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 October 31, 1996
----------------
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 No. 0-25184
-------
U.S. ELECTRICAR, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3056150
- ------------------------------- -----------------------------------
(State of other jurisdiction of (IRS employer identification number)
incorporation or organization)
5 Thomas Mellon Circle, Suite 305
San Francisco, CA 94134
----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Indicate by check mark whether he 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 periods 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 ( )
----- -----
As of December 12, 1996, there were 127,194,477 shares of Common Stock, no par
value, outstanding.
1
<PAGE>
INDEX
U.S. ELECTRICAR, INC.
Page No.
--------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) ........................... 3
Consolidated Balance Sheets:
October 31, 1996 and July 31, 1996 ........................ 3
Consolidated Statements of Operations:
Three months ended October 31, 1996 and 1995 ............... 4
Consolidated Statements of Cash Flows:
Three months ended October 31, 1996 and 1995 ............... 5
Notes to Consolidated Financial Statements:
for the Three months ended October 31, 1996 and 1995 ....... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .......................................... 14
Item 2. Changes in Securities ...................................... 14
Item 3. Defaults upon Senior Securities ............................ 14
Item 4. Submission of Matters to a Vote of Security Holders ........ 15
Item 5. Other Information .......................................... 15
Item 6. Exhibits and Reports on Form 8-K ........................... 15
SIGNATURE ............................................................ 16
2
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
U.S. ELECTRICAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
As of As of
October 31, 1996 July 31, 1996
---------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 51 $ 13
Accounts receivable, net of allowances of $434 and $596 771 856
Inventory 2,210 2,387
Prepaids and other current assets 184 184
-------- --------
Total Current Assets 3,216 3,440
PROPERTY, PLANT AND EQUIPMENT - NET 953 835
OTHER ASSETS 67 88
-------- --------
TOTAL ASSETS $ 4,236 $ 4,363
======== ========
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITES:
Accounts payable $ 2,857 $ 2,868
Accrued payroll and related expense 490 441
Accrued warranty expense 978 1,156
Reserve for lease obligations 91 112
Accrued Interest 257 208
Other accrued expenses 1,098 721
Customer deposits and deferred revenue 497 323
Bonds and notes payable 7,747 7,283
-------- --------
Total Current Liabilities 14,015 13,112
LONG TERM DEBT 3,987 3,987
SHAREHOLDERS' (DEFICIT):
Series A preferred stock - No par value; 30,000,000 shares authorized;
3,861,000 and 4,010,000 shares issued and outstanding at 10/31/96
and 7/31/96 2,843 2,983
Series B preferred stock - No par value; 5,000,000 shares authorized;
1,587,000 shares issued and outstanding 3,175 3,175
Stock notes receivable (1,080) (1,061)
Common Stock - No par value; 300,000,000 shares authorized; 127,169,000
and 120,220,000 shares issued and outstanding at 10/31/96 and 7/31/96 60,957 59,157
Accumulated deficit (79,661) (76,990)
-------- --------
Total Shareholders' (Deficit) (13,766) (12,736)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $ 4,236 $ 4,363
======== ========
<FN>
Note: The balance sheet at July 31, 1996 has been derived from the audited financial statements at that date.
See notes to consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
U.S. ELECTRICAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except for per share and share data)
- --------------------------------------------------------------------------------
Three Months Ended October 31,
-------------------------------
1996 1995
------------- -------------
NET SALES $ 527 $ 2,094
COST OF SALES 763 2,321
------------- -------------
GROSS MARGIN (236) (227)
------------- -------------
OTHER COSTS AND EXPENSES:
Research & development 166 336
Selling, general & administrative 600 1,237
Interest and financing fees 39 427
Acquisition of research company 1,630
------------- -------------
Total other costs and expenses 2,435 2,000
------------- -------------
LOSS BEFORE GAIN ON DEBT
RESTRUCTURING (2,671) (2,227)
GAIN ON DEBT RESTRUCTURING 283
------------- -------------
NET LOSS $ (2,671) $ (1,944)
============= =============
PER COMMON SHARE:
Loss before gain on debt restructuring $ (0.022) $ (0.040)
Gain on debt restructuring 0.005
------------- -------------
Net loss per common share $ (0.022) $ (0.035)
============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 121,421,529 55,559,303
4
<PAGE>
<TABLE>
U.S. ELECTRICAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
- --------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended October 31
-------------------------------
1996 1995
------- -------
<S> <C> <C>
OPERATIONS
Net loss $(2,671) $(1,944)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and Amortization 164 356
Change in allowance for doubtful accounts 0 (10)
Provision to reduce inventory values 5 (44)
Debt restructuring 0 (283)
Purchase of a research company 1,630 0
Stock option compensation 0 26
Interest income on stock notes receivable (19) (15)
Change in operating assets and liabilities:
Accounts Receivable (280) (989)
Inventory 201 1,142
Prepaids and other assets 94 (293)
Accounts payable and accrued expenses 76 463
Customer deposits and deferred revenue 29 (349)
------- -------
Net cash used by operating activities (771) (1,940)
------- -------
INVESTING:
Repayments on advances to Systronix Corporation 209
Purchases of property, plant and equipment, net of disposals 0 90
------- -------
Net cash provided by investing activities 209 90
------- -------
FINANCING:
Payments on notes payable (172) (41)
Borrowings on notes payable 472 2,288
Proceeds from issuance of common stock 300
------- -------
Net cash provided by financing activities 600 2,247
------- -------
NET INCREASE IN CASH AND EQUIVALENTS 38 397
CASH AND EQUIVALENTS:
Beginning of period 13 319
------- -------
End of period $ 51 $ 716
======= =======
</TABLE>
5
<PAGE>
<TABLE>
U.S. ELECTRICAR, INC, AND SUBSIDIARIES
CONSOLIDATED STSTEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
(In thousands)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended October 31,
-----------------------------
1996 1995
------- -------
<S> <C> <C>
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Series A preferred stock to common stock $ 140 $ 837
Conversion of convertible notes to common stock 500
Assumption of notes payable in connection with acquisition 800
Note issued in connection with acquisition 830
Note assumed by buyer in connection with divestiture (1,013)
Conversion of accrued interest to notes payable 147
Decrease in accounts receivable from divestiture of IEV 365
Decrease in inventory from divestiture of IEV 470
Decrease in accounts payable and accrued expenses from
divestiture of IEV (172)
Increase in inventory from acquisition of Systronix Corporation (499)
Increase in prepaids from acquisition of Systronix (94)
Increase in accounts payable and accrued expenses
from acquisition of Systronix 361
Increase in customer deposits from acquisition of Systronix 135
</TABLE>
6
<PAGE>
U. S. ELECTRICAR, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended October 31, 1996 and 1995
NOTE 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared from the
records of the Company without audit, and in the opinion of management,
include all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position at October 31, 1996 and the
interim results of operations and cash flows for the three month periods ended
October 31, 1996 and 1995. The balance sheet at July 31, 1996, presented herein,
has been prepared from the audited financial statements of the Company for the
fiscal year then ended.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
affecting the reported amounts of assets, liabilities, revenues and expenses,
and the disclosure of contingent assets and liabilities. The July 31, 1996 and
October 31, 1996 inventories are reported at market value. The inventory
valuation adjustments are estimates based on sales of inventory subsequent to
July 31, 1996, and the projected impact of certain economic, marketing and
business factors. Warranty reserves and certain accrual expenses are based upon
an analysis of future costs expected to be incurred in meeting contracted
obligations. The amounts estimated for the above, in addition to other estimates
not specifically addressed, could differ from actual results; and the difference
could have a significant impact on the financial statements.
Accounting policies followed by the Company are described in Note 1 to the
audited financial statements for the fiscal year ended July 31, 1996. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted for purposes of the interim financial statements. The
financial statements should be read in conjunction with the audited financial
statements, including the notes thereto, for the year ended July 31, 1996, which
are included in the Company's Form 10-K Annual Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 as filed with the Securities and
Exchange Commission.
The results of operations for the three month periods presented herein are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - Going Concern
The Company has experienced recurring losses from operations and use of cash
from operations and had an accumulated deficit of $76,990,000 at July 31, 1996
and $79,661,000 at October 31, 1996. A substantial portion of the losses are
attributable to research, development and other start-up costs associated with
the Company's focus on the development and manufacture of electric vehicles,
including electric powered buses, the conversion of gas powered cars and light
trucks to electric power and off-road electric powered industrial vehicles.
During the three years ended July 31, 1996, the Company obtained approximately
$45 million (net of debt repayments) in cash from financial activities through
private placements of common stock and Series A preferred stock, the exercise of
options and warrants, and the issuance of convertible subordinated notes payable
and secured convertible bonds and notes. During the three months ended October
31, 1996, the Company raised an additional $600,000, net of
7
<PAGE>
repayments, through the issuance of secured convertible debt and the sale of
unregistered common stock.
It is management's intention to complete its debt restructuring and to seek
additional financing through private placements as well as other means. As of
December 12, 1996, however, the Company had no commitments to provide
significant additional financing to the Company.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. Cash flows from operations for the
foreseeable future may not be sufficient to enable the Company to meet its
obligations. Market conditions and the Company's financial position may inhibit
its ability to achieve profitable operations.
These factors as well as the future availability or inadequacy of financing to
meet future needs, could force the Company to delay, modify, suspend or cease
some or all aspects of its planned operations, and/or seek protection under
applicable state and federal bankruptcy and insolvency laws.
NOTE 3 - Inventories
Inventories are comprised of the following (in thousands):
October 31, 1996 July 31, 1996
---------------- -------------
(unaudited)
Finished Goods $1,172 $1,000
Work-in-process 452 710
Raw materials 931 1,450
Valuation adjustment (345) (773)
-------- -------
$2,210 $2,387
======== =======
8
<PAGE>
U.S. ELECTRICAR, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
NOTE 4 - Notes and Bonds Payable, Long-Term Debt and Other Financing
Notes and bonds payable and long-term debt are comprised of the following (in
thousands):
<CAPTION>
October 31, 1996 July 31, 1996
---------------- -------------
<S> <C> <C>
Series S secured convertible bonds, interest at 10;
principal and interest due March 1997, secured by
the personal property of the parent company $3,000 $3,000
Convertible secured notes under a Supplemental Loan
Agreement with ITOCHU Corporation; interest at 10,
principal and interest due April 1997, secured by
the personal property of the parent company 3,000 3,000
Convertible secured note (acquisition of Nordskog);
due January 1997, with interest at 9% payable quarterly;
secured by certain machinery and equipment of the
subsidiary; in September 1996, the assets associated
with the previous acquisition of Nordskog were sold in
exchange for the assumption of this note -- 1,013
Secured promissory note - Credit Managers Association
of California ("CMAC") as exclusive agent for
Non-Qualified Creditors; interest at 3%, with principal
and interest due April 1999; secured with an interest
in a sinking fund escrow consisting of 10% of any financing
received ubsequent to April 1996; the Board of Directors
may waive the sinking fund set aside on a
case-by-case basis 95 95
Secured subordinated promissory note - CMAC as
exclusive agent for Qualified Creditors; interest
at 3%, with principal and interest due April 1999;
secured with an interest in a sinking fund escrow
as noted above 560 560
Secured subordinated promissory note - CMAC as exclusive
agent for Non-Qualified Creditors; interest at 3% for the
first 5 years, 6% for years 6 and 7, and then at prime plus
3% through date of maturity; interest payments are made
upon payment of principal, with principal and interest
due no later than April 2016; secured with an interest
in a sinking fund escrow as noted above; payments on
this note are subordinated to payment in full on all
principal and accrued interest owed on the above 3-year
non-qualified and qualified notes 3,332 3,332
Promissory note - accrued interest on Nordskog
convertible secured note converted to a new note;
due upon receipt of additional financing by the
Company, with interest at 9% 147 --
9
<PAGE>
NOTE 4 - LONG-TERM DEBT (Continued)
October 31, 1996 July 31, 1996
---------------- -------------
Promissory note payable to principals of Systronix
Corporation in connection with the acquisition of
Systronix; interest at 10%, due November 25, 1996 830 --
Convertible secured promissory note; interest at
10%, due November 1996; convertible into common
stock at $0.30 a share 600 100
Other 170 170
------- -------
11,734 11,270
Less current maturities 7,747 7,283
------- -------
$3,987 $ 3,987
======= =======
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The matters addressed below, with the exception of the historical information
presented, may incorporate certain forward-looking statements involving risks
and uncertainties, including the risks discussed under the heading "Certain
Factors That May Affect Future Results", as reported by the Company in the Form
10-K filed with the Commission on November 12, 1996.
GENERAL
U.S. Electricar, Inc. and Subsidiaries (the "Company") develops, converts,
assembles, manufactures and distributes battery-powered electric vehicles,
including on-road pick-up trucks, passenger cars, buses and delivery vehicles,
and a variety of off-road industrial vehicles. The Company's product lines
included converted vehicles (originally built to be powered by internal
combustion engines) and vehicles that are built specifically to be battery
powered. The Company's fiscal year ends July 31. All year references refer to
fiscal years.
During 1994 and the first half of 1995, the Company's approach to its business
was to establish manufacturing, marketing and support functions of a large scale
company so that the transition from development and prototype activities to
volume production of on-road electric vehicles could be made as quickly as
possible once component parts design, systems integration and assembly processes
were developed. The Company raised approximately $38 million to fund its
activities during this period. However, the Company was not able to achieve
volume production primarily because the development of such designs and
processes were not completed prior to the company's capital becoming severely
depleted which occurred in the second half of 1995. The Company incurred losses
totaling $62,586,000 during 1994 and 1995.
The Company was forced to severely curtail its activities in the second half of
1995 due to a lack of funds. Certain facilities were closed and operations were
consolidated, and the Company initiated programs to restructure its debt and
raise interim funding.
During 1996, the Company restructured a significant portion of its debt and
raised approximately $5 million in interim funding. However, its operations
continued to be impacted by an insufficient amount of funds to adequately
support its planned sales volumes and product development programs. The Company
curtailed the manufacture and sale of off-road industrial vehicles in the third
and fourth quarters of 1996 and reduced the carrying values of the assets
associated with this product line. In 1996, the Company incurred a loss of
$9,354,000.
In September 1996, a substantial portion of the assets of Industrial Electric
Vehicles, Inc., (formerly Nordskog Electric Vehicles, Inc. (Nordskog), prior to
its acquisition by the Company) were sold. Consideration for this sale included
the assumption of, and release of liability for, the note payable that totaled
$1,013,000 at July 31, 1996 to Nordskog.
On October 25, 1996, the Company acquired substantially all the tangible and
intangible assets, and assumed certain liabilities, of Systronix Corporation
(Systronix).
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced significant recurring cash flow shortages due to
operating losses primarily attributable to research, development ,administrative
and other expenses associated with the Company's efforts to become an
international manufacturer and distributor of electric vehicles. Cash flows from
operations have been extremely negative and have not been sufficient to meet the
Company's obligations as they came due. The Company has therefore had to raise
funds through numerous financial transactions and from various resources. At
least until the Company reaches break-even volume in sales and develops and/or
acquires the capability and technology necessary to manufacture and sell its
electric vehicles profitably, it will need to continue to rely extensively on
cash from debt and equity financing. The Company anticipates that it will
require substantial additional outside financing for at least two more years.
11
<PAGE>
During the three months ended October 31, 1996, the Company spent $771,000 in
cash on operating activities to fund the net loss of $2, 671,000 resulting from
factors explained in the following section of this discussion and analysis.
Accounts receivable, exclusive of the divestiture of the industrial electric
vehicles business, increased by $280,000. The reduction of accounts receivable
attributable to this divestiture was $365,000, net of allowances. Inventory, net
of the divestiture of the industrial electric vehicles business, which reduced
inventory by $470,000, and the acquisition of Systronix Corporation, which
increased inventory by $499,000, decreased by $201,000.
The operations of the Company during the three months ended October 31, 1996
were financed primarily by $472,000 received from the issuance of promissory
notes and an additional $300,000 received from Fontal International, Ltd., for
sales of unregistered common stock under Regulation S.
IF THE COMPANY IS UNABLE TO COMPLETE THE VOLUNTARY RESTRUCTURING OF ITS DEBT OR
OTHERWISE REFINANCE OR CONVERT SUCH DEBT, AND ADDITIONAL FUNDING IS NOT
AVAILABLE, THE COMPANY WOULD BE FORCED TO SEEK PROTECTION UNDER APPLICABLE STATE
AND FEDERAL BANKRUPTCY AND INSOLVENCY LAWS.
SIGNIFICANT ADDITIONAL FUNDING WILL BE NEEDED DURING THE REMAINDER OF 1997 AND
IN 1998. AS OF DECEMBER 12, 1996, THE COMPANY HAD NO COMMITMENTS FROM ANY PERSON
OR ENTITY TO PROVIDE CAPITAL AND THERE CAN BE NO ASSURANCE THAT ADDITIONAL FUNDS
WILL BE AVAILABLE FROM ANY SOURCE AT THE TIME THE COMPANY WILL NEED SUCH FUNDS.
THE INABILITY OF THE COMPANY TO OBTAIN ADDITIONAL FUNDING ON TERMS ACCEPTABLE TO
THE COMPANY WILL HAVE A MATERIAL ADVERSE EFFECT ON ITS BUSINESS. THE FUTURE
AVAILABILITY OR INADEQUACY OF FINANCING TO MEET FUTURE NEEDS COULD FORCE THE
COMPANY TO DELAY, MODIFY, SUSPEND OR CEASE SOME OR ALL ASPECTS OF ITS PLANNED
OPERATIONS, AND/OR SEEK PROTECTION UNDER APPLICABLE STATE AND FEDERAL BANKRUPTCY
AND INSOLVENCY LAWS.
RESULTS OF OPERATIONS
Net sales declined $1,567,000, or 74.8%, in the first quarter of 1997 from the
first quarter of 1996. The decline in sales was primarily due to the Company's
inability to raise the funds necessary to continue its operations at the same
levels as the first quarter of 1996. Significant declines occurred in all
product lines. Sales of converted sedans and light trucks declined from 34 units
in the first quarter of 1996 to 12 units in the first quarter of 1997. Total
revenue from this product line was $409,000 in the first quarter of 1997, down
66.2% from the corresponding quarter of 1996. Sales of industrial vehicles and
associated parts and service were only $27,000 in the first quarter of 1997,
since this business was sold on September 5, 1996.
Cost of sales as a percent of sales increased to 144.7% in the first quarter of
1997 from 110.8% in the first quarter of 1996. The increase in costs was
primarily due to the low levels of production and high costs from purchasing
parts in small quantities.
12
<PAGE>
Research and development expense decreased in the first quarter of 1997 by
$170,000, or 50.6%, from the first quarter of 1996 primarily as a result of a
significant reduction by the Company of its technical resources. The Company
reduced its technical staff and curtailed purchasing engineering services due to
a severe lack of funds. Selling, general and administrative expense in the first
quarter of 1997 declined $637,000, or 51.5%, primarily as a result of a
significant reduction in staff and outside services due to the aforementioned
lack of funds.
Interest and financing fees in the first quarter of 1997 declined $ 388,000, or
90.9%, from the first quarter of 1996. During 1996, the Company converted
$15,548,000 of principal and accrued interest to common stock, resulting in a
significant decrease in interest expense.
In October 1996, the Company acquired most of the assets and certain liabilities
of Systronix Corporation, a research company involved in the design and
development of drive trains for electric powered vehicles. The tangible assets
were recorded at their fair market value at the time of the acquisition. The
intangible assets were recorded as research and development expense.
As a result of the foregoing changes in net sales, cost of sales, other costs
and expenses, the acquisition of a research company and the gain on debt
restructuring, the net loss increased $727,000, or 37.4%, from $1,944,000 in the
first quarter of 1996 to $ 2,671,000 in the first quarter of 1997.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
The Company reported in Form 10-K filed with the Commission on
November 12, 1996, that on October 15, 1996, San Francisco
Superior Court sustained without leave to amend a demurrer
filed by the Company and a previous officer to an amended
complaint originally filed by a shareholder on May 20, 1996.
The Company also reported in Form 10-K that on October 29,
1996, the shareholder filed a motion for reconsideration. On
November 27, 1996, the motion for reconsideration was denied.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
Nordskog: In connection with the acquisition of Nordskog
Electric Vehicles, Inc., renamed Industrial Electric Vehicles,
Inc. ("IEV"), in July 1993, the Company issued a $1,000,000
secured convertible promissory note due in January 1997, with
interest at 9% annually and payable quarterly. This note was
secured by machinery and equipment owned by IEV. During 1995,
the Company sold some of the machinery and equipment used to
secure the note and used the proceeds of $18,000 to pay down
the principal. Quarterly interest payments have not been paid,
causing an event of default. The note holder did not exercise
any of its remedies with respect to the acceleration of the
principal and interest nor the collateral securing this note.
The full amount of the note was classified as a current
liability in 1995, due to the event of default. In September
1996, the Company sold the assets of IEV to a group headed by
former employees of the Company. The buyers assumed the
liability for the note, and the Company was released from this
liability. A new promissory note was issued to Nordskog for
the accrued unpaid interest of $147,000 that was outstanding
on the secured convertible promissory note at the time the
sale of the IEV business was completed.
Series S Bonds: In March 1995, the Company defaulted on the
payment of principal and interest totaling $12,600,000
originally due March 23, 1995 on its Series S Bonds. In May
1995, the Company and the holders of more than 75% of the
holders of the Series S Bonds entered into agreements to
restructure the convertible debt held pursuant to such bonds
such that the unpaid interest be added to principal, the
maturity dates be reset for March 1996, and the conversion
rate to common stock for most of the debt thereunder was
established at $0.30 per share. The holders of the debt also
agreed that a conversion shall occur upon (1) a
restructuring/repayment plan accepted by the Company's
unsecured creditors holding 80% or more of the Company's
unsecured trade debt, or (2) the election by Itochu
Corporation to cause conversion of the debt.
Systronix: In connection with the acquisition on October 25,
1996, of all of the assets and certain liabilities of
Systronix Corporation, the Company issued an $829,978.39
Promissory Note due November 25, 1996, secured by the acquired
assets pursuant to a security agreement ("the Note"). The
terms of the transaction and the Note are more fully reported
in the Company's Form 10-K
14
<PAGE>
filed with the Commission on November 12, 1996. The principal
and accrued interest due under the Note have not been paid,
causing an event of default under the terms of the Note. As of
December 12, 1996, the holder of the Note has not yet
exercised any of its remedies with respect to the collateral
securing the Note.
Item 4. Submission of Matters to a Vote of Securities Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Firm 8-K:
(a) Exhibits: None.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Commission on
September 19, 1996 reporting the sale of substantially all of
the assets of its wholly-owned subsidiary, Industrial Electric
Vehicles, Inc. The Company filed a report on Form 8-K with the
Commission on August 20, 1996 reporting the execution of a
Memorandum of Understanding with Systronix Corporation for the
purchase by the Company of the assets of Systronix.
[This space intentionally left blank.]
15
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15 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 on December 12, 1996.
U.S. ELECTRICAR, INC.
(Registrant)
/s/ Roy Y. Kusumoto
- --------------------------------------------------------------------------------
By: Roy Y. Kusumoto, Chief Executive Officer, President and
Acting Chief Financial Officer
(Principal executive officer and principal financial and accounting
officer)
16
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE ANNUAL REPORT ON FORM 10-Q OF U.S.
ELECTRICAR, INC. FOR THE QUARTER ENDED OCTOBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 51
<SECURITIES> 0
<RECEIVABLES> 771
<ALLOWANCES> 0
<INVENTORY> 2,210
<CURRENT-ASSETS> 3,216
<PP&E> 953
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,236
<CURRENT-LIABILITIES> 14,015
<BONDS> 3,987
<COMMON> 60,957
0
6,018
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<CGS> 763
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<INCOME-PRETAX> (2,671)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,671)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,671)
<EPS-PRIMARY> (0.02)
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</TABLE>
