<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 Three Months Ended Commission File Number
March 31, 1996 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; 53,562,087 shares
outstanding as of May 10, 1996
<PAGE> 2
Vector Aeromotive Corporation
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Assets
- -----------------------------------------------------------
Current assets:
Cash and cash equivalents $ 1,090,457 $ 12,370
Inventories 1,380,833 801,560
Prepaid expenses 167,534 279,306
Accounts and other receivable 7,427 -
----------- -----------
Total current assets 2,646,251 1,093,236
Property and equipment 749,172 618,083
Other assets 141,905 195,250
----------- -----------
$ 3,537,328 $ 1,906,569
=========== ===========
Liabilities and Stockholders' Equity
- -----------------------------------------------------------
Current liabilities:
Accounts payable $ 668,238 $ 1,498,667
Accrued expenses 550,605 632,891
Loans payable to related party 178,200 1,178,200
Customer deposits 50,000 40,000
----------- -----------
Total current liabilities 1,447,043 3,349,758
----------- -----------
Condintencies - Note 4
Total liabilities 1,447,043 3,349,758
Stockholders' Equity
Common stock, par value $.01 per share, 530,831 426,646
600,000,000 shares authorized; issued and
outstanding: 53,083,199 in 1996 and 42,664,699 in 1995
Capital in excess of par value 36,565,703 31,873,608
Accumulated deficit (35,006,249) (33,743,443)
----------- -----------
Total stockholders' equity 2,090,286 (1,443,189)
----------- -----------
$ 3,537,328 $ 1,906,569
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
1
<PAGE> 3
Vector Aeromotive Corporation
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Sales $ 149,470 -
Cost of sales 167,413 -
----------- -----------
Gross profit (loss) (17,943) -
Costs and expenses:
Manufacturing overhead $ 194,899 -
General and administrative 612,891 624,515
Research and development 473,076 785,181
----------- -----------
Total costs and expenses 1,280,865 1,409,696
----------- -----------
Operating loss (1,298,809) (1,409,696)
Other income (expense)
Interest and other income 36,002 80,747
----------- -----------
Net loss $(1,262,806) $(1,328,949)
=========== ===========
Net loss per share $ (0.02) $ (0.03)
=========== ===========
Weighted average common shares outstanding 50,575,366 39,324,144
=========== ===========
</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, 1995 42,664,699 $426,646 $31,873,608 $(33,743,443) $(1,443,189)
Issuance of shares for cash 10,000,000 100,000 4,604,733 4,704,733
Exercise of stock options and warrants 418,500 4,185 87,362 91,547
Net loss (1,262,806) (1,262,806)
----------------------------------------------------------------------------
Balance, March 31, 1996 53,083,199 $530,831 $36,565,703 $(35,006,249) $ 2,090,285
============================================================================
</TABLE>
See accompanying notes to unaudited condensed financial statements.
3
<PAGE> 5
Vector Aeromotive Corporation
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,262,806) $(1,365,390)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 59,031 29,590
Increase (decrease) from changes in
Inventories (579,273) (180,000)
Prepaid expenses and other assets 104,345 209,011
Accounts payable (830,429) (95,964)
Accrued expenses (82,286) (15,267)
Customer deposits 10,000 (35,000)
----------- -----------
Net cash from operating activities (2,581,418) (1,416,579)
Cash flows used in investing activities:
Acquisition of property and equipment (136,775) (111,861)
----------- -----------
Net cash used in investing activities (136,775) (111,861)
Cash flows from financing activities:
Proceeds from issuance of common stock
and warrants 4,704,733 6,000,000
Proceeds from exercise of warrants 91,547 (398,403)
Repayment of loan payable to related party (1,000,000)
----------- -----------
Net cash from financing activities 3,796,280 5,601,597
Net increase (decrease) in cash and cash
equivalents 1,078,087 4,073,157
Cash and cash equivalents, beginning of period 12,370 7,809
----------- -----------
Cash and cash equivalents, end of period $ 1,090,457 $ 4,080,966
=========== ===========
</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 December 31,
1995. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended March
31, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996.
2. Inventories
The components of inventory consist of the following:
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
---------- ---------
<S> <C> <C>
Raw Material $ 530,785 $286,347
Work-in-Progress 353,443 -
Finished Goods 496,605 180,000
---------- --------
Total $1,380,833 $486,347
========== ========
</TABLE>
5
<PAGE> 7
3. Stock Offerings
On January 24, 1996, the Company completed a Share Purchase Agreement
with V'Power Corporation which provided for the Company's issuance of
10,000,000 common shares to V'Power Corporation at a price of $.45 per
share. The Share Purchase Agreement also provided that the Company, in
exchange for $500,000, enter into an option agreement whereby the Company
issued to V'Power Corporation an option to acquire 50,000,000 additional
common shares at a price of $.45 per share expiring on January 24, 1997.
The Company received cash proceeds under this Share Purchase Agreement of
$4,000,000, which was net of the payment of a $1,000,000 note payable to
V'Power Corporation that was outstanding at December 31, 1995. V'Power
currently owns 37,333,333 shares, or approximately 70%, of the Company's
common stock.
During the first quarter of 1996, the Company issued 418,500 shares upon
exercise of warrants outstanding at an exercise price of $.22 per share.
4. Contingencies
As described below, the Company and Gerald A. Wiegert are parties to
certain legal proceedings which arose principally in connection with the
termination in 1993 of Mr. Wiegert as the Company's Chairman, President
and Chief Executive Officer. The Company is also a party to certain
legal proceedings against persons who acted with Mr. Wiegert in defiance
of the Company's Board of Directors.
In order to gain undisputed access and control over the Company's
facilities, assets and business operations, on March 24, 1993, the
Company filed an action in the Superior Court of California, Los Angeles
County captioned as Vector Aeromotive Corporation v. Gerald A. Wiegert,
requesting declaratory relief and a temporary restraining order. On
September 14, 1993, the court granted the Company's motion for summary
judgment on the declaratory judgment contained in the amended complaint.
Specifically, the court entered an order (i) declaring that the Board
properly exercised its authority to remove Mr. Wiegert as an officer of
the Company; (ii) enjoining Mr. Wiegert from any further dealing with the
property or interests of the Company; and (iii) calling for an orderly
transfer of day-to-day management of the Company to the Board. To date,
the Company believes that Mr. Wiegert has complied with the September 14,
1993 court order by refraining from participation in Company affairs and
by transferring day-to-day management of the Company to the Board.
6
<PAGE> 8
Although the court granted summary judgment in favor of the Company on
its claim for declaratory relief and undisputed, physical control of the
Company has been returned to the Board, all other claims in the Company's
amended complaint are pending. These claims seek monetary damages in an
amount to be proven at trial. Mr. Wiegert has asserted various claims
against the Company, including claims for unpaid rent on the Company's
former principal facility, which was leased by the Company from Mr.
Wiegert; breach of employment agreement; and for the return of business
assets which Mr. Wiegert alleges are owned by him rather than by the
Company. These claims have been asserted in a separate action filed in
the Superior Court of California for Los Angeles County on September 27,
1993 captioned Gerald A. Wiegert v. Vector Aeromotive Corporation.
Mr. Wiegert's complaint was dismissed by the court because it contained
claims which should have been asserted as cross-claims within the
Company's original action against Mr. Wiegert.
In February 1994, Mr. Wiegert filed a cross-complaint against the
Company, its directors, and its outside securities counsel alleging,
among other things, breach of employment contract; breach of covenant of
good faith and fair dealing; intentional and negligent misrepresentation;
interference with contractual advantage and business interest; negligent
and intentional infliction of emotional distress; and libel and slander.
The Company has challenged the legal sufficiency of the cross-complaint,
including subsequent amendments thereof, resulting in elimination of all
claims except the claims concerning breach of employment contract by the
Company, unpaid rent, conversion, libel and slander. The Company plans
to file a motion for summary judgment for the purpose of eliminating Mr.
Wiegert's causes of action for conversion, libel, slander and
conspiracy. In another action filed by Mr. Wiegert as general partner of
Vector Car entitled Vector Car v. Vector Aeromotive Corporation, et al.,
Mr. Wiegert alleges that the Company assumed a Vector Car debt owed to
him of approximately $325,000 and that the Company is obligated to Vector
Car under the terms of a $250,000 promissory note payable to Vector Car.
The Company intends to vigorously defend this action.
The three aforementioned actions between the Company and Mr. Wiegert are
expected to be tried in late 1996.
7
<PAGE> 9
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
General
In March 1996, the Company sold the first of the newly launched Vector M12
exotic sports car. Production of the M12 is currently at the rate of 2 per
month and the Company plans to produce at a rate of 12 cars per month by mid
1997.
Results of Operations
For the period ended March 31, 1996, the Company had a net loss of $1,262,806
compared to $1,328,949 for the comparable period of 1995.
Cost of sales related to this sale was significantly higher than costs per
vehicle anticipated later this year when production efficiencies are expected
to increase substantially. Gross profit as a percentage of sales will,
however, continue through the second quarter to be depressed by costs
associated with the start-up of production.
The Company's manufacturing overhead consists of the costs associated with
its purchasing, quality, manufacturing engineering and operations management
departments. Costs related to these departments totaled $194,899 in the first
quarter of 1996.
General and administrative expenses decreased approximately 2% compared to
the first quarter of 1995. Reductions in legal expenses and consulting fees
were offset by new staffing and related costs of the Company's sales and
marketing department.
Research and development costs proceeded into the first quarter of 1996 for
continuing development on the M12, including addressing development issues
specifically related to the vehicle's electrical system and refining
manufacturing and assembly procedures. These costs were $473,076 or 40% lower
than the first quarter of 1995.
Liquidity and Capital Resources
As previously reported, the Company entered into an agreement in January 1996
from which $3.7 million, net of stock offering costs, and the repayment of
$1,000,000 previously loaned in 1995 was received. As of March 31, 1996, the
balance of the Company's cash and equivalents is approximately $1 million.
Cash used during the first quarter of 1996 was primarily for completion
of development and production of the first M12s.
8
<PAGE> 10
Although the Company anticipates generating an increasing revenue stream from
M12 sales, the Company expects continued losses and negative cash flow through
mid-1996. Because of the delay in production start-up and the resulting delay
in vehicle sales, there can be no assurance that the Company's current funds
will be adequate until the Company achieves positive cash flow through vehicle
sales. The Company has no commitment from others to provide additional
capital, and there can be no assurance that such funding will be available
when needed, or if available, that its terms will be favorable or acceptable
to the Company. Should the Company be unable to obtain additional capital,
when and if needed it could be forced to either curtail operations or cease
business activities altogether.
ITEM 3. EXHIBITS AND REPORTS ON THE FORM 8-K
The Company filed a Form 8-K on January 31, 1996 reporting under Item 5. Other
Events.
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: May 14, 1996 By: /s/ D. Peter Rose
- ----------------------------- -------------------------------
D. Peter Rose
President
Date: May 14, 1996 By: /s/ Janna L. Connolly
- ----------------------------- -------------------------------
Janna L. Connolly
Chief Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,090,457
<SECURITIES> 0
<RECEIVABLES> 7,427
<ALLOWANCES> 0
<INVENTORY> 1,380,833
<CURRENT-ASSETS> 2,646,251
<PP&E> 1,265,237
<DEPRECIATION> 516,065
<TOTAL-ASSETS> 3,537,328
<CURRENT-LIABILITIES> 1,447,043
<BONDS> 0
0
0
<COMMON> 530,831
<OTHER-SE> 1,559,454
<TOTAL-LIABILITY-AND-EQUITY> 3,537,328
<SALES> 149,470
<TOTAL-REVENUES> 149,470
<CGS> 167,413
<TOTAL-COSTS> 167,413
<OTHER-EXPENSES> 1,280,865
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,262,806)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,262,806)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,262,806)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
