UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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
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 (9,435,876 shares) computed by reference to the closing price of such
stock on the American Stock Exchange, as of January 24, 1997:
$38,922,989
The number of shares outstanding (including shares held by affiliates) of each
of the registrant's classes of common stock, as of January 24, 1997:
11,711,665 shares of the
registrant's common stock,
$.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
In Part III certain documents are incorporated
by reference from other documents
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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 and Pacific 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:
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: The UQM PowerPhase System, has been 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.
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 India and Italy. In
addition, the UQM powered Ethos 3 EV electric car has been completed and is
being demonstrated to potential licensees in collaboration with the Pininfarina
Group of Turin, Italy (Pininfarina).
During fiscal 1996, the Company placed 1,057,708 shares of its common stock with
institutional and private investors in Europe pursuant to offerings under
Regulation S of the Securities and Exchange Act. Net proceeds to the Company
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from the above placements, after deducting expenses, amounted to an aggregate of
$3,909,379. To date, the Company has used a portion of these proceeds to fund
product development and to meet capital calls for its Taiwan joint venture See
also "Liquidity and Capital Resources" below.
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 and
global mass markets, should they develop, for energy-efficient clean vehicles
and related products.
Recent Developments
During fiscal 1996, the Company continued to strengthen its strategic
relationships with Invacare Corporation (Invacare), KYMCO, and Pininfarina, all
of which management deems critical to future manufacturing programs. In
addition, the Company was awarded several contracts during the year by various
other organizations and agencies of the U.S. Government. Recent developments
pertaining to these relationships and contract awards are summarized below:
Strategic Alliance with Invacare: In January 1996, Invacare became a shareholder
of the Company with the purchase of 129,032 shares of the Company's common stock
at $3.88 per share for a total capital contribution of $500,000. Proceeds of the
issuance were applied to the development of an advanced wheelchair motor.
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 and institutional beds, and
respiratory assistance products. Concurrent with Invacare's stock purchase, Mr.
J. B. Richey became a member of the Company's board of directors. Mr. Richey is
Invacare's top technical executive and holds the dual positions of Senior Vice
President-Total Quality Management and President of Invacare Technologies, a
wholly owned subsidiary of Invacare.
Taiwan Joint Venture: During the fourth fiscal quarter of 1996, Taiwan UQM
Electric Co., Ltd. (Taiwan UQM), a Taiwan corporation owned jointly by the
Company, KYMCO and Turn Luckily Technology Co., Ltd. (TLT), began construction
of a factory for the manufacture of products under license from the Company. The
45,000 square foot facility and adjacent 25,000 square foot office building is
being constructed on approximately three acres of prime industrial property that
was acquired in 1995 pursuant to a Taiwanese government incentive program.
Construction is expected to be completed in April 1997 to support the
commencement of manufacturing operations in June 1997. Initial production will
be confined to the manufacture of conventional starter motors and generators for
KYMCO and other automotive customers. Taiwan UQM plans to later expand into the
manufacture of electric scooter power systems for KYMCO and eventually a full
line of UQM motors and controllers for other Asian automotive and industrial
customers.
Previously, the Company, KYMCO and TLT had entered into an agreement whereby
KYMCO funded the Company's capital call obligations required to maintain its
equity in Taiwan UQM. Pursuant to the agreement, KYMCO purchased 3,783,000
shares of Taiwan UQM for the amount of NT$33,783,000 (U.S.$1,403,493) and
granted the Company the option to purchase the shares for a like amount plus
interest at 10 percent per annum. In November 1996, the Company exercised its
option to purchase the shares for the agreed upon purchase price (including
interest and transfer taxes)of NT$44,175,505 (U.S.$1,612,539) with funds
obtained from its recent Regulation S financing. Upon completion of the
transaction, the equity positions of the Company and KYMCO were equal at 39
percent, with the remaining 22 percent held by TLT. See also "Liquidity and
Capital Resources" below.
The Pininfarina Ethos 3 EV: With its partner Pininfarina, the Company has
developed the Ethos 3 EV electric car demonstrator that was completed in
September 1996. Since that time, the Ethos project team has been investigating
new body configurations, battery chemistries, powertrain options and low cost
assembly methods. It is the objective of the Unique/Pininfarina collaboration to
secure one or more funded programs to create a family of "clean" vehicles that
can be industrialized, and distributed by automotive clients for sale to the
general public in several models in many markets.
The Ethos 3 EV demonstrator made its public debut in October at the 13th
International Electric Vehicle Symposium (EVS-13) in Osaka, Japan. Following
EVS-13, the car was shipped to Taipei at the invitation of the Taiwanese
government which, together with Asia Pacific Investment Corporation (APIC), a
collaboration of over 200 corporate investors under the auspices of the Taiwan
government, is preparing plans to establish a domestic automobile industry.
Private demonstrations were also conducted during this period for several
Detroit and Japanese automakers. In December 1996, the Ethos 3 EV participated
in an industry sponsored ride and drive session at the North American Electric
Vehicle and Infrastructure Conference in San Diego, California.
Throughout these demonstrations the Ethos 3 EV received many favorable comments.
Its performance, drivability and comfort were highly regarded. The car reaches
60 mph in 11.2 seconds and can accelerate quickly up a six percent grade through
70 mph. It is maneuverable in traffic and with its nickel metal-hydride
batteries, can carry four passengers approximately 150 miles between charges at
an average speed of 45 m.p.h. Early in 1997, the Ethos 3 EV will be transported
to Italy where Pininfarina will demonstrate the vehicle to interested European
automakers.
Neither Unique nor Pinanfarina intends to sell and service vehicles directly to
the retail market.
Research and Development Contracts: In October 1996, the Company was awarded two
cost share contracts totaling $680,000 by the U.S. Department of Defense
Advanced Research Projects Agency (DARPA) for high speed flywheel testing and
development of a 75 kW vehicle traction motor. Separately, Koyo Seiko Co., Ltd.
(Japan) authorized the Company to begin a $150,000 project to build and test a
custom designed high speed PM flywheel motor and drive.
In November 1996, Kia Motor Corporation (KIA) authorized the Company to begin a
$645,000 project to convert five Kia Sephia sedans to electric drive using the
UQM PowerPhase system. Kia is the second largest Korean automobile company.
In October 1996, the Company received a $360,000 contract from Pan Asia
Technology Co., Ltd. (Taiwan)(Pan Asia) to develop an experimental hybrid
electric passenger car for test and evaluation. Pan Asia is a subsidiary of
APIC. The Formosa Plastic Group, Taiwan's largest industrial conglomerate, is
APIC's largest shareholder and Mr. Y.C. Wang, chairman of Formosa Plastic, is
also chairman of APIC.
In December 1996, the U.S. Agency for International Development (US AID)
authorized a $100,000 project to study the feasibility of applying the Company's
electric scooter power system to three wheeled "Autorickshaw" passenger vehicles
manufactured by Bajaj Auto Ltd. (India). Separately, the Company received a
$35,000 contract from Piaggio Veicoli S.p.A. (Italy) to install an electric
power system in a Piaggio scooter.
In January 1997, the Company received a $1.23 million contract from the
Metropolitan Transit Authority of Harris County Texas (Houston Metro) to supply
an advanced traction drive system for the "Advanced Technology Transit Bus"
being developed collaboratively by Northrop Grumman Corporation, Houston Metro
and the U.S. Department of Transportation. The contract involves a sixteen month
effort to develop a 107 kW state-of-the-art PM motor, controller, gear reduction
and braking system capable of supplying motive power not only for transit buses
but also for heavy duty vehicles of all types.
Patents and Trademarks: During fiscal 1996, the Company was awarded a patent for
a new compact, highly efficient PM motor by the European Patent Office. Motors
covered by this patent could be used for heavy duty military applications and
large off-highway industrial vehicles. The corresponding U.S. patent application
is pending. See also "Patents and Trademarks" below.
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, 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 100 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, creates
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 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.
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 kW 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.
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.
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,
<PAGE>
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.
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. 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.
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, 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.
Near Term Markets
Wheelchair Motors: The Company hopes to manufacture wheelchair motors for
Invacare. Powered wheelchairs typically require 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 two percent of all scooters sold in Taiwan to 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 rapidly 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.
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 groundskeeping. They are almost exclusively gasoline powered and
current vehicle design is 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 either directly or by a joint venture
or licensing arrangement with a major original equipment manufacturer during
calendar 1997.
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 thousands 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.
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.
License Agreements
The Company and Alcan Aluminum 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 a
license to make, use and sell the Company's electric motors and controls
exclusively in Taiwan, exclusively in the People's Republic of China with
respect to the propulsion system developed for KYMCO, and non-exclusively
throughout Asia. 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 been issued in
Australia, Brazil, Canada, India, Israel, South Korea, Mexico, New Zealand,
South Africa and Taiwan. Several other foreign applications remain pending,
three of which have been indicated to be allowable.
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 CIP 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 eight applications pending in foreign countries and one pending application
in the 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 power 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 been
allowed and the patent is expected to issue in February 1997. Patent
Applications in Canada, Europe, Japan and Korea are pending as designated in a
counterpart PCT International Patent Application.
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 markets its
ElecTrek automobile.
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 is still pending. 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, and patent applications filed thereunder are still
pending in five countries including the United States. Corresponding patents
have been granted in Australia and in Europe where the patent is effective as to
France, Germany, Italy, Switzerland, Liechtenstein and the United Kingdom. This
technology is similar to that developed by the Company but is complementary to
it, thus broadening the Company's range of products.
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, 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.
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 20 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." The foreign trademark registrations and applications include major
markets where the Company is doing business or anticipates doing business.
An application for trademark registration of the "PowerPhase" mark was filed in
the United States in September 1996 and is still pending. The Company expects to
file similar applications seeking registration of this mark in major foreign
markets in the near future.
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. See also "License Agreements" above.
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.
Backlog
At January 28, 1997, the Company had unperformed service contracts from
customers which will provide payments to the Company upon completion aggregating
approximately $2,750,000. Of this amount, the Company expects to complete
approximately $700,000 of these service contracts during the five month
transition period ending March 31, 1997 and the balance during the fiscal year
ending March 31, 1998. All such contracts are subject to amendment, modification
or cancellation. At October 31, 1995, the Company had unperformed service
contracts from customers of approximately $637,000.
In addition, the Company had an order backlog for motors and electronic controls
at January 28, 1997, with an aggregate sales value of approximately $70,000. The
Company expects to ship backlog products during the transition period ending
March 31, 1997. At October 31, 1995, the Company had an order backlog for motors
and electronic controls of approximately $14,000.
Customers and Suppliers
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 total contract services revenue is summarized in the following
table:
Year ended October 31,
1996 1995 1994
Ford Motor Company, $378,640 $1,720,347 $316,740
Kwang Yang Motor Co., Ltd. 202,343 880,420 369,595
Pentastar Electronics, Inc. 194,600
Hyundai Motor Company 135,950
Naval Air Systems Command 657,330
Walt Disney Imagineering 280,496
911,533 3,258,097 966,831
Percentage of total contract
services revenue 63% 81% 59%
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 year ended October 31, 1996, $800,208 or 56 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 October 31, 1996, the Company had 31 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.
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 fourth quarter of fiscal 1996.
<PAGE>
ITEM 5. MARKET PRICE OF COMMON STOCK
The Company's common stock trades on the American, Boston and Pacific Stock
Exchanges. The high and low closing prices, by fiscal quarter, as reported by
the American Stock Exchange for the last three years are as follows:
1996 High Low
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
On January 24, 1997 the closing price of the Company's common stock, as reported
on the American Stock Exchange, was $4.13 per share and there were 908 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
1996 1995 1994 1993 1992
Contract
Services
Revenue $ 1,436,484 4,031,951 1,643,203 1,461,568 2,306,070
Product
Sales $ 611,213 701,700 708,917 695,300 468,508
Operating
Loss $(2,744,606) (1,134,338) (3,367,873) (2,446,574) (2,240,170)
Net Loss $(2,904,743) (1,330,433) (3,395,356) (2,473,804) (2,217,207)
Net Loss
Per Common
Share $ (.26) (.13) (.35) (.28) (.33)
Total
Assets $ 8,712,649 7,626,178 5,903,551 7,791,826 4,700,507
Long-term
Obligations $ 744,389 807,003 886,996 921,758 2,161,376
Cash Divi-
dend Declared
Per Common
Share $ -0- -0- -0- -0- -0-
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 dated October 10, 1996. 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. During
the transition period the Company will report on operations for the quarter
ended January 31, 1997, through the filing of a quarterly report on Form 10-Q.
This will be followed by a transition period report on Form 10-K for the five
month period ended March 31, 1997. The Company will also defer its annual
meeting of shareholders until the summer of 1997 in order to conform the meeting
date to the new fiscal year end. Relevant information normally contained in the
Company's year end proxy statement may be found in Part III of this Form 10-K
below.
Throughout fiscal 1996, the Company invested significant amounts of capital in
the development of a proprietary motor for powered wheelchairs for Invacare as
well as in the development of manufacturing processes and facility layout
necessary for its manufacture. Primarily as a result, research and development
expenditures rose 31 percent to $1,698,352 for fiscal year 1996 compared to
$1,298,311 for fiscal 1995.
Financial Condition
The Company's financial condition strengthened somewhat during fiscal 1996 as a
result of capital raising activities conducted throughout the year. During
fiscal 1996, the company received net proceeds from the sale of common stock in
the amount of $4,060,211. Shareholders' equity rose from $4,397,047 to
$5,592,876. Current assets rose to $4,453,461 from $3,173,642. Working capital
(the excess of current assets over current liabilities) increased from
$1,140,579 to $2,469,197. Cash and certificates of deposit were $3,230,246 at
fiscal 1996 year end compared to $2,115,499 at fiscal 1995 year end.
Accounts receivable rose to $569,562 at October 31, 1996, compared to $337,849
at the prior year end, reflecting slower than expected collection on certain
commercial and government accounts. As a result, the accounts receivable balance
at fiscal 1996 year end represented approximately 102 days revenue compared to
an average accounts receivable balance of approximately 87 days revenue
throughout fiscal 1996. Despite the increase in revenue days outstanding,
management believes the amounts outstanding at October 31, 1996 are collectible
and that no allowance for doubtful accounts is necessary.
Costs and estimated earnings on uncompleted contracts declined $82,931 to
$179,483 from the fiscal 1995 year end level of $262,414. The decline was due to
accelerated billings on certain commercial contracts. Estimated earnings on
contracts in process rose to $596,765 at October 31, 1996 on total contracts in
process of $1,678,117 compared to estimated earnings on contracts in process of
$272,851 on total contracts in process of $1,177,785 at October 31, 1995. This
increase is attributable to the performance of substantially all fiscal 1996
contracts within budget and anticipated margins compared to cost overruns on
three out of nine programs in fiscal 1995 with aggregate cost overruns of
$71,777 representing approximately 19.7 percent of the contract value of the
overrun programs.
Finished products inventories declined approximately 38 percent due to lower
stocking levels. Raw material and work in process inventories rose, reflecting
somewhat higher production levels and stockpiling of long lead time parts.
The Company invested $182,011 for the acquisition of property and equipment
during fiscal 1996 compared to $440,079 and $413,907 in each of the prior two
fiscal years, respectively. The decrease was generally attributable to reduced
purchases of computer hardware and test equipment.
Investment in Taiwan joint venture declined to $1,366,540 at fiscal 1996 year
end from $1,432,735 at the beginning of the fiscal year. The decrease was due to
foreign currency exchange rate fluctuations and operating losses of Taiwan UQM,
which are recorded using the equity method of accounting for the Company's
minority ownership position.
Patent and trademark costs, net of accumulated amortization, increased $69,572
over the prior year level. The increase reflects prosecution of patent
applications in the United States and Europe and the worldwide registration
costs associated with the trademark UQM .
Other assets declined to $7,552 due to the sale of a parcel of real estate
previously held by the Company for investment.
Accounts payable rose to $121,790 from $83,859 at the end of fiscal 1995 due to
purchases of components and materials for projects in process in the normal
course of operation.
Other current liabilities declined to $400,574 at October 31, 1996, from
$464,186 at October 31, 1995. The decrease was attributable to a reduction in
accrued amounts due to subcontractors on a contract with the U.S. Government.
Accrued interest rose to $214,002 from $93,698 reflecting interest accruals
under the waiver and option agreement with KYMCO. See also "Liquidity and
Capital Resources" below.
Note payable to Taiwan joint venture participant declined to $1,375,121 at
October 31, 1996, from $1,403,493 at the prior year end. The decline was solely
due to foreign currency exchange rate fluctuations between the respective
balance sheet dates.
Billings in excess of costs and estimated earnings on uncompleted contracts rose
to $25,685 at fiscal 1996 year end due to billings in advance of the performance
of the associated work.
Long-term debt declined $62,614 during fiscal 1996 due to scheduled principal
payments on the mortgage debt associated with the Company's facility.
Common stock and additional paid-in capital increased to $117,514 and
$23,021,339 at October 31, 1996, respectively, compared to $105,720 and
$18,887,886 at October 31, 1995. The increases were due to sales of common stock
to institutional investors of $3,909,379; sales of common stock to employees
through the company's benefit plans of $150,832; and the issuance of common
stock for services of $61,391.
Results of Operations
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 $0.35
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 level
and 14 percent from the fiscal 1994 level. The decrease is attributable to price
reductions on the Company's high voltage prototype products and decreased sales
to the solar racing market.
Gross profit margins for fiscal 1996 declined to 15.1 percent compared to 28.7
percent for fiscal 1995 and were 4.2 percent higher than the fiscal 1994 margin
of 10.9 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
18.6 percent for fiscal 1996 compared to 31.0 percent in fiscal 1995 and 8.6
percent in fiscal 1994. Gross profit on product sales was 6.7 percent for fiscal
1996 compared to 15.2 percent in fiscal 1995 and 16.3 percent in fiscal 1994.
Research and development expenditures in fiscal 1996 rose $400,041 over the
fiscal 1995 level and declined $428,429 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
$780,000 or 46 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
$440,000 in fiscal 1996 compared to $710,000 for fiscal 1994.
General and administrative expense for fiscal 1996 rose $161,683 over the fiscal
1995 level and declined $142,915 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 legal fees associated with an
adverse arbitration award ($15,623). 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 a cost of contract services. Legal costs of the arbitration proceeding
were recorded as general and administrative expense. The foregoing award
represented a complete settlement of all claims by the consultant against the
Company.
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.
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 throughout fiscal 1996 were adequate
to meet operating needs. Net cash used by operating activities rose to
$2,584,034 in fiscal 1996, compared to $940,459 in fiscal 1995, due primarily to
higher operating losses. Cash requirements 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
on development milestones, Invacare has further agreed to purchase additional
shares at market price the proceeds of which would be used, in part, to fund the
Company's anticipated capital investment in motor manufacturing tools and
equipment.
During fiscal 1996, the Company also completed two offerings of its common stock
to overseas individual and institutional investors under Regulation S. Pursuant
to the 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$1,347,879 as of December 31, 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 is due and payable in two equal
installments on March 1, 1997 and June 1, 1997.
The Company does not currently possess the financial resources to meet its
capital call obligations to Taiwan UQM, although it is management's intent to
meet such obligations if capital becomes available on terms acceptable to the
Company. Accordingly, during the first quarter of fiscal 1997, the Company will
record an increase in its investment in the Taiwan joint venture and will record
a note payable to the joint venture in an amount equal to the capital call
obligation. There can be no assurance that the Company can secure the capital
required to meet this obligation. Should the Company be unable to do so, the
remaining joint venture partners have the right to purchase the shares otherwise
designated for sale to the Company. In that event the Company's equity interest
would be reduced from 39 percent to approximately 20 percent.
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 capital
expenditures for production tooling and fixtures, production machinery,
equipment, computer hardware and software are expected to exceed $1.5 million.
There can be no assurance, however, that the Company will launch volume
manufacturing operations for Invacare or others. The Company does not currently
possess sufficient cash to make the capital investment necessary to launch
manufacturing operations and there can be no assurance that the Company can
obtain the capital it requires on terms acceptable to the Company. The Company
has cash sufficient to fund non-manufacturing operations through July 31, 1997.
The Company hopes to meet its future cash requirements for Taiwan UQM, the
launch of manufacturing operations and non-manufacturing operations through
sponsored research and development activities, the issuance of equity or debt
securities, or a combination thereof, although there can be no assurance that
such sponsorship or financing can be arranged.
In the event the Company is unwilling or unable to arrange such sponsorship or
financing, management would defer, or forego its future cash contributions to
Taiwan UQM, as well as its expected investment in the launch of manufacturing
operations, and modify non-manufacturing operations to a level commensurate with
the then available cash resources.
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Unique Mobility, Inc.:
We have audited the accompanying consolidated balance sheets of Unique Mobility,
Inc. and Subsidiaries as of October 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
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 consolidated
financial statements based on our audits.
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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Unique Mobility,
Inc. and Subsidiaries as of October 31, 1996 and 1995, and the results of their
operations and their cash flows for 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
January 10, 1997
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
October 31, 1996 and 1995
Assets 1996 1995
Current assets:
Cash and cash equivalents $ 3,230,246 1,796,392
Certificates of deposit - 319,107
Accounts receivable (notes 7 and 12) 569,562 337,849
Costs and estimated earnings in excess of
billings on uncompleted contracts (note 2) 179,483 262,414
Inventories (note 3) 408,145 404,701
Prepaid expenses 37,848 35,397
Other current assets 28,177 17,782
Total current assets 4,453,461 3,173,642
Property and equipment, at cost (note 7):
Land (note 4) 335,500 335,500
Building (note 4) 1,364,500 1,364,500
Molds 102,113 102,113
Transportation equipment 258,675 251,175
Machinery and equipment 1,918,128 1,763,818
3,978,916 3,817,106
Less accumulated depreciation (1,613,786) (1,275,530)
Net property and equipment 2,365,130 2,541,576
Investment in Taiwan joint venture (note 5) 1,366,540 1,432,735
Patent and trademark costs, net of accumulated
amortization of $40,030 and $25,491 (note 11) 519,966 450,394
Other assets 7,552 27,831
$ 8,712,649 7,626,178
(Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
Liabilities and Stockholders' Equity 1996 1995
Current liabilities:
Accounts payable $ 121,790 83,859
Note payable to Taiwan joint venture 1,375,121 1,403,493
participant (note 5)
Other current liabilities (note 6) 400,574 464,186
Current portion of long-term debt (note 7) 61,094 81,525
Billings in excess of costs and estimated
earnings on uncompleted contracts (note 2) 25,685 -
Total current liabilities 1,984,264 2,033,063
Long-term debt, less current portion (note 7) 744,389 807,003
Total liabilities 2,728,653 2,840,066
Minority interest in consolidated subsidiary (note 4) 391,120 389,065
Stockholders' equity (notes 9 and 10):
Common stock, $.01 par value, 50,000,000 shares
authorized; 11,751,365 and 10,571,953 shares 117,514 105,720
issued
Additional paid-in capital 23,021,339 18,887,886
Accumulated deficit (17,331,279) (14,426,536)
Notes receivable from officers (65,816) (52,421)
Cumulative translation adjustment (21,030) -
Treasury stock, at cost, 39,341 and 37,341 shares (127,852) (117,602)
Total stockholders equity 5,592,876 4,397,047
Commitments (notes 5, 14 and 15)
$ 8,712,649 7,626,178
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended October 31, 1996, 1995 and 1994
1996 1995 1994
Revenue:
Contract services (note 12) $ 1,436,484 4,031,951 1,643,203
Product sales 611,213 701,700 708,917
2,047,697 4,733,651 2,352,120
Operating costs and expenses:
Costs of contract services 1,168,757 2,781,866 1,501,919
Costs of product sales 570,481 594,782 593,665
Research and development 1,698,352 1,298,311 2,126,781
====================================
General and administration 1,354,713 1,193,030 1,497,628
====================================
4,792,303 5,867,989 5,719,993
Operating loss (2,744,606) (1,134,338) (3,367,873)
Other income (expense):
Minority interest share of earnings of
consolidated subsidiary (69,400) (64,627) (69,517)
Interest income 113,582 50,890 98,228
Interest expense (202,798) (177,051) (73,813)
Equity in loss of Taiwan joint
venture (note 5) (45,164) (11,952) (3,888)
Other 43,643 6,645 21,507
(160,137) (196,095) (27,483)
Net loss $ (2,904,743) (1,330,433) (3,395,356)
Net loss per common share $(.26) (.13) (.35)
Weighted average number of shares of
common stock outstanding 11,021,742 10,090,778 9,763,391
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years Ended October 31, 1996, 1995 and 1994
<TABLE>
Notes
<CAPTION> Number of 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 (note 10) 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 services (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
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended October 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from (used by) operating activities:
Net loss $(2,904,743) (1,330,433) (3,395,356)
Adjustments to reconcile net loss to
net cash used by operating
activities:
Depreciation and amortization 375,590 346,567 271,772
Minority interest share of earnings
of consolidated subsidiary 69,400 64,627 69,517
Noncash compensation expense for
common stock and warrants issued
for services 61,391 50,000 42,550
Equity in loss of Taiwan joint
venture 45,164 11,952 3,888
Gain on sale of property and
equipment (45,676) (3,534) -
Other (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 (148,782) 161,223 28,995
Inventories (3,444) 70,450 52,215
Prepaid expenses and other
current assets (12,846) 27,105 28,660
Accounts payable and other
current liabilities (25,681) (200,703) 276,212
Billings in excess of costs and
estimated earnings on
uncompleted contracts 25,685 (137,247) 74,060
Net cash used by operating
activities (2,584,034) (940,459) (2,511,568)
Cash from (used by) investing activities:
Acquisition of property and equipment (182,011) (440,079) (413,907)
Increase in patent and trademark costs (92,390) (64,766) (131,652)
Investment in Taiwan joint venture - - (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 from (used by)
investing activities 108,067 (387,718) (590,641)
(Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
1996 1995 1994
Cash flows provided by financing activities:
Proceeds from borrowings $ - 212,337 -
Repayment of debt (83,045) (250,905) (36,077)
Proceeds from sale of common stock, net 3,909,379 1,950,554 -
Issuance of common stock upon exercise
of employee options 130,565 76,396 867,871
Issuance of common stock under
employee stock purchase plan 20,267 2,526 8,523
purchase plan
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 (67,345) (67,347) (60,613)
Net cash provided by financing
activities 3,909,821 1,923,561 1,026,815
Increase (decrease) in cash
and cash equivalents 1,433,854 595,384 (2,075,394)
Cash and cash equivalents at beginning of
year 1,796,392 1,201,008 3,276,402
Cash and cash equivalents at end of year $ 3,230,246 1,796,392 1,201,008
Interest paid in cash during the year $ 82,494 89,133 72,638
Non-cash investing and financing transactions:
In 1995, the Company financed its additional investment in the Taiwan joint
venture through the issuance of a note payable in the amount of $1,403,493
(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 6 months
prior to the date of the option exercise. The shares received are recorded at
cost as treasury stock. In fiscal 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.
In accordance with the provisions of the Company's stock options 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. In fiscal 1996, 1995 and 1994, the Company
issued 13,395, 2,900 and 48,352 shares of common stock with 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
October 31, 1996 and 1995
(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 October 31, 1996 and 1995, consisted of
the other stockholders' ownership interests in a subsidiary of the
Company. See Note 4.
(c) Cash, Cash Equivalents and Certificates of Deposit
The Company considers cash on hand and investments with original
maturities of three months or less to be cash equivalents.
Certificates of deposit are carried at cost.
(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 as they occur. Income or loss recognition is limited to
the extent of the Company's investment in, advances to and guarantees
of the joint venture.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Summary of Significant Accounting Policies (continued)
(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 annual fees paid to maintain the
patents in good standing . 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 service contracts, the terms of which is one year
or less, is recognized using the completed-contract method. 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 costs 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
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.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(k) Research and Development
Costs of researching and developing new technology or significantly
altering existing technology are charged to operations as incurred.
(l) 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 in a separate component of
stockholders' equity. Gains and losses from foreign currency
transactions are included in other income (expense).
(m) 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.
(n) 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.
(o) Reclassifications
Certain prior year amounts have been reclassified to conform to the
1996 presentation.
(2) Revenue in Excess of Billings and Billings in Excess of Revenue
At October 31, 1996, the estimated period to complete contracts in process
ranges from one to eight months, and the Company expects to collect
substantially all related accounts receivable and costs and estimated
earnings in excess of billings on uncompleted contracts within one year.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The following summarizes contracts in process at October 31:
1996 1995
Costs incurred on uncompleted
contracts $ 1,081,352 904,934
Estimated earnings 596,765 272,851
1,678,117 1,177,785
Less billings to date 1,524,319 915,371
$ 153,798 262,414
Included in the accompanying balance sheets as follows:
Costs and estimated earnings
in excess of billings on
on uncompleted contracts $ 179,483 262,414
Billings in excess of costs
and estimated earnings on
estimated earnings on
uncompleted contracts (25,685) -
$ 153,798 262,414
(3) Inventories
Inventories at October 31, consists of:
1996 1995
Raw materials $ 273,527 247,225
Work in process 55,996 31,525
Finished products 78,622 125,951
$ 408,145 404,701
(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 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.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(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 has the option to repurchase these shares from KYMCO for the
additional capital call amount, plus interest at 10% per annum. It was the
intent of management of the Company to repurchase the shares and maintain
the Company's equity interest in Taiwan UQM at 39%. The purchase by KYMCO
of the shares related to the Company's additional capital call obligations
has been accounted for as a financing arrangement. Accordingly, for
financial reporting purposes, as of 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. The exercise of the option to repurchase the shares of
Taiwan UQM from KYMCO and the payment of the amounts due allowed the
Company to maintain its 39% equity interest in Taiwan UQM.
Summarized unaudited financial information for Taiwan UQM is as follows:
Financial Position October 31, 1996
Current assets $ 330,826
Noncurrent assets - land and construction 3,196,300
in process
Total assets $ 3,527,126
(Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Current liabilities $ 19,816
Noncurrent liabilities 3,361
Stockholders' equity 3,503,949
Total liabilities and equity $ 3,527,126
Year ended
Results of Operations October 31, 1996
Revenue $ -
Expenses 128,214
Net loss $(128,214)
(6) Other Current Liabilities
Other current liabilities at October 31, consists of:
1996 1995
Accrued subcontractor expense $ - 174,781
Accrued interest 214,002 93,698
Accrued legal and accounting fees 45,237 48,611
Accrued payroll, consulting, personal
property and real estate taxes 52,585 44,882
Other 88,750 102,214
$ 400,574 464,186
(7) Long-term Debt
Long-term debt at October 31, consists of: 1996 1995
Note payable to bank, in monthly installments with interest at the bank's
prime rate plus 1.0% (9.25% at October 31, 1996); matures
October 2007; secured by land and building $ 789,793 829,714
with a net book value of $1,521,304
Note payable to bank, in monthly installments with interest at 12%;
matures November 1997; secured by all of the Company's accounts at
the bank and all accounts receivable and 15,690 58,814
certain equipment with a net book value of
$644,562
Total long-term debt 805,483 888,528
Less current portion 61,094 81,525
Long-term debt, less current portion $ 744,389 807,003
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Effective December 1, 1996, the Company refinanced its note payable to the
bank (maturing October 2007). The full amount of the outstanding note
balance was refinanced with a new note payable bearing interest at a fixed
rate of 9.1% per annum.
Considering the effects of this refinancing, the annual aggregate
maturities of long-term debt for each of the next five fiscal years and
thereafter are as follows:
1997 $ 59,485
1998 47,681
1999 52,271
2000 57,303
2001 62,819
Thereafter 525,924
$ 805,483
(8) Income Taxes
Income tax expense (benefit) attributable to income (loss) from continuing
operations differed from the amounts computed by applying the US federal
income tax rate of 34% as a result of the following:
Year Ended October 31
1996 1995 1994
Computed expected tax benefit $(987,613) (452,347) (1,154,421)
Increase (decrease) in taxes
resulting from:
Increase in valuation
allowance for net
deferred tax assets 985,132 450,383 1,142,656
Other, net 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:
October 31
1996 1995
Deferred tax assets -
Research and development credit
carryforwards $ 61,188 61,188
=======================
Net operating loss carryforwards 5,321,233 4,336,102
=========================
Total deferred tax assets 5,382,421 4,397,290
=========================
Less valuation allowance 5,382,421 4,397,290
=========================
Deferred tax assets,
net of valuation allowance $ - -
At October 31, 1996, the Company had net operating loss carryforwards for
income tax purposes aggregating approximately $17.1 million. Approximately
$1.4 million of the net operating loss carryforwards is attributable to
stock options, the benefit of which will be credited to additional paid-in
capital if realized. Net operating loss carryforwards are subject to
certain rules limiting their annual usage. These carryforwards will expire
in varying amounts between 1998 and 2011.
(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.
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 became 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 904,438 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 at $3.60 per share were privately placed, with offering
costs of $141,446.
During fiscal 1996, the Company completed nine 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.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10) Common Stock Options and Warrants
Incentive and Non-Qualified Option Plans
The Company has reserved 4,104,000 shares of common stock for key
employees, consultants, and key suppliers under its Incentive and
Non-Qualified Option plans. Options become exercisable as determined by
the Board of Directors and expire within 10 years from the date of grant.
The maximum number of shares that may be granted to any eligible employee
during the term of the Plan is 500,000 shares. The options require holders
to abide by certain Company policies on the trading of Company's common
stock.
The following table summarizes activity under the plans:
Shares under Per share
option option price
Outstanding at October 31, 1993 1,712,865 $ .375 - 8.00
Granted 618,333 5.00 - 8.13
Exercised (325,133) .375 - 3.50
Forfeited (91,532) 3.50 - 6.88
Outstanding at October 31, 1994 1,914,533 .50 - 8.13
Granted 100,000 5.00
Exercised (64,786) .50 - 3.50
Forfeited (97,515) 3.50 - 6.88
Outstanding at October 31, 1995 1,852,232 .50 - 8.13
Granted 590,000 4.13 - 4.75
Exercised (100,542) .50 - 3.50
Forfeited (315,978) 3.50 - 8.13
Outstanding at October 31, 1996 2,025,712 .50 - 8.13
Exercisable at October 31, 1996 1,616,820
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.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10) Common Stock Options and Warrants (continued)
The following table summarizes activity under the plan:
Shares Per share
under exercise
option 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 141,333 4.38 - 6.25
At October 31, 1996 options to purchase 52,444 shares were exercisable.
Warrants
In connection with a 1991 common stock issuance, the underwriters were
issued warrants to acquire 140,000 shares of the Company's common stock at
$2.32 per share. During fiscal 1993, the underwriters exercised warrants
for 120,000 shares of the Company's common stock. During fiscal 1994, the
underwriters exercised the remaining warrants and were issued 20,000
shares of the Company's common stock.
In connection with a 1992 common stock issuance, the underwriters were
issued warrants to acquire 100,000 shares of the Company's common stock at
$6.00 per share. These warrants expired unexercised on December 2, 1995.
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 October 31,
1996.
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.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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 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 October 31, 1996. 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 October 31, 1996.
In connection with the 1996 private placements, the placement agents were
issued warrants to acquire 50,000 shares of the Company's stock at $4.75
per share on February 27, 1996, 38,100 shares of the Company's 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 October 31, 1996.
Financial Accounting Standards No. 123
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"), effective for fiscal years beginning after
December 15, 1995. This statement defines a fair value method of
accounting for employee stock options and encourages entities to adopt
that method of accounting for its stock compensation plans. SFAS 123
allows an entity to continue to measure compensation costs for those plans
using the intrinsic value based method of accounting prescribed by
Accounting Pronouncement Bulletin 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 as prescribed under APB
25 and will make the pro forma disclosures of net income and earnings per
share required by SFAS 123 beginning with its annual financial statements
for fiscal 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 1/2 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 patent application and maintenance expenditures, up to an
amount not to exceed the annual royalties from the Company.
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
During fiscal 1996, 1995 and 1994, the Company recorded royalty expense of
$9,497, $23,423 and $11,458, respectively, all of which was applied to the
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:
Year Ended October 31
1996 1995 1994
Customer A $ 378,640 1,720,347 316,740
B 202,343 880,420 369,595
C 194,600 - -
D 135,950 - -
E - 657,330 -
F - - 280,496
$ 911,533 3,258,097 966,831
Percentage of total revenue 63% 81% 59%
These customers, in total, also represented 38%, 32% and 39% of total accounts
receivable at October 31, 1996, 1995 and 1994, 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 $800,208, $2,478,350 and $331,440 for the years ended October 31,
1996, 1995 and 1994, respectively.
(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 the debt is at a variable rate.
(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% of the
participant's
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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
$90,935, $98,441 and $95,257 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 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.
(15) Subsequent Events
Additional Capital Call
In November 1996, the board of directors of Taiwan UQM resolved to make an
additional capital call on all joint venture partners due December 1,
1996. The Company's additional capital call obligation approximates $1.35
million as of December 1, 1996. The Company has reached an agreement with
the joint venture partners to meet this call obligation by paying 50% of
the obligation by March 1, 1997 and the remaining 50% by June 1, 1997. The
Company will pay interest at 10% per annum to Taiwan UQM on the
outstanding capital call obligation. Should the Company be unable to meet
these call obligations, the remaining joint venture participants have the
right to purchase the shares otherwise designated for sale to the Company.
In that event, the Company's equity interest would be reduced from 39% to
20%. If the Company's equity interest is reduced to 20 percent, it is the
belief of the Company that it would continue to exercise significant
influence if its equity influence was diluted to 20%. It is the intent of
the management of the Company to meet these revised capital call payments
and maintain the Company's equity interest in Taiwan UQM at 39%.
Stock Option Grant
Effective as of January 1, 1997, the Company entered into three-year
employment agreements with its three executive officers, Messrs. Geddes,
Rankin and French. In conjunction with these employment agreements, the
Company issued options to purchase 78,000, 127,459 and 94,541 shares of
common stock at $3.31 per share to Messrs. Geddes, Rankin and French,
respectively, under its 1992 Stock Option Plan. The exercise price of the
options issued represents the market value of the Company's common stock
at the date of grant. The options vest equally on the anniversary date of
the agreements over the three-year vesting period; provided that if a
change of control event occurs and each individual remains continually
employed by the Company through the date of such event, then all options
that have not vested will become vested as of the date of such event.
<PAGE>
ITEM 9. CHANGE IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The following table contains information concerning the members of the Board of
Directors of the Company:
Officer
Position with or Director
Name Age the Company Since Business Experience
Ray A. 64 Chairman of the Board 1981 President from 1991 through
Geddes and Chief Executive 1995, Chairman of the Board
Officer; Member of of Directors and Chief
Executive Committee Executive Officer since
and Compensation & 1984
Benefits Committee
Frank 58 Director and Member 1993 Consultant to industry and
Hodsoll of Compensation and government since 1992;
Benefits Committee, Deputy Director for Manage-
Stock Option Committee ment and Budget (Washington
and Audit Committee D. C.) from 1991 through
1992; Executive Associate
Director and Chief
Financial Officer, United
States Office of Management
and Budget from 1989
through 1991; Chairman,
National Endowment for the
Arts from 1981 through
1989.
William 53 Director, President 1992 President and Chief
G. Rankin and Chief Operating Operating Officer since
Officer January 1996; Executive
Vice President-Operations
from 1992 through 1995;
General Manager-Deere Tech
Services, a division of
Deere and Company
(Moline, IL), a
manufacturer of
agricultural,
construction and
consumer equipment from
1986 through 1992.
H. J. 67 Director and Member 1994 Senior Counselor, Kearns
Young of Executive Committee, & West (Washington, D. C.),
Compensation & Benefits an international public
Committee, and Audit relations firm since 1994;
Committee Senior Vice President,
Edison Electric Institute
(Washington, D.C.) from
1982 through 1994.
<PAGE>
J. B. 60 Director, Member of 1995 President, Invacare
Richey Executive Committee, Technologies & Senior
Stock Option Committee Management, Invacare
Corporation, since 1992,
Senior Vice-President and
American Operations,
Invacare Corporation, from
1989 to 1992 and Senior
Vice President-Product
Development, Invacare
Corporation, from 1984 to
1992. Director, Invacare
Corporation, Steris
Corporation and Royal
Appliance Manufacturing
Company.
The Board of Directors is not classified, and each director serves for a term of
one year and thereafter until his successor is duly elected and qualified. No
family relationship exists between any director, executive officer, significant
employee or person nominated or chosen by the Company to become a director or
executive officer.
There are no arrangements or understandings between any director and any other
person pursuant to which any director was nominated as a director except as
follows:
The Company has executed a note and warrant purchase agreement with affiliates
of Advent International Corporation ("Advent Group") and Techno-Venture U.S.A.,
Inc. (Techno) whereby the Company has agreed to nominate and recommend for
election to the Company's Board of Directors one person designated by the Advent
Group and Techno for so long as warrants convertible into not less than 5
percent of the Company's common stock are outstanding. The Advent Group and
Techno have waived their right pursuant to this agreement.
The Company has executed a stock purchase agreement with Invacare Corporation
whereby the Company has agreed to nominate and recommend for election to the
Company's Board of Directors one person designated by Invacare for so long as
Invacare owns at least 100,000 shares of the Company's common stock and is not
in default of certain agreements. Mr. Richey currently serves on the Board of
Directors pursuant to this agreement.
<PAGE>
MANAGEMENT
The executive officers of the Company are:
Name Age Position
Ray A. Geddes 64 Chairman of the Board of Directors and
Chief Executive Officer
William G. Rankin 53 Director, President and Chief
Operating Officer
Donald A. French 41 Treasurer, Controller and Chief
Financial Officer
Ray A. Geddes, a director since 1981, joined the Company as Chairman of the
Board, Chief Executive Officer and Treasurer in 1984. From 1991 through 1995,
Mr. Geddes held the additional office of President. Prior to joining the
Company, Mr. Geddes was an independent consultant to the automotive industry
from 1974 through 1984. For twelve years prior to that, Mr. Geddes was employed
by Ford Motor Company in various management capacities including Executive Vice
President of Ford's Italian Automobile Group where he was responsible for the
production and marketing of the Ford Pantera sports car and Program Manager for
the production, marketing, and field support activities for several specialty
vehicles, including the Shelby Mustang, Ford Cobra and Ford GT sports racing
car. Mr. Geddes holds a Masters in Business Administration and Juris Doctor
Degree from the University of Michigan. He is Treasurer and a member of the
board of directors of the Electric Vehicle Association of the Americas and a
member of The Society of Automotive Engineers.
William G. Rankin, President and Chief Operating Officer since January 1996,
Executive Vice President-Operations and member of the Board of Directors from
1994 through 1995, joined the Company in 1992. Prior to joining the Company, Mr.
Rankin held a variety of management positions with Deere and Company, a
manufacturer of agricultural, construction, and consumer equipment. From 1986 to
1992, Mr. Rankin served as General Manager of Deere Tech Services, a division of
Deere and Company which developed, installed and marketed computer integrated
manufacturing technologies; from 1982 through 1986, as Manager of Computer-Aided
Manufacturing Services; and from 1976 through 1982, as Manager of Materials
Management Research and Planning.
Donald A. French, Treasurer, Controller and Chief Financial Officer, joined the
Company in 1987. Mr. French served as Corporate Secretary from 1987 through
1988. Prior to joining the Company, Mr. French was a practicing Certified Public
Accountant from 1985 to 1986. Prior to that Mr. French served as Vice President
and General Manager of Gaechter, Inc., an importer and distributor of apparel
and eyewear from 1983 to 1984. From 1981 to 1982, Mr. French served as
Supervisor of Financial Accounting for Husky Oil Company, a multinational oil
and gas company.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors, its
executive (and certain other) officers, and any persons holding more than 10
percent of the Company's common stock are required to report their ownership of
the Company's common stock and any changes in that ownership to the Securities
and Exchange Commission, the American Stock Exchange, the Boston Stock Exchange
and the Pacific Stock Exchange. The Company is required to report in this
statement any failure to file timely reports during fiscal 1996. All such
required reports were timely filed during fiscal 1996.
<PAGE>
ITEM 11. Executive Compensation
The following table sets forth information concerning compensation earned by the
Chief Executive Officer and any other executive officer whose total annual
salary and bonus exceeded $100,000 for each of the last three fiscal years:
Summary Compensation Table
Long-term
Compensation
Awards
Number of
Securities
Name of Underlying
Individual Fiscal Annual Options Other
and Position Year Compensation Granted Compensation
Salary Bonus
Ray A. Geddes,
Chairman and 1996 $162,533 $ -0- 98,926 $17,870 (1)
Chief Executive 1995 $152,375 $ -0- -0- $16,975 (1)
Officer 1994 $151,556 $ -0- 150,000 $17,107 (1)
William G.
Rankin,
Director, and 1996 $136,873 $ -0- 80,478 $ 6,978 (2)
Chief Operat- 1995 $123,960 $ -0- -0- $ 7,128 (2)
ing Officer 1994 $123,300 $ -0- 100,000 $ 6,600 (2)
(1) Represents matching contributions to the Company's 401(k) Savings Plan and
Company paid car allowance.
(2) Represents matching contributions to the Company's 401(k) Savings Plan.
The foregoing compensation tables do not include certain fringe benefits made
available on a non-discriminatory basis to all Company employees such as group
health insurance, dental insurance, long-term disability insurance, vacation and
sick leave.
<PAGE>
Options Grants During Fiscal 1996
Potential
Realizable
Value at
Percentage Assumed
of Total Annual Rates
Number of Options of Stock
Securities Granted to Price
Name of of Underlying Employees Exercise Expira- Appreciation
Individual Options in Fiscal Price Per tion for the
and Position Granted(1) 1996 Share Date Option Term
5%(2) 10%(3)
Ray A. Geddes
Chairman and
Chief Execu-
tive Officer 98,926 18.0 $4.13 12-07-05 $267,439 $651,641
William G.
Rankin
Director,
President and
Chief Operat-
ing Officer 80,478 14.6 $4.13 12-07-05 $209,431 $531,121
(1) Represents options granted pursuant to the 1992 Stock Option Plan. The
options granted vest as to one-third of the aggregate number of underlying
shares on December 8, 1996, December 8, 1997 and December 8, 1998,
respectively. Additionally, the options are subject to forfeiture and have
limitations as to marketability.
(2) The market capitalization of the Company, as determined by multiplying the
outstanding number of shares of common stock at fiscal 1996 year end by the
potential realizable share value achieved by applying the price appreciation
methodology utilized in this table, would be approximately $79 million
versus a market capitalization of approximately $54 million at October 31,
1996. Accordingly, the potential realizable value at assumed annual rates of
stock price appreciation over the ten-year term to all shareholders is
approximately $25 million assuming no increase in the number of shares of
common stock outstanding over the ten-year term.
(3) The market capitalization of the Company, as determined by multiplying the
outstanding number of shares of common stock at fiscal 1996 year end by the
potential realizable share value achieved by applying the price appreciation
methodology utilized in this table, would be approximately $126 million
versus a market capitalization of approximately $54 million at October 31,
1996. Accordingly, the potential realizable value at assumed annual rates of
stock price appreciation over the ten-year term to all shareholders is
approximately $72 million assuming no increase in the number of shares of
common stock outstanding over the ten-year term.
<PAGE>
Aggregate Option Exercises in Fiscal Year 1996
and Option Values at the End of Fiscal Year 1996
Value of
Number of Securities Unexercised
Underlying Unexer- in-the-money
cised Options at Options at
Number of Fiscal Year End Fiscal Year End
Name of Shares
Individual Acquired Value Exer- Unexer- Exer- Unexer-
and Position on Exercise Realized cisable cisable cisable cisable
Ray A. Geddes,
Chairman and
Chief Executive
Officer -0- -0- 330,936 148,926 $304,803 $ 49,463
William G.
Rankin,
Director,
President and
Chief Operat-
ing Officer -0- -0- 330,124 113,811 $388,362 $ 40,239
Compensation and Benefits Committee and
Stock Option Committee Report on Executive Compensation 1
This report combines reports of both the Compensation and Benefits Committee and
the Stock Option Committee.
The Compensation and Benefits Committee of the Board of Directors is responsible
for establishing Company policy regarding executive compensation. The
Compensation and Benefits Committee currently consists of Messrs. Young, Geddes,
and Hodsoll.
The Stock Option Committee administers the 1992 Stock Option Plan and determines
how many options will be granted to executive officers and other employees of
the Company as a group. The Stock Option Committee currently consists of Messrs.
Hodsoll, Richey and Young.
The Compensation and Benefits Committee determines all elements of executive
compensation except grants of stock options. Mr. Geddes does not participate
in deliberations regarding the grant of options to executive officers or other
employees of the Company. Mr. Geddes also does not participate in Compensation
and Benefit Committee deliberations and recommendations as to his own
compensation.
<PAGE>
Policy
The Company's compensation program for its Chief Executive Officer is based on
beliefs and principles designed to align compensation with business strategy,
company values, and management initiatives. The program:
Rewards the Chief Executive Officer for long-term strategic management and
the enhancement of shareholder value by cash remuneration and by delivering
appropriate ownership in the Company through the grant of options.
Integrates compensation programs with both the Company's annual and
longer-term strategic planning processes.
Supports a performance-oriented environment that rewards performance with
respect to Company goals.
Attracts and retains key executives critical to the long-term success of
the Company.
The Company's Compensation package for employees generally and executive
officers in particular consists of both cash remuneration and equity based
compensation. The Company maintains a variety of benefit programs which are
designed to allow the Company to attract and retain talented individuals in a
variety of disciplines. All employees may participate in the following benefit
plans upon the attainment of certain entrance requirements:
Unique Mobility Health Benefit Plan
401(K) Savings Plan of Unique Mobility, Inc.
Unique Mobility, Inc. Stock Purchase Plan (not available to Mr. Geddes)
In addition, employees may be eligible for participation in the following
benefit plans at the discretion of the Company's Board of Directors:
Unique Mobility, Inc. 1992 Stock Option Plan
Unique Mobility, Inc. Employee Stock Bonus Plan
The Board of Directors believes that equity based compensation is critical to
the Company's ability to attract and retain qualified employees. The Company's
equity based compensation plans are designed to encourage and create ownership
in the Company's common stock, not only by executive officers, but by all
employees generally. The Board believes that the equity based plans of the
Company meet the objective of aligning key employees' long-range interests with
those of shareholders by providing key employees with the opportunity to build a
meaningful stake in the Company. The principal Company plans used to facilitate
this objective are the 1992 Stock Option Plan and the Employee Stock Purchase
Plan. Under the 1992 Stock Option Plan, employees are granted the right to
acquire shares of the Company's common stock at a fixed price over a term not to
exceed ten years. To further the Company's goal of encouraging equity ownership,
all options granted under the 1992 Stock Option Plan since October 1994 provide
that option holders may not sell stock received through employee benefit
programs if the sale of such stock exceeds 10% of the total trading volume of
the stock on the date of sale by the option holder on any stock exchange and in
the over-the-counter market. The 1992 Stock Option Plan also provides for
incremental vesting of stock options and restricts trading by option holders to
specified periods throughout the Company's fiscal year.
<PAGE>
Performance Evaluation of Chief Executive Officer
The Compensation and Benefits Committee meets at least once with respect to each
fiscal year, without the Chief Executive Officer present, to evaluate his
performance.
The Chief Executive Officer's performance is evaluated based principally on the
following criteria:
The achievement of the Company's long-term business goals and objectives
during the immediately preceding one year period.
The achievement of specified individual and overall Company objectives durin
the immediately preceding one year period.
The performance of the Company's common stock during the preceding one year
period.
In view of the Company's stage of development, the measure of achievement
against goals and objectives tends to be subjective and the performance of the
Company's common stock in the marketplace tends to be based on factors other
than the widely-recognized financial performance measures of product sales, net
profits and dividends. Accordingly, the Committee has relied in its review of
the Chief Executive Officer's compensation on the following objective measures
of performance against goals and objectives, which are listed below in
descending order of importance:
The number and quality of strategic alliances initiated and/or completed as
measured against targeted goals. It is the Company's plan to form strategic
alliances with one or more major companies in order to develop products and
commercialize developed products as a means of accelerating the Company's
growth in existing commercial markets and the high investment, high risk
market for mass produced vehicle traction drives for the automotive sector.
During fiscal 1996, the Company initiated discussions with several prospective
strategic alliance partners and entered into a strategic alliance with
Northrop Grumman Corporation and Invacare Corporation. The Company also
continued to participate actively in its strategic alliance with KYMCO for the
development and commercialization of an electric propulsion system for
application to motor scooters and the establishment of manufacturing
operations for such systems and conventional starters and alternators through
a Taiwanese joint venture company, Taiwan UQM. Further, the Company
successfully extended its agreement with KYMCO which allowed the Company to
defer its previously required investments in Taiwan UQM until the first
quarter of fiscal 1997. In addition, the Company continued its relationship
with Pininfarina, leading to the successful development and demonstration of
the Ethos 3 EV vehicle to automotive manufacturers around the world.
The capitalization and financial resources available to the Company as
measured against targeted objectives. The Company completed two offerings of
its common stock under Regulation S during fiscal 1996 which resulted in net
proceeds to the Company of $3,909,379. From these proceeds, the Company
exercised its option to maintain its 39 percent ownership interest in Taiwan
UQM. In addition, the Company generally maintained an adequate capitalization
and possessed adequate financial resources to support operations throughout
fiscal 1996.
The number and quality of sponsored development programs and their
contribution to the technical objectives of the Company. The Company achieved
lower levels of revenue from sponsored development programs during fiscal
1996. However, this reduction was attributable, in great part, to the
Company's focus on accepting contracts which, upon completion of the
development activity, have product manufacturing opportunities.
<PAGE>
Technology advances and enhancements arising during the measurement period
from internally funded research and development activities. The Company
successfully extended its high voltage and low voltage product offerings
during fiscal 1996 as a result of internally funded, and sponsored research
and development activities. The Compensation and Benefits Committee also
reviewed other technological advances that are not the subject of patents and
that the Company chooses not to make public at this time because they are
confidential business information, the disclosure of which would have an
adverse effect on the Company.
Based on these factors, the Compensation and Benefits Committee elected to renew
the employment contract of the Chief Executive Officer for an additional
three-year term, increase the Chief Executive Officer's salary five percent to
$172,793 and grant the Chief Executive Officer options to acquire 78,000 shares
of the Company's common stock at the prevailing market price on the date of
grant under the 1992 Stock Option Plan.
Additional Information
The compensation of the executive officers other than the Chief Executive
Officer is set by the Compensation and Benefits Committee and Stock Option
Committee based on the recommendations of the Chief Executive Officer, who
evaluates subjectively and objectively their performance against assigned
responsibilities and tasks.
The Company has executed employment agreements with two executive officers and
Mr. Geddes. The employment agreements provide for the payment of severance
benefits to the executive officers if the executive is terminated "without
cause", (as such term is defined in the employment agreements)(see also
"Employment Agreements" below). The Compensation and Benefits Committee believes
it advisable to provide compensation to executive managers upon termination of
employment to encourage the executive to commit his services for the longer
duration of the Employment Agreements. The Compensation and Benefits Committee
established the salaries in the employment agreements applying the criteria
discussed above, and the employment agreements themselves were not a factor in
determining salaries.
During fiscal 1996 the Stock Option Committee granted options to acquire 500,000
shares of common stock to employees of the Company, of which options to acquire,
300,000 shares of common stock, or 60 percent, were granted to executive
officers as a group. In addition, the Company granted options to acquire 90,000
shares of common stock to consultants. All options granted during fiscal 1996 to
employees and consultants are exercisable at an amount equal to the fair market
value of the Company's common stock on the date of grant.
The Compensation and Benefits Committee of the Board of Directors:
Jack Young
Ray A. Geddes
Frank Hodsoll
The Stock Option Committee of the Board of Directors:
Frank Hodsoll
J. B. Richey
Jack Young
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation and Benefits Committee currently consists of three
directors (Messrs. Geddes, Young and Hodsoll) and the Stock Option Committee
currently consists of three outside directors (Messrs. Hodsoll, Young and
Richey). The purpose of the Compensation and Benefits Committee is to determine
compensation and benefits for executive officers of the Company (except stock
options). The Compensation and Benefits Committee held one meeting during fiscal
1996. The purpose of the Stock Option Committee is to administer the Company's
Stock Option Plans and make recommendations to the Board of Directors on the
grant of stock options. The Stock Option Committee met three times during fiscal
1996.
Mr. Geddes is Chairman of the Board and Chief Executive Officer.
Mr. Young is a consultant to Kearns & West, a public relations firm retained by
the Company periodically. In fiscal 1996, the Company paid $22,563 to this firm
for consulting services.
Mr. Richey is an officer and director of Invacare, which owns 1.10 percent of
the Company's common stock.
Employment Agreements
The Company has entered into Employment Agreements with Messrs. Geddes, Rankin
and French pursuant to which each has agreed to serve in his present capacity
for a term expiring December 31, 1999. The Employment Agreements provide that
Messrs. Geddes, Rankin and French will receive an annual base salary of
$172,793, $146,428 and $108,612, respectively. Messrs. Geddes and Rankin also
receive the use of an automobile. Messrs. Geddes, Rankin and French may receive
bonuses and stock options and were granted 78,000, 127,459 and 94,541 options,
respectively, upon execution of the employment agreements.
If employment is terminated by the Company without cause during or after the
term of the agreement (after three months' notice) or upon retirement after age
65, the officer shall receive one month's salary for each year of full-time
employment, but not less than 12 months salary and not more than 24 months
salary. If the officer terminates employment, he shall receive three months
salary, unless the Company is in default, which shall be considered termination
by the Company without cause. On a termination by the Company following a change
of control of the Company, the officer shall have the option of receiving all
amounts remaining due in the agreement or twice the payment due on a termination
by the Company in the absence of a change of control. If an officer dies during
employment, his estate shall receive three months compensation.
The employment agreements further provide that the Company shall maintain at its
expense, life insurance coverage on Messrs. Geddes, Rankin and French payable to
their designees in an amount equal to three times the annual compensation
payable to each executive.
Pursuant to the Employment Agreements, Messrs. Geddes, Rankin and French have
agreed to at no time disclose to others any confidential information relating to
the business affairs of the Company for any purpose other than the conduct of
the Company's business and each has agreed to assign to the Company all right,
title and interest in any inventions and patents developed in whole or in part
by them, individually or with others, at any time during the term of the
Employment Agreements, or six months thereafter, which relate to the business of
the Company.
The Employment Agreements further provide that Messrs. Geddes, Rankin and
French, for a period of one year after the term of their respective Employment
Agreements, will not become affiliated with any person, firm or corporation
whose business is similar to or in competition with the Company nor, for a
period of one year after such term, induce or attempt to induce any employee of
the Company to leave the employ of the Company; nor will they induce or attempt
to induce any customer, supplier or licensee to cease doing business with the
Company.
<PAGE>
BOARD OF DIRECTORS COMPENSATION
In fiscal 1993, the Board of Directors of the Company established the Unique
Mobility, Inc. Stock Option Plan for Non-Employee Directors which is designed to
encourage directors to participate in the ownership of the Company and therefore
to more closely align their interests with those of the Company's shareholders.
The plan was approved by the Company's shareholders in February 1994. Directors
of the Company who are not officers may elect to receive an annual retainer of
$12,000 in cash or the grant of options to acquire 16,000 shares of the
Company's common stock in accordance with the terms of the Unique Mobility, Inc.
Stock Option Plan for Non-Employee Directors, plus reimbursement for ordinar and
necessary expenses of attending meetings. In addition, directors upon their
initial election to the Board of Directions, are awarded 2,000 shares of the
Company's common stock at a purchase price of $0.01 per share. Directors who are
full-time officers of the Company are not entitled to additional compensation
for their service as directors.
The following table sets forth information concerning remuneration to directors
of the Company during fiscal 1996:
Number of
Securities
Underlying Share of
Options Price Expiration Common Stock
Name of Director Granted(3) Per Share Date Awarded
Ray A. Geddes(1) - - - -
Frank Hodsoll 16,000 $4.38 3-19-06 -
H. J. Young 16,000 $4.38 3-19-06 -
J. B. Richey(2) - - - -
William G. Rankin(1) - - - -
Michel A. Bell(3) - - - -
(1) Serves without compensation in his capacity as an officer of the Company.
(2) Serves without compensation in his capacity as a representative of Invacare
Corporation.
(3) Served without compensation in his capacity as a representative of Alcan
until his resignation on September 15, 1996.
All directors who were eligible to receive compensation as a director for the
term of service beginning March 20, 1996, elected to receive stock options in
lieu of cash payments.
<PAGE>
Performance Graph
The following graph represents the yearly percentage change in the cumulative
total return on the common stock of Unique Mobility, Inc., the group of
companies comprising the S&P Electrical Equipment Index, and those companies
comprising the S&P 500 Index for the five year period from 1991 through 1996:
Graph of the following information:
Indexed Returns
Years Ending
Base
Period
Company/Index Oct91 Oct92 Oct93 Oct 94 Oct 95 Oct 96
Unique Mobility, Inc. 100 254.78 509.56 326.44 234.84 294.59
Electrical Equipment 100 111.66 136.85 143.87 182.97 271.75
S & P 500 Index 100 109.95 126.39 131.27 165.98 205.97
ITEM 12. SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
The following table shows the ownership of the Company's $0.01 par value common
stock by (i) beneficial owners of 5 percent or more of the Company's common
stock, (ii) each director, (iii) the Chief Executive Officer, (iv) each
executive officer whose annual salary and bonus exceeds $100,000 and (v) all
directors and executive officers as a group, as of January 24, 1997. Unless
otherwise noted, each shareholder exercises sole voting and investment power
with respect to the shares beneficially owned:
Number of
Common Shares Percent of
Name of Shareholder Beneficially Owned Class (1 )
Alcan Aluminum Limited (2) 1,401,925 11.97%
Adval Limited Partnership (3) 182,379 1.54%
Advent Future Limited Partnership (4) 398,947 3.34%
Adwest Limited Partnership (5) 227,972 1.92%
Advent Performance Materials
Limited Partnership (6) 227,973 1.92%
Advent Omnibus Limited Partnership (7) 102,591 .87%
Ray A. Geddes (8) 874,101 7.13%
William G. Rankin 573,311 4.67%
Frank Hodsoll 50,000 .43%
Jack Young 50,000 .40%
J. B. Richey (9) 47,333 - %
Directors and Executive
Officers as a Group (6 persons) 1,915,982 14.48%
<PAGE>
(1) Calculated separately for each holder on the basis of the actual number of
outstanding shares as of January 24, 1997. Assumes that shares issuable upon
exercise of options and warrants held by such person (but not by anyone
else) and exercisable within 60 days from the date of this document have
been issued as of such date.
(2) Alcan's principal executive offices are located at 1188 Sherbrook Street
West, Montreal, Quebec, Canada H3A 3G2.
(3) Member of the Advent Group, which beneficially owns 1,139,862 shares
(9.21%). Its address is c/o Advent International Corporation, 101 Federal
Street, Boston, MA 02110. Includes 105,335 shares issuable upon the exercise
of warrants.
(4) Member of The Advent Group, which beneficially owns 1,139,862 shares
(9.21%). Its address is c/o Advent International Corporation, 101 Federal
Street, Boston MA 02110. Includes 230,412 shares issuable upon the exercise
of warrants.
(5) Member of The Advent Group, which owns 1,139,862 shares (9.21%). Its address
is c/o Advent International Corporation, 101 Federal Street, Boston, MA
02110. Includes 131,667 shares issuable upon the exercise of warrants.
(6) Member of The Advent Group, which beneficially owns 1,139,862 shares
(9.21%). Its address is c/o Advent International Corporation, 101 Federal
Street, Boston MA 02110. Includes 131,668 shares issuable upon the exercise
of warrants.
(7) Member of The Advent Group, which owns 1,139,862 shares (9.21%). Its address
is c/o Advent International Corporation, 101 Federal Street, Boston, MA
02110. Includes 59,251 shares issuable upon the exercise of warrants.
(8) Mr. Geddes' address is 425 Corporate Circle, Golden, Colorado 80401.
(9) Mr. Richey is an affiliate of Invacare Corporation which owns 129,032 shares
(1.10%). Mr. Richey disclaims beneficial ownership of Invacare
Corporation's shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" above.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements:
Independent Auditors' Report.
Consolidated Balance Sheets, October 31, 1996 and 1995.
Consolidated Statements of Operations for the years ended October
31, 1996, 1995 and 1994.
Consolidated Statements of Stockholders' Equity for the years
ended October 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended October
31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules:
None.
(b) Reports on Form 8-K:
Report detailing Cooperation Agreement with Northrop Grumman
Corporation dated March 19, 1996
Report detailing change in the Company's fiscal year end from
October 31 to March 31.
(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).
<PAGE>
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 Note and Warrant Purchase Agreement dated March 25, 1992 between Unique
Mobility, Inc. and affiliates of Advent International Corporation and
Techno-Venture U.S.A., Inc. Reference is made to Exhibit 19.1 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.
10.7 Warrant Agreements dated March 25, 1992 between Unique Mobility, Inc. and
affiliates of Advent International Corporation and Techno-Venture U.S.A.,
Inc. Reference is made to Exhibit 19.3 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.
10.8 Stock Restriction Agreement dated March 25, 1992 between Ray A. Geddes and
affiliates of Advent International Corporation and Techno-Venture U.S.A.,
Inc. Reference is made to Exhibit 19.5 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.
10.9 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.
10.10 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.
10.11 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>
10.12 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.
10.13 Registration agreement between Unique Mobility, Inc. and affiliates of
Advent International Corporation and Techno-Venture U.S.A., Inc. Reference
is made to exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1993, which is incorporated herein by
reference.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 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.
10.19 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.
10.20 Stock Purchase Agreement by and among Unique Mobility, Inc. and Invacare
Corporation 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.
<PAGE>
10.21 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.
23 Consent of KPMG Peat Marwick LLP.
27* Financial Data Schedule
- - ----------
* Filed with original filing of Form 10-K.
(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/A to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Golden, Colorado on the 8th day of September, 1997.
UNIQUE MOBILITY, INC.,
a Colorado corporation
By: /s/ Donald A. French
Donald A. French, Treasurer
Consent of Independent Auditors
The Board of Directors and Stockholders
Unique Mobility, Inc.:
We consent to the incorporation by reference in the registration statements
(Nos. 33-61166, 33-63399, 333-01919 and 333-13883) 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 10, 1997 relating to the consolidated
balance sheets of Unique Mobility, Inc. and subsidiaries as of October 31, 1996
and 1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
October 31, 1996, which report appears in the October 31, 1996 Annual Report on
Form 10-K/A of Unique Mobility, Inc.
KPMG Peat Marwick LLP
Denver, Colorado
September 2, 1997
