<PAGE>
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
For the quarterly period ended September 30, 1998
[ ] 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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(Exact name of registrant as specified in its charter)
California 95-4318554
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5462 Irwindale Avenue, Irwindale, California 91706
- -------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (626) 815-7400
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 [ ]
At October 15, 1998 the registrant had 12,550,445 shares of Class A Common
Stock, no par value; no shares of Class B Common Stock, no par value; and no
shares Preferred Stock, no par value, issued and outstanding.
(1)
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AMERIGON INCORPORATED
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 2
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION 11
Item 6. Exhibits and Reports on Form 8-K
Signature 12
(2)
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PART I
ITEM 1. FINANCIAL STATEMENTS
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $6,037 $3,710
Short-term investments 2,400 -
Accounts receivable less allowance of $74 255 162
Receivable due from joint venture partner 1,000 -
Inventory 35 120
Prepaid expenses and other assets 196 111
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Total current assets 9,923 4,103
Property and equipment, net 645 694
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Total assets $10,568 $4,797
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilites:
Accounts payable $650 $132
Deferred revenue 97 44
Accrued liabilities 350 418
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Total current liabilities 1,097 594
Long-term portion of capital lease 41 20
Shareholders' equity:
Preferred stock, no par value; 5,000 shares
authorized, none issued and outstanding
Common stock:
Class A - no par value; 40,000 shares authorized, 9,550 issued and
outstanding at September 30, 1998 and December 31, 1997
(An additional 3,000 shares held in escrow) 28,149 28,149
Class B - no par value; 3,000 shares authorized,
none issued and outstanding - -
Contributed capital 9,882 9,882
Deficit accumulated during development stage (28,601) (33,848)
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Total shareholders' equity 9,430 4,183
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Total liabilities and shareholders' equity $10,568 $4,797
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</TABLE>
See accompanying notes to the condensed financial statements
(3)
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AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
From
April 23, 1991
Three Months Ended Nine Months Ended (inception)
September 30, September 30, to September 30,
1997 1998 1997 1998 1998
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product $ - $ 11 $ - $ 18 $ 18
Development contracts and
related grants 399 273 1,134 631 17,841
Grants - - 12 - 6,183
-------- -------- -------- -------- --------
Total revenues 399 284 1,146 649 24,042
Costs and expenses:
Product - 13 - 24 24
Direct development contract and
related grant costs 536 - 2,424 - 20,904
Direct grant costs - - 28 - 4,757
Research and development 591 1,119 1,303 3,271 14,130
Selling, general and administrative,
including reimbursable expenses 1,091 885 3,280 2,855 21,113
-------- -------- -------- -------- --------
Total costs and expenses 2,218 2,017 7,035 6,150 60,928
-------- -------- -------- -------- --------
Operating loss (1,819) (1,733) (5,889) (5,501) (36,886)
Interest income 131 47 346 221 1,264
Interest expense - - (117) - (282)
Gain on disposal of assets 2,363 (29) 2,363 33 2,396
-------- -------- -------- -------- --------
Net income (loss) before extraordinary items $ 675 ($1,715) ($3,297) ($5,247) ($33,508)
Extraordinary loss from extinguishment
of indebtedness - - (340) - (340)
-------- -------- -------- -------- --------
Net income (loss) before extraordinary items $ 675 ($1,715) ($3,637) ($5,247) ($33,848)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Basic and diluted net income (loss) per share
before extraordinary item $0.07 ($0.18) ($0.39) ($0.55)
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted net income (loss) per share $0.07 ($0.18) ($0.43) ($0.55)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of shares outstanding 9,543 9,550 8,536 9,550
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying notes to the condensed financial statements
(4)
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AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISES)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
From
April 23, 1991
Nine Months Ended (inception) to
September 30, September 30,
1997 1998 1998
------------ ------------ -----------------
<S> <C> <C> <C>
Operating Activities:
Net loss ($3,637) ($5,247) ($33,848)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 293 397 1,471
Provision for doubtful account - - 190
Stock option compensation - - 712
Gain from sale of assets - (33) (2,396)
Contributed capital-founders' services
provided without cash compensation - - 300
Change in operating assets and liabilities:
Accounts receivable 628 93 (352)
Unbilled revenue 1,145 - -
Inventory 20 (86) (141)
Prepaid expenses and other assets (508) 86 (110)
Accounts payable (1,293) (408) (106)
Deferred revenue 55 (54) 43
Accrued liabilities 325 (20) 367
-------- -------- --------
Net cash used in operating activities (2,972) (5,272) (33,870)
Investing Activities:
Purchase of property and equipment (240) (447) (2,193)
Proceeds from sale of assets - - 2,800
Receivable from sale of assets - 1,000 -
Short-term investments sold (purchased) (1,321) 2,400 -
-------- -------- --------
Net cash provided (used) in investing activities (1,561) 2,953 607
Financing Activities:
Proceeds from sale of common stock units, net 17,445 - 34,772
Proceeds from exercise of stock options - - 160
Repurchase of common stock - - (15)
Borrowing under line of credit - - 6,280
Repayment of line of credit (1,187) - (6,280)
Repayment of capital lease (13) (8) (46)
Proceeds from Bridge Financing - - 3,000
Repayment of Bridge Financing (2,850) - (3,000)
Proceeds of notes payable to shareholder 250 - 450
Repayment of note payable to shareholder (450) - (450)
Notes payable to shareholders contributed to capital - - 2,102
-------- -------- --------
Net cash provided by financing activities 13,195 (8) 36,973
Net increase (decrease) in cash and cash equivalents 8,662 (2,327) 3,710
Cash and cash equivalents at beginning of period 203 6,037 -
-------- -------- --------
Cash and cash equivalents at end of period $8,865 $3,710 $3,710
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $120 - $280
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Non-Cash Transaction:
Conversion of Bridge Debentures into warrants $150 - $150
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to the condensed financial statements
(5)
<PAGE>
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED 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 balance sheet as of September 30, 1998 and the
statements of operations and cash flows for the three and nine months ended
September 30, 1998 and for the period from April 23, 1991 (inception) to
September 30, 1998 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 nine month periods ended September 30,
1998 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, 1997.
DEVELOPMENT CONTRACT REVENUES AND RELATED GRANTS. Historically, the
Company 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
paralleled 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.
(6)
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NOTE 3 - 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. Common stock
equivalents (stock options and stock warrants) are anti-dilutive in both
periods and are excluded from the net loss per share calculation.
(7)
<PAGE>
PART 1
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER 1998 COMPARED WITH THIRD QUARTER 1997
REVENUES. Revenues for the three months ended September 30, 1998
("Third Quarter 1998") were $284,000 as compared with revenues of $399,000 in
the three months ended September 30, 1997 ("Third Quarter 1997"). The
decrease in development contract and related grant revenues was due
principally to the completion of development contracts, somewhat offset by an
increase in revenues related to prototype seat contracts. The Company does
not intend to pursue any additional significant grants or development
contracts.
The Company has focused its efforts on developing its core products
and technologies (the CLIMATE CONTROL SEAT(TM) (CCS(TM)) system and the
AMERIGUARD(TM) Radar System), developing the manufacturing capability for
such productS and bringing them to market as rapidly as possible. Because of
the current development focus, and the decision not to pursue actively any
more significant grants or development contracts, the Company does not expect
to generate significant revenues in the near term from such development
contracts. Beginning in the Second Quarter 1998 the Company started
production and shipments of its CCS(TM) system to one customer.
DIRECT DEVELOPMENT CONTRACT AND RELATED GRANT COSTS. No direct
development contract and related grant costs were incurred in the Third
Quarter 1998 compared to $536,000 in the Third Quarter 1997 primarily due to
the end of activity in the Company's electric vehicle program (related to
development contracts). Additionally, all expenses related to prototype
orders from customers for seat and radar products and costs associated with
the electric vehicle program are recorded as research development expense for
the Third Quarter 1998.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $1,119,000 in Third Quarter 1998 from $591,000 in Third Quarter
1997. The increase in Third Quarter 1998 was due to higher levels of research
and development activity on the Company's CCS(TM) system. As mentioned
previously, all expenses related to prototype orders from customers for this
product, the radar product and the electric vehicle program are now recorded
as research and development expense. As the Company focuses on the
development of its core products, these expenses can be expected to increase
in future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses decreased to $885,000 in Third Quarter 1998
compared to $1,091,000 in
(8)
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Third Quarter 1997. The decrease in Third Quarter 1998 was due to a general
reduction in most expenses in this category, as support requirements have
decreased from the prior year with the end of activity in the Company's
electric vehicle program and the spinoff of the voice navigation business.
INTEREST INCOME. Net interest income in 1998 decreased due to a
decline in invested cash.
NINE MONTHS 1998 COMPARED WITH NINE MONTHS 1997
REVENUES. Revenues for the nine months ended September 30, 1998
("1998") were $649,000 as compared with revenues of $1,146,000 in the nine
months ended September 30, 1997 ("1997"). The decrease was primarily due to
the same reasons as given for the quarter.
DIRECT DEVELOPMENT CONTRACT AND RELATED GRANT COSTS. No direct
development contract and related grant costs were incurred in the 1998
compared to $2,424,000 in 1997. The decrease was primarily due to the same
reasons as given for the quarter.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $3,271,000 in 1998 from $1,303,000 in 1997 for the same reasons
given for the quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses decreased to $2,855,000 in 1998 compared to
$3,280,000 in 1997. The decrease was primarily due to the end of activity in
the Company's electric vehicle program, the spin-off of the voice navigation
business, costs associated with a Company financing in 1997 and relocation
costs for key personnel.
INTEREST INCOME. Net interest income in 1998 decreased due to a
decline in invested cash.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had working capital of
$3,509,000. The Company's principal sources of operating capital have been
the proceeds of its various financing transactions and, to a lesser extent,
revenues from grants, development contracts and sale of prototypes to
customers.
Cash and cash equivalents decreased by $2,327,000 in 1998 primarily
due to cash used in operating activities. Operating activities used
$5,272,000, which was primarily a result of the net loss of $5,247,000.
Investing activities provided $2,953,000, of which $2,400,000 was the result
of the sale of short-term investments.
The Company expects to incur losses for the foreseeable future due
to the continuing cost of its product development and marketing activities
and to begin volume manufacturing operations when it is required. Current
working capital is not sufficient to fund the Company's operations for the
next twelve months. The Company will use current cash and investments, but
will need cash
(9)
<PAGE>
from financing sources to fund its near-term operations before the Company
can achieve profitability from its operations. There can be no assurance that
profitability can be achieved in the future. The Company is focused on
bringing products to market and generating revenues based upon its available
resources. Although the Company has begun limited production on its CLIMATE
CONTROL SEAT(TM) product, larger orders for the seat product and the ability
to begin production on the radar product will require significant expenses
for tooling product parts and to set up manufacturing and/or assembly
processes. The Company also expects to require significant capital to fund
other near-term production engineering and manufacturing, as well as research
and development and marketing of these products. The Company does not intend
to pursue significant grants or development contracts to fund operations and
therefore is highly dependent on its current working capital sources. The
Company will require additional equity and/or debt financing. There can be no
assurance that either of these sources will be available in the future.
Certain matters discussed or referenced in this report, including
the Company's intention to develop, manufacture and market its CLIMATE
CONTROL SEAT(TM) system and the AMERIGUARD(TM) Radar System, the Company's
expectation of reduced revenues and continuing losses for the foreseeable
future, are forward looking statements. Other forward looking statements may
be identified by the use of forward looking terminology such as "may",
"will", "expect", "believe", "estimate", "anticipate", "continue", or similar
terms, variations of such terms or the negative of such terms. Such
statements are based upon management's current expectations and are subject
to a number of risks and uncertainties which could cause actual results to
differ materially from those described in the forward looking statements.
Such risks and uncertainties include the market demand for and performance of
the Company's products, the Company's ability to develop, market and
manufacture such products successfully, the viability and protection of the
Company's patents and other proprietary rights, and the Company's ability to
obtain new sources of financing. Additional risks associated with the company
and its business and prospects are described in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
(10)
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Exhibits
None
(b) Reports on Form 8-K
None
(11)
<PAGE>
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 30, 1998 /s/ Scott O. Davis
--------------------------
Scott O. Davis
Vice President Finance and
Chief Financial Officer
(12)
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,710
<SECURITIES> 0
<RECEIVABLES> 162
<ALLOWANCES> 0
<INVENTORY> 120
<CURRENT-ASSETS> 4,103
<PP&E> 2,166
<DEPRECIATION> (1,472)
<TOTAL-ASSETS> 4,797
<CURRENT-LIABILITIES> 594
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0
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<COMMON> 28,149
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<TOTAL-LIABILITY-AND-EQUITY> 4,797
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<TOTAL-REVENUES> 649
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<TOTAL-COSTS> 6,150
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