<PAGE> 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, 1995 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; 42,379,699 shares
outstanding as of August 10, 1995
<PAGE> 2
Vector Aeromotive Corporation
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Assets
---------------------------------------
Current assets:
Cash and cash equivalents $ 2,536,460 $ 7,809
Inventories 464,527 286,347
Prepaid expenses 35,913 12,789
Accounts receivable 32,306 50,000
Other receivable 7,228 232,804
----------- -----------
Total current assets 3,076,434 589,749
Property and equipment 794,951 567,861
Other assets 137,180 137,180
----------- -----------
$ 4,008,565 $ 1,294,790
=========== ===========
Liabilities and Stockholders' Equity
---------------------------------------
Current liabilities:
Accounts payable $ 449,282 $ 528,170
Accrued expenses 274,459 114,886
Interest payable 47,207 47,207
Note payable to related party 178,200 178,200
Customer deposits 48,900 65,000
----------- -----------
Total current liabilities 998,048 933,463
----------- -----------
Contingencies (Note 6)
----------- -----------
Total liabilities 998,048 933,463
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 31,619,315 26,211,740
Accumulated deficit (29,032,594) (26,090,876)
----------- -----------
Total stockholders' equity 3,010,517 361,327
----------- -----------
$ 4,008,565 $ 1,294,790
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
1
<PAGE> 3
Vector Aeromotive Corporation
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
----------------------------- ---------------------------
<S> <C> <C> <C> <C>
Automobile sales - - - -
Other sales - $ 48,420 - $ 48,420
Cost of sales - 26,730 - 26,730
--------------------------- --------------------------
Gross profit - 21,690 - 21,690
Costs and expenses
Salaries and wages $ 100,442 158,767 $ 212,100 253,443
Rental expense 34,276 17,348 70,935 101,002
Utilities 848 4,543 1,693 13,093
Research and development 948,588 863,054 1,733,769 946,223
Depreciation and amortization 58,516 115,523 88,106 146,285
Advertising and promotion 3,956 31,020 7,109 73,452
Professional fees 194,538 136,302 388,815 451,907
General and administrative 379,072 144,583 627,405 538,113
--------------------------- --------------------------
Total costs and expenses 1,720,236 1,471,140 3,129,932 2,523,518
--------------------------- --------------------------
Operating loss (1,720,236) (1,449,450) (3,129,932) (2,501,828)
Other income (expense)
Interest and other income 107,467 17,197 188,214 51,964
Other expense - (11,390) - (25,787)
--------------------------- --------------------------
Net loss ($1,612,769) ($1,443,643) ($2,941,718) ($2,475,651)
=========================== ==========================
Net loss per share ($0.04) ($0.06) ($0.07) ($0.10)
=========================== ==========================
Weighted average common shares
outstanding 42,379,699 24,526,629 40,851,921 24,526,629
=========================== ==========================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
2
<PAGE> 4
Vector Aeromotive Corporation
Condensed Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
------------------- Capital in Excess Accumulated
Shares Amount of Par Value Deficit Total
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 (409,092) (409,092)
Net loss (2,941,718) (2,941,718)
-------------------------------------------------------------------
Balance, June 30, 1995 42,379,699 $423,796 $31,619,315 ($29,032,594) $3,010,517
===================================================================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
3
<PAGE> 5
Vector Aeromotive Corporation
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($2,941,718) ($2,475,650)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 88,106 108,737
Increase (decrease) from changes in
Inventories (178,180) -
Other receivable 225,576 (24,763)
Prepaid expenses and other assets (5,430) (87,492)
Accounts payable (78,888) 207,847
Settlement payable - (260,000)
Accrued expenses 159,573 (329,480)
Customer deposits (16,100) -
----------- -----------
Net cash from operating activities (2,747,061) (2,860,801)
Cash flows used in investing activities:
Acquisition of property and equipment (315,196) (156,853)
Net cash used in investing activities (315,196) (156,853)
Cash flows from financing activities:
Proceeds from issuance of common stock
and warrants 6,000,000 2,380,500
Stock offering costs (409,092) -
----------- -----------
Net cash from financing activities 5,590,908 2,380,500
Net increase (decrease) in cash and cash
equivalents 2,528,651 (637,154)
Cash and cash equivalents,
beginning of period 7,809 2,378,012
Cash and cash equivalents, ----------- -----------
end of period $ 2,536,460 $ 1,740,858
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
4
<PAGE> 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 September 30, 1994. On October 3, 1994 the Company changed its
fiscal year-end from September 30 to December 31. A transition report
as 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 six months ended June 30, 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:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
-------- --------
<S> <C> <C>
Raw Material $284,527 $286,347
Finished Goods $180,000 -
-------- --------
Total $464,527 $286,347
======== ========
</TABLE>
During the first quarter of 1995, the Company repurchased one of its
Vector W8 automobiles from Lamborghini USA for cash.
5
<PAGE> 7
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 $409,092
were charged against capital in excess of par.
4. Other Receivable
In January, 1995, a settlement was reached for $125,385 regarding the
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
which will be completed during 1995 in exchange for certain
consideration. 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. Weigert's (the former President of the
Company) employment as an officer and employee of the Company should
be terminated. Mr. Weigert 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.
Weigert is the subject of an ongoing civil lawsuit which was commenced
by the Company on March 24, 1993.
6
<PAGE> 8
On September 14, 1993, the Company obtained a court order confirming the
validity of Mr. Weigert'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. Weigert, and by Mr. Weigert 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. Weigert 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. Weigert. 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 both in his name and under his dba, (the
Plaintiff), 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
Plaintiff performed services with respect to a public offering and that under
the terms of a finder's agreement, the Plaintiff is entitled to compensation
for services allegedly rendered in connection with the public offering. The
Plaintiff is seeking special damages of $155,000 plus interest from August 19,
1991. The Company believes that it will prevail in its defense of this action.
In 1994, Mr. Weigert, 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. Weigert has filed an application with the United State Patent and Trademark
Office to register Avtech as a trademark. The Company is opposing Mr.
Weigert's application.
7
<PAGE> 9
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 continued on plan during the first six
months of 1995. Preliminary bumper and roof crush testing has been
successfully completed. In addition, engine development to satisfy emission
requirements has been undertaken through the design and development contract
with automobili Lamborghini in Italy and the Company is now preparing for the
submission of a vehicle for EPA certification. Testing at the high speed test
facility at Nardo in southern Italy has verified satisfactory engine cooling
performance as well as satisfactory high speed stability.
Based on the Company's plan to establish a national network of 12 dealers by
year-end to support the marketing of the Avtech, there has been considerable
dealer development activity. This has generated serious interest from
approximately 40 suitable outlets.
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
next quarter.
Results of Operations
The Company recorded no automobile sales during the six months ended June 30,
1995 and 1994. Revenues for 1994 consisted of service and repair work.
Total costs and expenses for the second quarter of 1995 increased $249,096, or
approximately 17% compared to the second quarter of 1994, and $606,414 or 24%
year-to-date in 1995 compared to 1994, due to the increased research and
development activity and general and administrative expenses.
Total costs spent on research and development for the second quarter of 1995
were $948,588 as compared to $863,054 in 1994, an increase of $85,534. Total
costs spent on research and development year-to-date in 1995 were $1,733,769
compared to $946,223 year-to-date in 1994.
Salaries and wages for the second quarter of 1995 decreased by $58,325 or 37%
from the second quarter of 1994 and decreased $41,343 or 16% for the six months
ended June 30, 1995 compared to 1994. The sole reason for these decreases was
severance costs paid during the second quarter of 1994.
Professional fees have increased $58,236 or 43% from the second quarter of 1995
compared to the second quarter of 1994 due primarily to timing of payment of
legal fees incurred in connection with the Company's litigation with its former
President in 1994. Year-to-date these costs were $63,092 lower than last year.
General and administrative expenses increased by $234,489 or 162% in the second
quarter of 1995 compared to the second quarter of 1994 as a result of
8
<PAGE> 10
the reduction in workforce and related expenses which occurred during the
second quarter of 1994 in anticipation of the Company's relocation in 1994 to
Jacksonville, Florida.
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 June
30, 1995, the balance of the Company's cash and equivalents is approximately
$2.5 million. Cash used during the first six months of 1995 has been primarily
for engineering research and development and tooling and payment of legal costs
related to the ongoing litigation with the Company's former President.
The Company continues to progress towards planned production launch and sale of
the Avtech SC in the fall of this year. However, to insure the quality of the
product is not compromised, a reduction in the previously forecast rate of
production versus plan will most likely occur during the start-up phase of
production, resulting in lower than expected revenues in the fourth quarter of
1995. In this event, additional funding of up to approximately $1 million will
be needed to sustain the Company's operations until early 1996 when it is
anticipated that car sales will create positive cash flow. The Company is in
the process of investigating several alternative sources of financing.
However, there is no assurance that such financing will be available.
Exhibits
27.01 Financial Data Schedule (for SEC use only)
9
<PAGE> 11
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 11, 1995 By: /S/ D. Peter Rose
------------------------- -------------------
D. Peter Rose
President
Date: August 11, 1995 By: /S/ Janna L. Connolly
------------------------- -----------------------
Janna L. Connolly
Chief Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,536,460
<SECURITIES> 0
<RECEIVABLES> 39,534
<ALLOWANCES> 0
<INVENTORY> 464,527
<CURRENT-ASSETS> 3,076,434
<PP&E> 1,500,849
<DEPRECIATION> 705,898
<TOTAL-ASSETS> 4,008,565
<CURRENT-LIABILITIES> 988,048
<BONDS> 0
<COMMON> 423,796
0
0
<OTHER-SE> 2,586,721
<TOTAL-LIABILITY-AND-EQUITY> 4,008,565
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,129,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,941,718)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,941,718)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,941,718)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
