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
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________.
Commission File Number: 0 - 21810
AMERIGON INCORPORATED
---------------------
(Exact name of registrant as specified in its charter)
California 95-4318554
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5462 Irwindale Avenue, Irwindale, California 91706
- -------------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (626) 815-7400
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 period 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
--- ---
At April 15, 1998 the registrant had 12,550,445 shares of Class A Common
Stock, no par value; no shares of Class B Common Stock, no par value; and no
shares Preferred Stock, no par value, issued and outstanding.
AMERIGON INCORPORATED
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II OTHER INFORMATION 11
Item 6. Exhibits and Reports on Form 8-K
Signature 12
(2)
PART I
ITEM 1. FINANCIAL STATEMENTS
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(IN THOUSANDS)
December 31, March 31,
1997 1998
------------ -----------
ASSETS (unaudited)
Current Assets:
Cash & cash equivalents $6,037 $4,822
Short term investments 2,400 1,393
Accounts receivable less allowance of $80 255 114
Receivable due from joint venture partner 1,000 1,000
Inventory, primarily raw materials 35 193
Prepaid expenses and other assets 196 148
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Total current assets 9,923 7,670
Property and equipment, net 645 911
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Total Assets $10,568 $8,581
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------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilites:
Accounts payable $650 $616
Deferred revenue 97 97
Accrued liabilities 350 261
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Total current liabilities 1,097 974
Long term portion of capital lease 41 34
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Shareholders' Equity:
Preferred stock, no par value; 5,000 shares
authorized, none issued and outstanding
Common Stock;
Class A - no par value; 40,000 shares authorized,
9,550 issued and outstanding at
March 31, 1998 and December 31, 1997
(An additional 3,000 shares held in escrow) 28,149 28,149
Class B - no par value; 3,000 shares authorized,
none issued and outstanding - -
Contributed capital 9,882 9,882
Deficit accumulated during development stage (28,601) (30,458)
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Total shareholders' equity (deficit) 9,430 7,573
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Total Liabilities and Shareholders' Equity $10,568 $8,581
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------------ -----------
See accompanying notes to the condensed financial statements
(3)
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISES)
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
From
April 23,1991
Three Months (inception)
Ended March 31, to March 31,
------------------ -------------
1997 1998 1998
---- ---- ----
Revenues:
Development contracts and
related grants $ 384 $ 84 $17,294
Grants 12 - 6,183
------ ----- -------
Total Revenue 396 84 23,477
------ ----- -------
Costs And Expenses:
Direct development contract and
related grant costs 869 - 20,904
Direct grant costs 28 - 4,757
Research and development 256 1,024 11,883
Selling, general and administrative,
including reimbursable expenses 794 1,013 19,271
------ ----- -------
Total Costs and Expenses 1,947 2,037 56,815
------ ----- -------
Operating Loss (1,551) (1,953) (33,338)
Interest income 67 96 1,139
Interest expense (117) - (282)
Gain on disposal of assets - - 2,363
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Net loss before extraordinary item ($1,601) ($1,857) ($30,118)
Extraordinary loss from extinguishment
of indebtedness (340) - (340)
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Net loss ($1,941) ($1,857) ($30,458)
------ ----- -------
------ ----- -------
Basic and diluted net loss per share
before extraordinary item ($0.25) ($0.19)
------ -----
------ -----
Basic and diluted net loss per share ($0.30) ($0.19)
------ -----
------ -----
Weighted average number of shares outstanding 6,488 9,550
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------ -----
See accompanying notes to the condensed financial statements
(4)
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISES)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
From
April 23,1991
Three Months (inception)
Ended March 31, to March 31,
1997 1998 1998
-------- ------- ------------
Operating Activities:
Net loss ($1,941) ($1,857) ($30,458)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 97 104 1,178
Provision for doubtful account - - 190
Stock option compensation - - 712
Gain from sale of assets - - (2,363)
Contributed capital-founders'
services without cash compensation - - 300
Change in operating assets and liabilities:
Accounts receivable (621) 141 (304)
Unbilled revenue 915 - -
Inventory - (158) (213)
Prepaid expenses and other assets 529 48 (148)
Accounts payable (1,058) (34) 268
Deferred revenue 85 - 97
Accrued liabilities 99 (89) 297
------- ------ ------
Net cash used in operating activities (1,895) (1,845) (30,444)
------- ------ ------
Investing Activities:
Purchase of property and equipment (30) (370) (2,116)
Proceeds from sale of assets - - 2,800
Receivable from sale of assets - - (1,000)
Short term-investments sold (purchased) - 1,007 (1,393)
------- ------ ------
Net cash used in investing activities (30) 637 (1,709)
------- ------ ------
Financing Activities:
Proceeds sale of common stock units, net 17,704 - 34,772
Proceeds from exercise of stock options - - 160
Repurchase of common stock - - (15)
Borrowing under line of credit - - 6,280
Repayment of line of credit (1,187) - (6,280)
Repayment of capital lease (4) (7) (44)
Proceeds from Bridge Financing - - 3,000
Repayment of Bridge Financing (2,850) - (3,000)
Proceeds of notes payable to shareholder 250 - 450
Repayment of notes payable to shareholder (450) - (450)
Notes payable to shareholders contributed
capital - - 2,102
------- ------ ------
Net cash provided by financing activities 13,463 (7) 36,975
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Net increase (decrease) in cash and cash
equivalents 11,538 (1,215) 4,822
Cash and cash equivalents at beginning
of period 203 6,037 -
------- ------ ------
Cash and cash equivalents at end of period $11,741 $4,822 $4,822
------- ------ ------
------- ------ ------
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest 113 - $280
------- ------ ------
------- ------ ------
Supplemental Disclosure of Non-Cash Transaction:
Conversion of Bridge Debentures into warrants 150 - $150
------- ------ ------
------- ------ ------
See accompanying notes to the condensed financial statements
(5)
AMERIGON INCORPORATED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY:
Amerigon Incorporated (the "Company") is a development stage enterprise,
which was incorporated in California on April 23, 1991 primarily to develop,
manufacture and market proprietary, high technology automotive components and
systems for gasoline-powered and electric vehicles.
NOTE 2 -- BASIS OF PRESENTATION AND SUMMARY OF CERTAIN ACCOUNTING POLICIES:
The accompanying balance sheets as of March 31, 1998 and the statements
of operations and cash flows for the three months ended March 31, 1998 and
for the period from April 23, 1991 (inception) to March 31, 1998 have been
prepared by the Company without audit. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary for fair
presentation have been included. The results of operations for the three
month period ended March 31, 1998 are not necessarily indicative of the
operating results for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K for the year
ended December 31, 1997.
DEVELOPMENT CONTRACT REVENUES AND RELATED GRANTS. Historically, the
Company entered into a number of fixed price contracts under which revenue is
recognized using the percentage of completion method, or in the case of short
duration contracts, when the prototype or services are delivered.
Development contract revenues earned are recorded on the balance sheet as
Unbilled Revenue until billed. The Company has received government grants,
which paralleled one of its development contracts. These grants are included
in development contract and related grant revenues.
GRANT REVENUES. Revenue from government agency grants and other sources
pursuant to cost-sharing arrangements is recognized when reimbursable costs
have been incurred. Grant revenues earned are recorded on the balance sheet
as Unbilled Revenue until billed.
(6)
NOTE 3 -- NET LOSS PER SHARE:
The Company's net loss per share calculations are based upon the weighted
average number of shares of common stock outstanding. Excluded from this
calculation are the 3,000,000 Escrowed Contingent Shares. Common stock
equivalents (stock options and stock warrants) are anti-dilutive in both periods
and are excluded from the net loss per share calculation.
(7)
PART 1
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FIRST QUARTER 1998 COMPARED WITH FIRST QUARTER 1997
REVENUES. Revenues for the three months ended March 31, 1998 ("First
Quarter 1998") were $84,000 as compared with revenues of $396,000 in the
three months ended March 31, 1997 ("First Quarter 1997"). The decrease in
development contract and related grant revenues was due principally to the
completion of several development contracts and reduced revenues related to
prototype seat contracts. The Company does not intend to pursue any
additional significant grants or development contracts.
The Company intends to focus its efforts on developing its core products
and technologies (the Climate Control Seats and radar-based sensing devices),
developing the manufacturing capability for such products and bringing them
to market as rapidly as possible. Because of the current development focus,
and the decision not to pursue actively any more significant grants or
development contracts, the Company expects that revenues for the foreseeable
future will be significantly less than in prior periods.
DIRECT DEVELOPMENT CONTRACT AND RELATED GRANT COSTS. No direct
development contract and related grant costs were incurred in the First
Quarter 1998 compared to $869,000 in the First Quarter 1997 primarily due to
the end of activity in the Company's electric vehicle program (related to
development contracts) and the divestiture of the IVS-TM- product line.
Additionally, all expenses related to prototype orders from customers for
seat and radar products and costs associated with the electric vehicle
program are recorded as research development expense for the First Quarter
1998.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $1,024,000 in First Quarter 1998 from $256,000 in First Quarter
1997. The increase in First Quarter 1998 was due to higher levels of
research and development activity on the Company's Climate Control Seats and
radar products. As mentioned previously all expenses related to prototype
orders from customers for these two products and the electric vehicle program
are now recorded as research and development expense. As the Company begins
to focus on the development of its core products, these expenses can be
expected to increase in future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased to $1,013,000 in First Quarter 1998
compared to $794,000 in First
(8)
Quarter 1997. The increase in First Quarter 1998 was due to the fact that
fewer SG&A expenses were allocated to development contracts and an increase
in legal fees. Direct and indirect overhead expenses included in SG&A that
are associated with development contracts were allocated to such contracts.
As the Company has not obtained and is not actively pursuing any replacement
development contracts, the Company anticipates that SG&A expenses will
continue to increase in 1998 as compared to prior year comparisons. The
Company also expects SG&A expenses to increase as it hires additional
employees in connection with the development of radar products and the
development and marketing of Climate Control Seats .
INTEREST EXPENSE. Net interest income in 1998 increased due to cash
invested related to the receipt of proceeds from the secondary offering.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had working capital of $6,696,000. The
Company's principal sources of operating capital have been the proceeds of
its various financing transactions and, to a lesser extent, revenues from
grants, development contracts and sale of prototypes to customers.
Cash and cash equivalents decreased by $1,215,000 in 1998 primarily due
to cash used in operating activities. Operating activities used $1,845,000,
which was primarily a result of the net loss of $1,857,000. Investing
activities provided $637,000, of which $370,000 was related to the purchase
of property and equipment, offset by $1,007,000 related to the sale of
Treasury Bills.
The Company expects to incur losses for the foreseeable future due to
the continuing cost of its product development and marketing activities and
to begin volume manufacturing operations when it is required. To fund its
operations, the Company will use current cash and investments, but will need
cash from financing sources before the Company can achieve profitability from
its operations. There can be no assurance that profitability can be achieved
in the future. The Company is focused on bringing products to market and
achieving revenues based upon its available resources. The Company will
continue its program to divest assets or businesses where it does not have
sufficient resources to bring the product to market and where it will enhance
shareholder value. As has been previously mentioned, the Company is now
striving to accomplish a strategic venture with the Company's electric
vehicle program. The Company believes this divestiture will allow the Company
to pursue the market introduction of its Climate Control Seats and
radar-based sensor device, both for the automotive marketplace. Although the
Company has begun limited production on its Climate Control Seat product,
larger orders for the seat product and the ability to begin production on the
radar product will require significant expenses for tooling product parts and
to set up manufacturing and/or assembly processes. The Company also expects
to require significant capital to fund other near-term production engineering
and manufacturing, as well as research and development and marketing of these
products. The Company does not intend to pursue any more significant grants
or development contracts to fund operations and therefore is highly dependent
on its current working capital sources. Should the Company not achieve
profitability in the near future from the two above mentioned products,
(9)
additional equity and/or debt financing would be required. There can be no
assurance that either of these sources would be available in the future and
may be required in any case.
Certain matters discussed or referenced in this report, including the
Company's intention to develop, manufacture and market Climate Control Seats
and radar products and the Company's expectation of reduced revenues and
continuing losses for the foreseeable future, are forward looking statements.
Other forward looking statements may be identified by the use of forward
looking terminology such as "may", "will", "expect", "believe", "estimate",
"anticipate", "continue", or similar terms, variations of such terms or the
negative of such terms. Such statements are based upon management's current
expectations and are subject to a number of risks and uncertainties which
could cause actual results to differ materially from those described in the
forward looking statements. Such risks and uncertainties include the market
demand for and performance of the Company's products, the Company's ability
to develop, market and manufacture such products successfully, the viability
and protection of the Company's patents and other proprietary rights, and the
Company's ability to obtain new sources of financing. Additional risks
associated with the company and its business and prospects are described in
the Company's Annual Report on Form 10-K for the year ended December 31,
1997.
(10)
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None
(11)
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.
Amerigon Incorporated
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Registrant
Date: April 30, 1998 /s/ Scott O. Davis
------------------
Scott O. Davis
Vice President Finance and
Chief Financial Officer
(12)
5
1,000
3-MOS
DEC-31-1998
JAN-01-1998
MAR-31-1998
4,822
1,393
1,294
(80)
193
7,670
2,089
(1,178)
8,581
974
0
0
0
28,149
(20,576)
8,581
0
84
0
2,037
0
0
0
(1,857)
0
(1,857)
0
0
0
(1,857)
(0.19)
(0.19)
