-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KOFI4ZpkYQlnAkFA3lYsC2LCH1QkHepXlUFPoHpo+aemeLTT+0/lXQZ9m7SPIBJ+ dsbmXvtIHO4pvHIFNAsLMA== 0000315449-98-000006.txt : 19980630 0000315449-98-000006.hdr.sgml : 19980630 ACCESSION NUMBER: 0000315449-98-000006 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980629 SROS: AMEX SROS: BSE SROS: CSX SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIQUE MOBILITY INC CENTRAL INDEX KEY: 0000315449 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 840579156 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-10869 FILM NUMBER: 98655947 BUSINESS ADDRESS: STREET 1: 425 CORPORATE CIRCLE CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3032782002 MAIL ADDRESS: STREET 1: 425 CORPORATE CIRCLE CITY: GOLDEN STATE: CO ZIP: 80401 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K/A Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 30, 1998 Commission file number 1-10869 UNIQUE MOBILITY, INC (Exact name of Registrant as specified in its charter) Colorado 84-0579156 (State or other jurisdiction (I.R.S. employer indentification of incorporation or organization) number) 425 Corporate Circle, Golden, Colorado 80401 (Address of principal executive offices) (Zip code) (303) 278-2002 Registrant's telephone number, including area code Item 2. Acquisition or Disposition of Assets Unique Mobility, Inc. (the Registrant) hereby amends its current report on Form 8-K originally filed with the Securities and Exchange Commission (the Commission) on May 6, 1998, describing the acquisition by the Registrant of all of the issued and outstanding shares of common stock of Franklin Manufacturing Company (Franklin). Item 7. Financial Statements and Exhibits The following financial statements, pro forma financial information, and exhibits are filed as part of this report: (a) Financial Statements of Businesses Acquired Financial Statements of Franklin Manufacturing Company Independent Auditors Report Balance Sheets - September 30, 1997 and 1996 Statements of Operations for the years ended September 30, 1997, 1996 and 1995 Statements of Stockholders' Equity for the years ended September 30, 1997, 1996 and 1995 Statements of Cash Flows for the years ended September 30, 1997, 1996 and 1995 Notes to Financial Statements (b) Pro Forma Financial Statements Unaudited Pro Forma Consolidated Balance Sheet - December 31, 1997 Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended December 31, 1997 Unaudited Pro Forma Consolidated Statement of Operations for the year ended March 31, 1997 Notes to Unaudited Pro Forma Consolidated Financial Statements (c) Exhibits 23 Consent of KPMG Peat Marwick LLP Independent Auditors' Report The Board of Directors Franklin Manufacturing Company d/b/a Franklin Electronics Company: We have audited the accompanying balance sheets of Franklin Manufacturing Company d/b/a Franklin Electronics Company as of September 30, 1997 and 1996, and the related statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended September 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Franklin Manufacturing Company d/b/a Franklin Electronics Company as of September 30, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 1997, in conformity with generally accepted accounting principles. /S/ KPMG Peat Marwick LLP May 1, 1998 St. Louis, Missouri FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Balance Sheets September 30, 1997 and 1996
1997 1996 Assets Current assets: Cash and cash equivalents ........................ $ 100 2,517 Trade accounts receivable, net of allowance for doubtful accounts of $5,000 at 1997 and 1996 (note 10) ...................................... 1,504,858 879,148 Other receivable ................................. -- 100,000 Inventories ...................................... 1,547,741 1,249,344 Prepaid expenses and other current assets ........ 41,610 66,501 Deferred tax assets (note 7) ..................... 58,042 54,932 Total current assets ............................... 3,152,351 2,352,442 Property and equipment, net (note 2) ............... 305,390 444,376 Goodwill, net of accumulated amortization of $21,853 and $15,859 in 1997 and 1996, respectively ..................................... 65,111 71,105 Other assets, net .................................. 60,601 83,844 $3,583,453 2,951,767 Liabilities and Stockholders' Equity Current liabilities: Checks outstanding, net of deposits .............. 407,035 -- Accounts payable ................................. 1,048,730 550,183 Accrued expenses ................................. 234,551 108,994 Income taxes payable ............................. 26,496 36,266 Line of credit (note 3) .......................... 785,000 355,000 Current installments of long-term debt (note 4) .. 262,359 299,740 Current installments of capital lease obligations (note 5) ...................................... 17,529 15,485 Total current liabilities .......................... 2,781,700 1,365,668 Deferred tax liability (note 7) .................... 615 33,172 Long-term debt, less current installments (note 4) . 495,368 1,265,439 Long-term capital lease obligations, less current installments (note 5) ......................... 22,685 40,923 Total noncurrent liabilities ....................... 518,668 1,339,534 Stockholders' equity: Common stock of $1 par value, 30,000 shares authorized; 5,600 issued shares in 1997 and 1996 ........... 5,600 5,600 Retained earnings ................................ 287,485 250,965 293,085 256,565 Less treasury stock, at cost, 2,128 shares in 1997 and 1996 ................................. 10,000 10,000 Total stockholder' equity .......................... 283,085 246,565 Commitments and contingencies (note 9) $3,583,453 2,951,767
See accompanying notes to financial statements. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Statements of Operations Years ended September 30, 1997, 1996, and 1995
1997 1996 1995 Net sales (note 10) ............................. $ 10,458,447 6,663,893 4,764,200 Cost of sales ................................... 8,582,201 5,596,919 4,001,301 Gross profit .................................... 1,876,246 1,066,974 762,899 Selling, general, and administrative expenses ... 1,615,130 918,149 682,504 Operating income ................................ 261,116 148,825 80,395 Other income (expense): Interest expense .............................. (162,705) (186,581) (192,810) Interest income ............................... 189 609 1,798 Other, net .................................... (30,164) -- 51,152 (192,680) (185,972) (139,860) Income (loss) before income tax expense (benefit) 68,436 (37,147) (59,465) Income tax expense (benefit) .................... 31,916 591 (6,380) Net income (loss) ............................... $ 36,520 (37,738) (53,085)
See accompanying notes to financial statements. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Statements of Stockholders' Equity Years ended September 30, 1997, 1996, and 1995
Total Common Retained Treasury stockholders' Stock earnings stock equity Balance at September 30, 1994 $ 5,600 341,788 (10,000) 337,388 Net loss .................... -- (53,085) -- (53,085) Balance at September 30, 1995 5,600 288,703 (10,000) 284,303 Net loss .................... -- (37,738) -- (37,738) Balance at September 30, 1996 5,600 250,965 (10,000) 246,565 Net income .................. -- 36,520 -- 36,520 Balance at September 30, 1997 $ 5,600 287,485 (10,000) 283,085
See accompanying notes to financial statements. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Statements of Cash Flows Years ended September 30, 1997, 1996, and 1995
1997 1996 1995 Cash flows from operating activities: Net income (loss) ........................................ $ 36,520 (37,738) (53,085) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization ....................... 196,335 220,810 238,440 Deferred income taxes ............................... (35,667) (40,152) (15,975) Provision for bad debts ............................. - (6,000) (2,000) Loss on disposal of property and equipme ............ 47,025 - Changes in operating assets and liabilities: Trade accounts receivable ........................... (625,710) (72,878) 203,480 Other receivable .................................... 100,000 (100,000) - Inventories ......................................... (298,397) (303,552) (153,710) Prepaid expenses and other current assets ........... 24,891 (38,329) (12,444) Other assets ........................................ 23,243 40,717 (6,034) Accounts payable .................................... 498,547 369,648 27,391 Accrued expenses .................................... 125,557 41,020 (32,825) Income taxes payable ................................ (9,770) 28,535 8,053 Net cash provided by operating activities .................. 82,574 102,081 201,291 Cash flows from investing activities: Additions to property and equipment ...................... (111,088) (16,994) (84,332) Proceeds from sale of property and equipment ............. 12,708 - Net cash used in investing activities ...................... (98,380) (16,994) (84,332) Cash flows from financing activities Increase (decrease) in checks outstanding, net of deposits 407,035 - (9,325) Principal borrowings under line of credit, net ........... 430,000 223,000 132,000 Proceeds from long-term debt ............................. 406,896 - - Repayments of long-term debt and capital lease obligations (1,230,542) (306,744) (256,620) Net cash provided by (used in) financing activities ........ 13,389 (83,744) (133,945) Net increase (decrease) in cash and cash equivalents ....... (2,417) 1,343 (16,986) Cash and cash equivalents, beginning of year ............... 2,517 1,174 18,160 Cash and cash equivalents, end of year ..................... $ 100 2,517 1,174 Supplemental disclosures of cash flow information - cash paid during the year for: Interest ............................................... $ 155,254 179,680 189,407 Income taxes ........................................... $ 77,353 13,362 1,543
Supplemental schedule of noncash financing and investing activities: During 1995, the Company acquired office equipment for $80,300 in conjunction with a capital lease agreement. See accompanying notes to financial statements. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 (1) Summary of Significant Accounting Policies (a) Description of Business Franklin Manufacturing Company d/b/a Franklin Electronics Company (the Company) is a manufacturer and distributor of electronic circuitry for customers located primarily in Missouri and Illinois. (b) Principles of Consolidation The September 30, 1995 consolidated financial statements include the accounts of Franklin Manufacturing Company and its wholly-owned subsidiary, Franklin Electronics, Inc. All significant intercompany transactions have been eliminated in the consolidation. On April 1, 1996, Franklin Manufacturing Company merged its wholly-owned subsidiary, Franklin Electronics Company, through a statutory merger as defined by the State of Missouri. Under the provisions of the General and Business Corporations Law of Missouri, the statutory merger leaves Franklin Manufacturing Company as the sole surviving corporation doing business as Franklin Electronics Company. All of the property, rights, privileges, leases, contracts, licenses and patents, as well as all of the liabilities and obligations of Franklin Electronics Company became the property and/or obligation of Franklin Manufacturing Company. The effect of this merger is immaterial to the financial statements presented taken as a whole. (c) Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (d) Cash and Cash Equivalents For financial statement presentation purposes, cash and cash equivalents include cash on hand, amounts due from banks, and all highly liquid investment instruments with an initial maturity of three months or less. (e) Inventories Inventories consist of raw materials and are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 (f) Property and Equipment Property and equipment are stated at cost. Equipment under capital leases are stated at the present value of the minimum lease payments. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Equipment held under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. (g) Goodwill Goodwill of the purchased business is amortized on a straight-line basis over the period estimated to be benefited, which is 15 years. The Company assesses the recoverability of goodwill and other long-lived assets based upon undiscounted future operating cash flows whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Amortization expense was $5,994 for the years ended September 30, 1997, 1996, and 1995. (h) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. (2) Property and Equipment Property and equipment consist of the following:
Estimated useful lives in years 1997 1996 Office furniture and fixtures 5-7 $ 166,046 124,606 Automobiles ................. 5 22,775 22,775 Leasehold improvements ...... 7-39 9,915 9,874 Machinery and equipment ..... 3-7 1,011,248 1,173,663 1,209,984 1,330,918 Less accumulated depreciation 904,594 886,542 $ 305,390 444,376
FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 (3) Line of Credit At September 30, 1997, the Company had a $1,250,000 line of credit available from Commerce Bank. The line of credit is due on demand, but if no demand is made, then it is due June 1998. Interest is payable monthly at the bank's prime rate (8.5% at September 30, 1997). The line is secured by accounts receivable, inventory, equipment, furniture and fixtures, and general intangibles. In addition, it is guaranteed by a stockholder of the Company. Borrowings under the line of credit are limited to certain percentages of eligible accounts receivable and inventory. At September 30, 1997, there was approxi-mately $465,000 available under the line of credit. (4) Long-term Debt Long-term debt consists of the following:
1997 1996 Note payable to bank, interest at 7.5%, payable in monthly installments of $4,234 including interest, due March 1999, repaid in 1997 (a) ......... $ -- 194,244 Note payable to bank, interest at prime, payable in monthly installments of $5,910 plus interest, due December 1997, repaid in 1997 (a) ............................. -- 230,485 Notes payable to bank, interest at 1.5% over prime, payable in monthly installments of $10,893 plus interest, due March 1999, repaid in 1997 (a) ......... -- 588,214 Note payable to Eureka Holdings, interest at 1% over prime, payable in monthly payments of $11,567 including interest, due January 2000 (b) ..... 289,466 377,651 Note payable to Eureka Holdings, interest at 1% over prime, payable in monthly payments of $2,684, due January 2000 (b) ......................... 67,162 87,622 Note payable to Eureka Holdings, interest at 5.32%, payable in six consecutive monthly payments of $20,833 including interest, beginning one month after the payment of the other notes payable to Eureka Holdings but no later than January 2001 (b) ... 86,963 86,963 Note payable to bank, interest at prime, payable in monthly payments of $9,925 plus interest, due June 2000, secured by substantially all assets of the Company and guaranteed by a stockholder of the Company ........... 314,136 -- 757,727 1,565,179 Less current installments ................................. 262,359 299,740 $ 495,368 1,265,439
FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 (a) The notes are secured by accounts receivable, inventory, equipment, and assignment of a life insurance policy upon the life of a stockholder of the Company. (b) The notes are secured by all assets of the Company subject to a lien by a bank; the notes are also guaranteed by a stockholder of the Company. The Company's loan agreements require the Company to achieve specific financial and operating requirements. At September 30, 1997, the Company was not in compliance with certain covenants; however, waivers of noncompliance have been obtained from the respective lenders. The aggregate maturities of long-term debt as of September 30, 1997 are as follows: Year ending September 30: 1998 $ 262,359 1999 276,577 2000 218,791 $ 757,727 (5) Leases The Company is obligated under a capital lease for equipment that expires in November 1999. In addition, the Company leases certain facilities and equipment under various noncancelable operating lease agreements which expire at various dates throughout 2007. At September 30, 1997, the future minimum lease payments under operating leases with initial noncancelable terms in excess of one year, and future minimum capital lease payments are as follows: FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995
Capital Operating leases leases Year ending September 30: 1998 $ 21,649 260,274 1999 21,649 257,486 2000 2,899 263,514 2002 -- 251,224 2002 -- 244,164 Thereafter -- 1,130,658 46,197 2,407,320 Less amounts representing interest (5,983) Present value of minimum lease payments 40,214 Less current installments of obligations under capital leases 17,529 $ 22,685
Rent expense totaled $473,177, $245,549, and $137,961 in 1997, 1996, and 1995, respectively, and includes rent expense paid to a related party which is described in note 8. At September 30, 1997 and 1996, the gross amount of equipment and related accumulated amortization recorded under the capital lease is as follows:
1997 1996 Equipment $ 80,300 80,300 Accumulated amortization (57,174) (25,696) $ 23,126 54,604
Amortization of assets held under capital leases is included with depreciation expense. FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 (6) Employee Benefits In 1995, the Company instituted a retirement plan under Section 401(k) of the Internal Revenue Code, covering substantially all full-time employees. Employees may contribute up to 15% of their pretax income to the retirement plan. Employer contributions to the plan are at the discretion of management. During the years ended September 30, 1997, 1996, and 1995, the Company did not contribute to the retirement plan. (7) Income Taxes Income tax expense (benefit) consists of the following: Current Deferred Total
1997: Federal $ 61,035 (32,837) 28,198 State 6,548 (2,830) 3,718 $ 67,583 (35,667) 31,916 1996: Federal $ 34,287 (33,878) 409 State 6,456 (6,274) 182 $ 40,743 (40,152) 591 1995: Federal $ 6,867 (11,284) (4,417) State 2,728 (4,691) (1,963) $ 9,595 (15,975) (6,380)
FRANKLIN MANUFACTURING COMPANY D/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 The federal corporate statutory rate is reconciled to the Company's effective income tax rate as follows:
1997 1996 1995 Federal corporate statutory rate $23,269 (12,630) (20,218) State and local taxes, net of federal benefit .................... 2,454 120 (1,296) Surtax exemption ...................... (10,987) (519) 5,595 Officer's life insurance .............. 6,120 6,085 4,453 Nondeductible expenses ................ 11,060 7,535 5,086 $ 31,916 591 (6,380)
The temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to the deferred tax assets and deferred tax liabilities are as follows:
1997 1996 Deferred tax assets: Allowance for doubtful accounts .. $ 2,000 2,000 Inventory ........................ 48,023 47,976 Other assets ..................... 42,291 39,739 Accrued vacation ................. 4,052 2,714 Other accrued expenses ........... 3,967 2,242 Total deferred tax assets ............. 100,333 94,671 Deferred tax liabilities - property and equipment, due to differences in depreciation ...... 42,906 72,911 Net deferred tax asset ................ $ 57,427 21,760
The net deferred tax asset is classified as follows:
1997 1996 Deferred tax assets - current ..... $ 58,042 54,932 Deferred tax liability - noncurrent (615) (33,172) Net deferred tax asset ............ $ 57,427 21,760
Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management FRANKLIN MANUFACTURING COMPANY d/b/a Franklin Electronics Company Notes to Financial Statements September 30, 1997, 1996, and 1995 believes it is more likely than not the Company will realize the benefits of these deductible differences. (8) Related Party Transactions During 1996, the Company began leasing equipment under month-to-month operating lease agreements from an affiliated company, Jen Tech Enterprises, L.L.C., with common ownership and management. Total lease payments made during September 30, 1997 and 1996 were $186,000 and $51,600, respectively. Accounts receivable from this affiliated company was $100,000 at September 30, 1996, which consisted of a deposit on equipment. (9) Commitments and Contingencies The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position. (10) Business and Credit Concentrations During the year ended September 30, 1997, the Company had sales to three major customers of $3,380,401, $1,754,159, and $1,169,760, respectively, (32%, 17%, and 11% of sales, respectively). At September 30, 1997, accounts receivable from these customers were $530,693, $113,701, and $482,145, respectively. During the year ended September 30, 1996, the Company had sales to three major customers of $1,570,202, $958,777, and $813,287, respectively, (24%, 14%, and 12% of sales, respectively). At September 30, 1996, accounts receivable from these customers were $379,728, $482,145, and $200,869, respectively. During the year ended September 30, 1995, the Company had sales to three major customers of $1,077,827, $734,898, and $575,687, respectively, (23%, 15%, and 12% of sales, respectively). (11) Subsequent Events During December 1997, the Company elected to be taxed under the Subchapter S provisions of the Internal Revenue Code. Under these provisions, the Company does not generally pay corporate-level income taxes on its taxable income as earnings or losses and other tax attributes are passed through to the stockholder. The election is effective for the tax years beginning after October 1, 1997. On April 30, 1998, all of the outstanding shares of the Company were acquired by Unique Mobility, Inc. for a net purchase price of approximately $6.25 million. UNIQUE MOBILITY, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated balance sheet assumes that the acquisition of Franklin Manufacturing Company occurred on December 31, 1997, and includes the December 31, 1997, unaudited historical balance sheet of Unique Mobility, Inc. and Franklin Manufacturing Company adjusted for the pro forma effects of this acquisition. The following unaudited pro forma consolidated statements of operations for the year ended March 31, 1997, and the nine months ended December 31, 1997, assumes that the acquisition of Franklin Manufacturing Company had occurred on April 1, 1996 and include the historical unaudited consolidated statements of operations for Unique Mobility, Inc. for the year ended March 31, 1997, and the nine months ended December 31, 1997 adjusted for the pro forma effects of the acquisition. The unaudited pro forma consolidated statements are not necessarily indicative of the results of operations that would actually have occurred if the transaction had been consummated as of April 1, 1996 or December 31, 1997. These statements should be read in conjunction with the historical financial statements, and related notes thereto, of Unique Mobility, Inc. in its annual report on Form 10-K and Franklin Manufacturing Company financial statements included herein. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Balance Sheet December 31, 1997
Historical Related Franklin Asset Franklin Unique Manufacturing Acquisition Acquisition Pro Forma Assets Mobility, Inc. Company Adjustments Adjustments Consolidated Current Assets: Cash and cash equivalents ........... $ 3,474,700 -- -- (3,474,700)(1) -- Accounts receivable and other receivables ...................... 341,306 1,823,365 -- -- 2,164,671 Cost and estimated earnings in excess of billings on uncompleted contract . 758,431 -- -- -- 758,431 Inventories ......................... 409,879 1,164,382 -- -- 1,574,261 Prepaid expenses .................... 61,286 21,198 -- -- 82,484 Other current ....................... 301,766 58,042 -- (58,042)(4) 301,766 Total current assets ......... 5,347,368 3,066,987 -- (3,532,742) 4,881,613 Property and equipment, at cost: Land ................................ 335,500 -- -- -- 335,500 Building ............................ 1,438,090 -- -- -- 1,438,090 Molds ............................... 102,113 -- -- -- 102,113 Transportation equipment ............ 301,719 41,275 -- (41,275)(2) 323,719 22,000 (2) Machinery and equipment ............. 2,377,760 1,187,707 422,250 840,750(2) 3,640,760 (1,187,707)(2) -- 4,555,182 1,228,982 422,250 (366,232) 5,840,182 Less accumulated depreciation ......... (2,025,355) (939,961) -- 939,961 (2) (2,025,355) Net property and equipment ... 2,529,827 289,021 422,250 573,729 3,814,827 Investment in Taiwan joint venture ....... 2,499,787 -- -- -- 2,499,787 Other investments ........................ 1,000,000 -- -- 1,000,000 Patent and trademark costs, net of accumulated amortization of $57,048 ... 616,407 -- -- -- 616,407 Goodwill ................................. -- -- -- 5,186,769(3) 5,186,769 Other assets ............................. 850 123,268 -- -- 124,118 $ 11,994,239 3,479,276 422,250 2,227,756 18,123,521
See accompanying notes to unaudited pro forma consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Balance Sheet, Continued December 31, 1997
Historical Related Franklin Asset Franklin Unique Manufacturing Acquisition Acquisition Pro Forma Liabilities and Stockholders' Equity Mobility, Inc. Company Adjustments Adjustments ConsolidlIated Consolidated Current liabilities: Accounts payable ...................... $ 143,654 992,801 1,136,455 Acquisition price payable ............. -- -- 525,300 (1) 525,300 Line-of-credit ........................ -- 705,000 705,000 Other current liabilities ............. 657,151 227,259 (615)(4) 883,795 Current portion of long-term debt ..... 48,419 262,359 140,750 (1) 451,528 Billings in excess of costs and estimated earnings on uncompleted contracts .......................... 4,590 -- 4,590 Total current liabilities ...... 853,814 2,187,419 140,750 524,685 3,706,668 Long-term debt, less current portion ....... 689,703 747,612 281,500 (1) 1,718,815 Total liabilities .............. 1,543,517 2,935,031 422,250 524,685 5,425,483 Minority interest in consolidated subsidiary 393,254 -- 393,254 Stockholders' equity Common stock .......................... 142,230 5,600 (2,737)(1) 145,093 Additional paid-in capital ............ 30,168,853 (10,000) 2,254,453 (1) 32,413,306 Accumulated deficit ................... (20,067,345) 548,645 (548,645)(1)(20,067,345) Notes receivable from officers ........ (56,832) -- (56,832) Cumulative translation adjustment ..... (129,438) -- (129,438) Total stockholders' equity ......... 10,057,468 544,245 1,703,071 12,304,784 $ 11,994,239 3,479,276 422,250 2,227,756 18,123,521
See accompanying notes to unaudited pro forma consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Statement of Operations For the Nine Months Ended December 31, 1997
Historical Related Franklin Asset Franklin Unique Manufacturing Acquisition Acquisition Pro Forma Mobility, Inc. Company Adjustment Adjustments Consolidated Revenue: Contract services $ 2,333,718 -- 2,333,718 Product sales 494,594 8,821,307 9,315,901 2,828,312 8,821,307 11,649,619 Operating costs and expenses: Cost of contract services 2,197,878 -- 2,197,878 Cost of product sales 356,625 7,225,405 63,338 (8) 86,060 (2) 7,731,428 Research and development 486,643 -- 486,643 General and administrative 1,264,920 1,426,890 (60,750)(5) 2,181,060 (394,650)(7) (55,350)(8) Depreciation and amortization of intangible assets -- 194,504 (3) 194,504 Royalty 13,572 -- 13,572 4,319,638 8,652,295 63,338 (230,186) 12,805,085 Operating earnings (loss) (1,491,326) 169,012 (63,338) 230,186 (1,155,466) Other income (expense): Interest income 148,487 46 (148,533)(9) -- Interest expense (58,885) (114,971) (26,918)(8) (200,774) Equity in loss of Taiwan joint venture (82,296) -- (82,296) Minority interest share of earnings of consolidated subsidiary (52,980) - (52,980) Other 2,019 (34,106) (32,087) (43,655) (149,031) (26,918) (148,533) (368,137) Net earnings (loss) before tax (1,534,981) 19,981 (90,256) 81,653 (1,523,603) Income tax expense -- 8,000 (8,000)(6) -- Net earnings (loss) $ (1,534,981) 11,981 (90,256) 89,653 (1,523,603) Net earnings (loss) per common share- basic and diluted (.11) (.11) Weighted average number of shares of common stock outstanding 13,667,499 13,953,781
See accompanying notes to unaudited pro forma consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended March 31, 1997
Historical Related Franklin Asset Franklin Unique Manufacturing Acquisition Acquisition Pro Forma Mobility, Inc. Company Adjustment Adjustments Consolidated Revenue: Contract services $ 1,804,855 -- 1,804,855 Product sales 546,904 8,365,251 8,912,155 2,351,759 8,365,251 10,717,010 Operating costs and expenses: Costs of contract services 1,395,510 -- 1,395,510 Costs of product sales 475,189 6,870,524 84,450(8) 114,746(2) 7,544,909 Research and development 1,570,622 -- 1,570,622 General and administrative 1,451,302 1,015,166 (81,000)(5) 1,785,468 (526,200)(7) (73,800)(8) Depreciation and amortization of intangible assets -- __ 259,338 (3) 259,338 Royalty 10,938 -- 10,938 4,903,561 7,885,690 84,450 (306,916) 12,566,785 Operating loss (2,551,802) 479,561 (84,450) 306,916 (1,849,775) Other income (expense): Interest income 122,170 -- (122,170)(9) -- Interest expense (195,722) (242,207) (35,891)(8) (473,820) Equity in loss of Taiwan joint venture (52,602) -- (52,602) Minority interest share of earnings of consolidated subsidiary (68,537) -- (68,537) Other 7,926 (430) 7,496 (186,765) (242,637) (35,891) (122,170) (587,463) Net income (loss) before tax (2,738,567) 236,924 (120,341) 184,746 (2,437,238) Income tax expense -- 591 -- (591)(6) -- Net income (loss) $ (2,738,567) 236,333 (120,341) 185,337 (2,437,238) Net income (loss) per common share - basic and diluted (.24) (.21) Weighted average number of shares of common stock outstanding 11,575,969 11,862,251
See accompanying notes to unaudited pro forma financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Consolidated Financial Statements December 31, 1997 (A) Basis of Presentation The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1997, includes historical balances, adjusted for the pro forma effects of the Franklin Manufacturing Company acquisition completed subsequent to December 31, 1997, and assumes that the acquisition occurred on December 31, 1997. The Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended December 31, 1997, include the unaudited historical results of operations for Unique Mobility, Inc. and Franklin Manufacturing Company for the nine months ended December 31, 1997, adjusted for the pro forma effects of the acquisition assuming the acquisition occurred on April 1, 1996. The nine month results of Franklin Manufacturing Company were computed by adding the unaudited three month results of operations ended December 31, 1997 to the audited results of operations for the year ended September 30, 1997 and deducting the unaudited six month results of operations ended March 31, 1997. The unaudited Pro Forma Consolidated Statement of Operations for the year ended March 31, 1997, include the audited historical results of operations for the five months ended March 31, 1997 and the unaudited historical results for the seven months ended October 31, 1996 of Unique Mobility, Inc., and the unaudited historical results of operations for the year ended March 31, 1997 of Franklin Manufacturing Company, adjusted for the pro forma effects of the acquisition assuming the acquisition occurred on April 1, 1996. The twelve month results of operations of Franklin Manufacturing Company were computed by adding the unaudited six month results of operations ended March 31, 1997 to the audited results of operations for the year ended September 30, 1996 and deducting the unaudited results of operations for the six months ended March 31, 1996. 1) The acquisition price for Franklin was $6,247,316 which consisted of $6,247,316 for the common stock of Franklin and the assumption of certain debt for the acquisition of assets from a related entity. The acquisition price for the stock consisted of the payment of $4,000,000 in cash and the issuance of 286,282 shares of the common stock of Unique Mobility, Inc. at an average closing price of $7.85 per share. The acquisition will be accounted for as a purchase. The allocation of the purchase price as of the April 30, 1998 acquisition date is as follows: UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Consolidated Financial Statements, Continued December 31, 1997
Related Franklin Asset Acquisition Acquisition Purchase price ............................ $ 6,247,316 -- Net book value of equity acquired at April 30, 1998 ........................ (295,218) -- Excess of purchase price over net assets acquired .............................. $ 5,952,098 -- Allocation of excess of purchase price over net assets acquired: Net property and equipment ........... $ 655,182 -- Goodwill ............................. 5,296,916 -- $ 5,952,098 --
2) To record the fair value of the Franklin assets acquired, eliminate accumulated depreciation and adjust depreciation expense on property and equipment based on a five-year estimated useful life. 3) To record the excess of acquisition cost over the fair value of net assets acquired and record amortization based on a 20-year estimated useful life. 4) To fully reserve the deferred tax asset and adjust deferred tax liability in the recording of the purchase entries to reflect amounts unlikely to be realized or to be offset by fully reserved deferred tax assets of Unique relating to carryforward net operating losses. 5) To eliminate non-recurring expenses associated with assets distributed to previous owner prior to acquisition. 6) To eliminate non-recurring tax expense that would be offset by available net operating losses of Unique Mobility, Inc. which have not been recognized. 7) To eliminate compensation expense to former officers in excess of base salary under a new Employment Agreement and reductions in employee compensation levels. 8) To eliminate lease payments paid to related Company for equipment purchased in acquisition transaction and record interest expense and depreciation expense on acquired assets. 9) For the purposes of this pro-forma presentation, interest income has been eliminated as it has been assumed that all available cash, from which interest income is derived, was used to fund the acquisition of Franklin. The Company, in actuality, used existing cash balances at March 31, 1998 which included proceeds from a private stock offering in March 1998 to fund this acquisition. SIGNATURES 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 hereunto duly authorized. Unique Mobility, Inc. Registrant Date: June 26, 1998 By: /s/ Donald A. French Donald A. French Treasurer (Principal Financial and Accounting Officer) EX-23 2 Exhibit 23 Independent Auditors' Consent The Board of Directors Franklin Manufacturing Company d/b/a Franklin Electronics Company: We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 33-23113, 33-24071, 33-34612, 33-35055, 33-34613, 33-41325, 33-64852, 33-47454, 33-81430, and 33-92288) and Form S-3 (Nos. 33-61166, 33-63399, 333-01919, 333-13883, 333-44597, 333-23843, 333-50393, and 333-52861) of Unique Mobility, Inc. of our report dated May 1, 1998, relating to the balance sheets of Franklin Manufacturing Company d/b/a Franklin Electronics Company as of September 30, 1997 and 1996, and the related statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended September 30, 1997, which report appears in the Current Report on Form 8-K/A of Unique Mobility, Inc. /s/ KPMG Peat Marwick LLP St Louis, Missouri June 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----