<PAGE>
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 September 30, 1996.
[ ] 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 - 21810
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Amerigon Incorporated
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California 95-431855-4
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404 East Huntington Drive, Monrovia, California 91016
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(818) 932-1200
----------------------------------------
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 requirement for the past 90 days. Yes X No
--- ---
At October 23, 1996 the registrant had 7,068,500 shares of Class A Common
Stock; no par value; 0 shares of Class B Common Stock, no par value; and 0
shares Preferred Stock, no par value, issued and outstanding.
(1)
<PAGE>
AMERIGON INCORPORATED
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheet 3
Condensed Statement of Operations 4
Condensed Statement of Cash Flows 5
Condensed Statement of Shareholders' Equity 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II OTHER INFORMATION 15
Signature 15
(2)
<PAGE>
AMERICAN INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
----------------------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $4,486 $268
Accounts receivable less allowance of $100 1,052 1,053
Unbilled revenue 1,468 2,565
Inventories, primarily raw materials 243 127
Deferred contract costs 700
Prepaid expenses and other assets 961 460
----------------------------
Total current assets 8,210 5,173
Property and Equipment, net 785 703
----------------------------
Total Assets $8,995 $5,876
----------------------------
----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,123 $1,533
Deferred revenue 94 141
Accrued liabilities 512 416
Note payable to shareholder 200
Bank loan payable 2,532
----------------------------
Total current liabilities 1,729 4,822
----------------------------
Long Term Portion of Lease Liability 68 50
----------------------------
Shareholders' Equity:
Preferred stock, no par value; 5,000,000 shares
authorized, none issued and outstanding
Common stock:
Class A -no par value; 17,000,000 shares authorized
4,068,500 and 4,050,000 issued and outstanding at
September 30, 1996 and December 31, 1995, respectively
(An additional 3,000,000 shares held in escrow) 17,270 17,321
Class B -no par value; 3,000,000 shares authorized,
none issued and outstanding
Contributed capital 3,115 3,115
Deficit accumulated during development stage (13,187) (19,432)
----------------------------
Total shareholders' equity 7,198 1,004
----------------------------
Total Liabilities and Shareholders' Equity $8,995 $5,876
----------------------------
----------------------------
</TABLE>
See accompanying notes to the condensed financial statements.
(3)
<PAGE>
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
From
April 23, 1991
Three Months Nine Months (Inception)
Ended September 30, Ended September 30, to September 30,
1995 1996 1996 1996 1996
------------------- ------------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Development contracts and
related grants $2,146 $1,768 $4,326 $6,382 $15,196
Grants 74 119 480 119 5,943
------------------- ------------------- ----------------
Total revenues 2,220 1,887 4,806 6,501 21,139
------------------- ------------------- ----------------
Costs And Expenses:
Direct development contract and
related grant costs 1,463 1,567 3,895 9,142 15,927
Direct grant costs 66 101 390 101 4,623
Research and development 452 545 1,785 1,544 8,203
Selling, general and administrative,
including reimbursable expenses 753 657 1,820 1,838 12,215
------------------- ------------------- ----------------
Total Costs and Expenses 2,734 2,870 7,890 12,625 40,968
------------------- ------------------- ----------------
Operating Loss (514) (983) (3,084) (6,124) (19,829)
Interest Income 19 1 124 42 560
Interest Expense (84) (163) (163)
------------------- ------------------- ----------------
Net Loss ($495) ($1,066) ($2,960) ($6,245) ($19,432)
------------------- ------------------- ----------------
------------------- ------------------- ----------------
Net Loss Per Share ($0.15) ($0.26) ($0.90) ($1.54)
------------------- -------------------
------------------- -------------------
Weighted Average Number
Of Shares Outstanding 3,300 4,069 3,300 4,060
------------------- -------------------
------------------- -------------------
</TABLE>
See accompanying notes to the condensed financial statements.
(4)
<PAGE>
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS )
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Deficit
------------ Accumulated
Preferred Stock Class A Class B During the
--------------- ------- ------- Contributed Development
Shares Amount Shares Amount Shares Amount Capital Stage Total
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 - - 4,050 $17,270 - - $3,115 ($13,187) $7,198
Exercise of stock options 19 145 145
Expenses of sale of stock (94) (94)
Net Loss (6,245) (6,245)
------------------------------------------------------------------------------------
Balance at September 30, 1996 - - 4,069 $17,321 - - $3,115 ($19,432) $1,004
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed financial statements.
(5)
<PAGE>
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
From
April 23, 1991
Nine Months (inception) To
Ended September 30, September 30,
1995 1996 1996
------------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Operating Activities:
Net loss ($2,960) ($6,245) ($19,432)
Adjustments to reconcile net loss to
cash used in operating acitivites:
Depreciation and amortization 221 269 823
Provision for doubtful accounts 110
Stock option compensation 712
Contributed capital -founders'
services provided without cash compensation 300
Change in operating assets and liablilities:
Accounts receivable 457 (1) (1,163)
Unbilled revenue (1,036) (1,097) (2,565)
Inventory (515) 116 (127)
Deferred contract costs (700) (700)
Prepaid expenses and other assets (204) 501 (459)
Accounts payable 342 410 1,533
Deferred revenue (868) 47 141
Accrued liabilities (22) (96) 416
------------------- --------------
Net cash used in operating acitivities (4,585) (6,796) (20,411)
------------------- --------------
Investing Activities:
Purchase of property and equipment (276) (187) (1,458)
Short term investments 2,910 9
------------------- --------------
Net cash provided by (used in) investing activities 2,634 (187) (1,449)
------------------- --------------
Financing Activities:
Proceeds (expenses) from sale of common stock, net (94) 17,176
Proceeds from sale of warrants 1
Proceeds from exercise of stock options 145 145
Borrowing under line of credit 5,180 6,280
Repayment of line of credit (2,648) (3,748)
Repayment of capital lease (10) (18) (28)
Proceeds from note payable to shareholder 200 200
Notes payable to shareholders contributed
to capital 2,102
------------------- --------------
Net cash provided by (used in) financing activities (10) 2,765 22,128
------------------- --------------
Net increase (decrease) in cash (1,961) (4,218) 268
Cash and cash equivalents, beginning of period 2,405 4,486 -
------------------- --------------
Cash and cash equivalents, end of period $444 $268 $268
------------------- --------------
------------------- --------------
</TABLE>
See accompanying notes to the condensed financial statements.
(6)
<PAGE>
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY:
Amerigon Incorporated (the "Company") is a development stage enterprise,
which was incorporated in California on April 23, 1991 primarily to develop,
manufacture and market proprietary, high technology automotive components and
systems for gasoline-powered and electric vehicles.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF CERTAIN ACCOUNTING POLICIES:
The accompanying condensed balance sheet as of September 30, 1996 and the
condensed statements of operations and cash flows for the three months and for
the nine months ended September 30, 1996 and for the period from April 23, 1991
(inception) to September 30, 1996 have been prepared by the Company without
audit. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) necessary for fair presentation have been included. The
results of operations for the three month and the nine month periods ended
September 30, 1996 are not necessarily indicative of the operating results for
the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Form 10-K for the year ended December 31, 1995.
DEVELOPMENT CONTRACT REVENUES AND RELATED GRANTS. The Company has entered
into a number of fixed price contracts under which revenue is recognized using
the percentage of completion method, or in the case of short duration contracts,
when the prototype or services are delivered. Development contract revenues
earned are recorded on the balance sheet as Unbilled Revenue until billed. The
Company has received government grants which parallel one of its development
contracts. These grants are included in development contract and related grant
revenues.
GRANT REVENUES. Revenue from government agency grants and other sources
pursuant to cost-sharing arrangements is recognized when reimbursable costs have
been incurred. Grant revenues earned are recorded on the balance sheet as
Unbilled Revenue until billed.
RECLASSIFICATIONS. Certain reclassifications were made to the Statement of
Operations for the Three Months and Nine Months Ended September 30, 1995 to make
them consistent with the classifications in the corresponding periods of 1996.
(7)
<PAGE>
NOTE 3 - LOSS ON DEVELOPMENT CONTRACT:
In the second quarter of 1996, the Company recorded a provision of
$1,355,000 for the loss expected on the major electric vehicle contract. The
estimated ultimate loss on the contract was increased as of September 30,
1996 by $160,000 plus allocated overhead of $110,000 based upon actual costs
incurred in the third quarter 1996 and the Company's estimate of the
remaining costs to complete the contract. The contract loss reserve has been
reduced by actual costs incurred in excess of revenues recognized during the
third quarter of 1996. The balance of the contract loss reserve of $110,000
has been classified as a reduction of unbilled revenue.
NOTE 4 - NET LOSS PER SHARE:
The Company's net loss per share calculations are based upon the weighted
average number of shares of common stock outstanding. Excluded from this
calculation are the 3,000,000 Escrowed Contingent Shares (Note 4). Common stock
equivalents (stock options and stock warrants) are anti-dilutive in both periods
and are excluded from the net loss per share calculation.
NOTE 5 - ESCROW AGREEMENT
Prior to the effective date of the June 1993 initial public offering,
3,000,000 shares of the Company's Class A Common Stock ("Escrowed Contingent
Shares") were deposited into escrow by the then existing shareholders in
proportion to their then current holdings. These shares are not transferable
(but may be voted) and will be released from escrow in the event the Company
attains certain earnings levels (which have been adjusted for the December 29,
1995 private placement of 750,000 shares) during the period through December 31,
1998. The market price targets of the Class A Common Stock to reach specified
levels during the period through June 10, 1996 were not met.
The release of the Escrowed Contingent Shares, if any, will be deemed
compensatory and, accordingly, will result in charges to earnings equal to the
fair market value of the Escrowed Contingent Shares recorded ratably over the
period beginning on the date when management determines that any of the
specified events are probable of being attained and ending on the date on which
the Escrowed Contingent Shares are released. At the time a goal is attained,
previously unrecognized compensation expense will be adjusted by a one-time
charge based on the then fair market value of the shares released from Escrow.
Such charges could substantially reduce the Company's net income or increase the
Company's loss for financial reporting purposes in the periods such charges are
recorded. The specified events are not considered probable of attainment at
this time.
On April 30, 1999, all shares that have not been released from Escrow will
automatically be exchanged for shares of Class B Common Stock, which will then
be released from Escrow. Any dividends or other distributions made with respect
to Escrowed Contingent Shares that have not been released from Escrow as Class A
Common Stock will be forfeited and contributed to the capital of the Company on
April 30, 1999.
NOTE 6 - GOING CONCERN:
The Company expects to incur losses for the foreseeable future due to the
continuing cost of its product development and marketing activities. Cash
inflows during the development and early stage production period are dependent
upon achieving certain billing milestones under existing development contracts
and grants, and on obtaining new production and/or development contracts. Cash
outflows
(8)
<PAGE>
are dependent upon the level and timing of production and/or development work
and the amount of research and development and overhead expenses. Cash inflows
must be supplemented by cash from debt and/or equity financing. The Company is
presently seeking both short and long term financing. There can be no assurance
such financing will be obtained. If the Company is unable to obtain financing
in the near future, the Company will be unable to pay its trade and other
creditors.
The Company's bank line of credit has been extended to October 31, 1996 and
the bank has verbally agreed to extend the term to November 30, 1996. As of
September 30, 1996, the Company is in violation of certain financial and other
covenants contained in the loan agreement for which the Company has requested a
waiver or forbearance agreement from the bank. No assurances can be given that
the bank will approve the extension of the loan term through November 30, 1996
or agree to the requested waiver and forbearance. If the bank were to
accelerate the maturity date of the line of credit, the Company would not have,
absent additional financing, sufficient funds to repay the loan.
(9)
<PAGE>
PART 1
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER 1996 COMPARED WITH THIRD QUARTER 1995
REVENUES. Revenues for the three months ended September 30, 1996 ("Third
Quarter 1996") were $1,887,000 as compared with revenues of $2,220,000 in the
three months ended September 30, 1995 ("Third Quarter 1995"). Approximately
$1,609,000 of Third Quarter 1996 revenue relates to a single electric vehicle
development contract and related grants, which is a decrease of approximately
$278,000 compared to the corresponding amount in Third Quarter 1995 which
contained revenues from two new grants with respect to development activities
that had already been commenced. Development contract revenues are expected
to decline significantly in the next two fiscal quarters because the activity
on the major electric vehicle development contract is expected to diminish
during the fourth quarter of 1996 and ultimately conclude at the end of 1996
with no replacement contract presently scheduled to follow. Therefore, the
Company does not expect any revenues from this major electric vehicle
development contract in 1997. The percentage of completion method of
accounting is used for this contract and, accordingly, revenues and gross
profit are recognized as work is performed based on the relationship between
actual costs incurred and total estimated costs at completion. Revenues and
gross profit are recognized prospectively after taking into account revisions
in estimated total contract costs and contract values, and estimated losses
are recorded when identified. Grant revenue is recorded when reimbursable
costs are incurred.
In the Third Quarter 1996, two prototypes of the vehicle were improved
with design modification changes. Kits for all vehicle frames including
motor controllers required under the major electric vehicle development
contract were completed and shipped to the customer and final tooling for
body panels and interior portions of the vehicle and remaining parts were
being ordered during the Third Quarter 1996. By comparison, in the Third
Quarter 1995, the development contract was in an early stage where the scope
of work was beginning to increase from engineering design to ordering tooling
for parts.
During the Third Quarter 1996, development continued on the climate
control seat system and the radar system which was funded in part by
development contracts. Revenues recognized for the development of the seat
systems and radar, and for the sale of interactive voice navigation systems
("IVS"), was $157,000 in the Third Quarter 1996 compared to $259,000 in the
Third Quarter 1995, reflecting fewer of such development contracts in process
in the Third Quarter 1996 and continued slow sales of the IVS product.
Grant revenues from activities not related to development contracts totaled
$119,000 in the Third Quarter 1996, compared to $74,000 in the Third Quarter
1995. In the Third Quarter 1996, the Company's two grant contracts were larger
than those in the Third Quarter 1995.
DIRECT DEVELOPMENT CONTRACT AND RELATED GRANT COSTS. Direct development
contract and related grant costs increased to $1,567,000 in the Third Quarter
1996 compared to $1,463,000 in the Third Quarter 1995. The principal activity
in both periods relates to the Company's electric vehicle program. Two
prototypes of the vehicle were improved with design modification changes.
(10)
<PAGE>
Kits for all vehicle frames including motor controllers were completed and
shipped to the customer and final tooling for body panels and interior portions
of the vehicle and remaining parts were being ordered during the Third Quarter
1996.
DIRECT GRANT COSTS. Direct Grant Costs were $101,000 in the Third
Quarter 1996 compared to $66,000 in the Third Quarter 1995. These costs are
related to the projects for which grant revenues are reported. In 1996 grant
activity related to an IVS and radar systems project and in 1995 activity
related to a prior electric vehicle project and a seat project.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $545,000 in the Third Quarter 1996 from $452,000 in Third Quarter
1995 due to the fact that the level of activities in all programs was greater in
the Third Quarter 1996 than in the Third Quarter 1995 and less of the costs
were funded by development contracts and grants. The Company's research and
development expenses fluctuate significantly from period to period, due to both
changing levels of activity and changes in the amount of such activities that
are covered by customer contracts or grants. Where possible, the Company seeks
funding from third parties for its research and development activities. When
the Company successfully obtains such funding, the expenses attributable to such
research and development activities are reported in direct development contracts
and related grant costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $657,000 in Third Quarter 1996 compared to
$753,000 in Third Quarter 1995. Direct and indirect overhead expenses included
in SG&A which are associated with development contracts are allocated to such
contracts. The Company made a concerted effort to control these expenses in the
Third Quarter 1996.
INTEREST EXPENSE. The interest expense in the Third Quarter 1996 is
related to the bank line of credit obtained to finance work on the major
electric vehicle contract.
NINE MONTHS 1996 COMPARED WITH NINE MONTHS 1995
REVENUES. Revenues for the nine months ended September 30, 1996 ("1996")
were $6,501,000 as compared with revenues of $4,806,000 in the nine months
ended September 30, 1995 ("1995"). Approximately $5,535,000 of 1996 revenue
relates to a single electric vehicle development contract and related grants,
which is an increase of approximately $1,871,000 over 1995. Development
contract revenues are expected to decline significantly in the next two
fiscal quarters because the activity on the major electric vehicle
development contract is expected to diminish during the fourth quarter of
1996 and ultimately conclude at the end of 1996 with no replacement contract
presently scheduled to follow. Therefore, the Company does not expect any
revenues from this major electric vehicle development contract in 1997. The
percentage of completion method of accounting is used for this contract and,
accordingly, revenues and gross profit are recognized as work is performed
based on the relationship between actual costs incurred and total estimated
costs at completion. Revenues and gross profit are recognized prospectively
after taking into account revisions in estimated total contract costs and
contract values, and estimated losses are recorded when identified. Grant
revenue is recorded when reimbursable costs are incurred.
The level of activity in the contracts involved considerably more labor and
material expenses in 1996 compared to the beginning stages of the contracts in
1995 when engineering design was the principal activity. In 1996, two prototypes
of the vehicle were constructed and improved with design modification changes.
Kits for all vehicle frames with motor controllers required under the major
electric vehicle development contract were completed and
(11)
<PAGE>
shipped to the customer and final tooling for body panels and interior portions
of the vehicle and remaining parts were being ordered.
During 1996, development continued on the climate control seat system and
the radar system, some of which was funded pursuant to development contracts.
The magnitude of the revenues recognized for the development of the seat systems
and radar, and for the sale of IVS products in 1996 was $847,000 compared to
$727,000 in 1995. The Company began selling IVS products in December 1995.
Demand for the IVS product in 1996 was weak.
Grant revenues in 1996 of approximately $119,000 were related to new grants
for the IVS and radar products, compared to $480,000 in 1995 that were related
to two prior electric vehicle projects and a project in the seat systems area.
Certain other grant revenues that are related to the electric vehicle
development have been combined with the development contract revenue. These
grant revenues totaled $815,000 in 1996 compared to $872,000 in 1995.
DIRECT DEVELOPMENT CONTRACT AND RELATED GRANT COSTS. Direct development
contract and related grant costs increased to $9,142,000 in 1996 from
$3,895,000 in 1995 due to the increased activity in the Company's electric
vehicle program. In 1996, two prototypes of the vehicle were constructed and
improved with design modification changes, kits for all vehicle frames with
motor controllers were completed and shipped to the customer, and final
tooling for body panels and interior portions of the vehicle and remaining
parts were being ordered. In 1995, engineering design was the principal
activity. The amount for 1996 includes a provision of $1,625,000 for the
ultimate loss expected on the Company's major electric vehicle contract that
was provided for primarily in the second quarter of 1996. The cost overruns
were caused by unanticipated design and development problems and continued
delays in the completion of the contract, as well as other factors, which
resulted in higher labor costs together with higher than expected tooling
and material costs.
DIRECT GRANT COSTS. Direct Grant Costs in 1996 were $101,000 compared to
$390,000 in 1995. These costs are related to the projects for which grant
revenues are reported. The decrease in amount reflects the reduction in grant
project activities during 1996.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses were
$1,544,000 in 1996 compared to $1,785,000 in 1995. These expenses represent
unfunded research and development expenses. Expenses of research and
development projects that are specifically funded by development contracts from
customers are classified under direct development contract and related grant
costs or direct grant costs. The Company's research and development expenses
fluctuate significantly from period to period, due to both changing levels of
activity and changes in the amount of such activities that are covered by
customer contracts or grants. Where possible, the Company seeks funding from
third parties for its research and development activities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$1,838,000 in 1996 compared to $1,820,000 in 1995. Direct and indirect overhead
expenses included in SG&A which are associated with development contracts are
allocated to such contracts.
INTEREST INCOME (EXPENSE). The interest expense in 1996 is related to
the bank line of credit obtained to finance work on the major electric
vehicle contract. There was no such loan in 1995. Interest income decreased
to $42,000 in 1996 compared to $124,000 in 1995 reflecting the overall lower
cash balance during 1996.
(12)
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had working capital of $351,000.
The Company's principal sources of operating capital have been
the proceeds of its initial public offering in September 1993 and the private
placement of common stock in December 1995, together with revenues from grants,
development contracts and the sale of prototypes to customers. To a lesser
extent, the Company received capital contributions from the Company's principal
shareholders before becoming a public company and has received loans from the
Company's Chief Executive Officer and principal shareholder subsequent to such
date.
In 1996, cash and cash equivalents decreased by $4,218,000. Operating
activities used $6,796,000 of which $6,245,000 was for the operating loss,
$1,098,000 was for the increase in unbilled revenues and accounts receivable
(primarily related to the development contract and grant related to the
Company's electric vehicle program), and $700,000 was related to work on a
contract for a proposed joint venture company in India. Reductions of
$501,000 in prepaid expenses and other assets related to the electric vehicle
program and increases in accounts payable of $410,000 partially offset the
other uses of cash for operating activities. Investing activities used
$187,000 related to the purchase of property and equipment.
Financing activities provided $2,765,000 of which $2,532,000, net of
repayments, was from borrowing under a revolving bank line of credit established
to finance the cash flows of the major electric vehicle contract. The Company's
bank line of credit has been extended to October 31, 1996 and the bank has
verbally agreed to extend the term to November 30, 1996. As of September 30,
1996, the Company is in violation of certain financial and other covenants
contained in the loan agreement for which the Company has requested a waiver or
forbearance agreement from the bank. No assurances can be given that the bank
will approve the extension of the loan term through November 30, 1996 or agree
to the requested waiver and forbearance. If the bank were to accelerate the
maturity date of the line of credit, the Company would not have, absent
additional financing, sufficient funds to repay the loan.
The Company expects to incur losses for the foreseeable future due to the
continuing cost of its product development and marketing activities. To fund
its operations, the Company will continue to need cash from financing sources
unless and until such time as sufficient profitable production contracts are
obtained. Cash inflows during the development and early stage production period
are dependent upon achieving certain billing milestones under existing
development contracts and grants, and on obtaining new production and/or
development contracts. Cash outflows are dependent upon the level and timing of
production and/or development work and the amount of research and development
and overhead expenses. Cash inflows must be supplemented by cash from debt
and/or equity financing.
Since September 30, 1996, the Company's working capital has diminished to
almost zero. Moreover, the Company's borrowing capacity under its bank line of
credit is severely limited. The Company will be required to obtain significant
additional financing through bank borrowings, debt or equity financing or
otherwise to finance its current and planned operations. No assurance can be
given that any such financing will be obtained. If the Company does not obtain
such financing in the near future, the Company will be unable to pay its trade
and other creditors and may be required to curtail, abandon or dispose of one or
more of its operating activities. In any event, management believes that the
Company will be unable to obtain sufficient capital resources to continue to
pursue the further
(13)
<PAGE>
development, manufacture and sale of its four existing product lines. As a
result, the Company intends to concentrate its financial and other resources on
the development of the seat and radar technologies and to seek strategic or
financing partners for its electric vehicles and IVS technologies. No assurance
can be given, however, that such strategic or financial partners will be found.
Except for the historical information contained herein, the matters
discussed above include forward looking statements that involve risks and
uncertainties, including with respect to the electric vehicle project, potential
further delays in the completion of the contract, unanticipated costs associated
with the project which may cause the estimated loss to increase, unanticipated
product design problems and inability to obtain a financial or strategic
partner; and with respect to the overall operations and expected future
operating losses, the timing and amount of financing required to continue
operations; and other risks detailed from time to time in the Company's other
filings with the SEC.
(14)
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits: Not applicable.
Form 8-K (item 5) dated July 17, 1996
Signature
---------
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.
Amerigon Incorporated
---------------------
Registrant
Date: October 23, 1996 /s/ R. John Hamman, Jr.
-------------------------
R. John Hamman, Jr.
Vice President Finance and
Chief Financial Officer
(15)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 268
<SECURITIES> 0
<RECEIVABLES> 3,618
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0
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