CASH, BEGINNING OF PERIOD 4,304 309
----------------------
CASH, END OF PERIOD $ 1,060 $ 2,400
=======================================================================
</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: June 30, 1997
DATE OF REPORT: September 3, 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 97/09/03
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
EUGENE A. HODGSON EUGENE A. HODGSON 97/09/03
- ----------------------------------------------------------------------------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
<PAGE>
SCHEDULE B
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE SIX MONTHS ENDED JUNE 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 $ 247,122
Consulting fees $ 397,974
Rent (Ensenada facility) $ 123,600
a. The following amounts are due from related parties:
Advances receivable from directors,
interest free and payable on demand $ 62,969
1. For the quarter under review:
(a) Summary of securities issued during the second quarter:
Common Shares:
<TABLE>
<CAPTION>
Type of
Date Type of Issue # Price Gross Consideration
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apr-97 Options exercised 1,400 7.13 9,982.00 Cash
May-97 Options exercised 135,000 4.20 567,000.00 Cash
May-97 Options exercised 15,000 4.75 71,250.00 Cash
May-97 Options exercised 16,000 4.66 74,560.00 Cash
Jun-97 Options exercised 5,000 4.75 23,750.00 Cash
Jun-97 Options exercised 238,500 4.66 1,111,410.00 Cash
* Jun-97 Special Warrants
converted 112,000 0.00 Conversion
Jun-97 Warrants exercised 80,000 5.50 440,000.00 Cash
------- ------------
TOTAL ISSUED 602,900 2,297,952.00
======= ============
</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 Series "A" Special Warrants were converted
on July 2, 1997.
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
1. (Continued)
a. Summary of options granted during the quarter:
Date Shares Price Expiry
---------------------------------------------------
None
1. 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)
Issued and Outstanding Common Shares:
<TABLE>
<CAPTION>
June 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 377,014 2,241,680
Exercise of incentive stock
options 677,000 2,972,995
Conversion of Series "A" Special
Warrants (net of share issue
costs $137,492) 112,000 350,600
---------------------------
Balance, end of the period 24,746,112 $ 36,003,367
===========================
</TABLE>
(a) Summary of warrants outstanding:
<TABLE>
<CAPTION>
Exercised subsequent to June 30/97
Exercise ----------------------------------
# Expiry Date Price # Gross
------------------------------------------------------------------------
<C> <S> <C> <C> <C>
33,333 September 3, 1998 9.50 - -
32,000 July 2, 1997 5.50 32,000 176,000
------
65,333
======
</TABLE>
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
1. (b) (Continued)
Summary of options outstanding:
<TABLE>
<CAPTION>
Exercised subsequent to June 30/97
Exercise ----------------------------------
# Expiry Date Price # Gross
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
230,000 August 17, 1997 4.75 15,000 71,250
182,500 December 27, 1997 4.66 - -
431,000 February 27, 1998 7.13 1,400 9,982
475,000 September 3, 1998 9.00 - -
305,000 September 12, 1998 9.00 - -
480,000 January 6, 1999 9.85 - -
1,511,500 March 2, 2002 6.25 - -
- ---------
3,615,000
=========
</TABLE>
Summary of Series "A" special warrants outstanding:
<TABLE>
<CAPTION>
Exercised subsequent to June 30/97
Exercise ----------------------------------
# Expiry Date Price # Gross
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
4,013,000 July 2, 1997 5.50 625,000 3,437,500
</TABLE>
Subsequent to June 30, 1997 the remaining Series "A" special warrants were
converted into one common share and one ordinary share purchase warrant.
625,000 ordinary share purchase warrants were exercised and the remainder
expired.
Summary of Series "C" special warrants outstanding:
<TABLE>
<CAPTION>
Exercised subsequent to June 30/97
Exercise ----------------------------------
# Expiry Date Price # Gross
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
500,000 December 7, 1997 9.50 - -
</TABLE>
(c) Total number of shares held in escrow: 4,150,000
Total number of shares subject to pooling nil
<PAGE>
TURBODYNE TECHNOLOGIES INC.
SUPPLEMENTARY INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
1. (Continued)
(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 (appointed July 8, 1997)
<PAGE>
SUPPLEMENTARY SCHEDULE 1
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED SCHEDULE OF OPERATING EXPENSES
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended June Ended June
30, 1997 30, 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Advertising and trade shows $ 405,000 $ 26,689
Bad debts 115,000 -
Bank charges, interest and exchange, net 40,000 4,401
Consulting fees 1,285,000 93,612
Customs 73,000 -
Depreciation 213,000 7,560
Finder's fees - -
Filing and transfer fees 46,000 35,871
Fiscal agency fees 179,000 82,350
Insurance 270,000 -
Investor relations 291,000 57,822
Management fees - 15,000
Occupancy 190,000 38,000
Office administration and sundry 556,000 139,041
Printing 51,000 16,549
Professional fees 626,000 186,724
Salaries and employee benefits 1,938,000 212,512
Telephone 111,000 24,590
Travel and business development 690,000 140,686
-----------------------
Total Operating Expenses $7,079,000 $1,081,407
============================================================================
</TABLE>
<PAGE>
SUPPLEMENTARY SCHEDULE 2
TURBODYNE TECHNOLOGIES INC.
CONSOLIDATED SCHEDULE OF DEFERRED PRODUCT DEVELOPMENT COSTS
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended June Ended June
30, 1997 30, 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Project consulting $ 60,048 $ 131,982
Depreciation of equipment used in development 103,750 64,915
Project management fees 249,252 41,007
Office expenses related to project space 117,788 78,829
Project space rent and occupancy costs 124,123 112,736
Project development (testing R&D, evaluations) 2,144,997 557,564
Project staff salaries and benefits 1,422,708 733,521
Telephone and fax 55,308 12,696
Travel related to product testing and evaluation 54,520 24,327
----------- -----------
Deferred Product Development Costs for the period 4,332,494 1,757,577
PRODUCT DEVELOPMENT COSTS, BEGINNING OF PERIOD 8,705,373 3,770,883
----------- ------------
PRODUCT DEVELOPMENT COSTS, END OF PERIOD $13,037,867 $ 5,528,460
============================================================================
</TABLE>
<PAGE>
Schedule C
TURBODYNE TECHNOLOGIES INC.
MANAGEMENT DISCUSSION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(ALL REFERENCES IN CANADIAN DOLLARS)
Please find enclosed our consolidated financial results for the second quarter
1997. The Company's operating financial results and business activities
continue to proceed according to our business plan.
TURBODYNE BUSINESS
Final design of the 2500 series Turbopac was completed and limited production
has commenced. These units will be used for testing purposes initially. Final
testing of the 2500 Turbopac along with a catalyst at Southwest Research
Laboratories was completed very successfully. The EPA's standard of 0.1 grams
per brake horsepower hour for its Urban Bus Retrofit Program was met thereby
qualifying the Turbopac kit as the first air enhancement system to meet this
rigid standard. The Company has now applied jointly with Detroit Diesel for
certification of this kit, which is expected by October.
The Company was pleased to have successfully completed performance evaluations
of its specially designed high-speed fan modules that will be inserted into the
heating system line of a large European furnace manufacturer. The supply
contract calls for an initial order of 200,000 units for delivery in 1998.
Delivery dates are still to be finalized.
During the quarter, the Company appointed Burston Marseller as its
communications consultant and feels that its worldwide networks will greatly
enhance Turbodyne's international status. At June 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 $2,727,000 on project development
costs related to the development and commercialization of the 1200, 2200, 2500
and 3000 series Turbopac products. To date the Company has expended a
cumulative of $13,037,000 on product development costs.
Travel costs to Europe in conjunction with the Heating System program, 3K and
EASDAQ discussions were also higher than anticipated.
The working capital of the Company at June 30, 1997 is a positive $11,253,000.
No additional stock options were granted during the quarter.
On June 27, 1997 the Company's prospectus to qualify its Series "A" Special
Warrants was receipted by the B.C. Securities Commission, the Manitoba
Securities Commission and the Ontario Securities Commission. The prospectus
qualified the issuance of 4,125,000 common shares and 4,125,000 share purchase
warrants by July 2, 1997. Prior to June 30th, 112,000 Series "A" Special
Warrant unit holders converted their special warrants into common shares and
share purchase warrants. The remaining 4,013,000 Special Warrants were
converted on July 2, 1997.
<PAGE>
TURBODYNE TECHNOLOGIES INC.
MANAGEMENT DISCUSSION
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(ALL REFERENCES IN CANADIAN DOLLARS)
The Company has entered into a private placement engagement agreement with a
New York and London based Investment Firm for the placement of convertible
preference shares. The private placement is to raise $5,000,000 U.S. and will
be issued at a price equal to 110% of the common share market price at the date
of closing.
PACIFIC BAJA BUSINESS
The financial results for Pacific Baja Light Metals Holding Corp. have been
consolidated in the results of the Company for the 6 months ended June 30,
1997. This U.S. based subsidiary was acquired on July 2, 1996, hence, the
Company's June 30, 1996 comparative figures would not reflect the Pacific Baja
operations.
Pacific Baja's sales of $27,688,000 for the first six months have been very
strong and better than budgeted. This reflects the new Navistar machining
business now coming on stream.
The gross margin percentage of 22.0% was slightly lower than budgeted (25.0%).
The decrease was due to increased start-up costs related to the Navistar
machining work, increased training for the new labour force hired and higher
than expected scrapping and recasting of new product lines to obtain the
necessary quality levels.
It is expected that these problems will be minimized by the third quarter as
the expanded work force and production line becomes familiar with the new
product lines.
SUBSEQUENT EVENTS
Effective July 18, 1997, the Company formally delisted its shares from trading
on the Vancouver Stock Exchange. While the Vancouver exchange successfully
provided the Company with the public launch of its shares, the ongoing emphasis
on the United States necessitated a NASDAQ emphasis. In addition due to
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 has submitted a proposal to its Series "C" Special Warrant unit
holders offering 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
jurisdictions 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.
