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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 31, 1997
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Rotary Power International, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12756 13-3632860
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
P.O. Box 128, Wood-Ridge, New Jersey 07075-0128
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 777-7373
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
The following information may contain forward-looking statements that
are based on current expectations of Rotary Power International, Inc. (the
"Company") that involve a number of risks and uncertainties and such statements
should not be considered as guarantees of future performance. Factors that could
cause actual results to differ materially from any forward-looking statements
contained herein include, but are not limited to, an inability to arrange
additional debt or equity financing, interruption or cancellation of existing
contracts, the impact of competitive products and pricing, product demand and
market acceptance risks, the presence of competitors with greater financial
resources than the Company and product development and commercialization risks.
As previously reported, the Company has entered into a Plan and
Agreement of Merger, dated March 21, 1997 (the "Merger Agreement") with
PowerCold Corporation (formerly known as International Cryogenic Systems
Corporation) ("PowerCold"). The Merger Agreement provides for the merger of the
Company into a subsidiary of PowerCold upon the satisfaction of various
conditions set forth in the Merger Agreement, including approval of the merger
by the stockholders of the Company. Such approval is expected to be sought at a
special stockholders' meeting that will be called and held for that purpose in
the near future.
On March 31, 1997, the Directors of the Company elected Francis L.
Simola, Chairman, CEO and President of PowerCold, to fill a vacancy on the Board
of Directors and also to serve as the Secretary of the Company. Simultaneously
therewith, based on a written demand received from counsel to PowerCold and on
the belief that Mr. Simola's election as a Director and Secretary of the Company
had become effective, the four other Directors of the Company, Richard M.H.
Thompson, Robert L. Osborn, William T. Figart and Ken Brody, resigned as
Officers and Directors of the Company effective April 1, 1997. On June 17, 1997,
Mr. Simola informed the previous Officers and Directors of the Company in
writing that he did
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not, and had not, accepted the positions of Director and Secretary of the
Company. After several consultations with Mr. Simola, on July 16, 1997, Messrs.
Thompson, Osborn and Figart, three of the four former Directors who had resigned
effective April 1, 1977, held a meeting, rescinded their resignations as
Directors and elected Mr. Thompson as President and CEO of the Company to serve
as such at least through the effective date, if any, of the merger with
PowerCold.
During the first four months of 1997, the Company experienced negative
cash flow from operations, including net interest paid, of approximately
$375,000 per month. In May 1997, PowerCold lent the Company $175,000 and in June
1997 PowerCold lent the Company an additional $41,767. This money was used to
meet the payroll which was owed to employees (other than the payroll which was
due for the week ending May 23, 1997) and to pay certain outstanding
receivables. Apart from this loan, neither the Company nor PowerCold have been
able to secure additional equity or debt financing. As of May 23, 1997, the
Company terminated all of its remaining employees in an effort to reduce its
costs until it could raise the additional funding described below. After May 23,
1997, up to 13 employees of the Company and its subsidiary, Rotary Power Marine,
Inc., continued to work on a full or part time basis and those employees have
been paid for the majority, but not all, of the hours they have worked since May
23, 1997.
The Company failed to make its monthly payments to the Trustee for the
Company's 1992 bond financing with the New Jersey Economic Development Authority
(the "NJEDA") which were due on June 1, 1997 and July 1, 1997, respectively. On
July 2, 1997, the Company received a notice from the Trustee stating that, as a
result of the Company's failure to make the monthly payment which was due on
June 1, 1997, an Event of Default has occurred under the Loan Agreement between
the Company and the NJEDA and under the Trust Indenture securing the NJEDA
bonds. The Trustee has also notified the holders of the NJEDA bonds of the
occurrence of such Events of Default. The Company is also in arrears in its
monthly lease payments to its landlord, Curtiss-Wright Corporation, and has
received a Notice to Quit its leased premises from Curtiss-Wright Corporation.
Therefore, unless additional funding is immediately obtained by the Company in
an amount which will enable it to pay the amounts owed to the trustee for the
NJEDA bonds, its landlord, its employees and certain other creditors, such
creditors may pursue various remedies against the Company and its assets and/or
force the Company into a reorganization under the Federal Bankruptcy Code. In
the alternative, the Company may decide to voluntarily seek protection from its
creditors under the Federal Bankruptcy Code. The economic viability and future
of the Company therefore depends on its ability to obtain additional sources of
financing immediately. Although the Company is actively pursuing such additional
financing, there can be no assurance that the Company will be able to obtain any
such financing on satisfactory terms, if at all.
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Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not applicable.
Item 8. Change in Fiscal Year.
Not applicable.
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 hereunto duly authorized.
ROTARY POWER INTERNATIONAL, INC.
Date: July 18, 1997 By: /s/ Richard M.H. Thompson
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Name: Richard M.H. Thompson
Title: President &
Chief Executive Officer
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