<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 Nine Months Ended Commission File Number
September 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; 42,664,699 shares
outstanding as of November 10, 1995
<PAGE> 2
Vector Aeromotive Corporation
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Assets
- ----------------------------------------
Current assets:
Cash and cash equivalents $896,485 $7,809
Inventories 464,527 286,347
Prepaid expenses 16,903 12,789
Accounts receivable 0 50,000
Other receivable 5,868 232,804
----------- -----------
Total current assets 1,383,783 589,749
Property and equipment 915,819 567,861
Other assets 137,931 137,180
----------- -----------
$2,437,533 $1,294,790
=========== ===========
Liabilities and Stockholders' Equity
- ----------------------------------------
Current liabilities:
Accounts payable $528,379 $528,170
Accrued expenses 462,144 114,886
Interest payable 47,207 47,207
Note payable to related party 178,200 178,200
Customer deposits 48,900 65,000
----------- -----------
Total current liabilities 1,264,830 933,463
----------- -----------
Contingencies (Note 6)
----------- -----------
Total liabilities 1,264,830 933,463
Stockholders' Equity
Common stock, par value $.01 per share, 423,746 240,463
600,000,000 shares authorized; issued
and outstanding: 42,374,699 in 1995 and
24,046,366 in 1994
Capital in excess of par value 31,668,309 26,211,740
Accumulated deficit (30,919,352) (26,090,876)
----------- -----------
Total stockholders' equity 1,172,703 361,327
----------- -----------
$2,437,533 $1,294,790
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
1
<PAGE> 3
Vector Aeromotive Corporation
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------------------------- -------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Automobile sales - - - -
Other sales - $0 - $48,420
Cost of sales - $0 - 26,730
-------------------------- -------------------------------
Gross profit - 0 - 21,690
Costs and expenses
Salaries and wages $266,894 113,605 $478,994 367,048
Rental expense 18,315 (8,543) 89,250 92,459
Utilities 1,548 14,823 3,241 27,916
Research and development 1,009,055 233,322 2,742,824 1,179,545
Depreciation and amortization 66,824 77,935 154,930 224,220
Advertising and promotion 33,772 50,677 40,881 124,129
Professional fees 108,925 617,848 497,740 1,069,755
General and administrative 314,439 407,654 941,844 945,767
Other expense - 255,938 - 255,938
-------------------------- -------------------------------
Total costs and expenses 1,819,772 1,763,259 4,949,704 4,286,777
-------------------------- -------------------------------
Operating loss (1,819,772) (1,763,259) (4,949,704) (4,265,087)
Other income (expense)
Interest and other income 33,014 81,205 221,228 133,169
Other expense - (188,327) (214,114)
Litigation expense (100,000) (125,000) (100,000) (125,000)
-------------------------- -------------------------------
Net loss ($1,886,758) ($1,995,381) ($4,828,476) ($4,471,032)
========================== ===============================
Net loss per share ($0.04) ($0.08) ($0.12) ($0.21)
========================== ===============================
Weighted average common shares
outstanding 42,379,699 24,046,366 40,851,921 21,510,629
========================== ===============================
</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
Forfeiture of shares (5,000) (50) 50 $0
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
Issuance of options for services 70,240 70,240
Stock offering costs (430,388) (430,388)
Net loss (4,828,476) (4,828,476)
--------------------------------------------------------------------------
Balance, September 30, 1995 42,374,699 $423,746 $31,668,309 ($30,919,352) $1,172,703
==========================================================================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
3
<PAGE> 5
Vector Aeromotive Corporation
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($4,828,476) ($4,471,032)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 154,930 224,220
Gain on sale of fixed assets - (3,059)
Issuance of warrants and options
for services 70,240 255,938
Increase (decrease) from changes in
Inventories (178,180) 41,975
Other receivable 226,936 10,100
Prepaid expenses and other assets 45,135 (23,765)
Accounts payable 209 (283,323)
Court bond receivable - (232,803)
Accrued expenses 347,258 (237,587)
Customer deposits (16,100) (35,000)
----------- -----------
Net cash from operating activities (4,178,048) (4,754,336)
Cash flows used in investing activities:
Acquisition of property and equipment (502,888) (612,578)
Decrease in note receivable - 25,000
Decrease in other assets - 32,725
----------- -----------
Net cash used in investing activities (502,888) (554,853)
Cash flows from financing activities:
Proceeds from issuance of common stock, -
options and warrants 6,000,000 5,380,500
Stock offering costs (430,388) -
Decrease in changes in net settlement
payable - (185,000)
----------- -----------
Net cash from financing activities 5,569,612 5,195,500
Net increase (decrease) in cash and cash
equivalents 888,676 (113,689)
Cash and cash equivalents,
beginning of period 7,809 377,694
----------- -----------
Cash and cash equivalents,
end of period $896,485 $264,005
=========== ===========
</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 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 nine
months ended September 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>
Sept. 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 Issuances
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 $430,388 were charged against capital in excess
of par.
In November, 1995, VPC notified the Company that it is partially
exercising its option and is purchasing 2,325,581 shares of
Common Stock at an exercise price of $.43 per share.
In October, 1995, the Company entered into an agreement with a
consulting firm to perform certain services for the Company for
one year in exchange for i) $30,000 in cash, ii) 640,000
shares of Common Stock (290,000 of which were issued in October,
1995 and 350,000 of which are issuable in April, 1996) and iii)
options to purchase 500,000 shares of Common Stock at prices
ranging from $.50 to $1.75 per share. The options expire
ratably through April, 1998.
In November, 1990, the Company issued warrants to purchase 400,000
shares of Common Stock, "the 1990 Warrants." Under their original
terms, the 1990 Warrants were exercisable for one share of Common
Stock each for an exercise price of $4.68 and were to expire on
November 14, 1995. In October, 1995, the Company modified the
terms of the 1990 Warrants. As modified, the 1990 Warrants are
exercisable for one share of Common Stock for an exercise price
of $1.50 and expire August 12, 1996.
In August, 1995, the Company's Board of Directors approved the
issuance of options to certain of its employees and directors
under its 1994 Omnibus Plan for an aggregate of 439,000 shares of
Common Stock with an exercise price of $.38 per share, 70% of the
trading price of the Company's Common Stock at the time. The
Company has recorded compensation expense of $70,240 during the
third quarter of 1995 as a result.
6
<PAGE> 8
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.
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
7
<PAGE> 9
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, Thomas E. King, an individual both in his name and
under his "dba," "King and Associates" (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 has negotiated a
settlement of this case for the sum of $100,000 payable in nine
installments. The agreement is expected to be executed prior to
November 13, 1995.
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 States Patent
and Trademark Office to register "Avtech" as a trademark. The
Company is opposing Mr. Weigert's application.
8
<PAGE> 10
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
General
Testing and development of the M12 (formally known as the Avtech) has
progressed during the third quarter to include the successful compliance with
more than 7 specific FMVSS test requirements. These included FMVSS 208 and 301
tests that establish thresholds of acceptable performance for occupant injury
protection and fuel system integrity in a 30mph frontal impact. Characteristic
injury levels measured on the crash dummies were 50% of the maximum allowable
level, and fuel integrity was maintained.
During July, hot testing and high speed cooling continued to a satisfactory
conclusion in southern Italy. A second test vehicle was also shipped to Italy
to undergo calibration and drivability tests prior to being returned to the
United States to undergo EPA and CARB emission standard testing. These tests
are scheduled for completion in early November.
The completion of chassis weld fixtures and body lamination tooling were a
major focus of activity during the quarter as plans were implemented in
preparation for the commencement of production build during the early part of
October.
Dealer development continued resulting in the internal approval of 8 dealers
qualified to meet the Company's retail requirements. This activity will
continue in order to achieve the planned 12 dealers by year end.
Results of Operations
The Company recorded no automobile sales during the nine months ended September
30, 1995 and 1994. Revenues for 1994 consisted of service and repair work.
Total costs and expenses for the third quarter of 1995 increased $56,513 or
approximately 3% compared to the third quarter of 1994, and increased $684,617
or 16% year-to-date in 1995 compared to 1994, due to the increased research and
development activity.
Total costs spent on research and development for the third quarter of 1995
were $1,009,055 as compared to $233,322 in 1994, an increase of $775,733.
9
<PAGE> 11
Total costs spent on research and development year-to-date in 1995 were
$2,742,824 compared to $1,179,545 year-to-date in 1994.
Salaries and wages for the third quarter of 1995 increased by $153,289 or 135%
from the third quarter of 1994 and increased $111,946 or 30% for the nine
months ended September 30, 1995 compared to 1994. These increases reflect
the reduction in workforce and termination of most business operations during
mid 1993. Additionally, the Company recorded compensation expense of $70,240
in the third quarter of 1995 pursuant to the Board of Director's approval of
the issuance of options to certain of its employees and directors.
Professional fees have decreased $508,923 or 82% from the third quarter of 1995
compared to the third quarter of 1994 due to legal fees incurred in connection
with the Company's litigation with its former President in 1994. Year-to-date
these costs were $572,015 lower than last year.
General and administrative expenses decreased by $93,215 or 23% in the third
quarter of 1995 compared to the third quarter of 1994 as a result of an
inventory write-down during 1994 totaling $154,000 for obsolete inventory.
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
September 30, 1995, the balance of the Company's cash and equivalents is
approximately $896,000. Cash used during the first nine 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 M12 late this year. In November 1995, V'Power Corporation notified the
Company that it is partially exercising an option held by it and is purchasing
2,325,581 shares of the Company's Common Stock at $.43 per share, pursuant
to their Option Agreement with the Company dated April 17, 1995. The Company
believes that this additional funding of $1 million will sustain the Company's
operations until early 1996 when it is anticipated that car sales will create
positive cash flow. There can be no assurance, however, that additional funds
will not be required and the Company is continuing to seek additional funds
through private placement of debt or equity securities.
10
<PAGE> 12
Exhibits
4.01 Payment Agreement between Vector Aeromotive Corporation and
Corporate Relations Group, Inc.
27.01 Financial Data Schedule (for SEC use only)
11
<PAGE> 13
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: November 14, 1995 By: D. Peter Rose
--------------------------- -------------------------------
D. Peter Rose
President
Date: November 14, 1995 By: Janna L. Connolly
--------------------------- -------------------------------
Janna L. Connolly
Chief Accounting Officer
12
<PAGE> 1
EXHIBIT "B"
PAYMENT AGREEMENT
made by and between
VECTOR AEROMOTIVE CORPORATION
and
CORPORATE RELATIONS GROUP, INC.
THIS AGREEMENT is made this 1st day of October, 1995, and will serve as
confirmation of payment terms for services to be provided VECTOR AEROMOTIVE
CORPORATION ("CLIENT") whereby CORPORATE RELATIONS GROUP, INC. ("CRG") has
agreed to perform said service as defined in the "Lead Generation / Corporate
Relations Agreement."
TERMS
A. CLIENT will pay to CRG, ONE HUNDRED SEVENTY FIVE THOUSAND DOLLARS
($175,000 U.S. cy) or as a convenience to Client, 175,000 DOLLARS
worth of free trading VECTOR AEROMOTIVE CORPORATION common shares. The
formula shall be the $175,000 U.S. cy divided by the BID PRICE of the
shares on the date of signing this agreement which has been determined
to be $.50 per share. This will equal the amount of shares payable to
CRG. This has been determined to be 350,000 common shares of VECTOR
AEROMOTIVE CORPORATION.
B. This Agreement is subject to compliance with the rules of the
Exchanges and Securities Commissions on which Client is listed and
registered.
C. In the event of termination of the Agreement by client, CRG shall be
fully released and forever discharged by Client from any further
obligations or liabilities with respect to the "Lead Generation /
Corporate Relations Agreement" and any results therefrom, save and
except liabilities arising from CRG's own negligence during the term
of this Agreement. Concurrently, Client shall be fully released and
forever discharged by CRG from any and all obligations of further
payments or liabilities with respect to the "Lead Generation /
Corporate Relations Agreement." This release in no way affects Point
#6, Page 2 of the "Lead Generation / Corporate Relations Agreement."
/s/ , /s/
-----------
Initials
<PAGE> 2
EXHIBIT "B"
PAGE -2-
D. Shares shall be subject to the Registration Rights Agreement as set
forth in Exhibit "D".
E. Company shall issue options to CRG as outlined below.
<TABLE>
<CAPTION>
Amount Price Duration
------ ----- --------
<S> <C> <C>
50,000 shares at $.50 One (1) year from the date of this Agreement
50,000 shares at $.62 One (1) year from the date of this Agreement
50,000 shares at $.75 One (1) year from the date of this Agreement
50,000 shares at $.85 Two (2) years from the date of this Agreement
50,000 shares at $1.75 Two (2) years from the date of this Agreement.
</TABLE>
F. CRG represents and warrants to the Company that:
1. Accredited Investor. CRG is an "accredited investor", as that
term is defined in Regulation D promulgated by the Commission
under the Securities Act of 1933, as amended (the "1933
Act"), in that it has total assets in excess of $5 million and
was not formed for the purpose of an investment in the shares.
2. CRG has received and read and is familiar with the Company's
filings with the Securities and Exchange Commission. CRG
confirms that all documents, records and books pertaining to
the Company requested by CRG have been made available or
delivered to CRG. CRG has had an opportunity to ask questions
of and to receive answers from the management of the Company.
3. CRG understands that the shares, the options and the shares
underlying the options (collectively, the "Securities") will
not be registered under the 1933 Act or any securities act of
any state or other jurisdiction, in reliance on registration
exemptions under such statutes for private offerings. The
Securities are being and will be acquired solely for CRG's own
account. CRG will not sell or otherwise transfer any of the
Securities except in accordance with the 1933 Act and all
other applicable securities laws, and prior to any transfer
(other than pursuant to an effective registration statement
under the 1933 Act and otherwise in compliance with applicable
law) CRG will furnish to the Company a written opinion of
counsel
/s/ , /s/
------------
Initials
<PAGE> 3
EXHIBIT "B"
PAGE -3-
in form and substance satisfactory to the Company, to the
effect that all requisite action has been taken under all
applicable securities laws in connection with the proposed
transfer. CRG acknowledges its understanding that the
Securities will bear a legend substantially in the following
form until the Company's counsel determines that the legend is
no longer advisable:
The securities evidenced by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Act") or under the securities laws of
any jurisdiction, and must be held indefinitely
unless they are transferred pursuant to an effective
registration statement under the Act and in
compliance with all applicable securities laws, or
after receipt of an opinion of counsel, in form and
substance satisfactory to Vector Aeromotive
Corporation that registration is not required and the
transfer does not violate any applicable securities
law.
CRG also acknowledges that appropriate stop transfer orders
will be noted on the Company's records with respect to the
shares and any shares of common stock issued upon exercise of
the options.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
<TABLE>
<S> <C>
CORPORATE RELATIONS GROUP, INC.
BY: /s/ Roberto E. Veitia BY: /s/ James A. Skalko
------------------------ ----------------------------------
Roberto E. Veitia James A. Skalko
President Vice President, Investment Banking
BY: /s/ Daniel A. St. Pierre
------------------------
Daniel A. St. Pierre, Broker Relations Representative
VECTOR AEROMOTIVE CORPORATION
BY: /s/ Pete Rose
------------------------
Pete Rose
President
</TABLE>
/s/ , /s/
------------
Initials
<PAGE> 4
EXHIBIT "B"
PAYMENT AGREEMENT
made by and between
VECTOR AEROMOTIVE CORPORATION
and
CORPORATE RELATIONS GROUP, INC.
THIS AGREEMENT is made this 1st day of October, 1995, and will serve as
confirmation of payment terms for services to be provided VECTOR AEROMOTIVE
CORPORATION ("CLIENT") whereby CORPORATE RELATIONS GROUP, INC. ("CRG") has
agreed to perform said services as defined in the "Lead Generation / Corporate
Relations Agreement."
TERMS
A. CLIENT will pay to CRG, ONE HUNDRED SEVENTY FIVE THOUSAND DOLLARS
($175,000 U.S. cy) and as a convenience to Client, the 175,000 DOLLAR
payment will be made in two (2) forms: $30,000 U.S. cy and $145,000
worth of free trading VECTOR AEROMOTIVE CORPORATION common shares. The
formula shall be the $145,000 U.S. cy divided by the BID PRICE of the
shares on the date of signing this agreement which has been determined
to be $.50 per share. This will equal the amount of shares payable to
CRG. This has been determined to be 290,000 common shares of VECTOR
AEROMOTIVE CORPORATION.
B. This Agreement is subject to compliance with the rules of the
Exchanges and Securities Commissions on which Client is listed and
registered.
C. In the event of termination of the Agreement by client, CRG shall be
fully released and forever discharged by Client from any further
obligations or liabilities with respect to the "Lead Generation /
Corporate Relations Agreement" and any results therefrom, save and
except liabilities arising from CRG's own negligence during the term
of this Agreement. Concurrently, Client shall be fully released and
forever discharged by CRG from any and all obligations of further
payments or liabilities with respect to the "Lead Generation /
Corporate Relations Agreement." This release in no way affects Point
#6, Page 2 of the "Lead Generation / Corporate Relations Agreement."
/s/ , /s/
------------
Initials
<PAGE> 5
EXHIBIT "B"
PAGE -2-
D. Shares shall be subject to the Registration Rights Agreement as set
forth in Exhibit "D".
E. Company shall issue options to CRG as outlined below.
<TABLE>
<CAPTION>
Amount Price Duration
------ ----- --------
<S> <C> <C>
50,000 shares at $.50 One (1) year from the date of this Agreement
50,000 shares at $.62 One (1) year from the date of this Agreement
50,000 shares at $.75 One (1) year from the date of this Agreement
50,000 shares at $.85 Two (2) years from the date of this Agreement
50,000 shares at $1.75 Two (2) years from the date of this Agreement.
</TABLE>
F. CRG represents and warrants to the Company that:
1. Accredited Investor. CRG is an "accredited investor", as that
term is defined in Regulation D promulgated by the Commission
under the Securities Act of 1933, as amended (the "1933
Act"), in that it has total assets in excess of $5 million and
was not formed for the purpose of an investment in the shares.
2. CRG has received and read and is familiar with the Company's
filings with the Securities and Exchange Commission. CRG
confirms that all documents, records and books pertaining to
the Company requested by CRG have been made available or
delivered to CRG. CRG has had an opportunity to ask questions
of and to receive answers from the management of the Company.
3. CRG understands that the shares, the options and the shares
underlying the options (collectively, the "Securities") will
not be registered under the 1933 Act or any securities act of
any state or other jurisdiction, in reliance on registration
exemptions under such statutes for private offerings. The
Securities are being and will be acquired solely for CRG's own
account. CRG will not sell or otherwise transfer any of the
Securities except in accordance with the 1933 Act and all
other applicable securities laws, and prior to any transfer
(other than pursuant to an effective registration statement
under the 1933 Act and otherwise in compliance with applicable
law) CRG will furnish to the Company a written opinion of
counsel
/s/ , /s/
------------
Initials
<PAGE> 6
EXHIBIT "B"
PAGE -3-
in form and substance satisfactory to the Company, to the
effect that all requisite action has been taken under all
applicable securities laws in connection with the proposed
transfer. CRG acknowledges its understanding that the
Securities will bear a legend substantially in the following
form until the Company's counsel determines that the legend is
no longer advisable:
The securities evidenced by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Act") or under the securities laws of
any jurisdiction, and must be held indefinitely
unless they are transferred pursuant to an effective
registration statement under the Act and in
compliance with all applicable securities laws, or
after receipt of an opinion of counsel, in form and
substance satisfactory to Vector Aeromotive
Corporation that registration is not required and the
transfer does not violate any applicable securities
law.
CRG also acknowledges that appropriate stop transfer orders
will be noted on the Company's records with respect to the
shares and any shares of common stock issued upon exercise of
the options.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
<TABLE>
<S> <C>
CORPORATE RELATIONS GROUP, INC.
BY: /s/ Roberto E. Veitia BY: /s/ James A. Skalko
------------------------ ----------------------------------
Roberto E. Veitia James A. Skalko
President Vice President, Investment Banking
BY: /s/ Daniel A. St. Pierre
------------------------
Daniel A. St. Pierre, Broker Relations Representative
VECTOR AEROMOTIVE CORPORATION
BY: /s/ Pete Rose
------------------------
Pete Rose
President
</TABLE>
/s/ , /s/
------------
Initials
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 896,485
<SECURITIES> 0
<RECEIVABLES> 5,868
<ALLOWANCES> 0
<INVENTORY> 464,527
<CURRENT-ASSETS> 1,383,783
<PP&E> 1,688,981
<DEPRECIATION> (773,162)
<TOTAL-ASSETS> 2,437,533
<CURRENT-LIABILITIES> 1,264,830
<BONDS> 0
<COMMON> 423,746
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,437,533
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,949,704
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,828,476)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,828,476)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,828,476)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> 0
</TABLE>
