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 March 31, 2000
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or
(___) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From To .
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Commission File No. 0-25184
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U.S. ELECTRICAR, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3056150
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(State or other jurisdiction of (IRS employer identification number)
incorporation or organization)
19850 South Magellan Drive Torrance, CA 90502
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 527-2800
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 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 May 10, 2000, there were 225,182,278 shares of Common Stock, no par value,
outstanding.
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INDEX
U.S. ELECTRICAR, INC.
Page No.
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)................................3
Balance Sheets:
March 31, 2000 and December 31, 1999............................3
Statements of Operations:
Three months ended March 31, 2000 and 1999 .....................4
Statements of Cash Flows:
Three months ended March 31, 2000 and 1999......................5
Notes to Financial Statements:
for the Three months ended March 31, 2000 and 1999..............7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 9
Item 3. Quantitative and Qualitative Disclosure about Market Risk......13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .............................................14
Item 2. Changes in Securities and Use of Proceeds......................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...............................15
SIGNATURE ...............................................................16
EXHIBIT INDEX ...............................................................17
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<TABLE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
U.S. ELECTRICAR, INC.
BALANCE SHEETS
(In thousands, except for share and per share data)
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
As of As of
March 31, 2000 December 31, 1999
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ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,967 $ 1,465
Accounts receivable 678 566
Inventory 276 256
Stockholder receivable 0 38
Prepaids and other current assets 64 71
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Total Current Assets 2,985 2,396
PROPERTY, PLANT AND EQUIPMENT, NET 202 226
OTHER ASSETS 75 75
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TOTAL ASSETS $ 3,262 $ 2,697
============ ============
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITES:
Accounts payable $ 121 $ 202
Accrued payroll and related expense 280 229
Other accrued expenses 43 156
Bonds and notes payable 1,420 1,420
Customer deposits 102 102
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Total Current Liabilities 1,966 2,109
ACCRUED INTEREST PAYABLE 445 439
LONG TERM PAYABLES 1,632 1,832
LONG TERM DEBT 3,332 3,332
SHAREHOLDERS' (DEFICIT):
Series A preferred stock - No par value;
30,000,000 shares authorized;
3,175,767 and 3,259,000 shares issued and outstanding
at 3/31/00 and 12/31/99 respectively 2,116 2,166
Series B preferred stock - No par value; 5,000,000
shares authorized; 1,239,026 and 1,242,000 shares
issued and outstanding at 3/31/00 and 12/31/99 respectively 2,486 2,486
Stock notes receivable (1,149) (1,149)
Common Stock - No par value; 500,000,000 shares
authorized; 232,627,663 and 252,012,000 shares
issued and outstanding at 3/31/00 and 12/31/99 74,066 71,526
Common stock subscribed 70 1,445
Additional paid-in capital 4,956 4,917
Accumulated deficit (86,658) (86,406)
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Total Shareholders' (Deficit) (4,113) (5,015)
------------ ------------
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TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $ 3,262 $ 2,697
============ ============
<FN>
Note: The balance sheet at December 31, 1999 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See notes to consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
U.S. ELECTRICAR, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except for per share and share data)
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<CAPTION>
Three Months Ended March 31,
-------------------------------
2000 1999
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<S> <C> <C>
NET SALES $ 630 $ 751
COST OF SALES 457 353
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GROSS MARGIN 173 398
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OTHER COSTS AND EXPENSES:
Research & development 107 93
Selling, general & administrative 411 283
Interest and financing fees 68 180
Other (income)/expense (9) 0
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Total other costs and expenses 577 474
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LOSS FROM CONTINUING OPERATIONS (404) (76)
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INTEREST INCOME 23 --
GAIN ON DEBT RESTRUCTURING 127 --
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NET LOSS $ (254) $ (76)
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NET LOSS PER COMMON SHARE $ (0.01) $ (0.01)
============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 232,627,663 151,769,689
============= =============
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
U.S. ELECTRICAR, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
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<CAPTION>
Three Months Ended March 31, 2000
---------------------------------
2000 1999
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<S> <C> <C>
OPERATIONS
Net loss $ (252) $ (117)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and Amortization 35 28
Changes in operating assets and liabilities:
Accounts Receivable (112) 23
Inventory (20) 89
Stockholders receivable 38 0
Prepaids and other assets 7 18
Accounts payable and accrued expenses (337) 108
Customer deposits and deferred revenue 0 0
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Net cash used by operating activities (231) (98)
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INVESTING:
Purchases of property, plant and equipment, net of disposals (12) (1)
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Net cash provided (used) by investing activities (12) (1)
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FINANCING:
Payments on notes payable 0 0
Re-purchase of common stock (100) 0
Proceeds from issuance of common stock 1,255 0
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Net cash provided (used) by financing activities 1,155 0
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NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 502 148
CASH AND EQUIVALENTS:
Beginning of period 1,465 6
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End of period $ 1,967 $ 154
======= =======
</TABLE>
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U.S. ELECTRICAR, INC.
SUPPLEMENTAL CASH FLOW INFORMATION
(UNAUDITED)
(In thousands)
- --------------------------------------------------------------------------------
Three Months Ended
March 31, 2000
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2000 1999
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Cash paid for interest $23 $ --
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Series A preferred stock to
common stock $50 $ --
Conversion of debt to common stock $ 6 $ --
Conversion of accrued interest to equity $39 $ --
Issuance of common stock for services $17 $ --
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U.S. ELECTRICAR, INC.
----------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
For the Three Months Ended March 31, 2000 and 1999
NOTE 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared from the
records of the Company without audit and have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not contain all the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the financial position
at March 31, 2000 and the interim results of operations and cash flows for the
three months ended March 31, 2000 have been included. The balance sheet at
December 31, 1999, 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 December 31, 1999
and March 31, 2000 inventories are reported at market value. Inventories have
been valued on the basis that they would be used, converted and sold in the
normal course of business. 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 December 31, 1999.
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 December
31, 1999, 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 March 31, 2000 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 $0.01
currently reflected in the financial statements for the three months ended March
31, 2000, would be insignificant and, therefore, has not been calculated.
The results of operations for the three months ended March 31, 2000 and 1999
period presented herein are not necessarily indicative of the results to be
expected for the full year.
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NOTE 2 - Inventories
Inventories are comprised of the following (in thousands):
March 31, 2000 December 31, 1999
-------------- -----------------
(unaudited)
-----------
Raw materials 276 256
$276 $256
====== ======
NOTE 3 - Notes and Bonds Payable, Long-Term Debt and Other Financing
<TABLE>
Notes and bonds payable and long-term debt are comprised of the following (in
thousands):
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
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; with an
interest in a sinking fund escrow with
a balance of four thousand dollars as
of December 31, 1999 and March 31,
2000. The sinking fund escrow requires
the Company to fund the account with
10% of future equity financing,
including convertible debt converted
to equity. 3,332 3,332
Convertible secured promissory note
payable to ITOCHU Corporation;
interest at 12%; principal and
interest were due in December 1997;
convertible into common stock at $0.30
per share. The debt is secured by the
Company's personal property, and was
acquired by the Company's President
during 1999. 1,300 1,300
Other 120 120
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4,752 4,752
Less current maturities 1,420 1,420
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$ 3,332 $3,332
======= ======
</TABLE>
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U.S. ELECTRICAR, INC.
---------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following information should be read in conjunction with the consolidated
interim financial statements and the notes thereto in Part I, Item I of this
Quarterly Report and with Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's Annual report on
Form 10-K for the year ended December 31, 1999. The matters addressed in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, with the exception of the historical information presented contains
certain forward-looking statements involving risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks discussed herein
and in the report under the heading "Certain Factors That May Affect Future
Results" following this Management's Discussion and Analysis section, and
elsewhere in this report.
GENERAL
U.S. Electricar, Inc., a California Corporation (the "Company"), was
incorporated on July 30, 1976, under its original name, "Clover Solar
Corporation, Inc." The name of the Company was changed in June 1979, to "Solar
Electric Engineering, Inc.", and was subsequently changed to "U.S. Electricar,
Inc." in January 1994.
The Company's fiscal year ends December 31. All year references refer to fiscal
years.
During the first quarter of 2000, the Company continued to reduce operating
costs and outstanding debt. The Company's business activities are focused on the
development of electric and hybrid electric drive-trains and related components,
fuel cell systems, vehicle systems integration and the performance of various
engineering contracts. The Company has several key contracts with the U. S.
Government's Defense Advanced Research Project Agency or DARPA and the
Department of Transportation or DOT, including the analysis of a new plastic
lithium ion vehicle battery concept, testing of advanced vehicle batteries and
development of an airport electric passenger tram system. The Company has
enhanced its relationship with Hyundai Motor Company of Korea, the world's
seventh largest automobile manufacturer, with several engineering contracts to
design, develop and test electric and hybrid electric drive systems and related
products. Hyundai Motor Company has contracted with the Company for the
development of an advanced charging unit and a parallel hybrid production
vehicle, as well as continuing to produce the family of Panthertm drive system
for their electric vehicles. This hybrid contract follows the completion of a
development program between our companies that resulted in a parallel-hybrid
system for Hyundai's hybrid-electric concept. The Company is extending the
PantherTM drive system to hybrid vehicle applications in projects sponsored by
Hyundai. These hybrid systems will be applied to light, medium and heavy duty
transportation vehicles. The Company offers other components such as air
conditioning, heat pump units, electro-hydraulic power steering units and
battery management units to Original Equipment Manufacturers or OEMs, both
domestic and international. The Company has also developed a high power charger
for use with its drive systems. HMC has adapted a customized version of the
PantherTM 60 for their production
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electric vehicle. The Company is offering the modular drive systems to Original
Equipment Manufacturers or OEMs and other customers. These drive systems have
been installed in various vehicles. The Company is developing low voltage
electric drive system components for use by a major North American automotive
manufacturer.
The Company is pursuing various avenues of revenue generation to increase its
cash flow. These include further developing its relationship with the Hyundai
Group, joint venturing with global vehicle and bus manufacturers to utilize its
electric drive train system, and developing a comprehensive marketing plan to
penetrate various alternate niche markets for its drive system and its
components. The Company is further looking at non-automotive applications for
its products.
The Company has begun to explore international ventures with customers in the
United Kingdom and Italy. Furthermore, the Company intends to develop a
three-car tram for the airport and recreation industries utilizing its Panther
120 drive system. The Company has been awarded a contract with the U.S.
Department of Transportation to design and test this tram system.
The Company received a capital investment from Jagen, Pty, Ltd. in the amount of
$2,500,000 on June 4, 1999 and from Anthony Rawlinson, the Company's Chairman of
the Board, in the amount of $500,000 on July 30, 1999. In January 2000, Kafig,
Pty, Ltd. Invested $1,000,000 in the Company. These investments have enabled the
Company to further develop its hybrid drive systems as well as embark on other
in-house funded research and development.
Debt Restructuring
The Company's debt restructuring plan has progressed during 1999. Overall, the
Company has reduced outstanding indebtedness and liabilities by approximately
$7,000,000 or 62% in the last year. With the addition of capital as discussed
above, the Company retired the $307,000, three-year debt due to the Credit
Managers Association of California or CMAC. The CMAC's $3.3 million, 20-year
promissory note becomes due and payable in 2016. In March 1999, the Company's
Chief Executive Office and President purchased all of the Company's outstanding
debt due to Itochu Corporation, which was $4,300,000 plus accrued interest. As
of March 31, 2000, this individual has forgiven $3,000,000 in principal and
$1,549,506 in accrued interest. This effectively reduced the Company's total
outstanding obligation including interest to $1,300,000 from $5,849,506. In
December of 1999, the Company converted the Fontal International, Ltd. debt of
$1,000,000 in principal and $247,000 in accrued interest into 4,246,000 shares
of common stock at $0.30 per share. The Company has also been reducing its
outstanding past due accounts payable. The Company shall continue to pursue a
strategy of negotiating settlements on these outstanding payables where prudent.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations have been negative due to operating losses primarily
attributable to research, development, administrative and other costs associated
with the Company's efforts to become an international manufacturer and
distributor of electric drive systems and components. The Company has therefore
had to raise funds through numerous financial transactions. At least until the
Company reaches breakeven volume in sales and develops and/or acquires the
capability and technology necessary to manufacture and sell its products
profitably, it will need to continue to rely on cash from external financing.
The Company anticipates that it will require additional outside
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financing for at least one more year.
During the three months ended March 31, 2000, the Company spent $502,000 in cash
on operating activities to fund the net loss of $252,000 resulting from factors
explained in the following section of this discussion and analysis. Accounts
receivable increased by $112,000 as remittances for sales made late in the first
quarter are scheduled for the second quarter of 2000. Inventory increased by
$20,000.
Accrued expenses were reduced by $62,00 due to recapture of certain accrued
expenses and payments of the same. Interest accruing on notes payable has not
been paid and increased by $6,000 for the three months ended March 31, 2000 due
to Carl D. Perry forgiving interest in the amount of $39,000 during the first
quarter.
The operations of the Company during the current year were financed primarily by
the funds received on engineering contracts. In January 2000, the Company
received an additional equity infusion of $1,000,000 from Kafig Pty, Ltd for the
purchase of 3,333,333 shares of common stock.
It is management's intention to continue its debt restructuring, support current
operations through sales of products and technology consulting, as well as seek
additional financing through private placements and other means to increase
research and development. As of April 30, 2000, the Company has no firm
commitments for significant additional financing.
THE FUTURE UNAVAILABILITY 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 in the three months ending March 31, 2000 increased $264,000 from the
previous quarter, and decreased $121,000 in the first three months as compared
to the corresponding period of 1999. The increase from the previous quarter was
due to new contracts for the development of a parallel hybrid production drive
system for Hyundai Motor Company. The reduction as compared with the prior year
was due to the sale of a technology license to Hyundai Heavy Industries.
Development contracts with Hyundai Motor Company and the U.S. Government account
for almost all of the Company's sales for 2000.
Cost of sales in the quarter ended March 31, 2000 increased to $457,000,
compared to cost of sales of $353,000 for the same period last fiscal year.
Again this increase was due to the sale of the technology licenses to Hyundai
Heavy Industries which did not have associated costs of sales.
Research and development expense increased in the first quarter of 2000 by
$44,000, from the first quarter of 1999. The Company continues to increase its
technical staff for new contracts during 2000. The efforts expended by the
technical staff are directed primarily toward completion of engineering
contracts, such as the contracts for the Hyundai Group and federal and state
government agencies, as well as toward performing in-house research and
development on new and next generation products.
Selling, general and administrative expense increased $158,000 in the three
months ended March
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31, 2000 from the previous year's comparable period. The increase in expenses
was due to actions by the Company to begin to expand its operations and
additional legal and accounting expenses in connection with certain
restructuring transactions, regulatory filing requirements and the annual
shareholders meeting. The Company has also begun to increase its sales and
marketing efforts to attract new customers and partners in the sale and
distribution of its products.
Interest and financing fees decreased significantly to $68,000 in the first
quarter of 2000 from $158,000 in the first quarter of 1999. Interest costs have
decreased due to the reduction of outstanding debt. In March 1999, Itochu
Corporation sold all of its debt plus accrued interest outstanding ($5,693,400)
to Carl D. Perry, the Company's Chief Executive Officer and President Mr. Perry
has forgiven $4,393,400 of accrued interest and principal as of March 31, 2000.
As of March 31, 2000, there is $1,300,000 in principal owed by the Company to
Mr. Perry under this loan. Additionally, the Company has paid the outstanding
principal due on the CMAC note due August 1999 in full as of March 31, 2000.
Furthermore, Fontal International, Ltd. converted its $1,000,000 in debt and
accrued interest into 4,246,000 shares of common stock in December 1999. These
debt reductions shall reflect continued reduced interest expense in the future.
The Company incurred a net loss of $254,000 in the first quarter of 2000
compared to a net loss of $76,000 in the first quarter of 1999. The overriding
factor causing the difference was the additionally income derived in the first
quarter of 1999 from the sale of a technology license and an increase in selling
and general and administrative expenses during the first quarter of 2000.
Year 2000 Concerns
As of May 15, 2000, the Company has not experienced any material negative impact
related to year 2000 issues. In preparation for the year 2000, the Company
incurred internal staff costs as well as consulting and other expenses. Year
2000 expenses totaled less than $25,000. It is possible that the Company's
computerized systems could be affected in the future by the year 2000 issue. The
Company has computerized interfaces with third parties that are possibly
vulnerable to failure if those third parties have not adequately addressed their
year 2000 issues.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
This Form 10-Q contains forward looking statements concerning our existing and
future products, markets, expenses, revenues, liquidity, performance and cash
needs as well as our plans and strategies. These forward-looking statements
involve risks and uncertainties and are based on current management's
expectations and we are not obligated to update this information. Many factors
could cause actual results and events to differ significantly from the results
anticipated by us and described in these forward looking statements including,
but not limited to, the following risk factors.
Net Operating Losses. The Company has experienced recurring losses from
operations and had an accumulated deficit of $86,658,000 at March 31, 2000.
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.
Continued Losses. For the five months ended December 31, 1999 and 1998, the
Company had net losses of $961,000 and $515,000 respectively on sales of
$629,000 and $867,000, respectively. The Company incurred a net loss of $254,000
for the three months ended March 31, 2000 on sales of $630,000.
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Nature of Industry. The electric vehicle ("EV") industry is still 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 into
production. 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 or low-emission vehicles, (b) the
environmental consciousness of customers and (c) the ability of electric and
hybrid-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 or low
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously disclosed in the Company's periodic reports filed with the
Securities and Exchange Commission, the Company restructured approximately $22
million in debt to vendors and lenders. A creditor's committee was formed of
substantially all the vendors and lenders at that time. Nineteen creditors, at
that time, chose not to join the creditor's committee, instead opting to pursue
their legal remedies individually. The total outstanding dollar value of these
lawsuits has been reduced from $650,000 to $350,000 during the quarter ended
March 31, 2000.
In February 1999, the Company became a defendant in a lawsuit filed by an
individual alleging personal injury by a vehicle manufactured by a prior
subsidiary of the Company, Nordskog Electric Vehicles, Inc., a.k.a. Industrial
Electric Vehicles, Inc. The matter has been referred to the insurance company
which has assumed legal liability and is proceeding to defend the matter. As of
March 29, 2000, the potential liability to the Company is unknown, however due
to the insurance coverage, it is believed to be minimal.
An indemnification claim in the amount of approximately $169,000 has been
asserted against the Company by the former owners of Nordskog Electric Vehicles
or Nordskog, which had been acquired by the Company and renamed Industrial
Electric Vehicles or IEV. IEV was sold by the Company in 1997. The claim alleges
that the Company agreed to indemnify Nordskog for liabilities including a
workers compensation claim, when the Company acquired Nordskog. The Company has
not yet assessed the validity of this claim or its likely outcome.
Item 2. Changes in Securities and Use of Proceeds
In January 2000, the Company sold 3,333,333 shares of common stock at $0.30 per
share for a total of $1,000,000 to Kafig, Pty, Ltd., which represented that they
were accredited investors, an Australian company. The Company relied on Rule 506
of Regulation D and Section 4(2) of the Securities Act of 1933, as amended for
the exemption from registration of the sale of such shares.
Item 3. Defaults Upon Senior Securities:
During the period from December 1996 through February 1997, the Company and
Itochu Corporation executed several loan agreements whereby Itochu extended
loans to the Company in the aggregate amount of $1,300,000. The loans were
evidenced by promissory notes which provide for a due date of December 26, 1997,
an interest rate of twelve percent (12%) 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 15, 1999, the principal and
accrued interest due under the notes have not been paid, causing an event of
default under the terms of the notes. During 1999, the Company's President
acquired this debt and subsequently forgave all of the accrued interest to March
31, 2000. As of May 15, 2000, 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.
None.
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Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
---------
10.1 Securities Purchase Agreement dated as of January 20, 2000 by
and between the Company and Kafig Pty, Ltd.
(b) Reports on Form 8-K
The Company filed no current reports on Form 8-K during the
quarter ended March 31, 2000.
15
<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.
Date: May 15, 2000
U.S. ELECTRICAR, INC.
(Registrant)
/s/ Carl D. Perry
- --------------------------------------------------------------------------------
By: Carl D. Perry, Chief Executive Officer and Acting Chief Financial Officer
(Duly Authorized Officer, Principal Financial Officer and Principal
Accounting Officer)
16
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- --------------------------------------------------------------------------------
10.1 Securities Purchase Agreement
dated as of January 20,2000, by
and between the Company and
Kafig Pty, Ltd. 18
27 Financial Data Schedule 25
17
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE
OFFERED OR SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT, AND AS
REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER, UNLESS AN
EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW IS
AVAILABLE.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is dated effective as of January 20,
2000, by and between U.S. Electricar, Inc., a California corporation (the
"Corporation") and the investor whose name is set forth on the signature page
attached hereto (the "Investor").
RECITALS
A. The Investor desires to purchase from the Corporation, and the
Corporation desires to sell to the Investor, Common Stock on the terms and
conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereby
agree as follows:
1. Issuance of Securities, Payment and Delivery.
a. Sale of Securities. Subject to the terms and conditions of
this Agreement, the Investor agrees to purchase on, or before the date
set forth on Schedule 1 to the signature page attached hereto, or on
such later date as is agreed upon in writing by the Investor and the
Corporation (the "Closing") and the Company agrees to sell and issue to
the Investor that number of shares of the Corporation's Common Stock
set forth on Schedule 1 (the "Shares") at Thirty Cents per share for an
aggregate purchase price as set forth on Schedule 1 (the "Purchase
Price").
b. Payment and Delivery. The Investor shall purchase the
Shares by making payment to U.S. Electricar, Inc. in cash, by cashiers
check or wire transfer of funds, in immediately available U.S. Dollars
funds.
2. Deliveries at Closing. At the Closing or thereafter as indicated:
a. The Corporation and the Investor will at the Closing
deliver an executed counterpart of this Stock Purchase Agreement;
b. The Investor will provide the Corporation at the Closing
with payment in immediately available funds of the aggregate amount of
the Purchase Price;
c. The Corporation will deliver within three (3) business days
after the Closing a share certificate evidencing the Shares in the name
of the Investor;
d. The Corporation will deliver one or more certificates of
good standing to the Investor evidencing that the Corporation is in
good standing in each jurisdiction in which it does business, owns
property or has employees;
e. The Corporation will deliver an officer's certificate
providing that its representations and warranties contained in this
Agreement are true and correct as of the Closing
<PAGE>
f. The Investor will deliver a certificate providing that its
representations and warranties contained in this Agreement are true and
correct as of the Closing; and
g. The Corporation will deliver a copy of its most recently
prepared unaudited financial statements (the "Financial Statements").
3. Corporation's Representations and Warranties. Except as set forth
on Disclosure Schedule 3 attached hereto and incorporated herein by
reference, the Corporation hereby represents and warrants to the
Investor that as of the Closing:
a. Corporate Organization and Standing. The Corporation is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California. The Corporation has the requisite
corporate power to carry on its business as presently conducted, and as
proposed or contemplated to be conducted in the future, and to enter
into and carry out the provisions of this Agreement and the
transactions contemplated under this Agreement .
b. Authorization. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement by
the Corporation and the performance of all of the Corporation's
obligations hereunder has been taken. This Agreement, when executed and
delivered by the Corporation, shall constitute a valid and binding
obligation of the Corporation, enforceable in accordance with its
terms, except as may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
The Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable.
c. No Breach. The issue and sale of the Shares by the
Corporation does not and will not conflict with and does not and will
not result in a breach of any of the terms of the Corporation's
incorporating documents or any agreement or instrument to which the
Corporation is a party. The consummation of the transactions or
performance of the obligations contemplated by this Agreement will not
result in a breach of any term of, or constitute a default under, any
statute, indenture, mortgage, or other agreement or instrument to which
the Corporation or any of its subsidiaries is or are a party or by
which any of them is or are bound.
d. Pending or Threatened Claims. Neither the Corporation nor
any of its subsidiaries is a party to any action, suit or proceeding
which could materially affect its business or financial condition, and
no such actions, suits or proceedings are contemplated or have been
threatened.
e. No Preemptive Rights. There are no preemptive rights of any
shareholder of the Corporation with respect to the Shares.
4. Investor Representations and Warranties. The Investor represents
and warrants to the Corporation that:
a. Account. The Investor is acquiring the Shares for
investment for its own account, and not with a view to, or for resale
in connection with, any distribution thereof, and it has no present
intention of selling or distributing any of the Shares. The Investor
understands that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") by reason of
a specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the
investment as expressed herein.
b. Access to Data. The Investor has had an opportunity to
discuss the Corporation's business, management and financial affairs
with its management and to obtain any additional information which the
Investor has deemed necessary or appropriate for deciding whether or
not to purchase the Securities, and has had an opportunity to receive,
review and understand the disclosures and information
<PAGE>
regarding the Corporation's financial statements, capitalization and
other business information as set forth in Corporation's filings with
the Securities and Exchange Commission (the "SEC Filings") which are
all incorporated herein by reference, together with all exhibits
referenced therein. Investor understands that the Financial Statements
and any other information obtained from the Corporation that has not
been disclosed in the Corporation's SEC Filings are confidential and
may not be disclosed to any third party or used by the Investor for
purposes of trading in the Corporation's publicly traded stock until
such information is publicly released by the Corporation. The Investor
acknowledges that no other representations or warranties, oral or
written, have been made by the Corporation or any agent thereof except
as set forth in this Agreement.
c. No Fairness Determination. The Investor is aware that no
federal, state or other agency has made any finding or determination as
to the fairness of the investment, nor made any recommendation or
endorsement of the Shares.
d. Knowledge And Experience. The Investor has such knowledge
and experience in financial and business matters, including investments
in other start-up companies, that it is capable of evaluating the
merits and risks of the investment in the Shares, and it is able to
bear the economic risk of such investment. Further, the individual
executing this Agreement has such knowledge and experience in financial
and business matters that he is capable of utilizing the information
made available to him in connection with the offering of the Shares, of
evaluating the merits and risks of an investment in the Shares and of
making an informed investment decision with respect to the Shares,
including assessment of the Risk Factors set forth in the Corporation's
EDGAR filings with the SEC and incorporated herein by reference.
e. Limited Public Market. The Investor is aware that there is
currently a very limited "over-the-counter" public market for the
Corporation's registered securities and that the Corporation became a
"reporting issuer" under the Securities Exchange Act of 1934, as
amended, on January 27, 1995. There is no guarantee that a more
established public market will develop at any time in the future. The
Investor understands that the Shares are all unregistered and may not
presently be sold in even this limited public market. The Investor
understands that the Shares cannot be readily sold or liquidated in
case of an emergency or other financial need. The Investor has
sufficient liquid assets available so that the purchase and holding of
the Shares will not cause it undue financial difficulties.
f. Authority. If Investor is a corporation, partnership, trust
or estate: (i) the individual executing and delivering this Agreement
on behalf of the Investor has been duly authorized and is duly
qualified to execute and deliver this Agreement on behalf of Investor
in connection with the purchase of the Shares and (ii) the signature of
such individual is binding upon Investor.
g. Investment Experience. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the
Securities and Exchange Commission. The term "Accredited Investor"
under Regulation D refers to:
(i) A person or entity who is a director or executive
officer of the Corporation;
(ii) Any bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act
whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to Section 15 of the Exchange Act; insurance
Corporation as defined in Section 2(13) of the Securities Act;
investment Corporation registered under the Investment Corporation Act
of 1940; or a business development Corporation as defined in Section
2(a)(48) of that Act; Small Business Investment Corporation licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000; employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance
Corporation, or registered investment adviser, or if
<PAGE>
the employee benefit plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decision made solely by
persons that are accredited investors;
(iii) Any private business development Corporation as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
(iv) Any organization described in Section 501(c)(3)
of the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the Securities offered, with total assets in excess of
$5,000,000;
(v) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(vi) Any natural person who had an individual income
in excess of $200,000 during each of the previous two years or joint
income with that person's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income
level in the current year;
(vii) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective
investment; or
(viii) Any entity in which all of the equity owners
are accredited investors.
(ix) As used in this Section 4(g), the term "net
worth" means the excess of total assets over total liabilities. For the
purpose of determining a person's net worth, the principal residence
owned by an individual should be valued at fair market value, including
the cost of improvements, net of current encumbrances. As used in this
Section 4(g), "income" means actual economic income, which may differ
from adjusted gross income for income tax purposes. Accordingly, the
undersigned should consider whether it should add any or all of the
following items to its adjusted gross income for income tax purposes in
order to reflect more accurately its actual economic income: Any
amounts attributable to tax-exempt income received, losses claimed as a
limited partner in any limited partnership, deductions claimed for
depletion, contributions to an IRA or Keogh retirement plan, and
alimony payments.
7. Lock-Up. The Investor acknowledges and agrees that the Shares
shall be subject to certain restrictions on transfer following a
registered public offering of the Corporation's securities. In
connection with any registration of the Corporation's securities, the
Investor agrees, upon the request of the Corporation and/or the
underwriters managing such offering of the Corporation's securities, if
applicable, not to sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of any Shares (other than
those included in the registration) without the prior written consent
of the Corporation and, if applicable, such underwriters, as the case
may be, for such period of time, not to exceed fourteen (14) days
before and one hundred eighty (180) days, after the effective date of
such registration as the Corporation or the underwriters may specify;
provided, however, that all executive officers, directors and
shareholders holding more than 1% of the fully diluted capital stock of
the Corporation enter into similar agreements. The Corporation and
underwriters may request such additional written agreements in
furtherance of such standoff in the form reasonably satisfactory to the
Corporation and such underwriter. The Corporation may also impose
stop-transfer instructions with respect to the shares subject to the
foregoing restrictions until the end of said one hundred eighty (180)
day period.
8. Restrictive Legends. Each certificate evidencing the Shares which
the Investor may acquire hereunder and any other securities issued upon
any stock split, stock dividend, recapitalization, merger,
consolidation or similar event (unless no longer required in the
opinion of the counsel for the Corporation) shall be imprinted with one
or more legends substantially in the following form:
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES
MAY BE REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS,
AN OPINION OF COUNSEL (REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE COMPANY) TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT (OR QUALIFICATION UNDER STATE SECURITIES LAWS) IS
AVAILABLE WITH RESPECT TO ANY TRANSFER OF THESE SHARES THAT HAS NOT
BEEN SO REGISTERED (OR QUALIFIED).
THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. A COPY
OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND
SERIES WILL BE PROVIDED TO EACH STOCKHOLDER WITHOUT CHARGE, UPON
WRITTEN REQUEST.
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER TO WHICH ANY TRANSFEREE AGREES BY
HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE STOCK PURCHASE AGREEMENT,
DATED AS OF JANUARY 20, 2000. NO TRANSFER OF SUCH SHARES WILL BE MADE
ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF
COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND BY AN AGREEMENT OF THE
TRANSFEREE TO BE BOUND BY THE RESTRICTIONS SET FORTH IN SUCH AGREEMENT.
THE COMPANY WILL MAIL A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE UPON THE COMPANY'S RECEIPT OF A WRITTEN REQUEST
THEREFOR.
The Corporation shall be entitled to enter stop transfer notices on its
transfer books with respect to the Securities.
9. Miscellaneous.
a. Notices. Any notice, request or other communication
required or permitted hereunder will be in writing and shall be deemed
to have been duly given if personally delivered or if telecopied or
mailed by registered or certified mail, postage prepaid, at the
respective addresses of the parties as set forth below. Any party
hereto may by notice so given change its address for future notice
hereunder. Notice will be deemed to have been given when personally
delivered or when deposited in the mail or telecopied in the manner set
forth above and will be deemed to have been received when delivered.
(a) If to the Investor: as set forth on Schedule 1
(b) If to the Company
U.S. Electricar, Inc.
19850 South Magellan Drive
Torrance, California 90502
Attention: President
with a copy to:
Bay Venture Counsel, LLP
1999 Harrison Street, Suite 1300
Oakland, CA 94612
Attention: Donald C. Reinke, Esq.
Telecopier (510) 834-7440
b. Survival. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
<PAGE>
c. Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and
assigns of the parties.
d. Applicable Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the
parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving
effect to principles of conflicts of law.
e. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be
executed by facsimile.
f. Title and Subtitles. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only
and are not to be considered in construing this Agreement.
g. Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms
of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any
other relief to which it may be entitled.
h. Waiver. The provisions of this Agreement may be waived,
altered, amended or repealed, in whole or in part, only upon the
written consent of the Corporation and the Investor. No waiver by any
party hereto of any breach of this Agreement by any other party shall
operate or be construed as a waiver of any other or subsequent breach.
No waiver by any party hereto of any breach of this Agreement by any
other party hereto shall be effective unless it is in writing and
signed by the party claimed to have waived such breach.
i. Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not
alternative). The parties to this Agreement agree that, in the event of
any breach or threatened breach by the Corporation to this Agreement of
any covenant, obligation or other provision set forth in this Agreement
for the benefit of any other party to this Agreement, such other party
shall be entitled (in addition to any other remedy that may be
available to it) to (A) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant,
obligation or other provision, and (B) an injunction restraining such
breach or threatened breach.
j. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith to achieve the closest
comparable terms as is possible. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such
provision, then (a) such provision shall be excluded from this
Agreement, (b) the balance of the Agreement shall be interpreted as if
such provision were so excluded and (c) the balance of the Agreement
shall be enforceable in accordance with its terms.
k. Venue. Any action, arbitration, or proceeding arising
directly or indirectly from this Agreement or any other instrument or
security referenced herein shall be litigated or arbitrated, as
appropriate, in the County of Los Angeles, State of California.
l. Entire Agreement. This Agreement and the Exhibits,
Schedules and other documents referred to herein constitute the entire
agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements regarding the
subject matter hereof existing between the parties hereto are expressly
canceled.
<PAGE>
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
KAFIG, PTY, LTD. U.S. ELECTRICAR,, INC.
/s/ Josh Liberman /s/ Carl D. Perry
- ----------------------------------- --------------------------------------
Josh Liberman Carl D. Perry, Chief Executive Officer
Schedule 1
Closing Date: January 20, 2000
-----------------------
Number of Shares: 3,333,333
-------------------
Purchase Price: US $1,000,000
---------------------
Price per share: $0.30
--------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,967
<SECURITIES> 0
<RECEIVABLES> 678
<ALLOWANCES> 0
<INVENTORY> 276
<CURRENT-ASSETS> 64
<PP&E> 1,521
<DEPRECIATION> 1,318
<TOTAL-ASSETS> 3,262
<CURRENT-LIABILITIES> 4,043
<BONDS> 3,332
0
4,602
<COMMON> 74,066
<OTHER-SE> (81,809)
<TOTAL-LIABILITY-AND-EQUITY> 3,262
<SALES> 630
<TOTAL-REVENUES> 630
<CGS> 457
<TOTAL-COSTS> 457
<OTHER-EXPENSES> 509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> (404)
<INCOME-TAX> 0
<INCOME-CONTINUING> (404)
<DISCONTINUED> 0
<EXTRAORDINARY> 127
<CHANGES> 0
<NET-INCOME> (254)
<EPS-BASIC> (0.010)
<EPS-DILUTED> (0.010)
</TABLE>
