UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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 December 31, 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 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 February 8,
1999, was 16,195,622.
<PAGE>
PART I - FINANCIAL INFORMATION
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, March 31,
Assets 1998 1998
(unaudited)
Current assets:
Cash and cash equivalents $ 831,246 7,005,533
Accounts receivable (note 11) 2,163,773 1,105,466
Costs and estimated earnings in excess
of billings on uncompleted contracts
(note 3) 229,882 454,738
Inventories (note 4) 2,305,448 253,917
Prepaid expenses 165,720 158,764
Other 36,530 18,361
Total current assets 5,732,599 8,996,779
Property and equipment, at cost (note 7):
Land 444,480 444,480
Building 2,675,239 1,511,635
Molds 102,113 102,113
Transportation equipment 218,335 209,920
Machinery and equipment 8,755,516 5,605,326
12,195,683 7,873,474
Less accumulated depreciation (3,209,500) (2,186,805)
Net property and equipment 8,986,183 5,686,669
Investment in Taiwan joint venture (note 5) 1,752,370 2,044,393
Investment in EV Global 1,000,000 1,000,000
Patent and trademark costs, net of
accumulated amortization of $78,685
and $63,542 641,139 575,985
Goodwill, net of accumulated amortization
of $241,533 and $16,215 6,381,283 1,280,872
Other assets 25,402 853
$ 24,518,976 19,585,551
(Continued)
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
December 31, March 31,
Liabilities and Stockholders' Equity 1998 1998
(unaudited)
Current liabilities:
Accounts payable $ 1,524,716 389,791
Other current liabilities (note 6) 845,541 876,357
Current portion of long-term
debt (note 7) 747,051 163,554
Revolving line-of-credit (note 7) 393,000 -
Current income taxes payable 152,207 -
Billings in excess of costs and
estimated earnings on uncompleted
contracts (note 3) 123,931 450
Total current liabilities 3,786,446 1,430,152
Long-term debt, less current portion
(note 7) 3,276,021 1,029,924
Total liabilities 7,062,467 2,460,076
Minority interest in consolidated
subsidiary 397,944 394,343
Stockholders' equity (note 8):
Common stock, $.01 par value, 50,000,000
shares authorized; 16,163,342 and
15,394,621 shares issued 161,633 153,946
Additional paid-in capital 43,212,078 38,852,446
Accumulated deficit (25,134,448) (21,798,724)
Notes receivable from officers (note 9) (777,100) (56,056)
Accumulated comprehensive loss (note 14) (403,598) (420,480)
Total stockholders' equity 17,058,565 16,731,132
Commitments (notes 7 and 10)
$ 24,518,976 19,585,551
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
Revenue (note 11):
Contract services $ 384,301 630,348 1,129,629 2,333,718
Product sales 3,982,503 148,173 9,477,750 494,594
4,366,804 778,521 10,607,379 2,828,312
Operating costs and expenses:
Costs of contract services 315,631 619,608 1,013,701 2,197,878
Costs of product sales 3,677,497 99,888 8,828,014 356,625
Research and development 138,937 220,505 589,659 486,643
General and administrative 847,613 427,259 2,579,749 1,121,244
Depreciation and amortization 162,506 54,523 428,133 157,248
5,142,184 1,421,783 13,439,256 4,319,638
Operating loss (775,380) (643,262)(2,831,877) (1,491,326)
Other income (expense):
Interest income 12,095 50,518 92,680 148,487
Interest expense (83,735) (17,071) (238,985) (58,885)
Equity in loss of Taiwan joint
venture (note 5) (108,616) (50,863) (308,905) (82,296)
Minority interest share of
earnings of consolidated
subsidiary (18,118) (19,862) (54,112) (52,980)
Other 3,086 7 5,475 2,019
(195,288) (37,271) (503,847) (43,655)
Net loss $ (970,668) (680,533)(3,335,724) (1,534,981)
Net loss per common share
basic and diluted $ (.06) (.05) (.21) (.11)
Weighted average number of shares
of common stock outstanding
(note 12) 15,979,473 13,829,939 15,883,242 13,667,499
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended December 31,
1998 1997
Cash flows used by operating activities:
Net loss $(3,335,724) (1,534,981)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 1,296,513 276,068
Minority interest share of earnings of
consolidated subsidiary 54,112 52,980
Noncash compensation expense for common stock
issued and options granted for services 83,215 38,020
Equity in loss of Taiwan joint venture 308,905 82,296
Loss (gain) on sale of property and equipment (2,900) 23,100
Change in operating assets and liabilities:
Accounts receivable and costs and estimated
earnings in excess of billings on
uncompleted contracts 613,564 (518,538)
Inventories (961,992) 15,512
Prepaid expenses and other assets 32,697 (230,117)
Accounts payable and other current liabilities(167,373) 172,179
Billings in excess of costs and estimated
earnings on uncompleted contracts 123,481 (655,217)
Net cash used by operating activities (1,955,502) (2,278,698)
Cash used by investing activities:
Cash paid for acquisition of subsidiary, net (3,848,640) -
Acquisition of property and equipment (3,056,117) (480,758)
Proceeds from sale of assets 2,900 -
Increase in patent and trademark costs (80,297) (125,607)
Investment in Taiwan joint venture - (1,345,285)
Net cash used by investing activities $(6,982,154) (1,951,650)
(Continued)
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(unaudited)
Nine Months Ended December 31,
1998 1997
Cash provided by financing activities:
Proceeds from borrowings $ 6,444,399 -
Repayment of debt (4,946,263) (33,276)
Proceeds from sales of common stock, net 956,329 -
Repayment of notes receivable from officers 10,744 7,407
Issuance of common stock upon exercise of
employee and non-employee options 149,866 788,868
Issuance of common stock under employee stock
purchase plan 5,430 23,877
Issuance of common stock upon exercise of warrants 193,375 1,255,125
Distributions paid to holders of minority interest (50,511) (50,510)
Net cash provided by financing
activities 2,763,369 1,991,491
Decrease in cash and cash equivalents (6,174,287) (2,238,857)
Cash and cash equivalents at beginning of period 7,005,533 5,713,557
Cash and cash equivalents at end of period $ 831,246 3,474,700
Interest paid in cash during the period $ 222,258 92,097
Non-cash investing and financing transactions:
Cumulative translation adjustments of $16,882 and ($95,647) were recorded for
the nine months ended December 31, 1998 and 1997, respectively (see note 14).
In April 1998, the Company purchased all of the outstanding stock of Franklin
Manufacturing Company for $4,000,000 cash and 286,282 shares of the Company's
common stock with a value of $2,247,316.
In June 1997, the Company entered into a stock purchase agreement with EV
Global Motors Company (EVG) whereby the Company exchanged 200,000 shares of
its common stock for 400,000 shares of EVG with a value of $1,000,000.
In June, July and August, 1997, warrant holders exercised warrants to acquire
790,000 shares of common stock on a cashless exchange basis resulting in the
issuance of 556,276 shares of common stock based upon a fair market value of
the common stock on the dates of exchange of $6.50, $6.75, $7.13 and $7.25 per
share. See also note 8 to the Consolidated Financial Statements.
In accordance with the provisions of the Company's stock option plans, the
Company accepts as payment of the exercise price, mature shares of the
Company's common stock held by the option holder for a period of six months
prior to the date of the option exercise. For the nine months ended December
31, 1998, the Company issued 15,870 shares of common stock for options
exercised for an aggregate exercise price of $15,870, for which the Company
received 2,308 shares of common stock as payment for the exercise price. The
shares received were recorded at cost as treasury stock and were subsequently
retired.
In accordance with the provisions of the Company's stock option plans, the
Company may, and has, accepted promissory notes from officers of the Company
in satisfaction of the exercise price of options exercised. These notes
receivable are recorded as a reduction of shareholders' equity in the
consolidated financial statements. For the nine months ended December 31,
1998, the Company issued 250,362 shares of common stock for an aggregate
exercise price of $731,788 for which the Company received promissory notes for
the same amount. There were no notes receivable exchanged for the nine months
ended December 31, 1997.
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
(1) The accompanying consolidated financial statements are unaudited;
however, in the opinion of management, all adjustments which were
solely of a normal recurring nature, necessary to a fair presentation
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 six months at December 31, 1998, and from one to thirteen months at
December 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 eight months. Contracts in
process consist of the following:
December 31, 1998 March 31, 1998
(unaudited)
Costs incurred on uncompleted
contracts $ 1,535,195 1,724,552
Estimated earnings 584,581 515,782
2,119,776 2,240,334
Less billings to date (2,013,825) (1,786,046)
$ 105,951 454,288
Included in the accompanying
balance sheets as follows:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 229,882 454,738
Billings in excess of costs
and estimated earnings on
uncompleted contracts (123,931) (450)
$ 105,951 454,288
(4) Inventories consist of:
December 31, 1998 March 31, 1998
(unaudited)
Raw materials $ 1,898,584 76,377
Work in process 392,987 159,825
Finished products 13,877 17,715
$ 2,305,448 253,917
(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 Ltd., a
company organized under the laws of the Republic of China ("Taiwan
UQM"). Taiwan UQM was incorporated in April 1995.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
The Company owns a 38 1/4% interest in Taiwan UQM and its investment is
accounted for under the equity method.
Summarized unaudited financial information for Taiwan UQM is as
follows:
September 30, December 31,
Financial Position 1998 1997
Current assets $ 135,109 341,178
Noncurrent assets-land, property
and equipment 7,036,563 6,474,301
Total assets 7,171,672 6,815,479
Current liabilities 2,571,105 1,470,684
Noncurrent liabilities 19,207 -
Stockholders' equity 4,581,360 5,344,795
Total liabilities and equity 7,171,672 6,815,479
Quarter Ended Nine Months Ended
September 30, September 30, September 30, September 30,
Results of Operations 1998 1997 1998 1997
Revenue $ 35,072 9,254 54,551 74,663
Expenses (319,036) (140,725) (862,146) (286,729)
Net loss $(283,964) (131,471) (807,595) (212,066)
(6) Other current liabilities consist of:
December 31, March 31,
1998 1998
(unaudited)
Accrued interest $ 19,154 5,692
Accrued loss reserves 2,633 22,678
Accrued legal and accounting fees 59,563 55,376
Accrued payroll, consulting, personal
property taxes and real estate taxes 251,007 158,604
Accrued material purchases 55,417 82,357
Accrued machinery and equipment purchases 368,052 402,834
Unearned revenue - 65,037
Other 89,715 83,779
$ 845,541 876,357
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(7) Long-term debt consists of:
December 31, March 31,
1998 1998
(unaudited)
Note payable to bank, payable in monthly
installments with interest at 8.65%; matures
July 2003; secured by land and building $ 911,211 -
Note payable to bank, payable in monthly
installments with interest at 9.1%; matures
October 2007; secured by land and building 689,684 726,202
Note payable to bank, payable in monthly
installments with interest at 10.05%;
matures November 2001; secured by equipment - 467,276
Note payable to bank, payable in monthly
installments with interest at 8.50%; matures
October 2001; secured by equipment 425,434 -
Note payable to bank, payable in monthly
installments with interest at 8.5%; matures
April 2005; secured by equipment 387,715 -
Note payable to bank, payable in monthly
installments with interest at 8.5%; matures
May 2005; secured by equipment 127,349 -
Note payable to bank, payable in monthly
installments with interest at 8.5%; matures
October 2005; secured by equipment 211,466 -
Note payable to bank, payable in monthly
installments with interest at 8.5%; matures
December 2005; secured by equipment 363,838 -
Note payable to bank, payable in monthly
installments with interest at 8.125%; matures
July 2001; secured by accounts receivable,
inventory and equipment 807,292 -
Note payable to commercial lender, payable in
monthly installments with interest at 6.38%;
matures October 1999 80,421 -
Capital lease obligation 18,662 -
Total long-term debt 4,023,072 1,193,478
Less current portion 747,051 163,554
Long-term debt, less current portion $ 3,276,021 1,029,924
The Company's has two lines-of-credit of $.75 million and $2.5 million
expiring in June 1999 and August 1999, respectively. Both lines have
various covenants which limit the Company's ability to dispose of
assets, merge with another entity, and pledge trade receivables and
inventories as collateral. The Company is also required to maintain
certain financial ratios as defined in the agreements. The weighted
average rate of interest on these lines as of December 31, 1998 was
prime .5% or 8.0%.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(8) Common Stock Options and Warrants
Incentive and Non-Qualified Option Plans
The Company has reserved 5,104,000 shares of common stock for key
employees, consultants and key suppliers 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
options that may be granted to any eligible employee during the term of
the 1982 and 1992 plans is 1,000,000 options. Options granted under
the Company's plans to employees require the option holder to abide by
certain Company policies which restrict their ability to sell the
underlying common stock.
The following table summarizes activity under the plans:
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
Granted 601,000 7.88
Exercised (210,332) 4.75
Forfeited (13,772) 4.80
Outstanding at March 31, 1998 2,828,352 5.34
Granted 150,000 7.94
Exercised (313,302) 2.89
Forfeited (103,003) 7.82
Outstanding at December 31, 1998 2,562,047 $ 5.70
Exercisable at December 31, 1998 1,651,480 $ 5.28
(9) Notes Receivable From Officers
In accordance with the provisions of the Company's Stock Option Plans,
the Company may accept promissory notes from officers of the Company in
satisfaction of the exercise price of options exercised by officers.
Promissory notes from officers for a term not to exceed five years,
require at least quarterly
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
payments of principal and interest and contain a market rate of
interest based on similar loans available from a lending institution.
Loans from officers consists of the following:
December 31, 1998 March 31, 1998
(unaudited)
Note receivable in bi-monthly
installments with interest at
8.5%; matures March 2002 $ 22,210 26,475
Note receivable in quarterly
installments with interest at
8.5%; matures April 2002 24,577 29,581
Note receivable in quarterly
installments with interest at
8.5%; matures July 2003 10,553 -
Notes receivable in bi-monthly
installments with interest at
8.5%; matures July 2003 1,171 -
Notes receivable in quarterly
installments with interest at
8.5%; matures July 2003 26,382 -
Notes receivable in quarterly
installments with interest at
8.5%; matures October 2004 7,095 -
Note receivable in quarterly
installments with interest at
8.5%; matures October 2004 22,500 -
Note receivable in quarterly
installments with interest at
7.75%; matures October 2004 38,500 -
Note receivable in quarterly
installments with interest at
7.25%; matures October 2004 624,112 -
Total Notes Receivable from officers $ 777,100 56,056
The following table presents summarized information about stock options
outstanding at December 31, 1998:
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstanding Remaining Exercise Exercisable Exercise
Exercise Prices at 12/31/98 Contractual Life Price at 12/31/98 Price
$0.75 - 1.00 23,959 2.2 years $0.75 23,959 $0.75
$2.25 - 3.31 550,399 7.3 years $3.07 266,133 $2.82
$3.50 - 5.00 648,706 5.9 years $4.09 643,706 $4.09
$5.38 - 8.31 1,338,983 7.2 years $7.64 717,682 $7.40
$0.75 - 8.31 2,562,047 6.9 years $5.70 1,651,480 $5.28
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
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 500,000 shares of
common stock for issuance pursuant to the exercise of options under the
plan. The options vest ratably over a three-year period beginning one
year from the date of grant and are exercisable for 10 years from the
date of grant. Option prices are equal to the fair market value of
common shares at the date of grant.
The following table presents summarized activity under the plan:
Weighted
Shares Under Average
Option Exercise Price
Outstanding at October 31, 1995 109,333 $ 5.48
Granted 32,000 4.38
Outstanding at October 31, 1996, and
March 31, 1997 141,333 5.23
Granted 64,000 7.13
Exercised (16,000) 5.38
Outstanding at March 31, 1998 189,333 5.86
Granted 18,392 5.06
Outstanding at December 31, 1998 207,725 $ 5.79
Exercisable at December 31, 1998 136,000 $ 5.58
The following table presents summarized information about stock options
outstanding for non-employee directors:
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstanding Remaining ExerciseExercisable Exercise
Exercise Prices at 12/31/98 Contractual Life Price at 12/31/98 Price
$4.38 - 6.00 93,333 6.7 years $4.85 82,667 $4.92
$6.25 - 7.13 114,392 7.8 years $6.55 53,333 $6.60
207,725 7.4 years $5.79 136,000 $5.58
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation ("SFAS 123") defines a fair value method of
accounting for employee stock options and similar equity instruments. SFAS
123 permits an entity to choose to recognize compensation expense by
adopting the fair value method of accounting or to measure compensation
costs using the intrinsic value method prescribed by APB25. The Company
accounts for stock options granted to employees of the Company under the
intrinsic value method. Stock options granted to non-employees under the
Company's 1992 Stock Option Plan and directors under the Stock Option Plan
for Non-Employee Directors are accounted for under the fair value method.
Had the Company reported compensation costs as determined by the fair value
method of accounting for option grants to employees, net loss and net loss
per common share would have been the pro forma amounts indicated in the
following table:
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
Quarter Ended December 31,Nine Months Ended December 31,
1998 1997 1998 1997
Net loss - as
reported $(970,668) (680,533) (3,335,724) (1,534,981)
Compensation expense -
current period
option grants 228,670 - 243,622 (40,000)
Compensation expense -
prior period option
grants (343,925) (199,417) (165,177) (453,641)
Net loss - pro forma $(1,085,923) (879,950) (3,257,279) (2,028,622)
Net loss per common
share - as reported $ (.06) (.05) (.21) (.11)
Net loss per common
share - pro forma $ (.07) (.06) (.21) (.15)
The fair value of stock options granted was calculated using the Black
Scholes option pricing model based on the following weighted average
assumptions:
Quarter Ended December 31,Nine Months Ended December 31,
1998 1997 1998 1997
Expected volatility - - 48.5% 48.9%
Expected dividend yield - - 0.0% 0.0%
Risk free interest rate - - 5.8% 6.2%
Expected life of option
granted - - 6 years 6 years
Fair value of options
granted as computed
under the Black Scholes
option pricing model - - $4.26 per $3.70 per
share share
Pro forma net loss reflects only the fair value compensation expense of
options granted since November 1, 1995. The full impact of calculating
compensation cost for stock options under SFAS 123 is not reflected in
the pro forma net loss amounts presented above because compensation
cost is reflected over the option vesting periods (ranging from 1 to 3
years) and compensation cost for options granted prior to November 1,
1995, is not considered. Future pro forma compensation cost by fiscal
year, assuming no additional grants by the Company to employees and
directors, is as follows:
Pro Forma
Compensation
Expense
2000 $1,375,700
2001 $1,011,617
2002 $ 53,292
Warrants
In connection with the original issuance of certain subordinated
convertible term notes to Advent and Techno, the Company granted Advent and
Techno warrants to acquire 790,000 shares of the Company's common stock at
the lower of $2.40 per share, being the market value of the Company's stock
at the time of issuance or the market price of the common stock averaged
over the 30 trading days immediately preceding the date of exercise. The
warrants allowed for a cashless exercise of the warrants into common shares
based on the spread between the
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
market price of the common stock on the date of exercise and the $2.40
exercise price and expired in August 1997. 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. On July 31,
1997, warrants to acquire 45,000 shares of common stock were exercised on a
cashless basis resulting in the issuance of 29,000 shares of common stock.
On August 5, 1997, warrants to acquire 175,000 shares of common stock were
exercised on a cashless basis resulting in the issuance of 116,053 shares
of common stock. The remaining warrants to acquire 175,000 shares of the
Company's common stock were exercised on a cashless basis on August 15,
1997, resulting in the issuance of 117,069 shares of common stock.
The Company has reserved 300,000 shares of common stock for issuance
pursuant to a warrant agreement with an investment banking company. The
warrants are exercisable at a price of $6.00 per share and expire in
January, 1999. 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. On March 19, 1998, warrants to acquire 80,000 shares
of the Company's common stock were exercised resulting in cash proceeds
to the Company of $480,000. Warrants to acquire 220,000 shares of the
Company's common stock remained outstanding at December 31, 1998 and
subsequently expired unexercised in January, 1999.
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 in February 1996, 38,100 shares of the
Company's common stock at $5.00 per share in May 1996 and 50,000 shares
at $4.25 per share in September 1996. The exercise price of the
warrants was set at the market price of the common stock on the date of
each respective grant. The warrants expire three years from the date
of issuance. During October 1997, warrants to acquire 5,000 shares of
the Company's common stock at $4.25 per share were exercised resulting
in cash proceeds to the Company of $21,250. During June 1998, warrants
to acquire 38,100 shares of the Company's common stock in cash at $5.00
per share were exercised resulting in proceeds to the Company of
$190,500. Warrants to acquire 50,000 shares at $4.75 per share and
45,000 shares at $4.25 per share remain outstanding as of December 31,
1998.
In connection with the 1997 private placement, the placement agents
were issued warrants in February 1997, to acquire 225,625 shares of the
Company's stock at an exercise price of $3.50 per share and warrants to
acquire 50,000 shares at an exercise price of $4.20 per share. The
warrants expire three years from the date of issuance. During the
fiscal year ended March 31, 1998, warrants to acquire 151,750 shares of
the Company's common stock at $3.50 per share were exercised, resulting
in cash proceeds to the Company of $531,125.
In December 1997, warrants to acquire 50,000 shares of the Company's
common stock at $4.20 per share were exercised, resulting in cash
proceeds to the Company of $210,000. Warrants to acquire 73,875 shares
of the Company's common stock at $3.50 per share remain outstanding as
of December 31, 1998.
The Company completed a private placement in 1998 of 750,000 units
consisting of one common share and a warrant to acquire one common share at
an exercise price of $8.00 per share. Of the 750,000 units privately
placed, 626,875 were issued in March 1998 and the remaining 123,125 were
issued in April 1998. Also in connection with the 1998 private placement,
the placement agents were issued warrants in March 1998, to acquire 176,588
shares of the Company's common stock
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
at an exercise price of $8.00 per share. The warrants expire two years
from the date of issuance. All of the warrants remain outstanding as
of December 31, 1998.
(10) The Company has entered into employment agreements with three of its
officers which expire December 31, 1999 and with one officer which
expires March 31, 2001. The aggregate annual future compensation under
these agreements through the expiration date is $775,345.
(11) The Company has historically derived significant revenue from a few key
customers. The customers from which this revenue has been derived and
the percentage of total revenue is summarized as follows:
Quarter Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
Customer:
Deere & Company $ 26,488 113,116 29,488 320,310
Kia Motors Corporation - 194,985 - 707,771
Houston Metropolitan
Transit Authority 122,259 73,027 338,520 319,905
Siemens Electromechanical
Components 895,742 - 2,058,003 -
$ 1,044,489 381,128 2,426,011 1,347,986
Percentage of total revenue 24% 49% 23% 48%
These customers, in total, also represented 18% and 68% of total
accounts receivable at December 31, 1998 and 1997, 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 $259,079 and $108,560 for the quarter ended December 31,
1998 and 1997, respectively, and $592,042 and $522,501 for the nine months
ended December 31, 1998 and 1997, respectively.
(12) Net loss per common share amounts are based on the weighted average number
of common shares outstanding during the quarter and nine months ended
December 31, 1998 and 1997. Outstanding common stock options and warrants
were not included in the computation because the effect of such inclusion
would be antidilutive.
(13) Segments
The Company has three reportable segments: technology, mechanical
products and electronic products. The technology segment encompasses
the Company's technology-based operations including core research to
advance its technology, application engineering and product
development and job shop production of prototype components. The
mechanical products segment encompasses the manufacture and sale of
permanent magnet motors, precision gears, gear assemblies and related
mechanical products. The electronic products segment encompasses the
manufacture and sale of wire harness assemblies, electronic circuit
board assemblies and electronic products.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
During the quarter and nine months ended December 31, 1998,
intersegment sales or transfers were immaterial.
The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately
because each business requires different business strategies.
The following table summarizes significant financial statement
information for each of the reportable segments for the quarter ended
December 31, 1998:
Mechanical Electronic
Technology Products Products Total
Revenue $ 415,719 1,219,307 2,731,778 4,366,804
Interest income 10,568 1,527 - 12,095
Interest expense (17,733) (44,339) (21,663) (83,735)
Depreciation and
amortization (98,599) (218,875) (86,581) (404,055)
Goodwill amortization - (15,579) (68,866) (84,445)
Equity in loss of
Taiwan joint venture (108,616) - - (108,616)
Segment earnings (loss) (708,140) (268,027) 5,499 (970,668)
Segment assets 7,130,502 7,899,374 9,489,100 24,518,976
Expenditures for
segment assets $ (67,305) (281,932) (266,926) (616,163)
The following table summarizes significant financial statement
information for each of the reportable segments for the nine months
ended December 31, 1998:
Mechanical Electronic
Technology Products Products Total
Revenue $ 1,555,404 2,422,553 6,629,422 10,607,379
Interest income 69,775 22,905 - 92,680
Interest expense (50,682) (114,109) (74,194) (238,985)
Depreciation and
amortization (298,632) (576,286) (196,277)(1,071,195)
Goodwill amortization - (46,102) (179,216) (225,318)
Equity in loss of
Taiwan joint venture (308,905) - - (308,905)
Segment loss (2,194,000) (936,757) (204,967)(3,335,724)
Segment assets 7,130,502 7,899,374 9,489,100 24,518,976
Expenditures for
segment assets $ (424,163) (2,307,323) (404,928)(3,136,414)
(14) Reporting Comprehensive Income (Loss)
Financial Accounting Standards Board Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income," requires
all items that are required to be recognized under accounting standards
as components of comprehensive income to be reported in a financial
statement that is displayed with the same prominence as other financial
statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
The following table summarizes the Company's comprehensive loss for the
quarter and nine months ended December 31, 1998 and 1997:
Quarter Ended December 31, Nine Months Ended December 31,
1998 1997 1998 1997
Net loss $ (970,668) (680,533) (3,335,724) (1,534,981)
Translation gain
(loss) 116,402 2,343 16,882 (95,647)
Income tax effect - - - -
Comprehensive loss $ (854,266) (678,190) (3,318,842) (1,630,628)
(15) Acquisition of Aerocom and Franklin
On January 16, 1998, the Company acquired all of the outstanding common
stock of Aerocom Industries, Inc. (Aerocom) and on April 30, 1998, the
Company acquired all of the outstanding common stock of Franklin
Manufacturing Company (Franklin) for cash and shares of the Company's
common stock.
The acquisitions have been accounted for using the purchase method of
accounting. The unaudited pro forma revenue, net loss and loss per
common share for the nine months ended December 31, 1998 and 1997
respectively, assuming the acquisitions occurred on April 1, 1997 is as
follows:
Nine Months Nine Months
December 31, 1998 December 31, 1997
Revenue $ 11,567,092 $ 13,100,746
Net loss (3,301,493) (2,896,962)
Basic and diluted loss
per common share $ (.21) $ (.21)
The pro forma information does not necessarily represent the results
that would have occurred if the acquisition had been consummated on
April 1, 1997, nor are they necessarily indicative of the results of
future operations.
<PAGE>
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. These statements may differ materially from actual future
events or results. Readers are referred to the Risk Factor section of the
Registration Statement on Form S-3 (File No. 333-52861) filed by the Company
with the SEC, which identified important risk factors that could cause
actual results to differ from those contained in the forward-looking
statements, including the Company's history of operating losses, its ability
to obtain additional financing, competition, the Company's ability to
integrate acquired businesses into existing operation, the Company's ability
to protect its proprietary information, and the Company's limited experience
in manufacturing processes and procedures and marketing and distribution.
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
The Company's financial condition remained strong throughout the quarter
ended December 31, 1998, despite a net loss of $970,668. Cash used by
operations, before changes in operating assets and liabilities was $291,219
and $1,595,879 for the quarter and nine months ended December 31, 1998,
respectively. Working capital (the excess of current assets over current
liabilities) declined to $1,946,154 at December 31, 1998 from $7,566,627 at
March 31, 1998.
Accounts receivable rose $1,058,307 to $2,163,773 at December 31, 1998 from
$1,105,466 at March 31, 1998. The increase is primarily attributable to the
consolidation of the trade accounts receivable of the Company's new
manufacturing subsidiary, Franklin Manufacturing Company ("Franklin"), which
accounted for substantially all of the increase.
Costs and estimated earnings on uncompleted contracts decreased $224,856 to
$229,882 at December 31, 1998 from the fiscal 1998 year end level of
$454,738. The decrease was due to increased billings on customer sponsored
programs during the period based on milestone billing arrangements.
Estimated earnings on contracts in process rose to $584,581 at December 31,
1998 on costs incurred on contracts in process of $1,535,195 compared to
estimated earnings on contracts in process of $515,782 on costs incurred on
contracts in process of $1,724,552 at March 31, 1998. The increase reflects
improved margins on contracts in process and is attributable to greater
labor content in contracts in process and a reduction in anticipated cost
overruns.
Raw materials, and work in process inventories increased by $1,822,207 and
$233,162, respectively, to $1,898,584 and $392,987, respectively, at
December 31, 1998. Raw materials inventory rose primarily as a result of
the consolidation of raw material inventories of Franklin. Work in process
inventories rose due to production of SR286 motors and associated controls
pursuant to existing customer orders.
In April, 1998 the Company acquired all of the outstanding common stock of
Franklin Manufacturing Company for $6,247,316 plus the assumption then
existing debt of $3,148,146. The purchase price consisted of a cash payment
of $4,000,000 and the issuance of 286,282 shares of the Company's common
stock. The acquisition was accounted for under the purchase method of
accounting. Under this method, the excess of the purchase price over the
net assets acquired is first allocated to increase the recorded value of the
tangible and identified intangible assets acquired to their fair market
value, with any excess then recorded as goodwill. The excess of the
purchase price over the net assets acquired of Franklin resulted in an
increase in the recorded value of property and equipment in the amount of
$950,400 with the excess of $5,376,468 being recorded as goodwill.
<PAGE>
The Company invested $597,866 and $3,056,117 for the acquisition of property
and equipment during the quarter and nine months ended December 31, 1998
compared to $283,294 and $480,758 for the quarter and nine months ended
December 31, 1997. The increase in capital expenditures during the quarter
ended December 31, 1998 is attributable to the purchase of manufacturing
equipment of $49,008 by the technology segment, $281,932 by the mechanical
products segment and $266,926 by the electronic products segment. The
increase in capital expenditures for the nine months ended December 31, 1998
is attributable to the purchase of manufacturing equipment and construction
of a manufacturing facility amounting to $2,307,323 and purchases of
equipment of $343,866 and $404,928 by the technology and electronic products
segments, respectively.
Investment in Taiwan joint venture declined to $1,752,370 at December 31,
1998 from $2,044,393 at the beginning of the fiscal year. The decrease is
attributable to the Company's proportionate share of operating losses which
amounted to $308,905 and foreign currency translation adjustments which
amounted to $16,882.
Goodwill, net of accumulated amortization, rose to $6,381,283 at December
31, 1998 from $1,280,872 at March 31, 1998 due to the acquisition of
Franklin during the first quarter.
Accounts payable rose to $1,524,716 at December 31, 1998 from $389,791 at
March 31, 1998. The increase is primarily attributable to the consolidation
of the trade accounts payable of Franklin which accounted for $908,150 of
the increase and higher levels of accounts payable at Aerocom resulting from
higher levels of product shipments which accounted for $274,776 of the
increase.
Other current liabilities decreased to $845,541 at December 31, 1998 from
$876,357 at March 31, 1998. The decrease is primarily attributable to the
consolidation of the other current liabilities of Franklin less payments on
equipment purchase contracts by the mechanical products segment.
Revolving line-of-credit rose to $393,000 at December 31, 1998 due to the
consolidation of the revolving line-of-credit of Franklin.
Current portion of long-term debt rose $583,497 to $747,051 at December 31,
1998. The increase is due to current principal maturities on manufacturing
equipment loans by the mechanical products segment and the consolidation of
the current principal maturities of the debt of Franklin.
Long-term debt rose to $3,276,021 at December 31, 1998 due to term equipment
borrowings and mortgage financing by the mechanical products segment of
$1,653,330 and $922,500, respectively, and the consolidation of Franklin's
long-term debt which amounted to $494,792.
Common stock and additional paid-in capital increased to $161,633 and
$43,212,078 at December 31, 1998, respectively, compared to $153,946 and
$38,852,446 at March 31, 1998. The increases were due to the sale of common
stock to investors in the amount of $956,329; proceeds received upon the
exercise of warrants of $193,375; sales of common stock to employees and
consultants through the Company's benefit plans and the exercise of options
of $155,296; the issuance of common stock for the acquisition of Franklin of
$2,247,316.
Results of Operations
Operations for the quarter ended December 31, 1998, resulted in a net loss
of $970,668 or $.06 per share compared to a net loss of $680,533 or $0.05
per share for the quarter ended December 31, 1997. Operations for the nine
months ended December 31, 1998 resulted in a net loss of $3,335,724 or $0.21
per share compared to a net loss of $1,534,981 or $0.11 per share for the
nine months ended December 31, 1997.
<PAGE>
Product sales revenue for the quarter ended December 31, 1998 rose nearly
twenty seven-fold to $3,982,503 compared to $148,173 for the comparable
quarter last year and was 35 percent higher than second quarter product
sales of $2,941,800. For the nine months ended December 31, 1998 product
sales revenue rose over nineteen-fold to $9,477,750 compared to $494,594 for
the comparable period last year. The increase in product sales versus the
prior year comparable amount is primarily due to the acquisition of Franklin
which generated product sales of $2,731,778 and $6,629,422 for the quarter
and nine months ended December 31, 1998, respectively, and revenue growth in
the mechanical products segment which generated product sales of $1,219,307
and $2,422,553, respectively. Contract services revenue declined $246,047 or
39 percent to $384,301 during the third quarter and $1,204,089 or 52 percent
to $1,129,629 for the nine months ended December 31, 1998. The decrease in
contract services revenue is attributable to a shift in focus to deploying
technical resources on product development activities rather than customer
sponsored research programs.
Gross profit margins for the quarter and nine months ended December 31, 1998
were 8.6 percent and 7.2 percent, respectively, compared to a gross profit
margin of 7.6 percent for the comparable quarter last year and a gross
profit margin of 9.7 percent for the comparable nine month period last year.
Gross profit margins on contract services for the quarter and nine months
ended December 31, 1998 were 17.9 percent and 10.3 percent, respectively,
compared to gross profit margins of 1.7 percent and 5.8 percent for the
comparable periods last year. The increase in gross profit margins on
contract services during the third quarter is attributable to reduced levels
of cost overruns on development programs. Gross profit on product sales for
the quarter and nine months ended December 31, 1998 were 7.7 percent and
6.9, respectively, compared to 32.6 percent and 27.9 percent for the
comparable periods last year. The decline in gross profit margins is
generally attributable to a change in the product mix from exclusively high
margin prototype products to higher volume production products. Current
quarter and year to date margins have been adversely impacted by the
allocation of depreciation charges to cost of sales based on the step-up in
value of all production assets of Franklin and Aerocom to market value upon
their acquisition by the company. Depreciation expense charged to cost of
product sales amounted to $289,416 and $745,588 for the quarter and nine
months ended December 31, 1998, respectively.
Research and development expenditures during the quarter and nine months
ended December 31, 1998 declined to $138,937 and rose to $589,659,
respectively. The decrease for the quarter is generally attributable to
decreased levels of product development and launch expenditures on
wheelchair motors which entered production during the quarter. The increase
for the nine months ended December 31, 1998 is generally attributable to
increased levels of cost-share type development programs and product
development and launch expenditures on wheelchair motors.
General and administrative expense for the third quarter rose to $847,613
compared to $427,259 for the comparable quarter last year. The increase is
attributable to the consolidation of the general and administrative expenses
of Aerocom and Franklin which amounted to $373,533 during the quarter and
higher levels of business development and legal expenses. General and
administrative expenses for the nine months ended December 31, 1998 rose to
$2,579,749 compared to $1,121,244 for the comparable period last year. The
increase is attributable to the consolidation of the general and
administrative expenses of Franklin and Aerocom, higher levels of business
development, legal, accounting and acquisition costs.
Depreciation and amortization expense rose to $162,506 and $428,133 for the
quarter and nine months ended December 31, 1998, respectively, due primarily
to amortization of goodwill arising from the acquisition of Franklin and
Aerocom.
Interest income declined to $12,095 and $92,680 for the quarter and nine
months ended December 31, 1998, respectively, compared to $50,518 and
$148,487 for the comparable periods last year. The decrease is attributable
to lower levels of invested cash during the current fiscal year.
<PAGE>
Interest expense rose to $83,735 and $238,985 for the quarter and nine
months ended December 31, 1998, respectively, due to the consolidation of
interest expense of Franklin and Aerocom and increased levels of borrowing
on revolving credit facilities and term equipment lines during each
respective period.
Equity in loss of Taiwan joint venture rose to $108,616 and $308,905 for the
quarter and nine months ended December 31, 1998, respectively, compared to
$50,863 and $82,296, respectively, for the comparable periods last year. The
increases are due to expanded staffing and operations at Taiwan UQM
coincident with the launch of manufacturing operations.
Liquidity and Capital Resources
The Company's cash balances and liquidity throughout the quarter and nine
months ended December 31, 1998 were adequate to meet operating needs. Net
cash used by operating activities was $502,875 and $1,955,502 for the
quarter and nine months ended December 31, 1998. Cash requirements
throughout the period were funded primarily through the sale of common stock
to investors, cash received upon the exercise of outstanding common stock
warrants and options and borrowings on the Company's bank facilities.
During the first half, the Company completed the construction of a 25,000
square foot manufacturing plant in Frederick, Colorado. The plant is
situated on 2 acres of land and the Company holds an option to acquire an
adjacent 2 acre parcel to accommodate future expansion of the facility.
Construction cost of the plant, including land acquisition costs, was $1.34
million. Construction financing was provided from existing cash balances.
The Company secured mortgage financing on the facility during the second
quarter in the amount of $.9 million. Coincident with this expansion, the
Company expended $1.7 million during the nine months ended December 31, 1998
for manufacturing equipment, the majority of which was funded through
borrowings on the Company's term equipment loan facility.
During the first quarter, the Company acquired Franklin Manufacturing
Company, a privately held St. Charles, Missouri manufacturer and distributor
of electronic assemblies and components. The Company completed the
acquisition of the outstanding common stock of Franklin for $4 million in
cash, the assumption of approximately $3.1 million in liabilities and debt
and the issuance of 286,282 shares of the Company's common stock. During
the second quarter, the Franklin completed a loan facility with a commercial
bank to accommodate future Franklin growth. The loan facility consists of a
revolving line-of-credit of $2.5 million, a term loan of $.78 million and a
term equipment facility for future purchases of manufacturing equipment in
the amount of $1.25 million. For the nine months ended December 31, 1998
Franklin expended $404,928 for the purchase of manufacturing equipment which
was funded through a combination of cash and borrowings on the company's
revolving line-of-credit.
The Company met capital calls from Taiwan UQM of $1.4 million in both fiscal
1996 and 1997. Taiwan UQM reported a net loss of approximately $.6 million
in fiscal 1998 and $.8 million during the nine months ended December 31,
1998. Further losses or capital investment by Taiwan UQM could result in
additional capital calls by Taiwan UQM which the Company would be required
to fund or suffer a dilution of its ownership interest.
During the fourth quarter, the Company expects to invest substantially
greater amounts of capital to fund the working capital requirements
associated with the volume manufacture and supply of motors to Invacare
Corporation under a renewable two year supply agreement. These requirements
consist primarily of the funds necessary to fund inventories and accounts
receivable. The Company expects to fund this working capital requirement
through a combination of existing cash resources and short-term bank
lines-of-credit. To date the Company has funded such working capital
requirements from existing cash balances, however, the Company has a
revolving line-of-credit facility with a commercial bank in the amount of
$.75 million available to fund its increased working capital requirements.
<PAGE>
During the third quarter the cash usage from operations before changes in
working capital items (net loss plus non-cash items) decreased to $291,219
from $860,833 during the second quarter. The Company hopes to further
decrease its cash usage from operations to zero during the fourth quarter
and achieve positive cash flow from operations during the first quarter
which ends June 30, 1999. Accordingly, the Company believes it has cash
resources and borrowing capacity sufficient to fund its operations for a
period of at least one year, however, the impact of an unexpected and
extended economic event in one of the key markets served by the Company or
by a significant customer of the Company, could cause the Company to
experience liquidity problems.
For the longer-term, the Company expects to continue its strategy of growing
its business through expanding its product line of permanent magnet motors
and controllers, securing production orders from new and existing customers
for gear and component assemblies manufacture design and introduce new
products for manufacture, seek strategic alliances to accelerate the
commercialization of its technology and pursue synergistic and accretive
acquisitions. The Company expects to finance its future growth from
existing cash resources, cash flow from operations, if any, and through the
issuance of equity or debt securities or a combination thereof. There can,
however, be no assurance that such financing or capital will be available on
terms acceptable to the Company. In the event financing or capital for
future growth as envisioned under the Company's strategy is not available,
the Company believes it can configure its operations such that existing cash
balances and cash flow from operations will be sufficient to meet its
operating requirements.
Year 2000 Issues
The Year 2000 presents issues because many computer hardware and software
systems use only the last two digits to refer to a calendar year.
Consequently, these systems may fail to process dates correctly after
December 31, 1999, which may cause systems failures.
State of Readiness
The Company has conducted numerous internal discussions over the last
eighteen months amongst its management and technical staff to informally
assess the extent of the Year 2000 Issue on the Company's operations. In
September, 1998 the Company adopted a formal project to evaluate all of the
Company's systems for Year 2000 compliance. The project is being monitored
and supervised by the Company's Chief Operating Officer. The evaluation of
all hardware and software systems was completed in December 1998. The
Company believes that its critical hardware and software systems are Year
2000 compliant with the exception of the Company's voice mail system which
will be replaced prior to December 31, 1999.
As part of the Company's Year 2000 compliance evaluation, the Company began
contacting key suppliers and customers during the fourth calendar quarter of
1998 to determine the extent to which the Company is vulnerable to third
parties failures to remediate their Year 2000 compliance issues. The
Company expects to have contacted all key suppliers and customers by March
31, 1999. However, we cannot guarantee or assure you that the systems of
other companies that we rely on, such as suppliers of raw materials,
electricity providers and other similar suppliers, or the customers who buy
products from us, will effectively address their Year 2000 issues. In the
event these suppliers and customers experience a disruption in their
operations or cease operations indefinitely as a result of not addressing
their Year 2000 issues, our operations could be significantly impacted
including the temporary or permanent cessation of operations.
<PAGE>
Costs to Address the Year 2000 Issue
The total cost to address the Year 2000 issue, including the cost of Company
personnel and outside vendors and consultants is expected to be less than
$50,000. To date the Company has spent less than $15,000 to evaluate and
address the Year 2000 Issue.
Risks Associated with the Company's Year 2000 Issues
The Company utilizes a number of suppliers both large and small to provide
raw materials and components for its products. The failure of third party
suppliers to become Year 2000 compliant on a timely basis could create a
need for the Company to change suppliers or otherwise impair the sourcing of
raw materials, components or services to the Company, any of which could
have a material effect on the Company's business, financial condition and
results of operations. Likewise, the failure of the Company's customers to
become Year 2000 compliant, could cause a disruption or termination of their
operations which could result in a reduction or the elimination of orders to
purchase goods and services from the Company. Either of the foregoing
occurrences could have a material effect on the Company's business,
financial condition and results of operations.
Contingency Plan
The Company does not currently have a contingency plan if Year 2000 issues
are not resolved or go undetected.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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: February 12, 1999 By: /s/Donald A. French
Donald A. French
Treasurer
(Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONSOLIDATED
BALANCE SHEETS OF UNIQUE MOBILITY, INC. AND CONSOLIDATED SUBSIDIARIES AS OF
DECEMBER 31, 1998, AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD
ENDED DECEMBER 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 831,246
<SECURITIES> 0
<RECEIVABLES> 2,163,773
<ALLOWANCES> 0
<INVENTORY> 2,535,330
<CURRENT-ASSETS> 5,732,599
<PP&E> 12,195,683
<DEPRECIATION> 3,209,500
<TOTAL-ASSETS> 24,518,976
<CURRENT-LIABILITIES> 3,786,445
<BONDS> 3,276,021
0
0
<COMMON> 43,373,711
<OTHER-SE> (26,315,146)
<TOTAL-LIABILITY-AND-EQUITY> 24,518,976
<SALES> 3,982,503
<TOTAL-REVENUES> 4,366,804
<CGS> 3,993,128
<TOTAL-COSTS> 5,142,184
<OTHER-EXPENSES> (111,553)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,735
<INCOME-PRETAX> (970,668)
<INCOME-TAX> 0
<INCOME-CONTINUING> (970,668)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (970,668)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
