SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 1998
Commission file number 1-10869
UNIQUE MOBILITY, INC
(Exact name of Registrant as specified in its charter)
Colorado 84-0579156
(State or other jurisdiction (I.R.S. employer indentification
of incorporation or organization) number)
425 Corporate Circle, Golden, Colorado 80401
(Address of principal executive offices) (Zip code)
(303) 278-2002
Registrant's telephone number, including area code
<PAGE>
Item 2. Acquisition or Disposition of Assets
Unique Mobility, Inc. (the Registrant) hereby amends its current
report on Form 8-K originally filed with the Securities and
Exchange Commission (the Commission) on May 6, 1998, describing
the acquisition by the Registrant of all of the issued and
outstanding shares of common stock of Franklin Manufacturing
Company (Franklin).
Item 7. Financial Statements and Exhibits
The following financial statements, pro forma financial
information, and exhibits are filed as part of this report:
(a) Financial Statements of Businesses Acquired
Financial Statements of Franklin Manufacturing Company
Independent Auditors Report
Balance Sheets - September 30, 1997 and 1996
Statements of Operations for the years ended
September 30, 1997, 1996 and 1995
Statements of Stockholders' Equity for the years
ended September 30, 1997, 1996 and 1995
Statements of Cash Flows for the years ended
September 30, 1997, 1996 and 1995
Notes to Financial Statements
(b) Pro Forma Financial Statements
Unaudited Pro Forma Consolidated Balance Sheet -
December 31, 1997
Unaudited Pro Forma Consolidated Statement of
Operations for the nine months ended December 31, 1997
Unaudited Pro Forma Consolidated Statement of
Operations for the year ended March 31, 1997
Notes to Unaudited Pro Forma Consolidated Financial
Statements
(c) Exhibits
23 Consent of KPMG Peat Marwick LLP
<PAGE>
Independent Auditors' Report
The Board of Directors
Franklin Manufacturing Company
d/b/a Franklin Electronics Company:
We have audited the accompanying balance sheets of Franklin Manufacturing
Company d/b/a Franklin Electronics Company as of September 30, 1997 and 1996,
and the related statements of operations, stockholders' equity, and cash flows
for each of the years in the three-year period ended September 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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 financial statements referred to above present fairly, in
all material respects, the financial position of Franklin Manufacturing Company
d/b/a Franklin Electronics Company as of September 30, 1997 and 1996, and the
results of its operations and its cash flows for each of the years in the
three-year period ended September 30, 1997, in conformity with generally
accepted accounting principles.
/S/ KPMG Peat Marwick LLP
May 1, 1998
St. Louis, Missouri
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Balance Sheets
September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ........................ $ 100 2,517
Trade accounts receivable, net of allowance
for doubtful accounts of $5,000 at 1997 and 1996
(note 10) ...................................... 1,504,858 879,148
Other receivable ................................. -- 100,000
Inventories ...................................... 1,547,741 1,249,344
Prepaid expenses and other current assets ........ 41,610 66,501
Deferred tax assets (note 7) ..................... 58,042 54,932
Total current assets ............................... 3,152,351 2,352,442
Property and equipment, net (note 2) ............... 305,390 444,376
Goodwill, net of accumulated amortization
of $21,853 and $15,859 in 1997 and 1996,
respectively ..................................... 65,111 71,105
Other assets, net .................................. 60,601 83,844
$3,583,453 2,951,767
Liabilities and Stockholders' Equity
Current liabilities:
Checks outstanding, net of deposits .............. 407,035 --
Accounts payable ................................. 1,048,730 550,183
Accrued expenses ................................. 234,551 108,994
Income taxes payable ............................. 26,496 36,266
Line of credit (note 3) .......................... 785,000 355,000
Current installments of long-term debt (note 4) .. 262,359 299,740
Current installments of capital lease obligations
(note 5) ...................................... 17,529 15,485
Total current liabilities .......................... 2,781,700 1,365,668
Deferred tax liability (note 7) .................... 615 33,172
Long-term debt, less current installments (note 4) . 495,368 1,265,439
Long-term capital lease obligations, less current
installments (note 5) ......................... 22,685 40,923
Total noncurrent liabilities ....................... 518,668 1,339,534
Stockholders' equity:
Common stock of $1 par value, 30,000
shares authorized;
5,600 issued shares in 1997 and 1996 ........... 5,600 5,600
Retained earnings ................................ 287,485 250,965
293,085 256,565
Less treasury stock, at cost, 2,128 shares in
1997 and 1996 ................................. 10,000 10,000
Total stockholder' equity .......................... 283,085 246,565
Commitments and contingencies (note 9)
$3,583,453 2,951,767
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Statements of Operations
Years ended September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net sales (note 10) ............................. $ 10,458,447 6,663,893 4,764,200
Cost of sales ................................... 8,582,201 5,596,919 4,001,301
Gross profit .................................... 1,876,246 1,066,974 762,899
Selling, general, and administrative expenses ... 1,615,130 918,149 682,504
Operating income ................................ 261,116 148,825 80,395
Other income (expense):
Interest expense .............................. (162,705) (186,581) (192,810)
Interest income ............................... 189 609 1,798
Other, net .................................... (30,164) -- 51,152
(192,680) (185,972) (139,860)
Income (loss) before income tax expense (benefit) 68,436 (37,147) (59,465)
Income tax expense (benefit) .................... 31,916 591 (6,380)
Net income (loss) ............................... $ 36,520 (37,738) (53,085)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Statements of Stockholders' Equity
Years ended September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Total
Common Retained Treasury stockholders'
Stock earnings stock equity
<S> <C> <C> <C> <C>
Balance at September 30, 1994 $ 5,600 341,788 (10,000) 337,388
Net loss .................... -- (53,085) -- (53,085)
Balance at September 30, 1995 5,600 288,703 (10,000) 284,303
Net loss .................... -- (37,738) -- (37,738)
Balance at September 30, 1996 5,600 250,965 (10,000) 246,565
Net income .................. -- 36,520 -- 36,520
Balance at September 30, 1997 $ 5,600 287,485 (10,000) 283,085
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Statements of Cash Flows
Years ended September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ........................................ $ 36,520 (37,738) (53,085)
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization ....................... 196,335 220,810 238,440
Deferred income taxes ............................... (35,667) (40,152) (15,975)
Provision for bad debts ............................. - (6,000) (2,000)
Loss on disposal of property and equipme ............ 47,025 -
Changes in operating assets and liabilities:
Trade accounts receivable ........................... (625,710) (72,878) 203,480
Other receivable .................................... 100,000 (100,000) -
Inventories ......................................... (298,397) (303,552) (153,710)
Prepaid expenses and other current assets ........... 24,891 (38,329)
(12,444)
Other assets ........................................ 23,243 40,717 (6,034)
Accounts payable .................................... 498,547 369,648 27,391
Accrued expenses .................................... 125,557 41,020 (32,825)
Income taxes payable ................................ (9,770) 28,535 8,053
Net cash provided by operating activities .................. 82,574 102,081 201,291
Cash flows from investing activities:
Additions to property and equipment ...................... (111,088) (16,994) (84,332)
Proceeds from sale of property and equipment ............. 12,708 -
Net cash used in investing activities ...................... (98,380) (16,994) (84,332)
Cash flows from financing activities
Increase (decrease) in checks outstanding, net of deposits 407,035 - (9,325)
Principal borrowings under line of credit, net ........... 430,000 223,000 132,000
Proceeds from long-term debt ............................. 406,896 - -
Repayments of long-term debt and capital lease obligations (1,230,542) (306,744) (256,620)
Net cash provided by (used in) financing activities ........ 13,389 (83,744) (133,945)
Net increase (decrease) in cash and cash equivalents ....... (2,417) 1,343 (16,986)
Cash and cash equivalents, beginning of year ............... 2,517 1,174 18,160
Cash and cash equivalents, end of year ..................... $ 100 2,517 1,174
Supplemental disclosures of cash flow information -
cash paid during the year for:
Interest ............................................... $ 155,254 179,680 189,407
Income taxes ........................................... $ 77,353 13,362 1,543
</TABLE>
Supplemental schedule of noncash financing and investing activities:
During 1995, the Company acquired office equipment for $80,300 in conjunction
with a capital lease agreement.
See accompanying notes to financial statements.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
(1) Summary of Significant Accounting Policies
(a) Description of Business
Franklin Manufacturing Company d/b/a Franklin Electronics Company (the
Company) is a manufacturer and distributor of electronic circuitry for
customers located primarily in Missouri and Illinois.
(b) Principles of Consolidation
The September 30, 1995 consolidated financial statements include the
accounts of Franklin Manufacturing Company and its wholly-owned
subsidiary, Franklin Electronics, Inc. All significant intercompany
transactions have been eliminated in the consolidation.
On April 1, 1996, Franklin Manufacturing Company merged its
wholly-owned subsidiary, Franklin Electronics Company, through a
statutory merger as defined by the State of Missouri. Under the
provisions of the General and Business Corporations Law of Missouri,
the statutory merger leaves Franklin Manufacturing Company as the sole
surviving corporation doing business as Franklin Electronics Company.
All of the property, rights, privileges, leases, contracts, licenses
and patents, as well as all of the liabilities and obligations of
Franklin Electronics Company became the property and/or obligation of
Franklin Manufacturing Company. The effect of this merger is
immaterial to the financial statements presented taken as a whole.
(c) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(d) Cash and Cash Equivalents
For financial statement presentation purposes, cash and cash
equivalents include cash on hand, amounts due from banks, and all
highly liquid investment instruments with an initial maturity of three
months or less.
(e) Inventories
Inventories consist of raw materials and are stated at the lower of
cost or market. Cost is determined using the first-in, first-out
(FIFO) method.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
(f) Property and Equipment
Property and equipment are stated at cost. Equipment under capital
leases are stated at the present value of the minimum lease payments.
Depreciation is calculated using the straight-line method over the
estimated useful lives of the related assets. Equipment held under
capital leases and leasehold improvements are amortized using the
straight-line method over the shorter of the lease term or estimated
useful life of the asset.
(g) Goodwill
Goodwill of the purchased business is amortized on a straight-line
basis over the period estimated to be benefited, which is 15 years.
The Company assesses the recoverability of goodwill and other
long-lived assets based upon undiscounted future operating cash flows
whenever events or changes in circumstances indicate the carrying
amount of an asset may not be recoverable. Amortization expense was
$5,994 for the years ended September 30, 1997, 1996, and 1995.
(h) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated
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. The effect of a change in tax
rates on deferred tax assets and liabilities is recognized in income
in the period that includes the enactment date.
(2) Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
Estimated
useful lives
in years 1997 1996
<S> <C> <C> <C>
Office furniture and fixtures 5-7 $ 166,046 124,606
Automobiles ................. 5 22,775 22,775
Leasehold improvements ...... 7-39 9,915 9,874
Machinery and equipment ..... 3-7 1,011,248 1,173,663
1,209,984 1,330,918
Less accumulated depreciation 904,594 886,542
$ 305,390 444,376
</TABLE>
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
(3) Line of Credit
At September 30, 1997, the Company had a $1,250,000 line of credit
available from Commerce Bank. The line of credit is due on demand, but if
no demand is made, then it is due June 1998. Interest is payable monthly at
the bank's prime rate (8.5% at September 30, 1997). The line is secured by
accounts receivable, inventory, equipment, furniture and fixtures, and
general intangibles. In addition, it is guaranteed by a stockholder of the
Company. Borrowings under the line of credit are limited to certain
percentages of eligible accounts receivable and inventory. At September 30,
1997, there was approxi-mately $465,000 available under the line of credit.
(4) Long-term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Note payable to bank, interest at 7.5%, payable
in monthly installments of $4,234 including
interest, due March 1999, repaid in 1997 (a) ......... $ -- 194,244
Note payable to bank, interest at prime, payable in monthly
installments of $5,910 plus interest, due December
1997, repaid in 1997 (a) ............................. -- 230,485
Notes payable to bank, interest at 1.5% over prime,
payable in monthly installments of $10,893 plus
interest, due March 1999, repaid in 1997 (a) ......... -- 588,214
Note payable to Eureka Holdings, interest at 1%
over prime, payable in monthly payments of
$11,567 including interest, due January 2000 (b) ..... 289,466 377,651
Note payable to Eureka Holdings, interest at 1%
over prime, payable in monthly payments of
$2,684, due January 2000 (b) ......................... 67,162 87,622
Note payable to Eureka Holdings, interest at 5.32%,
payable in six consecutive monthly payments
of $20,833 including interest, beginning one month
after the payment of the other notes payable to
Eureka Holdings but no later than January 2001 (b) ... 86,963 86,963
Note payable to bank, interest at prime, payable in monthly
payments of $9,925 plus interest, due June 2000,
secured by substantially all assets of the Company and
guaranteed by a stockholder of the Company ........... 314,136 --
757,727 1,565,179
Less current installments ................................. 262,359 299,740
$ 495,368 1,265,439
</TABLE>
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
(a) The notes are secured by accounts receivable, inventory, equipment,
and assignment of a life insurance policy upon the life of a
stockholder of the Company.
(b) The notes are secured by all assets of the Company subject to a lien
by a bank; the notes are also guaranteed by a stockholder of the
Company.
The Company's loan agreements require the Company to achieve specific
financial and operating requirements. At September 30, 1997, the
Company was not in compliance with certain covenants; however, waivers
of noncompliance have been obtained from the respective lenders.
The aggregate maturities of long-term debt as of September 30, 1997
are as follows:
Year ending September 30:
1998 $ 262,359
1999 276,577
2000 218,791
$ 757,727
(5) Leases
The Company is obligated under a capital lease for equipment that expires
in November 1999. In addition, the Company leases certain facilities and
equipment under various noncancelable operating lease agreements which
expire at various dates throughout 2007.
At September 30, 1997, the future minimum lease payments under operating
leases with initial noncancelable terms in excess of one year, and future
minimum capital lease payments are as follows:
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Capital Operating
leases leases
Year ending September 30:
<S> <C> <C> <C>
1998 $ 21,649 260,274
1999 21,649 257,486
2000 2,899 263,514
2002 -- 251,224
2002 -- 244,164
Thereafter -- 1,130,658
46,197 2,407,320
Less amounts representing interest (5,983)
Present value of minimum lease payments 40,214
Less current installments of obligations
under capital leases 17,529
$ 22,685
</TABLE>
Rent expense totaled $473,177, $245,549, and $137,961 in 1997, 1996, and
1995, respectively, and includes rent expense paid to a related party which is
described in note 8.
At September 30, 1997 and 1996, the gross amount of equipment and related
accumulated amortization recorded under the capital lease is as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Equipment $ 80,300 80,300
Accumulated amortization (57,174) (25,696)
$ 23,126 54,604
</TABLE>
Amortization of assets held under capital leases is included with
depreciation expense.
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
(6) Employee Benefits
In 1995, the Company instituted a retirement plan under Section 401(k) of
the Internal Revenue Code, covering substantially all full-time employees.
Employees may contribute up to 15% of their pretax income to the retirement
plan. Employer contributions to the plan are at the discretion of
management. During the years ended September 30, 1997, 1996, and 1995, the
Company did not contribute to the retirement plan.
(7) Income Taxes
Income tax expense (benefit) consists of the following:
<TABLE>
Current Deferred Total
<CAPTION>
<S> <C> <C> <C>
1997:
Federal $ 61,035 (32,837) 28,198
State 6,548 (2,830) 3,718
$ 67,583 (35,667) 31,916
1996:
Federal $ 34,287 (33,878) 409
State 6,456 (6,274) 182
$ 40,743 (40,152) 591
1995:
Federal $ 6,867 (11,284) (4,417)
State 2,728 (4,691) (1,963)
$ 9,595 (15,975) (6,380)
</TABLE>
<PAGE>
FRANKLIN MANUFACTURING COMPANY
D/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
The federal corporate statutory rate is reconciled to the Company's
effective income tax rate as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Federal corporate statutory rate $23,269 (12,630) (20,218)
State and local taxes, net of
federal benefit .................... 2,454 120 (1,296)
Surtax exemption ...................... (10,987) (519) 5,595
Officer's life insurance .............. 6,120 6,085 4,453
Nondeductible expenses ................ 11,060 7,535 5,086
$ 31,916 591 (6,380)
</TABLE>
The temporary differences between the tax bases of assets and liabilities
and their financial reporting amounts that give rise to the deferred tax
assets and deferred tax liabilities are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts .. $ 2,000 2,000
Inventory ........................ 48,023 47,976
Other assets ..................... 42,291 39,739
Accrued vacation ................. 4,052 2,714
Other accrued expenses ........... 3,967 2,242
Total deferred tax assets ............. 100,333 94,671
Deferred tax liabilities - property and
equipment, due to
differences in depreciation ...... 42,906 72,911
Net deferred tax asset ................ $ 57,427 21,760
</TABLE>
The net deferred tax asset is classified as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets - current ..... $ 58,042 54,932
Deferred tax liability - noncurrent (615) (33,172)
Net deferred tax asset ............ $ 57,427 21,760
</TABLE>
Based upon the level of historical taxable income and projections for
future taxable income over the periods which the deferred tax assets are
deductible, management
<PAGE>
FRANKLIN MANUFACTURING COMPANY
d/b/a Franklin Electronics Company
Notes to Financial Statements
September 30, 1997, 1996, and 1995
believes it is more likely than not the Company will realize the benefits
of these deductible differences.
(8) Related Party Transactions
During 1996, the Company began leasing equipment under month-to-month
operating lease agreements from an affiliated company, Jen Tech
Enterprises, L.L.C., with common ownership and management. Total lease
payments made during September 30, 1997 and 1996 were $186,000 and $51,600,
respectively. Accounts receivable from this affiliated company was $100,000
at September 30, 1996, which consisted of a deposit on equipment.
(9) Commitments and Contingencies
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position.
(10) Business and Credit Concentrations
During the year ended September 30, 1997, the Company had sales to three
major customers of $3,380,401, $1,754,159, and $1,169,760, respectively,
(32%, 17%, and 11% of sales, respectively). At September 30, 1997, accounts
receivable from these customers were $530,693, $113,701, and $482,145,
respectively.
During the year ended September 30, 1996, the Company had sales to three
major customers of $1,570,202, $958,777, and $813,287, respectively, (24%,
14%, and 12% of sales, respectively). At September 30, 1996, accounts
receivable from these customers were $379,728, $482,145, and $200,869,
respectively.
During the year ended September 30, 1995, the Company had sales to three
major customers of $1,077,827, $734,898, and $575,687, respectively, (23%,
15%, and 12% of sales, respectively).
(11) Subsequent Events
During December 1997, the Company elected to be taxed under the Subchapter
S provisions of the Internal Revenue Code. Under these provisions, the
Company does not generally pay corporate-level income taxes on its taxable
income as earnings or losses and other tax attributes are passed through to
the stockholder. The election is effective for the tax years beginning
after October 1, 1997.
On April 30, 1998, all of the outstanding shares of the Company were
acquired by Unique Mobility, Inc. for a net purchase price of approximately
$6.25 million.
<PAGE>
UNIQUE MOBILITY, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet
assumes that the acquisition of Franklin Manufacturing Company
occurred on December 31, 1997, and includes the December 31,
1997, unaudited historical balance sheet of Unique Mobility, Inc.
and Franklin Manufacturing Company adjusted for the pro forma
effects of this acquisition. The following unaudited pro forma
consolidated statements of operations for the year ended March
31, 1997, and the nine months ended December 31, 1997, assumes
that the acquisition of Franklin Manufacturing Company had
occurred on April 1, 1996 and include the historical unaudited
consolidated statements of operations for Unique Mobility, Inc.
for the year ended March 31, 1997, and the nine months ended
December 31, 1997 adjusted for the pro forma effects of the
acquisition.
The unaudited pro forma consolidated statements are not
necessarily indicative of the results of operations that would
actually have occurred if the transaction had been consummated as
of April 1, 1996 or December 31, 1997. These statements should
be read in conjunction with the historical financial statements,
and related notes thereto, of Unique Mobility, Inc. in its annual
report on Form 10-K and Franklin Manufacturing Company financial
statements included herein.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1997
<TABLE>
<CAPTION>
Historical Related
Franklin Asset Franklin
Unique Manufacturing Acquisition Acquisition Pro Forma
Assets Mobility, Inc. Company Adjustments Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents ........... $ 3,474,700 -- -- (3,474,700)(1) --
Accounts receivable and other
receivables ...................... 341,306 1,823,365 -- -- 2,164,671
Cost and estimated earnings in excess
of billings on uncompleted contract . 758,431 -- -- -- 758,431
Inventories ......................... 409,879 1,164,382 -- -- 1,574,261
Prepaid expenses .................... 61,286 21,198 -- -- 82,484
Other current ....................... 301,766 58,042 -- (58,042)(4) 301,766
Total current assets ......... 5,347,368 3,066,987 -- (3,532,742) 4,881,613
Property and equipment, at cost:
Land ................................ 335,500 -- -- -- 335,500
Building ............................ 1,438,090 -- -- -- 1,438,090
Molds ............................... 102,113 -- -- -- 102,113
Transportation equipment ............ 301,719 41,275 -- (41,275)(2) 323,719
22,000 (2)
Machinery and equipment ............. 2,377,760 1,187,707 422,250 840,750(2) 3,640,760
(1,187,707)(2) --
4,555,182 1,228,982 422,250 (366,232) 5,840,182
Less accumulated depreciation ......... (2,025,355) (939,961) -- 939,961 (2) (2,025,355)
Net property and equipment ... 2,529,827 289,021 422,250 573,729 3,814,827
Investment in Taiwan joint venture ....... 2,499,787 -- -- -- 2,499,787
Other investments ........................ 1,000,000 -- -- 1,000,000
Patent and trademark costs, net of
accumulated amortization of $57,048 ... 616,407 -- -- -- 616,407
Goodwill ................................. -- -- -- 5,186,769(3) 5,186,769
Other assets ............................. 850 123,268 -- -- 124,118
$ 11,994,239 3,479,276 422,250 2,227,756 18,123,521
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet, Continued
December 31, 1997
<TABLE>
<CAPTION>
Historical Related
Franklin Asset Franklin
Unique Manufacturing Acquisition Acquisition Pro Forma
Liabilities and Stockholders' Equity Mobility, Inc. Company Adjustments Adjustments ConsolidlIated
Consolidated
<S> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable ...................... $ 143,654 992,801 1,136,455
Acquisition price payable ............. -- -- 525,300 (1) 525,300
Line-of-credit ........................ -- 705,000 705,000
Other current liabilities ............. 657,151 227,259 (615)(4) 883,795
Current portion of long-term debt ..... 48,419 262,359 140,750 (1) 451,528
Billings in excess of costs and
estimated earnings on uncompleted
contracts .......................... 4,590 -- 4,590
Total current liabilities ...... 853,814 2,187,419 140,750 524,685 3,706,668
Long-term debt, less current portion ....... 689,703 747,612 281,500 (1) 1,718,815
Total liabilities .............. 1,543,517 2,935,031 422,250 524,685 5,425,483
Minority interest in consolidated subsidiary 393,254 -- 393,254
Stockholders' equity
Common stock .......................... 142,230 5,600 (2,737)(1) 145,093
Additional paid-in capital ............ 30,168,853 (10,000) 2,254,453 (1) 32,413,306
Accumulated deficit ................... (20,067,345) 548,645 (548,645)(1)(20,067,345)
Notes receivable from officers ........ (56,832) -- (56,832)
Cumulative translation adjustment ..... (129,438) -- (129,438)
Total stockholders' equity ......... 10,057,468 544,245 1,703,071 12,304,784
$ 11,994,239 3,479,276 422,250 2,227,756 18,123,521
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended December 31, 1997
<TABLE>
<CAPTION>
Historical Related
Franklin Asset Franklin
Unique Manufacturing Acquisition Acquisition Pro Forma
Mobility, Inc. Company Adjustment Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Revenue:
Contract services $ 2,333,718 -- 2,333,718
Product sales 494,594 8,821,307 9,315,901
2,828,312 8,821,307 11,649,619
Operating costs and expenses:
Cost of contract services 2,197,878 -- 2,197,878
Cost of product sales 356,625 7,225,405 63,338 (8) 86,060 (2) 7,731,428
Research and development 486,643 -- 486,643
General and administrative 1,264,920 1,426,890 (60,750)(5) 2,181,060
(394,650)(7)
(55,350)(8)
Depreciation and amortization
of intangible assets -- 194,504 (3) 194,504
Royalty 13,572 -- 13,572
4,319,638 8,652,295 63,338 (230,186) 12,805,085
Operating earnings (loss) (1,491,326) 169,012 (63,338) 230,186 (1,155,466)
Other income (expense):
Interest income 148,487 46 (148,533)(9) --
Interest expense (58,885) (114,971) (26,918)(8) (200,774)
Equity in loss of Taiwan
joint venture (82,296) -- (82,296)
Minority interest share of earnings
of consolidated subsidiary (52,980) - (52,980)
Other 2,019 (34,106) (32,087)
(43,655) (149,031) (26,918) (148,533) (368,137)
Net earnings (loss) before tax (1,534,981) 19,981 (90,256) 81,653 (1,523,603)
Income tax expense -- 8,000 (8,000)(6) --
Net earnings (loss) $ (1,534,981) 11,981 (90,256) 89,653 (1,523,603)
Net earnings (loss) per common
share- basic and diluted (.11) (.11)
Weighted average number of shares
of common stock outstanding 13,667,499 13,953,781
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended March 31, 1997
<TABLE>
<CAPTION>
Historical Related
Franklin Asset Franklin
Unique Manufacturing Acquisition Acquisition Pro Forma
Mobility, Inc. Company Adjustment Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Revenue:
Contract services $ 1,804,855 -- 1,804,855
Product sales 546,904 8,365,251 8,912,155
2,351,759 8,365,251 10,717,010
Operating costs and expenses:
Costs of contract services 1,395,510 -- 1,395,510
Costs of product sales 475,189 6,870,524 84,450(8) 114,746(2) 7,544,909
Research and development 1,570,622 -- 1,570,622
General and administrative 1,451,302 1,015,166 (81,000)(5) 1,785,468
(526,200)(7)
(73,800)(8)
Depreciation and amortization of
intangible assets -- __ 259,338 (3) 259,338
Royalty 10,938 -- 10,938
4,903,561 7,885,690 84,450 (306,916) 12,566,785
Operating loss (2,551,802) 479,561 (84,450) 306,916 (1,849,775)
Other income (expense):
Interest income 122,170 -- (122,170)(9) --
Interest expense (195,722) (242,207) (35,891)(8) (473,820)
Equity in loss of Taiwan joint venture (52,602) -- (52,602)
Minority interest share of earnings
of consolidated subsidiary (68,537) -- (68,537)
Other 7,926 (430) 7,496
(186,765) (242,637) (35,891) (122,170) (587,463)
Net income (loss) before tax (2,738,567) 236,924 (120,341) 184,746 (2,437,238)
Income tax expense -- 591 -- (591)(6) --
Net income (loss) $ (2,738,567) 236,333 (120,341) 185,337 (2,437,238)
Net income (loss) per common share -
basic and diluted (.24) (.21)
Weighted average number of shares
of common stock outstanding 11,575,969 11,862,251
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Statements
December 31, 1997
(A) Basis of Presentation
The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1997, includes historical balances, adjusted for the pro forma
effects of the Franklin Manufacturing Company acquisition completed subsequent
to December 31, 1997, and assumes that the acquisition occurred on December 31,
1997. The Unaudited Pro Forma Consolidated Statement of Operations for the nine
months ended December 31, 1997, include the unaudited historical results of
operations for Unique Mobility, Inc. and Franklin Manufacturing Company for the
nine months ended December 31, 1997, adjusted for the pro forma effects of the
acquisition assuming the acquisition occurred on April 1, 1996. The nine month
results of Franklin Manufacturing Company were computed by adding the unaudited
three month results of operations ended December 31, 1997 to the audited results
of operations for the year ended September 30, 1997 and deducting the unaudited
six month results of operations ended March 31, 1997.
The unaudited Pro Forma Consolidated Statement of Operations for the year ended
March 31, 1997, include the audited historical results of operations for the
five months ended March 31, 1997 and the unaudited historical results for the
seven months ended October 31, 1996 of Unique Mobility, Inc., and the unaudited
historical results of operations for the year ended March 31, 1997 of Franklin
Manufacturing Company, adjusted for the pro forma effects of the acquisition
assuming the acquisition occurred on April 1, 1996. The twelve month results of
operations of Franklin Manufacturing Company were computed by adding the
unaudited six month results of operations ended March 31, 1997 to the audited
results of operations for the year ended September 30, 1996 and deducting the
unaudited results of operations for the six months ended March 31, 1996.
1) The acquisition price for Franklin was $6,247,316 which consisted of
$6,247,316 for the common stock of Franklin and the assumption of certain
debt for the acquisition of assets from a related entity. The acquisition
price for the stock consisted of the payment of $4,000,000 in cash and the
issuance of 286,282 shares of the common stock of Unique Mobility, Inc. at an
average closing price of $7.85 per share. The acquisition will be accounted for
as a purchase. The allocation of the purchase price as of the April 30, 1998
acquisition date is as follows:
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Statements, Continued
December 31, 1997
<TABLE>
<CAPTION>
Related
Franklin Asset
Acquisition Acquisition
<S> <C> <C>
Purchase price ............................ $ 6,247,316 --
Net book value of equity acquired at
April 30, 1998 ........................ (295,218) --
Excess of purchase price over net assets
acquired .............................. $ 5,952,098 --
Allocation of excess of purchase price over
net assets acquired:
Net property and equipment ........... $ 655,182 --
Goodwill ............................. 5,296,916 --
$ 5,952,098 --
</TABLE>
2) To record the fair value of the Franklin assets acquired, eliminate
accumulated depreciation and adjust depreciation expense on property
and equipment based on a five-year estimated useful life.
3) To record the excess of acquisition cost over the fair value of net
assets acquired and record amortization based on a 20-year estimated
useful life.
4) To fully reserve the deferred tax asset and adjust deferred tax
liability in the recording of the purchase entries to reflect amounts
unlikely to be realized or to be offset by fully reserved deferred tax
assets of Unique relating to carryforward net operating losses.
5) To eliminate non-recurring expenses associated with assets distributed
to previous owner prior to acquisition.
6) To eliminate non-recurring tax expense that would be offset by
available net operating losses of Unique Mobility, Inc. which have not
been recognized.
7) To eliminate compensation expense to former officers in excess of base
salary under a new Employment Agreement and reductions in employee
compensation levels.
8) To eliminate lease payments paid to related Company for equipment
purchased in acquisition transaction and record interest expense and
depreciation expense on acquired assets.
9) For the purposes of this pro-forma presentation, interest income has
been eliminated as it has been assumed that all available cash, from
which interest income is derived, was used to fund the acquisition of
Franklin. The Company, in actuality, used existing cash balances at
March 31, 1998 which included proceeds from a private stock offering
in March 1998 to fund this acquisition.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Unique Mobility, Inc.
Registrant
Date: June 26, 1998 By: /s/ Donald A. French
Donald A. French
Treasurer
(Principal Financial and
Accounting Officer)
Exhibit 23
Independent Auditors' Consent
The Board of Directors
Franklin Manufacturing Company
d/b/a Franklin Electronics Company:
We consent to the incorporation by reference in the registration statements on
Form S-8 (Nos. 33-23113, 33-24071, 33-34612, 33-35055, 33-34613, 33-41325,
33-64852, 33-47454, 33-81430, and 33-92288) and Form S-3 (Nos. 33-61166,
33-63399, 333-01919, 333-13883, 333-44597, 333-23843, 333-50393, and 333-52861)
of Unique Mobility, Inc. of our report dated May 1, 1998, relating to the
balance sheets of Franklin Manufacturing Company d/b/a Franklin Electronics
Company as of September 30, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended September 30, 1997, which report appears in the Current
Report on Form 8-K/A of Unique Mobility, Inc.
/s/ KPMG Peat Marwick LLP
St Louis, Missouri
June 24, 1998
