<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------------- --------------------
Commission File Number 0-21926
-------------------------------------------------------
AER Energy Resources, Inc.
--------------------------
(Exact name of registrant as specified in its charter)
Georgia 34-1621925
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 Highlands Parkway, Suite G, Smyrna, Georgia 30082
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 433-2127
-----------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
---------- ----------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
There were 24,776,763 shares of Common Stock outstanding as of July 31, 1997.
<PAGE> 2
AER ENERGY RESOURCES, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
Page
-----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
- ------- --------------------------------
<S> <C> <C>
Condensed Balance Sheets - June 30, 1997 and December 31, 1996. 3
Condensed Statements of Operations - Three Months Ended June 30, 4
1997 and 1996, Six Months Ended June 30, 1997 and 1996, and Period From July 17, 1989
(Date of Inception) to June 30, 1997.
Condensed Statements of Cash Flows - Six Months Ended June 30, 5
1997 and 1996 and Period From July 17, 1989 (Date of Inception)
to June 30, 1997.
Notes to Condensed Financial Statements - June 30, 1997. 6
Item 2. Management's Discussion and Analysis of Financial Condition and 8
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
- ------- ---------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K 12
- ------- --------------------------------
</TABLE>
Page 2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- ------------
ASSETS (Unaudited)
<S> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 14,635,028 $ 18,728,427
Trade accounts receivable (less allowances of $710 at June 30,
1997 and $2,411 at December 31, 1996) . . . . . . . . . . . . . . 2,339 3,475
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,705 100,399
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . 153,889 178,137
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 15,045,961 19,010,438
Equipment and improvements:
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . 3,187,318 2,993,555
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . 462,855 445,926
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . 254,766 254,766
------------ ------------
3,904,939 3,694,247
Less accumulated depreciation . . . . . . . . . . . . . . . . . . 2,297,932 2,033,392
------------ ------------
1,607,007 1,660,855
Other long term assets . . . . . . . . . . . . . . . . . . . . . . . 16,841 16,841
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,669,809 $ 20,688,134
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 264,468 $ 168,911
Accrued royalties - related party . . . . . . . . . . . . . . . . 40,000 30,000
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . 338,927 309,855
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . 643,395 508,766
Deferred rental expense . . . . . . . . . . . . . . . . . . . . . . . 3,022 2,957
Stockholders' equity:
Convertible debentures . . . . . . . . . . . . . . . . . . . . . . -- 909,198
Preferred stock, no par value:
Authorized - 10,000,000 shares; no shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common Stock, no par value:
Authorized - 100,000,000 shares; issued and outstanding -
24,776,763 shares at June 30, 1997 and 24,276,080 shares
at December 31, 1996 . . . . . . . . . . . . . . . . . . . 66,489,565 65,675,743
Notes receivable from common stock sales . . . . . . . . . . . . . (71,875) (71,875)
Unearned stock compensation . . . . . . . . . . . . . . . . . . . (155,159) (328,455)
Deficit accumulated during the development stage . . . . . . . . . (50,239,139) (46,008,200)
------------ ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 16,023,392 20,176,411
------------ ------------
Total liabilities and stockholders' equity . . . . . . . . . . . . . $ 16,669,809 $ 20,688,134
============ ============
</TABLE>
Note: The condensed balance sheet at December 31, 1996 has been derived from
the audited financial statements of AER Energy Resources, Inc. at that date but
does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See notes to condensed financial statements.
Page 3
<PAGE> 4
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, INCEPTION) TO
------------------------------ ---------------------------- June 30,
1997 1996 1997 1996 1997
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . $ 11,403 $ 5,363 $ 23,718 $ 20,091 $ 253,493
Cost of sales . . . . . . . 679,292 378,709 973,117 932,381 5,057,004
------------ ------------ ----------- ----------- ------------
Gross margin . . . . . . . (667,889) (373,346) (949,399) (912,290) (4,803,511)
Costs and expenses:
Research and development
- related party . . . . . -- -- -- -- 1,145,913
- other . . . . . . . . . 1,030,082 1,048,224 2,224,474 1,704,661 27,771,341
Marketing, general and
administrative
- related party . . . . . 24,543 49,840 49,050 99,397 1,192,151
- other . . . . . . . . . 705,992 737,195 1,455,186 1,478,734 17,880,225
------------ ------------ ----------- ----------- ------------
Total costs and expenses. . 1,760,617 1,835,259 3,728,710 3,282,792 47,989,630
------------ ------------ ----------- ----------- ------------
Operating loss . . . . . . (2,428,506) (2,208,605) (4,678,109) (4,195,082) (52,793,141)
Interest income . . . . . . 224,258 254,450 468,607 489,824 3,155,005
Interest expense
- related parties . . . . -- -- -- -- (264,445)
------------ ------------ ----------- ----------- ------------
Net loss . . . . . . . . . $ (2,204,248) $ (1,954,155) $(4,209,502) $(3,705,258) $(49,902,581)
============ ============ =========== =========== ============
Net loss per share . . . . $ (0.09) $ (0.08) $ (0.17) $ (0.17) $ (3.72)
============ ============ =========== =========== ============
Weighted average shares
outstanding . . . . . . . 24,566,898 23,153,314 24,445,575 21,232,044 13,422,961
</TABLE>
See notes to condensed financial statements.
Page 4
<PAGE> 5
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM JULY
17, 1989 (DATE
SIX MONTHS ENDED JUNE 30, OF INCEPTION) TO
------------------------------- June 30,
1997 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,209,502) $ (3,705,258) $ (49,902,581)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization. . . . . . . . . . . . . . 264,540 288,310 2,693,939
Amortization of unearned stock compensation. . . . . . . 56,483 72,872 567,950
Grant of compensatory stock options. . . . . . . . . . . -- -- 14,063
Loss on disposal of equipment. . . . . . . . . . . . . . -- 7,890 38,591
Deferred rental expense . . . . . . . . . . . . . . . . 65 (3,447) 3,022
Accretion of discount on marketable securities . . . . . -- -- (187,407)
Changes in operating assets and liabilities:
Trade accounts receivable. . . . . . . . . . . . . . . 1,136 745 (2,339)
Inventories. . . . . . . . . . . . . . . . . . . . . . (154,306) 10,110 (254,705)
Prepaid expenses and other current assets. . . . . . . 24,248 (43,640) (154,199)
Accounts payable . . . . . . . . . . . . . . . . . . . 95,557 (106,281) 264,468
Accrued royalties payable-related party. . . . . . . . 10,000 20,000 40,000
Other current liabilities. . . . . . . . . . . . . . . 29,072 292,544 497,861
------------ ------------ ------------
Net cash used in operating activities. . . . . . . . . . . (3,882,707) (3,166,155) (46,381,337)
INVESTING ACTIVITIES:
Purchases of equipment and improvements. . . . . . . . . . (210,692) (78,577) (3,965,864)
Purchase of marketable securities. . . . . . . . . . . . . -- -- (11,512,296)
Purchase of license agreement. . . . . . . . . . . . . . . -- -- (250,000)
Proceeds from marketable securities. . . . . . . . . . . . -- -- 11,700,000
Changes in other assets . . . . . . . . . . . . . . . . . -- -- (140,501)
------------ ------------ ------------
Net cash used in investing activities. . . . . . . . . . . (210,692) (78,577) (4,168,661)
FINANCING ACTIVITIES:
Proceeds from revolving credit note to related parties . . -- -- 5,430,000
Issuance of convertible debentures, net of issuance costs. -- -- 9,834,500
Payments on notes payable to related parties . . . . . . . -- -- (1,150,000)
Payments received on promissory notes. . . . . . . . . . . -- -- 57,425
Issuance of common stock, exercise of stock options. . . . -- 12,440 133,546
Issuance of common stock, net of issuance costs. . . . . . -- 9,365,217 50,879,555
------------ ------------ ------------
Net cash provided by financing activities. . . . . . . . . -- 9,377,657 65,185,026
------------ ------------ ------------
(Decrease) increase in cash and cash equivalents . . . . . (4,093,399) 6,132,925 14,635,028
Cash and cash equivalents at beginning of period . . . . . 18,728,427 16,417,152 --
------------ ------------ ------------
Cash and cash equivalents at end of period . . . . . . . . $ 14,635,028 $ 22,550,077 $ 14,635,028
============ ============ ============
</TABLE>
See notes to condensed financial statements.
Page 5
<PAGE> 6
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
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
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. These financial statements should be read in conjunction with
the Company's audited financial statements included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1996. Operating results for the three and six month
periods ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997 or any interim period.
2. SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AER Energy Resources, Inc. was incorporated on July 17, 1989 and since
inception has engaged in the development and commercialization of high energy
density, rechargeable zinc-air batteries. The Company's operations to date
have primarily been focused on developing and updating the technology, setting
up the manufacturing process, testing and selling zinc-air batteries,
recruiting personnel and similar activities. The Company began selling its
first product in August 1994. Sales from August 1994 through June 30, 1997
have been minimal. Until significant product sales occur, the Company is
considered to be a development stage company for financial reporting purposes.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, bank deposits and highly
liquid investments with maturities of three months or less when purchased and
are stated at cost, which approximates market.
Page 6
<PAGE> 7
Inventories
The Company's inventory has been valued at the lower of cost or
market, using the first in, first out method. The components of inventory are
listed below.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
Raw material $ 229,544 $ 95,814
Work in process 24,659 4,585
Finished products 502 --
--------- ---------
Total $ 254,705 $ 100,399
========= =========
</TABLE>
Use of Estimates
In accordance with FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
the Company records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and
the undiscounted cash flows estimated to be generated by those assets are less
than the carrying amounts of those assets. Based on the Company's estimate of
future undiscounted cash flows, the Company expects to recover the carrying
amounts of its fixed assets. Nonetheless, it is reasonably possible that the
estimate of undiscounted cash flows may change in the near term resulting in
the need to write-down those assets to fair value. During the three and six
months ended June 30, 1996, the Company recorded a write-off of obsolete
equipment with a net book value of $0 and $7,890, respectively, which was
included in marketing, general and administrative expenses.
Page 7
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Since its inception, the Company has been a development stage company
primarily engaged in developing rechargeable zinc-air battery technology,
establishing the manufacturing process, defining and developing market
opportunities, testing and selling rechargeable zinc-air batteries and
recruiting and training personnel. The Company currently markets two zinc-air
accessory batteries, the AER Energy PowerSlice LXTM and the PowerLinkTM. The
PowerSlice LX is designed for the Hewlett-Packard OmniBook 600 and 800 portable
computers. The PowerLink is designed for the OmniQuestTM satellite telephone
system manufactured by Mitsubishi Electric Corporation. The Company has
recorded minimal revenues from the sales of these products for the three and
six month periods ended June 30, 1997. The Company has incurred cumulative
losses of $49.9 million since inception to June 30, 1997 and expects to
continue to incur operating losses at least through the end of 1998.
The Company was formed to develop and commercialize rechargeable
zinc-air batteries for portable electronic products using technology licensed
from Dreisbach Electromotive, Inc. ("DEMI"). DEMI was formed in 1982 to
conduct research and development on electric vehicles and battery systems
utilizing, among others, zinc-air technology. DEMI's zinc-air development
programs included applications for electric vehicles and portable products.
The Company has licensed, through DEMI (the "DEMI License"), the rights to use
certain DEMI technology including zinc-air, in non-motor vehicle applications,
while DEMI has retained the rights to zinc-air technology for motor vehicle
applications and to its other technologies for motor vehicle applications and
batteries producing over 500 watts continuous power output. Effective October
15, 1993, the DEMI License was amended so that, under certain circumstances,
some or all of the royalties due under the DEMI License are payable to the
shareholders of DEMI rather than to DEMI.
Results of Operations
Three Months Ended June 30, 1997 and 1996
The Company generated net revenues of $11,000 for the three months
ended June 30, 1997, compared to $5,000 for the three months ended June 30,
1996.
The Company's cost of sales for the three months ended June 30, 1997
increased to $679,000 from $379,000 for the three months ended June 30, 1996.
The high cost of sales relative to revenues is primarily due to the
manufacturing inefficiencies and high material costs resulting from low
production volumes. During the quarter ended June 30, 1997, the Company also
experienced increased cost of sales expense related to the manufacture of
PowerLink batteries.
Page 8
<PAGE> 9
Research and development expenses decreased to $1,030,000 for the
three months ended June 30, 1997 from $1,048,000 for the same period in 1996.
This decrease was due in part to a $29,000 reduction in the manufacturing
overhead costs allocated to research and development in the period ended June
30, 1997 as compared to the same period in 1996. This allocation reflects the
use of the manufacturing facilities for technology development and product
testing. The Company also experienced a $23,000 decrease in material, design
and tooling costs. These decreases were partially offset by increases in
personnel-related costs and facility expenses of $22,000 and $14,000,
respectively.
Marketing, general, and administrative expenses decreased to $731,000
for the quarter ended June 30, 1997 from $787,000 for the same period in 1996.
This decrease was primarily due to a $25,000 reduction in minimum royalty
expense pursuant to the DEMI License, a $14,000 reduction in warranty expense
and a $13,000 reduction in travel related costs.
Six Months Ended June 30, 1997 and 1996
The Company generated net revenues of $24,000 for the six months ended
June 30, 1997 as compared to $20,000 for the six month period ended June 30,
1996.
The Company's cost of sales for the six months ended June 30, 1997 was
$973,000 as compared to $932,000 for the same period in 1996. The high cost of
sales relative to revenues is primarily due to low production volumes. During
the six months ended June 30, 1997, the Company also experienced an increase in
cost of sales expense related to the manufacture of PowerLink batteries.
Research and development expenses increased to $2,224,000 for the six
months ended June 30, 1997 from $1,705,000 for the same period in 1996. This
increase was primarily the result of a $394,000 increase in the manufacturing
overhead costs allocated to research and development during the six months
ended June 30, 1997 as compared to the same period in 1996. The Company also
experienced a $59,000 increase in material, design and tooling costs, a $53,000
increase in personnel-related costs, and a $27,000 increase in facility
expenses. These increases were partially offset by a $16,000 decrease in
depreciation expense.
Marketing, general and administrative expenses decreased to $1,504,000
for the six months ended June 30, 1997 from $1,578,000 for the same period in
1996. This decrease was due primarily to a $69,000 decrease in warranty
expense, a $50,000 decrease in minimum royalty expense pursuant to the DEMI
License and a $40,000 decrease in the write-off of obsolete inventory. The
decrease in marketing, general and administrative expenses from 1996 to 1997
also resulted from an $18,000 filing fee paid to NASDAQ during the six months
ended June 30, 1996. The Company also experienced a $23,000 reduction in
marketing, advertising and public relations costs and a $16,000 decrease in
directors' compensation expense relating to the Non-Employee Directors'
Restricted Stock Plan. These decreases were partially offset by a $116,000
increase in personnel-related costs and a $34,000 credit to bad debt expense in
the six-month
Page 9
<PAGE> 10
period ended June 30, 1996 resulting from the collection of a receivable that
had been written off.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
As of June 30, 1997, the Company had cash and cash equivalents of
$14.6 million. The Company anticipates using these funds as needed to fund
capital equipment purchases, research and development efforts, sales and
marketing activities, production of commercial and prototype zinc-air battery
products, development of relationships with manufacturers (OEMs), working
capital and general corporate purposes as determined by management. In the
interim, the Company invests any excess funds in government securities and
other short-term, investment grade, interest-bearing instruments.
Net cash used in operating activities increased to $3.9 million for
the six months ended June 30, 1997 from $3.2 million for the same period in
1996, primarily due to the increases in costs and expenses discussed above in
"Results of Operations".
For the six months ended June 30, 1997, the Company used net cash of
$211,000 for equipment purchases as compared to $79,000 for equipment purchases
for the same period in 1996.
During the six months ended June 30, 1997, the remaining $900,000 in
principal of the Company's 8% convertible debentures plus accrued interest were
converted into 518,683 shares of the Company's common stock at an average
conversion price of $1.93 per share.
Pursuant to the DEMI License, the Company has agreed to pay DEMI
royalties of 4% of net sales, subject to certain minimum amounts and to possible
increases or decreases to a maximum of 4% and a minimum of 2%, as specified in
the DEMI License. The applicable percentage of royalties is currently 4% of net
sales. The Company recorded royalty expense for the six month periods ended
June 30, 1997 and 1996 of $50,000 and $100,000, respectively. Minimum royalty
expenses are included in marketing, general and administrative expenses in the
statements of operations. Actual royalties due as a percentage of sales under
the DEMI License are recorded in cost of sales. As of June 30, 1997 and
December 31, 1996, $40,000 and $30,000, respectively, of these royalty payments
remained unpaid. The future minimum royalty payments specified by the DEMI
License consist of the following:
<TABLE>
<CAPTION>
Year Ending December 31,
<S> <C>
1997..................................$100,000
1998..................................$100,000
1999..................................$ 50,000
</TABLE>
The Company currently anticipates that its existing cash balances will
fund operations and continue technology development at the current level of
activity into 1998. However, it may
Page 10
<PAGE> 11
be necessary for the Company to increase its research and development and
marketing expenses as it continues to work to improve its zinc-air technology
and to expand its relationships with OEMs of portable computers and other
portable electronic devices. It may also be necessary for the Company to expand
its manufacturing capacity in order to meet anticipated future sales
requirements. The Company will continue to need working capital beyond that
generated by its May 1996 stock and warrant placement, and depending on the
Company's results of operations, the Company may find it necessary to obtain
additional working capital on an accelerated basis or in amounts greater than
currently anticipated. There can be no assurance that additional equity or debt
financing will be available when needed or on terms acceptable to the Company.
To date, both costs and development times have substantially exceeded the
Company's forecasts. In addition, the battery business is a chemical processing
business and, as such, the Company will require specialized equipment to
manufacture its zinc-air batteries. Future equipment additions could exceed
current Company estimates in cost, complexity and development time.
The market price of the Company's common stock has fluctuated
significantly since it began to be publicly traded on July 1, 1993 and may
continue to be highly volatile. Factors such as delays by the Company in
achieving development goals, inability of the Company to commercialize or
manufacture its products, fluctuation in the Company's operating results,
changes in earning estimates by analysts, announcements of technological
innovations or new products by the Company or its competitors, perceived
changes in the markets for various OEM applications incorporating the Company's
products, the announcement or termination of relationships with OEMs, and
general market conditions may cause significant fluctuations in the market
price of the Company's common stock. The market prices of the stock of many
high technology companies have fluctuated substantially, often unrelated to the
operating or research and development performance of the specific companies.
Such market fluctuations could adversely affect the market price for the
Company's common stock.
This report contains statements which to the extent that they are not
recitations of historical fact, may constitute "forward looking statements"
within the meaning of applicable federal securities laws. All forward looking
statements contained in this report are intended to be subject to the safe
harbor protection provided by applicable federal securities laws. For a
discussion identifying some important factors that could cause actual results
to vary materially from those anticipated in the forward looking statements
made by the Company, see the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, including, but not limited to, the "Liquidity, Capital
Resources and Financial Condition" discussion in Management's Discussion and
Analysis of Financial Condition and Results of Operations.
AER Energy and AER Energy PowerSlice LX are trademarks of AER Energy
Resources, Inc. PowerLink is a trademark of Alegna, Inc.
Page 11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1997 Annual Meeting of Shareholders was held on May 22,
1997. The Company's shareholders voted to elect all six of the Company's
nominees to the Company's Board of Directors. The following table shows the
number of votes cast for each nominee and the number of votes withheld as to
each nominee. There were no abstentions or broker non-votes as to any nominee,
and there were no nominees other than those named in the Company's proxy
statement (who are set forth below).
<TABLE>
<CAPTION>
Name of Nominee Affirmative Votes Votes Withheld
--------------- ----------------- --------------
<S> <C> <C>
David G. Brown 20,872,879 220,532
David W. Dorheim 20,818,529 274,882
William L. Jackson 20,868,279 225,132
H. Douglas Johns 20,875,529 217,882
Jon A. Lindseth 20,874,529 218,882
John L. Wilkes 20,869,329 224,082
</TABLE>
In addition to the election of directors, the following matter was
voted upon and approved by a vote of 20,031,952 for, 551,810 against and 90,575
abstentions or broker non-votes as to the proposal:
Approval to amend the Company's 1992 Stock Option Plan, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
11 Statement of Computation of Earnings per Share.
27 Financial Data Schedule (for SEC use only).
</TABLE>
(B) REPORTS ON FORM 8-K:
The registrant did not file any reports on Form 8-K during the three
months ended June 30, 1997.
Page 12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AER ENERGY RESOURCES, INC.
Date: August 11, 1997 By: /s/ David W. Dorheim
-------------------------------------
David W. Dorheim, President and
Chief Executive Officer
Date: August 11, 1997 By: /s/ M. Beth Donley
-------------------------------------
M. Beth Donley, Vice President,
Chief Financial Officer, Secretary
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Page 13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<S> <C> <C>
11 Statement of Computation of Earnings per Share. 15
27 Financial Data Schedule
</TABLE>
Page 14
<PAGE> 1
EXHIBIT 11
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, INCEPTION) TO
------------------------------ ------------------------------- JUNE 30,
1997 1996 1997 1996 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Weighted average Common
Stock outstanding . . . 24,566,898 23,153,314 24,445,575 21,232,044 12,043,584
Common Stock issued and
stock options granted in
accordance with SAB
No. 83 . . . . . . . . -- -- -- -- 1,379,377
------------- ------------- ------------- ------------- -------------
Total . . . . . . . . . . 24,566,898 23,153,314 24,445,575 21,232,044 13,422,961
============= ============= ============= ============= =============
Net loss . . . . . . . . $ (2,204,248) $ (1,954,155) $ (4,209,502) $ (3,705,258) $ (49,902,581)
============= ============= ============= ============= =============
Per share amount . . . . $ (0.09) $ (0.08) $ (0.17) $ (0.17) $ (3.72)
============= ============= ============= ============= =============
</TABLE>
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
BALANCE SHEETS AND SUMMARY OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10Q FOR THE QUARTER ENDED JUNE 30, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,635,028
<SECURITIES> 0
<RECEIVABLES> 3,049
<ALLOWANCES> 710
<INVENTORY> 254,705
<CURRENT-ASSETS> 15,045,961
<PP&E> 3,904,939
<DEPRECIATION> 2,297,932
<TOTAL-ASSETS> 16,669,809
<CURRENT-LIABILITIES> 643,395
<BONDS> 0
0
0
<COMMON> 66,489,565
<OTHER-SE> (50,466,173)
<TOTAL-LIABILITY-AND-EQUITY> 16,669,809
<SALES> 11,403
<TOTAL-REVENUES> 11,403
<CGS> 679,292
<TOTAL-COSTS> 679,292
<OTHER-EXPENSES> 1,760,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,204,248)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,204,248)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,204,248)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
</TABLE>
