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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-28060
BOLDER TECHNOLOGIES CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1166231
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4403 TABLE MOUNTAIN DRIVE
GOLDEN, CO 80403
(Address of principal executive offices) (Zip Code)
(303) 215-7200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS)
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 and 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant, based upon the closing price of the Common Stock reported on
the Nasdaq Stock Market (National Market) on February 29, 2000 was $124,074,000.
The number of shares of Common Stock outstanding as of February 29, 2000
was 14,565,168.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's definitive proxy statement to be
filed not later than 120 days after December 31, 1999, in connection with the
Registrant's 2000 Annual Meeting of Stockholders is incorporated by reference
into Part III of this Form 10-K.
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TABLE OF CONTENTS
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PART I
Item 1. Business........................................................................................3
Item 2. Properties.....................................................................................10
Item 3. Legal Proceedings..............................................................................11
Item 4. Submission of Matters to a Vote of Security Holders............................................11
PART II
Item 5. Market for Registrants' Common Equity and Related Stockholder Matters..........................12
Item 6. Selected Financial Data........................................................................13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..........15
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.....................................20
Item 8. Financial Statements and Supplementary Data....................................................20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........20
PART III
Item 10. Directors and Executive Officers of the Registrant.............................................21
Item 11. Executive Compensation.........................................................................21
Item 12. Security Ownership of Certain Beneficial Owners and Management.................................21
Item 13. Certain Relationships and Related Transactions.................................................22
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ...............................23
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PART I
ITEM 1. BUSINESS
This Annual Report contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. When used in this
document, the words "anticipate," "estimate," "project," "expect" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated, projected or expected. Key factors that may have a direct bearing on
our results include, but are not limited to, those discussed in the sections
entitled "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" as well as those discussed in the section
entitled "Risk Factors" in our Registration Statement on Form S-3 filed on
August 31, 1999 and the prospectus supplement filed November 8, 1999.
INTRODUCTION
We manufacture and market innovative battery cell powered products for
the consumer and other aftermarkets based on our patented thin metal film
("TMF(R)") technology. Our small size, light weight, high power density
batteries discharge and recharge very rapidly, possess no memory effect and
provide superior performance in cold temperatures. On a specific power (watts
per kilogram) basis, our TMF cells perform at 8 to 10 times the level of
traditional lead acid batteries that currently provide power for automobiles and
boats. We are currently manufacturing TMF cells at the rate of 30,000 to 35,000
per week. We anticipate increasing production as we add production equipment and
labor shifts during 2000.
In September 1999, we introduced our first commercial product,
SECURESTART(TM), a light-weight (less than five pounds) portable jump starter
that utilizes our TMF battery technology, six of our 1 Ah cells and built-in
cables to quickly jump start cars with dead batteries. This jump-start unit
stays charged for up to one year and can be recharged in less than five minutes.
It also includes a halogen flashlight. Our SECURESTART Portable Jump Starter is
now available through Sears stores, Orchard Supply Hardware stores, and several
catalogs including SkyMall, Herringtons, Sears and West Marine. We recently
launched our e-commerce website (www.securestartnow.com) to sell SECURESTART
directly to consumers.
In April 2000, we plan to commence shipments of our recently announced
marine version of the SECURESTART Portable Jump Starter which incorporates all
of the performance and ease-of-use characteristics of our SECURESTART Portable
Jump Starter for auto and truck applications, but also includes corrosion
proofing of the control electronics, cables and tin-plated clamp jaws.
Our high power density TMF cells are designed to quickly and
efficiently deliver large bursts of power. This contrasts with high energy
density batteries, which are designed to provide low amounts of power over an
extended period of time for applications such as laptop computers, cellular
telephone and other electronic devices. We believe our TMF batteries are
attractive for use in a variety of applications, including engine starting of
all types, standby power and industrial power quality maintenance.
MARKET AND PRODUCTS
We are developing products for engine starting applications in the
automobile, motorsports and marine markets. There are two major categories of
engine starting applications - jump starting and primary starting.
* JUMP STARTING. Our jump-starting products are portable and are used
to provide a quick engine start. SECURESTART is our first commercial
jump-starting product. SECURESTART is self-contained and does not
require the use of separate jumper cables, additional batteries or
another vehicle. SECURESTART weighs only five pounds, holds its
charge for up to one year and can be recharged in as little as five
minutes. In the fourth quarter 1999, we shipped over 28,000
SECURESTART units to customers. We are also currently developing
jump-starting products for the automobile professional and fleet
markets.
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o PRIMARY STARTING. We are designing 12V primary starting
batteries, both for use in aftermarket applications and for use
by OEM's in products they manufacture. We plan to introduce
several primary starting products for the automobile,
motorsports and marine markets over the next several years.
We granted Johnson Controls, Inc. ("JCI") a limited duration,
worldwide exclusive royalty-bearing license with respect to the automotive
primary starting market. JCI is a major supplier of batteries to the automobile
industry. Recently, JCI announced plans to offer engine-starting batteries,
based upon our TMF technology, for dual-battery and 36-volt systems under
development by major automotive manufacturers. We plan to introduce a line of
automobile and truck primary starting batteries for both automotive
manufacturers and the automotive aftermarket after JCI's exclusivity ends in
July 2001.
In addition to engine starting applications, we plan to address other
applications by selling our batteries to OEM customers that possess
application-specific expertise in areas such as standby power systems, portable
generators and power quality applications.
STRATEGY
Our objective is to become a major supplier of high power density
rechargeable batteries and innovative battery-powered products. Our strategies
for achieving this objective include the following:
o DEVELOP PRODUCTS THAT EXPLOIT THE UNIQUE CAPABILITIES OF TMF
BATTERIES. We intend to develop and market our own products,
primarily in the engine starting market, where we believe our
TMF battery technology is particularly well suited and there is
a significant opportunity to redefine the product category. The
first example of this is SECURESTART, an easy-to-use, instant
engine starter. We also plan to develop and introduce several
products in the automobile and motorsports and marine markets
over the next several years.
o CREATE BRAND RECOGNITION FOR OUR TRADEMARKS, INCLUDING
SECURESTART AND BOLDERTECH(TM). We intend to promote the
SECURESTART and "BOLDERTECH" trademarks to help create awareness
of the capabilities of our technology and permit premium
pricing.
o USING PRECISION PROCESS CONTROL AND ADVANCED ANALYTICAL TOOLS TO
IMPROVE PERFORMANCE AND REDUCE COSTS. We are committed to
improving process efficiency, enhancing product quality and
performance, and reducing manufacturing costs through the use of
advanced process controls and analytical tools. We use
sophisticated process controls to capture multiple data points
throughout the manufacturing process. We use this data to
evaluate, control and improve the cell manufacturing process,
optimize and improve product performance and reduce product
cost.
o PROTECTING AND ENHANCING OUR PROPRIETARY TECHNOLOGY BASE. We
consider our product and process technology to be one of our
most valuable assets. We believe our technology is applicable to
a wide range of products. We intend to exploit this technology
by developing new products to meet market needs. We intend to
protect our technology base through our established program for
intellectual property documentation and protection.
TMF TECHNOLOGY
We believe that our TMF technology represents a significant advance
over existing rechargeable battery technologies for applications that require
high power in a small package. TMF rechargeable cells employ a proprietary
configuration of traditional lead acid electrochemistry -- the same
electrochemistry that has been used in battery systems for over a century and
that is currently used in batteries for cars and many electronic applications.
We believe that the combination of the following characteristics of
our TMF cells offer advantages over other commercially available rechargeable
batteries in a broad range of current and future applications:
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o HIGH POWER. TMF batteries are designed to quickly and
efficiently deliver high bursts of power. This is important in
existing applications such as standby power systems, industrial
power quality maintenance and engine starting, and may enable
new applications such as high performance hybrid electric
vehicles.
o COST EFFECTIVE. TMF batteries are manufactured using
inexpensive, readily available raw materials. We believe our
manufacturing process will be cost effective at high production
volumes.
o NO MEMORY EFFECT. TMF batteries do not suffer from the memory
effect that reduces the capacity of nickel cadmium ("NiCd")
batteries if they are discharged and recharged repeatedly.
o SMALL SIZE. In high power applications, such as high power/pulse
power tools, engine starting and standby power systems, TMF
batteries can do the same amount of work as much larger,
commercially available rechargeable batteries. Since the battery
system typically accounts for a significant part of the physical
volume and weight of products, we believe TMF technology can
make products smaller and lighter.
o FASTER RECHARGE. TMF batteries can be recharged rapidly,
allowing them to be back to work quickly, thus increasing the
"up time" of devices employing TMF batteries.
o STABLE DISCHARGE VOLTAGE. In some applications, notably standby
power, electronic circuits must be used to compensate for the
voltage drop during discharge of other types of rechargeable
batteries. TMF batteries have very stable voltage, even during
high rate discharge, which provides more consistent performance
and potentially reduces the need for voltage regulation.
o COOL OPERATION. High power operation of other commercially
available batteries typically generates significant heat, which
must be accommodated in the design of products. The low
impedance of TMF batteries greatly reduces the amount of heat
generated by the battery, thus simplifying product design.
o SUPERIOR COLD TEMPERATURE PERFORMANCE. All batteries lose
capacity as the temperature drops. TMF batteries lose
significantly less of their room temperature capacity at lower
temperatures than do other commercially available batteries.
o EXTREMELY RAPID RESPONSE. TMF batteries deliver energy much more
rapidly than other commercially available batteries.
o EASY TO RECYCLE. Environmental concerns have made recycling of
batteries increasingly important. Unlike many existing and
emerging battery technologies, TMF batteries are readily handled
through the well-developed recycling process, which is currently
used to recycle approximately 90 percent of the lead acid
batteries in the United States.
A variety of combinations of chemical and metallurgical materials can
be used to form a rechargeable battery system. For example, rechargeable lead
acid batteries that are used in automobiles include a negative and positive
plate made of lead and lead oxide compounds and an electrolyte of sulfuric
acid. A rechargeable NiCd battery incorporates a positive and negative plate
made of nickel and cadmium compounds with a potassium hydroxide electrolyte.
TMF batteries use the same components as traditional lead acid batteries. This
provides a cost advantage over NiCd batteries because the raw materials for
lead acid batteries are less expensive than those used in NiCd batteries.
The primary structural innovations of our TMF batteries are an
increased plate surface area within the battery, a short path through the
active material between the negative and positive plates, and patented end cap
connectors. As in a traditional lead acid battery, the TMF battery cell has a
negative and positive plate. However, the TMF plates are unique because they
are comprised of very thin lead foil substrates that are coated with a very
thin, uniform layer of active material (lead oxide paste) (see Figure 1). The
negative and positive plates of the TMF battery are interleaved with a
fiberglass separator. In the spiral wound form factor of the TMF battery, the
combination of the negative and positive plates and the fiberglass separator
are wound so that the negative and positive plates are slightly offset at
opposite ends of the cell. A connector is cast on to each end of the cell (see
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Figure 2). We designed our patented connector to cap the ends of the spiral
wound TMF battery so that it is in continuous contact with the exposed edge of
both the negative and positive plates. TMF technology can be implemented in
spiral wound or prismatic (or flat) batteries. While we have built prototype
prismatic TMF batteries, essentially all of our development work has been on
spiral wound TMF batteries.
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FIGURE 1 FIGURE 2
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[A picture of one of our battery cells [A picture of the connector cap appears
and its component parts, including the here]
positive plate, the negative plate and the
separator appears here. The picture
illustrates the slight offset of the
negative and positive plates at opposite
ends of the cell.]
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The use of thin lead foil substrates significantly increases the
surface area of the lead, thus lowering the impedance of the cell and greatly
increasing the rate at which the cell can be charged and discharged. In
addition, the use of the thin lead foil substrates in combination with the
fiberglass separator provides for a short path through the active material
between the negative and positive plates, allowing for more rapid delivery of
the current, increasing the responsiveness of the cell. The patented end cap
provides a continuous, uniform and dispersed connection between the negative
and positive plates and the device being powered. TMF batteries have been made
in sizes ranging from 0.5-inch diameter (0.4 Ah) cells up to approximately
three-inch diameter (12 Ah) cells.
OTHER BATTERY TECHNOLOGIES
Rechargeable battery systems utilize a number of different
electrochemistries, the most common of which include lead acid, nickel cadmium,
nickel metal hydride and lithium ion. The performance characteristics of
battery systems are interdependent and all battery systems involve trade-offs
between various performance characteristics, such as power density and energy
density. For example, battery systems that are designed to maximize energy
density may not have a good power density, and vice versa. Therefore, different
electrochemistries have advantages in different applications.
Although there have been significant advances in the design of
rechargeable batteries over recent years, the primary focus of those efforts
has been to increase energy density. Increases in energy density allow longer
periods of use between recharges, but do not increase the sustained power that
a battery system can deliver. For example, as shown in Figure 3, lithium-ion
batteries have higher energy density (i.e., can store and deliver higher
amounts of energy) than other battery electrochemistries in low power
applications. By contrast, our TMF technology has been designed for high power
density. Increases in power density allow more high power work to be done with
a battery of a given size or weight. As Figure 3 indicates, we believe TMF
batteries are capable of five to six times the power delivery of any other
battery system. TMF batteries have the same advantage in power delivery as
lithium-ion batteries have in energy delivery. In addition, TMF batteries
deliver significantly more energy than other electrochemical systems when the
energy is provided at high power rates. Certain products with short duty
cycles, which require very high levels of power to operate, can be made
portable by utilizing TMF batteries.
FIGURE 3
[CHART]
[A graphic appears here plotting the power density and energy density
characteristics of existing battery systems. The graphic illustrates that Lead
Acid batteries have power density ranging from approximately 40-400 W/kg and an
energy density of approximately 40 to 15 Wh/kg; Nickel Cadmium batteries have a
power density ranging from approximately 50-900 W/kg and an energy density of
approximately 40 to 1 Wh/kg; Nickel Metal Hydride batteries have power density
ranging from approximately 40-800 W/kg and an energy density of approximately
45 to 20 Wh/kg; Lithium Ion batteries have power density ranging from
approximately 50-1500 W/kg and an energy density of approximately 90 to 1
Wh/kg; and; our TMF batteries have power density ranging from approximately
40-6000 W/kg and an energy density of approximately 30 to 5 Wh/kg. All battery
systems except TMF exhibit rapidly declining energy density with increasing
power density.]
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TRADITIONAL LEAD ACID. Traditional lead acid batteries have been in
commercial production for over a century. Traditional lead acid batteries come
in two types: flooded and valve regulated. Flooded lead acid batteries are
typically used as automobile batteries or for large standby power systems.
These batteries use a liquid electrolyte and must be stored and used upright.
Valve regulated lead acid batteries are used in security, medical and
electronics applications, and they can be used in any position. Lead acid
batteries are generally the least expensive of any battery system, provide
moderate energy and power density and have a nominal voltage of two volts per
cell.
NICKEL CADMIUM. NiCd batteries were first introduced in the 1960s and
have enabled a wide range of portable products, including electronics and
portable power tools. NiCd batteries cost more to produce than lead acid
batteries, in part because of the high cost of nickel and cadmium. While they
deliver good energy density and moderately good power density, NiCd batteries
have relatively low cell voltage (1.2 volts) and lose capacity if they are
repeatedly partially discharged and then recharged (this is referred to as the
memory effect). In addition, there are growing environmental concerns regarding
NiCd batteries, including the potential for harmful release of highly toxic
cadmium.
NICKEL METAL HYDRIDE. Nickel metal hydride ("NiMH") batteries, first
introduced in the mid-1980s, provide significantly higher energy density than
NiCd batteries. NiMH batteries are typically used in applications that require
low to moderate power output and long run times, such as camcorders and laptop
computers. NiMH batteries are more expensive than NiCd batteries and generally
less suitable for high power applications such as power tools.
LITHIUM. Both lithium ion batteries, which are now available
commercially, and lithium polymer batteries, which are becoming commercially
available, can provide substantially greater energy density than other
available battery systems for low rate applications, such as laptop computers.
Existing lithium systems, however, have low sustained power density and are
generally unsuitable for applications that require high power output. In
addition, they are significantly more expensive than other commercial
batteries, require relatively complex monitoring and charging circuitry and
raise safety issues due to the volatility of lithium metal.
STRATEGIC RELATIONSHIPS
We use strategic relationships from time to time as a means of
accessing funding, R&D, marketing and other resources, and to develop specific
markets. For example, we have a license relationship with JCI relating to the
commercialization of TMF batteries.
In June 1995, we established a Joint Venture with JCI to develop
high-volume manufacturing technology for TMF batteries, manufacture TMF
batteries for sale by both JCI and ourselves, and pursue hybrid electric
vehicle battery development opportunities for TMF batteries. In 1996, having
substantially completed the primary objective of developing the high-volume
manufacturing technology, the Joint Venture was terminated and we entered into
a new relationship with JCI. Under the new relationship, JCI and we are
separately developing TMF battery-manufacturing facilities.
We granted royalty-bearing licenses to JCI, certain of which are
subject to minimum royalties and minimum performance criteria. These licenses
give JCI the sole and exclusive worldwide right to sell TMF batteries for use
as primary engine starting batteries in automobiles and trucks until July 2001.
We have also entered into a cross supply agreement with JCI pursuant to which
each of us has committed to supply the other with minimum quantities of TMF
battery products for several years.
MANUFACTURING
We completed commercial qualification of our first production line for
1 Ah cells during 1998. The production line is operating 12 hours per day, seven
days per week. We are currently producing an average of 30,000 to 35,000 1 Ah
cells per week and intend to continuously enhance our manufacturing equipment,
processes and capability.
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[A flowchart of the manufacturing process for the spiral wound TMF
battery is shown below.]
[A flowchart appears here summarizing the manufacturing process of the
Company's spiral wound TMF battery. The flowchart illustrates that lead oxide
paste is applied to thin lead foil to form the positive and negative plates of
the cell, the separator is placed between the plates, the plates are then wound
together, the molten lead connectors are formed on each end of the cell, the
cell is assembled into a plastic case and filled with electrolyte, and the cell
is then formed into a 1 Ah cell.]
The manufacturing process starts with the application of active
material (lead oxide paste) to very thin lead foil to form the positive and
negative plates of the cell. The plates, separated by a thin fiberglass
separator, are wound together using a process similar to that used to wind
capacitors. Each end of the wound cell is immersed in molten lead, which forms
the positive and negative end connectors of the cell. The cell is assembled
into a plastic case and filled with liquid electrolyte. The cell undergoes a
process known as "formation," whereby a proprietary sequence of charges,
discharges, and rests are used to electrochemically make the negative and
positive plates functional. The completed cell is tested to verify that it
meets our specifications.
We use sophisticated process controls to capture multiple data points
throughout the manufacturing process which we use to evaluate, control and
improve the manufacturing process, to optimize and improve product performance,
and to reduce product cost. In addition, we employ an extensive validation
program that measures performance criteria critical to customer applications.
Certain elements of the manufacturing process are proprietary, and we own the
designs to certain equipment used in the process.
The principal raw materials used to produce TMF batteries are lead
foil and lead oxide. While these materials are available from multiple sources,
the TMF manufacturing process requires levels of consistency and purity in
excess of those required for many other applications. We have developed a
vendor qualification and partnering program and an incoming material inspection
system to evaluate the quality of raw materials.
MARKETING AND SALES
Currently, we are focused on maximizing sales of our SECURESTART line
of instant engine starters. We intend to market SECURESTART products through
automotive and marine specialty stores, catalog and specialty retailers, and
major mass merchandisers. In addition, we intend that SECURESTART will be
available directly from us through our e-commerce website and through
television shopping networks. We are marketing SECURESTART directly and through
several independent sales representatives.
The majority of our fourth quarter 1999 SECURESTART shipments were to
Sears, our first major customer upon the commercial launch of SECURESTART in
September 1999. The loss of Sears as a customer could have a material adverse
effect upon our revenues.
We are developing a nationwide advertising and public relations
campaign. As part of this effort, we contacted more than 50 consumer and trade
publications, providing information about SECURESTART and our TMF technology.
We intend to expand this effort to include television and radio advertising.
It is our intention to significantly broaden the retail distribution
for SECURESTART during the year 2000 to the point where this new and unique
product is available to the majority of United States and Canadian consumers.
It is also our intention to seek out international markets beyond the United
States and Canada.
RESEARCH AND DEVELOPMENT
We have invested a significant amount of time and capital to develop
our TMF technology and the associated manufacturing processes. In addition,
through the use of sophisticated process controls, we have collected large
amounts of data regarding the characteristics and performance of our TMF
batteries. We have utilized this information to substantially refine our TMF
battery technology and manufacturing process. Based on our experience, we
believe it would take a significant amount of time, in addition to a
substantial capital investment, to develop a competing battery technology.
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We continue to direct our primary R&D efforts toward improving the 1
Ah cell and our manufacturing processes. In addition, we have developed and
tested prototypes of various form factors, including larger and smaller spiral
wound cells and very thin (1/16-inch) prismatic batteries. While we believe
that each of these products may have market opportunities, there can be no
assurance that any of these prototypes will result in a commercial product.
PATENTS, TRADE SECRETS AND TRADEMARKS
We hold eight issued United States patents that expire beginning in
2008 and ending in 2019. Our issued patents cover a number of inventions
including thin non-perforated plates used in lead acid batteries and an end
connector for establishing electrical continuity between thin plates and a
battery terminal. We also have 21 issued foreign patents. In addition, we have
10 pending patents in the United States, as well as 13 pending foreign patents.
We have registered our BOLDER, TMF, and SECURESTART trademarks on the
principal federal trademark register.
In addition to patent and trademark protection, we rely on the law of
unfair competition and trade secrets to protect our proprietary rights. We
consider several elements of the TMF manufacturing process to be trade secrets.
We attempt to protect our trade secrets and other proprietary information
through agreements with customers and suppliers, proprietary information
agreements with employees and consultants and other security measures. Although
we believe that our issued and pending patents and additional intellectual
property rights provide significant protection for our proprietary designs and
processes, there can be no assurance that these measures will be successful.
COMPETITION
Competition in the battery and instant engine starting industries is,
and is expected to remain, intense. The competitors range from development
stage companies to major domestic and international companies.
Many of our competitors have significant financial resources,
established market positions, longstanding relationships with OEMs and other
customers, and significantly greater name recognition, technical, marketing,
sales, manufacturing, distribution and other resources than we do. No assurance
can be given that we will be able to compete successfully with those companies,
including with JCI in the markets where JCI has a license from us, or with
other competitors.
The market for engine jumpstarting devices has traditionally been
targeted at garages, tow truck operators and other professional users. Our
primary competitors in this market are Prestone Products Corporation (a
subsidiary of Allied Signal Corporation), Century Mfg. Co. and K&K Jump
Start/Chargers, Inc.
Prestone Products Corporation, Century Mfg. Co. and others are
marketing portable jump starters for automotive, marine and other applications,
some of which are priced materially lower than SECURESTART, and offer a variety
of features. Some of these products, with a power inverter, can also power
computers and other small appliances. While we believe SECURESTART is superior
to these other products in several respects, including its significantly
lighter weight, much faster recharging and ability to hold its charge for a
substantially longer period, no assurance can be given that we will market
SECURESTART successfully against the products of these other companies.
In applications such as portable tools and appliances and certain
electronic and medical products, our primary competitors are suppliers of NiCd
batteries, including:
o SANYO Energy (USA) Corporation;
o Panasonic Industrial Company, a division of Matsushita Electric
Corporation of America;
o Energizer Power Systems, a division of Eveready Battery Company;
and
o SAFT America, Inc.
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In applications such as car starting, standby power and certain
medical and electronics applications, our primary competitors are suppliers of
lead acid batteries:
o Suppliers of automotive batteries include JCI (which has a
license to use our TMF technology), Exide Corporation, GNB Inc.
and Delphi Automotive Systems Corporation, formerly a division
of General Motors Corporation; and
o Suppliers of small lead acid batteries used in non-automotive
applications include Yuasa Exide, Inc., Exide Corporation,
Matsushita Electric Corporation of America, Hawker Energy
Products, Inc., CSB Battery of America Corp. and GS Battery USA,
Inc., a division of Japan Storage Battery Co., Limited.
SAFETY AND ENVIRONMENTAL ISSUES
Our operations involve the storage, use and disposal of a number of
toxic and hazardous materials, including lead, lead oxide, sulfuric acid,
solvents and adhesives. As a result, we are required to maintain our research
and manufacturing operations in compliance with United States federal, state
and local standards that govern the storage, use and disposal of various
chemicals used in and waste materials produced by the manufacture of our TMF
batteries. Our new manufacturing facility includes an enclosed area
specifically for the mixing of lead oxide paste, the pasting of the lead foil
and the winding of the cells. Employees operating in these areas are instructed
in the use of safety equipment such as gloves, protective clothing and
respirators and are required under OSHA guidelines to submit to blood
monitoring tests on a periodic basis. The supervision and analysis of these
tests are undertaken by an outside, independent agency and the results thereof
are communicated to our employees.
Our activities are also subject to federal, state and local
environmental and safety laws and regulations, including but not limited to
regulations issued and laws enforced by the Colorado Labor and Employment
Department, the United States Department of Transportation, the United States
Department of Commerce, the United States Environmental Protection Agency, the
United States Department of Labor and state and county health and safety
agencies. United States and foreign agencies are considering more stringent
regulation of the disposal of all rechargeable batteries. There can be no
assurance that we will be able to operate in conformity with such laws and
regulations, or that changes in such laws or regulations will not require us to
incur substantial capital or operating costs to achieve and maintain
compliance. Any failure by us to adequately control the discharge of our
hazardous materials and wastes could also subject us to future liabilities,
which could be significant.
Lead acid batteries, including our TMF battery, may develop
significant internal pressures during severe overcharge conditions due to the
release of gases as a byproduct of the chemical reaction occurring in the cell.
In order to prevent potential pressure build up, our batteries incorporate a
Bunsen pressure relief valve that, under normal overcharge conditions, will
allow the venting of small amounts of gases, primarily hydrogen and oxygen. If
the batteries are subjected to abusive overcharge or overdischarge conditions,
larger amounts of these gases may be vented, which when mixed with air, can
cause explosions. In addition, under these conditions, toxic gases and/or
sulfuric acid spray may be released. Sulfuric acid can cause burns. While we
maintain product liability insurance in amounts which we believe are reasonable
given the associated risks, there is no assurance that such insurance will be
adequate to cover any potential liability relating to one or more claims of
product liability. We have tested our batteries under a variety of conditions
and plans to continue to test our products for safety.
HUMAN RESOURCES
As of February 29, 2000, the Company had 183 full-time employees. Of
the total, 15 employees were engaged in product research and development, 124
in operations, 9 in marketing and sales, and 26 in general and administrative
functions. Our success will depend in a large part on our ability to attract
and retain skilled and experienced employees. None of our employees are covered
by a collective bargaining agreement, and we consider our relation with our
employees to be satisfactory.
ITEM 2. PROPERTIES
The Company is located in a 127,000 square foot leased facility in
Golden, Colorado (approximately 15 miles northwest of Denver) that was
built-to-suit in 1997 for the Company. The Company has an eleven-year lease for
the facility with two five-year renewal options. This facility includes all of
the Company's offices and
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<PAGE> 11
laboratories as well as the Company's first high volume production line. The
facility is designed to accommodate multiple high volume production lines and
two development lines.
ITEM 3. LEGAL PROCEEDINGS
From time to time we are subject to legal proceedings arising out of
our operations. In September 1999, Century Mfg. Co., a subsidiary of Pentair,
Inc., filed a complaint against us 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 we have 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. We have answered Century's complaint and asserted
counterclaims for Century's misappropriation for our own trade secrets and
confidential information. We believe that Century's claims are without merit,
intend to defend against them vigorously, and intend to press vigorously our
counterclaims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1999, there were no matters requiring a
vote of security holders.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET INFORMATION
The Company's Common Stock, par value $.001 per share, (Nasdaq Stock
Market (National Market) Symbol "BOLD") began trading publicly on the Nasdaq
National Market effective May 1, 1996. Prior to that date, there was no public
market for the Company's Common Stock. The following table presents quarterly
information on the price range of the Company's Common Stock. This information
indicates the high and low sale prices reported by the Nasdaq Stock Market
(National Market).
<TABLE>
1996 HIGH LOW
---- ------ ------
<S> <C> <C>
Second Quarter (from May 1) .... $15.38 $10.50
Third Quarter .................. $14.38 $10.75
Fourth Quarter ................. $17.13 $13.13
</TABLE>
<TABLE>
1997 HIGH LOW
---- ------ ------
<S> <C> <C>
First Quarter .................. $17.25 $11.25
Second Quarter ................. $14.25 $11.00
Third Quarter .................. $15.50 $12.13
Fourth Quarter ................. $14.00 $ 8.50
</TABLE>
<TABLE>
1998 HIGH LOW
---- ------ ------
<S> <C> <C>
First Quarter .................. $11.75 $ 7.88
Second Quarter ................. $14.00 $ 8.50
Third Quarter .................. $14.31 $ 8.50
Fourth Quarter ................. $13.75 $ 8.13
</TABLE>
<TABLE>
1999 HIGH LOW
---- ------ ------
<S> <C> <C>
First Quarter .................. $14.50 $ 8.25
Second Quarter ................. $10.25 $ 7.25
Third Quarter .................. $11.75 $ 6.88
Fourth Quarter ................. $13.63 $ 9.00
</TABLE>
HOLDERS
As of February 29, 2000, there were approximately 289 holders of
record of the Common Stock.
DIVIDENDS
The Company has not paid any dividends on its Common Stock since its
inception and does not intend to pay any dividends on its Common Stock in the
foreseeable future.
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<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below with respect to the
Company's statements of operations for the years ended December 31, 1999, 1998,
1997, 1996 and 1995, and balance sheets as of December 31, 1999, 1998, 1997,
1996 and 1995 are derived from audited financial statements of the Company.
Such financial statements were audited by Arthur Andersen LLP, independent
public accountants, whose report with respect to the years ended December 31,
1999, 1998 and 1997 and as of December 31, 1999 and 1998 appears elsewhere
herein. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the Notes related thereto included
elsewhere in this document.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues
Product sales ............................... $ 1,859,992 $ 49,264 $ 84,716 $ 35,580 $ 39,006
Research and development services ........... 169,324 2,410,605 2,466,377 440,324 66,667
------------ ------------ ------------ ------------ ------------
Total revenues ........................ 2,029,316 2,459,869 2,551,093 475,904 105,673
Cost of revenues
5,566,697 332,919 707,606 171,486 49,647
------------ ------------ ------------ ------------ ------------
(3,537,381) 2,126,950 1,843,487 304,418 56,026
------------ ------------ ------------ ------------ ------------
Operating expenses:
Research and development ....................... 6,553,973 7,677,787 7,092,534 2,863,552 2,479,428
General and administrative ..................... 5,268,822 3,286,783 3,348,061 2,132,565 808,724
Selling and marketing .......................... 2,845,277 665,573 357,716 212,960 163,771
Loss on asset disposals ........................ 1,408,814 -- -- -- --
------------ ------------ ------------ ------------ ------------
Total operating expenses ................. 16,076,886 11,630,143 10,798,311 5,209,077 3,451,923
------------ ------------ ------------ ------------ ------------
Loss from operations ............................. (19,614,267) (9,503,193) (8,954,824) (4,904,659) (3,395,897)
Other income (expense):
Interest income ................................ 542,192 905,735 839,025 798,846 126,546
Interest expense ............................... (1,307,317) (1,346,511) (633,625) (54,277) (72,633)
------------ ------------ ------------ ------------ ------------
Net loss ......................................... (20,379,392) (9,943,969) (8,749,424) (4,160,090) (3,341,984)
------------ ------------ ------------ ------------ ------------
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) $ (4,160,090) $ (3,341,984)
============ ============ ============ ============ ============
Basic and diluted net loss per share (1) ......... $ (1.97) $ (1.22) $ (0.97) $ (0.64) $ (3.07)
============ ============ ============ ============ ============
Shares used in computing basic
and diluted net loss per share (1) ............... 11,221,354 9,560,660 9,446,930 6,465,281 1,087,554
============ ============ ============ ============ ============
Unaudited, pro forma basic net loss per share .... $ (0.49)
============
Shares used in computing unaudited,
pro forma basic net loss per share ............ 8,437,817
============
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
available-for-sale securities .............. $ 22,630,223 $ 11,119,734 $ 20,394,777 $ 16,070,677 $ 2,799,697
Working capital .............................. 19,809,297 8,060,606 15,016,605 12,403,356 2,532,911
Total assets.................................. 48,113,877 32,591,747 41,275,589 27,146,116 4,748,347
Notes and capital leases payable ............. 8,858,831 10,381,045 6,404,903 486,537 558,687
Mandatorily Redeemable Preferred stock(2) .... -- -- -- -- 13,433,482
Convertible, Redeemable Preferred stock ..... 15,653,939 15,998,863 16,205,046 -- --
Total stockholders' equity (deficit) ......... 34,814,718 20,388,338 30,286,815 23,070,901 (9,538,565)
</TABLE>
(1) See Note 2 of Notes to Financial Statements for information concerning the
computation of basic net loss per share.
(2) Each share of the Company's Mandatorily Redeemable Preferred Stock
automatically converted into one share of the Common Stock on May 6, 1996
upon the closing of the Company's initial public offering.
14
<PAGE> 15
ITEM 7. 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 our
filings with the Securities and Exchange Commission, including our registration
statement on Form S-3 filed on August 31, 1999 and the prospectus supplement
filed November 8, 1999. These risks (i) have materially and adversely affected,
and may in the future materially and adversely affect, our 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 us .
GENERAL
From our inception in March 1991 until the launch of our first
commercial product in the second half of 1999, we were a development stage
company, principally engaged in the research and development of our TMF battery
technology, to which we devoted significant resources. In May 1997, we moved to
a new 127,000 square foot leased manufacturing facility and corporate
headquarters in Golden, Colorado. We believe this facility will accommodate
multiple production lines, two research and development ("R&D") lines, and all
of our other operations. In the third quarter of 1997, we installed our first
high-volume manufacturing line, designed to annually produce approximately four
million 1 Ah cells. For approximately the next year, we focused most of our
resources on qualifying the line for commercial production. In the fourth
quarter of 1998, we qualified our production line and introduced our 1 Ah cell,
which can be a modular building block for various battery packs.
Upon qualifying the production line and introducing our 1 Ah cell, our
focus shifted to the design, manufacture and introduction of products based on
our TMF technology. On August 5, 1999, we introduced SECURESTART, an instant
engine starter which employs our TMF technology and, specifically, the 1 Ah
cell. In August 1999, we entered into an agreement with Sears to supply
SECURESTART to approximately 2,000 Sears stores. We began commercial shipments
of SECURESTART in October 1999 and shipped over 28,000 units in the fourth
quarter 1999, with the majority going to Sears. SECURESTART is currently
available in Sears stores and Orchard Supply Hardware stores, as well as through
a variety of catalogs, including SkyMall, Herringtons, West Marine and Sears. We
believe that the majority of our near-term revenues will be generated from sales
of SecureStart.
Our fourth quarter shipments to Sears included stocking orders in
anticipation of the holiday gift-giving period and the winter driving season.
In addition, we purposely delayed adding other major retailers to be assured of
meeting our product obligations to Sears. For both of these reasons, we expect
lower first quarter 2000 revenues than in the fourth quarter 1999 period.
Beyond the first quarter 2000, we expect increasing sales from the addition of
new retailers to the SECURESTART distribution base and from the introduction of
the marine version of SECURESTART in the second quarter of 2000.
We are working with potential OEM customers who are testing and
evaluating our TMF batteries for potential design into their products.
We believe that the task of improving the yield of our first
production line, the efficiency of the overall manufacturing process and the
performance of our TMF products will be an ongoing activity. Additional
modifications will be required from time to time to improve the production
capability of our production line. Similarly, changes in the design of our
products will be required from time to time in order to improve product
performance.
In June 1995, we established a joint venture with JCI (the "Joint
Venture") to develop high-volume manufacturing technology for TMF batteries,
manufacture TMF batteries for sale by both JCI and ourselves, and pursue hybrid
electric vehicle battery development opportunities for TMF batteries. In 1996,
having substantially completed the primary objective of developing the
high-volume manufacturing technology, the Joint Venture was
15
<PAGE> 16
terminated and we entered into a new relationship with JCI. Under the new
relationship, JCI and we are separately developing TMF battery-manufacturing
facilities. We granted royalty-bearing licenses to JCI, certain of which are
subject to minimum royalties and minimum performance criteria. These licenses
give JCI the sole and exclusive right to sell TMF batteries for use as primary
starting batteries in automobiles and trucks until July 2001. We have also
entered into a cross supply agreement with JCI pursuant to which each of us has
committed to supply the other with minimum quantities of TMF battery products
for several years.
RESULTS OF OPERATIONS
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
As the company transitioned in the second half of 1999 from primarily
development activities to manufacturing and sales activities, the
classification of certain costs have changed in the Company's statement of
operations. For example, activities which were previously performed prior to
the third quarter 1999 in support of the Company's research and development
("R&D") efforts (and therefore classified as R&D expense), now support the
Company's manufacturing efforts and are classified as cost of revenues.
Additionally, because the Company's production volume of batteries and other
products is not yet sufficient to allow absorption of the manufacturing
overhead, the Company has incurred a loss on gross margin, which can be
expected to continue until production volumes are at significantly higher
levels.
Revenues from product sales increased to $1,860,000 in 1999 from
$49,000 in 1998. Most of the 1999 revenues consisted of sales of our new
jumpstart product, SECURESTART, which was launched during the fourth quarter.
R&D revenues declined to $169,000 in 1999 from $2,411,000 in 1998. The 1998
period included $1,760,000 of R&D revenues recognized for services provided in
connection with our 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 in 1999 from $367,000 in 1998. This
program was completed in the first quarter 1999. We consider R&D revenues as
insignificant to the future of our business.
Cost of revenues increased to $5,567,000 in 1999 from $333,000 in
1998. The increase in 1999 resulted from the ramp-up of 1 Ah cell production in
the second half of 1999 to support the launch of SECURESTART, which contains
six 1 Ah cells. Associated with the manufacturing ramp-up, certain start-up
manufacturing costs were incurred that were attributable to inefficiencies from
training an additional production shift and from associated higher yield losses
than would be expected in the future. In addition, our initial production
levels do not allow full absorption of fixed manufacturing overhead expenses.
Unit product costs are expected to decrease as we increase production levels
and realize added economies of scale during 2000.
R&D expenses decreased to $6,554,000 in 1999 from $7,678,000 in 1998.
The decrease was due to the change in classification of certain production line
functions and associated expenses from R&D expenses to cost of revenues in the
second half of 1999. Of the $7,678,000 of R&D expenses in 1998, only $5,457,000
would have been treated as R&D expenses were they incurred in 1999. The
increase in R&D expenses in 1999, compared to the expenses in 1998 that would
have been treated as R&D expenses were they incurred in 1999, was primarily due
to additional technical staff and product development expenses associated with
our new jumpstart product.
General and administrative expenses increased to $5,269,000 in 1999
from $3,287,000 in 1998. The increase in 1999 resulted primarily from funding
start-up vendor costs for components needed in the assembly and launch of
SECURESTART, from higher legal fees and business insurance costs, and from
increased staffing and related compensation expenses.
Selling and marketing expenses increased to $2,845,000 in 1999 from
$666,000 in 1998. The increase in 1999 was primarily due to increased staffing
levels, business development activities and advertising and promotional
expenses associated with the commercial introduction of SECURESTART.
In the fourth quarter 1999, we recorded a non-cash write-off of
$1,409,000 to remove obsolete equipment no longer usable in our manufacturing
process. This equipment became obsolete due to changes made in the
manufacturing process during the fourth quarter of 1999.
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<PAGE> 17
Interest income decreased to $542,000 in 1999 from $906,000 in 1998.
The decrease was due to smaller average invested cash balances in 1999 than in
1998.
Interest expense decreased slightly to $1,307,000 in 1999 from
$1,347,000 in 1998. The decrease in 1999 was due to slightly lower average debt
balances in 1999 than in 1998.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Total revenues decreased to $2,459,869 in 1998 from $2,551,093 in
1997. As in previous reporting periods, the majority of revenues resulted from
R&D services. Revenues from product sales decreased to $49,264 in 1998 from
$84,716 in 1997. Approximately 73 and 71 percent of the $2,410,605 and
$2,466,377 of R&D revenues in 1998 and 1997, respectively, resulted from our
recognition of revenue from services performed in connection with the
technology transfer arrangement with JCI. The remainder of the R&D revenues in
1998 and 1997 resulted from customer-funded research and development programs.
The R&D revenues associated with the JCI agreement were non-cash items in 1998.
The technology transfer agreement with JCI was completed in 1998, and no
additional R&D revenues were recognized beyond 1998 from this agreement.
Cost of revenues decreased to $332,919 in 1998 from $707,606 in 1997.
Most of the decrease in 1998 was due to lower levels of customer funded product
development programs compared to 1997.
R&D expenses increased to $7,678,000 in 1998 from $7,092,534 in 1997.
The increase in 1998 was primarily due to additional technical staff and
associated expenses and new manufacturing facility and production line expenses
related to our expanded efforts to commercialize our 1 Ah cell and to implement
high-volume manufacturing.
General and administrative expenses decreased to $3,287,000 in 1998
compared to $3,348,061 in 1997. The small decrease in 1998 reflected slightly
lower expenses for legal, recruiting and relocation than in the prior year.
Selling and marketing expenses increased to $666,000 in 1998 compared
to $357,716 in 1997. The increases in 1998 were primarily due to increased
staffing levels and small amounts of advertising expenses associated with the
commercial introduction of our products.
Interest income increased to $905,735 in 1998 from $839,025 in 1997.
This increase was due to larger invested cash balances in 1998, primarily
resulting from our private placement of Series A Preferred Stock in October
1997 and proceeds from debt financing in March 1998.
Interest expense increased to $1,346,511 in 1998, compared to $633,625
in 1997. The increases in 1998 were due to increased levels of debt financing.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996.
During 1997, we received revenues from services provided under a
technology transfer agreement with JCI, from a Small Business Innovation
Research ("SBIR") research and development agreement, from a customer-funded
development program and from the sale of batteries for testing and evaluation
by customers. R&D revenues increased to $2,466,377 in 1997 from $440,324 in
1996. Approximately 71 percent of the 1997 R&D revenues resulted from the
technology transfer agreement with JCI, which did not exist in 1996. The
remaining 29 percent of the R&D revenues in 1997 and all of the 1996 R&D
revenues resulted from a combination of both private customer-funded and the
SBIR product development programs. Product sales revenues increased to $84,716
in 1997 from $35,580 in 1996.
Cost of revenues increased to $707,606 in 1997 from $171,486 in 1996.
The increase was a result of higher costs directly related to commercial and
government funded product development programs.
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<PAGE> 18
R&D expenses increased to $7,092,534 in 1997 from $2,863,552 in 1996,
primarily due to additional technical staff and associated expenses and new
manufacturing facility expenses related to our increased efforts to
commercialize our 1 Ah cell and to implement high-volume manufacturing.
General and administrative expenses increased to $3,348,061 in 1997
from $2,132,565 in 1996. The increase was due to additional administrative
staffing and added expenses for insurance, legal and investor relations. Also,
included in the 1997 expenses were $210,000 of costs (printing, legal and
accounting) associated with a registration statement that was filed in February
1997 and withdrawn in May 1997.
Selling and marketing expenses increased to $357,716 in 1997 from
$212,960 in 1996. The increase was primarily due to increased marketing and
business development activities related to our efforts to obtain new customers
for future delivery of product.
Interest income increased to $839,025 in 1997 from $798,846 in 1996.
The increase resulted primarily from slightly higher average cash balances
invested during 1997 than in 1996.
Interest expense increased to $633,625 in 1997 from $54,277 in 1996.
The increase resulted primarily from increased levels of lease and debt
financing in 1997.
LIQUIDITY AND CAPITAL RESOURCES
From our inception, we have financed our operations and met our
capital requirements primarily through private and public offerings of our
equity securities, raising net proceeds of approximately $86 million from sales
of these securities. Included in this amount are net proceeds of approximately
$21.1 million received from a secondary public offering of equity securities on
November 11, 1999, and the exercise of the underwriter's overallotment option
in December 1999. Also, included in this amount are net proceeds of
approximately $12.7 million received from private offerings of equity
securities on May 18, 1999 and July 9, 1999. In 1997 and 1998, we received net
proceeds of approximately $12.3 million from a loan agreement with Transamerica
Business Credit Corporation ("TBCC"). The remaining loan balance was
approximately $8.9 million as of December 31, 1999. At December 31, 1999, our
balances of cash, cash equivalents, and available-for-sale securities totaled
approximately $22.6 million, compared to approximately $11.1 million at
December 31, 1998.
We believe that our cash, cash equivalents and short-term investments
at December 31, 1999 will be sufficient to fund our operations through at least
December 31, 2000. Beyond 2000, we will require substantial capital resources
in the future in order to increase our production capacity and to fund our
operations until we achieve profitability. We have no additional availability
under the TBCC loan agreement or other capital resources. Our inability to
obtain required capital resources when needed would have a material adverse
effect on our business, results of operations and financial condition.
INCOME TAXES
We have not paid income taxes since our inception. As of December 31,
1999, we had net operating loss ("NOL") carry-forwards totaling approximately
$51.9 million available to reduce any future taxable income. Our private
placement of Series A Convertible, Redeemable Preferred Stock in October 1997
and the Secondary Common Stock Offering in November 1999 resulted in a change
of ownership under the Tax Reform Act of 1986, which would limit the annual
utilization of NOL carry-forwards. As a result, we are limited to using
approximately $7.0 million of NOL carry-forwards in each future year. Our NOL
carry-forwards expire from 2005 through 2014.
YEAR 2000
We rely on software in our information systems and manufacturing
equipment, most of which was installed and written within the past three years.
Prior to December 31, 1999, we completed an inventory of our critical control
systems, computers and application software, and validated our internal systems
for Year 2000 compliance. The validation of our internal systems was
implemented through a combination of written vendor confirmations and specific
validation testing. In connection with our validation process, we either found
our equipment and software to be Year 2000 compliant, applied applicable
supplier fixes and, in some instances, replaced equipment. In
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<PAGE> 19
addition, we implemented processes to identify and evaluate the Year 2000
status of newly acquired equipment and to evaluate supplier and customer Year
2000 compliance. The cost of testing and validation did not exceed $50,000,
including consulting and internal resources.
Thus far, we have had no significant problems related to Year 2000
issues. However, we cannot guarantee that the Year 2000 problem will not
adversely affect our business, operating results or financial condition at some
point in the future. We believe that the remaining risks of Year 2000 issues
are primarily external, due to the difficulty of validating key third parties'
readiness for Year 2000 issues. We have sought confirmation of such compliance
and seek relationships with third parties that are compliant. However, even if
we obtain Year 2000 compliance assurances from third parties, there is still a
risk that a major supplier of raw materials or an OEM customer could become
unreliable due to Year 2000 problems. Therefore, we intend to maintain
contingency plans for each of these key relationships as they arise, such as
second sourcing, purchasing additional inventory and creating contingency plans
for Year 2000 situations with each relationship.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable, because the Company has only fixed rate debt and no
derivatives.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data of the Company are
provided at the pages indicated in Item 14(a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has not been any change of accountants or any disagreements with
the Company's accountants on any matter of accounting practice or financial
disclosure during the reporting periods.
20
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to executive officers and directors of the
Company appearing in the Proxy Statement under the captions "Election of Class
I Directors," "Executive Officers and Key Employees" and "Section 16(a)
Beneficial Ownership Reporting Compliance" is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation appearing in the
Proxy Statement under the caption "Executive Compensation" is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by
reference to the information in the Proxy Statement labeled "Security Ownership
of Certain Beneficial Owners and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by
reference to the section in the Proxy Statement labeled "Certain Transactions."
21
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) FINANCIAL STATEMENTS
The financial statements required by this item are submitted in a separate
section beginning on Page F-1 of this report.
FINANCIAL STATEMENTS OF BOLDER TECHNOLOGIES CORPORATION
<TABLE>
<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) REPORTS ON FORM 8-K
During the last quarter of its fiscal year ended December 31, 1999, the
Company filed two Reports on Form 8-K, dated October 14, 1999 and
November 10, 1999, pursuant to Item 5 of such Form.
c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
3(i).1* Amended and Restated Certificate of Incorporation of the Company.
3(i).2** Certificate of Designation of the Series A Preferred Stock of the Company.
3(i).3** Amendment to the Certificate of Designation of the Series A Preferred Stock of the Company.
3(i).4*** Certificate of Designation of the Series B Junior Participating Preferred Stock of the Company.
3(ii).1* Amended and Restated Bylaws of the Company.
3(ii).2** Amendment to the Amended and Restated Bylaws of the Company.
4.1 Reference is made to Exhibits 3(i).1 through 3(ii).2.
4.2* Specimen stock certificate representing shares of Common Stock of the Company.
4.3** Specimen stock certificate representing shares of Series A Preferred Stock of the Company.
4.4*** Rights Agreement between the Company and American Stock Transfer & Trust Company, dated
January 23, 1998.
4.5*** Form of Rights Certificate.
10.1*+ Form of Indemnity Agreement between the Company and each of its directors and executive officers.
10.2 1996 Equity Incentive Plan of the Company, as amended through March 26, 1999 (previously filed as
an exhibit to the Company's Registration Statement on Form S-8 (Registration No. 333-08968) and
incorporated herein by reference).
10.3* 1996 Employee Stock Purchase Plan of the Company, as amended through March 26, 1999.
10.4*+ Employment Agreement between the Company and Daniel S. Lankford, dated July 11, 1994.
10.5*+ Employment Agreement between the Company and Joseph F. Fojtasek, dated February 13, 1996.
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C>
10.6+ Employment Agreement between the Company and Arthur S. Homa, dated September 25, 1997
(previously filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference).
10.7+ Employment Agreement between the Company and Daniel A. Schwob, dated September 16, 1998
(previously filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1998
and incorporated herein by reference).
10.8+ Employment Agreement between the Company and Roger Warren, dated as of September 17, 1999.
10.9+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.10+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.11+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.12+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.13+ Incentive Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.14* Series C Preferred Stock Purchase Agreement between the Company and the purchasers named therein,
dated July 19, 1994.
10.15* Supplemental Agreement to Series C Preferred Stock Purchase Agreement between the Company and the
purchasers named therein, dated September 30, 1994.
10.16* First Amendment to Purchase Agreement among the Company, the stockholders of the Company named
therein and Phoenix Leasing Incorporated, dated July 29, 1994.
10.17* Amendment to Purchase Agreement among the Company, the stockholders of the Company named therein and
Phoenix Leasing Incorporated, dated March 21, 1996.
10.18* Note and Warrant Purchase Agreement between the Company and the purchasers named therein, dated
March 14, 1995.
10.19* Preferred Stock and Warrant Purchase Agreement between the Company and the purchasers named
therein, dated May 24, 1995.
10.20* Letter Agreement among the Company, Harold Scott and the stockholders of the Company named therein,
dated January 18, 1996.
10.21* Series E Preferred Stock and Warrant Purchase Agreement among the Company, Johnson Controls
Battery Group, Inc. and the stockholders of the Company named therein, dated June 26, 1995.
10.22** Purchase Agreement between the Company and BT Alex. Brown Incorporated, dated October 3, 1997.
10.23** Registration Rights Agreement between the Company and BT Alex. Brown Incorporated,
dated October 8, 1997.
10.24* Senior Loan and Security Agreement between the Company and Phoenix Leasing Incorporated, dated
July 29, 1994, including forms of Promissory Notes and Warrants to Purchase Shares of Series C
Preferred Stock issued thereunder.
10.25 Security Agreement between the Company and Transamerica Business Credit Corporation, dated
March 4, 1997, including form of Promissory Notes issued thereunder (previously filed as an
exhibit to the Company's Form 10-KSB for the year ended December 31, 1996 and incorporated
herein by reference).
10.26* Agreement between the Company and Wright Industries, Inc., dated March 11, 1996.
10.27 Agreement among the Company, Johnson Controls Battery Group, Inc. and Johnson Controls/Bolder LLC,
dated July 31, 1996 (previously filed as an exhibit to the Company's February 5, 1997 Form 8-K and
incorporated herein by reference).
10.28 Cross Supply Agreement between the Company and Johnson Controls Battery Group, Inc., dated
January 22, 1997 (previously filed as an exhibit to the Company's February 5, 1997 Form 8-K and
incorporated herein by reference).
10.29 Common Stock Purchase Agreement, dated May 14, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
10.30 Common Stock Purchase Agreement, dated May 18, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
10.31 Common Stock Purchase Agreement, dated July 9, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C>
10.32 Registration Rights Agreement, dated May 14, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of
Form S-3 and incorporated herein by reference).
10.33 Registration Rights Agreement, dated May 18, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's
July 12, 1999 Registration Statement of Form S-3 and
incorporated herein by reference).
10.34 Registration Rights Agreement, dated July 9, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's
July 12, 1999 Registration Statement of Form S-3 and
incorporated herein by reference).
10.35 Warrant Agreement between the Company and First Security Van Kasper Inc. dated November 8, 1999
(previously filed as an exhibit to the Company's November 10, 1999 Form 8-K and incorporated
herein by reference).
10.36 Warrant issued by the Company to First Security Van Kasper Inc. (previously filed as an exhibit
to the Company's November 10, 1999 Form 8-K and incorporated herein by reference).
10.37 Underwriting Agreement between the Company and First Security Van Kasper Inc. (previously filed
as an exhibit to the Company's November 10, 1999 Form 8-K and incorporated herein by reference).
23.1 Consent of Arthur Andersen LLP, independent auditors.
27.1 Financial Data Schedule.
</TABLE>
- -----------------
* Previously filed as an exhibit to the Company's Registration Statement
on Form SB-2 (Registration No. 333-2500-D) and incorporated herein by
reference.
** Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (Registration No. 333-41625) and incorporated herein by
reference.
*** Previously filed as an exhibit to the Company's January 23, 1998 Form
8-K and incorporated herein by reference.
+ Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BOLDER TECHNOLOGIES CORPORATION
Date: March 29, 2000 By: /s/ ROGER F. WARREN
-----------------------------
Roger F. Warren
Chief Executive Officer, President
and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ ROGER F. WARREN Chief Executive Officer, March 29, 2000
- ------------------- President and Chairman of
(Roger F. Warren) the Board (Principal
Executive Officer)
/s/ JOSEPH F. FOJTASEK Chief Financial Officer, Vice March 29, 2000
- ---------------------- President of Finance and
(Joseph F. Fojtasek) Administration, Treasurer,
and Secretary (Principal
Financial and Accounting
Officer)
</TABLE>
24
<PAGE> 25
<TABLE>
<S> <C> <C>
/s/ DANIEL S. LANKFORD Director March 29, 2000
- ----------------------
(Daniel S. Lankford)
/s/ WILMER R. BOTTOMS Director March 29, 2000
- ----------------------
(Wilmer R. Bottoms)
/s/ WILLIAM D. CONNOR Director March 29, 2000
- ----------------------
(William D. Connor)
/s/ DONOVAN B. HICKS Director March 29, 2000
- ----------------------
(Donovan B. Hicks)
/s/ DAVID L. RIEGEL Director March 29, 2000
- ----------------------
(David L. Riegel)
/s/ CARL S. STUTTS Director March 29, 2000
- ----------------------
(Carl S. Stutts)
</TABLE>
25
<PAGE> 26
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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
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> 33
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> 34
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> 35
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> 36
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> 37
(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> 38
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> 39
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> 40
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> 41
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> 42
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> 43
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> 44
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> 45
<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> 46
(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> 47
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> 48
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> 49
<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> 50
(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> 51
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
3(i).1* Amended and Restated Certificate of Incorporation of the Company.
3(i).2** Certificate of Designation of the Series A Preferred Stock of the Company.
3(i).3** Amendment to the Certificate of Designation of the Series A Preferred Stock of the Company.
3(i).4*** Certificate of Designation of the Series B Junior Participating Preferred Stock of the Company.
3(ii).1* Amended and Restated Bylaws of the Company.
3(ii).2** Amendment to the Amended and Restated Bylaws of the Company.
4.1 Reference is made to Exhibits 3(i).1 through 3(ii).2.
4.2* Specimen stock certificate representing shares of Common Stock of the Company.
4.3** Specimen stock certificate representing shares of Series A Preferred Stock of the Company.
4.4*** Rights Agreement between the Company and American Stock Transfer & Trust Company, dated
January 23, 1998.
4.5*** Form of Rights Certificate.
10.1*+ Form of Indemnity Agreement between the Company and each of its directors and executive officers.
10.2 1996 Equity Incentive Plan of the Company, as amended through March 26, 1999 (previously filed as
an exhibit to the Company's Registration Statement on Form S-8 (Registration No. 333-08968) and
incorporated herein by reference).
10.3* 1996 Employee Stock Purchase Plan of the Company, as amended through March 26, 1999.
10.4*+ Employment Agreement between the Company and Daniel S. Lankford, dated July 11, 1994.
10.5*+ Employment Agreement between the Company and Joseph F. Fojtasek, dated February 13, 1996.
10.6+ Employment Agreement between the Company and Arthur S. Homa, dated September 25, 1997
(previously filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference).
10.7+ Employment Agreement between the Company and Daniel A. Schwob, dated September 16, 1998
(previously filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1998
and incorporated herein by reference).
10.8+ Employment Agreement between the Company and Roger Warren, dated as of September 17, 1999.
10.9+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.10+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.11+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.12+ Nonstatutory Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.13+ Incentive Stock Option Agreement between the Company and Roger Warren, dated October 1, 1999.
10.14* Series C Preferred Stock Purchase Agreement between the Company and the purchasers named therein,
dated July 19, 1994.
10.15* Supplemental Agreement to Series C Preferred Stock Purchase Agreement between the Company and the
purchasers named therein, dated September 30, 1994.
10.16* First Amendment to Purchase Agreement among the Company, the stockholders of the Company named
therein and Phoenix Leasing Incorporated, dated July 29, 1994.
10.17* Amendment to Purchase Agreement among the Company, the stockholders of the Company named therein and
Phoenix Leasing Incorporated, dated March 21, 1996.
10.18* Note and Warrant Purchase Agreement between the Company and the purchasers named therein, dated
March 14, 1995.
10.19* Preferred Stock and Warrant Purchase Agreement between the Company and the purchasers named
therein, dated May 24, 1995.
10.20* Letter Agreement among the Company, Harold Scott and the stockholders of the Company named therein,
dated January 18, 1996.
</TABLE>
<PAGE> 52
<TABLE>
<S> <C>
10.21* Series E Preferred Stock and Warrant Purchase Agreement among the Company, Johnson Controls
Battery Group, Inc. and the stockholders of the Company named therein, dated June 26, 1995.
10.22** Purchase Agreement between the Company and BT Alex. Brown Incorporated, dated October 3, 1997.
10.23** Registration Rights Agreement between the Company and BT Alex. Brown Incorporated,
dated October 8, 1997.
10.24* Senior Loan and Security Agreement between the Company and Phoenix Leasing Incorporated, dated
July 29, 1994, including forms of Promissory Notes and Warrants to Purchase Shares of Series C
Preferred Stock issued thereunder.
10.25 Security Agreement between the Company and Transamerica Business Credit Corporation, dated
March 4, 1997, including form of Promissory Notes issued thereunder (previously filed as an
exhibit to the Company's Form 10-KSB for the year ended December 31, 1996 and incorporated
herein by reference).
10.26* Agreement between the Company and Wright Industries, Inc., dated March 11, 1996.
10.27 Agreement among the Company, Johnson Controls Battery Group, Inc. and Johnson Controls/Bolder LLC,
dated July 31, 1996 (previously filed as an exhibit to the Company's February 5, 1997 Form 8-K and
incorporated herein by reference).
10.28 Cross Supply Agreement between the Company and Johnson Controls Battery Group, Inc., dated
January 22, 1997 (previously filed as an exhibit to the Company's February 5, 1997 Form 8-K and
incorporated herein by reference).
10.29 Common Stock Purchase Agreement, dated May 14, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
10.30 Common Stock Purchase Agreement, dated May 18, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
10.31 Common Stock Purchase Agreement, dated July 9, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's July 12, 1999 Registration Statement of Form S-3
and incorporated herein by reference).
10.32 Registration Rights Agreement, dated May 14, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's
July 12, 1999 Registration Statement of Form S-3 and
incorporated herein by reference).
10.33 Registration Rights Agreement, dated May 18, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's
July 12, 1999 Registration Statement of Form S-3 and
incorporated herein by reference).
10.34 Registration Rights Agreement, dated July 9, 1999, between the Company and certain stockholders
(previously filed as an exhibit to the Company's
July 12, 1999 Registration Statement of Form S-3 and
incorporated herein by reference).
10.35 Warrant Agreement between the Company and First Security Van Kasper Inc. dated November 8, 1999
(previously filed as an exhibit to the Company's November 10, 1999 Form 8-K and incorporated
herein by reference).
10.36 Warrant issued by the Company to First Security Van Kasper Inc. (previously filed as an exhibit
to the Company's November 10, 1999 Form 8-K and incorporated herein by reference).
10.37 Underwriting Agreement between the Company and First Security Van Kasper Inc. (previously filed
as an exhibit to the Company's November 10, 1999 Form 8-K and incorporated herein by reference).
23.1 Consent of Arthur Andersen LLP, independent auditors.
27.1 Financial Data Schedule.
</TABLE>
- -----------------
* Previously filed as an exhibit to the Company's Registration Statement
on Form SB-2 (Registration No. 333-2500-D) and incorporated herein by
reference.
** Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (Registration No. 333-41625) and incorporated herein by
reference.
*** Previously filed as an exhibit to the Company's January 23, 1998 Form
8-K and incorporated herein by reference.
+ Management contract or compensatory plan or arrangement.
<PAGE> 1
EXHIBIT 10.8
BOLDER TECHNOLOGY CORPORATION
KEY EMPLOYEE AGREEMENT
FOR
ROGER WARREN
This Employment Agreement ("Agreement") is entered into as of the 17th
day of September 1999, by and between Roger Warren ("Executive") and Bolder
Technology Corporation, a Delaware corporation (the "Company").
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 Subject to the terms set forth herein, the Company agrees
to employ Executive in the position of President and Chief Executive Officer,
and Executive hereby accepts such employment effective as of October 1, 1999
(the "Employment Date"). As of January 1, 2000, Executive shall also become
Chairman of the Board and shall serve as such so long as he is President and
Chief Executive Officer. During the term of his employment with the Company,
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by the Company's
general employment policies) to the business of the Company.
1.2 Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then current title,
consistent with the Bylaws of the Company and as required by the Company's
Board of Directors (the "Board").
1.3 The employment relationship between the parties shall
also be governed by the general employment policies and practices of the
Company, including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.
<PAGE> 2
2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be
rendered hereunder an annualized base salary of $100,000 during the first year
of this Agreement, $125,000 during the second year of this Agreement and
$150,000 during the third year of this Agreement. Such salary shall be payable
on the Company's payroll schedule.
2.2 DISCRETIONARY BONUS. Executive will be eligible for a
discretionary bonus, in an amount of up to 80% of his base salary for the year
for which the bonus is being paid. The bonus will be payable upon achievement
of criteria determined by the Company's Board of Directors. The Board of
Directors shall determine in its sole discretion whether such criteria have
been met. . For the quarter ending December 31, 1999, Executive shall receive a
bonus of $15,000.
2.3 STOCK OPTIONS. On the Employment Date, the Company shall
grant Executive five stock options as follows:
<TABLE>
<CAPTION>
Exercise
Option Shares Price Vesting Term Type Post-Termination Exercise
- ------ ------ --------- ------- ---- ---- -------------------------
<S> <C> <C> <C> <C> <C> <C>
1. 150,000 FMV Vested immediately 10 years ISO/NSO 12 months for death or
disability
3 months for all other
terminations
- -----------------------------------------------------------------------------------------------------------------
2. 150,000 FMV Vested pro rata 10 years ISO/NSO 12 months for death or
monthly over 36 months disability
3 months for all other
terminations
- -----------------------------------------------------------------------------------------------------------------
3. 150,000 FMV Vested pro rata 10 years ISO/NSO 24 months following any
monthly over 36 months termination
- -----------------------------------------------------------------------------------------------------------------
4. 150,000 25% of FMV Vested pro rata 10 years NSO Exerciseable for full 10
monthly over 36 months year term, regardless of
termination
- -----------------------------------------------------------------------------------------------------------------
5. 22,000 FMV Lump sum in 7 years, 10 years NSO 12 months for death or
subject to disability
performance-based
acceleration 3 months for all other
terminations
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
2.
<PAGE> 3
"FMV" means the Fair Market Value of the Company's Common Stock on the
Employment Date, determined pursuant to the Company's Stock Option Plan.
Options No. 1, 2 and 3 will be incentive stock options to the extent permitted
under the Internal Revenue Code.
Each option will be evidenced by an option agreement in the form attached as
Exhibits A, B, C, D, and E. As more fully set forth in such Exhibits, Options
1, 2, 3, 4 and 5 will each become fully vested and exercisable in the event of
a "Sale of the Company", as defined below.
Option 5 shall vest seven years from the date of grant, subject to acceleration
upon achievement of performance objectives to be established at the beginning
of each year by the Company's Board of Directors. A similar option shall be
granted at the beginning of each of years two and three under this Agreement,
and will be subject to accelerated vesting based upon performance criteria
defined by the Board of Directors for such year.
Executive shall retain all previously granted director options, which shall
continue to vest in accordance with their terms.
2.4 STANDARD COMPANY BENEFITS. Executive shall be entitled to
all rights and benefits for which he is eligible under the terms and conditions
of the standard Company benefits and compensation practices which may be in
effect from time to time and provided by the Company to its employees
generally.
2.5 RELOCATION ALLOWANCE. The Company will pay Executive a
lump sum relocation allowance of $50,000. The Company will also pay reasonable
relocation expenses and temporary living expenses.
2.6 SPECIAL BONUS UPON SALE OF COMPANY. If, during the term
of this Agreement, the Company consummates the Sale of the Company, Executive
will be entitled to receive a special bonus in an amount equal to one percent
(1%) of the Equity Value of the Company minus Executive's Option Value. For
purposes of this Section 2.6:
(i) "Sale of the Company" means a sale of all or
substantially all of the Company's assets, or a merger of the Company
with or into another company if, as a result of such merger, the
holders of the Company's voting securities immediately prior to the
closing of such transaction own less than fifty percent of the voting
securities of the surviving company in such merger.
(ii) "Equity Value" means the value of all cash,
securities and other consideration received by the holders of the
Company's capital stock in connection with the Sale of the Company.
The Equity Value shall include the consideration received or
receivable by holders of the Company's common stock, preferred stock
and vested stock options (less the exercise price of such options),
but shall not include the value of consideration receivable upon
exercise of unvested stock options. Any consideration in the form of
marketable securities shall be valued at the closing sale price of
such securities on the business day immediately prior to the closing
date of the Sale of the Company. Any consideration in the form of
3.
<PAGE> 4
securities for which there is no established trading market shall be
valued at their fair market value as of the closing date by the
Company's Board of Directors.
(iii) "Option Value" shall mean the aggregate value
of the Common Stock issuable upon exercise of Executive's stock
options (based on the closing sale price of the Company's Common Stock
as of the business day prior to the closing of the Sale of the
Company), minus the aggregate exercise price of such stock options.
The bonus shall be paid at the same time and in the same form as the
consideration payable to the holders of the Company's capital stock.
2.7 ADDITIONAL PAYMENT.
(a) Notwithstanding any other provision of this
Agreement, if any portion of any payment under this Agreement, or under any
other agreement with or plan of the Company or its affiliates (in the aggregate
"Total Payments"), would constitute an "excess parachute payment", Executive
shall be paid an additional amount (the "Gross-Up Payment") such that the net
amount retained by Executive after deduction of any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), any
interest charges or penalties in respect of the imposition of such excise tax
(but not any federal, state or local income tax, or employment tax ) on the
Total Payments, and any federal, state and local income tax, employment tax,
and excise tax upon the payment provided for by this Section shall be equal to
the Total Payments. The Gross-Up Payment shall be made by the Company to the
Executive as soon as practicable, but in no event beyond thirty (30) days from
the later of (i) the date of the determination of the Gross-Up Payment or (ii)
the date of the payments triggering the application of this Section 2.7(a) are
made. For purposes of determining the amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income tax and employment taxes at the highest
marginal rate of federal income and employment taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of Executive's
domicile for income tax purposes on the date the Gross-Up Payment is made, net
of the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.
(b) For purposes of this Agreement, the terms
"excess parachute payment" and "parachute payments" shall have the meanings
assigned to them in Section 280G of the Code and such "parachute payments"
shall be valued as provided therein. Present value for purposes of this
Agreement shall be calculated in accordance with Section 1274(b)(2) of the Code
(or any successor provision). Within fifteen (15) days following the date of
notice by the Company to the Executive, or of the Executive to the Company, of
its or his belief that there is a payment or benefit due the Executive which
will result in an excess parachute payment as defined in Section 280G of the
Code, the Executive and the Company, at the Company's expense, shall obtain the
opinion (which need not be unqualified) of nationally recognized tax counsel
("National Tax Counsel") selected by the Company's independent auditors and
reasonably acceptable to the
4.
<PAGE> 5
Executive (which may be regular outside counsel to the Company), which opinion
sets forth (i) the amount of the Base Period Income, (ii) the amount and
present value of Total Payments and (iii) the amount and present value of any
excess parachute payments. As used in this Agreement, the term "Base Period
Income" means an amount equal to the Executive's "annualized includable
compensation for the base period" as defined in Section 280G(d)(1) of the Code.
For purposes of such opinion, the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Company's independent auditors in
accordance with the principles of Section 280G(d)(3) and (4) of the Code (or
any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive. The
opinion of National Tax Counsel shall be dated as of the date of determination
and addressed to the Company and the Executive and shall be binding upon the
Company and the Executive. If such National Tax Counsel so requests in
connection with the opinion required by this paragraph (b) of Section 2.7, the
Executive and the Company shall obtain the advice of a firm of recognized
executive compensation consultants as to the reasonableness of any item of
compensation to be received by the Executive solely with respect to its status
under Section 280G of the Code and the regulations thereunder. Subject to the
second sentence of Section 2.7(a) above, within five (5) days after the
National Tax Counsel's opinion is received by the Company and the Executive,
the Company shall pay (or cause to be paid) or distribute (or cause to
distribute) to or for the benefit of Executive such amounts as are then due to
Executive under this Agreement.
(c) In the event that upon any audit by the Internal
Revenue Service, or by a state or local taxing authority, of the Total Payments
or Gross-Up Payment, a change is finally determined to be required in the
amount of taxes paid by Executive, appropriate adjustments shall be made under
this Agreement such that the net amount which is payable to the Executive after
taking into account the provisions of Section 4999 of the Code shall reflect
the intent of the parties as expressed in paragraph (a) above, in the manner
determined by the National Tax Counsel.
(d) The Company agrees to bear all costs associated
with, and to indemnify and hold harmless, the National Tax Counsel of and from
any and all claims, damages, and expenses resulting from or relating to its
determinations pursuant to paragraphs (b) and (c) above, except for claims,
damages or expenses resulting from the gross negligence or willful misconduct
of such firm.
3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 AGREEMENT. Executive agrees to execute and abide by the
Proprietary Information and Inventions Agreement attached hereto as Exhibit D.
3.2 REMEDIES. Executive's duties under the Proprietary
Information and Inventions Agreement shall survive termination of his
employment with the Company. Executive acknowledges that a remedy at law for
any breach or threatened breach by him of the provisions of the Proprietary
Information and Inventions Agreement would be inadequate, and he therefore
agrees that the Company shall be entitled to injunctive relief in case of any
such breach or threatened breach.
5.
<PAGE> 6
4. OUTSIDE ACTIVITIES.
4.1 Except with the prior written consent of the Company's
Board of Directors, Executive will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise,
other than ones in which Executive is a passive investor. Executive may engage
in civic and not-for-profit activities so long as such activities do not
materially interfere with the performance of his duties hereunder.
4.2 Except as permitted by Section 4.3, Executive agrees not
to acquire, assume or participate in, directly or indirectly, any position,
investment or interest known by him to be adverse or antagonistic to the
Company, its business or prospects, financial or otherwise.
4.3 During the term of his employment by the Company, except
on behalf of the Company, Executive will not directly or indirectly, whether as
an officer, director, stockholder, partner, proprietor, associate,
representative, consultant, or in any capacity whatsoever engage in, become
financially interested in, be employed by or have any business connection with
any other person, corporation, firm, partnership or other entity whatsoever
which were known by him to compete directly with the Company, throughout the
world, in any line of business engaged in (or planned to be engaged in) by the
Company; provided, however, that anything above to the contrary
notwithstanding, he may own, as a passive investor, securities of any
competitor corporation, so long as his direct holdings in any one such
corporation shall not in the aggregate constitute more than 1% of the voting
stock of such corporation.
5. TERMINATION OF EMPLOYMENT.
5.1 TERMINATION WITHOUT CAUSE.
(a) The Company shall have the right to terminate
Executive's employment with the Company at any time without cause.
(b) In the event Executive's employment is
terminated without cause before November 1, 2002, the Company shall pay
Executive an amount equivalent to his base salary for a period of 12 months.
Such severance pay will be paid in 12 equal monthly installments.
(c) In the event Executive's employment is
terminated without cause on or after November 1, 2002, he will not be entitled
to severance pay, pay in lieu of notice or any other such compensation, except
as provided in Section 5.3(a) hereof.
5.2 TERMINATION FOR CAUSE.
(a) The Company shall have the right to terminate
Executive's employment with the Company at any time for cause.
(b) "Cause" for termination shall mean: (a)
indictment or conviction of any felony or of any crime involving dishonesty;
(b) participation in any
6.
<PAGE> 7
fraud against the Company; (c) intentional damage to any property of the
Company; or (d) conduct by Executive which in the good faith and reasonable
determination of the Board demonstrates gross unfitness to serve.
(c) In the event Executive's employment is
terminated at any time with cause, he will not be entitled to severance pay,
pay in lieu of notice or any other such compensation.
5.3 VOLUNTARY OR MUTUAL TERMINATION.
(a) Executive may voluntarily terminate his
employment with the Company at any time, after which no further compensation
will be paid to Executive. In order to allow the Company time to hire a
replacement, Executive shall give the Company at least six months written
notice of his resignation. The Company may elect to terminate Executive's
employment at any time before the end of such notice period, provided that
severance compensation equal to Executive's then current base salary shall be
paid during any portion of the such notice period remaining after any such
accelerated employment termination date.
(b) In the event Executive voluntarily terminates
his employment, he will not be entitled to severance pay, pay in lieu of notice
or any other such compensation.
6. RESTRICTIVE COVENANT. In the event Executive voluntarily terminates
his employment with the Company, or his employment is terminated for cause,
then for one (1) year immediately following the termination date, Executive
shall not, without first obtaining the prior written approval of the Company,
directly or indirectly engage or prepare to engage, in any activities in
competition with the Company, or accept employment or establish a business
relationship with a business engaged in or preparing to engage in competition
with the Company, in any geographical location in which the Company as of the
termination date either conducts or plans to conduct business.
7. NONINTERFERENCE.
While employed by the Company, and for three (3) years
immediately following the Termination Date, Executive agrees not to interfere
with the business of the Company by:
(a) soliciting, attempting to solicit, inducing, or
otherwise causing any employee of the Company to terminate his or her
employment in order to become an employee, consultant or independent contractor
to or for any competitor of the Company; or
(b) directly or indirectly soliciting the business
of any customer of the Company which at the time of termination or one year
immediately prior thereto was listed on the Company's customer list.
7.
<PAGE> 8
8. GENERAL PROVISIONS.
8.1 NOTICES. Any notices provided hereunder must be in
writing and shall be deemed effective upon the earlier of personal delivery
(including personal delivery by telex) or the third day after mailing by first
class mail, to the Company at its primary office location and to Executive at
his address as listed on the Company payroll.
8.2 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
8.3 WAIVER. If either party should waive any breach of any
provisions of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
8.4 COMPLETE AGREEMENT. This Agreement and its Exhibits
constitute the entire agreement between Executive and the Company and it is the
complete, final, and exclusive embodiment of their agreement with regard to
this subject matter. It is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot be
modified or amended except in a writing signed by an officer of the Company.
8.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
8.6 HEADINGS. The headings of the sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
8.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive and the
Company, and their respective successors, assigns, heirs, executors and
administrators, except that Executive may not assign any of his duties
hereunder and he may not assign any of his rights hereunder without the written
consent of the Company, which shall not be withheld unreasonably.
8.8 DISPUTE RESOLUTION. The parties hereby agree that, in
order to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement (or any other agreement contemplated by or related to
this Agreement or any other agreement between the Company and Executive),
including without limitation, any claim based on contract, tort or statute, or
the arbitrability of any claim hereunder (a "Claim"), shall be settled, at the
request of any party to this Agreement, by final and binding arbitration
conducted in
8.
<PAGE> 9
Denver, Colorado. All such Claims shall be settled by one arbitrator in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association. Each party hereto expressly consents to, and waives
any future objection to, such forum and arbitration rules. Judgment upon any
award may be entered by any state or federal court having jurisdiction thereof.
Except as required by law (including, without limitation, the rules and
regulations of the Securities and Exchange Commission and the Nasdaq Stock
Market, if applicable), neither party nor the arbitrator shall disclose the
existence, content, or results of any arbitration hereunder without the prior
written consent of all parties. Adherence to this dispute resolution process
shall not limit the right of the Company or Executive to obtain any provisional
remedy, including without limitation, injunctive or similar relief from any
court of competent jurisdiction as may be necessary to protect their respective
rights and interests pending arbitration. Notwithstanding the foregoing
sentence, this dispute resolution procedure is intended to be the exclusive
method of resolving any Claims arising out of or relating to this Agreement.
The arbitration procedures shall follow the substantive law of the State of
Colorado, including the provisions of statutory law dealing with arbitration,
as it may exist at the time of the demand for arbitration, insofar as said
provisions are not in conflict with this Agreement and specifically excepting
therefrom sections of any such statute dealing with discovery and sections
requiring notice of the hearing date by registered or certified mail. If either
party hereto brings any action to enforce his or its rights hereunder, the
prevailing party in any such action shall be entitled to recover his or its
reasonable attorneys' fees and costs incurred in connection with such action to
the extent that the other party's claims or defenses are found to be frivolous.
8.9 CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of
the State of Colorado.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
BOLDER TECHNOLOGY CORPORATION
By:
----------------------------
[NAME]
[TITLE]
Date:
--------------------------
Accepted and agreed this
___ day of _________, 1999.
- ----------------------------
Roger Warren
9.
<PAGE> 1
EXHIBIT 10.9
NONSTATUTORY STOCK OPTION
Roger Warren, Optionee:
Bolder Technologies Corporation (the "Company") has granted to you,
the optionee named above, an option to purchase shares of the Common Stock of
the Company ("Common Stock"). This option is not intended to qualify and will
not be treated as an "incentive stock option" within the meaning of Section 422
of the Code.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is twenty-two thousand (22,000).
2. VESTING. Subject to the limitations contained herein, all of the
shares granted hereunder will vest (become exercisable) on September 30, 2006,
subject to acceleration upon achievement of performance objectives to be
established at the beginning of each year by the Company's Board of Directors,
unless and until you cease to provide services to the Company for any reason.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
$10.375 per share.
(b) METHOD OF PAYMENT. Payment of the exercise price per
share is due in full upon exercise of all or any part of each installment which
has accrued to you. You may elect, to the extent permitted by applicable
statutes and regulations, to make payment of the exercise price under one of
the following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act, or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
6. TERM. The term of this option commences on October 1, 1999, the
date of grant, and expires on September 30, 2009 (the "Expiration Date"),
unless this option expires sooner as
1.
<PAGE> 2
set forth below. In no event may this option be exercised on or after the
Expiration Date. Notwithstanding the foregoing, this option shall terminate
three (3) months after the termination of your Continuous Status as an
Employee, Director or Consultant for any reason and for no reason unless:
(a) such termination of Continuous Status as an Employee,
Director or Consultant is due to your disability (within the meaning of Section
422(c)(6) of the Code), in which event the option shall expire on the earlier
of the Expiration Date set forth above or twelve (12) months following such
termination of Continuous Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an Employee,
Director or Consultant is due to your death or your death occurs within three
(3) months following your termination for any other reason, in which event the
option shall expire on the earlier of the Expiration Date set forth above or
twelve (12) months after your death; or
(c) during any part of such three (3) month period the option
is not exercisable solely because of the condition set forth in paragraph 5
above, in which event the option shall not expire until the earlier of the
Expiration Date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of Continuous Status
as an Employee, Director or Consultant; or
(d) exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
would result in liability under Section 16(b) of the Exchange Act, in which
case the option will expire on the earlier of (i) the Expiration Date set forth
above, (ii) the tenth (10th) day after the last date upon which exercise would
result in such liability or (iii) six (6) months and ten (10) days after the
termination of your Continuous Status as an Employee, Director or Consultant.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions
of paragraph 2 of this option.
7. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require
pursuant to paragraph 7(b) below.
(b) The Company may require you, as a condition of exercising
this option: (i) to give written assurances satisfactory to the Company as to
your knowledge and experience in financial and business matters, and that you
are capable of evaluating the merits and risks of exercising this option; and
(ii) to give written assurances satisfactory to the Company that you are
acquiring the shares subject to the option for your own account and not with
any present
2.
<PAGE> 3
intention of selling or otherwise distributing such shares. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (x) the issuance of the shares upon the exercise of this option
has been registered under a then currently effective registration statement
under the Securities Act, or (y) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued upon exercise of this option as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(c) By exercising this option, you agree that as a
precondition to the completion of any exercise of this option, the Company may
require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of:
(i) the exercise of this option; (ii) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (iii)
the disposition of shares acquired upon such exercise. You also agree that any
exercise of this option has not been completed and that the Company is under no
obligation to issue any Common Stock to you until such an arrangement is
established or the Company's tax withholding obligations are satisfied, as
determined by the Company.
8. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3 of the Exchange Act
(a "QDRO"), and is exercisable during your life only by you or a transferee
pursuant to a QDRO. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a
third party who, in the event of your death, shall thereafter be entitled to
exercise this option.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the shares subject to this
option without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company), the option will be appropriately adjusted in the class(es) and
number of shares and price per share of the stock subject thereto. Such
adjustments shall be made by the Board of Directors of the Company, the
determination of which shall be final, binding and conclusive. The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company".
(b) In the event of: (i) a dissolution, liquidation or sale
of substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation; or (iii) a
reverse merger in which the Company is the surviving corporation but the shares
of Common Stock of the Company outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then to the extent permitted by applicable law:
(x) any surviving corporation or an Affiliate of such surviving corporation
shall
3.
<PAGE> 4
assume this option or shall substitute a similar option therefor, or (y) this
option shall continue in full force and effect. In the event any surviving
corporation and its Affiliates refuse to assume or continue this option, or to
substitute a similar option therefor, then the time during which this option
may be exercised shall be accelerated and the option terminated if not
exercised prior to such event.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate,
or their respective stockholders, Boards of Directors, officers or employees to
continue any relationship which you might have as a Director or Consultant for
the Company or Affiliate.
11. NOTICES. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. MISCELLANEOUS. The Board shall have the power to accelerate the
time at which this stock option may first be exercised or the time during which
this stock option or any part thereof will vest pursuant to section 2,
notwithstanding the provisions in this stock option stating the time at which
it may first be exercised or the time during which it will vest. Neither an
Employee, a Director, a Consultant nor any person to whom this stock option is
transferred in accordance with the terms hereof shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to this stock option unless and until such person has satisfied all
requirements for exercise of this stock option pursuant to the terms hereof.
The Board of Directors at any time, and from time to time, may amend the terms
of this stock option; provided, however, that the rights and obligations under
this stock option shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom this stock option was
granted and (ii) such person consents in writing.
13. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only directors' fee by the Company or who are
not compensated by the Company for their services as Directors.
(d) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT" means the employment or relationship as a Director or Consultant is
not interrupted or terminated. The Board of Directors of the Company, in its
sole discretion, may determine whether Continuous
4.
<PAGE> 5
Status as an Employee, Director or Consultant shall be considered interrupted
in the case of: (i) any leave of absence approved by the Board of Directors,
including sick leave, military leave, or any other personal leave; or (ii)
transfers between locations of the Company or between the Company, Affiliates
or their successors.
(e) "DIRECTOR" means a member of the Board of Directors of
the Company.
(f) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(h) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
5.
<PAGE> 6
Dated the 1st day of October, 1999.
Very truly yours,
BOLDER TECHNOLOGIES CORPORATION
By:
-----------------------------
Name:
Title:
ATTACHMENTS:
Notice of Exercise
6.
<PAGE> 7
The undersigned:
1. Acknowledges receipt of the foregoing option and understands that
all rights and liabilities with respect to this option are set forth in the
option; and
2. Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
None
------------------------
(Initial)
Other:
------------------------
------------------------
------------------------
------------------------------------
OPTIONEE
Address:
------------------------------------
------------------------------------
7.
<PAGE> 1
EXHIBIT 10.10
NONSTATUTORY STOCK OPTION
Roger Warren, Optionee:
Bolder Technologies Corporation (the "Company") has granted to you, the
optionee named above, an option to purchase shares of the Common Stock of the
Company ("Common Stock"). This option is not intended to qualify and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Code.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is one hundred fifty thousand
(150,000).
2. VESTING. Subject to the limitations contained herein, 1/36th of the
shares will vest (become exercisable) on first day of each month hereafter until
either (i) you cease to provide services to the Company for any reason, or (ii)
this option becomes fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is $2.594
per share.
(b) METHOD OF PAYMENT. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act, or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
6. TERM. The term of this option commences on October 1, 1999, the date
of grant, and expires on September 30, 2009 (the "Expiration Date"), regardless
of any termination of your Continuous Status as an Employee, Director or
Consultant for any reason and for no reason. In no event may this option be
exercised on or after the Expiration Date.
1.
<PAGE> 2
7. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to paragraph 7(b) below.
(b) The Company may require you, as a condition of exercising
this option: (i) to give written assurances satisfactory to the Company as to
your knowledge and experience in financial and business matters, and that you
are capable of evaluating the merits and risks of exercising this option; and
(ii) to give written assurances satisfactory to the Company that you are
acquiring the shares subject to the option for your own account and not with any
present intention of selling or otherwise distributing such shares. The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (x) the issuance of the shares upon the exercise of this
option has been registered under a then currently effective registration
statement under the Securities Act, or (y) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued upon exercise of this option as such counsel deems necessary
or appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.
(c) By exercising this option, you agree that as a
precondition to the completion of any exercise of this option, the Company may
require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of:
(i) the exercise of this option; (ii) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (iii) the
disposition of shares acquired upon such exercise. You also agree that any
exercise of this option has not been completed and that the Company is under no
obligation to issue any Common Stock to you until such an arrangement is
established or the Company's tax withholding obligations are satisfied, as
determined by the Company.
8. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3 of the Exchange Act (a
"QDRO"), and is exercisable during your life only by you or a transferee
pursuant to a QDRO. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the shares subject to this option
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the option will be
9.
<PAGE> 3
appropriately adjusted in the class(es) and number of shares and price per share
of the stock subject thereto. Such adjustments shall be made by the Board of
Directors of the Company, the determination of which shall be final, binding and
conclusive. The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company".
(b) In the event of: (i) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation; or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
of the Company outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then to the extent permitted by applicable law: (x) any
surviving corporation or an Affiliate of such surviving corporation shall assume
this option or shall substitute a similar option therefor, or (y) this option
shall continue in full force and effect. In the event any surviving corporation
and its Affiliates refuse to assume or continue this option, or to substitute a
similar option therefor, then the time during which this option may be exercised
shall be accelerated and the option terminated if not exercised prior to such
event.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall obligate the Company or any Affiliate, or their
respective stockholders, Boards of Directors, officers or employees to continue
any relationship which you might have as a Director or Consultant for the
Company or Affiliate.
11. NOTICES. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. MISCELLANEOUS. The Board shall have the power to accelerate the
time at which this stock option may first be exercised or the time during which
this stock option or any part thereof will vest pursuant to section 2,
notwithstanding the provisions in this stock option stating the time at which it
may first be exercised or the time during which it will vest. Neither an
Employee, a Director, a Consultant nor any person to whom this stock option is
transferred in accordance with the terms hereof shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to this stock option unless and until such person has satisfied all requirements
for exercise of this stock option pursuant to the terms hereof. The Board of
Directors at any time, and from time to time, may amend the terms of this stock
option; provided, however, that the rights and obligations under this stock
option shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom this stock option was granted and
(ii) such person consents in writing.
3.
<PAGE> 4
13. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only directors' fee by the Company or who are not
compensated by the Company for their services as Directors.
(d) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board of Directors of the Company, in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board of Directors, including sick leave, military
leave, or any other personal leave; or (ii) transfers between locations of the
Company or between the Company, Affiliates or their successors.
(e) "DIRECTOR" means a member of the Board of Directors of the
Company.
(f) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(h) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
4.
<PAGE> 5
Dated the 1st day of October, 1999.
Very truly yours,
BOLDER TECHNOLOGIES CORPORATION
By:
------------------------------
Name:
Title:
ATTACHMENTS:
Notice of Exercise
5.
<PAGE> 6
The undersigned:
1. Acknowledges receipt of the foregoing option and understands that
all rights and liabilities with respect to this option are set forth in the
option; and
2. Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
None
---------------------------
(Initial)
Other:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
OPTIONEE
Address:
-------------------------------------
-------------------------------------
6.
<PAGE> 1
EXHIBIT 10.11
NONSTATUTORY STOCK OPTION
Roger Warren, Optionee:
Bolder Technologies Corporation (the "Company") has granted to you, the
optionee named above, an option to purchase shares of the Common Stock of the
Company ("Common Stock"). This option is not intended to qualify and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Code.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is one hundred fifty thousand
(150,000).
2. VESTING. Subject to the limitations contained herein, 1/36th of the
shares will vest (become exercisable) on the first day of each month hereafter
until either (i) you cease to provide services to the Company for any reason, or
(ii) this option becomes fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
$10.375 per share.
(b) METHOD OF PAYMENT. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act, or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
6. TERM. The term of this option commences on October 1, 1999, the date
of grant, and expires on September 30, 2009 (the "Expiration Date"), unless this
option expires sooner as set forth below. In no event may this option be
exercised on or after the Expiration Date. Notwithstanding the foregoing, this
option shall terminate twenty-four (24) months following 1.
<PAGE> 2
any termination of your Continuous Status as an Employee, Director or Consultant
for any reason and for no reason. However, this option may be exercised
following termination of Continuous Status as an Employee, Director or
Consultant only as to that number of shares as to which it was exercisable on
the date of termination of Continuous Status as an Employee, Director or
Consultant under the provisions of paragraph 2 of this option.
7. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to paragraph 7(b) below.
(b) The Company may require you, as a condition of exercising
this option: (i) to give written assurances satisfactory to the Company as to
your knowledge and experience in financial and business matters, and that you
are capable of evaluating the merits and risks of exercising this option; and
(ii) to give written assurances satisfactory to the Company that you are
acquiring the shares subject to the option for your own account and not with any
present intention of selling or otherwise distributing such shares. The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (x) the issuance of the shares upon the exercise of this
option has been registered under a then currently effective registration
statement under the Securities Act, or (y) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued upon exercise of this option as such counsel deems necessary
or appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.
(c) By exercising this option, you agree that as a
precondition to the completion of any exercise of this option, the Company may
require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of:
(i) the exercise of this option; (ii) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (iii) the
disposition of shares acquired upon such exercise. You also agree that any
exercise of this option has not been completed and that the Company is under no
obligation to issue any Common Stock to you until such an arrangement is
established or the Company's tax withholding obligations are satisfied, as
determined by the Company.
8. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3 of the Exchange Act (a
"QDRO"), and is exercisable during your life only by you or a transferee
pursuant to a QDRO. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
2.
<PAGE> 3
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the shares subject to this option
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the option will be appropriately adjusted in the class(es) and number
of shares and price per share of the stock subject thereto. Such adjustments
shall be made by the Board of Directors of the Company, the determination of
which shall be final, binding and conclusive. The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company".
(b) In the event of: (i) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation; or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
of the Company outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then to the extent permitted by applicable law: (x) any
surviving corporation or an Affiliate of such surviving corporation shall assume
this option or shall substitute a similar option therefor, or (y) this option
shall continue in full force and effect. In the event any surviving corporation
and its Affiliates refuse to assume or continue this option, or to substitute a
similar option therefor, then the time during which this option may be exercised
shall be accelerated and the option terminated if not exercised prior to such
event.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall obligate the Company or any Affiliate, or their
respective stockholders, Boards of Directors, officers or employees to continue
any relationship which you might have as a Director or Consultant for the
Company or Affiliate.
11. NOTICES. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. MISCELLANEOUS. The Board shall have the power to accelerate the
time at which this stock option may first be exercised or the time during which
this stock option or any part thereof will vest pursuant to section 2,
notwithstanding the provisions in this stock option stating the time at which it
may first be exercised or the time during which it will vest. Neither an
Employee, a Director, a Consultant nor any person to whom this stock option is
transferred in accordance with the terms hereof shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to this stock option unless and until such person has satisfied all requirements
for exercise of this stock option pursuant to the terms hereof. The
3.
<PAGE> 4
Board of Directors at any time, and from time to time, may amend the terms of
this stock option; provided, however, that the rights and obligations under this
stock option shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom this stock option was granted and
(ii) such person consents in writing.
13. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only directors' fee by the Company or who are not
compensated by the Company for their services as Directors.
(d) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board of Directors of the Company, in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board of Directors, including sick leave, military
leave, or any other personal leave; or (ii) transfers between locations of the
Company or between the Company, Affiliates or their successors.
(e) "DIRECTOR" means a member of the Board of Directors of the
Company.
(f) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(h) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
4.
<PAGE> 5
Dated the 1st day of October, 1999.
Very truly yours,
BOLDER TECHNOLOGIES CORPORATION
By:
------------------------------
Name:
Title:
ATTACHMENTS:
Notice of Exercise
5.
<PAGE> 6
The undersigned:
1. Acknowledges receipt of the foregoing option and understands that
all rights and liabilities with respect to this option are set forth in the
option; and
2. Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
None
---------------------------
(Initial)
Other:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
OPTIONEE
Address:
-------------------------------------
-------------------------------------
6.
<PAGE> 1
EXHIBIT 10.12
NONSTATUTORY STOCK OPTION
Roger Warren, Optionee:
BOLDER Technologies Corporation (the "Company") has granted to you, the
optionee named above, an option to purchase shares of the Common Stock of the
Company ("Common Stock"). This option is not intended to qualify and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Code.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is two hundred sixty-three
thousand eight hundred and fifty-eight (263,858).
2. VESTING. Subject to the limitations contained herein, one hundred
forty-two thousand seven hundred and seventy-two (142,772) of the shares will
vest (become exercisable) on October 1, 1999 and 1/36th of the remaining shares
will vest on the first day of each month hereafter until either (i) you cease to
provide services to the Company for any reason, or (ii) this option becomes
fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
$10.375 per share.
(b) METHOD OF PAYMENT. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act, or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
1.
<PAGE> 2
6. TERM. The term of this option commences on October 1, 1999, the date
of grant, and expires on September 30, 2009 (the "Expiration Date"), unless this
option expires sooner as set forth below. In no event may this option be
exercised on or after the Expiration Date. Notwithstanding the foregoing, this
option shall terminate prior to the Expiration Date three (3) months after the
termination of your Continuous Status as an Employee, Director or Consultant for
any reason and for no reason unless:
(a) such termination of Continuous Status as an Employee,
Director or Consultant is due to your disability (within the meaning of Section
422(c)(6) of the Code), in which event the option shall expire on the earlier of
the Expiration Date set forth above or twelve (12) months following such
termination of Continuous Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an Employee,
Director or Consultant is due to your death or your death occurs within three
(3) months following your termination for any other reason, in which event the
option shall expire on the earlier of the Expiration Date set forth above or
twelve (12) months after your death; or
(c) during any part of such three (3) month period the option
is not exercisable solely because of the condition set forth in paragraph 5
above, in which event the option shall not expire until the earlier of the
Expiration Date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of Continuous Status
as an Employee, Director or Consultant; or
(d) exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
would result in liability under Section 16(b) of the Exchange Act, in which case
the option will expire on the earlier of (i) the Expiration Date set forth
above, (ii) the tenth (10th) day after the last date upon which exercise would
result in such liability or (iii) six (6) months and ten (10) days after the
termination of your Continuous Status as an Employee, Director or Consultant.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
7. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to paragraph 7(b) below.
(b) The Company may require you, as a condition of exercising
this option: (i) to give written assurances satisfactory to the Company as to
your knowledge and experience in financial and business matters, and that you
are capable of evaluating the merits and risks of
2.
<PAGE> 3
exercising this option; and (ii) to give written assurances satisfactory to the
Company that you are acquiring the shares subject to the option for your own
account and not with any present intention of selling or otherwise distributing
such shares. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (x) the issuance of the shares upon
the exercise of this option has been registered under a then currently effective
registration statement under the Securities Act, or (y) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued upon exercise of this option as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(c) By exercising this option, you agree that as a
precondition to the completion of any exercise of this option, the Company may
require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of:
(i) the exercise of this option; (ii) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (iii) the
disposition of shares acquired upon such exercise. You also agree that any
exercise of this option has not been completed and that the Company is under no
obligation to issue any Common Stock to you until such an arrangement is
established or the Company's tax withholding obligations are satisfied, as
determined by the Company.
8. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3 of the Exchange Act (a
"QDRO"), and is exercisable during your life only by you or a transferee
pursuant to a QDRO. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the shares subject to this option
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the option will be appropriately adjusted in the class(es) and number
of shares and price per share of the stock subject thereto. Such adjustments
shall be made by the Board of Directors of the Company, the determination of
which shall be final, binding and conclusive. The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company".
(b) In the event of: (i) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation; or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
of the Company outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of
3.
<PAGE> 4
securities, cash or otherwise, then to the extent permitted by applicable law:
(x) any surviving corporation or an Affiliate of such surviving corporation
shall assume this option or shall substitute a similar option therefor, or (y)
this option shall continue in full force and effect. In the event any surviving
corporation and its Affiliates refuse to assume or continue this option, or to
substitute a similar option therefor, then the time during which this option may
be exercised shall be accelerated and the option terminated if not exercised
prior to such event.
10. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall obligate the Company or any Affiliate, or their
respective stockholders, Boards of Directors, officers or employees to continue
any relationship which you might have as a Director or Consultant for the
Company or Affiliate.
11. NOTICES. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. MISCELLANEOUS. The Board shall have the power to accelerate the
time at which this stock option may first be exercised or the time during which
this stock option or any part thereof will vest pursuant to section 2,
notwithstanding the provisions in this stock option stating the time at which it
may first be exercised or the time during which it will vest. Neither an
Employee, a Director, a Consultant nor any person to whom this stock option is
transferred in accordance with the terms hereof shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to this stock option unless and until such person has satisfied all requirements
for exercise of this stock option pursuant to the terms hereof. The Board of
Directors at any time, and from time to time, may amend the terms of this stock
option; provided, however, that the rights and obligations under this stock
option shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom this stock option was granted and
(ii) such person consents in writing.
13. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only directors' fee by the Company or who are not
compensated by the Company for their services as Directors.
4.
<PAGE> 5
(d) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board of Directors of the Company, in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board of Directors, including sick leave, military
leave, or any other personal leave; or (ii) transfers between locations of the
Company or between the Company, Affiliates or their successors.
(e) "DIRECTOR" means a member of the Board of Directors of the
Company.
(f) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(h) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
5.
<PAGE> 6
Dated the 1st day of October, 1999.
Very truly yours,
BOLDER TECHNOLOGIES CORPORATION
By:
------------------------------
Name:
Title:
ATTACHMENTS:
Notice of Exercise
6.
<PAGE> 7
The undersigned:
1. Acknowledges receipt of the foregoing option and understands that
all rights and liabilities with respect to this option are set forth in the
option; and
2. Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
None
---------------------------
(Initial)
Other:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
OPTIONEE
Address:
-------------------------------------
-------------------------------------
6.
<PAGE> 1
EXHIBIT 10.13
INCENTIVE STOCK OPTION
Roger Warren, Optionee:
BOLDER Technologies Corporation (the "Company"), pursuant to its 1996
Equity Incentive Plan (as amended from time to time, the "Plan"), has granted to
you, the optionee named above, an option to purchase shares of the common stock
of the Company ("Common Stock"). This option is intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers). Defined terms not explicitly defined in this agreement but
defined in the Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is thirty six thousand one hundred
and forty-two (36,142).
2. VESTING. Subject to the limitations contained herein, seven thousand
two hundred and twenty-eight (7,228) shares will vest (become exercisable) on
October 1, 1999 and 1/36th of the remaining shares will vest (become
exercisable) on the first day of each month hereafter until either (i) you cease
to provide services to the Company for any reason, or (ii) this option becomes
fully vested.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
$10.375 per share, being not less than the fair market value of the Common Stock
on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
1.
<PAGE> 2
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act.
6. TERM. The term of this option commences on October 1, 1999, the date
of grant, and expires on September 30, 2009 (the "Expiration Date," which date
shall be no more than ten (10) years from the date this option is granted),
unless this option expires sooner as set forth below or in the Plan. In no event
may this option be exercised on or after the Expiration Date. Notwithstanding
the foregoing, this option shall terminate prior to the Expiration Date three
(3) months after the termination of your Continuous Status as an Employee,
Director or Consultant unless one of the following circumstances exists:
(a) Your termination of Continuous Status as an Employee,
Director or Consultant is due to your disability (within the meaning of Section
422(c)(6) of the Code). This option will then expire on the earlier of the
Expiration Date set forth above or twelve (12) months following such termination
of Continuous Status as an Employee, Director or Consultant.
(b) Your termination of Continuous Status as an Employee,
Director or Consultant is due to your death or your death occurs within three
(3) months following your termination of Continuous Status as an Employee,
Director or Consultant for any other reason. This option will then expire on the
earlier of the Expiration Date set forth above or twelve (12) months after your
death.
(c) If during any part of such three (3) month period you may
not exercise your option solely because of the condition set forth in paragraph
5 above, then your option will not expire until the earlier of the Expiration
Date set forth above or until this option shall have been exercisable for an
aggregate period of three (3) months after your termination of Continuous Status
as an Employee, Director or Consultant.
(d) If your exercise of the option within three (3) months
after termination of your Continuous Status as an Employee, Director or
Consultant would result in liability under section 16(b) of the Securities
Exchange Act of 1934, then your option will expire on the earlier of (i) the
Expiration Date set forth above, (ii) the tenth (10th) day after the last date
upon which exercise would result in such liability or (iii) six (6) months and
ten (10) days after the termination of your Continuous Status as an Employee,
Director or Consultant.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status of an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or
2.
<PAGE> 3
permanent and total disability. The Company has provided for continued vesting
or extended exercisability of your option under certain circumstances for your
benefit, but cannot guarantee that your option will necessarily be treated as an
"incentive stock option" if you provide services to the Company or an Affiliate
of the Company as a consultant or exercise your option more than three (3)
months after the date your employment with the Company and all Affiliates of the
Company terminates.
7. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subsection 13(e) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any
exercise of this option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (A) the exercise of this option;
(B) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (C) the disposition of shares acquired upon
such exercise; and
(ii) you will notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the shares of the
Common Stock issued upon exercise of this option that occurs within two (2)
years after the date of this option grant or within one (1) year after such
shares of Common Stock are transferred upon exercise of this option.
8. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option.
9. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in this option shall obligate the Company or any Affiliate of the
Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
10. NOTICES. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
3.
<PAGE> 4
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
4.
<PAGE> 5
Dated the 1st day of October, 1999.
Very truly yours,
By:
-------------------------------
Duly authorized on behalf of
the Board of Directors
ATTACHMENTS:
Bolder Technologies Corporation 1996 Equity Incentive Plan, as amended
Notice of Exercise
5.
<PAGE> 6
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
None
---------------------------
(Initial)
Other:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
OPTIONEE
Address:
-------------------------------------
-------------------------------------
6.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Annual Report on Form 10-K, into BOLDER Technologies
Corporation's previously filed Registration Statement on Form S-3 (File No.
333-41625), Registration Statement on Form S-8 (File No. 333-20989),
Registration Statement on Form S-8 (File No. 333-08968), Registration Statement
on Form S-3 (File No. 333-82635), Registration Statement on Form S-3 (File No.
333-86235) and Registration Statement on Form S-3 (File No. 333-94077).
/s/ Arthur Andersen LLP
Denver, Colorado,
March 29, 2000.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 17,651,373
<SECURITIES> 4,978,850
<RECEIVABLES> 1,833,261
<ALLOWANCES> (219,000)
<INVENTORY> 1,656,539
<CURRENT-ASSETS> 26,371,733
<PP&E> 24,658,878
<DEPRECIATION> (3,496,275)
<TOTAL-ASSETS> 48,113,877
<CURRENT-LIABILITIES> 6,652,436
<BONDS> 8,858,831
0
15,653,939
<COMMON> 14,578
<OTHER-SE> 19,146,201
<TOTAL-LIABILITY-AND-EQUITY> 48,113,877
<SALES> 1,859,992
<TOTAL-REVENUES> 2,029,316
<CGS> 5,551,178
<TOTAL-COSTS> 5,566,697
<OTHER-EXPENSES> 16,076,886
<LOSS-PROVISION> 219,000
<INTEREST-EXPENSE> 1,307,317
<INCOME-PRETAX> (20,379,392)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,379,392)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,379,392)
<EPS-BASIC> (1.97)
<EPS-DILUTED> 0
</TABLE>
