-----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, N8hy2wzvktGkSUiVrec6mN87mDCncH4ZhyTVhg8TFORHCk+CRBYEr32Sad9qW7nx p2ZzkEsxSsbx8SlEJdj8Lg== 0000315449-00-000001.txt : 20000203 0000315449-00-000001.hdr.sgml : 20000203 ACCESSION NUMBER: 0000315449-00-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000202 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-10869 FILM NUMBER: 519549 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 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1999 Commission file number 1-10869 UNIQUE MOBILITY, INC. (Exact name of registrant as specified in its charter) Colorado 84-0579156 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 425 Corporate Circle Golden, Colorado 80401 (Address of principal executive offices) (zip code) (303) 278-2002 (Registrant's telephone number, including area code) 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 . The number of shares outstanding (including shares held by affiliates) of the registrant's common stock, par value $0.01 per share at January 26, 2000, was 16,577,082. PART I - FINANCIAL INFORMATION UNIQUE MOBILITY, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, March 31, Assets 1999 1999 (unaudited) Current assets: Cash and cash equivalents $ 1,004,572 1,537,453 Accounts receivable (note 11) 2,427,562 2,601,994 Costs and estimated earnings in excess of billings on uncompleted contracts (note 3) 171,853 173,457 Inventories (note 4) 2,893,524 2,787,994 Prepaid expenses 95,121 248,441 Other 519,190 340,658 Total current assets 7,111,822 7,689,997 Property and equipment, at cost: Land (note 9) 517,080 444,480 Building (note 9) 2,678,525 2,675,763 Molds 102,113 102,113 Transportation equipment 146,386 195,890 Machinery and equipment (note 9) 10,410,794 10,098,430 13,854,898 13,516,676 Less accumulated depreciation (4,944,104) (3,643,341) Net property and equipment 8,910,794 9,873,335 Investment in Taiwan joint venture (note 5) - 1,595,432 Investment in EV Global (note 6) - 1,000,000 Patent and trademark costs, net of accumulated amortization of $116,365 and $90,869 705,899 686,195 Goodwill, net of accumulated amortization of $573,530 and $324,318 6,078,629 6,327,841 Other assets 36,881 33,778 $ 22,844,025 27,206,578 (Continued) UNIQUE MOBILITY, INC. AND SUBSIDIARIES Consolidated Balance Sheets, Continued December 31, March 31, Liabilities and Stockholders' Equity 1999 1999 (unaudited) Current liabilities: Accounts payable $ 2,045,436 2,244,144 Other current liabilities (note 8) 1,206,917 952,498 Current portion of long-term debt (note 9) 958,589 928,701 Revolving line-of-credit (note 9) 1,750,000 1,100,000 Billings in excess of costs and estimated earnings on uncompleted contracts (note 3) 150,888 69,393 Total current liabilities 6,111,830 5,294,736 Long-term debt, less current portion (note 9) 3,671,526 4,396,127 Total liabilities 9,783,356 9,690,863 Minority interest in consolidated subsidiary 404,769 399,591 Stockholders' equity (note 10): Common stock, $.01 par value, 50,000,000 shares authorized; 16,574,769 and 16,222,932 shares issued 165,747 162,230 Additional paid-in capital 45,319,531 43,412,390 Accumulated deficit (32,038,467) (25,552,794) Accumulated other comprehensive loss (384,300) (451,639) Notes receivable from officers (406,611) (454,063) Total stockholders' equity 12,655,900 17,116,124 Commitments (notes 9 and 15) $ 22,844,025 27,206,578 See accompanying notes to consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Consolidated Statements of Operations (unaudited) Quarter Ended Nine Months Ended December 31, December 31, 1999 1998 1999 1998 Revenue (note 11): Contract services $ 343,226 384,301 1,158,649 1,129,629 Product sales 3,324,616 3,982,503 13,607,767 9,477,750 3,667,842 4,366,804 14,766,416 10,607,379 Operating costs and expenses: Costs of contract services 168,173 315,631 905,617 1,013,701 Costs of product sales 3,121,035 3,677,497 11,746,959 8,828,014 Research and development 203,023 138,937 337,469 589,659 General and administrative 902,473 925,674 3,258,001 2,782,564 Write-down of investments - - 4,104,628 - Amortization of goodwill 83,166 84,445 249,211 225,318 4,477,870 5,142,184 20,601,885 13,439,256 Operating loss (810,028) (775,380)(5,835,469)(2,831,877) Other income (expense): Interest income 9,448 12,095 47,600 92,680 Interest expense (120,558) (83,735) (360,497) (238,985) Equity in loss of Taiwan joint venture (note 5) - (108,616) (186,538) (308,905) Equity in loss of Germany joint venture (note 7) - - (93,632) - Minority interest share of earnings of consolidated subsidiary (18,796) (18,118) (55,689) (54,112) Other (3,782) 3,086 (1,448) 5,475 (133,688) (195,288) (650,204) (503,847) Net loss $ (943,716) (970,668)(6,485,673)(3,335,724) Net loss per common share basic and diluted $ (.06) (.06) (.39) (.21) Weighted average number of shares of common stock outstanding (note 12) 16,574,409 15,979,473 16,514,551 15,883,242 See accompanying notes to consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited) Nine Months Ended December 31, 1999 1998 Cash flows used by operating activities: Net loss $(6,485,673) (3,335,724) Adjustments to reconcile net loss to net cash used by operating activities: Write-down of investments 4,104,628 - Depreciation and amortization 1,596,830 1,296,513 Minority interest share of earnings of consolidated subsidiary 55,689 54,112 Noncash compensation expense for common stock issued for services 29,743 83,215 Equity in loss of Taiwan joint venture 186,538 308,905 Equity in loss of Germany joint venture 93,632 - Loss (gain) on sale of property and equipment 3,785 (2,900) Change in operating assets and liabilities: Accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts 176,036 613,564 Inventories (105,530) (961,992) Prepaid expenses and other current assets (84,740) 32,697 Accounts payable and other current liabilities 55,711 (167,373) Billings in excess of costs and estimated earnings on uncompleted contracts 81,495 123,481 Net cash used by operating activities (291,856) (1,955,502) Cash used by investing activities: Cash paid for acquisition of subsidiary, net - (3,848,640) Acquisition of property and equipment (404,366) (3,056,117) Proceeds from sale of assets 41,000 2,900 Increase in patent and trademark costs (45,200) (80,297) Investment in other long-term assets (515,708) - Net cash used by investing activities $ (924,274) (6,982,154) (Continued) UNIQUE MOBILITY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows, Continued (unaudited) Nine Months Ended December 31, 1999 1998 Cash provided by financing activities: Proceeds from borrowings $ 57,166 6,444,399 Repayment of debt (751,879) (4,946,263) Net borrowings on revolving line-of-credit 650,000 956,329 Repayment of notes receivable from officers 47,452 10,744 Proceeds from sale of common stock, net 488,828 - Issuance of common stock upon exercise of employee options, net of repayments 135,335 149,866 Issuance of common stock under employee stock purchase plan 25,957 5,430 Issuance of common stock upon exercise of warrants 80,901 193,375 Distributions paid to holders of minority interest (50,511) (50,511) Net cash provided by financing activities 683,249 2,763,369 Decrease in cash and cash equivalents (532,881) (6,174,287) Cash and cash equivalents at beginning of period 1,537,453 7,005,533 Cash and cash equivalents at end of period $ 1,004,572 831,246 Interest paid in cash during the period $ 363,030 222,258 Non-cash investing and financing transactions: Cumulative translation adjustments of $67,339 and $16,882 were recorded for the nine months ended December 31, 1999 and 1998, respectively. In May 1999, the Company acquired a 33.6 percent ownership interest in a German company. Pursuant to this transaction the Company issued 208,333 shares of common stock with an aggregate value of $1,149,894 in exchange for its ownership interest. In April 1998, the Company purchased all of the outstanding stock of Franklin Manufacturing Company for $4,000,000 cash and 286,282 shares of the Company's common stock with a value of $2,247,316. In accordance with the provisions of the Company's stock option plans, the Company accepts as payment of the exercise price, mature shares of the Company's common stock held by the option holder for a period of six months prior to the date of the option exercise. For the nine months ended December 31, 1998, the Company issued 15,870 shares of common stock for options exercised for an aggregate exercise price of $15,870, for which the Company received 2,308 shares of common stock as payment for the exercise price. The shares received were recorded at cost as treasury stock and were subsequently retired. In accordance with the provisions of the Company's stock option plans, the Company may and has, accepted promissory notes from officers of the Company in satisfaction of the exercise price of options exercised. These notes receivable are recorded as a reduction of shareholders' equity in the consolidated financial statements. For the nine months ended December 31, 1998, the Company issued 250,362 shares of common stock for an aggregate exercise price of $731,788 for which the Company received promissory notes for the same amount. See accompanying notes to consolidated financial statements. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (unaudited) (1) The accompanying consolidated financial statements are unaudited; however, in the opinion of management, all adjustments which were solely of a normal recurring nature, necessary to a fair presentation of the results for the interim period, have been made. The results for the interim period are not necessarily indicative of results to be expected for the fiscal year. (2) Certain financial statement amounts have been reclassified for comparative purposes. (3) The estimated period to complete contracts in process ranged from one to nineteen months at December 31, 1999, and from one to seven months at March 31, 1999. The Company expects to collect substantially all related accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts within twenty-one months. Contracts in process consist of the following: December 31, 1999 March 31, 1999 (unaudited) Costs incurred on uncompleted contracts $ 475,836 1,457,955 Estimated earnings 126,137 285,804 601,973 1,743,759 Less billings to date (581,008) (1,639,695) $ 20,965 104,064 Included in the accompanying balance sheets as follows: Costs and estimated earnings in excess of billings on uncompleted contracts $ 171,853 173,457 Billings in excess of costs and estimated earnings on uncompleted contracts (150,888) (69,393) $ (20,965) 104,064 (4) Inventories consist of: December 31, 1999 March 31, 1999 (unaudited) Raw materials $ 2,289,900 2,205,042 Work in process 455,897 452,653 Finished products 147,727 130,299 $ 2,893,524 2,787,994 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (5) Investment in Taiwan Joint Venture On January 29, 1994, the Company, Kwang Yang Motor Co., Ltd., and Turn-Luckily Technology Co., Ltd., entered into a joint venture agreement providing for the formation, funding and operation of Taiwan UQM Electric Co., Ltd., a company organized under the laws of the Republic of China. Taiwan UQM was incorporated in April 1995. The Company owns a 38-1/4 percent interest in Taiwan UQM which was acquired through an initial investment of $45,082. In 1995 and 1996 the Company invested an additional $2,748,778 pursuant to capital calls by Taiwan UQM's Board of Directors, raising its aggregate investment since inception to $2,793,860. Since inception, Taiwan UQM has incurred substantial operating losses and the Company has reported its proportionate share of such losses and foreign exchange rate fluctuations as a reduction in the recorded value of its investment in Taiwan UQM under the equity method of accounting. Because of continued operating losses at September 30, 1999 the Company evaluated this investment relative to its potential to achieve profitable operations over the near-term and the Company's potential to recover the recorded value of its investment. Based on its assessment of these factors and the uncertainty of recovering its investment, on September 30, 1999 the Company wrote down the carrying value of this investment from $1,476,233 to zero. The Company does not intend to make any further investments in Taiwan UQM and through its participation on Taiwan UQM's Board of Directors has the ability to restrict or prevent future capital calls by Taiwan UQM. (6) Investment in EV Global In June of 1997, the Company acquired 400,000 shares of EV Global Motors Company (EVG) common stock in exchange for 200,000 shares of the Company's common stock which was valued at $1,000,000. The Company's investment in EVG is accounted for under the cost method. In June 1999, Unique acquired an approximately 9.5 percent participation in a $5.225 million convertible note receivable from Windermere Eco Development Limited, a Bahamian company ("WED") held by EVG, for $500,000 in cash. WED is an environmentally sensitive development of Windermere Island in the Bahamas. The entire loan is convertible into approximately 50.4 percent of the total outstanding equity of WED. Therefore, if EVG converts the loan, Unique will have the right to receive approximately 4.82 percent of the equity of WED. Because of continuing operating losses reported by these investees at September 30, 1999 the Company evaluated these investments relative to their potential to achieve profitable operations over the near-term and the Company's potential to recover the carrying value of each asset. Based on its assessment of these factors, on September 30, 1999 the Company wrote down the carrying value of EV Global from $1,000,000 to zero and the carrying value of its interest in the WED note receivable from $515,708 to zero. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (7) Investment in Germany Joint Venture In May, 1999, the Company and three other entities formed a German private company, Unique Mobility Europa GmbH (Europa), to develop and manufacture a battery-electric cargo and passenger vehicle. Europa was initially capitalized with DM50,000 cash (US $9,572) and a contribution to surplus of 625,000 shares of Unique Mobility, Inc. common stock, of which 208,333 were newly issued shares contributed by the Company in exchange for 33.6 percent ownership interest in Europa. On October 8, 1999 the Company entered into an agreement with the Shareholder's of Europa providing for the reduction of its ownership percentage to 5.9 percent in exchange for a funding commitment from one of the shareholders in the amount of DM 3 million (USA $1,630,200) and the reimbursement of $400,000 of organization costs incurred by the Company on behalf of Europa. As a result of this agreement and the Company's assessment of the potential for Europa to achieve profitable operations over the near-term and the Company's potential to recover the carrying value of its investment at September 30, 1999 the Company wrote down the carrying value of its investment from $1,112,687 to zero. (8) Other current liabilities consist of: December 31, March 31, 1999 1999 (unaudited) Accrued interest $ 25,256 28,623 Accrued legal and accounting fees 59,850 66,205 Accrued payroll, consulting, personal property taxes and real estate taxes 440,539 268,729 Accrued executive compensation 324,866 - Accrued material purchases 213,365 285,722 Other 143,041 303,219 $ 1,206,917 952,498 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (9) Long-term debt consists of: December 31, March 31, 1999 1999 (unaudited) Note payable to bank, payable in monthly installments with interest at 8.65%; matures July 2003; secured by land and building $ 880,469 903,338 Note payable to bank, payable in monthly installments with interest at 9.1%; matures October 2007; secured by land and building 636,577 676,652 Note payable to bank, payable in monthly installments with interest at 8.5%; matures October 2001; April, May, October and December 2005; secured by equipment 1,257,884 1,451,242 Note payable to bank, payable in monthly installments with interest at 8.125%; matures July 2001; secured by accounts receivable, inventory and equipment 494,792 729,167 Note payable to bank, payable in monthly installments with interest at 7.70%; matures March 2004; secured by equipment 1,306,235 1,500,000 Note payable to bank, payable in monthly installments with interest at 9.50%; matures June 2006; secured by equipment 54,158 - Note payable to commercial lender, payable in monthly installments with interest at 6.38%; matures October 1999 - 50,648 Capital lease obligation - 13,781 Total long-term debt 4,630,115 5,324,828 Less current portion 958,589 928,701 Long-term debt, less current portion $ 3,671,526 4,396,127 Certain of the above loan agreements require the Company to achieve specific financial and operating requirements. As of December 31, 1999, the Company was in compliance with all covenants. The annual aggregate maturities of long-term debt for the reminder of this fiscal year and for each of the next five fiscal years and thereafter are as follows: 2000 $ 233,988 2001 965,656 2002 762,854 2003 609,482 2004 661,616 Thereafter 1,396,519 $ 4,630,115 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) Lines of credit At December 31, 1999, the Company has lines of credit of $.75 million and $2.5 million with available borrowing capacity of $.65 million and $.85 million, respectively. The $.75 million line of credit expires in October 2000. The $2.5 million line of credit is due on demand, but if no demand is made, it is due August 15, 2000. Interest on the lines of credit is payable monthly at prime plus .75% (9.25% at December 31, 1999) and prime less .50% (8.00% at December 31, 1999), respectively. Both lines have various covenants which limit the Company's ability to dispose of assets, merge with another entity, and pledge trade receivables and inventories as collateral. The Company is also required to maintain certain financial ratios as defined in the agreements. Outstanding borrowings under both lines of credit are secured by accounts receivable, inventory and general intangibles, and are limited to certain percentages of eligible accounts receivable and inventory. (10) Common Stock Options and Warrants Incentive and Non-Qualified Option Plans The Company has reserved 6,104,000 shares of common stock for key employees, consultants and key suppliers under its Incentive and Non-Qualified Option Plans of 1992 and 1982. Under these option plans the exercise price of each option is set at the fair market value of the common stock on the date of grant and the maximum term of the options is 10 years from the date of grant. Options granted to employees vest ratably over a three-year period. The maximum number of options that may be granted to any eligible employee during the term of the 1982 and 1992 plans is 1,000,000 options. Options granted under the Company's plans to employees require the option holder to abide by certain Company policies which restrict their ability to sell the underlying common stock. The following table summarizes activity under the plans for the nine months ended December 31, 1999: Shares Under Weighted-Average Option Exercise Price Outstanding at March 31, 1999 3,037,554 5.49 Granted 50,000 4.38 Exercised (34,845) 3.88 Forfeited (76,519) 6.16 Outstanding at December 31, 1999 2,976,190 $ 5.48 Exercisable at December 31, 1999 1,914,164 $ 5.43 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) The following table presents summarized information about stock options outstanding at December 31, 1999: Options Outstanding Options Exercisable Weighted Weighted Weighted Number Average Average Number Average Range of Outstanding Remaining Exercise Exercisable Exercise Exercise Prices at 12/31/99 Contractual Life Price at 12/31/99 Price $0.50 - 1.00 23,959 1.2 years $0.75 23,959 $0.75 $2.25 - 3.31 528,473 5.9 years $3.06 393,649 $2.98 $3.50 - 5.00 1,135,275 6.6 years $4.23 601,097 $4.10 $5.38 - 8.13 1,288,483 6.1 years $7.65 895,459 $7.53 $0.50 - 8.13 2,976,190 6.2 years $5.48 1,914,164 $5.43 Non-Employee Director Stock Option Plan In February 1994, the Company's Board of Directors ratified a Stock Option Plan for Non-Employee Directors pursuant to which Directors may elect to receive stock options in lieu of cash compensation for their services as directors. Directors electing options grants in lieu of cash compensation may elect option periods ranging from three years to ten years, and must elect to receive options at least six months prior to the anticipated grant date. The Company has reserved 500,000 shares of common stock for issuance pursuant to the exercise of options under the Plan. The options vest ratably over a three-year period beginning one year from the date of grant. Option prices are equal to the fair market value of common shares at the date of grant. The following table presents summarized activity under the plan for the nine months ended December 31, 1999: Weighted Shares Under Average Option Exercise Price Outstanding at March 31, 1999 253,333 5.66 Granted 9,275 4.25 Forfeited (221,333) 5.59 Outstanding at December 31, 1999 41,275 $ 5.68 Exercisable at December 31, 1999 16,000 $ 6.44 The following table presents summarized information about stock options outstanding for non-employee directors: Options Outstanding Options Exercisable Weighted Weighted Weighted Number Average Average Number Average Range of Outstanding Remaining Exercise Exercisable Exercise Exercise Prices at 12/31/99 Contractual Life Price at 12/31/99 Price $4.25 - 5.13 25,275 9.1 years $4.76 5,333 $5.06 $7.13 16,000 7.7 years $7.13 10,667 $7.13 $4.25 - 7.13 41,275 8.5 years $5.68 16,000 $6.44 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) The Company accounts for stock options granted to employees and directors of the Company under the intrinsic value method. Stock options granted to non-employees under the Company's 1992 Stock Option Plan are accounted for under the fair value method. Had the Company reported compensation costs as determined by the fair value method of accounting for option grants to employees and directors, net loss and net loss per common share would have been the pro forma amounts indicated in the following table: Quarter Ended Nine Months Ended December 31, December 31, 1999 1998 1999 1998 Net loss - as reported $ (943,716) (970,668)(6,485,673)(3,335,724) Compensation expense - current option grants (1,250) - (2,500) (120,283) Compensation expense - prior period option grants (248,971) (367,203)(1,065,626) (998,656) Net loss - pro forma $(1,193,937)(1,337,871)(7,553,799)(4,454,663) Net loss per common share - as reported $ (.06) (.06) (.39) (.21) Net loss per common share - pro forma $ (.07) (.08) (.46) (.28) The fair value of stock options granted was calculated using the Black Scholes option pricing model based on the following weighted average assumptions: Quarter Ended Nine Months Ended December 31, December 31, 1999 1998 1999 1998 Expected volatility - - 4.65% 48.5% Expected dividend yield - - 0.0% 0.0% Risk free interest rate - - 6.3% 5.8% Expected life of option granted - - 3 years 6 years Fair value of options granted as computed under the Black Scholes option pricing model - - $ 1.62 per $ 4.26 per share share Future pro forma compensation cost for the remainder of the current fiscal year and each fiscal year thereafter, assuming no additional grants by the Company to employees and directors, is as follows: Pro Forma Compensation Expense 2000 $ 351,650 2001 $ 584,800 2002 $ 452,567 2003 $ 1,250 UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) During June 1999, the Company completed a private placement of 88,900 shares of common stock with an institutional investor. Cash proceeds to the Company, net of offering costs was $488,828. The Company completed a private placement in fiscal 1998 of 750,000 units consisting of one common share and a warrant to purchase a common share at an exercise price of $8.00 per share for a term of two years. Of the 750,000 units privately placed, 626,875 were issued in March 1998 and the remaining 123,125 were issued in April 1998. Also in connection with the 1998 private placement, the placement agents were issued warrants in March 1998, to acquire 176,588 shares of the Company's common stock at an exercise price of $8.00 per share. In December 1999, the Company offered the warrant holders the opportunity to extend the expiration date of their warrants by eighteen months, at any time prior to the expiration, upon payment of the fair market value of the extension as determined by the Black-Scholes option pricing model on the date of acceptance. At December 31, 1999, warrants to purchase 149,375 shares of common stock at the exercise price of $8.00 per share had been extended resulting in cash proceeds to the Company of $25,651. All of the warrants issued remain outstanding as of December 31, 1999. In connection with the 1997 private placement, the placement agents were issued warrants in February 1997, to acquire 225,625 shares of the Company's stock at an exercise price of $3.50 per share and warrants to acquire 50,000 shares at an exercise price of $4.20 per share. The warrants expire three years from the date of issuance. Warrants to acquire 43,875 shares of the Company's common stock at $3.50 per share remain outstanding as of December 31, 1999. In connection with the 1996 private placements, the placement agents were issued warrants to acquire 50,000 shares of the Company's common stock at $4.75 per share in February, 1996, 38,100 shares of the Company's common stock at $5.00 per share in May, 1996, and 50,000 shares at $4.25 per share in September, 1996. The warrants expire three years from the date of issuance. During May 1999, warrants to acquire 13,000 shares of the Company's common stock at $4.25 per share were exercised resulting in cash proceeds to the Company of $55,250. The remaining 32,000 shares at $4.25 per share expired unexercised during the quarter ended September 30, 1999. (11) The Company has historically derived significant revenue from one key customer. The customer from which this revenue has been derived and the percentage of total revenue for the quarter ended December 31, 1999 and 1998 was $856,053 or 23%, and $895,742 or 21%, respectively, and $3,235,202 or 22% and $2,058,003 or 19% for the nine months ended December 31, 1999 and 1998, respectively. This customer also represented 13% and 15% of total accounts receivable at December 31, 1999 and 1998, respectively. Contract services revenue derived from contracts with agencies of the U.S. Government and from sub-contracts with U.S. Government prime contractors totaled $260,641 and $259,079 for the quarter ended December 31, 1999 and 1998, respectively, and $653,847 and $592,042 for the nine months ended December 31, 1999 and 1998, respectively. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (12) Net loss per common share amounts are based on the weighted average number of common shares outstanding during the quarter and nine months ended December 31, 1999 and 1998. Outstanding common stock options and warrants were not included in the computation because the effect of such inclusion would be antidilutive. (13) Segments The Company has three reportable segments: technology, mechanical products and electronic products. The technology segment encompasses the Company's technology-based operations including core research to advance its technology, application engineering and product development and job shop production of prototype components. The mechanical products segment encompasses the manufacture and sale of permanent magnet motors, precision gears, gear assemblies and related mechanical products. The electronic products segment encompasses the manufacture and sale of wire harness assemblies, electronic circuit board assemblies and electronic products. During the quarter and nine months ended December 31, 1999, intersegment sales were $90,542 and were eliminated in consolidation. The salaries of the executive officers and corporate general and administrative expense is allocated entirely to the technology segment. The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different business strategies. The following table summarizes significant financial statement information for each of the reportable segments for the quarter ended December 31, 1999: Mechanical Electronic Technology Products Products Total Revenue $ 507,842 451,748 2,708,252 3,667,842 Interest income 9,878 (430) - 9,448 Interest expense (23,212) (48,965) (48,381) (120,558) Depreciation and amortization (96,258) (232,547) (130,253) (459,058) Goodwill amortization - (15,580) (67,586) (83,166) Equity in loss of Taiwan joint venture - - - - Segment loss (412,813) (371,478) (159,425) (943,716) Segment assets 4,482,627 6,464,793 11,896,605 22,844,025 Expenditures for segment assets $ (58,340) (106,132) (42,186) (206,658) UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) The following table summarizes significant financial statement information for each of the reportable segments for the quarter ended December 31, 1998: Mechanical Electronic Technology Products Products Total Revenue $ 415,719 1,219,307 2,731,778 4,366,804 Interest income 10,568 1,527 - 12,095 Interest expense (17,733) (44,339) (21,663) (83,735) Depreciation and amortization (98,599) (218,875) (86,581) (404,055) Write-down of investments - - - - Goodwill amortization - (15,579) (68,866) (84,445) Equity in loss of Taiwan joint venture (108,616) - - (108,616) Equity in loss of Germany joint venture - - - - Segment earnings (loss) (708,140) (268,027) 5,499 (970,668) Segment assets 7,130,502 7,899,374 9,489,100 24,518,976 Expenditures for segment assets $ (67,305) (281,932) (266,926) (616,163) The following table summarizes significant financial statement information for each of the reportable segments for the nine months ended December 31, 1999: Mechanical Electronic Technology Products Products Total Revenue $ 1,557,705 2,881,152 10,327,559 14,766,416 Interest income 45,755 1,845 - 47,600 Interest expense (46,338) (148,866) (165,293) (360,497) Depreciation and amortization (277,367) (695,731) (374,521)(1,347,619) Write-down of investments (4,104,628) - - (4,104,628) Goodwill amortization - (46,738) (202,473) (249,211) Equity in loss of Taiwan joint venture (186,538) - - (186,538) Equity in loss of Germany joint venture (93,632) - - (93,632) Segment loss (6,083,520) (746,284) 344,131 (6,485,673) Segment assets 4,482,627 6,464,793 11,896,605 22,844,025 Expenditures for segment assets $ (210,401) (123,194) (115,971) (449,566) UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) The following table summarizes significant financial statement information for each of the reportable segments for the nine months ended December 31, 1998: Mechanical Electronic Technology Products Products Total Revenue $ 1,555,404 2,422,553 6,629,422 10,607,379 Interest income 69,775 22,905 - 92,680 Interest expense (50,682) (114,109) (74,194) (238,985) Depreciation and amortization (298,632) (576,286) (196,277)(1,071,195) Write-down of investments - - - - Goodwill amortization - (46,102) (179,216) (225,318) Equity in loss of Taiwan joint venture (308,905) - - (308,905) Equity in loss of Germany joint venture - - - - Segment loss (2,194,000) (936,757) (204,967)(3,335,724) Segment assets 7,130,502 7,899,374 9,489,100 24,518,976 Expenditures for segment assets $ (424,163) (2,307,323) (404,928)(3,136,414) (14) Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents, accounts receivable and accounts payable and revolving line of credit: The carrying amounts approximate fair value because of the short maturity of these instruments. Long-term debt: The carrying amount of the Company's long-term debt approximates fair value since the interest rate on this debt represents the current market rate for similar financing available to the Company providing comparable security to the lender. (15) Commitments and Contingencies Employment Agreements The Company has entered into employment agreement with three of its officers which expired on December 31, 1999 and with one officer which expires April 30, 2001. The employment agreements for two of the officers are expected to be renewed for another three years expiring December 31, 2002. One of the officers retired at December 31, 1999. The compensation due this officer upon retirement UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) under the provisions of his employment agreement is $324,866 which was recorded in the Company's operating results during the quarter ended September 30, 1999. The aggregate annual future compensation under these agreements based on current salary levels, excluding the aforementioned retirement payment, is $1,258,342. Lease Commitments The Company has entered into operating lease agreements for office space and equipment which expire at various times through 2007. As of December 31, 1999, the future minimum lease payments under operating leases with initial noncancelable terms in excess of one year for the remainder of the fiscal year and for each of the next five fiscal years and thereafter are as follows: 2000 $ 75,040 2001 279,937 2002 265,364 2003 251,444 2004 253,961 2005 252,144 Thereafter 504,276 $ 1,882,166 Rental expense under these leases totaled $71,793 and $63,543 for the quarter ended December 31, 1999 and 1998, respectively and $215,379 and $169,448 for the nine months ended December 31, 1999 and 1998, respectively. Uncertainty due to Year 2000 Issue The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the Year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 issue may be experienced before, on, or after January 1, 2000, and, if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failures which could affect the Company's ability to conduct normal business operations. There can be no assurance that all aspects of the Year 2000 issue affecting the Company, including those related to the efforts of customers, suppliers or other third parties, will be fully resolved. Through the date of this report, the Company has not experienced any problems arising from the effects of the Year 2000 issue. UNIQUE MOBILITY, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (16) Reporting Comprehensive Income The following table summarizes the Company's comprehensive loss for the quarter and nine months ended December 31, 1999 and 1998: Quarter Ended Nine Months Ended December 31, December 31, 1999 1998 1999 1998 Net loss $(943,716) (970,668) (6,485,673)(3,335,724) Other comprehensive earnings - translation adjustment - 116,402 67,339 16,882 Income tax effect - - - - Comprehensive loss $(943,716) (854,266) (6,418,334)(3,318,842) (17) Acquisition of Franklin Manufacturing Company On April 30, 1998, the Company acquired all of the outstanding common stock of Franklin Manufacturing Company (Franklin) for cash and shares of the Company's common stock. The acquisition was accounted for using the purchase method of accounting. The unaudited revenue, net loss and loss per common share for the nine months ended December 31, 1999 and the unaudited proforma comparable information for the nine months ended December 31, 1998, assuming the acquisition occurred on April 1, 1998, is as follows: Nine Months Ended December 31, 1999 1998 Revenue $ 14,766,416 11,567,092 Net loss (6,485,673) (3,301,493) Basic and diluted loss per common share $ (.39) (.21) The pro forma information does not necessarily represent the results that would have occurred if the acquisition had been consummated on April 1, 1998. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This press release contains forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the Risk Factors section of the Registration Statement on Form S-3 (File No. 333-78525) filed by the Company with the SEC, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including the Company's ability to become profitable and its ability to obtain additional financing, the Company's reliance on major customers and suppliers, and the possibility that product liability insurance may become unavailable. These forward-looking statements represent the Company's judgment as of the date of the press release. The Company disclaims, however, any intent or obligation to update these forward-looking statements. Financial Condition The Company's financial condition remained strong at December 31, 1999. Cash and cash equivalents was $1,004,572 and working capital (the excess of current assets over current liabilities) was $999,992 at December 31, 1999 compared with $1,537,453 and $2,395,261,respectively, at March 31, 1999. Accounts receivable declined $174,432 to $2,427,562 at December 31, 1999 from $2,601,994 at March 31, 1999. The decrease is primarily attributable to the lower levels of revenue during the third quarter ended December 31, 1999. Inventories rose $105,530 to $2,893,524 at December 31, 1999 from $2,787,994 at March 31, 1999 reflecting increases in raw material and finished good inventories associated with higher sales levels for the year-to-date period and the effect of certain customers reduced production requirements in the third quarter. Prepaid expenses declined to $95,121 at December 31, 1999 from $248,441 at March 31, 1999 reflecting the periodic expensing of prepaid insurance premium costs on the Compan's commercial insurance coverages. Other current assets rose $178,532 to $519,190 at December 31, 1999 from $340,658 at March 31, 1999 reflecting amounts due from Haco Trading Ltd. arising from the Company's reduction in its ownership interest in Unique Mobility Europa GmbH. The Company invested $193,596 and $404,366 for the acquisition of property and equipment during the quarter and nine months ended December 31, 1999, respectively, compared to $597,866 and $3,056,117 for the quarter and nine months ended December 31, 1998. The decrease reflects higher levels of capital expenditures in the comparable prior year periods arising from investments in manufacturing equipment and the construction of a manufacturing plant by the mechanical products segment, investments in manufacturing equipment and tooling by the electronic products segment, and investments in equipment by the technology segment. During the second quarter, the Company evaluated its investments in three long-term investments, Taiwan UQM Electric Co., Ltd., Unique Mobility Europa GmbH and EV Global Motors Company and their related operations relative to each investments potential to achieve profitable operations over the near term and the Company's ability to recover the carrying value of its investment in each entity. Based on this evaluation, investment in Taiwan joint venture declined $1,595,432 to zero at December 31, 1999 reflecting the Company's proportionate share of operating losses during the six months ended September 30, 1999 of $186,538 and the Company's impairment of the remaining carrying value of this investment of $1,476,233. Similarly, investment in EV Global declined $1,000,000 to zero at December 31, 1999. The Company also impaired its approximately 9.5 percent participation interest in a $5.225 million convertible note receivable from Windermere Eco Development, Ltd. ("WED") held by EV Global reducing its carrying value of the note receivable from $515,708 to zero at December 31, 1999. On October 8, 1999, the Company entered into an agreement with the shareholder's of Europa providing for the reduction of its ownership interest to 5.9 percent in exchange for a funding commitment from one of the shareholders in the amount of DM 3,000,000 (USD$1,630,200) and the reimbursement of $400,000 of organization costs incurred by the Company on behalf of Europa. As a result of this transaction and the Company's evaluation of this investment described above, the Company reduced the carrying value of its investment from $1,112,687 to zero. Patent and trademark costs rose $19,704 to $705,899 at December 31, 1999 reflecting expenditures for the filing of patents during the nine months ended December 31, 1999. Goodwill, net of accumulated amortization, declined to $6,078,629 at December 31, 1999 from $6,327,841 at March 31, 1999 due to the amortization of this asset over its 20 year useful life. Accounts payable declined $198,708 to $2,045,436 at December 31, 1999 from $2,244,144 at March 31, 1999. The decrease is primarily attributable to lower sales levels for the third quarter. Other current liabilities increased $254,419 to $1,206,917 at December 31, 1999 from $952,498 at March 31, 1999. The increase is primarily attributable to the accrual of compensation payable to the Company's former Chief Executive Officer. Revolving line-of-credit rose to $1,750,000 at December 31, 1999 due to expanded working capital requirements during the nine months ended December 31, 1999 arising from higher revenue and inventory levels at the Company's Franklin Manufacturing unit and higher inventory levels at the Company's Unique Power Products unit. Billings in excess of costs and estimated earnings on uncompleted contracts rose $81,495 to $150,888 at December 31, 1999 from $69,393 at March 31, 1999 reflecting the prepayments by customers for engineering services commenced during the nine months ended December 31, 1999. Long-term debt declined $724,601 to $3,671,526 at December 31, 1999 primarily due to principal repayments on the Company's term bank debt during the nine month period. Common stock and additional paid-in capital increased to $165,748 and $45,319,531 at December 31, 1999, respectively, compared to $162,230 and $43,412,390 at March 31, 1999. The increases were due to the sale of common stock to investors in the amount of $488,828; the issuance of common stock in exchange for an ownership interest in Europa of $1,149,894; proceeds received upon the exercise of warrants of $80,901; and sales of common stock to employees and consultants through the Company's benefit plans and the exercise of options of $161,293. Results of Operations Operations for the quarter ended December 31, 1999, resulted in a net loss of $943,716 or $.06 per share compared to a net loss of $970,668 or $0.06 per share for the quarter ended December 31, 1998. Operations for the nine months ended December 31, 1999 resulted in a net loss of $6,485,673 or $0.39 per share compared to a net loss of $3,335,724 or $0.21 per share for the nine months ended December 31, 1998. Operations for the nine months ended December 31, 1999 were adversely impacted by the write-off of the Company's investments in Taiwan UQM, Europa, EV Global and WED which resulted in a charge to earnings of $4,104,628 or $0.25 per share. Total revenue for the quarter ended December 31, 1999 declined 16 percent to $3,667,842 from $4,366,804 for the comparable quarter last year. For the nine months ended December 31, 1999 total revenue rose 39 percent to $14,766,416 compared to $10,607,379 for the comparable period last year. Product sales for the quarter and nine months ended December 31, 1999 were $3,324,616 and $13,607,767, respectively, compared to $3,982,503 and $9,477,750 for the comparable periods last year. The decline in product sales for the quarter was primarily attributable to a 63 percent decline in revenue in the Company's mechanical product segment due to sharply lower product shipments to agricultural sector customers. Revenue growth for the nine months ended December 31, 1999 was fueled by growth in the Company's mechanical products and electronic products segments. Mechanical product segment revenue for the nine months ended December 31, 1999 rose to $2,881,152 compared to $2,422,553 for the comparable period last year. The increase in product sales versus the prior year comparable amount is primarily due to the launch of motor production operations earlier this year which was offset, in part, by weaker sales to agricultural sector customers. Electronic product segment revenue for the nine months ended December 31, 1999 rose to $10,327,559 compared to $6,629,422 for the comparable period last year. The increase is primarily attributable to growth in the automotive sector with existing customers and the addition of new customers in the automotive and industrial sectors. Contract services revenue declined $41,075 or 11 percent to $343,226 during the third quarter and rose $29,020 or 3 percent to $1,158,649 for the nine months ended December 31, 1999. The increase for the third quarter and year-to-date period is primarily attributable to the launch of two multi-year government sponsored development programs and generally stronger demand for sponsored engineering programs. Gross profit margins for the third quarter and nine months ended December 31, 1999 were 10.3 percent and 14.3 percent, respectively, compared to a gross profit margin of 8.6 percent for the comparable quarter last year and gross profit margin of 7.2 percent for the comparable nine month period last year. Gross profit margins on contract services during the quarter and nine months ended December 31, 1999 were 51.0 percent and 21.8 percent, respectively, compared to 17.9 percent and 10.3 percent for the comparable periods last year. The improvement in contract services margins is attributable to reduced levels of cost overruns on development programs and improved pricing on development projects in process. Gross profit margins on product sales for the third quarter and year-to-date period were 6.1 percent and 13.7 percent, respectively, compared to a gross profit margin of 7.7 percent for the comparable quarter last year and a gross profit margin of 6.9 percent for the comparable nine month period last year. The decline in gross profit margins on product sales for the quarter is attributable to less favorable overhead absorption arising from lower revenue levels for the quarter. The increase in gross profit margins on product sales for the nine month period is attributable to improved overhead absorption and production cost improvements at the Company's Franklin Manufacturing unit as well as improved pricing on motor products and a more favorable product mix on gearing products at the Company's Unique Power Products unit. Research and development expenditures during the third quarter rose $64,086 to $203,023 and declined $252,190 to $337,469 for the nine month period ended December 31, 1999. The increase for the quarter is attributable to a focused product development effort during the quarter. The decrease for the nine month period is generally attributable to internally-funded development expenditures on the product launch for Invacare Corporation during the comparable prior year period which have decreased substantially since the launch of production during the fourth quarter last year. General and administrative expense for the third quarter declined $23,201 to $902,473 compared to $925,674 for the comparable quarter last year and rose $475,437 to $3,258,001 for the nine months ended December 31, 1999 compared to $2,782,564 for the comparable nine month period last year. The increase for the nine month period is primarily attributable to the accrual of retirement compensation payable to the Company's former Chief Executive Officer under the terms of his employment agreement and the write-off of an uncollectible account receivable from a customer. Write-down of investments for the nine months ended December 31, 1999 represents charges resulting from the Company's impairment of its investment in EV Global Motors Company, Unique Mobility Europa GmbH and Taiwan UQM Electric Co., Ltd. See also "Financial Condition" above. Interest expense rose $36,823 to $120,558 for the quarter ended December 31, 1999 and $121,512 to $360,497 for the nine months ended December 31, 1999, respectively. The increase for the quarter is attributable to higher borrowing levels on the Company's line-of-credit associated with higher levels of revenue and associated accounts receivable. The increase for the nine month period is attributable to higher levels of short-term and long-term debt during the current period versus the same period last year. Equity in loss of Taiwan joint venture declined to $186,538 for the nine months ended December 31, 1999 compared to $308,905, respectively, for the comparable period last year. The decrease is due to the Company's writedown of its investment in Taiwan UQM during the second quarter, at which time it ceased recording its pro rata share of the operating losses of Taiwan UQM after September 30, 1999. Equity in loss of Germany joint venture was $93,632 for the nine months ended December 31, 1999. The increase is attributable to the Company's recording of its proportionate share of the losses incurred by Unique Mobility Europa GmbH prior to reducing its ownership interest early in the third quarter. Liquidity and Capital Resources The Company's cash balances and liquidity throughout the quarter and nine months ended December 31, 1999 were adequate to meet operating needs. For the quarter ended December 31, 1999 net cash provided by operations was $108,543 compared to net cash used by operations in the same quarter of the prior year of $502,875. For the nine months ended December 31, 1999 net cash used by operations was $291,856 compared to $1,955,502 for the prior year. The increase for the quarter is primarily attributable to the collection of accounts receivable and a reduction in the level of costs in excess of billings on uncompleted contracts. The decrease for the nine month period is primarily attributable to reduced levels of cash used to fund operating losses, improved collection of accounts receivable and lower levels of inventory. Cash used by investing activities for the quarter and nine month period amounted to $165,658 and $924,274, respectively. The decrease for the nine month period is attributable to the acquisition of Franklin Manufacturing Company, the construction of a manufacturing plant in Frederick, Colorado and related equipment purchases during the comparable nine month period last year. The Company's cash requirements for the nine months ended December 31, 1999 were funded primarily through the sale of common stock to investors and borrowings on the Company's line-of-credit. During the second quarter the Company wrote-down its investments in EV Global Motors Company and its related investment in Winderemere ECO Development, Ltd., Unique Mobility Europa GmbH and Taiwan UQM Electric Co., Ltd. as a result of its evaluation of each investment's potential to achieve profitable operations over the near term and the Company's ability to recover the carrying value of its investment. Pursuant to the terms of the agreement governing the future operations of Unique Mobility Europa GmbH the Company reduced its ownership stake to 5.8 percent and has no obligation to fund the future operations of this entity. Similarly, the Company has no future funding obligations to either EV Global Motors Company or Windermere ECO Development, Ltd. Pursuant to the terms of the Joint Venture Agreement governing the operations of Taiwan UQM Electric Co., Ltd. upon the unanimous vote of the directors of Taiwan UQM the shareholders of Taiwan UQM may be obligated to contribute additional capital. The Company holds two seats on the board of directors of Taiwan UQM and therefore has the ability to restrict or eliminate future capital calls by Taiwan UQM. However, in the event the other shareholders of Taiwan UQM elect to contribute additional capital to fund Taiwan UQM's future operations the Company will suffer a dilution of its ownership interest. The Company expects to fund its future working capital requirement through a combination of existing cash resources, cash flow generated from operations, if any, and borrowings on short-term bank lines-of-credit. The Company believes its existing cash resources and bank lines-of-credit are sufficient to fund its operations for the forseeable future. For the longer-term, the Company expects to continue its strategy of growing its business through expanding its product line of permanent magnet motors and controllers, securing production orders from new and existing customers for gear and component assemblies, manufacture design and introduce new products for manufacture, seek strategic alliances to accelerate the commercialization of its technology and pursue synergistic and accretive acquisitions. The Company expects to finance its future growth from existing cash resources, cash flow from operations, if any, and through the issuance of equity or debt securities or a combination thereof. There can, however, be no assurance that such financing or capital will be available on terms acceptable to the Company. In the event financing or capital for future growth as envisioned under the Company's strategy is not available, the Company believes it can configure its operations such that existing cash balances and cash flow from operations will be sufficient to meet its operating requirements. Year 2000 Issue The Year 2000 presents issues because many computer hardware and software systems use only the last two digits to refer to a calendar year. Consequently, these systems may fail to process dates correctly after December 31, 1999, which may cause systems failures. Through the date of this report the Company has not experienced any problems arising from the effects of the Year 2000 issue. PART II - OTHER INFORMATION Item 3. Quantitative and Qualitative Disclosure About Market Risks Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign exchange and interest rates. The Company does not use financial instruments to any degree to manage these risks and does not hold or issue financial instruments for trading purposes. Subsequently, all of the Company's product sales, and related receivables are payable in U.S. dollars. The Company is subject to interest rate risk on its debt obligations and notes receivable, all of which have fixed interest rates. Interest rates on these instruments approximate current market rates as of December 31, 1999. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial data schedule (b) Reports on Form 8-K Current Report dated October 14, 1999 regarding the writedown of the Company's investment in certain joint ventures. 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 thereunto duly authorized. Unique Mobility, Inc. Registrant Date: January 31, 2000 By: /s/Donald A. French Donald A. French Treasurer (Principal Financial and Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS OF UNIQUE MOBILITY, INC. AND CONSOLIDATED SUBSIDIARIES AS OF DECEMBER 31, 1999, AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-2000 DEC-31-1999 1,004,572 0 2,427,562 0 3,065,377 7,111,822 13,854,898 4,944,104 22,844,025 6,111,830 3,671,526 0 0 45,485,278 (32,829,378) 22,844,025 3,324,616 3,667,842 3,289,208 4,477,870 13,130 0 120,558 (943,716) 0 (943,716) 0 0 0 (943,716) (.06) (.06)
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