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 June 30. 2000
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 or other jurisdiction of (IRS employer identification number)
incorporation or organization)
19850 South Magellan Drive Torrance, CA 90502
---------------------------------------------
(Address of Principal Executive Offices and 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 August 10, 2000, there were 228,357,833 shares of Common Stock, no par
value, outstanding.
<PAGE>
INDEX
U.S. ELECTRICAR, INC.
Page No.
--------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).....................................3
Balance Sheets:
June 30, 2000 and December 31, 1999..................................3
Statements of Operations:
Three and Six months ended June 30, 2000 and 1999....................4
Statements of Cash Flows:
Six months ended June 30, 2000 and 1999..............................5
Notes to Financial Statements:
for the Six months ended June 30, 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.................15
Item 5. Other Information...................................................16
Item 6. Exhibits and Reports on Form 8-K....................................16
SIGNATURE ....................................................................17
EXHIBIT INDEX ................................................................18
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
U.S. ELECTRICAR, INC.
BALANCE SHEETS
(In thousands, except for share and per share data)
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
As of As of
June 30, December 31,
2000 1999
-------- --------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,477 $ 1,465
Accounts receivable 680 566
Inventory 322 256
Stockholder receivable 0 38
Prepaids and other current assets 48 71
-------- --------
Total Current Assets 2,527 2,396
PROPERTY, PLANT AND EQUIPMENT - NET 209 226
OTHER ASSETS 75 75
-------- --------
TOTAL ASSETS $ 2,811 $ 2,697
======== ========
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITES:
Accounts payable $ 91 $ 202
Accrued payroll and related expense 217 229
Other accrued expenses 38 156
Bonds and notes payable 1,420 1,420
Customer deposits 102 102
-------- --------
Total Current Liabilities 1,868 2,109
ACCRUED INTEREST PAYABLE 458 439
LONG TERM PAYABLES 1,431 1,832
LONG TERM DEBT 3,332 3,332
SHAREHOLDERS' (DEFICIT):
Series A preferred stock - No par value; 30,000,000 shares authorized;
3,165,767 and 3,259,000 shares issued and outstanding
at 6/30/00 and 12/31/99 respectively 2,079 2,166
Series B preferred stock - No par value; 5,000,000 shares authorized;
1,217,196 and 1,242,000 shares issued and outstanding
at 6/30/00 and 12/31/99 respectively 2,434 2,486
Stock notes receivable (1,149) (1,149)
Common Stock - No par value; 500,000,000 shares authorized; 228,375,554
and 252,012,000 shares issued and outstanding at 6/30/00 and 12/31/99 74,367 71,526
Common stock subscribed 10 1,445
Additional paid-in capital 4,956 4,917
Accumulated deficit (86,975) (86,406)
-------- --------
Total Shareholders' (Deficit) (4,278) (5,015)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $ 2,811 $ 2,697
======== ========
<FN>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date. See notes to consolidated financial
statements.
</FN>
</TABLE>
3
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<TABLE>
U.S. ELECTRICAR, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except for per share and share data)
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
--------------------------------- ---------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 544 $ 466 $ 1,174 $ 1,217
COST OF SALES 430 340 887 693
------------- ------------- ------------- -------------
GROSS MARGIN 114 126 287 524
------------- ------------- ------------- -------------
OTHER COSTS AND EXPENSES:
Research & development 110 78 281 124
Selling, general & administrative 594 379 810 649
Interest and financing fees 28 158 96 316
Other (income)/expense (165) (135) (9) (135)
Interest income (22) (7) (45) (7)
------------- ------------- ------------- -------------
Total other costs and expenses 545 473 1,133 947
------------- ------------- ------------- -------------
LOSS FROM CONTINUING OPERATIONS $ (431) $ (347) $ (846) $ (423)
------------- ------------- ------------- -------------
GAIN ON DEBT RESTRUCTURING 127 0 277 0
NET LOSS $ (304) $ (347) $ (569) $ (423)
NET LOSS PER COMMON SHARE: $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 228,375,554 152,076,615 228,375,554 152,076,615
</TABLE>
4
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<TABLE>
U.S. ELECTRICAR, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended June 30
----------------------------
2000 1999
------- -------
<S> <C> <C>
OPERATIONS
Net loss $ (569) $ (423)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and Amortization 74 56
Change in operating assets and liabilities:
Accounts Receivable (114) 77
Inventory (66) 69
Stockholder receivable 38 0
Prepaids and other assets 23 37
Accounts payable and accrued expenses (623) 262
Customer deposits and deferred revenue 0 (225)
------- -------
Net cash used by operating activities (1,237) (188)
------- -------
INVESTING:
Purchases of property, plant and equipment, net of disposals (57) (1)
------- -------
Net cash provided (used) by investing activities (57) (1)
------- -------
FINANCING:
Issuance of notes payable 0 400
Re-purchase of common stock (100) 0
Proceeds from issuance of common stock 1,406 2,100
------- -------
Net cash provided (used) by financing activities 1,306 2,500
------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 12 2,270
CASH AND EQUIVALENTS:
Beginning of period 1,465 6
------- -------
End of period $ 1,477 $ 2,276
======= =======
</TABLE>
5
<PAGE>
<TABLE>
U.S. ELECTRICAR, INC.
STATEMENTS OF CASH FLOWS (Continued)
SUPPLEMENTAL CASH FLOW INFORMATION
(UNAUDITED)
(In thousands)
-----------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Cash paid for interest $38 $--
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Series A preferred stock to common stock $87 $--
Conversion of Series B preferred stock to common stock $52
Conversion of debt to common stock $14 $--
Conversion of accrued interest to equity $39 $--
Issuance of common stock for services $27 $--
</TABLE>
6
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U. S. ELECTRICAR, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
For the Six Months Ended June 30, 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 June 30, 2000 and the interim results of operations and cash flows for the
three and six months ended June 30, 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 June 30, 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 six months
ended June 30, 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 six months ended June 30, 2000,
would be insignificant and, therefore, has not been calculated.
The results of operations for the three and six months ended June 30, 2000 and
1999 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):
June 30, December 31,
2000 1999
---- ----
(unaudited)
Raw materials 322 256
$322 $256
==== ====
NOTE 3 - 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):
June 30, December 31,
2000 1999
------- -------
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 June 30, 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
------- -------
4,752 4,752
Less current maturities 1,420 1,420
------- -------
$ 3,332 $ 3,332
======= =======
8
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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. In July 2000, the Company changed its name to
Enova Systems, Inc.
The Company's fiscal year ends December 31. All year references refer to fiscal
years.
Enova Systems believes it is a leader in the development and production of
commercial digital power management systems. The Company is now building, under
contract with global vehicle and technology companies, efficient, robust, cost
effective digital power processing and energy management technologies for
electric, hybrid electric and fuel cell vehicles. These power management
technologies are now being applied to commercialization of fuel cell power
generation for stationary non-automotive applications.
The Company's business activities continue to be focused on the development of
electric and hybrid electric drive systems and related components, fuel cell
power management systems for both automotive and stationary power applications,
vehicle systems integration and the performance of various engineering
contracts.
The Company is working with Ecostar Electric Drive Systems, a joint venture of
Ford, Daimler Chrysler and Ballard Power to develop and manufacture low voltage
electric drive system components for use in Ford's Global Th!nk City. Ecostar
has announced that an all electric vehicle is scheduled to be introduced in late
2001 for markets in North America. Enova is designing and manufacturing the
electronics for the drive system as well as certain auxiliary components. The
prototype systems are currently undergoing pre-production testing and validation
in the Th!nk vehicle. Enova continues to develop its relationship with Hyundai,
Ecostar and other OEMs and Tier-One suppliers
9
<PAGE>
for sales of its automotive products. The Company offers its modular drive
systems to Original Equipment Manufacturers or OEMs and other customers. These
drive systems have been installed in various vehicles operating in North
America, Europe and Asia.
Enova Systems is effecting a marketing strategy to penetrate alternative markets
for its drive system and its components. Through these efforts, the Company is
developing a drive system powered by a fuel cell with Hyundai Motor Company and
International Fuel Cells or IFC, a subsidiary of United Technologies. The
Company is pursuing, with fuel cell manufacturers, the development of power
management systems for stationary power fuel cell applications. Additionally, in
furtherance of its advanced battery testing and research, the Company is working
with ArgoTech, a subsidiary of HydroQuebec to integrate their Lithium Polymer
batteries into a Ford Th!nk vehicle for display at EVS-17, a major industry
trade show to be held in October 2000. The Company has allied itself with Gillig
Bus, one of the top bus manufacturers in the U.S., to develop and manufacture a
series hybrid electric transit bus. The Company anticipates delivery of the
first of these buses to Gillig in late 2001.
The Company also has several engineering contracts with the U. S. Government's
Defense Advanced Research Project Agency or DARPA and the Department of
Transportation or DOT, including the development of an airport electric
passenger tram system and a EV commercialization study for the State of Hawaii.
The Company's contract with the U.S. Department of Transportation to design and
test this tram system will utilize the Panther 120kW drive system. The tram is
being developed in conjunction with APS, an electric bus manufacturer in Oxnard,
California. This tram, capable of carrying 100 passengers, is anticipated to be
delivered in the first quarter of 2001 to the Honolulu, Hawaii Airport for test
and evaluation. The Company intends to market this tram system to other
airports, national and recreational parks and other high capacity transit
applications.
The Company continues to further its relationship with Hyundai Motor Company of
Korea, or HMC, the world's seventh largest automobile manufacturer, with
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 a parallel hybrid production vehicle and a
fuel cell powered electric drive system, as well as continuing to produce the
family of Panther(tm) drive system for their electric vehicles. These hybrid
systems are slated to be integrated into HMC's new Santa Fe sport utility
vehicle.
The Company intends to 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.
HMC has adapted a customized version of the Panther(TM) 60 for their production
electric vehicle and intends to utilize U.S. Electricar's hybrid drive system
and battery management for their next generation alternative fuel vehicles. The
Company has also developed a high power fast charger for use with its drive
systems in conjunction with HMC.
The Company has begun to explore international ventures with customers in the
United Kingdom and Italy. Enova is also developing a turbine powered hybrid
drive system for EPT of Italy, a manufacturer of medium-size, shuttle type
buses. Furthermore, Enova has begun to develop new applications for its products
in the telecommunications and other non-automotive industries.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced cash flow shortages due to operating losses
primarily attributable to research, development, marketing and other costs
associated with the Company's strategic plan to become an international
manufacturer and supplier of electric propulsion and power management systems
and components. Cash flows from operations 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. 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 financing for at least the
next twelve months.
During the six months ended June 30, 2000, the Company spent $1,237,000 in cash
on operating activities to fund the net loss of $569,000 resulting from factors
explained in the following section of this discussion and analysis. Accounts
receivable increased by $114,000 however there was no significant change in
receivable balances from the first quarter as new sales replaced remittances.
Inventory increased by $66,000 from December 31, 1999 in preparation for
deliveries of drive components for the Ecostar agreement in the third quarter of
2000.
Accrued expenses were reduced by $130,000 due to recapture of certain accrued
expenses and payments of the same. Interest accruing on notes payable increased
by $19,000 for the six months ended June 30, 2000 due to Carl D. Perry forgiving
interest in the amount of $78,000 during that period.
During the six months ending June 30, 2000, the Company has reduced these
antecedent accounts payable by approximately $600,000. The Company continues to
pursue a strategy of negotiating settlements on these outstanding payables.
The operations of the Company during the first two quarters of fiscal 2000 were
financed primarily by the funds received on engineering contracts and sales of
drive system components, as well as an additional equity infusion of $1,000,000
from Kafig Pty, Ltd for the purchase of 3,333,333 shares of common stock, as
previously reported.
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 July 31, 2000, the Company has no firm
commitments for additional financing.
11
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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.
RESULTS OF OPERATIONS
Net sales in the six months ending June 30, 2000 decreased $86,000 from the
previous quarter, and decreased $43,000 in the first six months as compared to
the corresponding period of 1999. The decrease from the previous quarter was due
to the Company performing on certain contracts which were completed and
subsequently billed in the third quarter. The reduction as compared with the
prior year was due to the non-recurring sale of a technology license to Hyundai
Heavy Industries. Development contracts with Hyundai Motor Company, Ecostar
Electric Drive Systems and the U.S. Government account for almost all of the
Company's sales for 2000.
Cost of sales in the quarter ended June 30, 2000 increased to $430,000 compared
to cost of sales of $340,000 for the same period last fiscal year. Again this
increase was due to the sale of the technology licenses to Hyundai Heavy
Industries last year which did not have associated costs of sales.
Research and development expense increased in the second quarter of 2000 by
$125,000, from the first quarter of 1999. The Company continues to increase its
technical staff for new contracts and the development of the 240kW drive system,
hybrid and fuel cell systems 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 $161,000 in the six months
ended June 30, 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 is also increasing 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 $28,000 in the second
quarter of 2000 from $158,000 in the second 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 $4,589,000 of accrued interest and principal as of June 30, 2000.
As of June 30, 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 and interest due on the CMAC note due August 1999 in full as of June
30, 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 $304,000 in the second quarter of 2000
compared to a net loss of $347,000 in the second quarter of 1999. The overriding
factor causing the difference was the forgiveness of debt associated with the
negotiated settlements of antecedent trade payables during the second quarter of
2000.
12
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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 $86,975,000 at June 30, 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 substantial 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
$569,000 for the six months ended June 30, 2000 on sales of $1,174,000.
Nature of Industry. The electric vehicle ("EV") and Hybrid EV ("HEV") industry
are still relatively new. 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, or that a different form of zero emission or low
13
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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 $200,000 during the six months ended
June 30, 2000.
In June 2000, a lawsuit, Fontal International, Ltd. versus U.S. Electricar,
Inc., a California Corporation, was filed in the United States District Court,
Central District of California. The suit alleges breach of contract with respect
to certain warrants to purchase 10,833,332 shares of U.S. Electricar's common
stock. The suit seeks to have Enova Systems issue 10,000,000 shares of common
stock for release of said warrants or to have Enova Systems declare that the
exercise period for said warrants is extended for five years from the date of
delivery. The Company maintains that these warrants have expired and therefore
the plaintiff has no claim to them.
Item 2. Changes in Securities and Use of Proceeds
None
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. The principal and accrued interest due
under the notes have not been paid, causing an event of default under the terms
of the notes. The Company's President acquired this debt and subsequently
forgave all of the accrued interest to June 30, 2000. As of August 10, 2000, the
holder of the notes had not yet exercised any of its remedies with respect to
the notes.
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Item 4. Submission of Matters to a Vote of Securities Holders
The Company held its annual meeting of stockholders on June 1, 2000, at which
the following matters were voted upon.
1. The Company's stockholders voted upon and approved a proposal to
approve an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split of the Company's Common Stock in a ratio
of one-for-twenty, at any time until the next Annual Meeting of
Shareholders. The results of the voting were as follows:
Number of Shares voted FOR: 186,209,521
Number of Shares voted AGAINST: 303,533
Number of Shares ABSTAINING: 31,064
Number of Broker NON-VOTES: N/A
2. The Company's stockholders voted upon and approved a proposal to
approve an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split of the Company's Common Stock in a ratio
of one-for-fifteen, at any time until the next Annual Meeting of
Shareholders. The results of the voting were as follows:
Number of Shares voted FOR: 186,128,587
Number of Shares voted AGAINST: 386,267
Number of Shares ABSTAINING: 30,264
Number of Broker NON-VOTES: N/A
3. The Company's stockholders voted upon and approved a proposal to
approve an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split of the Company's Common Stock in a ratio
of one-for-ten, at any time until the next Annual Meeting of
Shareholders. The results of the voting were as follows:
Number of Shares voted FOR: 186,169,331
Number of Shares voted AGAINST: 349,523
Number of Shares ABSTAINING: 26,264
Number of Broker NON-VOTES: N/A
4. The Company's stockholders voted upon and approved a proposal to
approve an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split of the Company's Common Stock in a ratio
of one-for-five, at any time until the next Annual Meeting of
Shareholders. The results of the voting were as follows:
Number of Shares voted FOR: 186,156,770
Number of Shares voted AGAINST: 319,834
Number of Shares ABSTAINING: 28,264
Number of Broker NON-VOTES: N/A
16
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5. The Company's stockholders voted upon and approved a proposal to
approve an amendment to the Company's Certificate of Incorporation to
change the name of the Company to Enova Systems, Inc. The results of
the voting were as follows:
Number of Shares voted FOR: 186,403,354
Number of Shares voted AGAINST: 76,570
Number of Shares ABSTAINING: 24,944
Number of Broker NON-VOTES: N/A
6. The Company's stockholders voted upon and approved to elect six (6)
individuals to the Board of Directors. The following Directors will
serve until the next Annual Meeting of Shareholders or until their
respective successors are elected and qualified.
Re-elected Directors: FOR WITHHELD
-------------------- --- --------
Anthony Rawlinson 186,865,277 14,080
Carl D. Perry 185,866,657 12,700
Edwin Riddell 185,866,657 12,700
Dr. Malcolm Currie 185,865,487 13,870
John J. Micek, III 185,866,277 12,490
Donald Dreyer (Preferred B) 672,011 3,346
7. The Company's stockholders voted upon and approved a proposal to ratify
the action of the Board of Directors appointing Moss Adams LLP as the
independent auditors for the Company for the year ended December 31,
2000. The results of the voting were as follows:
Number of Shares voted FOR: 186,441,988
Number of Shares voted AGAINST: 3,800
Number of Shares ABSTAINING: 58,880
Number of Broker NON-VOTES: N/A.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
None
(b) Reports on Form 8-K
The Company filed no current reports on Form 8-K during the
quarter ended June 30, 2000.
17
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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: August 14, 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)
18
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EXHIBIT INDEX
Exhibit No. Description Page No.
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27 Financial Data Schedule 18
19
