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, 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 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 254
---------------------------------
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 10, 1997, there were 151,205,668 shares of Common Stock, no par
value, outstanding.
1
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INDEX
U.S. ELECTRICAR, INC.
Page No.
--------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) ......................... 3
Consolidated Balance Sheets:
October 31, 1997 and July 31, 1997 ...................... 3
Consolidated Statements of Operations:
Three months ended October 31, 1997 and 1996 ............. 4
Consolidated Statements of Cash Flows:
Three months ended October 31, 1997 and 1996 ............. 5
Notes to Consolidated Financial Statements:
for the Three months ended October 31, 1997 and 1996 ..... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 10
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 ...... 14
Item 5. Other Information ........................................ 14
Item 6. Exhibits and Reports on Form 8-K ......................... 14
SIGNATURES.................................................................. 15
EXHIBIT INDEX............................................................... 16
2
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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, 1997 July 31, 1997
---------------- -------------
ASSETS (Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash $ 154 $ 333
Accounts receivable, net of allowances of $115 and $115 586 829
Inventory 1,819 1,812
Prepaids and other current assets 225 258
-------- --------
Total Current Assets 2,784 3,232
PROPERTY, PLANT AND EQUIPMENT - NET 1,009 1,099
OTHER ASSETS 181 182
-------- --------
TOTAL ASSETS $ 3,974 $ 4,513
======== ========
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITES:
Accounts payable $ 2,484 $ 2,335
Accrued payroll and related expense 763 634
Accrued warranty expense 556 564
Reserve for lease obligations 21 28
Accrued Interest 759 598
Other accrued expenses 248 337
Customer deposits and deferred revenue 187 44
Current maturities of obligations under capital lease 193 209
Bonds and notes payable 5,220 5,220
-------- --------
Total Current Liabilities 10,431 9,969
LONG TERM DEBT 3,639 3,639
SHAREHOLDERS' (DEFICIT):
Series A preferred stock - No par value; 30,000,000 shares authorized;
3,621,000 shares issued and outstanding at 10/31/97 and 7/31/97 2,543 2,543
Series B preferred stock - No par value; 5,000,000 shares authorized;
1,340,000 shares issued and outstanding at 10/31/97 and 7/31/97 2,682 2,682
Stock notes receivable (1,172) (1,149)
Common Stock - No par value; 300,000,000 shares authorized; 151,206,000
and 151,068,000 shares issued and outstanding at 10/31/97 and 7/31/97 68,354 68,354
Accumulated deficit (82,503) (81,525)
-------- --------
Total Shareholders' (Deficit) (10,096) (9,095)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $ 3,974 $ 4,513
======== ========
<FN>
Note: The balance sheet at July 31, 1997 has been derived from the audited financial statements at that date.
See notes to consolidated financial statements.
</FN>
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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,
------------------------------
1997 1996
------------- -------------
NET SALES $ 640 $ 527
COST OF SALES 534 763
------------- -------------
GROSS MARGIN 106 (236)
------------- -------------
OTHER COSTS AND EXPENSES:
Research & development 141 166
Selling, general & administrative 782 600
Interest and financing fees 161 39
Acquisition of research company 0 1,630
------------- -------------
Total other costs and expenses 1,084 2,435
------------- -------------
NET LOSS $ (978) $ (2,671)
============= =============
NET LOSS PER COMMON SHARE $ (0.006) $ (0.022)
============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 151,182,678 121,421,529
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U.S. ELECTRICAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended October 31
-----------------------------
1997 1996
------- -------
OPERATIONS
<S> <C> <C>
Net loss $ (978) $(2,671)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and Amortization 95 164
Provision to reduce inventory values 13 5
Purchase of a research company 0 1,630
Interest income on stock notes receivable (23) (19)
Change in operating assets and liabilities:
Accounts Receivable 243 (280)
Inventory (20) 201
Prepaids and other assets 33 94
Accounts payable and accrued expenses 335 76
Customer deposits and deferred revenue 143 29
------- -------
Net cash used by operating activities (159) (771)
------- -------
INVESTING:
Repayments on advances to Systronix Corporation 0 209
Purchases of property, plant and equipment, net of disposals (4) 0
------- -------
Net cash provided (used) by investing activities (4) 209
------- -------
FINANCING:
Payments on notes payable 0 (172)
Payments on capital leases (16) 0
Borrowings on notes payable 0 472
Proceeds from issuance of common stock 0 300
------- -------
Net cash provided (used) by financing activities (16) 600
------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (179) 38
CASH AND EQUIVALENTS:
Beginning of period 333 13
------- -------
End of period $ 154 $ 51
======= =======
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U.S. ELECTRICAR, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
(In thousands)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended October 31,
----------------------------------------
1997 1996
---------------- ---------------
<S> <C>
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Series A preferred stock to common stock -- $ 140
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 inventory from accounts payable and accrued
expenses from acquisition of Systronix -- (361)
Increase in customer deposits from acquisition of Systronix -- 135
</TABLE>
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U. S. ELECTRICAR, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended October 31, 1997 and 1996
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, 1997 and the interim
results of operations and cash flows for the three month periods ended October
31, 1997 and 1996. The balance sheet at July 31, 1997, 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, 1997 and
October 31, 1997 inventories are reported at market value. The inventory
valuation adjustments are estimates based on sales of inventory subsequent to
July 31, 1997, 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, 1997. 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, 1997, 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 loss per common share is based on the weighted average of common shares
outstanding. Potential dilution exists in earnings per share for the three
months ended October 31, 1997 if common stock equivalents, consisting of
unexercised stock options and warrants, were included in the calculation. The
resulting dilution in the net loss per share, when compared to the loss of $.006
currently reflected in the financial statements, would be insignificant and,
therefore, has not been calculated.
The results of operations for the three month period 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 $81,525,000 at July 31, 1997
and $82,503,000 at October 31, 1997. 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.
7
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During the three years ended July 31, 1997, the Company obtained approximately
$23 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. No new cash was obtained through
financial activities during the three months ended October 31, 1997.
It is management's intention to complete its debt restructuring and to seek
additional financing through private placements as well as other means. In
March, 1997, the Company completed an agreement with Hyundai Motor Company
("HMC") and Hyundai Electronics Industries Co., Ltd. ("HEI") whereby HMC and HEI
collectively purchased $3.6 million of the Company's common stock and secured a
technology license for an additional payment of $2.0 million. The Company
received $1,850,000 in cash and the remaining $150,000 is to be received over 6
years.
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, 1997 July 31, 1997
---------------- -------------
(unaudited)
Finished Goods $ 614 $ 667
Work-in-process 445 375
Raw materials 1,065 1,062
Valuation adjustment (305) (292)
------ ------
$1,819 $1,812
====== ======
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U.S. ELECTRICAR, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 1997 July 31, 1997
---------------- -------------
<S> <C> <C>
Convertible secured notes under a Supplemental Loan Agreement with ITOCHU
Corporation; interest at 10%, principal and interest due April 1998, secured by
the personal property of the parent company. $3,000 $3,000
Secured promissory note - Credit Managers Association of California ("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
consisting of 10% of any financing received subsequent to April 1996; the Board
of Directors may waive the sinking fund set aside on a case-by-case basis 307 307
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
Convertible secured promissory note payable to Itochu Corporation; interest at
10%, due December 1997; convertible into common stock at $0.30 per share. 1,300 1,300
Convertible promissory note payable to Fontal International, Ltd.; interest at
10%, due July, 1997; convertible into common stock at $0.30 per share. 800 800
Other 120 120
------ ------
8,859 8,859
Less current maturities 5,220 5,220
------ ------
$3,639 $3,639
====== ======
</TABLE>
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters addressed in this report, with the exception of the historical
information presented, incorporate certain forward-looking statements involving
risks and uncertainties, including the risks discussed in the report 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 October 29, 1997.
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 off-road industrial vehicles. The Company's product lines include converted
vehicles (originally built to be powered by internal combustion engines) and
vehicles that are built specifically to be battery powered. The Company's
efforts relating to the converted vehicle program consist primarily of selling
off the existing inventory. 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.
The Company also acquired substantially all the tangible and intangible assets,
and assumed certain liabilities, of Systronix Corporation (Systronix) on October
25, 1996, for stock, a note and cash.
10
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In March 1997, the Company completed an agreement with Hyundai Motor Company
("HMC") and Hyundai Electronics Industries Co., Ltd. ("HEI") whereby HMC and HEI
collectively purchased $3.6 million of the Company's common stock and secured a
technology license for an additional payment of $2.0 million. The Company
received $1,850,000 in cash and the remaining $150,000 is to be received over 6
years.
During the three months ended October 31, 1997, the Company has continued to
concentrate on the reduction of operating costs. Headcount was further reduced
in the quarter, so that the Company had 45 employees as of October 31, 1997.
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.
During the three months ended October 31, 1997, the Company spent $159,000 in
cash on operating activities to fund the net loss of $978,000 resulting from
factors explained in the following section of this discussion and analysis.
Accounts receivable decreased by $243,000. Inventory increased by $7,000.
The operations of the Company during the three months ended October 31, 1997
were financed primarily by the funds received in prior periods. There was no new
debt or equity financing in the quarter.
IF THE COMPANY IS UNABLE TO RESTRUCTURE 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 IN 1998. AS OF DECEMBER 10, 1997,
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.
11
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RESULTS OF OPERATIONS
Net sales increased $113,000, or 21%, in the first quarter of 1998 from the
first quarter of 1997. The increase in sales was attributed primarily to
engineering contracts for various development contracts with Hyundai Motor
Company , Hyundai Electronics Industries and various state and federal agencies.
These sales, collectively, represented $567,000 in sales for the first quarter
of 1998. Sales of converted sedans and light trucks declined from 12 vehicles in
the first quarter of 1997 to only one vehicle in the first quarter of 1998 as
this program winds down to an eventual termination.
Cost of sales as a percent of sales decreased to 83% in the first quarter of
1998 from 145% in the first quarter of 1997. The lower level of sales of
converted sedans and light trucks helped to lower the cost of sales relative to
sales. Efforts to reduce manufacturing overhead continue, with reductions in
manufacturing headcount and consolidation of facilities.
Research and development expense decreased in the first quarter of 1998 by
$25,000, or 15%, from the first quarter of 1997. The Company has reduced its
technical staff and curtailed purchasing engineering services in order to keep
costs down.
Selling, general and administrative expense increased $182,000, or 30% in the
first quarter of 1998. This was primarily due to the additional overhead and
program administration associated with the drive train engineering, which was
formerly Systronix Corporation. In the first quarter of 1997, the operating
results of Systronix Corporation were consolidated with the Company only for the
last six days of October. Legal expenses relating to the defense of shareholder
and other lawsuits were also significant in the first three months of 1998.
Interest and financing fees in the first quarter of 1998 increased $122,000 or
313%, from the first quarter of 1997. Interest expenses were underaccrued in the
first quarter of 1997 and adjusted in the second quarter of 1997.
As a result of the foregoing changes in net sales, cost of sales, other costs
and expenses, and the acquisition of a research company in 1997, the net loss of
$978,000 in the first quarter of 1998 decreased $1,693,000, or 63% from the
first quarter of 1997. In the first quarter of 1997, the Company expensed
$1,630,000 in research and development costs associated with the acquisition of
Systronix Corporation. This was a non-recurring expense.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Future trends for the Company's revenue and profitability remain difficult to
predict. The Company operates in a rapidly changing and developing market that
involves a number of risks, some of which are beyond the Company's control. In
addition, as previously disclosed in the Form 10-K, the Company's financial
condition remains extremely precarious. The following discussion highlights
certain of these risks.
Going Concern / Net Operating Losses. The Company has experienced recurring
losses from operations and had an accumulated deficit of $82,503,000 at October
31, 1997. There is no assurance, however, that any net operating losses will be
available to the Company in the future as an offset against future profits for
income tax purposes. A substantial portion of the losses are attributable to
product development and other start-up costs associated with the Company's
business focus on the development, production and sale of battery powered
electric vehicles. Cash flows from future operations may not be sufficient to
enable the Company to achieve profitable operations. Market conditions and the
Company's financial position may inhibit its
12
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ability to achieve profitable operations. These factors, as well as others,
indicate the Company may be unable to continue as a going concern unless it is
able to obtain significant additional financing and generate sufficient cash
flows to meet its obligations as they come due and sustain its operations. As of
December 10, 1997, the Company had no firm 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.
Continued Losses. For the fiscal years ended July 31, 1997, 1996 and 1995, the
Company had substantial net losses of $4,535,000, $9,354,000 and $37,565,000,
respectively on sales of $4,484,000, $4,209,000 and $11,625,000, respectively,
and a net loss of $978,000 for the three months ended October 31, 1997.
Nature of Industry. The electric vehicle ("EV") industry is in its infancy.
Although the Company believes that it has manufactured a significant percentage
of the electric vehicles sold in the United States based upon its own knowledge
of the industry, there are many large and small companies, both domestic and
foreign, now in, poised to enter, or entering this industry. This EV industry is
subject to rapid technological change. Most of the major domestic and foreign
automobile manufacturers (1) have produced design-concept electric vehicles,
and/or (2) have developed improved electric storage, propulsion and control
systems, and/or (3) are now entering or planning to enter the field. Various
non-automotive companies are also developing improved electric storage,
propulsion and control systems. Growth of the present limited demand for
electric vehicles depends upon (a) future regulation and legislation requiring
more use of non-polluting vehicles, (b) the environmental conciousness of
customers and (c) the ability of electric vehicles to successfully compete with
vehicles powered with internal combustion engines on price and performance.
Changed Legislative Climate. Because vehicles powered by internal combustion
engines cause pollution, there has been significant public pressure in Europe
and Asia, and enacted or pending legislation in the United States at the federal
level and in certain states, to promote or mandate the use of vehicles with no
tailpipe emissions ("zero emission vehicles") or reduced tailpipe emissions
("low emission vehicles"). Legislation requiring or promoting zero emission
vehicles is necessary to create a significant market for electric vehicles.
There can be no assurance, however, that further legislation will be enacted or
that current legislation or state mandates will not be repealed or amended (as
recently occurred in California), or that a different form of zero emission or
low emission vehicle will not be invented, developed and produced, and achieve
greater market acceptance than electric vehicles. Extensions, modifications or
reductions of current federal and state legislation, mandates and potential tax
incentives could adversely affect the Company's business prospects if
implemented.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
On June 23, 1997, fourteen shareholders and former
shareholders of the Company filed a lawsuit in a federal
district court in California, alleging violations of the
securities laws and asserting eleven federal and state law
claims. On September 29, 1997, the district court dismissed
all of the claims asserted in the plaintiffs' complaint, but
allowed leave to amend with respect to all but one of the
claims. On October 20, 1997, the plaintiffs filed an amended
complaint which added several additional shareholders and
asserted nine federal and state law claims. Defense counsel
has filed a second motion to dismiss, which has been scheduled
for hearing in January 1998.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
During the period from January 1997 through April 1997, the
Company and Fontal International, Ltd. executed several loan
agreements whereby Fontal extended loans to the Company in the
aggregate amount of $800,000. The loans were evidenced by
promissory notes which provide for a due date of July 9, 1997,
an interest rate of ten percent (10%) per annum, and the right
to convert principal and accrued interest at any time into
shares of the Company's common stock at the rate of $0.30 per
share. As of December 10, 1997, the principal and accrued
interest due under the notes have not been paid, causing an
event of default under the terms of the notes. Discussions
about extending the maturity date of the notes are underway.
As of December 10, 1997, the holder of the notes had not yet
exercised any of its remedies with respect to the notes.
Item 4. Submission of Matters to a Vote of Securities Holders:
None
Item 5. Other Information:
On November 18, 1997, Roy Y. Kusumoto resigned as Chairman and
President of the Company and from the Board of Directors. Also
on November 18, 1997, Carl D. Perry was elected Chief
Executive Officer and Chairman of the Board, and Don C. Kang
was appointed as a Director and was elected President and
Chief Operating Officer.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
14
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SIGNATURES
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 10, 1997.
U.S. ELECTRICAR, INC.
(Registrant)
/s/ Carl D. Perry
- --------------------------------------------------------------------------------
By: Carl D. Perry, Chief Executive Officer
(Principal executive officer)
/s/ Barrett R. Woodruff
- --------------------------------------------------------------------------------
By: Barrett R. Woodruff, Acting Chief Financial Officer
(Principal financial and accounting officer)
15
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EXHIBIT INDEX
Exhibit No. Description Page No.
- --------------------------------------------------------------------------------
27 Financial Data Schedule 17
16
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<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, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000922237
<NAME> U.S.ELECTRICAR,INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 154
<SECURITIES> 0
<RECEIVABLES> 586
<ALLOWANCES> 0
<INVENTORY> 1,819
<CURRENT-ASSETS> 2,784
<PP&E> 1,009
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,974
<CURRENT-LIABILITIES> 10,431
<BONDS> 3,639
0
5,225
<COMMON> 68,354
<OTHER-SE> (82,503)
<TOTAL-LIABILITY-AND-EQUITY> 3,974
<SALES> 640
<TOTAL-REVENUES> 640
<CGS> 534
<TOTAL-COSTS> 1,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> (978)
<INCOME-TAX> 0
<INCOME-CONTINUING> (978)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (978)
<EPS-PRIMARY> (0.006)
<EPS-DILUTED> (0.006)
</TABLE>
