-----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, QXPTmYIRFInGNiT/0FyBXooyJzlhmh/PdtMi45jcY816XWjIUxauzl7/8hb+IaNZ 2i0p35Vaggl5fZdBex6ARg== 0000315449-01-000002.txt : 20010130 0000315449-01-000002.hdr.sgml : 20010130 ACCESSION NUMBER: 0000315449-01-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010129 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: 1516894 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 0001.txt 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, 2000 Commission file number 1-10869 UQM TECHNOLOGIES, 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 19, 2001, was 17,396,671. PART I - FINANCIAL INFORMATION UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, March 31, Assets 2000 2000
(unaudited) Current assets: Cash and cash equivalents $ 1,417,327 2,085,115 Accounts receivable, net (notes 6 and 8) 4,555,753 2,821,894 Costs and estimated earnings in excess of billings on uncompleted contracts (note 3) 582,932 329,111 Inventories (notes 4 and 6) 6,803,210 3,120,279 Prepaid expenses 201,849 192,492 Other 1,386 400,068 Total current assets 13,562,457 8,948,959 Property and equipment, at cost: Land 517,080 517,080 Buildings 2,678,525 2,678,525 Molds 102,113 102,113 Transportation equipment 146,386 146,386 Machinery and equipment 12,206,170 10,462,893 15,650,274 13,906,997 Less accumulated depreciation (6,633,556) (5,365,304) Net property and equipment 9,016,718 8,541,693 Patent and trademark costs, net of accumulated amortization of $156,182 and $125,078 739,885 731,282 Goodwill, net of accumulated amortization of $906,195 and $656,696 5,745,964 5,995,463 Other assets 99,205 40,446 $ 29,164,229 24,257,843
(Continued) UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets, Continued December 31, March 31, Liabilities and Stockholders' Equity 2000 2000 (unaudited)
Current liabilities: Accounts payable $ 3,408,698 1,379,316 Other current liabilities (note 5) 1,668,105 845,462 Current portion of long-term debt 1,083,489 972,123 Revolving line-of-credit (note 6) 2,480,000 - Billings in excess of costs and estimated earnings on uncompleted contracts (note 3) 422,691 79,499 Total current liabilities 9,062,983 3,276,400 Long-term debt, less current portion 3,236,097 3,422,459 Total liabilities 12,299,080 6,698,859 Minority interest in consolidated subsidiary 422,347 413,066 Stockholders' equity (note 7): Common stock, $.01 par value, 50,000,000 shares authorized; 17,385,671 and 17,194,192 shares issued 173,857 171,942 Additional paid-in capital 50,515,953 49,382,877 Accumulated deficit (33,862,708) (32,024,601) Accumulated other comprehensive loss (note 12) (384,300) (384,300) Total stockholders' equity 16,442,802 17,145,918 Commitments (note 11) $ 29,164,229 24,257,843
See accompanying notes to consolidated financial statements. UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (unaudited) Quarter Ended Nine Months Ended December 31, December 31, 2000 1999 2000 1999
Revenue (note 8): Contract services $ 594,708 343,226 1,492,607 1,158,649 Product sales 6,817,925 3,324,616 18,816,849 13,607,767 7,412,633 3,667,842 20,309,456 14,766,416 Operating costs and expenses: Costs of contract services 470,129 168,173 1,336,470 905,617 Costs of product sales 6,241,902 3,121,035 17,066,313 11,746,959 Research and development 14,050 203,023 79,460 337,469 General and administrative 905,973 902,473 2,871,205 3,258,001 Write-down of investments - - - 4,104,628 Impairment of assets - - 216,818 - Amortization of goodwill 83,166 83,166 249,499 249,211 7,715,220 4,477,870 21,819,765 20,601,885 Operating loss (302,587) (810,028) (1,510,309) (5,835,469) Other income (expense): Interest income 9,940 9,448 52,800 47,600 Interest expense (116,679) (120,558) (317,891) (360,497) Equity in loss of joint ventures - - - (280,170) Minority interest share of earnings of consolidated subsidiary (20,213) (18,796) (59,790) (55,689) Other - (3,782) (2,917) (1,448) (126,952) (133,688) (327,798) (650,204) Net loss $ (429,539) (943,716) (1,838,107) (6,485,673) Net loss per common share basic and diluted $ (.02) (.06) (.10) (.39) Weighted average number of shares of common stock outstanding (note 9) 17,363,215 16,574,409 17,282,878 16,514,551
See accompanying notes to consolidated financial statements. UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited) Nine Months Ended December 31, 2000 1999
Cash flows used by operating activities: Net loss $ (1,838,107) (6,485,673) Adjustments to reconcile net loss to net cash used by operating activities: Write-down of investments - 4,104,628 Depreciation and amortization 1,759,544 1,596,830 Impairment of assets 216,818 - Minority interest share of earnings of consolidated subsidiary 59,789 55,689 Noncash compensation expense for common stock issued for services 79,176 29,743 Equity in loss of joint ventures - 280,170 Loss on sale of property and equipment 2,917 3,785 Change in operating assets and liabilities: Accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (1,971,439) 176,036 Inventories (3,682,931) (105,530) Prepaid expenses and other current assets (10,675) (84,740) Accounts payable and other current liabilities 2,852,025 55,711 Billings in excess of costs and estimated earnings on uncompleted contracts 343,192 81,495 Net cash used by operating activities (2,189,691) (291,856) Cash used by investing activities: Acquisition of property and equipment (2,180,701) (404,366) Proceeds from sale of property and equipment 7,000 41,000 Increase in patent and trademark costs (39,707) (45,200) Proceeds from sale of Germany joint venture 400,000 - Investment in other long-term assets (75,000) (515,708) Net cash used by investing activities $ (1,888,408) (924,274)
(Continued) UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows, Continued (unaudited) Nine Months Ended December 31, 2000 1999
Cash provided by financing activities: Proceeds from borrowings $ 700,000 57,166 Repayment of debt (774,996) (751,879) Net borrowings on revolving line-of-credit 2,480,000 650,000 Repayment of notes receivable from officers - 47,452 Proceeds from sale of common stock, net - 488,828 Issuance of common stock upon exercise of employee options, net of repayments 934,095 135,335 Issuance of common stock under employee stock purchase plan 25,720 25,957 Issuance of common stock upon exercise of warrants 96,000 80,901 Distributions paid to holders of minority interest (50,508) (50,511) Net cash provided by financing activities 3,410,311 683,249 Decrease in cash and cash equivalents (667,788) (532,881) Cash and cash equivalents at beginning of period 2,085,115 1,537,453 Cash and cash equivalents at end of period $ 1,417,327 1,004,572 Interest paid in cash during the period $ 307,552 363,030
Non-cash investing and financing transactions: Cumulative translation adjustment of $67,339 was recorded for the nine months ended December 31, 1999. In 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 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, 2000, the Company issued 20,045 shares of common stock for options exercised for an aggregate exercise price of $63,864, for which the Company received 7,983 shares of common stock as payment for the exercise price. The shares received were recorded at cost as treasury stock and were subsequently retired. See accompanying notes to consolidated financial statements. UQM TECHNOLOGIES, 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. The notes contained herein should be read in conjunction with the notes to the Company's Consolidated Financial Statements filed on Form 10-K for the year ended March 31, 2000. (2) Certain financial statement amounts have been reclassified for comparative purposes. (3) The estimated period to complete contracts in process ranged from one to eighteen months at December 31, 2000, and from one to seventeen months at March 31, 2000. The Company expects to collect substantially all related accounts receivable and costsand estimated earnings in excess of billings on uncompleted contracts within nineteen months. Contracts in process consist of the following: December 31, 2000 March 31, 2000 (unaudited) Costs incurred on uncompleted contracts $ 1,865,740 645,425 Estimated earnings 472,224 180,293 2,337,964 825,718 Less billings to date (2,177,723) (576,106) $ 160,241 249,612 Included in the accompanying balance sheets as follows: Costs and estimated earnings in excess of billings on uncompleted contracts $ 582,932 329,111 Billings in excess of costs and estimated earnings on uncompleted contracts (422,691) (79,499) $ 160,241 249,612 (4) Inventories consist of: December 31, 2000 March 31, 2000 (unaudited) Raw materials $ 5,912,302 2,446,779 Work in process 654,866 627,131 Finished products 236,042 46,369 $ 6,803,210 3,120,279 UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) (5) Other current liabilities consist of: December 31, 2000 March 31, 2000 (unaudited) Accrued interest $ 31,698 21,360 Accrued legal and accounting fees 57,528 71,275 Accrued payroll, consulting, personal property taxes and real estate taxes 650,886 339,263 Accrued material purchases 779,802 327,828 Other 148,191 85,736 $ 1,668,105 845,462 (6) Lines of credit The Company has two lines of credit totaling $4.75 million. At December 31, 2000, the Company had advanced $2.48 million against these lines. The $.75 million line of credit expires December 2001. The $4.0 million line of credit is due on demand, but if no demand is made, it is due August 2001. Interest on the lines of credit is payable monthly at prime plus .75% (10.25% at December 31, 2000) and prime less .50% (9.00% at December 31, 2000), 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. (7) 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, 2000: UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) Shares Under Weighted-Average Option Exercise Price Outstanding at March 31, 2000 3,231,394 $6.01 Granted 53,333 7.60 Exercised (175,243) 5.69 Forfeited (672,127) 7.32 Outstanding at December 31, 2000 2,437,357 $5.71 Exercisable at December 31, 2000 1,693,734 $5.11 The following table presents summarized information about stock options outstanding at December 31, 2000: Options Outstanding Options Exercisable Weighted Weighted Weighted Number Average Average Number Average Range of Outstanding Remaining Exercise Exercisable Exercise Exercise Prices at 12/31/00 Contractual Life Price at 12/31/00 Price $0.75 14,000 0.2 years $0.75 14,000 $0.75 $2.25 - 3.31 456,876 4.7 years $3.02 456,876 $3.02 $3.50 - 5.00 835,643 5.2 years $4.23 586,297 $4.17 $6.25 - 8.75 1,130,838 6.1 years $7.95 636,561 $7.55 $0.75 - 8.75 2,437,357 5.5 years $5.71 1,693,734 $5.11 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 are vested on the date of grant and are exercisable for terms ranging from three years to ten years 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, 2000: Shares Under Weighted-Average Option Exercise Price Outstanding at March 31, 2000 41,275 $5.68 Granted 5,785 7.94 Outstanding at December 31, 2000 47,060 $5.96 Exercisable at December 31, 2000 29,758 $6.09 UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) 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 12/31/00 Contractual Life Price at 12/31/00 Price $4.25 - 5.06 25,275 5.9 years $4.76 13,758 $4.88 $7.13 - 8.00 21,785 5.9 years $7.34 16,000 $7.13 $4.25 - 8.00 47,060 5.9 years $5.96 29,758 $6.09 Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123") defines a fair value method of accounting for employee stock options and similar equity instruments. SFAS 123 permits an entity to choose to recognize compensation expenses by adopting the fair value method of accounting or continue to measure compensation costs using the intrinsic value methods prescribed by APB 25. 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, 2000 1999 2000 1999 Net loss - as reported $ (429,539) (943,716) (1,838,107) (6,485,673) Compensation expense - current option grants (4,850) - (34,200) (2,500) Compensation expense - prior period option grants (175,800) (362,128) (626,490) 1,198,235) Net loss - pro forma $ (610,189) (1,305,844) (2,498,797) (7,686,408) Net loss per common share - as reported $ (.02) (.06) (.10) (.39) Net loss per common share - pro forma $ (.04) (.08) (.14) (.47) 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, 2000 1999 2000 1999 Expected volatility 4.83% - 4.72% 4.65% Expected dividend yield 0.0% - 0.0% 0.0% Risk free interest rate 5.7% - 6.2% 6.3% Expected life of option granted 5.9 years - 5.6 years 3 years Fair value of options granted as computed under the Black Scholes option pricing model $2.91 per - $3.94 per $1.62 per share share share UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) 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: Fiscal Year Pro Forma Ended Compensation March 31, Expense 2001 $ 221,387 2002 $ 883,020 2003 $ 459,169 2004 $ 10,950 Warrants The Company completed a private placement in fiscal 1998 of 750,000 units consisting of one common share and one warrant. The warrants expire two years from the date of issuance, unless extended. During April, 2000 warrants to acquire 12,000 shares of the Company's common stock at $8.00 per share were exercised resulting in cash proceeds to the Company of $96,000. During fiscal 2000, warrants to purchase 299,375 shares of common stock were extended for a period of eighteen months at the fair value of such extension and remain outstanding as of December 31, 2000. (8) The Company has historically derived significant revenue from two customers. The customers from which this revenue has been derived and the percentage of total revenue for the quarter ended December 31, 2000 and 1999 was $3,528,865, or 48%, and $856,053, or 23%, respectively, and $7,760,769, or 38% and $3,235,202, or 22% for the nine months ended December 31, 2000 and 1999, respectively. These customers also represented 58% and 13% of total accounts receivable at December 31, 2000 and 1999, 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 $244,531 and $260,641 for the quarter ended December 31, 2000 and 1999, respectively, and $576,677 and $653,847 for the nine months ended December 31, 2000 and 1999, respectively. (9) 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, 2000 and 1999. Outstanding common stock options and warrants were not included in the computation because the effect of such inclusion would be antidilutive. (10) 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. UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) During the quarter and nine months ended December 31, 2000, intersegment sales or transfers were immaterial. 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, 2000: Mechanical Electronic Technology Products Products Total Revenue $ 599,033 1,119,215 5,694,385 7,412,633 Interest income 8,143 1,797 - 9,940 Interest expense (13,463) (41,321) (61,895) (116,679) Depreciation and amortization (100,271) (243,492) (185,243) (529,006) Goodwill amortization - (15,579) (67,587) (83,166) Segment loss (166,704) (230,895) (31,940) (429,539) Segment assets 8,090,699 6,116,178 14,957,352 29,164,229 Expenditures for segment assets $ (77,185) (174,408) (509,009) (760,602) 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) 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) UQM TECHNOLOGIES, 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, 2000: Mechanical Electronic Technology Products Products Total Revenue $ 2,122,816 3,324,849 14,861,791 20,309,456 Interest income 45,359 7,441 - 52,800 Interest expense (41,482) (127,451) (148,958) (317,891) Depreciation and amortization (297,620) (715,520) (496,905) (1,510,045) Write-down of investments - - - - Impairment of assets - - (216,818) (216,818) Goodwill amortization - (46,738) (202,761) (249,499) Equity in loss of joint ventures - - - - Segment loss (544,664) (833,401) (460,042) (1,838,107) Segment assets 8,090,699 6,116,178 14,957,352 29,164,229 Expenditures for segment assets $ (332,042) (203,442) (1,759,924) (2,295,408) 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) Impairment of assets - - - - Goodwill amortization - (46,738) (202,473) (249,211) Equity in loss of joint ventures (280,170) - - (280,170) 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 $ (726,109) (123,194) (115,971) (965,274) (11) Commitments and Contingencies Employment Agreements The Company has entered into employment agreement with two of its officers which expire December 31, 2002. The aggregate future compensation under the employment agreements is $796,646. UQM TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (unaudited) 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, 2000, 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 each fiscal year thereafter are as follows: 2001 $ 74,390 2002 272,597 2003 251,444 2004 253,961 2005 252,140 Thereafter 504,280 $ 1,608,812 Rental expense under these leases totaled $75,749 and $71,793 for the quarter ended December 31, 2000 and 1999, respectively, and $227,247 and $215,379 for the nine months ended December 31, 2000 and 1999, respectively. (12) Comprehensive Loss The following table summarizes the Company's comprehensive loss for the quarter and nine months ended December 31, 2000 and 1999: Quarter Ended Nine Months Ended December 31, December 31, 2000 1999 2000 1999 Net loss $(429,539) (943,716) (1,838,107) (6,485,673) Other comprehensive earnings - translation adjustment - - - 67,339 Comprehensive loss $(429,539) (943,716) (1,838,107) (6,418,334) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report 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 Factor section of the Registration Statement on Form S-3 (File No. 333-78525) filed by the Company with the SEC, which identified important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including the Company's ability to be profitable, 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 this report. The Company disclaims, however, any intent or obligation to update these forward-looking statements. Financial Condition Cash and cash equivalents at December 31, 2000 was $1,417,327. Working capital (the excess of current assets over current liabilities) was $4,499,474 compared with $5,672,559 at March 31, 2000. Accounts receivable rose $1,733,859 to $4,555,753 at December 31, 2000 from $2,821,894 at March 31, 2000. The increase is primarily attributable to record revenue levels during the nine months ended December 31, 2000 and extended payment terms offered to selected customers of the Company's mechanical products and electronics segments. Costs and estimated earnings on uncompleted contracts increased $253,821 to $582,932 at December 31, 2000 from the fiscal 2000 year-end level of $329,111. The increase is attributable to higher levels of unbilled work in process on engineering contracts. Estimated earnings on contracts in process rose to $472,224 at December 31, 2000 on costs incurred on contracts in process of $1,865,740 compared to estimated earnings on contracts in process of $180,293 on costs incurred on contracts in process of $645,425 at March 31, 2000. The increase in estimated earnings on contracts in process is attributable to higher billing rate realization on development programs in process. Raw materials, work in process and finished products inventories rose by $3,465,523, $27,735 and $189,673, respectively, to $5,912,302, $654,866 and $236,042, respectively, at December 31, 2000. The increase in raw materials inventories is primarily attributable to inventory accumulation associated with the transfer of value-added production activities from a customers facility, higher revenue levels generally and periodic electronic component shortages and component delivery delays at the Company's electronics unit which has required higher stocking levels for all related parts used in the manufacture of affected products. Finished products inventories rose primarily as a result manufacturing and stocking certain completed customer products at the Company's electronics unit in anticipation of future shipment release orders. Prepaid expenses rose to $201,849 at December 31, 2000 from $192,492 at March 31, 2000 reflecting the prepayment of certain annual insurance premium costs on the Company's commercial insurance coverages. Other current assets declined $398,682 to $1,386 at December 31, 2000 reflecting the collection of amounts due from the disposition of the Company's remaining equity interest in its German joint venture. The Company invested $754,696 and $2,180,701 for the acquisition of property and equipment during the quarter and nine months ended December 31, 2000, respectively, compared to $193,596 and $404,366 for the quarter and nine months ended December 31, 1999, respectively. The increase in capital expenditures represents expenditures for manufacturing equipment at the Company's electronic products segment to improve manufacturing throughput and component placement density which amounted to $509,009 and $1,759,924 of the increase for the quarter and nine months, respectively. Goodwill, net of accumulated amortization, declined $249,499 to $5,745,964 at December 31, 2000 due to the amortization of this asset over its 20 year useful life. Other assets increased $58,759 to $99,205 at December 31, 2000 due primarily due to the Company's purchase of a minority equity interest in Aeromax Corporation. Accounts payable rose $2,029,382 to $3,408,698 at December 31, 2000 from $1,379,316 at March 31, 2000. The increase is primarily attributable to higher levels of inventory purchases from suppliers associated with higher levels of production and periodic component part delivery delays. Other current liabilities increased $822,643 to $1,668,105 at December 31, 2000 from $845,462 at March 31, 2000. The increase is primarily attributable higher levels of accrued material purchases and payroll associated with higher levels of production in the Company's electronics segment. Revolving line-of-credit rose to $2,480,000 at December 31, 2000 due to expanded working capital requirements during the nine months ended December 31, 2000 primarily due to higher levels of trade accounts receivable and inventory. Billings in excess of costs and estimated earnings on uncompleted contracts rose $343,192 to $422,691 at December 31, 2000 from $79,499 at March 31, 2000 reflecting the prepayment by several customers for engineering services commenced during the nine months ended December 31, 2000. Long-term debt decreased $186,362 to $3,236,097 at December 31, 2000 due to reclassification of principal maturities within one year and scheduled principal repayments on the Company's term bank debt during the nine month period. Common stock and additional paid-in capital increased to $173,857 and $50,515,953 at December 31, 2000, respectively, compared to $171,942 and $49,382,877 at March 31, 2000. The increases were due to the proceeds received upon the exercise of stock options by employees of $934,095; proceeds from the sale of common stock under the Company's Employee Stock Purchase Plan of $25,720 and proceeds received upon the exercise of warrants of $96,000. Results of Operations Operations for the quarter ended December 31, 2000, resulted in a net loss of $429,539 or $.02 per share compared to a net loss of $943,716 or $0.06 per share for the quarter ended December 31, 1999. Operations for the nine months ended December 31, 2000 resulted in a net loss of $1,838,107 or $0.10 per share compared to a net loss of $6,485,673 or $0.39 per share for the nine months ended December 31, 1999. Operations for the prior year nine month period ended December 31, 1999 was adversely impacted by the write-down of the Company's investments in various joint ventures which resulted in a charge to earnings of $4,104,628 or $0.25 per share. Excluding this charge, the prior years comparable nine month operating results resulted in a net loss of $2,381,045 or $0.14 per share. Total revenue for the quarter ended December 31, 2000 rose $3,744,791 or 102 percent to $7,412,633 compared to $3,667,842 for the comparable quarter last year. For the nine months ended December 31, 2000 total revenue rose $5,543,040 or 38 percent to $20,309,456 compared to $14,766,416 for the comparable period last year. Contract services revenue for the quarter increased $251,482 or 73 percent to $594,708 compared to $343,226 for the comparable quarter last year, and rose $333,958 or 29 percent to $1,492,607 compared to $1,158,649 for the nine months ended December 31, 2000. The increase in contract services revenue for the quarter and nine months ended December 31, 2000 is attributable to stronger demand for development programs. Product sales for the quarter rose $3,493,309 or 105 percent to $6,817,925 versus $3,324,616 for the comparable quarter last year. Product sales for the nine months ended December 31, 2000 rose $5,209,082 or 38 percent to $18,816,849 compared to $13,607,767 for the comparable nine month period last year. Product sales revenue for the mechanical products segment increased $667,467 or 148 percent to $1,119,215 for the quarter and $443,697 or 15 percent to $3,324,849 for the nine months ended December 31, 2000, respectively, compared to $451,748 and $2,881,152 for the comparable periods last year. The growth in revenue in the mechanical products segment for the quarter and nine month period is primarily attributable to improved shipments of gears and gear assemblies during the quarter. Product sales revenue for the electronic products segment increased $2,986,133 or 110 percent to $5,694,385 for the quarter and $4,534,232 or 44 percent to $14,861,791 for the nine months ended December 31, 2000, respectively, compared to $2,708,252 and $10,327,559 for the comparable periods last year. The growth in revenue in the electronic products segment is attributable to the launch of a value added product for an existing customer in the third quarter together with higher production volumes for certain customers throughout the nine month period. Gross profit margins for the quarter and nine months ended December 31, 2000 were 9.5 percent and 9.4 percent, respectively, compared to 10.3 percent and 14.3 percent for the comparable quarter and nine month period last year. Gross profit margins on contract services were 20.9 percent for the quarter and 10.5 percent for the nine months ended December 31, 2000, compared to 51.0 percent and 21.8 percent for the comparable periods last year. The decline in contract services margins is attributable to lower billing rate realization and cost overruns on development programs. Gross profit margins on product sales for the quarter and nine months ended December 31, 2000 were 8.4 percent and 9.3 percent, respectively, compared to 6.1 percent and 13.7 percent for the comparable periods last year. The increase in margins on product sales for the quarter is primarily attributable to improved overhead absorption associated with higher production volumes at the Company's gear manufacturing and electronics manufacturing operations, which were partially offset by product launch costs at the electronics manufacturing operation. Research and development expenditures for the quarter and nine months ended December 31, 2000 declined to $14,050 and $79,460, respectively, compared to $203,023 and $337,469 for the comparable periods last year. The decreases are generally attributable to lower levels of internally-funded development activities. General and administrative expense for the third quarter rose $3,500 to $905,973 compared to $902,473 for the comparable quarter last year and decreased $386,796 to $2,871,205 for the nine months ended December 31, 2000 compared to $3,258,001 for the comparable period last year. The increase for the quarter includes investment banking fees associated with acquisition activities of approximately $100,000 and costs associated with a special meeting of the Company's shareholders of approximately $20,000. The decrease for the nine month period is primarily attributable to the accrual of compensation payable to the Company's former Chief Executive Officer under the terms of his employment agreement of $324,866 and the write-off of an uncollectible account receivable $254,870 in the comparable prior year periods. Write-down of investments in the prior year periods represents charges resulting from the Company's write down of its investment in EVG, Europa and Taiwan UQM. During the nine months ended December 31, 2000 the Company purchased additional equipment at its UQM Electronics unit and subsequently conducted a re-layout and balancing of its manufacturing lines. As a result, certain older machines were taken out of service, resulting in an impairment charge of $216,818. Interest income was $9,940 and $52,800 for the quarter and nine months ended December 31, 2000 compared to $9,448 and $47,600 for the comparable prior year periods. The increase for the quarter and nine month period is generally attributable to higher yields on invested cash balances. Interest expense decreased $3,879 to $116,679 for the quarter ended December 31, 2000 and $42,606 to $317,891 for the nine months ended December 31, 2000, respectively. The decrease for the quarter and nine month period is attributable to lower levels of borrowing on the Company's revolving line-of-credit. Equity in loss of joint ventures for the prior year periods represents the Company's proportionate share of the losses of various joint ventures which the Company wrote down in the second quarter last year. As a result, the Company no longer reports its pro rata share of the earnings or loss of these entities. Liquidity and Capital Resources The Company's cash balances and liquidity throughout the quarter and nine months ended December 31, 2000 were adequate to meet operating needs. Net cash used by operating activities was $951,515 and $2,189,691 for the quarter and nine months ended December 31, 2000 versus net cash provided by operating activities of $108,543 for the comparable prior year quarter and cash used by operating activities of $291,856 for the nine months ended December 31, 1999. The increase in cash used by operating activities for the quarter and nine months ended December 31, 2000 is primarily attributable to higher levels of accounts receivables resulting from increased revenues and the granting of extended terms to selected customers and higher inventory levels. The Company expects its inventory levels to decline during the fourth quarter. Cash requirements throughout the quarter and nine months ended December 31, 2000 were funded from existing cash balances, cash proceeds from the exercise of warrants and employee stock options and from borrowings on the Company's revolving lines-of-credit. During the third quarter the Company renewed its two existing lines-of-credit raising the amount available for borrowing thereunder from $3.25 million to $4.75 million. One of the lines-of-credit expires in August 2001 and the other in December 2001. The Company believes that its current cash balances and available borrowing capacity under its revolving lines-of-credit are sufficient to fund its current and anticipated operations for the foreseeable future. During the quarter and nine months ended December 31, 2000 the Company invested $754,696 and $2,180,701 for the purchase of additional equipment. The Company does not anticipate any material capital expenditures for the remainder of the fiscal year. 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, 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 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 will modify its strategy to align its operations with its then available financial resources. 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. Long-term debt obligations have fixed interest rates and the Company's revolving line-of-credit has variable rates of interest indexed to the prime rate. Interest rates on these instruments approximate current market rates as of December 31, 2000. Item 4. Submissions of Matters to a Vote of Security Holders The Annual Meeting of the Shareholders of UQM Technologies, Inc. was held on August 15, 2000. The following is a summary of the matters submitted to a vote of security holders and the results of the voting thereon: Proposal 1: Election of Directors Withhold For Authority William G. Rankin 14,642,229 98,011 J. B. Richey 14,063,702 676,538 Ernest H. Drew 14,066,797 673,443 Stephen J. Roy 14,639,349 100,891 Proposal 2: Proposal to ratify the appointment of KPMG LLP as the independent auditors of the Company. For Against Abstain 14,598,525 28,763 112,952 Outstanding votable shares: 17,235,345 Total voted shares represented in person and by proxy: 14,740,240 Percentage of the outstanding votable shares: 85.52% A special meeting of the shareholders of UQM Technologies, Inc. was held on January 24, 2001. The following is a summary of the matter submitted to a vote of security holders and the results of the voting thereon: Proposal 1: Amendment to the certificate of incorporation to change the name of the Company to UQM Technologies, Inc. For Against Abstain 15,014,651 36,017 37,606 Outstanding votable shares: 17,363,517 Total voted shares represented in person and by proxy: 15,088,274 Percentage of the outstanding votable shares: 86.9% Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial data schedule (b) Reports on Form 8-K None 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. UQM Technologies, Inc. Registrant Date: January 26, 2001 By: /s/Donald A. French Donald A. French Treasurer and Secretary (Principal Financial and Accounting Officer) EX-27 2 0002.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF UQM TECHNOLOGIES, INC. AND CONSOLIDATED SUBSIDIARIES AS OF DECEMBER 31, 2000, AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS MAR-31-2001 DEC-31-2000 1,417,327 0 4,555,753 0 7,386,142 13,562,457 15,650,274 6,633,556 29,164,229 9,062,983 3,236,097 0 0 50,689,810 (34,247,008) 29,164,229 18,816,849 20,309,456 17,066,313 4,753,452 9,907 0 317,891 (1,838,107) 0 (1,838,107) 0 0 0 (1,838,107) (.10) (.10)
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