<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 24, 2000
BOLDER TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-28060 84-1166231
(Commission File No.) (IRS Employer Identification No.)
4403 TABLE MOUNTAIN DRIVE
GOLDEN, COLORADO 80403
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (303) 215-7200
<PAGE> 2
ITEM 5. OTHER EVENTS.
Attached hereto are certain audited historical financial statements of
the Registrant for the period ended December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
The historical financial statements of the Registrant for the period
ended December 31, 1999 are submitted in a separate section beginning on Page
F-1 of this report.
FINANCIAL STATEMENTS OF BOLDER TECHNOLOGIES CORPORATION
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Public Accountants........................................................ F-1
Balance Sheets as of December 31, 1999 and 1998................................................. F-2
Statements of Operations for the three years ended December
31, 1999, 1998, and 1997...................................................................... F-4
Statements of Stockholders' Equity (Deficit) for the three years ended
December 31, 1999............................................................................. F-5
Statements of Cash Flows for the three years ended December 31,
1999, 1998 and 1997........................................................................... F-9
Notes to Financial Statements.................................................................. F-11
</TABLE>
(b) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ------------------------- -----------------------------------------------------
<S> <C> <C>
23.1 Consent of Arthur Andersen LLP, independent auditors.
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To BOLDER Technologies Corporation:
We have audited the accompanying balance sheets of BOLDER Technologies
Corporation (a Delaware corporation) as of December 31, 1999 and 1998, and the
related statements of operations, stockholders' equity and cash flows for each
year in the three-year period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BOLDER Technologies Corporation
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each year in the three-year period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
February 17, 2000.
F-1
<PAGE> 4
BOLDER TECHNOLOGIES CORPORATION
BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 17,651,373 $ 962,453
Available-for-sale securities 4,978,850 10,157,281
Trade accounts receivable, net 1,833,261 46,151
Inventory, net 1,656,539 129,887
Prepaid expenses 251,710 109,040
-------------- --------------
Total current assets 26,371,733 11,404,812
-------------- --------------
PROPERTY AND EQUIPMENT, at cost:
Furniture, fixtures and equipment 17,014,890 16,916,057
Leasehold improvements 5,335,354 5,303,058
Construction in progress 2,308,634 908,840
-------------- --------------
24,658,878 23,127,955
Less- Accumulated depreciation and amortization (3,496,275) (2,312,955)
-------------- --------------
Property and equipment, net 21,162,603 20,815,000
PATENTS, net of accumulated amortization of $109,768 and
$61,041 in 1999 and 1998, respectively 523,345 335,113
OTHER ASSETS 56,196 36,822
-------------- --------------
Total assets $ 48,113,877 $ 32,591,747
============== ==============
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
F-2
<PAGE> 5
BOLDER TECHNOLOGIES CORPORATION
BALANCE SHEETS
December 31, 1999 and 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,468,618 $ 384,256
Accrued compensation and other accrued liabilities (Note 8) 2,936,710 1,403,108
Deferred revenue (Note 5) 35,000 35,000
Current portion of notes payable (Note 6) 2,122,108 1,521,842
-------------- --------------
Total current liabilities 6,562,436 3,344,206
-------------- --------------
LONG-TERM LIABILITIES:
Notes payable (Note 6) 6,736,723 8,859,203
-------------- --------------
Total long-term liabilities 6,736,723 8,859,203
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible, redeemable preferred stock, $0.001 par value, 5,000,000
shares authorized; 325,000 and 336,200 issued and outstanding at
December 31, 1999 and 1998, with a liquidation and redemption
value of $16,250,000 and $16,810,000, respectively 15,653,939 15,998,863
Common stock, $0.001 par value, 25,000,000 shares authorized;
14,577,826 and 9,713,376 issued at December 31, 1999
and 1998, respectively 14,578 9,713
Treasury stock, $0.001 par common stock, 33,333 shares at
December 31, 1999 and 1998 (50,000) (50,000)
Deferred compensation (1,069,887) --
Additional paid-in capital 72,989,247 36,773,529
Accumulated deficit (52,723,159) (32,343,767)
-------------- --------------
Total stockholders' equity 34,814,718 20,388,338
-------------- --------------
Total liabilities and stockholders' equity $ 48,113,877 $ 32,591,747
============== ==============
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
F-3
<PAGE> 6
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES (Note 10):
Net product sales $ 1,859,992 $ 49,264 $ 84,716
Research and development services and royalties 169,324 2,410,605 2,466,377
-------------- -------------- --------------
Total revenues 2,029,316 2,459,869 2,551,093
-------------- -------------- --------------
COST OF REVENUES 5,566,697 332,919 707,606
-------------- -------------- --------------
(3,537,381) 2,126,950 1,843,487
-------------- -------------- --------------
OPERATING EXPENSES:
Research and development 6,553,973 7,677,787 7,092,534
General and administrative 5,268,822 3,286,783 3,348,061
Selling and marketing 2,845,277 665,573 357,716
Loss on asset disposals 1,408,814 -- --
-------------- -------------- --------------
Total operating expenses 16,076,886 11,630,143 10,798,311
-------------- -------------- --------------
LOSS FROM OPERATIONS (19,614,267) (9,503,193) (8,954,824)
OTHER INCOME (EXPENSE):
Interest income 542,192 905,735 839,025
Interest expense (1,307,317) (1,346,511) (633,625)
-------------- -------------- --------------
NET LOSS (20,379,392) (9,943,969) (8,749,424)
-------------- -------------- --------------
Dividend on preferred stock (1,487,700) (1,512,900) (352,320)
Accretion of preferred stock offering costs (215,076) (214,217) (50,000)
-------------- -------------- --------------
NET LOSS ALLOCABLE TO COMMON STOCKHOLDERS $ (22,082,168) $ (11,671,086) $ (9,151,744)
============== ============== ==============
Basic and diluted net loss per share (Note 2) $ (1.97) $ (1.22) $ (0.97)
============== ============== ==============
Shares used in computing basic and diluted
net loss per share (Note 2) 11,221,354 9,560,660 9,446,930
============== ============== ==============
</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
F-4
<PAGE> 7
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK OPTIONS AND WARRANTS
--------------------- -------------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1996 -- $ -- 9,447,622 $ 9,448 19,125 $ --
Issuance of common stock under the Employee
Stock Purchase Plan ($8.93 - $11.90 per share) -- -- 15,375 15 -- --
Issuance of common stock to employees for
options exercised ($0.09 - $6.00 per share) -- -- 35,443 35 -- --
Issuance of Series A Convertible, Redeemable
Preferred Stock as part of a Private Placement,
net of offering costs of $1,007,274 in October 336,200 15,802,726 -- -- -- --
Issuance of warrants to purchase 30,641 shares
of common stock exercisable at $14.50 per share
for five years, in connection with the issuance
of the Series A Convertible, Redeemable
Preferred Stock -- -- -- -- 30,641 --
Accretion of preferred stock offering costs -- 50,000 -- -- -- --
Accrual of Series A Preferred Stock dividend -- 352,320 -- -- -- --
Net loss -- -- -- -- -- --
------- ----------- --------- ------- ------ ------
BALANCES, December 31, 1997 336,200 $16,205,046 9,498,440 $ 9,498 49,766 $ --
======= =========== ========= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL TREASURY STOCK
PAID-IN DEFERRED ------------------- ACCUMULATED
CAPITAL COMPENSATION SHARES AMOUNT DEFICIT
------------ ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1996 $ 36,761,827 $ -- (33,333) $(50,000) $(13,650,374)
Issuance of common stock under the Employee
Stock Purchase Plan ($8.93 - $11.90 per share) 152,985 -- -- -- --
Issuance of common stock to employees for
options exercised ($0.09 - $6.00 per share) 9,577 -- -- -- --
Issuance of Series A Convertible, Redeemable
Preferred Stock as part of a Private Placement,
net of offering costs of $1,007,274 in October -- -- -- -- --
Issuance of warrants to purchase 30,641 shares
of common stock exercisable at $14.50 per share
for five years, in connection with the issuance of
the Series A Convertible, Redeemable Preferred
Stock
-- -- -- -- --
Accretion of preferred stock offering costs (50,000) -- -- -- --
Accrual of Series A Preferred Stock dividend (352,320) -- -- -- --
Net loss -- -- -- -- (8,749,424)
------------ ------ -------- -------- ------------
BALANCES, December 31, 1997 $ 36,522,069 $ -- (33,333) $(50,000) $(22,399,798)
============ ====== ======== ======== ============
</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
F-5
<PAGE> 8
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK OPTIONS AND WARRANTS
----------------------- ------------------ --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- --------- --------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1997 336,200 $ 16,205,046 9,498,440 $9,498 49,766 $ --
Issuance of common stock under the Employee
Stock Purchase Plan (at $8.18 per share) -- -- 13,661 14 -- --
Issuance of common stock to employees for
options exercised ($0.15 - $11.75 per share) -- -- 5,684 6 -- --
Offering costs incurred in connection with the
issuance of Series A Convertible, Redeemable
Preferred Stock -- (68,080) -- -- -- --
Accretion of preferred stock offering costs -- 214,217 -- -- -- --
Accrual of Series A Preferred Stock dividend -- 1,512,900 -- -- -- --
Issuance of common shares in payment of
dividend on Series A Convertible, Redeemable
Preferred Stock (includes $86 of cash payment
due to fractional shares) -- (1,865,220) 195,591 195 -- --
Net loss -- -- -- -- -- --
---------- ------------ --------- ------ ------ ------------
BALANCES, December 31, 1998 336,200 $ 15,998,863 9,713,376 $9,713 49,766 $ --
========== ============ ========= ====== ====== ============
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL TREASURY STOCK
PAID-IN DEFERRED ------------------- ACCUMULATED
CAPITAL COMPENSATION SHARES AMOUNT DEFICIT
----------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCES, December 31, 1997 $36,522,069 $ -- (33,333) $(50,000) $(22,399,798)
Issuance of common stock under the Employee
Stock Purchase Plan (at $8.18 per share) 111,734 -- -- -- --
Issuance of common stock to employees for
options exercised ($0.15 - $11.75 per share) 1,904 -- -- -- --
Offering costs incurred in connection with the
issuance of Series A Convertible, Redeemable
Preferred Stock -- -- -- -- --
Accretion of preferred stock offering costs (214,217) -- -- -- --
Accrual of Series A Preferred Stock dividend (1,512,900) -- -- -- --
Issuance of common shares in payment of
dividend on Series A Convertible, Redeemable
Preferred Stock (includes $86 of cash payment
due to fractional shares) 1,864,939 -- -- -- --
Net loss -- -- -- -- (9,943,969)
----------- ------------ ------- -------- -----------
BALANCES, December 31, 1998 $36,773,529 $ -- (33,333) $(50,000) $(32,343,767)
=========== ============ ======= ======== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
F-6
<PAGE> 9
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK OPTIONS AND WARRANTS
-------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- ----------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1998 336,200 $15,998,863 9,713,376 $ 9,713 49,766 $ --
Issuance of common stock under the Employee
Stock Purchase Plan (at $7.67 to $8.50 per share) -- -- 15,639 16 -- --
Issuance of common stock to employees for
options exercised ($0.09 - $1.50 per share) -- -- 64,052 64 -- --
Proceeds from private common stock offering, at
$6 per share -- -- 1,289,967 1,290 -- --
Proceeds from private common stock offering, at
$7 per share -- -- 763,215 763 -- --
Offering costs associated with private common
stock offering -- -- -- -- -- --
Stock issued to vendor in payment for services
rendered -- -- 12,500 13 -- --
Proceeds from secondary common stock offering,
at $9.00 per share less underwriter's discount of
$1,366,200 -- -- 2,530,000 2,530 -- --
Offering cost associated with secondary common
stock offering -- -- -- -- -- --
Issuance of warrants to consultant for services
rendered -- -- -- -- 195,000 550,000
Issuance of warrants to underwriter -- -- -- -- 66,000 593,340
Issuance of options to executive at less than fair
market value -- -- -- -- -- 1,167,150
Amortization of deferred compensation -- -- -- -- -- --
Issuance of shares upon exercise of warrants, net -- -- 10,676 11 (19,125) --
Conversion of Series A Preferred Stock to
common stock, including payment of accrued
dividend in common stock (11,200) (560,000) 39,245 39 -- --
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL TREASURY STOCK
PAID-IN DEFERRED ------------------- ACCUMULATED
CAPITAL COMPENSATION SHARES AMOUNT DEFICIT
------------ ------------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, December 31, 1998 $36,773,529 $ -- (33,333) $(50,000) $(32,343,767)
Issuance of common stock under the Employee
Stock Purchase Plan (at $7.67 to $8.50 per share) 125,827 -- -- -- --
Issuance of common stock to employees for
options exercised ($0.09 - $1.50 per share) 46,234 -- -- -- --
Proceeds from private common stock offering, at
$6 per share 7,738,512 -- -- -- --
Proceeds from private common stock offering, at
$7 per share 5,341,737 -- -- -- --
Offering costs associated with private common
stock offering (349,487) -- -- -- --
Stock issued to vendor in payment for services
rendered 120,691 -- -- -- --
Proceeds from secondary common stock offering,
at $9.00 per share less underwriter's discount of 21,401,270 -- -- -- --
$1,366,200
Offering cost associated with secondary common (271,557) -- -- -- --
stock offering
Issuance of warrants to consultant for services -- (550,000) -- -- --
rendered
(592,680) -- -- -- --
Issuance of warrants to underwriter
Issuance of options to executive at less than fair -- (1,167,150) -- -- --
market value
-- 647,263 -- -- --
Amortization of deferred compensation
(23) -- -- -- --
Issuance of shares upon exercise of warrants, net
Conversion of Series A Preferred Stock to
common stock, including payment of accrued
dividend in common stock 559,961 -- -- -- --
</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
F-7
<PAGE> 10
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK OPTIONS AND WARRANTS ADDITIONAL
--------------------- ------------------- -------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------- ---------- ------- ------- ------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accretion of preferred stock offering costs -- 215,076 -- -- -- -- (215,076)
Accrual of Series A Preferred Stock dividend -- 1,487,700 -- -- -- -- (1,487,700)
Issuance of common shares in payment of
dividends on Series A Convertible, Redeemable
Preferred Stock (includes $42 cash payment due
to fractional shares) -- (1,487,700) 139,156 139 -- -- 1,487,519
Net loss -- -- -- -- -- -- --
------- ------------ ---------- ------- ------- ---------- ------------
BALANCES, December 31, 1999 325,000 $ 15,653,939 14,577,826 $14,578 291,641 $2,310,490 $ 70,678,757
======= ============ ========== ======= ======= ========== ============
</TABLE>
<TABLE>
<CAPTION>
TREASURY STOCK
DEFERRED --------------------------- ACCUMULATED
COMPENSATION SHARES AMOUNT DEFICIT
-------------- ---------- -------- --------------
<S> <C> <C> <C> <C>
Accretion of preferred stock offering costs -- -- -- --
Accrual of Series A Preferred Stock dividend -- -- -- --
Issuance of common shares in payment of
dividends on Series A Convertible, Redeemable
Preferred Stock (includes $42 cash payment due
to fractional shares) -- -- -- --
Net loss -- -- -- (20,379,392)
----------- ------- -------- ------------
BALANCES, December 31, 1999 $(1,069,887) (33,333) $(50,000) $(52,723,159)
=========== ======= ======== ============
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
F-8
<PAGE> 11
BOLDER TECHNOLOGIES CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1999 1998 1997
---------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(20,379,392) $ (9,943,969) $ (8,749,424)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,505,451 1,109,850 670,672
Amortization of deferred compensation 647,263 -- --
Stock issuance in payment for services rendered 120,704 -- --
Loss on asset disposals 1,408,814 -- --
Provision for doubtful accounts 219,000 -- --
Provision for returns and warranty 75,175 -- --
Changes in
Trade accounts receivable (2,006,110) 32,302 13,263
Inventory (1,526,652) 32,941 (127,032)
Prepaid expenses and other assets (142,670) 12,967 (41,439)
Accounts payable 1,084,362 (677,641) 817,004
Accrued liabilities 1,458,427 449,317 399,643
Deferred revenue -- (1,786,924) 1,075,581
------------ ------------ ------------
Net cash used in operating activities (17,535,628) (10,771,157) (5,941,732)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale securities (6,932,154) (7,091,027) (12,894,062)
Sale of available-for-sale securities 12,110,585 11,914,193 13,015,995
Purchases of property and equipment (3,213,141) (1,624,354) (10,247,985)
Construction in progress payables -- (746,259) (1,297,035)
Patent costs and other long-term assets (256,333) (154,907) (72,851)
------------ ------------ ------------
Net cash provided by (used in) investing activities 1,708,957 2,297,646 (11,495,938)
------------ ------------ ------------
</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
F-9
<PAGE> 12
BOLDER TECHNOLOGIES CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock $ -- $ -- $ 15,921,400
Proceeds from issuance of common stock 34,658,243 113,658 162,621
Proceeds from issuance of notes payable -- 5,119,951 7,019,749
Payments on notes payable (1,522,214) (1,143,809) (1,101,383)
Stock issuance costs (621,044) (68,080) (118,684)
Other 606 (86) --
------------ ------------ ------------
Net cash provided by financing activities 32,515,591 4,021,634 21,883,703
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 16,688,920 (4,451,877) 4,446,033
CASH AND CASH EQUIVALENTS, beginning of period 962,453 5,414,330 968,297
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 17,651,373 $ 962,453 $ 5,414,330
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 1,326,438 $ 1,307,113 $ 552,875
============ ============ ============
</TABLE>
The accompanying notes to financial statements are
an integral part of these statements.
F-10
<PAGE> 13
BOLDER TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
BOLDER Technologies Corporation (the "Company") is an energy technology
company that is currently involved in the design, development and marketing of
advanced, high power, rechargeable lead acid-based batteries and battery-powered
products based on its patented Thin Metal Film ("TMF") technology. During the
fourth quarter 1999, the Company ceased being a development stage company. The
Company was incorporated in the state of Colorado on March 22, 1991
("Inception") as Bolder Battery, Inc., and reincorporated as a Delaware
corporation on November 19, 1993 and was subsequently renamed BOLDER
Technologies Corporation. In May 1996, the Company successfully completed an
Initial Public Offering ("IPO") of 2,200,000 shares of stock at $10.50 per
share. The Company is located in Golden, Colorado, and its customers have been
primarily United States companies and the United States government. Revenue
recognized in 1998 and 1997 relates primarily to a technology transfer agreement
with a strategic partner, Johnson Controls, Inc. ("Johnson Controls"), Small
Business Innovation Research research and development agreements, a
customer-funded research and development agreement, and sales of demonstration
and evaluation units of the Company's product. The Company's business plan does
not contemplate that research and development services will continue to a
significant degree after the Company commences sales of its product in
commercial quantities. Accordingly, such revenue from research and development
services are not considered as recurring or indicative of the Company's future
revenue, if any, from the sale of its battery products in commercial quantities.
During the fourth quarter of 1999, the Company began volume shipments of its
first commercial product, SECURESTART, a portable jump-starting unit.
The Company has incurred losses since its inception, and has an
accumulated deficit of $52,723,159 at December 31, 1999. The Company's
operations are subject to certain risks and uncertainties, some of which follow.
The Company has now demonstrated the ability to produce its Sub-C cell in large
volumes on a one-shift basis. The Company must be able to produce its product in
commercial quantities on a 24-hour per day basis, and commercial acceptance of
the Company's products will have to occur in the marketplace before the Company
can sustain successful operations. The Company expects to incur additional
losses in the future as it continues to improve its manufacturing process and
improve product performance, expand commercial sales and seeks to improve its
manufacturing, sales and marketing capability. There can be no assurance that
the Company will achieve significant revenues or profitability in the future.
Further, during the period required to achieve successful operations, the
Company may require additional capital which may not be available to it. If
capital is not available, or the terms of available capital are not acceptable
to the Company, the Company would have to delay planned expenditures and/or cut
back on its current level of operations, among other actions. The Company
believes that its available cash and cash equivalents, investments and interest
income will be sufficient to satisfy its funding needs at least through December
31, 2000.
Further, the recovery of the carrying amount of the Company's
long-lived assets, primarily assets for the high-volume production of batteries,
is dependent on generating revenue from sales of the Company's products in
commercial quantities.
F-11
<PAGE> 14
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions may affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
Available-for-Sale Securities
Debt and equity securities that the Company has both the positive
intent and ability to hold to maturity are classified as held-to-maturity and
are reported at amortized cost. Debt and equity securities that are bought and
held principally for the purpose of selling them in the near term are classified
as trading securities and reported at fair value, with the unrealized gains and
losses included in earnings. Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
or losses excluded from earnings and reported as a separate component of
stockholders' equity.
The Company's available-for-sale securities at December 31, 1999 and
1998, consist of United States Treasury bills and debt securities of United
States government agencies and are reported at fair value. The fair market value
of these securities approximates their amortized cost.
Inventory
Inventories are stated at the lower of cost (first-in, first-out basis)
or market. Inventories, net of provisions, consist of the following as of
December 31:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Raw materials ........... $ 946,180 68,661
Work in process ......... 435,747 35,938
Finished goods .......... 274,612 25,288
---------- ----------
$1,656,539 $ 129,887
========== ==========
</TABLE>
Property and Equipment
Property and equipment, excluding production line equipment, are stated
at cost and depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets, which are three to seven years.
Production line property and equipment are stated at cost and depreciated based
on units expected to be produced over the estimated lives of the assets, which
are five to ten years. Depreciation and amortization expense related to property
and equipment for the years ended December 31, 1999, 1998 and 1997 was
$1,456,724, $1,082,286, and $654,591, respectively. Leasehold improvements are
capitalized and amortized over the shorter of the lease term or their estimated
useful life. Maintenance and repairs that do not improve or extend the life of
assets and expenditures for research and development equipment for which there
is no future alternative use are expensed as incurred. Expenditures which
F-12
<PAGE> 15
improve or extend the life of assets are capitalized. During 1999, the Company
disposed of obsolete production equipment with a net book value of approximately
$1.4 million.
Patents
The Company capitalizes direct, external costs associated with patent
applications and filings. Costs associated with successful applications are
amortized over fourteen years beginning with the date of issue. Capitalized
costs are written off at such time as it becomes known that an application will
not be successful or when a particular patent is deemed to no longer be of
value.
Product Revenue
Revenue from sales of products are recognized when the product ships
and title passes to the customer. Revenue is net of allowances for estimated
returns.
Advertising Expense
Advertising costs are charged to expense as incurred and amounted to
$456,275, $20,189 and $16,470 for the years ended December 31,1999, 1998 and
1997, respectively.
Research and Development Revenue and Royalties
Revenues for research and development services performed under the
Company's technology transfer arrangement with Johnson Controls were recognized
using the percentage of completion method, based on the actual effort expended
for a particular period relative to the total expected effort to perform the
Company's obligations under this arrangement. Revenues recognized under this
agreement totaled $0, $1,748,174, and $1,748,169, for the years ended December
1999, 1998, and 1997, respectively. The Company completed all of its obligations
under the technology transfer agreement in October 1998 and accordingly
recognized all remaining revenue associated with this arrangement. Research and
development revenues and royalties in 1999 relate primarily to minimum royalties
received from Johnson Controls.
For other research and development arrangements, the Company generally
recognizes revenue upon the completion of established milestones or upon project
completion.
Basic and Diluted Net Loss Per Share
The Company presents basic and diluted earnings or loss per share in
accordance with SFAS No. 128, Earnings Per Share, which establishes standards
for computing and presenting basic and diluted earnings per share. Under this
statement, basic earnings or loss per share is computed by dividing the net
earnings or loss by the weighted average number of shares of common stock
outstanding. Diluted earnings or loss per share is determined by dividing the
net earnings or loss by the sum of 1) the weighted average number of shares of
common stock outstanding, 2) if not antidilutive, the number of shares of
convertible preferred stock as if converted upon issuance, and 3) if not
antidilutive, the effect of outstanding stock options and warrants determined
using the treasury stock method.
Accordingly, the Company has presented basic earnings per share for
each period presented. For all periods presented, the effects of the convertible
preferred stock, stock options and warrants were excluded from the calculation
of diluted loss per share since the result would have been antidilutive.
At December 31, 1999, securities that have been excluded from basic and
diluted net loss per share because they would be antidilutive, without regard to
the treasury stock method, are outstanding options to purchase 2,501,430 shares
of the Company's common stock, outstanding warrants to purchase 291,641 shares
of the Company's common stock and 325,000 shares of Convertible, Redeemable
Preferred Stock, which are convertible into 1,083,333 shares of common stock.
F-13
<PAGE> 16
At December 31, 1998, securities that have been excluded from basic and
diluted net loss per share because they would be antidilutive, without regard to
the treasury stock method, are outstanding options to purchase 1,528,814 shares
of the Company's common stock, outstanding warrants to purchase 49,766 shares of
the Company's common stock and 336,200 shares of Convertible, Redeemable
Preferred Stock, which are convertible into 1,120,667 shares of common stock.
At December 31, 1997, securities that have been excluded from basic and
diluted net loss per share because they would be antidilutive, without regard to
the treasury stock method, are outstanding options to purchase 1,139,240 shares
of the Company's common stock, outstanding warrants to purchase 49,766 shares of
the Company's common stock and 336,200 shares of Convertible, Redeemable
Preferred Stock, which are convertible into 1,120,667 shares of common stock.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents, available for
sale securities and accounts receivable. The Company maintains the majority of
its cash, cash equivalents and short-term investment balances with financial
institutions that management believes are creditworthy in the form of demand
deposits and United States Treasury notes, Treasury bills, and debt securities
of agencies of the United States government. The Company has no significant
off-balance sheet concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging arrangements.
The Company performs ongoing credit evaluations of its customers'
financial condition and generally does not require collateral. Its accounts
receivable balances are primarily domestic. The Company had two principal
customers that accounted for approximately 90% and 99% of its total revenue for
the years ended December 31, 1999 and 1998, respectively. Accounts receivable
from these customers represented 85% and 88% of the accounts receivable balance
at December 31, 1999 and 1998, respectively.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents, short-term trade receivables and payables and notes payable. The
carrying values of cash and cash equivalents and short-term trade receivables
and payables approximate fair value. The fair value of notes payable is
estimated based on current rates available for similar debt with similar
maturities and collateral, and at December 31, 1999, approximates the carrying
value.
Impairment of Long-lived Assets
The Company continually evaluates whether events and circumstances have
occurred which may indicate that its long-lived assets may be impaired. The
Company evaluates impairment based upon estimated undiscounted cash flows over
the remaining life of the long-lived assets. Management believes the carrying
value of all long-lived assets at December 31, 1999 and 1998 are recoverable
through normal operations.
Stock-based Compensation
The Company accounts for stock-based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
Number 25, "Accounting for Stock Issued to Employees" and related
interpretations and complies with the disclosure provisions of Statement of
Financial Accounting Standards ("SFAS") Number 123, "Accounting for Stock-Based
Compensation." Under APB 25, compensation expense is based on the difference, if
any, on the date of the grant, between the fair value of the Company's stock and
the exercise price of the option. The Company accounts for equity instruments
issued to nonemployees in accordance with the provisions of SFAS No. 123 and
related interpretations.
F-14
<PAGE> 17
Income Taxes
The current provision for income taxes represents actual or estimated
amounts payable or refundable on tax returns filed or to be filed each year.
Deferred tax assets and liabilities are recorded for the estimated future tax
effects of temporary differences between the tax basis of assets and liabilities
and amounts reported in the accompanying balance sheets. Deferred tax assets are
also recognized for net operating loss and tax credit carryovers. The overall
change in deferred tax assets and liabilities for the period measures the
deferred tax expense for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustments to tax expense
in the period of enactment. The measurement of deferred tax assets may be
reduced by a valuation allowance based on judgmental assessment of available
evidence if deemed more likely than not that some or all of the deferred tax
assets will not be realized.
Comprehensive Income
Effective January 1, 1998, the Company adopted the provisions of 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 material transactions that are required to be reported in comprehensive
income as compared to its net loss.
Segment Information
In June 1997, the Financial Accounting Standards Board 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.
Recent Accounting Pronouncements
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 financial
statements 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.
The AICPA has issued SOP No. 98-5, "Reporting on the Costs of Start-up
Activities." SOP No. 98-5 requires that all non-governmental entities expense
the costs of start-up activities, including organizational costs, as these costs
are incurred, and is effective for fiscal years beginning after December 15,
1998. The adoption of SOP No. 98-5 did not have a material impact on the
Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Company is required to adopt SFAS 133
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.
In December 1999, the SEC issued SAB No. 101, "Revenue Recognition"
("SAB 101"). SAB 101 clarifies the SEC Staff's views in applying generally
accepted accounting principles to selected revenue recognition issues. The
guidance in SAB 101 must be implemented by the Company during its first quarter
of fiscal 2000. The Company is currently evaluating the impact, if any, of SAB
101 on its financial reporting.
F-15
<PAGE> 18
Reclassifications
Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
(3) AVAILABLE-FOR-SALE SECURITIES
The following is a summary of available-for-sale securities as of
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
U.S. government agency debt securities ...... $ 4,978,850 $ 9,138,509
U.S. Treasury notes ......................... -- 1,018,772
----------- -----------
$ 4,978,850 $10,157,281
=========== ===========
</TABLE>
Unrealized gains and losses on available-for-sale securities were
immaterial as of December 31, 1999 and 1998 and for each of the three years
ended December 31, 1999.
The amortized cost of debt securities at December 31, 1999, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities.
<TABLE>
<S> <C>
Less than 1 year.................... $ 4,978,850
===========
</TABLE>
(4) STOCKHOLDERS' EQUITY
Preferred Stock
In October 1997, the Company completed a private placement sale of
336,200 shares of Series A Convertible, Redeemable Preferred Stock, $0.001 par
value per share ("1997 Series A"), for $50 per share. The net proceeds from the
offering were approximately $15.8 million. The placement agents for the 1997
Series A received warrants to purchase an aggregate of 30,641 shares of the
Company's common stock at an exercise price of $14.50 per share, in addition to
customary commissions. Cash offering costs related to this private placement
totaled $1,075,354.
Dividends on the 1997 Series A are cumulative and payable semi-annually
on June 30 and December 31, beginning October 8, 1997, at an annual rate equal
to $4 per share if paid in cash and $4.50 per share if paid in shares of the
Company's common stock. The shares of 1997 Series A are convertible into common
stock at the option of the holder at a conversion price equal to $15 per share
subject to adjustment in certain circumstances. The 1997 Series A, if not
earlier redeemed, must be redeemed on October 8, 2002 at the redemption price.
The redemption price, which is equal to $50 per share plus accrued and
unpaid dividends, may be paid in shares of the Company's common stock or cash or
in a combination of common stock and cash, at the Company's option. It is the
Company's intent, however, to redeem the 1997 Series A for shares of the
Company's common stock. Accordingly, the 1997 Series A is included as a
component of stockholders' equity.
F-16
<PAGE> 19
Dividends paid on the 1997 Series A have been paid in shares of the
Company's common stock (with cash payments for fractional shares) as follows:
<TABLE>
<CAPTION>
Dividend Payment Date Cash Amount Paid Common Shares Issued
--------------------- ---------------- --------------------
<S> <C> <C> <C>
March 1998 $ 26 77,985
June 1998 $ 43 36,704
December 1998 $ 17 80,902
June 1999 $ 26 82,444
December 1999 $ 16 56,712
</TABLE>
The carrying amount of the 1997 Series A is increased for accrued and
unpaid dividends plus periodic accretion of offering costs, using the effective
interest method, such that the carrying amount will equal the redemption amount
on October 8, 2002. The carrying amount includes accreted offering costs of
$479,293 and $264,217 at December 31, 1999 and 1998, respectively.
1996 Equity Incentive Plan
In March 1996, the Company adopted the 1996 Equity Incentive Plan, as
amended (the "Equity Incentive Plan"). The Equity Incentive Plan is a successor
to, and restatement of, the Company's 1992 Incentive Stock Option Plan and its
1992 Non-Qualified Stock Option Plan (the "1992 Plans"). The Equity Incentive
Plan provides for the following types of stock-based awards: incentive stock
options for employees (including officers and employee directors); nonstatutory
stock options for employees (including officers and non-employee directors),
directors and consultants; and restricted stock purchase awards, stock bonuses
and stock appreciation rights to employees (including officers and employee
directors) and consultants. As of December 31, 1999, no grants of stock bonuses,
restricted stock purchase awards or stock appreciation rights have been made.
The Company has reserved 2,308,973 shares of its Common Stock for
future issuance under the Equity Incentive Plan at December 31, 1999. At
December 31, 1999, options for 400,629 shares of common stock are available for
grant under the terms of the Equity Incentive Plan.
Employee Stock Purchase Plan
In March 1996, the Company adopted the Employee Stock Purchase Plan, as
amended, (the "Purchase Plan"), which covers an aggregate of 80,000 shares of
Common Stock. The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code.
Under the Purchase Plan, the Board of Directors may authorize participation by
eligible employees, including officers, in periodic offerings following the
adoption of the Purchase Plan. The offering period for any offering will be no
more than 27 months.
Employees are eligible to participate if they are employed by the
Company or an affiliate of the Company designated by the Board of Directors for
at least 20 hours of service per week and are employed by the Company or a
subsidiary of the Company designated by the Board for at least five months of
service per calendar year. Employees who participate in an offering can have up
to 10% of their earnings withheld pursuant to the Purchase Plan. The amount
withheld will then be used to purchase shares of Common Stock on specified dates
determined by the Board of Directors. The price of Common Stock purchased under
the Purchase Plan will be equal to 85% of the lower of the fair market value of
the Common Stock on the commencement date of each offering period or the
relevant purchase date. Employees may end their participation in the offering at
any time during the offering period, and participation ends automatically on
termination of employment with the Company. At December 31, 1999, 44,675 shares
of common stock had been issued under the Purchase Plan. Subsequent to December
31, 1999, 12,754 shares were issued related to employee participation in 1999.
At December 31, 1999, 35,325 shares of common stock were available for future
offerings, which amount was reduced to 22,571 with the issuance subsequent to
December 31, 1999.
F-17
<PAGE> 20
Rights Agreement
In January 1998, the Board of Directors of the Company declared a
dividend distribution of one preferred share purchase right (a "Right") for each
outstanding share of common stock. Upon certain events, including events which
could result in a change in control of the Company, each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series B Junior Participating Preferred Stock at a price of $100, subject to
adjustment.
Statement of Financial Accounting Standards No. 123
SFAS 123 defines a fair value based method of accounting for employee
stock options or similar equity instruments. However, SFAS 123 allows the
continued measurement of compensation cost for such plans using the intrinsic
value based method prescribed by APB 25, provided that pro forma disclosures are
made of net income or loss and net income or loss per share, assuming the fair
value based method of SFAS 123 had been applied. The Company has elected to
account for its stock-based compensation plans for employees and directors under
APB 25. During 1999, the Company recognized $97,263 in compensation expense for
options granted at less than market value. During 1998 and 1997, all options
were granted at fair value, and accordingly, the Company recorded no
compensation expense during 1998 and 1997 under the provisions of APB 25. For
purposes of the pro forma disclosures presented below, the Company has computed
the fair values of all options granted during 1999, 1998 and 1997, using the
Black-Scholes pricing model and the following weighted average assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- ---------
<S> <C> <C> <C>
Risk-free interest rate............ 5.7% 5.3% 6.1%
Expected dividend yield............ 0.0% 0.0% 0.0%
Expected lives outstanding......... 3.6 yrs. 6.1 yrs. 5.3 yrs.
Expected volatility................ 55.8% 26.0% 22.3%
</TABLE>
To estimate lives of options for this valuation, it was assumed options
will be exercised upon becoming fully vested. All options are initially assumed
to vest. Cumulative compensation costs recognized in pro forma net income or
loss with respect to options that are forfeited prior to vesting is reflected as
a reduction of pro forma compensation expense in the period of forfeiture. The
expected volatility was based on the Company's volatility since its IPO. Actual
volatility of the Company's common stock varies. Fair value computations are
highly sensitive to the volatility factor assumed; the greater the volatility,
the higher the computed fair value of options granted.
The total fair value of options granted was computed to be
approximately $5,283,000, $1,773,000, and $1,684,000 for the years ended
December 31, 1999, 1998 and 1997, respectively. These amounts are amortized
ratably over the vesting periods of the options or recognized at date of grant
if no vesting period is required. Pro forma stock-based compensation, net of the
effect of forfeitures, was $1,433,887, $904,376, and $619,497 for 1999, 1998 and
1997, respectively. Because the fair value method of accounting prescribed by
SFAS 123 has not been applied to options granted prior to January 1, 1996, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years.
F-18
<PAGE> 21
In addition to the options, there was approximately $53,000, $58,000,
and $38,500 of pro forma compensation related to the Purchase Plan for 1999,
1998 and 1997, respectively. The shares were valued assuming a 55.8%, 26.0%, and
22.3% volatility factor, and a 5.1%, 4.8%, and 5.2% risk free interest rate for
1999, 1998 and 1997, respectively.
If the Company had accounted for its stock-based compensation plans in
accordance with SFAS 123, the Company's net loss and pro forma net loss per
common share would have been reported as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss: As reported ................... $(20,379,392) $ (9,943,969) $ (8,749,424)
============ ============ ============
Pro forma ..................... $(21,866,089) $(10,906,558) $ (9,407,421)
============ ============ ============
Net loss allocable
to common As reported .................. $(22,082,168) $(11,671,086) $ (9,151,744)
shareholders ============ ============ ============
Pro forma .................... $(23,568,865) $(12,633,675) $ (9,809,741)
============ ============ ============
Basic and As reported (Note 2) ......... $ (1.97) $ (1.22) $ (0.97)
============ ============ ============
Diluted EPS Pro forma (Note 2) ........... $ (2.10) $ (1.32) $ (1.04)
============ ============ ============
</TABLE>
A summary of stock options for the years ended December 31, 1999, 1998
and 1997 is presented below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- -----------
<S> <C> <C>
BALANCES, as of December 31, 1996 ...... 887,750 $ 6.07
Granted .............................. 362,916 $ 14.22
Canceled ............................. (75,983) $ 8.19
Exercised ............................ (35,443) $ 0.27
---------
BALANCES, as of December 31, 1997 ...... 1,139,240 $ 8.71
---------
Granted .............................. 518,130 $ 9.22
Canceled ............................. (122,872) $ 13.48
Exercised ............................ (5,684) $ 0.34
---------
BALANCES, as of December 31, 1998 ...... 1,528,814 $ 8.53
---------
Granted .............................. 1,095,358 $ 8.48
Canceled ............................. (58,690) $ 11.95
Exercised ............................ (64,052) $ 0.72
---------
BALANCES, as of December 31, 1999 ...... 2,501,430 $ 8.63
=========
</TABLE>
The weighted average exercise prices and weighted average fair value of options
granted during the years ended December 31, 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
YEAR ENDED DECEMBER 31, NUMBER OF ESTIMATED FAIR AVERAGE
1999 OPTIONS VALUE EXERCISE PRICE
--------- ---------------- --------------
<S> <C> <C> <C>
Exercise price equal to
estimated fair value ......... 945,358 $ 4.31 $ 9.42
Exercise price less than
estimated fair value ......... 150,000 8.05 2.59
--------- --------- ---------
Total ........................ 1,095,358 $ 4.82 $ 8.48
========= ========= =========
</TABLE>
F-19
<PAGE> 22
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
YEAR ENDED DECEMBER 31, NUMBER OF ESTIMATED FAIR AVERAGE
1998: OPTIONS VALUE EXERCISE PRICE
--------- ---------------- --------------
<S> <C> <C> <C>
Exercise price equal to
estimated fair value ......... 518,130 $ 3.45 $ 9.22
Exercise price less than
estimated fair value ......... -- -- --
------- ------- -------
Total ........................ 518,130 $ 3.45 $ 9.22
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
YEAR ENDED DECEMBER 31, NUMBER OF ESTIMATED FAIR AVERAGE
1997: OPTIONS VALUE EXERCISE PRICE
--------- ---------------- --------------
<S> <C> <C> <C>
Exercise price equal to
estimated fair value ......... 362,916 $ 4.77 $ 14.22
Exercise price less than
estimated fair value ......... -- -- --
------- ------- -------
Total ........................ 362,916 $ 4.77 $ 14.22
======= ======= =======
</TABLE>
The following table summarizes information about the options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OUTSTANDING AT EXCERCISABLE AT
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------------------------------------ -----------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE NUMBER AVERAGE
RANGE OF EXERCISE PRICES NUMBER CONTRACTUAL EXERCISE EXERCISE
LIFE PRICE PRICE
- ------------------------- --------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
$0.15 .................... 45,887 4.2 0.15 45,850 0.15
$0.38 .................... 149,331 4.5 0.38 149,208 0.38
$0.75 .................... 10,241 5.1 0.75 10,062 0.75
$1.50 .................... 59,392 5.5 1.50 54,874 1.50
$2.59 .................... 150,000 9.8 2.59 12,500 2.59
$6.00 .................... 155,362 6.1 6.00 106,938 6.00
$8.00 - $9.31 ............ 584,819 8.6 8.84 119,720 8.47
$9.50 - $10.50 ........... 700,336 9.4 10.24 229,061 10.31
$11.75 - $15.50 .......... 646,062 8.5 13.32 273,483 14.37
--------- ---------
TOTAL ............. 2,501,430 8.1 8.63 1,001,696 7.99
========= =========
</TABLE>
Stock Warrants
The Company issued warrants to a consultant in exchange for services to
purchase 195,000 shares of common stock at an exercise price of $8.00. The total
fair value of the warrants was $550,000, which was recorded as consulting
expense in 1999.
In connection with the common stock offering in November 1999, the Company
issued warrants to the underwriter to purchase 66,000 shares of common stock.
The fair value of the warrants was $593,340, which offsets the proceeds from the
common stock offering.
F-20
<PAGE> 23
(5) JOINT VENTURE AND LICENSE AGREEMENTS
In June 1995, the Company and Johnson Controls formed a joint venture,
Johnson Controls/Bolder LLC (the "Joint Venture"), to develop high volume
manufacturing technology for TMF batteries, to commercialize the TMF technology
and to promote the TMF technology in the hybrid electric vehicle market. In July
1996, having substantially completed its primary objective of developing the
high volume manufacturing technology, the Company and Johnson Controls agreed to
discontinue the Joint Venture and separately implement TMF battery manufacturing
facilities to best meet the unique requirements of the markets addressed by
each. This agreement to discontinue the Joint Venture was formalized on January
22, 1997, but made effective as of July 31, 1996. From inception until it was
terminated, the Joint Venture was primarily engaged in the research and
development of the manufacturing process for TMF batteries and did not generate
any significant revenues. Assets and liabilities of the Joint Venture at the
date of termination were considered to be the property of the Company, and the
net assets attributable to Johnson Controls' ownership interest were considered
to be advance payments on the technology transfer agreement entered into between
the Company and Johnson Controls.
In connection with the termination of the Joint Venture and the
restructuring of the relationship between the Company and Johnson Controls, the
Company agreed to engage in technology transfer services which will allow
Johnson Controls to deploy TMF technology in specified markets in commercial
quantities. In exchange for services to be performed under the technology
transfer agreement, the Company received Johnson Controls' interest in the net
assets of the Joint Venture in the amount of $746,343 during 1996, and a cash
payment of $2,750,000 from Johnson Controls during 1997. The Company recognized
$1,748,174 and $1,748,169 of revenue related to this agreement during the years
ended December 31, 1998 and 1997, respectively. In October 1998 the Company
completed the technology transfer and recognized the remaining revenue relating
to the agreement.
In addition, the Company granted Johnson Controls, Inc. a license to
make and sell TMF batteries in markets related to auto/truck primary starting,
hybrid electric vehicles, lawn and garden equipment starting, motorcycle
starting and uninterruptible power supplies. The Company will receive royalties
on all units sold by Johnson Controls into these markets which incorporate the
Company's TMF technology, subject to certain minimum royalties payable each
year. In 1999 and 1998, the Company received $140,000 and $295,000,
respectively, in minimum royalties. The Company and Johnson Controls also
entered into a cross supply agreement pursuant to which they will supply each
other with TMF battery products.
(6) NOTES PAYABLE
The Company has entered into a senior loan and security agreement (the
"Agreement") whereby the Company may borrow, in one or more borrowings, an
amount not to exceed $1,500,000 in the aggregate. At December 31, 1999,
cumulative borrowings under the Agreement totaled $862,915. No further
borrowings are allowed under the terms of this Agreement. The Company has
granted a first perfected security interest in certain of its equipment,
machinery and fixtures as collateral to these borrowings. At December 31, 1999,
$22,697 is outstanding under the Agreement.
The notes payable under the Agreement at December 31, 1999 and 1998,
bear interest at rates varying from 9.1% to 10.0% (weighted average interest
rate of 9.11% at December 31, 1999), due on varying dates through July 2000 and
require monthly payments of principal and interest totaling $3,341.
In connection with the Agreement, the Company issued warrants to the
lender. Under the terms of the warrants, the lender could acquire up to 10,500
shares and 8,625 shares of the Company's Common Stock for $3.00 and $6.00 per
share, respectively. During 1999, the lender exercised these warrants, resulting
in the issuance of 10,676 shares, net.
F-21
<PAGE> 24
In March 1997, the Company entered into a senior loan and security
agreement ("the Loan Agreement"), whereby the Company may borrow, in one or more
borrowings, an amount not to exceed $13 million in the aggregate. At December
31, 1999, cumulative borrowings under the Loan Agreement totaled $12.26 million.
The Company gave the lender a first perfected security interest in certain of
its tenant improvements in its Golden, Colorado facility and in its commercial
production line as collateral. At December 31, 1999, $8,836,134 is outstanding
under the Loan Agreement.
The notes payable under the Loan Agreement at December 31, 1999 and
1998 bear interest at rates varying from 12.8% to 17.2% (weighted average
interest rate of 13.5% at December 31, 1999), are due on varying dates through
February 2004 and require monthly payments of principal and interest totaling
$239,085.
The aggregate maturities of the notes payable are as follows:
<TABLE>
<S> <C>
2000 .................... $2,122,108
2001 .................... 2,247,600
2002 .................... 1,835,261
2003 .................... 1,899,337
2004 .................... 754,525
----------
$8,858,831
==========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
The Company leases its office space and production facility under an
eleven-year lease with two five-year renewal options. The Company also leases
certain office equipment under lease agreements which terminate in 2002. Future
minimum commitments under these leases are as follows:
<TABLE>
<S> <C>
2000 .................... $ 646,150
2001 .................... 622,081
2002 .................... 552,417
2003 .................... 548,262
2004 .................... 540,876
Thereafter .............. 1,778,122
----------
$4,687,908
==========
</TABLE>
Monthly rental payments for the Company's office and manufacturing
space are approximately $45,000. Rent expense for the years ended December 31,
1999, 1998 and 1997 was $533,490, $461,119, and $482,584, respectively.
The Company has entered into employment agreements with certain
executives that provide for specified severance payments should the Company
terminate the executive's employment with the Company, other than for cause. The
amount to be paid is subject to reduction in certain circumstances.
The Company has a 401(k) plan under which eligible employees may defer
up to 20% of their compensation. The Company may make matching contributions and
discretionary contributions if approved by the Board of Directors. For 1999,
1998 and 1997, no employer matching or discretionary contributions were made to
the Plan.
The Company is subject to certain environmental and other regulations
primarily administered by the United States Environmental Protection Agency and
various state agencies. Management of the Company believes it has complied with
all material aspects associated with these regulations.
F-22
<PAGE> 25
From time to time the Company is subject to legal proceedings arising
out of operations. In September 1999, Century Mfg. Co. ("Century"), a subsidiary
of Pentair, Inc., filed a complaint against the Company in the United States
District court for the District of Minnesota. Century, which manufactures a line
of portable power and jump-starting products, alleges among other things that
the Company has misappropriated Century's trade secrets and breached a
confidentiality agreement in producing and manufacturing SECURESTART.
Century later filed a separate lawsuit alleging that the SECURESTART
product infringes a patent issued to Century in November 1999. That suit was
consolidated with the first action, and now all of Century's claims are pending
in the first action. The Company has answered Century's complaint and asserted
counterclaims for Century's misappropriation for the Company's trade secrets and
confidential information. The Company believes that Century's claims are without
merit, intend to defend against them vigorously, and intend to press vigorously
our counterclaims.
In December 1999, Mueller Electric Company ("Mueller"), a manufacturer
of cable assemblies, filed an arbitration demand in Denver, Colorado against the
Company alleging breach of a supply contract and demanding payment of $443,000
plus interest. The Company has denied the claims, believes that Mueller failed
to perform under the contract and has filed a breach of contract counter claim
and is seeking damages of at least $40,000 plus interest and fees. An
arbitration hearing has been set for May 2000. It is probable that a settlement
cost will occur, the amount of which is uncertain.
(8) ACCRUED COMPENSATION AND OTHER ACCRUED LIABILITIES
The components of accrued compensation and other accrued liabilities
are as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Accrued vacation ....................... $ 390,493 $ 250,676
Employee stock purchase plan payable ... 95,011 60,523
Property taxes payable ................. 533,227 218,016
Accrued commissions and bonuses ........ 674,390 344,400
Compensation payable ................... 264,710 178,386
Accrued interest ....................... 101,028 120,149
Warranty and returns allowance ......... 75,175 --
Advertising costs ...................... 185,000 --
Professional services .................. 247,257 --
Other .................................. 370,419 230,958
---------- ----------
$2,936,710 $1,403,108
========== ==========
</TABLE>
(9) INCOME TAXES
The Company has had losses since Inception, and therefore has not been
subject to federal or state income taxes. As of December 31, 1999, the Company
had an accumulated net operating loss ("NOL") carryforward for income tax
purposes of approximately $51.9 million. The carryforward is subject to
examination by the tax authorities and expires at various dates through the year
2014. The Tax Reform Act of 1986 contains provisions that may limit the NOL
carryforwards available for use in any given year upon the occurrence of certain
events, including significant changes in ownership interest. A change of
ownership of a company greater than 50% within a three-year period results in an
annual limitation on the Company's ability to utilize its NOL carryforwards from
tax periods prior to the ownership change. The private placement sale of the
1997 Series A in October 1997 and the secondary common stock offering in
November 1999 resulted in such a change of ownership, limiting the annual
utilization of the NOL carryforward. As a result, the Company estimates that the
NOL carryforward limitation will be approximately $7.0 million in each future
year. The Company does not believe that this limitation will affect the eventual
utilization of its total NOL carryforwards.
Deferred tax assets and liabilities consist of the following:
F-23
<PAGE> 26
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ....... $ 19,839,554 $ 13,459,592
Warrants issued ........................ 210,375 --
Deferred revenue ....................... 13,388 13,388
Warranty reserve ....................... 28,751 --
Accounts receivable .................... 83,768 --
Inventory .............................. 545,552 67,264
Accrued compensation ................... 386,514 251,264
Other .................................. 95,623 21,994
------------ ------------
21,203,525 13,813,502
Less valuation allowance ............... (20,086,465) (12,297,020)
------------ ------------
1,117,060 1,516,482
Deferred tax liability:
Depreciation differences ............... (916,881) (1,388,301)
Capitalized patent costs ............... (200,179) (128,181)
------------ ------------
(1,117,060) (1,516,482)
------------ ------------
Net deferred taxes ..................... $ 0 $ 0
============ ============
</TABLE>
The Company's net deferred tax assets represent a previously
unrecognized tax benefit. Recognition of these benefits requires future taxable
income, the attainment of which is uncertain, and therefore, a valuation
allowance has been established for the entire tax benefit and no benefit for
income taxes has been recognized in the accompanying statements of operations.
The differences in income taxes provided and the amounts determined by
applying the federal statutory rate to income taxes result from the following:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Income tax benefit using federal statutory rate $(7,132,787) $(3,480,389) $(3,062,298)
State income tax benefit (662,330) (323,179) (284,356)
Meals and entertainment and other 5,672 2,883 12,371
Change in valuation allowance 7,789,445 3,800,685 3,334,284
----------- ----------- -----------
$ 0 $ 0 $ 0
=========== =========== ===========
</TABLE>
F-24
<PAGE> 27
(10) BUSINESS SEGMENT INFORMATION
In accordance with the provisions of SFAS No. 131, the Company has
determined that it does not have separately reportable operating segments.
Below is a listing of major customers, each of which comprised more
than 10% of revenues:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------- ---------------------- -----------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Sears, Roebuck & Company .............. $1,659,667 82% -- -- -- --
Johnson Controls ...................... $ 140,000 7% $2,055,810 84% $1,952,367 77%
United States Government SBIR
Contract .............................. $ 29,324 1% $ 367,436 15% $ 280,786 11%
Customer 2............................. -- -- -- -- $ 277,500 11%
</TABLE>
F-25
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOLDER TECHNOLOGIES CORPORATION
Date: March 24, 2000
By: /s/ Joseph F. Fojtasek
----------------------------
Joseph F. Fojtasek
Vice President and
Chief Financial
Officer (Principal
Financial and
Accounting Officer)
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
23.1 Consent of Arthur Andersen LLP, independent auditors.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-3 dated March 3, 2000 of our
reports dated February 17, 2000 included in BOLDER Technologies Corporation's
Form 8-K filed on March 24, 2000 and to all references to our Firm included in
such Form S-3.
Denver, Colorado
March 22, 2000
