<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File Number 0-28060
BOLDER TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 84-1166231
- -------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
4403 Table Mountain Drive, Golden, CO 80403
(Address of principal executive offices including zip code)
(303) 215-7200
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. y
Common Stock $.001 par Value 9,599,141
--------------------------------- ------------------------------------
(Class) (Outstanding at November 1, 1998)
<PAGE> 2
BOLDER TECHNOLOGIES CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
COVER PAGE 1
TABLE OF CONTENTS 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Balance Sheets as of September 30, 1998 and December 31, 1997 3
Condensed Statements of Operations for the three and nine-month periods
ended September 30, 1998 and 1997, and the period from inception (March
22, 1991) through September 30, 1998 4
Condensed Statements of Cash Flows for the nine-month periods ended
September 30, 1998 and 1997; and the period from inception (March 22,
1991) through September 30, 1998. 5
Notes to Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 14
ITEM 2. CHANGES IN SECURITIES. 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 14
ITEM 5. OTHER INFORMATION. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 14
SIGNATURES 15
</TABLE>
2
<PAGE> 3
BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,584,474 $ 5,414,330
Available-for-sale securities 13,209,765 14,980,447
Other current assets 359,853 362,937
------------ ------------
TOTAL CURRENT ASSETS 15,154,092 20,757,714
Property and equipment, at cost, net 20,674,123 20,272,932
Other assets, net 379,119 244,943
------------ ------------
TOTAL ASSETS $ 36,207,334 $ 41,275,589
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities $ 1,731,999 $ 2,015,688
Construction-in-process payable 186,582 746,259
Deferred revenue 598,205 1,821,924
Notes and capital leases, current portion 1,410,789 1,157,238
------------ ------------
TOTAL CURRENT LIABILITIES 3,927,575 5,741,109
Notes and capital leases, less current portion 9,126,116 5,247,665
Commitments and contingencies
Stockholders' equity:
Convertible, redeemable preferred stock, $0.001 par value, 336,200
authorized and outstanding at September 30, 1998 and December 31, 1997,
with a liquidation and redemption value of $16,810,000
16,324,355 16,205,046
Common Stock, $.001 par value, 25,000,000 shares authorized; 9,632,474 and
9,498,440 shares issued at September 30, 1998 and December 31, 1997,
respectively 9,632 9,498
Treasury stock, $.001 par common stock, 33,333
shares at September 30, 1998 and December 31, 1997 (50,000) (50,000)
Additional paid-in capital 36,448,135 36,522,069
Deficit accumulated during the development stage (29,578,479) (22,399,798)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 23,153,643 30,286,815
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,207,334 $ 41,275,589
============ ============
</TABLE>
See accompanying notes
3
<PAGE> 4
BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED FOR THE PERIOD
SEPTEMBER 30, SEPTEMBER 30, FROM INCEPTION
------------------------------ ------------------------------ (MARCH 22,1991) TO
1998 1997 1998 1997 SEPTEMBER 30, 1998
------------ ------------ ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Product sales $ 11,824 $ 12,601 $ 43,905 $ 54,217 $ 312,586
Research and development services 672,267 678,494 1,753,212 1,838,716 4,659,913
------------ ------------ ------------ ------------ ------------
684,091 691,095 1,797,117 1,892,933 4,972,499
COST OF REVENUES 71,184 201,359 274,710 550,001 1,224,403
------------ ------------ ------------ ------------ ------------
612,907 489,736 1,522,407 1,342,932 3,748,096
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Research and development 1,948,302 1,965,341 5,669,212 4,489,475 22,129,193
General and administrative 821,937 978,340 2,457,216 2,932,390 10,921,210
Selling and marketing 176,315 98,651 322,238 258,542 1,056,683
------------ ------------ ------------ ------------ ------------
2,946,554 3,042,332 8,448,666 7,680,407 34,107,086
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (2,333,647) (2,552,596) (6,926,259) (6,337,475) (30,358,990)
OTHER INCOME (EXPENSE)
Interest income 226,623 168,593 733,408 552,812 2,586,546
Interest expense (372,308) (253,851) (985,830) (390,883) (1,806,035)
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (2,479,332) $ (2,637,854) $ (7,178,681) $ (6,175,546) $(29,578,479)
============ ============ ============ ============ ============
Basic net loss per share $ (0.30) $ (0.28) $ (0.89) $ (0.65)
============ ============ ============ ============
(See note 1)
Shares used in computing basic
net loss per share 9,598,009 9,459,477 9,547,692 9,438,684
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FOR THE PERIOD
SEPTEMBER 30, FROM INCEPTION
------------------------------ (MARCH 22, 1991) TO
1998 1997 SEPTEMBER 30, 1998
-------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (7,178,681) $ (6,175,546) $(29,578,479)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 807,934 436,829 2,443,645
Change in deferred revenue (1,223,719) (1,621,219) 598,205
Other -- -- 104,956
Changes in operating assets and liabilities (279,123) 4,173,661 1,353,393
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (7,873,589) (3,186,275) (25,078,280)
------------ ------------ ------------
INVESTING ACTIVITIES
Purchase of short term investments (7,091,027) (4,807,505) (65,837,831)
Sale of short term investments 8,861,709 12,786,024 52,628,066
Purchases of property and equipment (1,190,648) (8,159,033) (23,048,176)
Increase (decrease) in construction-in-process payable (559,711) (1,943,905) 186,548
Patent costs (154,105) (46,305) (394,258)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (133,782) (2,170,724) (36,465,651)
------------ ------------ ------------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock -- -- 25,869,062
Proceeds from issuance of common stock 113,658 200,899 25,719,787
Proceeds from issuance of notes payable 5,043,064 6,639,965 16,423,460
Purchase of treasury stock from founder -- -- (50,000)
Payments on notes payable and capital leases payable (911,061) (517,330) (2,406,627)
Stock issuance costs (68,146) (38,527) (2,430,240)
Issuance of warrants to purchase common or preferred stock -- -- 2,963
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,177,515 6,285,007 63,128,405
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,829,856) 928,008 1,584,474
Cash and cash equivalents, beginning of period 5,414,330 968,297 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,584,474 $ 1,896,305 $ 1,584,474
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 945,594 $ 390,882 $ 1,585,739
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Accretion of preferred stock offering costs $ 160,448 $ -- $ 210,448
============ ============ ============
Preferred stock dividend accrual $ 1,134,675 $ -- $ 1,471,393
============ ============ ============
Preferred stock dividends paid in common stock $ 1,092,132 $ -- $ 1,092,132
============ ============ ============
Conversion of notes payable and related accrued interest to
preferred stock $ -- $ -- $ 3,585,820
============ ============ ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The interim financial information of BOLDER Technologies Corporation (the
"Company" or "BOLDER") for the three and nine- month periods ended September
30, 1998 is unaudited, but includes all adjustments (consisting only of normal
recurring entries) which the Company's management believes to be necessary for
the fair presentation of financial position, results of operations and cash
flows for the periods presented. The accompanying interim financial statements
should be read in conjunction with the financial statements and notes thereto
for the year ended December 31, 1997 included in the Company's Annual Report on
Form 10-K. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission rules and regulations. Interim results of operations for
the three- and nine- month periods ended September 30, 1998 are not necessarily
indicative of operating results to be expected for the full year.
The Company has received certain payments in connection with its strategic
agreement with Johnson Controls, Inc. ("JCI"). These payments, which have
been recorded as deferred revenue, are consideration to the Company for certain
services provided to JCI to transfer appropriate technical information to JCI
as specified in the agreement. The Company is recognizing revenue as services
are performed, using the percentage of completion method. These revenues and
others related to JCI totaled approximately 89% and 82% of total research and
development services revenues during the three- and nine-months ended September
30, 1998, respectively, as compared to 78% and 73% for the three and nine
months ended September 30, 1997.
In 1998, the Company has adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income, " which requires companies to report
and display comprehensive income and its components in the financial
statements. For the three and nine-month periods ended September 30, 1998 and
1997, and inception to date, comprehensive income does not differ from net
loss.
The Company has computed earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share," which the Company
adopted in 1997. Also, the Company has adopted the guidance of the Securities
and Exchange Commission Staff Accounting Bulletin No. 98 and related
interpretations. Accordingly, the Company has presented basic earnings per
share for each period presented. Diluted net loss per common share is not
presented, as the effect of common equivalent shares from stock options and
warrants is antidilutive.
The following table provides additional information regarding the computation
of basic earnings per share for the three and nine months ending September 30,
1998:
6
<PAGE> 7
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1998
----------------------------------------
Weighted
Average
Loss Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net Loss $(2,479,332)
Dividend on preferred stock (379,261)
Accretion of preferred stock offering costs (53,769)
-----------
Net loss allocable to common stockholders $(2,912,362) 9,598,009 $ (0.30)
=========== ========= ========
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1998
--------------------------------------------
Weighted
Average
Loss Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net Loss $(7,178,681)
Dividend on preferred stock (1,134,675)
Accretion of preferred stock offering costs (160,448)
-----------
Net loss allocable to common stockholders $(8,473,804) 9,547,692 $ (0.89)
=========== =========== ========
</TABLE>
The following table provides additional information regarding the computation
of basic earnings per share for the three and nine months ending September 30,
1997:
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1997
----------------------------------------
Weighted
Average
Loss Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net loss allocable to common stockholders $(2,637,854) 9,459,477 $ (0.28)
=========== =========== ========
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1997
--------------------------------------------
Weighted
Average
Loss Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net loss allocable to common stockholders $(6,175,546) 9,438,684 $ (0.65)
=========== =========== ========
</TABLE>
At September 30, 1998, securities that could potentially dilute basic net loss
per share in the future include 1,424,934 outstanding options to purchase the
Company's common stock, 49,766 outstanding warrants to purchase the Company's
common stock and 336,200 shares of Convertible, Redeemable Preferred Stock.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities"("SFAS 133"). SFAS 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value.
SFAS133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting.
SFAS 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement SFAS 133 as of the beginning of any fiscal quarter
after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). SFAS 133 cannot be applied retroactively. SFAS 133 must be
applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the company's elections, before
January 1, 1998).
The Company has historically not entered into instruments which would fall into
the scope of SFAS 133.
8
<PAGE> 9
BOLDER TECHNOLOGIES CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, this report may contain
forward-looking statements that involve risks and uncertainties, including
manufacturing risks associated with implementing new process technology,
testing and validating the new production line, achieving commercial-scale
manufacturing levels, achieving consistent yields and quality, uncertainty of
market acceptance and the timing of market acceptance, as well as other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission, including the Company's registration statement on Form S-3
filed on December 5, 1997, as amended through February 19, 1998; the report on
Form 8-K filed February 12, 1998; and the Form 10-K filed March 30, 1998. These
risks, particularly those associated with the Company's implementation of its
new manufacturing line and processes, (i) have materially and adversely
affected, and may in the future materially and adversely affect, the Company's
results and (ii) have caused and may in the future cause such results to differ
materially from those expressed in any forward-looking statements made by
BOLDER.
GENERAL
Since its inception in March 1991, BOLDER Technologies Corporation (the
"Company") has been a development stage company, principally engaged in the
research and development of its Thin Metal Film ("TMF(R)") battery technology,
and has devoted significant resources to the development of its technology and
processes to manufacture its TMF batteries. In May 1997, the Company moved to
a new leased manufacturing facility and corporate headquarters in Golden,
Colorado. This facility has been designed to accommodate three production
lines and two research and development lines, as well as all of the Company's
other operations. The Company contracted with Wright Industries to manufacture
the first high-volume production line, which will produce sub-C cells. The
Company had disclosed in early February 1998 that the qualification of its
first high-volume manufacturing line had proceeded more slowly than originally
anticipated due to the late delivery and installation of equipment and the time
involved in initial debugging of the line. Since February, the Company focused
on making key modifications to the production line and completing the debugging
and testing process. The Company completed this process, along with the
testing and qualification of its first commercial battery product, the sub-C
cell. As a result of completing these milestones, the Company announced in
October that it is ready to ship commercial product and will begin accepting
purchase orders.
The Company believes that the task of improving the efficiency of its first
production line, the efficiency of the overall manufacturing process, and the
performance of its TMF products will be an ongoing activity, as with any new
process technology, even beyond the start of commercial operations. Additional
modifications will be required from time to time to improve the production
capability of the line. Similarly, changes in the design of the Company's
products will be required from time to time to improve product performance.
As with any new enabling technology, the Company expects to go through a period
of market adoption in which customers test and evaluate the BOLDER TMF
batteries, subsequently designing the batteries into customer's products.
Initially, the Company expects modest product shipments until significant
numbers of customers have completed this process. The Company expects to
generate revenues primarily from the sale of its TMF batteries.
9
<PAGE> 10
In June 1995, the Company and Johnson Controls, Inc. ("JCI") established a
joint venture (the "Joint Venture") to develop high volume manufacturing
technology for TMF batteries, to manufacture TMF batteries for sale by both
partners and to pursue HEV battery development opportunities for TMF batteries.
In 1997, having substantially completed its primary objective of developing the
high volume manufacturing technology, the Company and JCI announced a new
strategic partnership, which replaced the Joint Venture effective as of July
1996. Under the terms of the new strategic partnership, which was finalized in
July 1997, each party will separately implement TMF battery-manufacturing
facilities to best meet the unique requirements of the markets addressed by
each.
In connection with the agreement to discontinue the Joint Venture, BOLDER
received a cash payment from JCI, as well as all of the tangible net assets of
the Joint Venture. In return, BOLDER granted JCI certain royalty-bearing
licenses and committed to provide certain technology transfer services. All of
the licenses are royalty bearing and certain of the licenses are subject to
minimum royalties and minimum performance criteria. BOLDER and JCI also
entered into a cross supply agreement with commitments to supply the other
party with minimum quantities of TMF battery products for several years.
The Company believes that its results of operations to date may not be
indicative of results in future periods. Future operating results may be
affected by a wide range of factors and may fluctuate significantly from period
to period.
RESULTS OF OPERATIONS
Total revenues decreased to $684,091 and $1,797,117 for the three-and
nine-month periods ended September 30, 1998, respectively, from $691,095 and
$1,892,933 for the same periods in 1997. As in previous reporting periods, the
majority of revenues resulted from research and development services ("R&D").
Revenues from product sales were at nominal levels and are expected to remain
at nominal levels until the Company has gone through a period of market
adoption by customers and commercial operations begin to increase.
Approximately 89 and 82 percent of the $672,267 and $1,753,212 of research and
development services revenues for the three-and nine month periods ended
September 30, 1998, respectively, resulted from the Company's recognition of
revenue from services performed in connection with the technology transfer
arrangement with JCI. This compares to approximately 78 and 73 percent for the
same periods in 1997. The remainder of the R&D services revenues for the
three-and nine-month periods ended September 30, 1998 and 1997 resulted from
customer-funded research and development programs. The decrease in 1998 R&D
revenues compared to the 1997 periods was due to the completion of a
customer-funded product development program in 1997 that contributed
approximately $239,000 of revenues to the 1997 periods. The R&D revenues
associated with the JCI agreement are non-cash items in 1998 and should be
completed by the end of 1998. The Company considers R&D revenues as an
insignificant part of the future of the business.
Cost of revenues decreased to $71,184 and $274,710 for the three and nine-month
periods ended September 30, 1998, respectively, from $201,359 and $550,001 for
the same periods in 1997. Most of the decrease in 1998 was due to lower levels
of customer funded product-development programs compared to 1997.
10
<PAGE> 11
Research and development expenses increased to $5,669,212 for the nine months
ended September 30, 1998, from $4,489,475 for the same period in 1997. The
increase in 1998 was primarily due to additional technical staff and associated
expenses, and new manufacturing facility and production line expenses related
to the Company's expanded efforts to commercialize its sub-C cell and prepare
to implement high volume manufacturing. Increases from these factors also
affected and would have caused the three months ended September 30, 1998 to
have higher expenses than the same period in 1997, except for certain
offsetting factors. For example, certain expenses associated with the start-up
of debug, test and qualification of the production line realized in the third
quarter 1997 did not apply to the 1998 period. Also, in the third quarter
1998, certain applications engineers included in research and development
expenses in the third quarter 1997 were classified in selling and marketing
expenses in the third quarter 1998. As a result of these offsetting factors,
research and development expenses for the third quarter 1998 of $1,948,302 were
similar to the prior year third quarter expenses of 1,965,341.
General and administrative expenses decreased to $821,937 and $2,457,216 for
the three- and nine-month periods ended September 30, 1998, respectively, as
compared to $978,340 and $2,932,390 for the same periods in 1997. One reason
for the decrease in 1998 was the inclusion for the nine-month period ended
September 30, 1997 of approximately $210,000 of costs associated with the
registration statement filed in February 1997 and withdrawn in May 1997. In
addition, the decrease in both the 1998 three- and nine-month periods reflected
lower expenses for legal fees and recruiting and relocation than in the prior
year.
Selling and marketing expenses increased to $176,315 and $322,238 for the
three- and nine-month periods ended September 30, 1998, respectively, as
compared to $98,651 and $258,542 for the same periods in 1997. The increases
in 1998 were primarily due to increased staffing levels and small amounts of
advertising expenses associated with the commercial introduction of the
Company's products.
Interest income increased to $226,623 and $733,408 for the three- and
nine-month periods ended September 30, 1998, respectively, from $168,593 and
$552,812 for the same periods in 1997. This increase was due to larger
invested cash balances in 1998, primarily resulting from the Company's private
placement in October 1997 and proceeds from debt financing in March 1998.
Interest expense increased to $372,308 and $985,830 for the three- and
nine-month periods ended September 30, 1998, respectively, from $253,851 and
$390,883 for the same periods in 1997. The increases in 1998 were due to
increased levels of lease and debt financing.
LIQUIDITY AND CAPITAL RESOURCES
From its inception through September 30, 1998, the Company has financed its
operations and met its capital requirements primarily through private and
public offerings of its equity securities, raising net proceeds of $52.5
million from sales of these securities. The Company has also received net
proceeds of $12.3 million from a debt agreement with Transamerica Business
Credit Corporation. At September 30, 1998, the Company's balances of cash,
cash equivalents, and available-for-sale securities totaled $14.8 million,
compared to $20.4 million at December 31, 1997.
11
<PAGE> 12
In October 1997, the Company received approximately $15.8 million in net
proceeds from the private placement of 336,200 shares of Series A Convertible
Preferred Stock. The first dividend payment, in the form of shares of the
Company's common stock, was made on March 13, 1998, resulting in the issuance
of 77,985 shares of the Company's common stock. The total amount of this
dividend payment, representing the period from October 8, 1997 through March
12, 1998, was $642,464. An additional dividend payment, in the form of shares
of the Company's common stock, was made on June 30, 1998. This resulted in the
issuance of 36,704 shares. The total value of the dividend payment, which
covered the period from March 13, 1998 through June 30, 1998, was $449,668.
In March 1998, the Company obtained loan proceeds of $5.2 million from its
debt agreement with Transamerica Business Credit Corporation ("TBCC"). The
Company has no additional financing available from the TBCC debt agreement.
The remaining loan balance, which is collateralized by tenant improvements and
the high volume production line, is $10.5 million at September 30, 1998.
As of September 30, 1998, the Company had made progress payments of $11.2
million to fund the construction of its first high-volume production line, of
which $8.0 million were financed through its debt agreement with TBCC. The
Company's remaining liability of $0.2 million to the supplier of the
production line is payable upon specific vendor performance. The Company
invested $0.4 and $1.2 million during the three- and nine-months ended
September 30, 1998 in leasehold improvements, machinery, equipment, and office
furnishings to support its new facility and its development, production, sales,
and administrative activities.
Except as noted above, the Company currently has no other significant capital
commitments other than its commitments under notes payable. The Company
believes that its existing sources of liquidity, as well as projected cash
generated from future operations, will satisfy the Company's capital
requirements for at least the next 12 months. To provide funds for future
production lines, the Company will need to access additional sources of equity
capital or debt. If these financing sources are not available, the Company
would likely delay any substantial expansion of fully-automated manufacturing
capacity. There can be no assurance that the Company will generate revenues
and operating income sufficient to satisfy its working capital and equipment
expenditure needs in the future. In addition, the Company is unable to predict
the precise amount of future capital that it may require, and there can be no
assurance that any additional financing will be available to the Company if
that need arises or that financing will be in a form or on terms acceptable to
the Company. The inability to generate revenues and operating income or obtain
required financing on acceptable terms would have a material adverse effect on
the Company's business, financial condition, and results of operations.
Consequently, the Company could be required to significantly reduce or suspend
its operations, seek a merger partner or sell additional securities on terms
that could be dilutive to the Company's stockholders.
YEAR 2000
State of Readiness. The Company relies on software in its information systems
and manufacturing equipment. Most of this equipment and software was installed
and written within the past three years. The Company has done an initial
survey of the installed control systems, computers, and application software,
and it appears that these systems are either compliant, the vendor claims
compliance, or the problems can be corrected by purchasing small amounts of
hardware, software, or software upgrades.
12
<PAGE> 13
Costs. The Company has a plan to validate each of these systems by the end of
Second Quarter 1999. This plan (20% of total expected hours completed to
September 30, 1998) will be accomplished through a combination of written
vendor confirmations and specific validation testing. This validation process
is expected to be accomplished primarily with internal corporate staff. The
validation phase is expected to cost approximately $25,000, including
consulting and internal resources.
Due to the fact that the Company's information and embedded systems are new,
generally off-the-shelf, and vendor relationships still exist for the subject
equipment and software, Year 2000 remediation costs are expected to be
relatively small. They are expected to consist of replacing relatively
low-cost personal computers, and installations of bug-fixes from major
manufacturers of equipment, along with some custom software fixes. These
costs, including hardware replacements accelerated by the Year 2000 situation,
and other contingency plan activities, are not expected to exceed $50,000.
Risks. The most likely risks to the Company from Year 2000 issues are
external, due to the difficulty of validating key third parties' readiness for
Year 2000. The Company will seek confirmation of such compliance and seek
relationships which are compliant. However, the risk that a major supplier of
raw materials, or a major OEM customer, will become unreliable due to Year 2000
problems will still exist. The Company will maintain contingency plans for
each of these key relationships as they arise, such as second sourcing,
purchasing additional inventory, and creating joint contingency plans for Year
2000 situations with each relationship.
13
<PAGE> 14
BOLDER TECHNOLOGIES CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBIT DESCRIPTIONS OF DOCUMENTS
27 -- Financial Data Schedule.
(b) There were no reports on Form 8-K for the three
months ended September 30, 1998.
14
<PAGE> 15
BOLDER TECHNOLOGIES CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed in its behalf by the undersigned
thereunto duly authorized.
BOLDER Technologies Corporation
Date: November 10, 1998 By: /s/ Daniel S. Lankford
------------------------- ------------------------------------
Daniel S. Lankford
Chairman and Chief Executive Officer
By: /s/ Joseph F. Fojtasek
------------------------------------
Joseph F. Fojtasek
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<PAGE> 16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 -- Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,584,474
<SECURITIES> 13,209,765
<RECEIVABLES> 73,378
<ALLOWANCES> 0
<INVENTORY> 122,589
<CURRENT-ASSETS> 15,154,092
<PP&E> 22,694,249
<DEPRECIATION> (2,020,126)
<TOTAL-ASSETS> 36,207,334
<CURRENT-LIABILITIES> 3,927,575
<BONDS> 9,126,116
0
16,324,355
<COMMON> 9,632
<OTHER-SE> 6,819,656
<TOTAL-LIABILITY-AND-EQUITY> 36,207,334
<SALES> 11,824
<TOTAL-REVENUES> 684,091
<CGS> 29,411
<TOTAL-COSTS> 71,184
<OTHER-EXPENSES> 2,946,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 372,308
<INCOME-PRETAX> (2,479,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,479,332)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,479,332)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> 0
</TABLE>
