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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 June 30, 1999
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)
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<S> <C>
Delaware 84-1166231
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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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.
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<S> <C>
Common Stock $.001 par Value 11,862,028
- ------------------------------------------------- --------------------------------------------
(Class) (Outstanding at August 1, 1999)
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BOLDER TECHNOLOGIES CORPORATION
TABLE OF CONTENTS
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PAGE NUMBER
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COVER PAGE 1
TABLE OF CONTENTS 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Balance Sheets as of June 30, 1999 and December 31, 1998 3
Condensed Statements of Operations for the three and six-month
periods ended June 30, 1999 and 1998; and the period from inception
(March 22, 1991) through June 30, 1999 4
Condensed Statements of Cash Flows for the three and six-month
periods ended June 30, 1999 and 1998; and the period from
inception (March 22, 1991) through June 30, 1999 5
Notes to Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 13
ITEM 2. CHANGES IN SECURITIES. 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 13
ITEM 5. OTHER INFORMATION. 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 15
SIGNATURES 16
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2
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BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
(UNAUDITED)
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JUNE 30, DECEMBER 31,
1999 1998
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ASSETS
Current assets:
Cash and cash equivalents $ 2,608,474 $ 962,453
Available-for-sale securities 7,023,941 10,157,281
Other current assets 544,998 285,078
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TOTAL CURRENT ASSETS 10,177,413 11,404,812
Property and equipment, at cost, net 21,698,245 20,815,000
Other assets, net 480,799 371,935
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TOTAL ASSETS $ 32,356,457 $ 32,591,747
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities $ 2,171,604 $ 1,787,364
Deferred revenue 35,000 35,000
Notes and capital leases, current portion 1,774,419 1,521,842
------------ ------------
TOTAL CURRENT LIABILITIES 3,981,023 3,344,206
Notes and capital leases, less current portion 7,901,491 8,859,203
Commitments and contingencies
Stockholders' equity:
Convertible, redeemable preferred stock, $0.001 par value, 336,200
authorized and outstanding at June 30, 1999 and December 31, 1998,
with a liquidation and redemption value of $16,810,000 16,106,401 15,998,863
Common Stock, $.001 par value, 25,000,000 shares authorized; 11,123,340
and 9,713,376 shares issued at June 30, 1999 and December 31, 1998,
respectively 11,123 9,713
Treasury stock, $.001 par common stock, 33,333
shares at June 30, 1999 and December 31, 1998 (50,000) (50,000)
Additional paid-in capital 44,193,152 36,773,529
Deficit accumulated during the development stage (39,786,733) (32,343,767)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 20,473,943 20,388,338
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,356,457 $ 32,591,747
============ ============
</TABLE>
See accompanying notes.
3
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BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD
JUNE 30, JUNE, 30 FROM INCEPTION
---------------------------- ---------------------------- (MARCH 22,1991)
1999 1998 1999 1998 TO JUNE 30, 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Product sales $ 53,562 $ 4,240 $ 70,682 $ 32,081 $ 388,627
Research and development services 35,001 527,641 99,325 1,080,945 5,416,631
------------ ------------ ------------ ------------ ------------
88,563 531,881 170,007 1,113,026 5,805,258
COST OF REVENUES 132,524 75,734 195,139 203,526 1,477,751
------------ ------------ ------------ ------------ ------------
(43,961) 456,147 (25,132) 909,500 4,327,507
============ ============ ============ ============ ============
OPERATING EXPENSES
Research and development 2,276,551 1,751,739 4,318,573 3,612,392 28,464,725
General and administrative 941,235 853,222 1,695,658 1,681,700 13,438,049
Selling and marketing 555,571 89,596 933,277 208,021 2,333,297
------------ ------------ ------------ ------------ ------------
3,773,357 2,694,556 6,947,508 5,502,112 44,236,071
============ ============ ============ ============ ============
LOSS FROM OPERATIONS (3,817,318) (2,238,409) (6,972,640) (4,592,612) (39,908,564)
OTHER INCOME (EXPENSE)
Interest income 94,249 262,876 209,428 506,785 2,968,301
Interest expense (335,589) (379,486) (679,754) (613,522) (2,846,470)
------------ ------------ ------------ ------------ ------------
NET LOSS (4,058,658) (2,355,019) (7,442,966) (4,699,349) $(39,786,733)
============ ============ ============ ============ ============
Dividends on preferred stock (378,225) (377,189) (756,450) (755,414)
Accretion of preferred stock offering costs (53,769) (53,769) (107,538) (106,679)
------------ ------------ ------------ ------------
NET LOSS ALLOCABLE TO COMMON STOCKHOLDERS $ (4,490,652) $ (2,785,977) $ (8,306,954) $ (5,561,442)
============ ============ ============ ============
Basic and diluted net loss per share $ (0.43) $ (0.29) $ (0.83) $ (0.58)
============ ============ ============ ============
Shares used in computing basic and diluted
net loss per share 10,340,043 9,555,494 10,016,418 9,522,116
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
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BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
SIX MONTHS ENDED FOR THE PERIOD
JUNE 30, FROM INCEPTION
---------------------------- (MARCH 22, 1991)
1999 1998 TO JUNE 30, 1999
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OPERATING ACTIVITIES
Net Loss $ (7,442,966) $ (4,699,349) $(39,786,733)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 639,948 512,914 3,385,509
Change in deferred revenue -- (699,269) 35,000
Other -- 104,956
Changes in operating assets and liabilities 104,254 (1,012,420) 1,586,656
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (6,698,764) (5,898,124) (34,674,612)
------------ ------------ ------------
INVESTING ACTIVITIES
Purchase of short term investments (2,922,116) (4,083,750) (68,759,947)
Sale of short term investments 6,055,456 5,929,518 61,736,006
Purchases of property and equipment (1,501,744) (797,603) (24,983,626)
Increase (decrease) in construction-in-process payable -- (373,129) --
Patent costs (110,248) (54,220) (505,308)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,521,348 620,816 (32,512,875)
------------ ------------ ------------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock 25,869,062
Proceeds from issuance of common stock 7,803,811 56,864 33,523,598
Proceeds from issuance of notes payable -- 5,043,064 16,500,347
Purchase of treasury stock from founder (50,000)
Payments on notes payable and capital leases payable (705,133) (574,286) (3,344,508)
Payments on issuance of dividends
Stock issuance costs (275,241) (68,146) (2,705,415)
Issuance of warrants to purchase common or preferred stock -- -- 2,963
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,823,437 4,457,496 69,795,961
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,646,021 (819,812) 2,608,474
Cash and cash equivalents, beginning of period 962,453 5,414,330 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,608,474 $ 4,594,518 $ 2,608,474
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 688,240 $ 694,273 $ 2,635,498
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Accretion of preferred stock offering costs $ 107,538 $ 106,679 $ 371,755
============ ============ ============
Preferred stock dividend accrual $ 756,450 $ 755,414 $ 2,621,670
============ ============ ============
Preferred stock dividends paid in common stock $ 756,450 $ 1,092,132 $ 2,621,670
============ ============ ============
Conversion of notes payable and related accrued interest to
preferred stock $ -- $ -- $ 3,585,820
============ ============ ============
</TABLE>
See accompanying notes
5
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BOLDER TECHNOLOGIES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999 (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 six-month periods ended June 30, 1999
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, 1998 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 six-month periods ended June 30, 1999 are not necessarily
indicative of operating results to be expected for the full year.
Prior to 1999, the Company received certain payments in connection with its
strategic agreement with Johnson Controls, Inc. ("JCI"). These payments were
consideration to the Company for certain services provided to JCI to transfer
appropriate technical information to JCI as specified in the agreement. The
Company recorded these payments as deferred revenue, and recognized the revenue
as services were performed, using the percentage of completion method. These
services were completed in 1998. These revenues totaled approximately 80% and
78% of total research and development services revenues for the three- and
six-months ended June 30, 1998, respectively.
At June 30, 1999, securities that have been excluded from basic and diluted net
loss per share because they would be antidilutive include 1,750,306 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, which are convertible into 1,120,666 shares of
common stock.
Effective January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting comprehensive income
and its components in financial statements. Comprehensive income, as defined,
includes all changes in equity (net assets) during a period from non-owner
sources. From Inception, the Company has not had any transactions that are
required to be reported in comprehensive income as compared to its net loss.
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
This statement establishes standards for the way companies report information
about operating segments in annual financial statements. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. In accordance with the provisions of SFAS No. 131, the
Company has determined that it does not have separately reportable operating
segments.
In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") No. 98-1, "Software for Internal Use,"
which provides guidance on accounting for the cost of computer software
developed or obtained for internal use. SOP No. 98-1 is effective for fiscal
years beginning after December 15, 1998. The adoption of SOP No. 98-1 did not
have a material impact on the Company's financial statements.
6
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In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Company is required to adopt SFAS in
fiscal 2001. SFAS No. 133 established methods of accounting for derivative
financial instruments and hedging activities related to those instruments as
well as other hedging activities. To date, the Company has not entered into any
derivative financial instruments or hedging activities.
7
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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,
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 Form 10-K filed March 30, 1999, and the
registration statement on Form S-3 filed on July 12, 1999. These risks (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 127,000 square foot leased manufacturing facility and corporate
headquarters in Golden, Colorado. This facility has been designed to
accommodate multiple production lines and two research and development lines,
as well as all of the Company's other operations. In the third quarter of 1997,
the Company received from its vendor the first high-volume manufacturing line,
designed to produce four million sub-C two-volt battery cells per year. The
Company then focused most of its resources for approximately one year on
qualifying the line for commercial production. The Company completed a process
of debugging, testing and qualifying the production line, as well as making
appropriate modifications to the line, in the fourth quarter of 1998. Upon
qualifying the production line for commercial production, the Company
introduced in the fourth quarter of 1998 its sub-C cell, which can be a modular
building block for various battery packs. The Company is currently producing a
few thousand sub-C cells per month for sampling, to fulfill small orders and
for experiments to improve the production process and product performance.
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.
Upon qualifying the production line and introducing its sub-C cell, the
Company's focus has shifted to the design and introduction of a series of
end-use customer products based on TMF technology, as well as continued OEM
customer development. On August 5, 1999, the Company introduced the BOLDER
SECURESTART(TM), an instant engine starter, which is based on the Company's TMF
technology and, specifically, the sub-C cell. In June 1999, BOLDER announced an
agreement with Snap-on Tools Company, a subsidiary of Snap-on Incorporated, to
supply BOLDER's TMF battery technology to a line of Snap-on products for
professional auto technicians. Under the agreement, Snap-on Tools will market
and distribute TMF-powered products manufactured by BOLDER to Snap-on's
specifications.
With respect to OEM customers, the Company continues 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.
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The Company expects modest product shipments to OEM customers until significant
numbers of such customers have completed this process.
The Company expects to generate revenues primarily from the sale of its
TMF-based products. Product shipments and resulting revenues are expected to
remain at nominal levels until the beginning of shipments of SECURESTART in the
fourth quarter. At this time, the Company expects the majority of its near-term
revenues to be generated from sales of the BOLDER-based SECURESTART product.
In June 1995, the Company and 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 relationship, which replaced
the Joint Venture effective as of July 1996. Under the terms of the new
relationship, which was finalized in July 1997, each party is separately
implementing 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. The
Company completed all of its obligations to provide technology transfer
services to JCI in 1998. 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
Revenues from product sales increased to $53,562 and $70,682 for the three- and
six-months ended June 30, 1999, respectively, from $4,240 and $32,081 for the
same periods in 1998. Product sales are relatively small and are expected to
remain at such levels until shipments of SECURESTART, the instant engine
starter product, begin in the fourth quarter.
Research and development services ("R&D") revenues declined to $35,001 and
$99,325 for the three- and six-months ended June 30, 1999, respectively, from
$527,641 and $1,080,945 for the same periods in 1998. The three- and six-months
ended June 30, 1998 included $350,000 and $699,000 of R&D revenues,
respectively, recognized by BOLDER for services provided in connection with its
technology transfer arrangement with JCI, which was completed at the end of
1998. R&D revenues from a customer-funded product development program decreased
to $29,000 for the three- and six-month periods ended June 30, 1999,
respectively, from $104,000 and $234,000 for the same periods in the prior
year. This program was completed in the first quarter 1999. The Company
considers R&D revenues as insignificant to the future of the business.
Cost of revenues increased to $132,524 from $75,734 for the three-month periods
ended June 30, 1999 and 1998, respectively. The increase in 1999 was due to
increased product shipment volumes. Cost of revenues decreased to $195,139 from
$203,526 for the six months ended June 30, 1999 and 1998, respectively.
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The decrease in 1999 was primarily due to less activity in the 1999 first
quarter than in the 1998 first quarter on a government funded product
development program that was completed in the first quarter 1999. This decrease
in cost of revenues was almost offset by the higher costs resulting from
increased product shipment volumes in the second quarter 1999, as noted
previously.
Research and Development expenses increased to $2,276,551 and $4,318,573 for the
three- and six-month periods ended June 30, 1999, respectively, from $1,751,739
and $3,612,392 for the same periods in the prior year. The increase in 1999 was
primarily due to additional technical staff and associated expenses, and new
manufacturing facility and production line expenses related to the Company's
efforts to provide high volume production capability in support of the Company's
commercialization efforts.
General and administrative expenses increased to $941,235 and $1,695,658 for
the three- and six-month periods ended June 30, 1999, respectively, from
$853,222 and $1,681,700 for the same periods in the prior year. Most of the
increase in 1999 resulted from higher legal fees and insurance compared to the
prior year.
Selling and marketing expenses increased to $555,571 and $933,277 for the
three- and six-month periods ended June 30, 1999, respectively, as compared to
$89,596 and $208,021 for the same periods in the prior year. The increases in
1999 were primarily due to increased staffing levels and business development
activities associated with the commercial introduction of the Company's
products.
Interest income decreased to $94,249 from $262,876 for the three-month periods
ended June 30, 1999 and 1998, respectively. For the six-month periods ended
June 30,1999 and 1998, respectively, interest income decreased to $209,428 from
$506,785. The decreases were due to smaller average invested cash balances in
1999 than in 1998.
Interest expense decreased to $335,589 from $379,486 for the three-month
periods ended June 30, 1999 and 1998, respectively. The decrease in 1999 was
due to lower average debt balances in the 1999 period than in the prior year
period. For the six months ended June 30, 1999 and 1998, interest expense
increased to $679,754 from $613,522. The increase in 1999 was due to higher
average debt balances in the first quarter 1999 as compared to the prior year
quarter, which more than offset lower debt balances in the 1999 second quarter
as noted previously.
LIQUIDITY AND CAPITAL RESOURCES
From its inception through June 30, 1999, 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 $60.0 million from
sales of these securities. Included in this amount are net proceeds of $7.5
million received from a private offering of equity securities on May 18, 1999.
The Company has also received net proceeds of $12.3 million from a debt
agreement with Transamerica Business Credit Corporation ("TBCC"). At June 30,
1999, the Company's balances of cash, cash equivalents, and available-for-sale
securities totaled $9.6 million, compared to $11.1 million at December 31, 1998.
Subsequent to the end of the second quarter, the Company received proceeds of
approximately $5.3 million from a private offering of equity securities on July
12, 1999.
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 $654,900. Additional dividend payments, in the form of shares of
the Company's common stock, were made on June 30 and December 31, 1998, and on
June 30, 1999. This resulted in the issuance of 36,704, 80,902 and 82,333
shares, respectively. The total value of the dividend payment that covered the
period from March 13, 1998 through June 30, 1998, was $453,870. The value of
the dividend payments that covered the periods from July 1, 1998 through
December 31, 1998, and January 1, 1999 through June 30, 1999, was $756,450.
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In March 1998, the Company obtained loan proceeds of $5.2 million from its debt
agreement with 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 $9.6 million at
June 30, 1999.
The Company made progress payments of $11.4 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. As of June 30, 1999, the Company has no
additional obligations to the supplier of its production line. The Company
invested approximately $900,000 during the three months ended June 30, 1999 in
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 funding
requirements at least through the first quarter of 2000. 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.
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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 completed an inventory
of its critical control systems, computers, and application software.
Costs. The Company has planned to validate each of these internal systems by
the end of Third Quarter 1999. This plan (90% of total expected hours completed
to June 30, 1999) has been implemented through a combination of written vendor
confirmations and specific validation testing. The Company has tested 95% of
its equipment and software and found it to be compliant, has applied supplier
fixes, or replaced the equipment. The Company has implemented processes to
identify and evaluate the Y2K status of newly acquired equipment, and to
evaluate supplier and customer Y2K compliance. These programs will continue
through the end of 1999. The cost of the testing and validation phase is not
expected to exceed $50,000, 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 have been minimal and are
expected to remain so. The Company has replaced relatively low-cost personal
computers, and installed low or no-cost bug-fixes from manufacturers of
equipment and software. These costs, including hardware replacements
accelerated by the Year 2000 situation, and other contingency plan activities,
are not expected to exceed $40,000.
Risks. The remaining risks of Year 2000 issues are primarily external, due to
the difficulty of validating key third parties' readiness for Year 2000. The
Company has sought confirmation of such compliance and seeks relationships that
are compliant. 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.
12
<PAGE> 13
BOLDER TECHNOLOGIES CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
In May 1999, the Company issued 1,289,967 shares of common
stock in a private placement to a group of unaffiliated,
accredited investors at a price per share of $6.00, payable
in cash. The sale and issuance of these shares were exempt
from registration pursuant to Rule 506 of Regulation D
promulgated under the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Stockholders was held on June 3, 1999.
Proxies of the meeting were solicited by management; there
was no solicitation in opposition to management's nominees
for Class III Directors set forth in the Proxy Statement and
all such nominees were elected. The stockholders approved the
Company's 1996 Equity Incentive Plan, as amended, and the
Company's Employee Stock Purchase Plan, as amended. The
stockholders also approved management's proposal to ratify
the selection of Arthur Andersen LLP as independent
accountants of the Company for the fiscal year ending
December 31, 1999.
Each holder of record of Common Stock was entitled to one
vote per share, and each holder of record of Series A
Preferred Stock was entitled to 3.33 votes per share. All
voting tabulations below include the effect of both the
Common Stock and Series A Preferred Stock, based on the
relative voting rights as noted.
a) The following details the voting results
with respect to each nominee for office,
including the number of shares not voted at
all (Not present) and the proxies that
brokers did not vote in full (Broker
non-voted).
<TABLE>
<CAPTION>
Nominee Common Stock
------- ------------
<S> <C>
Donovan B. Hicks
For 8,507,846
Against 37,079
Withhold - 0 -
Not present 2,290,871
Broker non-voted - 0 -
----------
Total Eligible Shares 10,835,786
==========
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
Nominee Common Stock
------- ------------
<S> <C>
Roger F. Warren
For 8,507,846
Against 37,079
Withhold - 0 -
Not present 2,290,871
Broker non-voted - 0 -
----------
Total Eligible Shares 10,835,786
==========
</TABLE>
b) The following details the voting results with
respect to the proposal to approve the Company's
1996 Equity Incentive Plan, as amended, to increase
the aggregate number of shares of Common Stock
authorized for issuance thereunder by 700,000
shares.
<TABLE>
<S> <C>
For 5,458,058
Against 467,709
Abstain 12,968
Broker non-voted 2,606,190
Not present 2,290,871
----------
Total Eligible Shares 10,835,786
==========
</TABLE>
c) The following details the voting results with
respect to the proposal to approve the Company's
1996 Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common
Stock authorized for issuance thereunder by 40,000
shares.
<TABLE>
<S> <C>
For 5,844,745
Against 45,229
Abstain 17,718
Broker non-voted 2,637,233
Not present 2,290,871
----------
Total Eligible Shares 10,835,796
==========
</TABLE>
d) The following details the voting results with
respect to ratifying the selection of Arthur
Andersen LLP as independent accountants for the
fiscal year ending December 31, 1999.
<TABLE>
<S> <C>
For 8,524,584
Against 13,523
Abstain 6,818
Not present 2,290,871
Broker Non-voted - 0 -
----------
Total Eligible Shares 10,835,796
==========
</TABLE>
14
<PAGE> 15
ITEM 5. OTHER INFORMATION.
Notice of Deadlines for Stockholder Proposals for 2000 Proxy
Statement
The deadlines for submitting a stockholder proposal for
inclusion in the Company's proxy statement and form of proxy
for the Company's 2000 Annual Meeting of Stockholders
pursuant to Rule 14a-8, "Shareholder Proposals," of the
Securities and Exchange Commission's Regulation 14A is
December 31, 1999.
The date after which notice of a stockholder proposal or a
stockholder nomination for a director submitted outside the
procedures of Rule 14a-8 is considered untimely is April 5,
2000.
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 June 30, 1999.
15
<PAGE> 16
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: August 13, 1999 By: /s/ Daniel S. Lankford
----------------------- --------------------------------
Daniel S. Lankford
Chief Executive Officer, President
and Chairman of the Board
(Principal Executive Officer)
By: /s/ Joseph F. Fojtasek
---------------------------------
Joseph F. Fojtasek
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,608,474
<SECURITIES> 7,023,941
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 286,985
<CURRENT-ASSETS> 10,177,413
<PP&E> 24,629,705
<DEPRECIATION> (2,931,454)
<TOTAL-ASSETS> 32,356,457
<CURRENT-LIABILITIES> 3,981,023
<BONDS> 9,675,910
0
16,106,401
<COMMON> 11,123
<OTHER-SE> 4,356,419
<TOTAL-LIABILITY-AND-EQUITY> 32,356,457
<SALES> 53,562
<TOTAL-REVENUES> 88,563
<CGS> 132,524
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,773,357
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335,589
<INCOME-PRETAX> (4,058,658)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,058,658)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,058,658)
<EPS-BASIC> (0.43)
<EPS-DILUTED> (0.43)
</TABLE>
