UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from
November 1, 1996, to March 31, 1997
Commission file number 1-10869
UNIQUE MOBILITY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0579156
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Corporate Circle, Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 278-2002
Securities registered pursuant to Section 12(b) of the Act:
Common stock, $.01 par value
Name of each exchange on which registered:
American Stock Exchange
Boston Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
Indicate 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. X
The aggregate market value of the voting stock held by nonaffiliates of the
registrant (11,700,585 shares) computed by reference to the closing price of
such stock on the American Stock Exchange, as of June 25, 1997:
$81,904,095
The number of shares outstanding (including shares held by affiliates) of each
of the registrant's classes of common stock, as of June 25, 1997:
13,355,435 shares of the
registrant's common stock,
$.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
In Part III certain information is incorporated by reference
from the Company's definitive Proxy Statement for the
August 19, 1997 Annual Meeting of Shareholders
<PAGE>
ITEM 1. BUSINESS
General
Unique Mobility, Inc. ("Unique" or the "Company") was organized in 1967 and
presently develops and manufactures high efficiency permanent magnet (PM) motors
and controls for automotive, industrial and aerospace applications. Since 1990,
the Company's focus has been to apply its products to several types of electric
(EV) and hybrid electric vehicle (HEV) propulsion systems. The Company's
objective is to leverage its technology base and name recognition to serve a
number of high potential niche markets in the near-term, and automotive mass
markets in the longer-term. The Company's common stock trades on the American,
Boston, Pacific and Chicago Stock Exchanges under the symbol "UQM".
Historically, the Company's revenue has been derived from contract research and
development services. These sponsored research and development activities have
supplemented internally funded product development programs and have added
significantly to the Company's technology base. Now, the Company, its affiliates
and its licensees hope to begin commercial production of products that the
Company hopes will generate a more consistent and greater revenue stream than
that of prior years. The Company's future commercial products are expected
to include:
Bicycle Motors: Proprietary PM motors, controllers and chargers for
application in electrically powered bicycles.
Wheelchair Motors: Proprietary PM wheelchair motors that are compact and
energy efficient for application in motorized wheelchair products.
Scooter Motors: Advanced hub-mounted PM traction motors and controls for
motor scooter applications. These matched systems deliver high performance
over a wide power range with programmable control and regenerative braking.
They will be manufactured in Taiwan by the Company's licensee for Kwang
Yang Motor Co., Ltd. (KYMCO), one of the world's largest producers of motor
scooters.
Golf Cart Motors: Higher power (5-10 kW) variations of the scooter motor
and controller designed to reach existing markets for small electric
vehicles such as golf carts, light industrial vehicles and lawn care
products.
EV and HEV Motors: Power ranges from 30-100 kW. Typical is the UQM
PowerPhase System, developed for on-road EV and HEV applications and is
currently offered for sale on a prototype low volume basis. The system
includes a 53 kW PM motor, matching controller and single stage transaxle
with differential gearing and parking lock. Larger versions (63-100 kW) are
currently offered or under development for bus and truck applications.
Management believes that the innovative designs, carefully selected materials
and advanced manufacturing processes used in UQM products provide a number of
benefits. These benefits include high power density (packageability), high
efficiency over a wide range of operation, and simplified construction that is
capable of achieving cost benefits at higher production levels. High power
density and efficiency are critical attributes in any application where space
is at a premium and the energy supply is limited.
Unique's relationships with major original equipment manufacturers (OEMs) and
other industry leaders has enabled the Company to obtain partial funding for
product development while still retaining substantially all rights to its
intellectual property. In some cases, these funding sources are, or are
expected to become, manufacturing partners, customers or licensees of the
developed products. Such is the case with KYMCO, co-funder and licensee of the
Company's electric scooter power system, who is also the Company's partner in a
Taiwan based joint venture company.
<PAGE>
The Company intends to continue to advance its technology base and to develop
new products that have a high potential for commercialization. Key among these
are the development of 75 and 100 kW traction drive systems for trucks and
buses; an advanced high speed motor for flywheels, spindle drives and vacuum
pumps; electric and hybrid electric passenger car conversion projects for
customers in Korea and Taiwan; and the application of the Company's electric
scooter power system to small vehicles for customers in Asia and Europe. In
addition, the UQM powered Ethos 3 EV electric car is being demonstrated to
potential licensees in collaboration with the Pininfarina Group of Turin,
Italy (Pininfarina).
Unique believes that its technology, its developed products, its cadre of
strategic partners and its key management and technical personnel have
positioned the Company to potentially capitalize on existing niche markets an
global mass markets, should they develop, for energy-efficient clean vehicles
and related products.
Recent Developments
During fiscal 1997, the Company continued to strengthen its strategic
relationships with Invacare Corporation (Invacare), KYMCO and Pininfarina. The
Company also formed a new strategic relationship with EV Global Motors, a new
company formed by former Chrysler Chairman, Lee A. Iacocca, to market light
electric vehicles.
Invacare Relationship: The design for manufacture of the Invacare wheelchair
motor has been completed and prototypes have been delivered to Invacare for in-
chair testing. Invacare is a leading U.S. based manufacturer and marketer of
home medical equipment with products that include a complete line of
wheelchairs, patient aids, seating and positioning products, home institutional
beds, and respiratory assistance products. Mr. J. B. Richey, Invacare's top
technical executive, is a member of the Company's board of directors. The
Company is currently negotiating with Invacare (1) to manufacture wheelchair
motors pursuant to a long-term supply agreement and (2) to grant Invacare an
exclusive worldwide royalty bearing license to make, use and sell other of the
Company's motors for application in medical products. There can be no
assurance, however, that such negotiations will be successful.
Taiwan Joint Venture: During fiscal 1997, Taiwan UQM Electric Co., Ltd. (Taiwan
UQM), a Taiwan corporation owned jointly by the Company, KYMCO and Turn-Luckily
Technology (TLT), completed construction of a factory for the manufacture of
products under license from the Company. Taiwan UQM is currently installing
semi-automated manufacturing equipment and is planning to launch the production
of conventional starter motors and generators in August 1997 pursuant to a
supply agreement with KYMCO. Taiwan UQM plans to launch production of electric
power systems for KYMCO scooters in 1999 and eventually will produce a full
line of UQM products for other Asian automotive and industrial customers.
The Pininfarina Ethos 3 EV: The Company has continued to demonstrate the Ethos 3
EV electric car to automotive OEMs and other interested parties with its partner
Pininfarina. During fiscal 1997, product presentations and demonstrations were
conducted in Italy for Audi, BMW, Fiat, Mercedes-Micro Compact Car, Rover and
Saab. Upon its return to the U.S., the vehicle was showcased at the Denver
"Summit of the Eight." Other demonstrations are planned in Denver and in Italy
throughout the remainder of calendar 1997. It is the objective of these
demonstrations to secure one or more funded programs leading to the development
of a global family of "clean" vehicles that can be industrialized and
distributed by third party automotive clients for sale to the general public
in several models in many markets worldwide.
<PAGE>
EV Global Motors: In June 1997, the Company entered into a strategic partnership
with EV Global Motors Company (EVG), a new entity recently formed by former
Chrysler Chairman Lee Iacocca to develop and market light electric
transportation systems such as bicycles, scooters and electric cars. EVG
purchased 1,151,925 shares of the Company's stock in a private transaction from
Alcan Aluminum Limited and purchased warrants from other sources for an
additional 350,000 shares. Separately, the Company and EVG entered into a Stock
Purchase Agreement whereby the Company has agreed to purchase 400,000 shares of
EVG's common stock in exchange for 200,000 newly-issued shares of the Company's
common stock. Upon completion of the latter transaction, EVG's beneficial
ownership will represent approximately 12.2 percent of the Company's
outstanding shares, making EVG the Company's largest shareholder. Concurrently,
it is contemplated that Mr. Iacocca will join the Company's board of directors
and Mr. Ray A. Geddes, the Company's chairman and Chief Executive Officer, will
join the board of EVG.
Also in June 1997, the Company, EVG, KYMCO, TLT and Taiwan UQM entered into a
memorandum of understanding for the formation of an international strategic
alliance to develop and market KYMCO electric scooters in North and South
America.
Products/Technology
The Company has an aggressive strategy to commercialize its technologies and
develop products to provide for future growth. Initial product offerings are
being directed primarily toward near term markets for low voltage small vehicle
traction applications and will be followed by an expansion into the markets,
should they develop, for larger, high voltage vehicle propulsion systems. Small
vehicle applications include wheelchairs, bicycles, motor scooters, small
industrial vehicles, golf carts and lawn care products that generally require
power levels from 1 kW to 10 kW at voltages from 12 Vdc to 48 Vdc. Large vehicle
applications include electric and hybrid electric passenger cars, commercial
trucks and urban transit buses that generally require power levels from 20 kW
to 250 kW at voltages from 96 Vdc to 400 Vdc.
The Company's current product offerings typically utilize a number of
proprietary technologies, several of which are patented, including high pole-
count PM motor design with six step commutation and phase advanced control.
The high pole-count, together with a relatively large air-gap diameter, create
a higher torque, lower speed motor than that of more conventional architectures.
Higher torque at lower speed allows for a lower gear ratio, fewer mechanical
losses and higher efficiency at light "cruising" loads. These designs have
excellent heat rejection capability, high copper utilization (i.e. tight end
turns), and a "hollow" profile that provides room to package other components
inside the motor. Six step commutation enables the use of low cost rotor
positioning sensing mechanisms and reduces switching losses to improve inverter
efficiency. Phase advanced control is a technique for manipulating current to
allow the motor to run faster and thus deliver more power without the cost of
having to increase the current supply.
Currently developed products include:
Wheelchair Motor: A proprietary PM motor has been developed for the Invacare
powered wheelchair product line. The Motor is compact and energy efficient.
While it was developed specifically for powered wheelchair applications,
management believes that scaled-up versions of the motor can serve several other
markets for electrically powered vehicles. The Company is currently
negotiating with Invacare to manufacture motors for its wheelchairs; however,
there can be no assurance that such negotiations will be successful.
<PAGE>
Picture of Wheelchair and Motor
Fig. 1 Invacare Storm' Wheelchair and PM Wheelchair Motor
Scooter Motor and Controller: A 3.6 kW hub-mounted PM motor and full authority
48 Vdc controller with integrated charger and dc-dc converter has been developed
for the KYMCO electric scooter product line. This system is air-cooled, compact
and efficient over a wide operating range. It delivers torque at a wide range
of speeds and provides regenerative braking down to zero rpm. While the scooter
motor system was developed for KYMCO's exclusive use in most Asian markets, the
Company has reserved commercial rights in Japan and India and in all markets
outside Asia.
Picture of Prototype Electric Scooter
FIG. 2 KYMCO Prototype Electric Scooter and Traction System
Golf Cart Motor and Controller: A higher power (5-10 kW) variation of the KYMCO
scooter motor and controller is being developed to reach existing markets for
small electric vehicles such as golf carts, light industrial vehicles and lawn
care products. The golf cart motor is longer in dimension than the scooter
motor, but has the same diameter stator core and can be built from the same
tooling. Its features of merit are similar to those of the scooter motor, but
at power levels up to 10 kW. Management believes this product can be marketed
as an aftermarket replacement motor as well as original equipment, and for this
reason universal motor mounts have been designed for easy "drop-in"
installation.
<PAGE>
Picture of Golf Cart Motor
Fig. 3 Golf Cart Motor
PowerPhase System: A high power, modular traction drive system for on-road
electric and hybrid electric vehicle applications. The PowerPhase system was
initially developed for the Ethos 3 EV demonstrator vehicle, but has application
as a power system for all types of passenger cars and light trucks. The system
includes a matched set of components composed of a 53 kW liquid cooled PM motor,
a 180-400 Vdc microprocessor based programmable controller with phase advance
control, and a single stage transaxle with differential and a mechanical parking
lock. The transaxle connects the output shaft of the motor to the road wheels in
a variety of front or rear wheel drive configurations. A 63 kW motor and
controller of the same frame size is offered with in-line gear reduction for
bus and heavy truck applications.
Picture of Unique PowerPhase System
Fig. 4 53 kW PowerPhase System
Ethos 3 EV Demonstrator
In partnership with Pininfarina, the Company has developed the system
architecture for the Ethos 3 EV electric car. The Ethos 3 EV is a four-door,
four-passenger hatchback sedan, styled as a wedge-like aerodynamic cube. It has
a rectangular base, short in length, but wide and tall to provide a roomy
interior. The split tailgate simplifies the loading of cargo from above,
particularly when the car is parked bumper to bumper along the curb. The
McPherson-type front suspension has telescoping arms and coil springs, while
the rear suspension has interconnected trailing arms. Electric power steering
is by rack and pinion and the braking system incorporates full regenerative
braking supplemented by discs on the front and drums on the rear.
<PAGE>
Picture of Ethos e EV Demonstrator and Space Frame Structure
Fig. 5 Ethos 3 EV Demonstrator and Space Frame Structure
The Ethos 3EV is built on an extruded aluminum space frame that forms a sturdy
cage to give a high level of occupant protection. Impact beams are incorporated
in the doors. The front seats are fitted with pre-tensioned seat belts and a
driver's side air bag. Instruments and controls include a speedometer, a battery
state-of-charge gauge, shift lever, an engine-on light, and a main power
disconnect switch. Integrated into the dash panel is an efficient heating,
cooling and ventilating system specially developed for the Ethos 3 EV by
Calsonic International, one of the world's largest suppliers of automotive
climate control systems.
At the heart of the Ethos 3 EV is the front mounted UQM PowerPhase traction
drive system that provides 53 kW maximum power and 150 Nm of continuous torque.
The motor drives through a 6.8 to 1 single stage transaxle with a mechanical
differential and parking brake. Electric current is supplied to the motor by a
400 Vdc, 300 Amp inverter using IGBT power switching modules with digital
microprocessor control. Proprietary software provides for smooth, quick
acceleration with phase advance control for extended power and full
regenerative braking for extended range.
The UQM PowerPhase system is matched to a high-performance energy storage
system that uses 26 Ovonic nickel metal-hydride (NiMH) batteries. NiMH
batteries are characterized by high power, long cycle life, no memory effect,
few maintenance problems and they are totally recyclable. GM Ovonic, a joint
venture between General Motors and Ovonic Battery Company is the manufacturing
agent. In the Ethos 3 EV, the batteries are housed in three compartments, two
under the front seats and one under the rear cargo area. They have a specific
energy of 70 Wh/kg, a specific power of 220 W/kg and are connected in series to
provide 312 Vdc with 85 Amp hours of capacity. This system permits the Ethos 3
EV to travel more than twice as far per charge as would lead-acid batteries of
the same size and weight, or approximately 150 miles at 45 mph.
Marketing/Markets
The Company's marketing strategy is to build on its technology base to become a
leading supplier of advanced vehicle power systems for energy efficient,
environmentally clean surface transportation throughout the world. In the near
term, the Company's focus is being directed toward existing markets for low-
voltage systems used in small vehicles such as wheelchairs, bicycles, electric
scooters, golf carts, light industrial vehicles and lawn care equipment. This
effort will be followed by initiatives to reach the market for larger, high-
voltage systems required for on-road passenger cars, trucks and buses, should
such a market develop.
<PAGE>
Near Term Markets
Wheelchair Motors: The Company hopes to manufacture wheelchair motors for
Invacare. Each powered wheelchair requires two motors. Invacare is the country's
largest manufacturer of home health care and mobility products. It holds the No.
1 position in powered wheelchairs with approximately 60 percent of the market
and is No. 2 in Europe. The Company is currently negotiating with Invacare to
manufacture motors for its wheelchairs; however, there can be no assurance that
such negotiations will be successful.
Scooter Motors and Controllers: The Company's electric scooter power system is
expected to be manufactured by Taiwan UQM for KYMCO and possibly for other
scooter manufacturers in markets where KYMCO does not have exclusive rights
(i.e., Japan, India and all markets outside Asia). KYMCO is Taiwan's largest
producer of two-wheeled vehicles with approximately one third of the market.
Timing for the production launch of the KYMCO electric scooter has not as yet
been released, but the launch is scheduled to occur no later than 1999 to meet
a government mandate requiring, by the year 2000, that two percent of all
scooters sold in Taiwan be electric. There can be no assurance that the
government mandates will not be modified or rescinded.
The Taiwan Ministry of Transportation and Communication reports that 1994
domestic sales of gasoline powered two-wheeled vehicles totaled 1,192,503 units
with approximately 500,000 additional units being produced for export,
primarily to the People's Republic of China. This would indicate a Taiwanese
market of 23,850 electric scooters by the year 2000, assuming a flat sales
rate from now until then. Other potential markets for electric scooters and/or
power system components include China, India and Indonesia, all of which have
larger usage of two-wheeled vehicles than Taiwan.
Golf Cart Motors and Controllers: Motors used to power golf carts are also used
for other commercial vehicle applications. To better understand the potential,
the Company commissioned Markowitz & McNaughton, Inc., a Reston, Virginia,
consulting firm, to define and quantify the U.S. market for golf cart motors
and controllers.
The golf cart market is defined as vehicles sold to golf courses, golf
communities and resorts for the transport of one or more persons around a golf
course or residential community. Also included are golf carts operating as
utility vehicles for on-site and in-plant materials transport and security
patrol vehicles. The domestic market for golf carts is approximately 190,000
units annually, with 65,000 being electric. Environmental concerns are expected
to increase the percentage of electric models in future years.
Neighborhood electric vehicles (NEVs) are an outgrowth of electric golf carts.
They are used for personal transportation, primarily to carry two or four
persons around closed residential subdivisions, resorts, and town centers.
Current market size is estimated at 15,000 units annually, with most being some
type of modified golf cart. Growth of this segment is expected to come from the
retired residential community market that is being served by a combination of
new NEV manufacturers and the golf cart industry.
<PAGE>
Industrial personnel and cargo carriers also represent a market for golf cart
motors. These vehicles are used for towing, materials handling and people
transport in plants, industrial parks, warehouses and other close proximity
manufacturing and industrial settings. Generally, they are electrically driven
by brushed dc motors that often require expensive brush replacement maintenance
during the life of the vehicle. Market size of this segment is estimated at
6,000 units annually.
Lawn tractors, riding mowers and turf equipment are used for residential or
commercial grounds keeping. They are almost exclusively gasoline powered and
current vehicle designs are not oriented toward electric motor use. However, the
demand for electric equipment could escalate with environmental regulation and
advances in battery technology. Electric versions would require at least two
motors, one or more for the cutting blade and one for propulsion. Current U.S.
market size is estimated at 135,000 riding mowers and 1,000,000 riding tractors,
not including farm equipment.
At present, the Company does not have distribution channels in place to reach
the described markets for golf cart motors and controllers. It is the Company's
goal, however, to establish distribution channels either directly or by a joint
venture or licensing arrangement with a major original equipment manufacturer
during calendar 1997, although, there can be no assurance that it will be
successful.
Emerging Growth Markets
In a world that produces over 50 million cars, trucks and buses every year, the
Company believes that the potential for electric and hybrid electric vehicle
power systems is substantial, especially in those markets that place a premium
on fuel efficiency and good air quality. The Company's long term goal has been,
and is, to become a leading provider to this emerging segment of the automotive
industry. However, the electric vehicle market has been slow to develop and the
hybrid electric vehicle market could take even longer. Early product offerings
are costly, advanced batteries are not yet in mass production and battery
charging infrastructure is virtually non-existent.
Recently, a joint study by the Electric Vehicle Association of the Americas
(EVAA) and the Electric Transportation Coalition (ETC) attempted to project a
timetable for the emergence of a sustainable market for electric vehicles. The
conclusions drawn from this study reveal an anticipated three-phase growth
pattern:
Phase I: Entry of electric vehicles into limited early markets,
primarily fleets; time frame 1996-1998 with production of low thousand
of units over the period.
Phase II: Expansion to additional markets with improved technology
(batteries); time frame 1999-2002 with production of tens of thousands of
units over the period.
Phase III: Broad based market launch of commercially competitive
electric vehicles; time frame 2003-2006 with production of 50,000 units
or more.
Several market drivers such as advanced battery development, government
incentives and the degree to which the market accepts early product offerings
could speed up or slow down this timetable, making accurate forecasting
extremely difficult. The Company believes that its technology, as evidenced by
the Ethos 3 EV and the UQM PowerPhase system, has positioned it well to
capitalize on this potential, should such a market develop.
<PAGE>
Environmental Initiatives and Legislation
The major driving force behind the commercialization of electric and hybrid
electric vehicles in the United States is the demand for clean urban air. The
federal government has responded with the Clean Air Act, the Energy Policy Act
and other initiatives directed toward reducing vehicular emissions. Some state
governments, California, Massachusetts and New York in particular, have done
likewise. California, for example, mandated that beginning in 1998, at least
two percent of all cars and light trucks offered for sale by major automakers
must be zero emission vehicles (ZEVs). The requirement was to increase to five
percent in 2001 and to ten percent in 2003. Massachusetts and New York adopted
similar regulations.
During 1996, California canceled the mandates for ZEVs until 2003 when all
automakers that sell more than 3,000 vehicles in California will be required to
meet the ten percent ZEV requirement. Massachusetts has announced its intention
to follow California, but New York has not. In lieu of the earlier mandates, the
California Air Resources Board (CARB) opted for a market-based approach whereby
the major automakers agreed to install limited ZEV manufacturing capacity prior
to 2003, and CARB would grant credit for early ZEV sales toward the 2003
mandate. As of December 31, 1996, six manufacturers --- GM, Ford, Chrysler,
Toyota, Nissan and Honda --- have announced plans to market limited numbers of
ZEVs beginning in the first quarter of 1997.
Also during 1996, the U.S. Department of Energy modified its rules governing how
certain state government and utility/fuel provider fleets covered by the Energy
Policy Act of 1992 must comply with the Act's requirements for the use of
alternative fuels. Under the modified rules, covered fleets must make
increasingly higher purchases of alternatively fueled light duty vehicles
(which may include electric) over the 1997-2001 period. A fleet is covered by
the Act if the fleet has 50 or more light-duty vehicles (under 8,500 GVW).
The current fleet acquisition formula is as follows:
Model Utility/Fuel State Government
Year Provider Fleets Fleets
1997 30% 10%
1998 50% 15%
1999 70% 25%
2000 90% 50%
2001 90% 75%
The Company views the relaxation of the California ZEV mandates as a positive
step in the development of the EV industry. While the ZEV mandates were
instrumental in jump starting the development of several new technologies, they
have the potential to force manufacturers to offer poorly performing products
at prohibitive costs that may not be accepted in the marketplace. Management
believes such a result would create an artificial market and would seriously
damage the ultimate acceptance of electric vehicles. There can be no assurance
that the state and federal mandates will not be further modified or rescinded.
<PAGE>
License Agreements
The Company and Alcan Aluminium Limited (Alcan) have entered into an agreement
(Assignment Agreement) wherein Alcan assigned to the Company all of its rights,
title and interest in all technology previously developed by the Company for or
on behalf of Alcan. The Assignment Agreement further provides that the Company
shall pay to Alcan royalties on revenue derived from the manufacture and sale
of products or processes embodying PM technology, subject to an offset in the
amount of one-half of the Company's patent application and maintenance fees
related to the PM technology.
In May 1996, the Company entered into a License and Technical Assistance
Agreement with Taiwan UQM, a joint venture company in which the Company has a
39 percent equity interest. Pursuant to the agreement, Taiwan UQM was granted
an exclusive license in Taiwan to make, use and sell the Company's electric
motors and controls an exclusive license in the People's Republic of China with
respect to the propulsion system developed for KYMCO and a nonexclusive license
throughout the rest of Asia (except India and Japan) for the Company's electric
motors and controls. The license is royalty bearing except for propulsion
systems manufactured by Taiwan UQM for KYMCO.
In November 1996, KYMCO entered into a supply agreement with Taiwan UQM relating
to the purchase from Taiwan UQM of propulsion systems developed by the Company.
With the execution of the supply agreement, the grant of license contained in
the Company's Product Development and License Agreement with KYMCO became
effective. Pursuant thereto, KYMCO has a worldwide, royalty-free license,
exclusive in Asia except for Japan and India, to sell scooters with propulsion
systems manufactured by Taiwan UQM using the Company's technology.
Competition
The automotive, industrial and commercial markets into which the Company hopes
to introduce and market its products are all highly competitive and
characterized by rapid changes due to technological improvements. The automotive
industry, in particular, is currently being driven by legislation and other
initiatives to develop low-emission, fuel efficient vehicle propulsion systems.
The Company is aware of efforts by many companies, including large automotive
OEMs, to develop electric and hybrid electric vehicles. The Company believes
that its principal competitors in the automotive supply sector include Auxilec,
Delco Power Electronics, Fuji Electric, Hitachi, Matsushita and Siemans.
Principal competitors in the industrial and commercial sectors include Advanced
DC, Emerson Electric, General Electric and the Reliance Division of Rockwell
International. The Company is aware of other companies, both large and small,
that have entered or may enter the market and expects competition to intensify
as demand increases for high efficiency PM motors.
Although the Company is not as well capitalized as many of its competitors, its
strategy is to compete with larger companies on the basis of technical skills,
proprietary know-how and its affiliation with large and well-financed strategic
partners.
Patents and Trademarks
The Company filed a motor patent application with the U.S. Patent office in
December 1985, and similar applications are being prosecuted in many other
countries throughout the world. As a result of the original U.S. Application,
U.S. Patent No. 5,004,944 was issued on April 2, 1991 containing one independent
claim and three dependent claims. A Continuing Application of the 1985
application was filed in October 1990 to pursue subject matter that was not
allowed in the original U.S. Patent. As a result, U.S. Patent 5,311,092 issued
on May 10, 1994 with four independent claims and one dependent claim. Of the
foreign applications, a patent has been published covering thirteen European
member countries of the European Patent Office (EPO), and an opposition thereto
has been resolved. In addition, corresponding patents have issued in Australia,
Brazil, Canada, India, Israel, South Korea, Mexico, New Zealand, South Africa
and Taiwan. Seven other foreign applications remain pending, three of which
have been indicated to be allowable.
<PAGE>
In August 1989, the Company filed a separate application with the U.S. Patent
office to cover certain proprietary aspects of its electronic control circuitry.
Additional claims were added by means of a Continuation in Part (CIP) filed in
May 1990. In April 1992, the Company was issued U.S. Patent No. 5,107,151 as a
result of the CIP Application. In August 1990, an International Patent
Application corresponding to the U.S. Application and the Continuation in Part
was filed under the provisions of the Patent Cooperation Treaty (PCT) which
includes the EPO, Japan and South Korea, among others. National applications
were also filed in eight additional countries including India, Taiwan and
Israel; patents have been granted in Mexico, Taiwan, India and Israel.
Applications remain pending in Japan and Korea but the EPO Application has been
withdrawn.
In March 1990, a Continuing Application was filed to claim the method of
constructing the motor as disclosed in U.S. Patent No. 5,004,944. The
Continuing Application resulted in U.S. Patent 5,319,844 issued June 14, 1994.
In March 1991 the Company filed an International Patent Application
corresponding to the U.S. Application; as a result a patent has been granted in
Australia and there are seven applications pending in foreign countries and one
pending application in the European Patent Office (EPO) which designates the
European group of countries.
In September 1992, the Company filed a separate application with the U.S. Patent
Office titled "Stator and Method of Constructing Same for High Power Density
Electric Motors and Generators" which has resulted in issuance of U.S. Patent
5,382,859 in January, 1995. This patent embodies the Company's most recent
enhancement to its motor technology which utilizes a segmented iron powder
stator ring developed specifically for brushless permanent magnet stator cores.
A Divisional U.S. Patent Application has been filed to pursue a second invention
disclosed in the original application; that divisional application has resulted
in U.S. Patent 5,592,731 issued January 14, 1997. Patent Applications in
Canada,Europe, Japan and Korea are pending as a result of a counterpart PCT
International Patent Application.
In July 1994 the Company filed an application in the U.S. Patent office titled
"Brushless DC motor using Phase Timing Advance" which embodies a low cost
method of controlling the drive current to a motor to achieve operating
characteristics ideal for vehicle traction drives. This application has been
allowed and the company is awaiting issuance of the patent. In June 1995 a
counterpart PCT International Patent Application was filed and various foreign
country patent applications are now being filed.
During 1994 the Company acquired the assets of Everton Developments of
Birmingham, England including all rights under PCT Application WO 92/22121
published December 10, 1992. Patent applications filed thereunder are still
pending in four countries. The United States application has been allowed and
the company is awaiting issuance of the patent. Corresponding patents have
been granted in Australia and in Europe where the patent is effective as to
France, Germany, Italy, Switzerland, Liechtenstein and United Kingdom.
The Company elected to write-off the costs associated with this patent during
the five months ended March 31, 1997, due to the uncertainty of applying the
underlying technology to commercial markets in the near term. See also
"Management Discussion and Analysis of Financial Condition and Result of
Operations" below.
The Company owns the trademark "UM," which is registered with the United States
Patent and Trademark Office and is subject to renewal in October 2000. This
trademark is available for use in connection with the products and publications
of Unique. The Company owns three U.S. Trademark Registrations for "UNIQ"
(International Class 7 for power Transducers, and Class 12 for Utility Land
Vehicles and Class 16 for Publications). The Class 12 trademark is subject to
renewal in June 2006; the Class 7 trademark is subject to renewal in August
2006; and the Class 16 trademark is subject to renewal in February 2007.
<PAGE>
The Company currently holds a patent issued by the United States Patent Office,
in August 1980, which covers certain mechanical features of the ElecTrek
automobile, principally its composite unibody structure and battery trays.
This patent expires in August 1997. The Company no longer produces or market
its ElecTrek automobile.
The Company has also initiated registration of the letters UQM and a stylized
version thereof as its new trademark in the U.S. and 26 countries throughout
the world. Two U.S. Trademark Registrations and 22 out of 26 of the foreign
countries have granted registrations or indicated them to be allowable. These
trademarks are directed to the same trademark classes as for the marks "UM" and
"UNIQ". UQM is the American Stock Exchange code identification for the Company.
The foreign trademark registrations and applications include major markets
where the Company is doing business or establishing business contacts.
The Company has recently begun using "POWERPHASE" as a trademark to identify its
modular brushless permanent magnet electric motor traction drives for electric
and hybrid electric vehicles. An application for trademark registration in the
United States was filed in September 1996 and is still pending. Corresponding
applications for trademark registration have been filed in 11 countries and the
European community.
In November 1994, the Company and Alcan completed an assignment agreement which
provided, among other things, that for so long as Alcan beneficially owns at
least five percent of the Company's common stock, it shall be obligated to pay
one-half of the patent application and maintenance fees (including reasonable
attorney's fees related thereto) associated with the Company's PM technology
in an amount not to exceed the aggregate amount of royalty revenue derived from
the PM technology.
The Company's future success depends, in part, on the diligent prosecution of
its issued and pending motor and electronic patents, as well as the filing and
prosecution of patents on future technological advances, if any. There can be
no assurance that the Company will possess the financial resources necessary to
prosecute and maintain existing applications or to pursue additional patents.
If the Company is not able to prosecute and maintain its existing patent
applications, they will lapse. There can be no assurance that the Company's
patents will not be circumvented, invalidated or infringed, or that the Company
will possess the financial resources to enforce its existing patents and patent
applications in the event of an infringement. Further, new technology may be
developed by third parties or may already exist unknown to the Company causing
the Company's proprietary technology to be obsolete.
The Company also intends to rely on the unpatented proprietary know-how it has
developed and now utilizes in its products. There can be no assurance that
others will not independently develop, acquire or obtain access to the Company's
technology. Although the Company protects its proprietary rights by executing
confidentiality agreements with its management, employees and others with access
to the Company's technology, these measures may not be adequate to protect the
Company from disclosure or misappropriation of its proprietary information.
Manufacturing
To date, the Company has manufactured all of its products at its facility in
Golden, Colorado. The Company anticipates investing in manufacturing equipment
to further develop the manufacturing capacity at this facility at such time as
the Company secures a commitment for the volume purchase of its products. The
Golden facility has current available capacity of approximately 15,000 square
feet which can be dedicated to manufacturing operations without significant
alteration. Although the Company has no prior experience in delivering large
volumes of its products, it is currently in the process of establishing the
capacity to meet such high volume production requirements and has retained
talented personnel with experience in motor manufacturing to assist in the
launch of such operations. The Company believes additional manufacturing space
and equipment is readily available.
<PAGE>
Backlog
At May 31, 1997, the Company had unperformed service contracts from customers
which will provide payments to the Company upon completion aggregating
approximately $2,875,000. All such contracts are subject to amendment,
modification or cancellation.
In addition, the Company had an order backlog for motors and electronic controls
at May 31, 1997, with an aggregate sales value of approximately $158,000.
Customers and Suppliers
A significant portion of the Company's revenue for the five months ended
March 31, 1997, was derived from General Motors Corporation, Kia Motors, and
Pan Asia Technology, Co., Ltd. Contract services revenue of $452,478 or 65
percent of total contract services revenue was derived from these customers.
Principal raw materials purchased by the Company include iron, steel, copper
wire, neodymium boron iron alloy, fiberglass and epoxy resins. All of the above
items are available from several suppliers and the Company generally relies on
more than one for each item. Principal purchased products include power
electronic switching devices and magnet material which are available from
several suppliers.
US Government Contracts
For the five months ended March 31, 1997, $78,532 or 11 percent of the Company's
contract service revenue was derived from contracts with agencies of the U.S.
Government and from subcontracts with U.S. Government prime contractors.
Some of the Company's business with the U.S. Government was performed on a cost
plus fixed fee basis. These contracts provide for reimbursement of costs, to
the extent allocable and allowable under applicable regulations, and payment of
a fee. Certain other contracts with the U.S. Government provide for the
reimbursement of costs on a 50 percent cost sharing basis based on not-to-exceed
billing rates negotiated between the Company and the U.S. Government. Other
U.S. Government business is performed under firm fixed price contracts. On
"cost-share" and "firm fixed price" contracts, the Company can incur an actual
loss in the performance thereof if incurred costs exceed the contract amount.
All U.S. Government contracts with the Company are subject to modification or
cancellation at the convenience of the Government.
Employee and Labor Relations
As of March 31,1997, the Company had 32 full-time employees. The Company has
entered into employment contracts with its three executive officers which expire
in December 1999. None of the Company's employees are covered by a collective
bargaining agreement. The Company's management believes that its relationship
with its employees has been generally satisfactory.
In addition to its full-time staff, the Company from time to time engages the
services of outside consultants and contract labor to meet peak workload or
specialized program requirements. The Company does not anticipate any
difficulty in locating additional qualified professional engineers, technicians
and production workers, if so required, to meet expanded research and
development or manufacturing operations.
<PAGE>
ITEM 2. PROPERTIES
Facilities
The Company leases a 40,000 square foot office/laboratory/warehouse building in
Golden, Colorado, from a limited liability company of which the Company and an
investor are equal owners. The Company has entered into a ten-year lease of the
building at $21,667 per month with an option for an additional five years at the
then market rate. The Company is required to pay all taxes, maintenance and
insurance. The Company currently subleases 12,500 square feet of this facility
for $7,031 per month plus an allocable share of taxes, maintenance and
insurance costs. The Company believes its existing facilities are adequate to
meet its operational needs for the foreseeable future.
The Company also owns the basic tools and equipment, including computer hardware
and software, necessary for the conduct of its production, research and
development and vehicle prototyping activities.
ITEM 3. LEGAL PROCEEDINGS
There is no material litigation with respect to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted for vote by security holders of the Company
during the five months ended March 31, 1997.
ITEM 5. MARKET PRICE OF COMMON STOCK
The Company's common stock trades on the American, Boston, Pacific and Chicago
Stock Exchanges. The high and low closing prices, by fiscal quarter, as
reported by the American Stock Exchange for the last three years, the quarter
ended January 31, 1997, and the five months ended March 31, 1997, are as
follows:
1997 High Low
Two Months Ended March 31, 1997. . . . . . $4.50 $3.18
Quarter Ended January 31, 1997. . . . . . . $4.88 $3.18
1996
Fourth Quarter. . . . . . . . . . . . . . . .$5.19 $3.81
Third Quarter . . . . . . . . . . . . . . . .$5.00 $3.50
Second Quarter. . . . . . . . . . . . . . . .$5.13 $4.19
First Quarter . . . . . . . . . . . . . . . .$4.50 $3.31
1995
Fourth Quarter . . . . . . . . . . . . . . . $5.38 $3.63
Third Quarter. . . . . . . . . . . . . . . . $5.56 $3.83
Second Quarter . . . . . . . . . . . . . . . $5.63 $3.75
First Quarter. . . . . . . . . . . . . . . . $5.75 $4.75
1994
Fourth Quarter . . . . . . . . . . . . . . . $7.00 $4.88
Third Quarter. . . . . . . . . . . . . . . . $6.88 $4.88
Second Quarter . . . . . . . . . . . . . . . $7.88 $5.75
First Quarter. . . . . . . . . . . . . . . . $8.63 $7.00
<PAGE>
On June 25, 1997 the closing price of the Company's common stock, as reported on
the American Stock Exchange, was $7.00 per share and there were 891 holders of
record of the common stock.
The Company has not paid any cash dividends on its common stock since inception
and intends for the foreseeable future to retain any earnings to finance the
growth of its business. Future dividend policy will be determined by the Board
of Directors of the Company based upon consideration of the Company's earnings,
capital needs and other factors then relevant.
ITEM 6. SELECTED FINANCIAL DATA
Unique Mobility, Inc.
Consolidated Selected Financial Data
<TABLE>
<CAPTION>
Five Months
Ended
March 31,
1997(1) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Contract
Services
Revenue $ 700,132 1,436,484 4,031,951 1,643,203 1,461,568 2,306,070
Product
Sales $ 152,016 611,213 701,700 708,917 695,300 468,508
Operating
Loss $(1,120,900) (2,744, (1,134,338) (3,367,873) (2,446,574) (2,240,170)
Net Loss $(1,201,085) (2,904,743) (1,330,433) (3,395,356) (2,473,804) (2,217,207)
Net Loss
Per Common
Share $ (.12) (.26) (.13) (.35) (.28) (.33)
Total
Assets $12,370,699 8,712,649 7,626,178 5,903,551 7,791,826 4,700,507
Long-term
Obligations $ 726,218 744,389 807,003 886,996 921,758 2,161,376
Cash Divi-
dend Declared
Per Common
Share $ -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Prior to March 31, 1997, the Company's fiscal year ended on October 31.
Effective March 31, 1997, the Company changed its fiscal year to end on
March 31. The following table sets forth unaudited consolidated selected
financial data for the unaudited five months ended March 31, 1996:
Contract Services Revenue $ 331,761
Product Sales $ 216,325
Operating Loss $(1,313,705)
Net Loss $(1,367,261)
Net Loss per Common Share $ (0.13)
Total Assets $ 7,799,981
Long-Term Obligations $ 774,248
Cash Divident declared per Common Share $ 0
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this Report. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this report and
any documents incorporated herein by reference, as well as, in the Company's
Registration Statement on Form S-3 (file no. 23843). These forward-looking
statements represent the Company's judgment as of the date of this Report. The
Company disclaims, however, any intent or obligation to update these forward-
looking statements.
The Company has changed its fiscal year end from October 31 to March 31. This
change results in a five month transition period for financial reporting
purposes commencing on November 1, 1996, and ending on March 31, 1997. This
report covers the Company's financial condition at March 31, 1997 and
October 31, 1996 and results of operations, changes in stockholders' equity and
changes in cash flows for the five months ended March 31, 1997, and the fiscal
years ended October 31, 1996, 1995 and 1994, respectively.
Financial Condition
The Company's financial condition strengthened during five months ended
March 31, 1997, due to the sale of 1,289,288 shares of common stock pursuant to
offerings under Regulation S and Regulation D of the Exchange Act of 1934.
Cash proceeds to the Company from the offering, net of offering costs, amounted
to $4,146,820. Primarily as a result thereof, cash and cash equivalents rose to
$5,713,557 at March 31, 1997 compared to $3,230,246 at fiscal 1996 year end and
shareholders' equity rose to $8,574,799 at March 31, 1997, from $5,592,876 at
October 31, 1996. Working capital (the excess of current assets over current
liabilities) increased to $4,174,184 at March 31, 1997 from $2,469,197 at
October 31, 1996.
Accounts receivable declined to $389,314 at March 31, 1997 from $569,562 at
October 31, 1996, reflecting collection of certain overdue trade receivables.
Accordingly, the accounts receivable balance at March 31, 1997, represented
approximately 69 days revenue compared to 102 days revenue at fiscal 1996 year
end.
Costs and estimated earnings on uncompleted contracts increased $12,402 to
$191,885 at March 31, 1997 from the fiscal 1996 year end level of $179,483. The
increase was due to increased levels of contract services in process.
Estimated earnings on contracts in process decreased to $490,407 at
March 31, 1997 on total contracts in process of $3,649,111 compared to
estimated earnings on contracts in process of $596,765 on total contracts in
process of $1,678,117 at October 31, 1996. The decrease is attributable to
two contracts, representing 9 percent of total contracts in process at
March 31, 1997, which have cost overruns of approximately $119,000 in the
aggregate and a greater proportion of material costs in contracts in process at
March 31, 1997.
Raw materials and work in process inventories rose to $283,155 and $69,460,
respectively, at March 31, 1997 compared to $273,527 and $55,996, respectively,
at October 31, 1996. The increase is attributable to increased demand for the
Company's PowerPhase drive system. Finished products inventories declined
$5,846 to $72,776 at March 31, 1996 due to increased product sales and product
utilization in contract services contracts during the five months ended
March 31, 1997.
<PAGE>
The Company invested $118,608 for the acquisition of property and equipment
during the five months ended March 31, 1997, compared to $22,279 for the
comparable five month period ended March 31, 1996. The increase in capital
expenditures is primarily attributable to improvements to the Company's Golden,
Colorado, facility by Unique Building Partners. The Company expended $47,865
on the prosecution of its trademark and patent applications during the five
months ended March 31, 1997.
Investment in Taiwan joint venture rose to $2,677,730 at March 31, 1997, from
$1,366,540 at October 31, 1996, reflecting the recording of future capital call
obligations to Taiwan UQM. The capital call obligation to Taiwan UQM was
funded in April 1997 from the proceeds of the Company's sale of common stock
completed in March, 1997. See also "Liquidity and Capital Resources" below.
Patent and trademark costs, net of accumulated amortization, was $502,297 at
March 31, 1997 a decrease of $17,669 from October 31, 1996. The decrease
represents the net effect of the write-off of a patent acquired from Everton
Developments Limited in fiscal 1995. The write-off of the patent costs
reflects the Company's assessment that the revenue realizable from the
technology encompassed under the patent over the near term would be
insufficient to support the carrying cost of the associated technology asset.
Accounts payable rose to $169,403 at March 31, 1997 from $121,790 at October 31,
1996, due to increased levels of purchased components and materials for projects
in process in the normal course of operation.
Other current liabilities increased to $459,223 at March 31, 1997, from
$400,574 at October 31, 1996. The increase was primarily attributable to an
overpayment by a participant in the Company's March 1997 common stock offering.
Billings in excess of costs and estimated earnings on uncompleted contracts rose
to $659,807 at March 31, 1997 from $25,685 at October 31, 1996 primarily due to
a substantial prepayment by an overseas customer on a development program.
Long-term debt declined $18,171 during the five months ended March 31, 1997,
due to scheduled principal payments on the mortgage debt associated with the
Company's facility.
Common stock and additional paid-in capital increased to $130,430 and
$27,094,170 at March 31, 1997, respectively, compared to $117,514 and
$23,021,339 at October 31, 1996. The increases were due to the sale of common
stock to institutional investors and an individual investor in the amount of
$4,146,820; sales of common stock to employees and consultant's through the
company's benefit plans of $45,000; and the issuance of common stock for
services of $3,949.
Results of Operations
Five months ended March 31, 1997
Operations for the five months ended March 31, 1997, resulted in a net loss of
$1,201,085 or $0.12 per share compared to a net loss of $1,367,261 or $0.13 per
share for the comparable five month period last year.
Revenue derived from contract services was $700,132 for the five months ended
March 31, 1997 versus $331,761 for the comparable period last year. The
increase is attributable to increased levels of sponsored development
activities.
Product sales during the five months ended March 31, 1997, declined to $152,016
compared to $216,325 for the comparable five month period last year due
principally to price reductions and lower unit volumes of high voltage products
and decreased sales to the solar race car market.
<PAGE>
Gross profit margins for the five months ended March 31, 1997, increased to
15.6 percent compared to a negative margin of 2.3 percent for the comparable
five month period last year. Gross profit on contract services was 15.2 percent
for the five months ended March 31, 1997, compared to a negative margin of 3.3
percent for the comparable period last year. Gross profit on product sales for
the five months ended March 31, 1997, was 17.3 percent compared to a negative
margin of .7 percent for the comparable period last year. The increase in
contract services margins for the five months ended March 31, 1997, is
attributable to increased absorption of overhead costs. The increase in
margins on product sales is attributable to lower overhead allocations and
improvement in purchased material costs.
Research and development expenditures for the five months ended March 31, 1997,
decreased $120,785 to $489,442 for the five months ended March 31, 1997 from the
amount expended during the comparable period last year of $610,227. The
decrease is attributable to lower levels of internally-funded production and
facilitization engineering activities associated with the launch of volume
manufacturing operations at the Company's Golden, Colorado facility and lower
levels of "cost sharing" type contracts during the five months ended
March 31, 1997.
General and administrative expense for the five months ended March 31, 1997,
rose $65,204 over the amount expended during the comparable period last year to
$600,446. The increase during the five months ended March 31, 1997, was due
primarily to the impairment of patent costs which were written off during the
period of approximately $55,000 and commission costs on the production design
phase of the KYMCO development program of approximately $30,000 which were
recorded during the five months ended March 31, 1997.
Depreciation and amortization expense was $159,473 during the five months ended
March 31, 1997, compared to $153,106 for the five month period ended
March 31, 1996. The increase is due to depreciation of additional property and
equipment and the amortization of patent and trademark costs in an expanded
number of countries.
Interest income increased to $54,802 during the five months ended March 31,
1997, compared to $46,214 for the comparable period last year. The increase is
attributable to higher levels of invested cash and improved yields on short-term
investment instruments.
Interest expense decreased to $84,704 during the five months ended March 31,
1997, compared to $91,780 for the comparable period last year due primarily to
a lower interest rate achieved through refinancing of the mortgage loan on the
Company's facility.
Equity in loss of Taiwan joint venture rose to $24,121 for the five months ended
March 31, 1997 compared to $16,682 for the comparable period last year. The
increase is due to expanded staffing and operations at Taiwan UQM preparatory
to the launch of manufacturing operations.
Effect of Recently Issued Accounting Standards
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, Earnings Per Share ("SFAS 128") which will be
effective for interim and annual periods ending after December 15, 1997, and
changes the computation and disclosure requirements for earnings per share.
Had earnings per share been reported under the provisions of SFAS 128 for the
five months ended March 31, 1997, basic earnings per share would have been
$0.12 per share. The effect of the adoption of SFAS 128 is not expected to
have a material effect on the earnings per share disclosures.
<PAGE>
Fiscal years ended October 31, 1996, 1995 and 1994
Operations for the year ended October 31, 1996, resulted in a net loss of
$2,904,743 or $0.26 per share. This compares to a net loss of $1,330,433 or
$0.13 for the year ended October 31,1995, and a net loss of $3,395,356 or $0.3
per share of the year ended October 31, 1994.
Revenue derived from contract services in fiscal 1996 declined 64 percent or
$2,595,467 from the fiscal 1995 level, and 13 percent or $206,719 from the
fiscal 1994 level. The decrease in revenue from fiscal 1995 was attributable
principally to a reduced level of work performed for Ford Motor Company and the
U.S. Department of Energy which accounted for $1,526,445 or 59 percent of the
decrease in revenue. The decrease in revenue from fiscal 1994 was also
primarily attributable to a reduced level of work performed under the product
development agreement with KYMCO which accounted for $167,252 or 81 percent of
the decrease in revenue.
Product sales during fiscal 1996 declined 13 percent from the fiscal 1995 leve
and 14 percent from the fiscal 1994 level. The decrease is attributable to
price reductions on the Company's high voltage prototype products anddecreased
sales to the solar racing market.
Gross profit margins for fiscal 1996 declined to 20.9 percent compared to 31.7
percent for fiscal 1995 and were 6.6 percent higher than the fiscal 1994 margin
of 14.3 percent. The fiscal 1996 decline is attributable to price reductions
in the Company's high voltage product line and decreased absorption of overhead
costs on sponsored development contracts. Gross profit on contract services
was 25.4 percent for fiscal 1996 compared to 34.2 percent in fiscal 1995 and
12.3 percent in fiscal 1994. Gross profit on product sales was 9.9 percent for
fiscal 1996 compared to 17.5 percent in fiscal 1995 and 18.7 percent in fiscal
1994.
Research and development expenditures in fiscal 1996 rose $335,843 over the
fiscal 1995 level and declined $459,671 from the amount expended during fiscal
1994. The fiscal 1996 increase is attributable primarily to production and
facilitization engineering activities associated with the planned launch of
volume manufacturing operations for Invacare which accounted for approximately
$745,000 or 48 percent of internally-funded research and development
expenditures. The decrease from fiscal 1994 expenditures is attributable to a
decline in "cost sharing" development contracts which amounted to approximately
$420,000 in fiscal 1996 compared to $695,000 for fiscal 1994.
General and administrative expense for fiscal 1996 rose $185,417 over the fiscal
1995 level and declined $173,705 from the amount expended in fiscal 1994. The
fiscal 1996 increase was primarily attributable to higher levels of professional
services costs ($20,369), commission expenses associated with the sublease of a
portion of the Company's facility ($53,483), and an adverse arbitration award
($41,945). The decrease from the fiscal 1994 expenditure level was primarily
attributable to lower levels of legal expenses ($56,952) and reduced staffing of
administrative functions ($62,535). During the second quarter of fiscal 1996 an
arbitrator awarded compensation and legal fees to a consultant of the Company
for work the consultant asserted was performed at the Company's request on its
contract with Ford Motor Company and the U.S. Department of Energy. The
Company was unable to secure reimbursement of the consultant's costs under the
Ford/DOE contract and therefore recorded such costs as general and
administrative expense including the legal costs of the arbitration proceeding.
The foregoing award represented a complete settlement of all claims by the
consultant against the Company.
Depreciation and amortization expense increased to $375,590 during fiscal 1996.
The increase reflects depreciation of a commercial vehicle owned and leased by
the Company's leasing subsidiary and the amortization of intellectual property
in an expanded number of countries. UQM Leasing, Inc. provides leases on the
Company's products to qualified customers to facilitate the purchase of such
products. To date, its operations have been limited to providing lease
financing on a prototype vehicle with annual lease payments of $48,000 per
year. The operations of UQM Leasing, Inc. are immaterial to the Company's
overall operations and as a result the Company has elected to omit the more
expansive disclosures of leasing operations required by generally accepted
accounting principles.
Royalty expense declined to $9,497 in fiscal 1996 reflecting lower levels of
royalty bearing content in the sale of products and services.
Interest income increased to $113,582 in fiscal 1996 compared to $50,890 and
$98,228 for fiscal 1995 and 1994, respectively. The increases were primarily
attributable to higher levels of invested cash during fiscal 1996.
<PAGE>
Interest expense rose to $202,798 during fiscal 1996 due to increased loan value
underlying leases issued by UQM Leasing, Inc. and interest accruals under the
waiver and option agreement with KYMCO. See also "Liquidity and Capital
Resources" below.
Equity in loss of Taiwan joint venture rose to $45,164 in fiscal 1996 compared
to $11,952 and $3,888 for fiscal 1995 and 1994, respectively. The increases
were due to expanded staffing and operations at Taiwan UQM preparatory to the
launch of manufacturing operations.
Other income rose to $43,643 in fiscal 1996 primarily as a result of a gain on
the sale of real estate held for investment ($38,124) and foreign currency
exchange gains ($5,700).
Liquidity and Capital Resources
The Company's cash balances and liquidity during the five months ended March 31,
1997, were adequate to meet its operating needs. Net cash used by operating
activities was $104,769 for the five month period ended March 31, 1997 compared
to net cash used by operations for the comparable period last year of
$1,371,427. The decrease is primarily attributable to a reduction in trade
accounts receivable and prepayments by customers for contract services
reflected as an increase in billings in excess of costs and estimated earnings
on uncompleted contracts. Cash requirements during the period were funded
primarily through the sale of common stock.
In January 1996, Invacare purchased 129,032 shares of common stock at a price of
$3.88 per share. Net proceeds to the Company were $500,000, all of which were
applied to fund the development of a wheelchair motor for Invacare. Contingent
upon achieving development milestones, Invacare further agreed to purchase
additional shares at the then market price, the proceeds of which would be used,
in part, to fund the Company's anticipated capital investment in motor
anufacturing tools and equipment. The Company is currently negotiating with
Invacare to manufacture motors for its wheelchairs. During the course of these
negotiations, Invacare has informed the Company that they would prefer to
invest directly in the assets required to launch production, such as tooling
and dedicated manufacturing equipment in lieu of the second investment
envisioned in the original stock purchase agreement. Accordingly, the Company
does not anticipate any further sales of its equity securities to Invacare.
There can be no assurance that negotiations will lead to the completion of a
definitive supply agreement.
During the five months ended March 31, 1997, the Company completed the
placement of 1,289,288 shares of its common stock to various institutional
investors and an individual investor in offerings under Regulation S and
Regulation D of the Securities and Exchange Act. The common stock was sold at
$3.50 per share which was the average closing price of the common stock on the
American Stock Exchange for the ten days prior to the offering pricing date.
Net proceeds to the Company, after deducting offering costs of $365,688, was
$4,146,820. The Company also completed two offerings of its common stock to
overseas individual and institutional investors under Regulation S in fiscal
1996. Pursuant to these offerings, the Company placed 1,057,708 shares of
common stock and received cash proceeds, net of offering expenses, of
$3,909,379.
In fiscal 1994, the Company, KYMCO and TLT entered into a joint venture
agreement which provided for the formation, capitalization and operation of
Taiwan UQM, a company organized under the laws of the Republic of China. The
Company purchased 39 percent of the initial stock of Taiwan UQM for
NT$1,170,000 (US$45,082 on the transaction date). Pursuant to the joint
venture agreement, the venture partners are obligated to meet future capital
calls as the Board of Directors of Taiwan UQM, by unanimous vote, determines.
During fiscal 1995, the company was unable to fund its capital call obligations.
In June 1995, the Company, KYMCO and TLT entered into a waiver and option
agreement pursuant to which KYMCO agreed to purchase those shares of Taiwan UQM
underlying the Company's capital call obligations. The purchase price of such
shares was NT$37,830,000 (U.S.$1,403,493 at October 31, 1995). The Company was
granted the option to repurchase the shares for the original capital call
amount plus 10 percent interest and associated transfer taxes. In
November 1996, the Company exercised its option and subsequently repurchased
the shares from KYMCO, thus maintaining the Company's ownership position at 39
percent of the then outstanding shares of Taiwan UQM. The repurchase price
plus interest and taxes totaled NT$44,175,505 (US$1,612,539 on the
transaction date).
In November 1996, the Board of Directors of Taiwan UQM announced an additional
capital call to provide cash to fund facility construction and the launch of
electric component production. The Company's capital call obligation pursuant
thereto is NT$37,050,000 (US$1,348,300 as of December 1, 1996), plus interest
at the rate of 10 percent per annum on the outstanding amount from
December 1, 1996, through the due date. The obligation was due and payable in
two equal installments on March 1, 1997 and June 1, 1997. In April, the
Company elected to fund the entire capital call obligation in one payment and
remitted approximately $1,384,000 including accrued interest of approximaterly
$40,000 in complete satisfaction of its capital call obligation. The Company
believes that Taiwan UQM is adequately capitalized to meet its operating cash
requirements over the next twelve months. Accordingly, the Company does not
anticipate any additional capital calls by Taiwan UQM in fiscal 1998.
Over the next several months, the Company expects to invest substantially
greater amounts of capital to launch manufacturing operations for Invacare,
should Invacare elect to purchase motors from the Company. Anticipated capita
expenditures for working capital, production machinery, equipment, computer
hardware and software are expected to exceed $1.5 million. The Company is
negotiating to sell motors to Invacare, a leading wheelchair manufacturer.
There can be no assurance that a final agreement will be reached. The Company
expects to fund this investment requirement through a combination of existing
cash resources and short-term bank lines-of-credit. Although the Company has,
to-date, not entered into formal arrangements for such bank lines-of-credit,
Management believes bank lines-of-credit are readily available to the Company
on terms acceptable to the Company. There can, however, be no assurance that
the Company will launch volume manufacturing operations for Invacare or others.
The Company believes it has cash resources, in addition to those required to
launch volume manufacturing operations, sufficient to fund non-manufacturing
operations through at least March 31, 1998.
<PAGE>
ITEM 8. Financial Statements
Independent Auditors' Report
The Board of Directors
Unique Mobility, Inc.:
We have audited the accompanying consolidated balance sheets of Unique Mobility,
Inc. and subsidiaries as of March 31, 1997 and October 31, 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the five months ended March 31, 1997 and each of the years in the three-year
period ended October 31, 1996. These consolidated 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 did not audit the
financial statements of Taiwan UQM Electric Co., Ltd., (a 39% percent owned
investee company). The Company's investment in Taiwan UQM Electric Co., Ltd. at
March 31, 1997 was $2,677,730, and its equity in the losses of Taiwan UQM
Electric Co., Ltd were $(24,121) for the five months ended March 31, 1997. The
financial statements of Taiwan UQM Electric Co., Ltd. were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Taiwan UQM Electric Co., Ltd. for the five
months ended March 31, 1997 is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 and the report
of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Unique Mobility, Inc. and
subsidiaries as of March 31, 1997 and October 31, 1996, and the results of their
operations and their cash flows for the five months ended March 31, 1997 and
each of the years in the three-year period ended October 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
June 26, 1997
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, October 31,
Assets 1997 1996
Current Assets
Cash and cash equivalents $ 5,713,557 3,230,246
Accounts receivable (note 12) 389,314 569,562
Costs and estimated earnings in excess
of billings on uncompleted contracts
(note 2) 191,885 179,483
Inventories (note 3) 425,391 408,145
Prepaid expenses 115,260 37,848
Other current assets 17,675 28,177
Total current assets 6,853,082 4,453,461
Property and equipment, at cost:
Land (notes 4 and 7) 335,500 335,500
Building (notes 4 and 7) 1,438,090 1,364,500
Molds 102,113 102,113
Transportation equipment 258,675 258,675
Machinery and equipment 1,963,146 1,918,128
4,097,524 3,978,916
Less accumulated depreciation (1,764,288) (1,613,786)
Net property and equipment 2,333,236 2,365,130
Investment in Taiwan joint venture (note 5) 2,677,730 1,366,540
Patent and trademark costs, net of
accumulated amortization of $45,551
and $40,030 (note 11) 502,297 519,966
Other assets 4,354 7,552
$ 12,370,699 8,712,649
(Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
March 31, October 31,
Liabilities and Stockholders' Equity 1997 1996
Current liabilities:
Accounts payable $ 169,403 121,790
Note payable to Taiwan joint venture
(note 5) 1,345,285 1,375,121
Other current liabilities (note 6) 459,223 400,574
Current portion of long-term
debt (note 7) 45,180 61,094
Billings in excess of costs and
estimated earnings on uncompleted
contracts (note 2) 659,807 25,685
Total current liabilities 2,678,898 1,984,264
Long-term debt, less current portion
(note 7) 726,218 744,389
Total liabilities 3,405,116 2,728,653
Minority interest in consolidated
subsidiary (note 4) 390,784 391,120
Stockholders' equity (notes 9 and 10)
Common stock, $.01 par value, 50,000,000
shares authorized; 13,042,964 and
11,751,365 shares issued 130,430 117,514
Additional paid-in capital 27,094,170 23,021,339
Accumulated deficit (18,532,364) (17,331,279)
Notes receivable from officers (83,646) (65,816)
Cumulative translation adjustment (33,791) (21,030)
Treasury stock, at cost - (127,852)
Total stockholders' equity 8,574,799 5,592,876
Commitments (notes 5 and 14)
$ 12,370,699 8,712,649
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<caption
Five Months
Ended
March 31, Year Ended October 31,
1997 1996 1995 1994
<S>
Revenue: <C> <C> <C> <C>
Contract services (note 12) $ 700,132 1,436,484 4,031,951 1,643,203
Product sales 152,016 611,213 701,700 708,917
852,148 2,047,697 4,733,651 2,352,120
Operating costs and expenses:
Costs of contract services 593,891 1,070,224 2,653,771 1,440,374
Costs of product sales 125,719 550,519 579,015 576,540
Research and development 489,442 1,628,646 1,292,803 2,088,317
General and administrative 600,446 1,157,827 972,410 1,331,532
Depreciation and amortization 159,473 375,590 346,567 271,772
Royalty (note 11) 4,077 9,497 23,423 11,458
1,973,048 4,792,303 5,867,989 5,719,993
Operating loss (1,120,900) (2,744,606) (1,134,338) (3,367,873)
Other income (expense):
Interest income 54,802 113,582 50,890 98,228
Interest expense (84,704) (202,798) (177,051) (73,813)
Equity in loss of Taiwan joint
venture (note 5) (24,121) (45,164) (11,952) (3,888)
Minority interest share of earnings
of consolidated subsidiary (27,725) (69,400) (64,627) (69,517)
Other 1,563 43,643 6,645 21,507
(80,185) (160,137) (196,095) (27,483)
Net loss $ (1,201,085) (2,904,743) 1,330,433) (3,395,356)
Net loss per common share
(note 1n) $ (.12) (.26) (.13) (.35)
Weighted average number of shares
of common stock outstanding 12,043,481 11,021,742 10,090,778 9,763,391
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Number of Notes
common Additional Cumulative Accumu- receivable Total
shares Common paid-in translation lated due from Treasury stockholders'
issued stock capital adjustment deficit officers stock equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at October 31, 1993 9,461,385 $ 94,614 15,557,205 - (9,700,747) (31,944) (41,823) 5,877,305
Issuance of common stock upon exercise
of Alcan preemptive right (note 9) 111,395 1,114 199,397 - - - - 200,511
Issuance of common stock upon exercise
of underwriter warrants 20,000 200 46,400 - - - - 46,600
Issuance of common stock upon exercise
of employee options 325,133 3,251 936,996 - - (18,727) (53,649) 867,871
Issuance of common stock for directors'
compensation 6,000 60 42,490 - - - - 42,550
Issuance of common stock under
employee stock purchase plan 1,632 16 8,507 - - - - 8,523
Net loss - - - (3,395,356) - - (3,395,356)
Balances at October 31, 1994 9,925,545 99,255 16,790,995 - (13,096,103) (50,671) (95,472) 3,648,004
Issuance of common stock in private
offerings, net of offering costs
of $141,446 (note 9) 581,111 5,812 1,944,742 - - - - 1,950,554
Issuance of common stock upon exercise
of employee options 64,786 648 99,628 - - (1,750) (22,130) 76,396
Issuance of common stock under
employee stock purchase plan 511 5 2,521 - - - - 2,526
Issuance of warrants for service (note 10) - - 50,000 - - - - 50,000
Net loss - - - - (1,330,433) - - (1,330,433)
Balances at October 31, 1995 10,571,953 105,720 18,887,886 - (14,426,536) (52,421) (117,602) 4,397,047
Issuance of common stock in private
offerings, net of offering costs
of $247,309 (note 9) 1,057,708 10,577 3,898,802 - - - - 3,909,379
Issuance of common stock upon
exercise of employee options 100,542 1,005 153,205 - - (13,395) (10,250) 130,565
Issuance of common stock under
employee stock purchase plan 6,668 67 20,200 - - - - 20,267
Issuance of common stock for
services 14,494 145 61,246 - - - - 61,391
Cumulative translation adjustment - - - (21,030) - - - (21,030)
Net loss - - - - (2,904,743) - - (2,904,743)
Balances at October 31, 1996 11,751,365 117,514 23,021,339 (21,030) (17,331,279) (65,816) (127,852) 5,592,876
Issuance of common stock in private
offerings, net of offering costs
of $365,688 (note 9) 1,289,288 12,893 4,133,927 - - - - 4,146,820
Issuance of common stock upon
exercise of employee options 40,105 401 62,429 - - (17,830) - 45,000
Issuance of common stock for
services 1,547 15 3,934 - - - - 3,949
Cumulative translation adjustment - - - (12,761) - - - (12,761)
Retirement of treasury stock (39,341) (393) (127,459) 127,852 -
Net Loss - - - - (1,201,085) - - (1,201,085)
Balances at March 31, 1997 13,042,964 $130,430 27,094,170 (33,791) (18,532,364) (83,646) - 8,574,799
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Five Months
Ended
March 31, Year Ended October 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Cash flows provided by (used by) operating
activities:
Net loss $ (1,201,085) (2,904,743) (1,330,433) (3,395,356)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 159,473 375,590 346,567 271,772
Minority interest share of earnings of
consolidated subsidiary 27,725 69,400 64,627 69,517
Noncash compensation expense for
common stock and warrants issued
for services 3,949 61,391 50,000 42,550
Equity in loss of Taiwan joint venture 24,121 45,164 11,952 3,888
Gain on sale of property and equipment - (45,676) (3,534) -
Write-off of patent costs 55,529 - - -
Other 1,210 (20,092) (466) 35,919
Change in operating assets and liabilities:
Accounts receivable and costs and
estimated earnings in excess of
billings on uncompleted contracts 167,846 (148,782) 161,223 28,995
Inventories (17,246) (3,444) 70,450 52,215
Prepaid expenses and other current
assets (66,910) (12,846) 27,105 28,660
Accounts payable and other current
liabilities 106,497 (25,681) (200,703) 276,212
Billings in excess of costs and
estimated earnings on uncompleted
contracts 634,122 25,685 (137,247) 74,060
Net cash used by operating
activities (104,769) (2,584,034) (940,459) (2,511,568)
Cash provided by (used by)investing activities:
Acquisition of property and equipment (118,608) (182,011) (440,079) (413,907)
Increase in patent and trademark costs (47,865) (92,390) (64,766) (131,652)
Investment in Taiwan joint venture (1,375,121) - - (45,082)
Proceeds from sale of certificates of deposit
and other investments - 319,107 117,127 -
Proceeds from sale of property and equipment - 63,361 - -
Net cash provided by (used by)
investing activities $ (1,541,594) 108,067 (387,718) (590,641)
</TABLE>
(Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
Five Months
Ended
March 31, Year Ended October 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Cash flows provided by financing activities:
Proceeds from borrowings $ - - 212,337 -
Repayment of debt (34,085) (83,045) (250,905) (36,077)
Proceeds from sale of common stock, net 4,146,820 3,909,379 1,950,554 -
Issuance of common stock upon exercise
of employee options 45,000 130,565 76,396 867,871
Issuance of common stock under employee
stock purchase plan - 20,267 2,526 8,523
Issuance of common stock upon exercise of
underwriter warrants - - - 46,600
Issuance of common stock upon exercise of
Alcan preemptive right - - - 200,511
Distributions paid to holders of minority
interest (28,061) (67,345) (67,347) (60,613)
Net cash provided by financing
activities 4,129,674 3,909,821 1,923,561 1,026,815
Increase (decrease) in cash and
cash equivalents 2,483,311 1,433,854 595,384 (2,075,394)
Cash and cash equivalents at beginning of period 3,230,246 1,796,392 1,201,008 3,276,402
Cash and cash equivalents at end of period $ 5,713,557 3,230,246 1,796,392 1,201,008
Interest paid in cash during the period $ 276,591 82,494 89,133 72,638
</TABLE>
Non-cash investing and financing transactions:
In December 1996, the Company financed an additional investment in the
Taiwan joint venture through the issuance of a note payable in the amount
of $1,345,285 (see note 5).
In accordance with the provisions of the Company's stock option plans, the
Company accepts as payment of the exercise price, mature shares of the
Company's common stock held by the option holder for a period of six months
prior to the date of the option exercise. For the five months ended
March 31, 1997, there were no such transactions. For the years ended
October 31, 1996, 1995 and 1994, the Company issued 13,666, 32,130 and
24,364 shares of common stock for options exercised for an aggregate exercise
price of $10,250, $22,130 and $53,649, respectively, for which the Company
received 2,000, 5,365 and 6,813 shares of common stock as payment for the
exercise price. The shares received were recorded at cost as treasury stock
and were subsequently retired. In accordance with the provisions of the
Company's stock option plans, the Company may, and has, accepted promissory
notes from officers of the Company in satisfaction of the exercise price of
options exercised. These notes receivable are recorded as a reduction
of shareholders' equity in the consolidated financial statements. For the
five months ended March 31, 1997, the Company issued 20,105 shares of common
stock for an aggregate exercise price of $17,830 for which the Company
received promissory notes for the same amount. For the years ended
October 31, 1996, 1995 and 1994, the Company issued 13,395, 2,900 and 48,352
shares of common stock for an aggregate exercise price of $13,395, $1,750
and $18,727, respectively, for which the Company received promissory notes
for the same amount.
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
(a) General Business
Unique Mobility, Inc. and subsidiaries (the "Company") is engaged in the
research, development and commercialization of electric and hybrid
electric vehicles, propulsion systems for such vehicles, as well as
other non-automotive applications of its technologies. The Company's
revenue is derived primarily from contract research and development
services and sales of products developed from such technology.
The Company's operations are based in the United States with a
significant investment in a joint venture in Taiwan.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of Unique
Mobility, Inc. and those of all majority-owned or controlled
subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
The minority interests as of March 31, 1997, and October 31, 1996,
consisted of the other stockholders' ownership interests in a subsidiary
of the Company. See Note 4.
(c) Cash and Cash Equivalents
The Company considers cash on hand and investments with original
maturities of three months or less to be cash equivalents.
(d) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.
(e) Property and Equipment
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets which range from three to five years, except for the building
which is depreciated over 31 years. Maintenance and repairs are charged
to expense as incurred.
(f) Investment in Taiwan Joint Venture
The Company's investment in a joint venture located in Taiwan is
accounted for under the equity method of accounting. Under this method,
the investment, originally recorded at cost, is adjusted to recognize
the Company's share of the net earnings or losses of the joint venture.
Income or loss recognition is limited to the extent of the Company's
investment in, advances to and guarantees of the joint venture.
Commencing with the five months ended March 31, 1997, due to timing
considerations, the financial position and results of operations
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
for the Taiwan joint venture are included in the Company's consolidated
financial statements on a three-month time lag. Accordingly, the
consolidated statements of operations, stockholders' equity and cash
flows include activity of the Taiwan joint venture for the two months
ended December 31, 1996, and the twelve months ended October 31, 1996,
1995 and 1994. Similarly, the accompanying consolidated balance sheets
and related footnote disclosures as of March 31, 1997, and October 31,
1996, include the financial position of the Taiwan joint venture as of
December 31, 1996, and October 31, 1996, respectively. The cumulative
foreign currency translation adjustments with respect to the Taiwan joint
venture were calculated using the average rates in effect during the
respective two and twelve month periods ended December 31, 1996, and
October 31, 1996, 1995 and 1994, respectively and the spot rates in
effect at the respective December 31, 1996, and October 31, 1996,
balance sheet dates.
(g) Patent and Trademark Costs
Patent and trademark costs consist primarily of legal expenses, and
represent those costs incurred by the Company for the filing of patent
and trademark applications and the maintenance of patents issued.
Amortization of patent and trademark costs is computed using the
straight-line method over the estimated useful life of the asset,
typically 17 years for patents, and 40 years for trademarks.
(h) Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ("SFAS
121"). SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The Company
adopted SFAS 121 in 1996 and the adoption of SFAS 121 did not have an
effect on the Company's financial statements.
(i) Contract Services Revenue and Cost Recognition
Revenue relating to long-term fixed price contracts is recognized using
the percentage of completion method. Under the percentage-of-completion
method, contract revenues and related costs are recognized based on the
percentage that costs incurred to date bear to total estimated costs.
Changes in job performance, estimated profitability and final contract
settlements may result in revisions to cost and revenue, and are
recognized in the period in which the revisions are determined.
Contract costs include all direct materials, subcontract and labor
costs. General and administrative costs and other indirect costs are
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
charged to expense as incurred. At the time a loss on a contract
becomes known, the entire amount of the estimated ultimate loss is
accrued.
The aggregate of costs incurred and estimated earnings recognized on
uncompleted contracts in excess of related billings is shown as a
current asset, and billings on uncompleted contracts in excess of costs
incurred and estimated earnings is shown as a current liability.
Revenue relating to cost-plus type contracts is recognized as costs are
incurred. Revenue relating to "milestone billing" contracts is
recognized upon completion of the various stages (milestones) of the
project, based upon the contractual amounts.
(j) Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes.
Under the asset and liability method of Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date.
(k) Research and Development
Costs of researching and developing new technology or significantly
altering existing technology are charged to operations as incurred.
(l) Equity Instruments Issued for Non-Employee Services
The Company periodically issues common stock to non-employees for
services rendered. The cost of these services is recorded based
upon the fair market value of the Company's common stock on the date
of issuance.
(m) Foreign Currency Translation
The net assets of the foreign investment of the Company is translated
at the appropriate period-end exchange rates. Income and expense
accounts are translated at average monthly exchange rates. Net exchange
gains or losses resulting from such translation are excluded from
results of operations and accumulated as a separate component of
stockholders' equity. Gains and losses from foreign currency
transactions are included in other income (expense).
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(n) Loss Per Common Share
Loss per common share is based on the weighted average number of shares
of common stock outstanding during each year. Common stock equivalents
were not included in the computations because their effect was anti-
dilutive. The fair value of the pre-emptive rights arising from the
issuance of employee stock options during the five months ended March
31, 1997, has been treated in a manner similar to a preferred stock
dividend in the calculation of net loss per common share. The estimated
aggregate fair value of these rights was $201,000.
(o) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(p) Reclassifications
Certain prior year amounts have been reclassified to conform to the
current period presentation.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Revenue in Excess of Billings and Billings in Excess of Revenue
At March 31, 1997, the estimated period to complete contracts in process
ranged from 1 to 15 months, and the Company expects to collect
substantially all related accounts receivable and costs and estimated
earnings in excess of billings on uncompleted contracts as of March 31,
1997, within one year.
The following summarizes contracts in process at March 31, 1997, and
October 31, 1996:
March 31, October 31,
1997 1996
Costs incurred on uncompleted
contracts $ 3,158,704 1,081,352
Estimated earnings 490,407 596,765
3,649,111 1,678,117
Less billings to date (4,117,033) (1,524,319)
$ (467,922) 153,798
Included in the accompanying balance
sheets as follows:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 191,885 179,483
Billings in excess of costs and
estimated earnings on
uncompleted contracts (659,807) (25,685)
$ (467,922) 153,798
(3) Inventories
Inventories at March 31, 1997, and
October 31, 1996 consists of:
March 31, October 31,
1997 1996
Raw materials $ 283,155 273,527
Work in process 69,460 55,996
Finished products 72,776 78,622
$ 425,391 408,145
(4) Limited Liability Company
In September 1992, the Company and a private investor formed a Colorado
limited liability company to acquire, own and maintain a 40,000 square-foot
facility in Golden, Colorado, and the surrounding land. This facility serves
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
as the Company's corporate headquarters. Ownership in this limited
liability company is divided equally between the Company and the private
investor. However, the Company is deemed to have a controlling interest in
the limited liability company by virtue of the operating agreement which
authorizes the Company to make all decisions with respect to the business
of the limited liability company, subject only to certain protective rights
of the private investor, and by virtue of the lease agreement with the
limited liability company covering the entire facility. The limited
liability company is, therefore, accounted for as a consolidated subsidiary.
Minority interest in consolidated subsidiary represents the private
investor's allocable portion of the equity of the consolidated subsidiary.
(5) Investment in Taiwan Joint Venture
On January 29, 1994, the Company, Kwang Yang Motor Co. Ltd. ("KYMCO"), and
Turn Luckily Technology Co. Ltd. ("TLT"), entered into a joint venture
agreement (the "Joint Venture Agreement") providing for the formation,
funding, and operation of Taiwan UQM Electric Company, Ltd., a company
organized under the laws of the Republic of China ("Taiwan UQM"). Taiwan
UQM was incorporated in April 1995.
In 1994, the Company purchased 39% of the initial equity capital of Taiwan
UQM for $45,082, and agreed to invest 39% of any additional capital calls.
Pursuant to the Joint Venture Agreement, the venturers are required to
invest additional funds in Taiwan UQM, as the board of directors of Taiwan
UQM by unanimous vote determines to be required.
During 1995, the Company was unable to make payments for additional capital
call obligations under the Joint Venture Agreement. The Company, KYMCO and
TLT entered into a Waiver and Option Agreement (the "Option Agreement") on
June 12, 1995, whereby KYMCO agreed to first purchase those shares of Taiwan
UQM underlying the Company's additional capital call obligations in the
amount of $1,403,493. Under the Option Agreement, the Company had the
option to repurchase these shares from KYMCO for the additional capital call
amount, plus interest at 10% per annum. The purchase by KYMCO of the shares
related to the Company's additional capital call obligations was accounted
for as a financing arrangement. Accordingly, for financial reporting
purposes, at October 31, 1995, the Company recorded $1,403,493 as an
addition to its investment in the joint venture and as a note payable to the
joint venture participant. The note payable remained outstanding at October
31, 1996, with the decrease in its recorded value to $1,375,121 due to
exchange rate fluctuations.
The Company exercised its option prior to the November 30, 1996, expiration
date of the option and tendered cash to repay the principal amount due to
the joint venture participant. The related interest and taxes due under the
Option Agreement were also paid in conjunction with the payment of the
principal amount.
In December 1996, Taiwan UQM made an additional capital call which was
payable in two equal installments due March 1, 1997, and June 1, 1997, with
interest accruing at 10% per annum. The Company's 39% share of the December
1996 capital call was $1,345,285. Although 50% of the Company's
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
obligation was payable March 1, 1997, it was not paid until April 17, 1997,
at which time the entire obligation plus accrued interest was paid.
Therefore, the note payable remained outstanding at March 31, 1997.
Summarized unaudited financial information for Taiwan UQM is as follows:
December 31, October 31,
Financial Position 1996 1996
Current assets $ 889,881 330,826
Noncurrent assets-land and
construction in process 4,542,142 3,196,300
Total assets 5,432,023 3,527,126
Current liabilities 607,453 19,816
Noncurrent liabilities - 3,361
Stockholders' equity 4,824,570 3,503,949
Total liabilities and equity $ 5,432,023 3,527,126
Two Months
Ended Year Ended
December 31, October 31,
Results of Operations 1996 1996
Revenue $ 10,123 -
Expenses 56,403 128,214
Net loss $ (46,280) (128,214)
(6) Other Current Liabilities
Other current liabilities at March 31, 1997, and October 31, 1996, consists
of:
March 31, October 31,
1997 1996
Accrued interest $ 39,218 214,002
Accrued legal and accounting fees 37,171 45,237
Accrued payroll, consulting,
personal property taxes and real
estate taxes 67,207 52,585
Refund of overpayment 250,005 -
Other 65,622 88,750
$ 459,223 400,574
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Long-term Debt
Long-term debt at March 31, 1997, and October 31, 1996, consists of:
March 31, October 31,
1997 1996
Note payable to bank, payable in
monthly installments with interest at
9.1%; matures October 2007; secured
interest at a by land and building
with a net book value of
$1,575,420 $ 771,398 789,793
Note payable to bank, payable in
monthly installments with
interest at 12%; repaid
in March 1997 - 15,690
Total long-term debt 771,398 805,483
Less current portion 45,180 61,094
Long-term debt, less current
portion $ 726,218 744,389
The annual aggregate maturities of long-term debt for each of the next five
fiscal years and thereafter are as follows:
1998 $ 45,180
1999 49,528
2000 54,597
2001 59,523
2002 65,255
Thereafter 497,315
$ 771,398
(8) Income Taxes
Income tax expense (benefit) attributable to income (loss) from continuing
operations differed from the amounts computed by applying the U.S. federal
income tax rate of 34% as a result of the following:
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
March 31, Year Ended October 31,
1997 1996 1995 1994
Computed "expected" tax
benefit $ (408,369) (987,613) (452,347) (1,154,421)
Increase (decrease) in
taxes resulting from:
Increase in
valuation
allowance for
net deferred
tax assets 407,443 985,132 450,383 1,142,656
Other, net 926 2,481 1,964 11,765
Income tax benefit $ - - - -
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset are presented below:
March 31, October 31,
1997 1996
Deferred tax assets:
Research & development
credit carryforwards $ 61,188 61,188
Net operating loss
carryforwards 5,728,676 5,321,233
Total deferred
tax assets 5,789,864 5,382,421
Less valuation allowance 5,789,864 5,382,421
Deferred tax assets,
net of valuation
allowance $ - -
As of March 31, 1997, the Company had net operating loss carryforwards
(NOL) of approximately $18.3 million for US income tax purposes which expire
in varying amounts through 2012. Approximately $1.4 million of the net
operating loss carryforwards are attributable to stock options, the benefit
of which will be credited to additional paid-in capital if realized.
However, due to the provisions of Section 382 of the Internal Revenue Code,
the utilization of a portion of these NOLs is limited. At October 21, 1991,
the Company experienced an ownership change for purposes of Section 382
subjecting approximately $2.8 million in NOLs to an annual usage limitation
of approximately $0.9 million. The amount of this annual limitation is
sufficient to allow for the utilization of the entire amount of these NOLs
prior to expiration should sufficient taxable income be generated.
Future ownership changes under Section 382 could occur that would result in
an additional Section 382 limitation which would further restrict the use of
NOLs. In addition, the Section 382 limitation could be reduced to zero if
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
the Company fails to satisfy the continuity of business enterprise
requirement for the two-year period following an ownership change.
(9) Stockholders' Equity
Alcan
Alcan Aluminum Limited (Alcan) and certain affiliates of Advent
International Corporation (Advent) and Techno-Venture U.S.A., Inc.
(Techno), significant stockholders, have preemptive rights to acquire
16.7%, 13.1% and 2.1%, respectively, of the Company's shares of common
stock offered in any offering for so long as they hold any shares of the
Company's common stock. In June 1997, Advent and Techno sold their holding
in the Company to various investors and the preemptive rights granted to
Advent and Techno were terminated.
Additionally, Alcan has the right of first refusal to purchase any private
placement equity securities to be issued or sold to third parties if such
issuance would cause such parties to become the beneficial owner of more
than 5% of any class of the Company's equity securities. Separately, the
Company's Chairman, who holds or has the right to acquire 982,438 shares of
the Company's common stock, has granted Alcan a right of first refusal to
purchase any shares to be sold or transferred by the Chairman in any public
or private sale.
Private Placement
During fiscal 1995, the Company completed three private placements of
common stock with institutions outside of the United States. In total,
581,111 shares of common stock were privately placed at $3.60 per share.
During fiscal 1996, the Company completed several private placements of
common stock with institutional and private investors outside of the United
States. In total 928,676 shares were placed at between $3.30 and $4.75 per
share. In addition, 129,032 shares of common stock were sold to Invacare
Corporation in a private placement, at $3.88 per share.
During the five months ended March 31, 1997, the Company completed one
private placement of common stock with institutional and private investors
outside of the United States. In total 1,289,288 shares of common stock were
privately placed at $3.50 per share.
(10) Common Stock Options and Warrants
The Company has three stock option plans, the 1982 and 1992 Incentive and
Non-Qualified Stock Option Plans and the Non-Employee Director Stock Option
Plan. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-
Based Compensation ("SFAS 123"). This standard defines a fair value method
of accounting for employee stock options and similar equity instruments.
SFAS 123 permits an entity to choose to recognize compensation expense by
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
adopting the new fair value method of accounting or continue to measure
compensation costs using the intrinsic value methods of accounting
prescribed by Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees ("APB 25"). The Company has elected to continue
to account for its employee stock compensation plans using the method
prescribed by APB 25 and, accordingly, because the Company grants its
options at or above the current market value, no compensation cost has been
recognized for stock options granted under the Company's stock option
plans. Had the Company reported compensation cost as determined by the
fair value method of accounting for option grants under its stock option
plans as prescribed by SFAS 123, net loss and net loss per common share
would have been the proforma amounts indicated.
Five Months
Ended Year Ended
March 31, 1997 October 31, 1996
Net loss - as reported $ (1,201,085) (2,904,743)
Net loss - pro forma $ (1,462,974) (3,243,964)
Net loss per common share -
as reported $(.12) (.26)
Net loss per common share -
pro forma $(.14) (.29)
The fair value of stock options granted was calculated using the Black
Scholes option pricing model based on the following assumptions:
Five Months
Ended Year Ended
March 31, 1997 October 31, 1996
Expected volatility 47.6% 49.1%
Expected dividend yield 0.0% 0.0%
Risk free interest rate 6.4% 5.6%
Expected life of options
granted 6 years 6 years
Fair value of options granted
as computed under the Black
Scholes option pricing model $1.79 per share $2.22 per share
Pro forma net loss reflects only options granted in the five months ended
March 31, 1997, and the year ended October 31, 1996. Therefore, the full
impact of calculating compensation cost for stock options under SFAS 123 is
not reflected in the pro forma net loss amounts presented above because
compensation cost is reflected over the option vesting periods (ranging
from 1 to 3 years) and compensation cost for options granted prior to
November 1, 1995, is not considered.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Incentive and Non-Qualified Option Plans
The Company reserved 4,104,000 shares of common stock for key employees,
consultants and key supplier under its Incentive and Non-Qualified Option
Plans of 1992 and 1982. Under these option plans the exercise price of
each option is set at the fair market value of the common stock on the date
of grant and the maximum term of the options is 10 years from the date of
grant. Options granted to employees vest ratably over a three year period.
The maximum number of shares that may be granted to any eligible employee
during the term of the 1982 and 1992 plans is 500,000 shares. Options
granted under the Company's plans to employees require the option holder
to abide by certain Company policies which restrict their ability to sell
the underlying common stock.
The following table summarizes activity under the plans during the last
three fiscal years and the five months ended March 31, 1997:
Shares Under Weighted-Average
Option Exercise Price
Outstanding at October 31, 1994 1,914,533 $5.02
Granted 100,000 5.00
Exercised (64,786) 1.55
Forfeited (97,515) 5.38
Outstanding at October 31, 1995 1,852,232 5.12
Granted 590,000 4.15
Exercised (100,542) 1.53
Forfeited (315,978) 5.63
Outstanding at October 31, 1996 2,025,712 4.94
Granted 500,000 3.31
Exercised (40,105) 1.57
Expired (30,000) 5.00
Forfeited (4,151) 3.31
Outstanding at March 31, 1997 2,451,456 4.66
Exercisable at March 31, 1997 1,566,715 4.97
The following table presents summarized information about stock options
outstanding at March 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise Prices at 3/31/97 Contractual Life Exercise Price at 3/31/97 Exercise Price
<C> <C> <C> <C> <C> <C>
$0.50 - 1.00 113,117 3.0 years $0.79 113,117 $0.79
2.25 - 3.31 649,849 8.6 years 3.06 154,000 2.25
3.50 - 5.00 884,555 7.5 years 4.03 595,663 3.99
5.38 - 8.13 803,935 6.8 years 7.20 703,935 7.07
0.50 - 8.13 2,451,456 7.4 years 4.66 1,566,715 4.97
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Non-Employee Director Stock Option Plan
In February 1994, the Company's Board of Directors ratified a Stock Option
Plan for Non-Employee Directors pursuant to which Directors may elect to
receive stock options in lieu of cash compensation for their services as
directors. The Company has reserved 250,000 shares of common stock for
issuance pursuant to the exercise of options under the Plan. The options
vest ratably over a three-year period beginning one year from the date of
grant and are exercisable for 10 years from the date of grant. Option
prices are equal to the fair market value of common shares at the date of
grant.
The following table summarizes activity under the plan:
Shares under Per share
option exercise price
Granted during 1994 and outstanding at
October 31, 1994 48,000 $ 5.38 - 6.25
Granted 61,333 5.00 - 5.13
Outstanding at October 31, 1995 109,333 5.00 - 6.25
Granted 32,000 4.38
Outstanding at October 31, 1996
and March 31, 1997 141,333 4.38 - 6.25
At March 31, 1997, options to purchase 83,556 shares were exercisable.
Warrants
In connection with the original issuance of certain subordinated
convertible term notes to Advent and Techno, the Company granted Advent
and Techno warrants to acquire 790,000 shares of the Company's common
stock at the lower of $2.40 per share, being the market value of the
Company's stock at the time of issuance or the market price of the common
stock averaged over the 30 trading days immediately preceding the date of
exercise. The warrants expire August 1997, and allow for a cashless
exercise of the warrants into common shares based on the spread between
the market price of the common stock on the date of exercise and the $2.40
exercise price. All of these warrants remain outstanding at March 31, 1997.
The Company has reserved 300,000 shares of common stock for issuance
pursuant to a warrant agreement with an investment banking company.
Warrants to acquire 200,000 shares of common stock vested on January 20,
1994, and the remaining 100,000 shares vested on January 20, 1995. The
warrants were exercisable for a period of five years, expiring on January
19, 1999, at a price of $7.63 per share. Further, the warrants were
redeemable on a one-time basis only through June 30, 1994, for a like
number of warrants, at the then current fair market value of the Company's
common stock with otherwise identical terms. On April 18, 1994, the
warrants were redeemed in accordance with the above provision for a like
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
number of warrants which are exercisable at a price of $6.00 per share, the
market price of the common stock of the Company at the date of redemption.
The warrants contain transfer restrictions and provisions for the
adjustment of the exercise price and the number and type of securities
issuable upon exercise based on the occurrence of certain events. All of
these warrants remain outstanding at March 31, 1997. The estimated fair
value of the warrants issued of $50,000 was recorded as compensation for
the investment banking services rendered in 1995.
In connection with the 1995 common stock issuance, the placement agent was
issued warrants expiring July 21, 1998, to acquire 150,000 shares of the
Company's common stock at $5.75 per share. All of these warrants remain
outstanding at March 31, 1997.
In connection with the 1996 private placements, the placement agents were
issued warrants to acquire 50,000 shares of the Company's common stock at
$4.75 per share on February 27, 1996, 38,100 shares of the Company's common
stock at $5.00 per share on May 31, 1996, and 50,000 shares at $4.25 per
share on September 30, 1996, being the market price of the common stock of
the Company at the date of each respective grant. The warrants expire
three years from the date of issuance. All of these warrants remain
outstanding at March 31, 1997.
In connection with the 1997 private placement, the placement agents were
issued warrants to acquire 225,625 shares of the Company's stock at $3.50
per share on February 27, 1997, being the average of the closing price of
the Company' stock for the ten days preceding the closing of such
placement. The agents were also issued warrants to acquire 50,000 shares
of the Company's common stock at $4.20 per share on February 27, 1997,
being 120% of the average closing price of the Company's common stock for
the ten days preceding the closing of the placement. All of these warrants
remain outstanding at March 31, 1997.
(11) Alcan Agreements
The Company had previously entered into agreements with Alcan. Under terms
of the agreements, the Company's then existing motor technology and
technology resulting from development projects for Alcan were cross-
licensed between Alcan and the Company. Royalties from the manufacture
and sale of licensed products and a portion of royalties received from the
sub-licensing of technology to third parties were payable by the licensing
party to the other if the technology was commercialized. During 1994, the
Company and Alcan executed another agreement, in which Alcan assigned to
the Company all of its rights, title and interests in all technology
developed under the original agreements between Alcan and the Company. The
1994 agreement further provides that the Company shall pay to Alcan
royalties of one-half of one percent on revenue derived from the
manufacture and sale of products or processes embodying the related
technology (the Technology). The Company has also agreed to offer to
Alcan a first right of refusal to acquire any and all intellectual and
proprietary property related to the Technology prior to consummating and
assignment or sale of any Technology. In addition, subject to certain
conditions, Alcan has agreed to reimburse the Company for 50% of its
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
patent application and maintenance expenditures, up to an amount not to
exceed the annual royalties from the Company.
For the five months ended March 31, 1997, and for the years ended October
31, 1996, 1995 and 1994, the Company recorded royalty expense of $4,077,
$9,497, $23,423 and $11,458, respectively, all of which was applied as a
reduction of patent application and maintenance expenditures.
(12) Significant Customers
The Company has historically derived significant contract services revenue
from a few key customers. The customers from which this revenue has been
derived and the percentage of this revenue as a percentage of total
contract services revenue is summarized as follows:
Five Months
Ended Year Ended October 31,
March 31, 1997 1996 1995 1994
Customer A $ 162,500 - - -
B 113,229 - - -
C 176,749 - - -
D - 378,640 1,720,347 316,740
E - 202,343 880,420 369,595
F - 194,600 - -
G - 135,950 - -
H - - 657,330 -
I - - - 280,496
$ 452,478 911,533 3,258,097 966,831
Percentage of
contract services
revenue 65% 63% 81% 59%
These customers, in total, also represented 49% and 38% of total accounts
receivable at March 31, 1997 and October 31, 1996, respectively.
Contract services revenue derived from contracts with agencies of the U.S.
Government and from sub-contracts with U.S. Government prime contractors,
certain portions of which are included in revenue from other key customers
above, totaled $78,532 for the five months ended March 31, 1997, and
$800,208, $2,478,350 and $331,440 for the years ended October 31, 1996,
1995 and 1994, respectively.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13) Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash and cash equivalents, certificates of deposit, accounts receivable,
notes payable to joint venture participant, and accounts payable:
The carrying amounts approximate fair value because of the short
maturity of these instruments.
Long-term debt:
The carrying amount of the Company's long-term debt approximates fair
value since the interest rate on this debt represents the current market
rate for similar financing available to the Company.
(14) Employee Benefit Plans
401(k) Plan
The Company has established a 401(k) Savings Plan (the Plan) under which
eligible employees may contribute up to 15% of their compensation. At the
direction of the participants, contributions are invested in several
investment options offered by the Plan including the Company's common
stock.The Company matches participant contributions on a dollar-for-dollar
basis on the participant's contributions up to 5 percent of the
participant's salary and 25% of participant contributions in excess of this
limit, subject to certain limitations. These contributions vest ratably
over a three-year period. Matching contributions to the Plan by the
Company were $39,535, $90,935, $98,441 and $95,257 for the five months
ended March 31, 1997, and for the years ended October 31, 1996, 1995 and
1994, respectively.
Stock Purchase Plan
The Company has established a stock purchase plan which allows eligible
employees to purchase, through payroll deductions, shares of the Company's
common stock at 85% of the fair market value at specified dates. The
Company has reserved 200,000 shares of common stock for issuance under the
stock purchase plan. During the five months ended March 31, 1997, the
Company did not issue any shares under the Stock Purchase Plan. During the
years ended October 31, 1996, 1995 and 1994, the Company issued 6,668
shares, 511 shares and 1,632 shares of common stock, respectively, under
the stock purchase plan.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(15) Transition Period Comparative Financial Information (Unaudited)
The following table sets forth certain unaudited statement of operations
data for the five months ended March 31, 1996:
Revenue:
Contract services $ 331,761
Product sales 216,325
548,086
Operating costs and expenses:
Costs of contract services 342,779
Costs of product sales 217,800
Research and development 610,227
General and administrative 535,242
Depreciation and amortization 153,106
Royalty 2,637
1,861,791
Operating loss (1,313,705)
Other income (expense):
Interest income 46,214
Interest expense (91,780)
Equity in loss of Taiwan joint
venture (16,682)
Minority interest share of earnings
of consolidated subsidiary (28,588)
Other 37,280
(53,556)
Net loss $(1,367,261)
Net loss per common share $ (.13)
Weighted average number of shares
of common stock outstanding 10,708,645
(16) Subsequent Event
In June of 1997, the Company entered into a strategic relationship with EV
Global Motors Company (EVG) to develop and market light electrical
transportation products. EVG purchased 1,151,925 shares of the Company's
common stock in a private transaction from Alcan and purchased warrants to
acquire an additional 350,000 shares of common stock from other sources.
Separately, the Company and EVG entered into a stock purchase agreement
whereby the Company agreed to purchase 400,000 shares of EVG common stock
in exchange for 200,000 shares of the Company's common stock.
<PAGE>
ITEM 9. CHANGE IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
<PAGE>
PART III
Pursuant to instruction G(3) to Form 10-K, the information required in Items
10-13 is hereby incorporated by reference from the Company's definitive Proxy
Statement for the Annual Meeting of Shareholder to be held on August 19, 1997,
to be filed on or about July 7, 1997, pursuant to Regulation 14A.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements:
Unique Mobility, Inc. (included in Part II):
Independent Auditors' Report.
Consolidated Balance Sheets, March 31, 1997 and October 31,
1996.
Consolidated Statements of Operations for the five months
ended March 31, 1997 and each of the years in the three
year period ended October 31, 1996.
Consolidated Statements of Stockholders' Equity for the five
months ended March 31, 1997, and each of the years in the
three year period ended October 31, 1996.
Consolidated Statements of Cash Flows for five months ended
March 31, 1997 and each of the years in the three year
period ended October 31, 1996.
Notes to Consolidated Financial Statements.
Taiwan UQM Electric Co., Ltd. (included in Part IV):
Independent Auditors' Report.
Balance Sheets, December 31, 1996 and 1995.
Statements of Income for the year ended December 31, 1996,
and the period January 17, 1995 to December 31, 1995.
Statement of Changes in Shareholders' Equity for the year
ended December 31, 1996 and the period January 17, 1995,
to December 31, 1995.
Statements of Cash Flows, for the year ended December 31,
1996 and the period January 17, 1995 to December 31, 1995.
Notes to Financial Statements.
2. Financial Statement Schedules:
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
Taiwan UQM Electric Co., Ltd.
We have examined the balance sheets of Taiwan UQM Electric Co., Ltd. as of
December 31, 1996 and 1995, and the related statements of income, changes in
shareholders' equity and cash flows for the year ended December 31, 1996 and
the period January 17, 1995 to December 31, 1995. Our examinations were made
in accordance with auditing standards generally accepted in the Republic of
China and the regulations governing such examinations and, accordingly,
included such tests of accounting records and such other auditing procedures as
we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the
financial position of Taiwan UQM Electric Co., Ltd. as of December 31, 1996 and
1995, and the results of its operations and its cash flows for the year ended
December 31, 1996 and the period January 17, 1995 to December 31, 1995, in
conformity with accounting principles generally accepted in the Republic of
China applied on a consistent basis.
Horwath & Company
Taipei, Republic of China
January 16, 1997
<PAGE>
TAIWAN UQM ELECTRIC CO., LTD.
BALANCE SHEETS
(In Development Stage)
December 31, 1996 and 1995
(Amounts Expressed in New Taiwan Dollars)
December 31
1996 1995
ASSETS Amounts % Amounts %
CURRENT ASSETS
Cash and cash equivalents
(Notes 2 & 3) $ 22,510,890 15.08 $ 17,633,984 17.77
Other receivables 1,880,181 1.25 64,511 0.06
Other current assets 69,657 0.05 26,235 0.03
Total Current Assets 24,460,728 16.38 17,724,730 17.86
PROPERTY AND EQUIPMENT
(Notes 2, 4 & 7)
Cost 980,842 0.66 - -
Less: accumulated depreciation (108,473) (0.07) - -
Add: construction in progress
and prepayment for land 122,507,538 82.04 81,114,412 81.74
Net 123,379,907 82.63 81,114,412 81.74
OTHER ASSETS
Deferred income tax assets
(Notes 2 & 6) 1,472,828 0.99 391,844 0.40
TOTAL ASSETS $149,313,463 100.00 $ 99,230,986 100.00
December 31
LIABILITIES AND 1996 1995
SHAREHOLDERS' EQUITY Amounts % Amounts %
CURRENT LIABILITIES
Notes payable $ 4,014 - $ - -
Other notes payable 15,915,177 10.66 - -
Accrued expenses (Note 7) 703,820 0.47 392,729 0.01
Other current liabilities 74,440 0.05 13,788 0.40
Total Current Liabilities 16,697,451 11.18 406,517 0.41
SHAREHOLDERS' EQUITY
Common stock-$10 par value, 10,000,000
shares authorized and issued 100,000,000 66.97 100,000,000 100.77
Capital received in advance 37,050,000 24.81 - -
Deficit in development stage
(Note 5) (4,433,988) (2.96) (1,175,531) (1.18)
Total Shareholders' Equity 132,616,012 88.82 98,824,469 99.59
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $149,313,463 100.00 $ 99,230,986 100.00
(See accompanying notes to financial statements)
<PAGE>
TAIWAN UQM ELECTRIC CO., LTD.
STATEMENTS OF INCOME
(In Development Stage)
For the Year Ended December 31 ,1996
and the Period January 17, 1995 to December 31,1995
(Amounts Expressed in New Taiwan Dollars)
January 17,1995 to
1996 1995 December 31, 1996
NET SALES $ - $ - $ -
COST OF GOODS SOLD - - -
GROSS PROFIT - - -
OPERATING EXPENSES (Note 7) (4,617,699) (1,819,488) (6,437,187)
OPERATING LOSS (4,617,699) (1,819,488) (6,437,187)
NON-OPERATING INCOME
Interest income 278,258 252,113 530,371
INCOME BEFORE INCOME TAX (4,339,441) (1,567,375) (5,906,816)
INCOME TAX
(Notes 2 & 6)
Current tax expense - - -
Deferred tax benefit 1,080,984 391,844 1,472,828
NET LOSS $(3,258,457) $(1,175,531) $(4,433,988)
EARNINGS PER SHARE
Net loss $ (0.33) $ (0.31)
(See accompanying notes to financial statements)
<PAGE>
<PAGE>
TAIWAN UQM ELECTRIC CO., LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Development Stage)
For the Year Ended December 31,1996
and the Period January 17, 1995 to December 31,1995
(Amounts Expressed in New Taiwan Dollars)
Common Stock Issued
Capital Deficit in
Received Development
Shares Amounts in Advance Stage
INITIAL PAID-IN CAPITAL,
JANUARY 17,1995 2,500,000 $ 25,000,000 $ - $ -
Capital increase by cash 7,500,000 75,000,000 - -
Net loss for the period
January 17, 1995 to
December 31,1995 - - - (1,175,531)
BALANCE, DECEMBER 31,1995 10,000,000 100,000,000 - (1,175,531)
Capital received in advance - - 37,050,000 -
Net loss for 1996 - - (3,258,457)
BALANCE, DECEMBER 31, 1996 10,000,000 $100,000,000 $37,050,000 $(4,433,938)
(See accompanying notes to financial statements)
<PAGE>
TAIWAN UQM ELECTRIC CO., LTD.
STATEMENTS OF CASH FLOWS
(In Development Stage)
For the Year Ended December 31, 1996
and the Period January 17, 1995 to December 31, 1995
(Amounts Expressed in New Taiwan Dollars)
January 17, 1995 to
1996 1995 December 31,1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,258,457) $(1,175,531) $ (4,433,988)
Adjustments:
Depreciation 108,473 - 108,473
Net changes in:
Other receivables (1,815,670) (64,511) (1,880,181)
Other current assets (43,422) (26,235) (69,657)
Deferred income tax assets (1,080,984) (391,844) (1,472,828)
Notes payable 4,014 - 4,014
Accrued expenses 311,091 392,729 703,820
Other current liabilities 60,652 13,788 74,440
Net Cash Used in Operating
Activities (5,714,303) (1,251,604) (6,965,907)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and
equipment (26,458,791) (81,114,412) (107,573,203)
CASH FLOWS FROM FINANCING ACTIVITIES
Initial paid-in capital and
capital increase by cash - 100,000,000 100,000,000
Increase in capital received
in advance 37,050,000 - 37,050,000
Net Cash Provided by
Financing Activities 37,050,000 100,000,000 137,050,000
NET INCREASE IN CASH AND CASH
EQUIVALENTS 4,876,906 17,633,984 22,510,890
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 17,633,984 - -
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $22,510,890 $17,633,984 $ 22,510,890
(See accompanying notes to financial statements)
<PAGE>
TAIWAN UQM ELECTRIC CO., LTD.
NOTES TO FINANCIAL STATEMENTS
(In Development State)
December 31, 1996 and 1995
(Amounts Expressed in New Taiwan Dollars)
1. ORGANIZATION AND NATURE OF BUSINESS
Taiwan UQM Electric Co., Ltd. (the Company) was incorporated on January
17, 1995, as a company limited by shares under the Company Law of the
Republic of China. The Company is mainly engaged in the manufacture and
sale of motors, motor controllers and related components. However, the
Company was still in development stage as of December 31, 1996, and was
mainly engaged in financial planning, recruitment and training, factory
construction, etc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies conform with accounting principles
generally accepted in the Republic of China.
1) Cash and cash equivalents
The statements of cash flows are prepared on the basis of cash and cash
equivalents. Cash equivalents are short-term and highly liquid
investments with original maturities of three months or less.
2) Property and equipment
Property and equipment are stated at cost. Major additions, replacements
and betterments are capitalized, while maintenance and repairs are
expensed currently.
Depreciation is provided by the straight-line method over the estimated
useful lives of the respective assets. Property and equipment which are
depreciated to residual values and are still in use will be depreciated
over their remaining useful lives. When assets are retired or disposed
of, their cost and related accumulated depreciation are removed from the
respective accounts. Any resulting gain or loss is credited or charged
to income, and the gain after deducting the applicable income tax is
transferred to capital surplus in the following year.
3) Income tax
The Company provides income tax in accordance with Statement of Financial
Accounting standards 22 "Accounting for Income Tax." The tax effects of
taxable temporary differences are recognized as deferred income tax
liabilities, while those of deductible temporary differences, loss
carryover and tax credits are recognized as deferred income tax assets.
The valuation allowance is provided on the basis of the estimated
realizability of deferred income tax assets.
<PAGE>
3. CASH AND CASH EQUIVALENTS
December 31
1996 1995
Cash on hand $ 26,130 $ 8,379
Checking accounts 18,647 -
Demand deposits 22,466,113 3,625,605
Time deposits - 14,000,000
Total $ 22,510,890 $17,633,984
4. PROPERTY AND EQUIPMENT
December 31
1996 1995
Cost
Transportation equipment $ 746,306 $ -
Furniture and fixtures 234,536 -
Construction in progress 38,093,247 -
Prepayment for land 84,414,291 84,414,412
123,488,380 84,414,412
Accumulated Depreciation 82,923 -
Transportation equipment
Furniture and fixtures 25,550 -
108,473 -
Net $123,379,907 $84,414,412
As of December 31, 1996, the Company has signed contracts with Everlight
Electric Industrial Co., Ltd. to purchase land and factory, aggregating
$86,563,756 and $96,000,000, respectively. The Company has paid
$84,414,291 for the land and $36,396,275 for the factory. To secure the
transactions, the Company has obtained certain collateral's from
Everlight Electric Industrial Co., Ltd. and its affiliate.
5. RETAINED EARNINGS
The Company's Articles of Incorporation provide that 10% of annual net
income shall be appropriated as legal reserve, and 5% of the remainder
shall be appropriated as employees' bonus, the remainder shall be
appropriated at the shareholders' meeting in the following year.
6. INCOME TAX
1) Summary of deferred income tax assets or liabilities
December 31
1996 1995
a)Total deferred income tax liabilities $ - $ -
b)Total deferred income tax assets 1,472,828 391,844
c)Valuation allowance for deferred
income tax assets - -
d)Tax effects of temporary differences
December 31, 1996
Amounts Tax effects
Deferred Organization Cost $5,891,311 $1,472,828
December 31, 1995
Amounts Tax effects
Deferred Organization Cost $1,567,375 $ 391,844
<PAGE>
2) Classification of deferred income tax assets and liabilities
December 31
1996 1995
Deferred income tax assets - noncurrent $1,472,828 $391,844
Valuation allowance - -
$1,472,828 $ 391,844
Deferred income tax liabilities - noncurrent - -
Net deferred income tax assets - noncurrent $1,472,828 $ 391,844
3) Income tax
December 31
1996 1995
Current income tax expense $ - $ -
Deferred income tax benefit
Deferred organization cost 1,080,984 391,884
Net $1,080,984 $ 391,884
7. RELATED PARTIES TRANSACTIONS
1) Related parties and relationship
Related parties Relationship
Kymco Motor Co., Ltd. Major shareholder
Turn Luckily Technology Co., Ltd. Major shareholder
Everlight Electric Industrial Co., Ltd. Its major shareholder is the
director of the Company
DJ ATO Components Corp. Invested by the Company's
major shareholder
<PAGE>
2) Significant transactions with related parties
a) Rental expense and related payable
1996 1995
Rental Rental
expense Payable expense Payable
Turn Luckily Technology
Co., Ltd. $ 40,000 $ - $181,500 $85,575
DJ ATO Components Corp. 257,143 - - -
Total $297,143 $ - $181,500 $85,575
b) Property and equipment
1996 Amount Paid as of
Transactions Total amount December 31, 1996
Everlight Electric Purchase
Industrial Co. Ltd. of land $86,563,756 $84,414,291
plus land value
increment tax
Everlight Electric
Industrial Co., Ltd. Purchase of $96,000,000
factory $36,396,275
1995 Amount paid as of
Everlight Electric Transactions Total Amount December 31, 1995
Industrial Co., Ltd Purchase of $87,994,507 $81,114,412
land Plus land value
increment tax
<PAGE>
(b) Reports on Form 8-K:
Report regarding Memorandum of Understanding for the formation
of a strategic alliance to import, distribute and market
electric scooters dated June 18, 1997.
Report regarding completion of offering of common stock
pursuant to Regulation S and Regulation D dated March 31, 1997.
(c) Exhibits
3.1 Articles of Incorporation and Bylaws. Reference is made to
Exhibit 3.1 of the Company's Registration Statement on Form S-1
(No. 33-42342), which is incorporated herein by reference.
3.2 Restated Articles of Incorporation. Reference is made to
Exhibit 3.2 of the Company's Quarter Report on Form 10-K for the
year ended October 31, 1993 (No. 0-9146) which is incorporated
herein by reference.
4.1 Specimen Stock Certificate. Reference is made to Exhibit 3.1 of
the Company Registration Statement on Form 10, dated
February 27, 1980 (No. 0-9146) which is incorporated herein by
reference.
10.1 Shareholder Agreement by and among Alcan International Limited,
Ray A. Geddes and Unique Mobility, Inc. dated June 7, 1988.
Reference is made to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1988
(No. 0-9146) which is incorporated herein by reference.
10.2 Unique Mobility, Inc. Incentive and Non-qualified Stock Option
Plan (amended and restated effective January 1, 1988). Reference
is made to Exhibit 10.4 of the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1988 (No. 0-9146).
10.3 Unique Mobility, Inc. 1992 Stock Option Plan. Reference is made
to Exhibit 4.1 to the Company's Registration Statement on Form
S-8 (No. 33-47454), which is incorporated herein by reference.
10.4 Unique Mobility, Inc. Employee Stock Purchase Plan. Reference
is made to Exhibit 4.3 to the Company's Registration Statement
on Form S-8 (No. 33-34612), which is incorporated herein by
reference.
10.5 401(k) Savings Plan of Unique Mobility, Inc. Reference is made
to Exhibit 4.3 to the Company's Registration Statement on Form
S-8 (No. 33-34613), which is incorporated herein by reference.
10.6 Amendment to Shareholder Agreement dated March 25, 1992 between
Unique Mobility, Inc., Ray A. Geddes and Alcan International
Limited. Reference is made to Exhibit 19.7 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 30,
1992 (No. 0-9146) which is incorporated herein by reference.
10.6 Unique Building Partners, Ltd. Liability Co. Operating Agreement
dated September 16, 1992. Reference is made to Exhibit 10.33 of
the Company's Registration Statement on Form S-2 (No. 33-53376),
which is incorporated herein by reference.
10.8 Lease between the Company and Unique Building Partners, Ltd.
Liability Co. dated September 22, 1992. Reference is made to
Exhibit 10.34 of the Company's Registration Statement on Form
S-2 (No. 33-53376), which is incorporated herein by reference.
<PAGE>
10.9 Amended Warrant Agreements between Unique Mobility, Inc. and
affiliates of Advent International Corporation and Techno
Venture U.S.A., Inc. Reference is made to exhibits 10.1 through
10.7 to the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1993, (No. 0-9146) which is incorporated
herein by reference.
10.10 Unique Mobility, Inc. Stock Option Plan for Non-Employee
Directors. Reference is made to Exhibit 10.39 of the Company's
Quarter Report on Form 10-K (No. 0-9146) for the year ended
October 31, 1993 which is incorporated herein by reference.
10.11 Warrant Agreement with Arnhold and S. Bleichroeder, Inc.
Reference is made to Exhibit 10.41 of the Company's Quarter
Report on Form 10-K (No. 0-9146) for the year ended
October 31, 1993 which is incorporated herein by reference.
10.12 Assignment Agreement with Alcan International Limited.
Reference is made to Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994
(No. 0-9146) which is incorporated herein by reference.
10.13 Amendment to the 1992 Stock Option Plan of Unique Mobility, Inc.
Reference is made to Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994
(No. 0-9146) which is incorporated herein by reference.
10.14 Amendment to the 401(k) Savings Plan of Unique Mobility, Inc.
dated January 18, 1995. Reference is made to Exhibit 10.1 in
the Company's Quarterly Report on Form 10-Q for the Quarter
ended January 31, 1995 (No. 0-9146) which is incorporated
herein by reference.
10.15 Amendment to the 1992 Stock Option Plan of Unique Mobility, Inc.
dated December 7, 1994. Reference is made to Exhibit 10.2 in
the Company's Quarterly Report on Form 10-Q for the Quarter
ended January 31, 1995 (No. 0-9146) which is incorporated
herein by reference.
10.16 Stock Purchase Agreement by and among Unique Mobility, Inc. and
Invacare Corporat on dated December 7, 1995. Reference is made
to exhibit 10.36 in the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995, (No. 1-10869)which
is incorporated herein for reference.
10.17 Amendment to the Stock Purchase Agreement by and among Unique
Mobility Inc. and Invacare Corporation. Referenced is made to
exhibit 10.3 in the Company's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1996, (No. 0-9146) which is
incorporated herein by reference.
21 Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Horwath & Co. (Taiwan)
27 Financial Data Schedule
<PAGE>
(d) Financial Statement Schedules
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities and Exchange Act
of 1934, Unique Mobility, Inc. has duly caused this Annual Report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Golden, Colorado on the 26th day of June, 1997.
UNIQUE MOBILITY, INC.,
a Colorado Corporation
By: "Ray A. Geddes"
Ray A. Geddes
Chairman of the Board of Directors
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons on
behalf of Unique Mobility, Inc., in the capacities indicted and on the date
indicated.
Signature Title Date
Chairman of the Board of Directors
"Ray A. Geddes" (Principal Executive Officer) June 26, 1997
Ray A. Geddes
Treasurer and Controller
(Principal Financial and
"Donald A. French" Accounting Officer) June 26, 1997
Donald A. French
"William G. Rankin" President and Director June 26, 1997
William G. Rankin
"Francis S.M. Hodsoll" Director June 26, 1997
Francis S.M. Hodsoll
"H. J. Young" Director June 26, 1997
H. J. Young
"J. B. Richey" Director June 26, 1997
J. B. Richey
Exhibit 21
Subsidiaries of the Company:
UQM Leasing, Inc.
Unique Power Products, Inc.
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Unique Mobility, Inc.:
We consent to the incorporation by reference in the registration statements
(Nos. 33-61166, 33-63399, 333-01919, 333-13883 and 333-23843) on Form S-3
and in the registration statements (Nos. 33-23113, 33-24071, 33-34612,
33-35055, 33-34613, 33-41325, 33-64852, 34-47454, 33-81430, and 33-92288) on
Form S-8 of Unique Mobility, Inc. of our report dated June 26, 1997 relating
to the consolidated balance sheets of Unique Mobility, Inc. and subsidiaries
as of March 31, 1997 and October 31, 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the five
months ended March 31, 1997 and each of the years in the three-year period
ended October 31, 1996, which report appears in the March 31, 1997 Annual
Report on Form 10-K of Unique Mobility, Inc.
KPMG Peat Marwick LLP
Denver, Colorado
June 26, 1997
Exhibit 23.2
Consent of Independent Auditors'
The Board of Directors
Unique Mobility, Inc:
We consent to the incorporation by reference in the registration statements
(Nos. 33-61166, 33-63399, 333-01919, 333-13883 and 333-23843) on Form S-3 and
in the registration statements (Nos. 33-23113, 33-24071, 33-34612, 33-35055,
33-34613, 33-41325, 33-64852, 34-47454, 33-81430, and 33-92288) on Form S-8
of Unique Mobility, Inc. of our report dated January 16, 1997 relating to the
balance sheets of Taiwan UQM Electric Co., Ltd. as of December 31, 1996 and
1995, and the related statements of income, shareholders' equity, and cash
flows for each of the years in the two-year period ended December 31, 1996,
which report appears in the March 31, 1997 Annual Report on Form 10-K of
Unique Mobility, Inc.
Horwath & Co.
Taipei, Republic of China
June 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF UNIQUE MOBILITY, INC. AND CONSOLIDATED
SUBSIDIARIES AS OF MARCH 31, 1997 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FIVE MONTHS ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,713,557
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<RECEIVABLES> 389,314
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<INVENTORY> 617,276
<CURRENT-ASSETS> 6,853,082
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<DEPRECIATION> 1,764,288
<TOTAL-ASSETS> 12,370,699
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<BONDS> 726,218
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<COMMON> 27,224,600
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