UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[ ] Transition Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
Commission file number 1-10869
UNIQUE MOBILITY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0579156
(State or other jurisdiction of (I.R.S. Employer incorporation or
organization) Identification No.)
425 Corporate Circle Golden, Colorado 80401
(Address of principal executive offices) (zip code)
(303) 278-2002
(Registrant's telephone number, including area code)
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 .
The number of shares outstanding (including shares held by affiliates) of the
registrant's common stock, par value $0.01 per share at August 12, 1997 was
13,827,424.
PART I - FINANCIAL INFORMATION
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, March 31,
Assets 1997 1997
(unaudited)
Current assets:
Cash and cash equivalents $ 3,230,518 5,713,557
Accounts receivable (note 9) 434,271 389,314
Costs and estimated earnings in excess of
billings on uncompleted contracts (note 3) 419,502 191,885
Inventories (note 4) 392,887 425,391
Prepaid expenses 86,498 115,260
Other current assets 16,294 17,675
Total current assets 4,579,970 6,853,082
Property and equipment, at cost:
Land 335,500 335,500
Building 1,438,090 1,438,090
Molds 102,113 102,113
Transportation equipment 235,575 258,675
Machinery and equipment 2,037,338 1,963,146
4,148,616 4,097,524
Less accumulated depreciation (1,850,039)(1,764,288)
Net property and equipment 2,298,577 2,333,236
Investment in Taiwan joint venture (note 5) 2,637,542 2,677,730
Patent and trademark costs, net of accumulated
amortization of $49,383 and $45,551 558,119 502,297
Other assets 1,003,034 4,354
$ 11,077,242 12,370,699
(Continued)
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
June 30, March 31,
Liabilities and Stockholders' Equity 1997 1997
(unaudited)
Current liabilities:
Accounts payable $ 251,631 169,403
Note payable to Taiwan joint venture - 1,345,285
Other current liabilities (note 6) 227,107 459,223
Current portion of long-term debt 45,978 45,180
Billings in excess of costs and estimated earnings
on uncompleted contracts (note 3) 102,224 659,807
Total current liabilities 626,940 2,678,898
Long-term debt, less current portion 714,647 726,218
Total liabilities 1,341,587 3,405,116
Minority interest in consolidated subsidiary 390,394 390,784
Stockholders' equity (notes 7 and 11):
Common stock, $.01 par value, 50,000,000 shares
authorized; 13,516,094 and 13,042,964
shares issued 135,161 130,430
Additional paid-in capital 28,130,910 27,094,170
Accumulated deficit (18,777,712)(18,532,364)
Notes receivable from officers (83,646) (83,646)
Cumulative translation adjustment (59,452) (33,791)
Total stockholders' equity 9,345,261 8,574,799
Commitments (note 10)
$ 11,077,242 12,370,699
See accompanying notes to consolidated financial statements.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended June 30,
1997 1996
Revenue:
Contract services (note 9) $ 1,029,611 444,281
Product sales 227,551 191,306
1,257,162 635,587
Operating costs and expenses:
Cost of contract services 869,991 318,826
Cost of product sales 158,381 174,698
Research and development 98,239 396,122
General and administrative 374,521 324,314
1,501,132 1,213,960
Operating loss (243,970) (578,373)
Other income (expense):
Interest income 51,673 25,970
Interest expense (24,079) (54,612)
Equity in loss of Taiwan joint venture (note 5) (14,527) (9,639)
Minority interest share of earnings of
consolidated subsidiary (16,447) (17,201)
Other 2,002 357
(1,378) (55,125)
Net loss $ (245,348) (633,498)
Net loss per common share $ (.02) (.06)
Weighted average number of shares of common
stock outstanding (note 8) 13,084,151 11,020,857
See accompanying notes to consolidated financial statements.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Quarter Ended June 30,
1997 1996
Cash flows used by operating activities:
Net loss $ (245,348) (633,498)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 90,902 93,062
Minority interest share of earnings of
consolidated subsidiary 16,447 17,201
Noncash compensation expense for common stock
issued for services - 7,270
Equity in loss of Taiwan joint venture 14,527 9,639
Gain on sale of property and equipment - (350)
Change in operating assets and liabilities:
Accounts receivable and costs and estimated
earnings in excess of billings on
uncompleted contracts (272,574) (31,687)
Inventories 32,504 (35,480)
Prepaid expenses and other current assets 30,143 26,272
Accounts payable and other current liabilities(149,888) (90,936)
Billings in excess of costs and estimated
earnings on uncompleted contracts (557,583) (73,952)
Net cash used by operating activitie (1,040,870) (712,459)
Cash provided by (used by) investing activities:
Acquisition of property and equipment (51,092) (58,622)
Increase in patent and trademark costs (59,653) (25,530)
Investment in Taiwan joint venture (1,345,285) -
Proceeds from sale of assets - 350
Proceeds from sale of certificates of deposit
and other investments - 319,107
Net cash used by investing activities $(1,456,030) 235,305
(Continued)
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(unaudited)
Quarter Ended June 30,
1997 1996
Cash flows provided by financing activities:
Repayment of debt $ (10,773) (20,790)
Proceeds from sale of common stock, net - 598,411
Issuance of common stock upon exercise of
employee options 30,259 45,000
Issuance of common stock under employee stock
purchase plan 11,212 14,152
Distributions paid to holders of minority interest (16,837) (16,836)
Net cash provided by financing activities 13,861 619,937
Increase (decrease) in cash and cash equivalents (2,483,039) 142,783
Cash and cash equivalents at beginning of quarter 5,713,557 2,001,028
Cash and cash equivalents at end of quarter $ 3,230,518 2,143,811
Interest paid in cash during the quarter $ 57,336 20,718
Non-cash investing and financing transactions:
During the quarter ended June 30, 1997 and 1996 the Company recorded unrealized
foreign currency losses related to its investment in Taiwan UQM in the amount
of $25,661 and $5,257, respectively.
In June, 1997, a warrant holder exercised warrants to acquire 395,000 shares of
common stock on a cashless exchange basis resulting in the issuance of 249,154
shares of common stock based upon a fair market value of the commmon stock on
the date of exchange of $6.50 per share.
In June, 1997 the Company exchanged 200,000 shares of its common stock for
400,000 shares of EV Global Motors Company. The aggregate value of the shares
on the date of exchange was $1,000,000.
See accompanying notes to consolidated financial statements.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
(1) The accompanying financial statements are unaudited; however, in the opinion
of management, all adjustments which were solely of a normal recurring
nature, necessary to a fair statement of the results for the interim period,
have been made. The results for the interim period are not necessarily
indicative of results to be expected for the fiscal year.
(2) Certain financial statement amounts have been reclassified for comparative
purposes.
(3) The estimated period to complete contracts in process ranged from one to
twelve months at June 30, 1997, and from one to fifteen months at March 31,
1997. 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. Contracts in process consist of the
following:
June 30, 1997 March 31, 1997
(unaudited)
Costs incurred on uncompleted
contracts $ 1,810,046 3,158,704
Estimated earnings 604,948 490,407
2,414,994 3,649,111
Less billings to date (2,097,716) (4,117,033)
$ 317,278 (467,922)
Included in the accompanying balance sheets as follows:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 419,502 191,885
Billings in excess of costs
and estimated earnings on
uncompleted contracts (102,224) (659,807)
$ 317,278 (467,922)
(4) Inventories consist of:
June 30, 1997 March 31, 1997
(unaudited)
Raw materials $ 203,001 283,155
Work in process 105,495 69,460
Finished products 84,391 72,776
$ 392,887 425,391
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(5) 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 percent of the initial equity capital of
Taiwan UQM and agreed to invest 39 percent 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.
In December 1996, Taiwan UQM made an additional capital call which was
payable in two equal installments due March 1, 1997, and June 1, 1997, with
interest accruing at 10% per annum. The Company's 39% share of the December
1996 capital call was $1,345,285. Although 50% of the Company's obligation
was payable March 1, 1997, it was not paid until April 17, 1997, at which
time the entire obligation plus accrued interest was paid.
Summarized unaudited financial information for Taiwan UQM is as follows:
Financial Position March 31, 1997 December 31, 1996
(unaudited)
Current assets $ 1,349,704 889,881
Noncurrent assets-
land and construction in process 5,502,953 4,542,142
Total assets 6,852,657 5,432,023
Current liabilities 42,903 607,453
Noncurrent liabilities 46,826 -
Stockholders' equity 6,762,928 4,824,570
Total liabilities
and equity $ 6,852,657 5,432,023
Quarter Ended Quarter Ended
Results of Operations March 31, 1997 March 31, 1996
(unaudited) (unaudited)
Revenue $ 32,895 4,741
Expenses (70,144) (29,456)
Net loss $ (37,249) (24,715)
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(6) Other current liabilities consist of:
June 30, 1997 March 31, 1997
(unaudited)
Accrued interest $ 5,769 39,218
Accrued legal and accounting fees 27,162 37,171
Accrued payroll, consulting,
personal property and real
estate taxes 89,340 67,207
Refund of overpayment - 250,005
Other 104,836 65,622
$ 227,107 459,223
(7) The Company reserved 4,104,000 shares of common stock for key employees,
consultants and key supplier under its Incentive and Non-Qualified Option
Plans of 1992 and 1982. Under these option plans the exercise price of each
option is set at the fair market value of the common stock on the date of
grant and the maximum term of the options is 10 years from the date of
grant. Options granted to employees vest ratably over a three year period.
The maximum number of shares that may be granted to any eligible employee
during the term of the 1982 and 1992 plans is 500,000 shares. Options
granted under the Company's plans to employees require the option holder to
abide by certain Company policies which restrict their ability to sell the
underlying common stock.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
The following table summarizes activity under the plans during the last two
fiscal years, the five months ended March 31, 1997 and the three months ended
June 30,1997:
Shares Under Weighted Average
Option Exercise Price
Outstanding at October 31, 1995 1,852,232 5.12
Granted 590,000 4.15
Exercised (100,542) 1.53
Forfeited (315,978) 5.63
Outstanding at October 31, 1996 2,025,712 4.94
Granted 500,000 3.31
Exercised (40,105) 1.57
Expired (30,000) 5.00
Forfeited (4,151) 3.31
Outstanding at March 31, 1997 2,451,456 4.66
Exercised (20,000) 2.25
Outstanding at June 30, 1997 2,431,456 4.69
Exercisable at June 30, 1997 1,646,715 5.20
The following table presents summarized information about stock options
outstanding at June 30, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise Prices at 6/30/97 Contractual Life Exercise Price at 6/30/97 Exercise Price
<S> <C> <C> <C> <C> <C>
$0.50 - 1.00 113,117 2.7 years $0.79 113,117 $0.79
2.25 - 3.31 629,849 8.5 years 3.08 134,000 2.25
3.50 - 5.00 884,555 7.3 years 4.03 595,663 3.99
5.38 - 8.13 803,935 6.6 years 7.20 803,935 7.07
0.50 - 8.13 2,431,456 7.1 years 4.66 1,646,715 4.97
</TABLE>
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.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
The following table presents summarized activity under the plan:
Shares Under Per Share
Option Exercise Price
Granted during 1994 and
outstanding at October 31, 1994 48,000 $ 5.38 - 6.25
Granted 61,333 $ 5.00 - 5.13
Outstanding at October 31, 1995 109,333 $ 5.00 - 6.25
Granted 32,000 $ 4.38
Outstanding at June 30, 1997 141,333 $ 4.38 - 6.25
At June 30, 1997, options to purchase 94,223 shares were exercisable.
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 in 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. On
June 19, 1997, warrants to acquire 395,000 shares of common stock were
exercised on a cashless basis resulting in the issuance of 249,154 shares
of common stock. The remaining warrants as to 395,000 shares of common
stock remain outstanding at June 30, 1997.
The Company has reserved 300,000 shares of common stock for issuance
pursuant to a warrant agreement with an investment banking company.
Warrants to acquire 200,000 shares of common stock vested on January 20,
1994, and the remaining 100,000 shares vested on January 20, 1995. The
warrants were exercisable for a period of five years, expiring in January,
1999, at a price of $7.63 per share. Further, the warrants were redeemable
on a one-time basis only through June, 1994, for a like number of warrants,
at the then current fair market value of the Company's common stock with
otherwise identical terms. In fiscal 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. The estimated fair value of the warrants
issued of $50,000 was recorded as compensation for the investment banking
services rendered in fiscal 1995. All of these warrants remain outstanding
at June 30, 1997.
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
In connection with the 1995 common stock issuance, the placement agent was
issued warrants expiring July, 1998, to acquire 150,000 shares of the
Company's common stock at $5.75 per share. All of these warrants remain
outstanding at June 30, 1997.
In connection with the 1996 private placements, the placement agents were
issued warrants to acquire 50,000 shares of the Company's common stock at
$4.75 per share on February 27, 1996, 38,100 shares of the Company's common
stock at $5.00 per share on May 31, 1996, and 50,000 shares at $4.25 per
share on September 30, 1996, being the market price of the common stock of
the Company at the date of each respective grant. The warrants expire three
years from the date of issuance. All of these warrants remain outstanding
at June 30, 1997.
In connection with the 1997 private placement, the placement agents were
issued warrants to acquire 225,625 shares of the Company's stock at $3.50
per share on February 27, 1997, being the average of the closing price of
the Company's stock for the ten days preceding the closing of such
placement. The agents were also issued warrants to acquire 50,000 shares of
the Company's common stock at $4.20 per share on February 27, 1997, being
120% of the average closing price of the Company's common stock for the ten
days preceding the closing of the placement. All of these warrants remain
utstanding at June 30, 1997.
(8) Net loss per common share amounts are based on the weighted average number
of common shares outstanding during the first quarter of each fiscal year
presented. Outstanding common stock options and warrants were not included
in the computation because the effect of such inclusion would be
antidilutive.
(9) The Company has historically derived significant revenue from contract
services 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:
Quarter Ended June 30,
1997 1996
Customer: Kia Motors Corporation $ 424,881 -
Koyo Seiko Company 122,874 -
Asia Pacific Technology Co., Ltd. 147,575 -
Ford Motor Company - 147,107
Kwang Yang Motor Co., Ltd. - 126,142
$ 695,330 273,249
Percentage of contract services revenue 68% 62%
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
These customers, in total, also represented 36% and 30% of total accounts
receivable at June 30, 1997, and June 30, 1996, respectively.
Contract services revenue derived from contracts with agencies of the U.S.
Government and from sub-contracts with U.S. Government prime contractors,
certain portions of which are included in revenue from other key customers
above, totaled $133,621 and $118,371 for the quarter ended June 30, 1997
and June 30, 1996, respectively.
(10) The Company has entered into employment agreements with three of its
officers which expire December 31, 1999. The aggregate annual future
compensation under these agreements through the expiration date is
$1,069,583.
(11) In June, 1997, the Company entered into a strategic relationship with EV
Global Motors Company (EVG) to develop and market light electrical
transportation products. EVG purchased 1,151,925 shares of the Company's
common stock and warrants to acquire an additional 350,000 shares of common
stock in private transactions. Separately, the Company and EVG completed a
stock purchase transaction pursuant to which the Company purchased 400,000
shares of EVG common stock in exchange for 200,000 shares of the Company's
common stock.
On July 31, 1997, EVG exercised warrants to acquire 175,000 shares of
common stock on a cashless basis resulting in the issuance of 116,053
shares of common stock based upon a fair market value of the common sock on
the date Of exchange of $7.13 per share. Warrants to acquire 175,000 shares
of common stock remain outstanding which expire on August 25, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this report and
any documents incorporated herein by reference, as well as, in the Company's
Registration Statement on Form S-3 (file no. 23843). These forward-looking
statements represent the Company's judgment as of the date of this Report. The
Company disclaims, however, any intent or obligation to update these
forward-looking statements.
Financial Condition
During the first quarter of fiscal 1998 the Company strengthened its strategic
relationships and reported improved financial performance.
In April, the Company completed an additional investment of $1.35 million in
Taiwan UQM, a Taiwan based manufacturer of electric motors and controls owned
jointly by Unique, KYMCO and TLT. This investment raised Unique's total
investment in the joint venture to $2.79 million representing 39 percent of the
total capitalization of the venture. Unique's investment was coincident with the
completion and occupancy by Taiwan UQM of a 45,000 square foot manufacturing
facility and adjoining 25,000 square foot office building. Initial manufacturing
operations of starter motors and AC generators under a supply agreement with
KYMCO are expected to commence later this summer. However, there can be no
assurance that the commencement of manufacturing operations will not be delayed.
In June, the Company signed a memorandum of understanding with former Chrysler
Chairman Lee Iacocca's new company, EV Global Motors Company (EVG), KYMCO,
Taiwan UQM and TLT for the formation of an international strategic relationship
to import, distribute and market electric motor scooters in North and South
America.
Also in June the Company announced a strategic relationship with EVG to develop
electric drive systems for bicycles, scooters and other light vehicles. EVG
purchased 1,151,925 shares of the Company's common stock in a private
transaction from Alcan Aluminium Limited and purchased warrants from other
sources for an additional 350,000 shares. Separately, EVG acquired 200,000
shares of the Company's common stock in exchange for 400,000 shares of EVG
common stock raising EVG's beneficial ownership to 12.2% of the Company, makin
EVG Unique's largest shareholder. Mr. Iacocca joined Unique's Board of
Directors, effective July 1, 1997, and Mr. Geddes, Unique's Chairman and Chief
Executive Officer will sit on EVG's Board.
Subsequent to the end of the quarter, the Company announced that it had executed
a license and supply agreement to build electric motors for Invacare Corporation
(Invacare), the world's leading manufacturer and distributor of home health care
products and mobility products for people with disabilities, including power
wheelchairs. The motors will be manufactured pursuant to a renewable two-year
supply agreement with Unique Power Products, Inc., a newly formed, wholly owned
subsidiary of the company. Concurrent with the supply agreement, Unique granted
Invacare an exclusive worldwide license covering the commercial use of other
Unique designed motors for application in the general field of medical and
health care products.
The Company's financial condition remained satisfactory throughout the quarter.
Cash and cash equivalents declined $2,483,039 to $3,230,518 at June 30, 1997
from $5,713,557 at March 31, 1997 due principally to the application of cash to
operations during the quarter of $1,040,870 and the Company's additional equity
investment in Taiwan UQM in the amount of $1,345,285. Working capital (the
excess of current assets over current liabilities) declined from $4,174,184 at
the beginning of the quarter to $3,953,030 at the end of the quarter.
Accounts receivable rose to $434,271 at June 30, 1997 from $389,314 at March 31,
1997 reflecting higher levels of contract services revenue. The accounts
receivable balance at June 30, 1997, represented approximately 35 days revenue
compared to 69 days revenue at March 31, 1997.
Costs and estimated earnings on uncompleted contracts rose $227,617 to $419,502
at the end of the first quarter due to milestone billing arrangements on certain
commercial and government projects and increased levels of contract services
programs generally. Estimated earnings on contracts in process increased
$114,541 to $604,948 at June 30, 1997 on total contracts in process of
$1,810,046 compared to estimated earnings on contracts in process of $490,407 on
total contracts in process of $3,158,704 at March 31, 1997. The increase in
estimated earnings is attributable to a greater proportion of contracts with
commercial customers and a decline in services applied to "cost-share" type
contracts with the U.S. Government. The decrease in total contracts in process
is attributable to higher levels of revenue realization during the quarter.
Work in process and finished product inventories rose while raw materials
inventory declined during the quarter resulting in an overall decline in
inventory levels from $425,391 at the beginning of the quarter to $392,887 at
June 30, 1997. The decrease in raw materials inventory is primarily attributable
to the transfer of raw materials to work in process during the quarter.
During the first quarter of fiscal 1997 the Company invested $51,092 for the
acquisition of property and equipment and $59,653 in the prosecution of its
trademarks and patent applications throughout the world compared to $58,622 and
$25,530, respectively, for the comparable prior year quarter. The increase in
capital expenditures during the quarter was primarily attributable to the
construction of a new high power dynamometer test laboratory at the Company's
Golden, Colorado facility. The increase in patent and trademark costs is
primarily attributable to prosecution of the mark "PowerPhase " throughout the
world and ongoing patent continuation fees.
Investment in Taiwan joint venture declined to $2,637,542 at June 30, 1997
reflecting the Company's recording of its proportionate share of the operating
losses of Taiwan UQM during the quarter.
Other assets rose to $1,003,034 at the end of the first quarter compared to
$4,354 at the beginning of the quarter. The increase is attributable to the
Company's acquisition of 400,000 shares of the common stock of EVG in exchange
for 200,000 shares of the Company's common stock.
Accounts payable rose to $251,631 at the end of the first quarter compared to
$169,403 at March 31, 1997. The increase is primarily attributable to increased
component purchases for sponsored development programs and the construction of a
new dynamometer test laboratory.
Note payable to Taiwan joint venture declined $1,345,285 during the quarter
reflecting the Company's funding of its capital call obligation to Taiwan UQM.
Other current liabilities declined to $227,107 at June 30, 1997 compared to
$459,223 at March 31, 1997. The decrease was primarily attributable to the
repayment during the first quarter of an inadvertent overpayment submitted by a
customer in the prior quarter ended March 31, 1997.
Billings in excess of costs and estimated earnings on uncompleted contracts
declined to $102,224 at June 30, 1997 from $659,807 at March 31, 1997 reflecting
performance of work on certain sponsored development programs against advance
payments deposited by the customer with the Company.
Long-term debt declined $11,571 during the first quarter due to scheduled
principal payments on the mortgage debt associated with the Company's facility.
Common stock and additional paid-in capital increased to $135,161 and
$28,130,910 at June 30, 1997, respectively, compared to $130,430 and $27,094,170
at March 31, 1997. The increases were due to the issuance of common stock upon
the exercise of stock options by employees and consultants of the company, the
issuance of common stock under the Company's employee stock purchase program,
the cashless exercise of certain warrants and the issuance of common stock
associated with the Company's investment in EVG.
Results of Operations
Operations for the quarter ended June 30, 1997, resulted in a net loss of
$245,348 or $0.02 per share compared to a net loss of $633,498 or $0.06 per
share for the comparable quarter last year.
Revenue derived from contract services was $1,029,611 for the fiscal 1998 first
quarter versus $444,281 for the comparable prior year quarter. The increase is
attributable to increased levels of sponsored development activities.
Product sales rose to $227,551 during the first quarter of fiscal 1997 from
$191,306 for the prior year quarter. The increase is primarily attributable to
increased sales of the Company's PowerPhase system.
Gross profit margins for the first quarter of fiscal 1998 declined to 18.2
percent compared to 22.4 percent for the comparable quarter last year. The
decline in margins is attributable to lower than expected margins in the
Company's contract services business. Gross profit margins from contract
services declined to 15.5 percent for the first quarter of fiscal 1998 compared
to 28.2 percent for the comparable quarter last year. The decrease in contract
services margins is generally attributable to increased material content in
sponsored development programs and cost overruns on two commercial sponsored
development programs. Gross profit margins on product sales rose to 30.4 percent
during the first quarter compared to 8.7 percent for the comparable prior year
quarter. The improvement in product sales margins is attributable to increased
sales of the PowerPhase system which carry higher gross margins.
Research and development expenditures during the first quarter of fiscal 1998
declined $297,883 to $98,239 compared to $396,122 for the comparable quarter
last year. The decrease is attributable to the deployment of technical personnel
on sponsored development activities resulting in the deferral of certain
internally funded development activities. Management expects higher levels of
research and development costs commencing in the second quarter associated with
production planning and launch of volume manufacturing operations.
General and administrative expenses for the quarter ended June 30, 1997 rose to
$374,521 from the prior year level of $324,314 due to higher levels of business
development, legal and accounting expenditures.
Interest income rose to $51,673 for the quarter ended June 30, 1997 compared to
$25,970 during the comparable prior year quarter. The increase is attributable
to higher levels of invested cash throughout the quarter.
Interest expense declined to $24,079 for the first quarter of fiscal 1998
compared to $54,612 for the comparable quarter last year. The decrease is
attributable elimination of interest costs on the Company's capital call
obligations to Taiwan UQM upon extinguishment of the obligation during the
quarter.
Equity in loss of Taiwan joint venture rose to $14,527 for the quarter ended
June 30, 1997 compared to $9,639 during the comparable quarter last year. The
increase is attributable to expanded staffing and operations at Taiwan UQM
preparatory to the launch of manufacturing operations.
Liquidity and Capital Resources
The Company's cash balances and liquidity during the quarter ended June 30,
1997, were adequate to meet its operating needs. Net cash used by operating
activities was $1,040,870 for the quarter ended June 30, 1997 compared to net
cash used by operations for the comparable period last year of $712,459. The
decrease is primarily attributable to the performance of sponsored development
activities against cash prepayments from customers on deposit with the company
increased levels of accounts receivable and costs and estimated earnings in
excess of billings on uncompleted contracts and the repayment of an overpaymen
to a customer. Cash requirements during the period were funded primarily from
cash on hand.
In January 1996, Invacare purchased 129,032 shares of common stock at a price of
$3.88 per share. Net proceeds to the Company were $500,000, all of which were
applied to fund the development of a wheelchair motor for Invacare. Contingent
upon achieving development milestones, Invacare further agreed to purchase
additional shares at the then market price, the proceeds of which would be used,
in part, to fund the Company's anticipated capital investment in motor
manufacturing tools and equipment. In August, the Company completed agreements
with Invacare to manufacture motors for its wheelchairs. Coincident to these
agreements Invacare will purchase directly the assets required to launch
production, such as tooling and dedicated manufacturing equipment in lieu of
completing the second investment originally envisioned in the stock purchase
agreement. Accordingly, the Company does not anticipate any further sales of its
equity securities to Invacare.
In fiscal 1994, the Company, KYMCO and TLT entered into a joint venture
agreement which provided for the formation, capitalization and operation of
Taiwan UQM, a company organized under the laws of the Republic of China. The
Company purchased 39 percent of the initial stock of Taiwan UQM for NT$1,170,000
(US$45,082 on the transaction date). Pursuant to the joint venture agreement,
the venture partners are obligated to meet future capital calls as the Board of
Directors of Taiwan UQM, by unanimous vote, determines. During fiscal 1995, the
company was unable to fund its capital call obligations. In June 1995, the
Company, KYMCO and TLT entered into a waiver and option agreement pursuant to
which KYMCO agreed to purchase those shares of Taiwan UQM underlying the
Company's capital call obligations. The purchase price of such shares was
NT$37,830,000 (U.S.$1,403,493 at October 31, 1995). The Company was granted the
option to repurchase the shares for the original capital call amount plus 10
percent interest and associated transfer taxes. In November 1996, the Company
exercised its option and subsequently repurchased the shares from KYMCO, thus
maintaining the Company's ownership position at 39 percent of the then
outstanding shares of Taiwan UQM. The repurchase price plus interest and taxes
totaled NT$44,175,505 (US$1,612,539 on the transaction date).
In November 1996, the Board of Directors of Taiwan UQM announced an additional
capital call to provide cash to fund facility construction and the launch of
electric component production. The Company's capital call obligation pursuant
thereto is NT$37,050,000 (US$1,348,300 as of December 1, 1996), plus interest at
the rate of 10 percent per annum on the outstanding amount from December 1,
1996, through the due date. The obligation was due and payable in two equal
installments on March 1, 1997 and June 1, 1997. During the first quarter of
fiscal 1998, the Company elected to fund the entire capital call obligation in
one payment and remitted approximately $1,384,000 including accrued interest of
approximately $40,000 in complete satisfaction of its capital call obligation.
The Company believes that Taiwan UQM is adequately capitalized to meet its
operating cash requirements over the next twelve months. Accordingly, the
Company does not anticipate any additional capital calls by Taiwan UQM in fiscal
1998. However, there can be no assurance that additional capital will not be
required.
Over the next several months, the Company expects to invest substantially
greater amounts of capital to launch manufacturing operations for Invacare.
Anticipated capital expenditures for working capital, production machinery,
equipment, computer hardware and software are expected to exceed $1.5 million.
The Company expects to fund this investment requirement through a combination of
existing cash resources and short-term bank lines-of-credit. Although the
Company has, to-date, not yet received a commitment for such bank
lines-of-credit, Management believes bank lines-of-credit are readily available
to the Company on terms acceptable to the Company. The Company believes it has
cash resources, over and above those required to launch volume manufacturing
operations, sufficient to fund non-manufacturing operations through at least
March 31, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27* Financial Data Schedule
- - ----------
* Filed with original filing of Form 10-Q.
(b) Reports on Form 8-K
Current Report dated June 18, 1997 regarding a memorandum of
understanding to import, distribute and market electric scooters.
Current Report dated June 30, 1997 regarding a strategic alliance with
EV Global Motors Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Unique Mobility, Inc.
Registrant
Date: September 8, 1996 By:/s/ Donald A. French
Donald A. French
Treasurer and Controller
(Principal Financial and
Accounting Officer)
