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 June 30, 2000
Commission file number 1-10869
UNIQUE MOBILITY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0579156
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Corporate Circle Golden, Colorado 80401
(Address of principal executive offices) (zip code)
(303) 278-2002
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
The number of shares outstanding (including shares held by affiliates) of the
registrant's common stock, par value $0.01 per share at August 10, 2000, was
17,254,051.
<PAGE>
PART I - FINANCIAL INFORMATION
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
June 30, March 31,
Assets 2000 2000
(unaudited)
<CAPTION>
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,624,592 2,085,115
Accounts receivable, net (notes 6 and 8) 3,956,811 2,821,894
Costs and estimated earnings in excess
of billings on uncompleted contracts
(note 3) 379,316 329,111
Inventories (notes 4 and 6) 4,468,344 3,120,279
Prepaid expenses 145,427 192,492
Other 1,257 400,068
Total current assets 11,575,747 8,948,959
Property and equipment, at cost:
Land 517,080 517,080
Building 2,678,525 2,678,525
Molds 102,113 102,113
Transportation equipment 146,386 146,386
Machinery and equipment 11,529,101 10,462,893
14,973,205 13,906,997
Less accumulated depreciation (5,817,252) (5,365,304)
Net property and equipment 9,155,953 8,541,693
Patent and trademark costs, net of
accumulated amortization of $136,581
and $125,078 744,276 731,282
Goodwill, net of accumulated amortization
of $739,862 and $656,696 5,912,297 5,995,463
Other assets 122,804 40,446
$ 27,511,077 24,257,843
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
<TABLE>
June 30, March 31,
Liabilities and Stockholders' Equity 2000 2000
(unaudited)
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable $ 3,601,981 1,379,316
Other current liabilities (note 5) 1,226,631 845,462
Current portion of long-term debt 984,191 972,123
Revolving line-of-credit (note 6) 978,000 -
Billings in excess of costs and
estimated earnings on uncompleted
contracts (note 3) 41,089 79,499
Total current liabilities 6,831,892 3,276,400
Long-term debt, less current portion 3,172,105 3,422,459
Total liabilities 10,003,997 6,698,859
Minority interest in consolidated subsidiary 415,816 413,066
Stockholders' equity (note 7):
Common stock, $.01 par value, 50,000,000
shares authorized; 17,235,345 and
17,194,192 shares issued 172,353 171,942
Additional paid-in capital 49,660,690 49,382,877
Accumulated deficit (32,357,479) (32,024,601)
Accumulated other comprehensive loss (note 12) (384,300) (384,300)
Total stockholders' equity 17,091,264 17,145,918
Commitments (note 11)
$ 27,511,077 24,257,843
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
<TABLE>
Quarter Ended June 30,
2000 1999
<CAPTION>
<S> <C> <C>
Revenue (note 8):
Contract services $ 545,018 433,439
Product sales 5,920,472 5,330,972
6,465,490 5,764,411
Operating costs and expenses:
Costs of contract services 485,862 443,427
Costs of product sales 5,198,498 4,426,421
Research and development 37,909 26,179
General and administrative 900,733 874,001
Amortization of goodwill 83,166 82,879
6,706,168 5,852,907
Operating loss (240,678) (88,496)
Other income (expense):
Interest income 26,713 16,396
Interest expense (96,414) (117,152)
Equity in loss of joint ventures - (140,568)
Minority interest share of earnings
of consolidated subsidiary (19,585) (18,262)
Other (2,914) 2,331
(92,200) (257,255)
Net loss $ (332,878) (345,751)
Net loss per common share -
basic and diluted $ (.02) (.02)
Weighted average number of shares
of common stock outstanding (note 9) 17,215,239 16,395,791
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30,
2000 1999
<S> <C> <C>
Cash flows provided (used) by operating activities:
Net loss $ (332,878) (345,751)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 554,474 526,459
Minority interest share of earnings of
consolidated subsidiary 19,585 18,262
Noncash compensation expense for common stock
issued for services 31,874 -
Equity in loss of joint ventures - 140,568
Loss on sale of property and equipment 2,917 -
Change in operating assets and liabilities:
Accounts receivable and costs and estimated
earnings in excess of billings on
uncompleted contracts (1,192,480) (783,477)
Inventories (1,348,065) 387,056
Prepaid expenses and other current
assets 45,876 (81,339)
Accounts payable and other current
liabilities 2,603,834 (667,037)
Billings in excess of costs and estimated
earnings on uncompleted contracts (38,410) 16,992
Net cash provided (used) by
operating activities 346,727 (788,267)
Cash used by investing activities:
Acquisition of property and equipment (1,083,982) (84,009)
Increase in patent and trademark costs (24,497) (22,641)
Proceeds from sale of property and equipment 7,000 -
Proceeds from sale of Germany joint venture 400,000 -
Investment in other long-term assets (75,000) (503,249)
Net cash used by investing
activities $ (776,479) (609,899)
</TABLE>
(Continued)
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30,
2000 1999
<S> <C> <C>
Cash provided by financing activities:
Proceeds from borrowings $ - 57,166
Repayment of debt (238,286) (273,020)
Net borrowings on revolving line-of-credit 978,000 585,000
Proceeds from sale of common stock, net - 496,271
Issuance of common stock upon exercise of
employee options net of note repayments 133,289 158,216
Issuance of common stock under employee stock
purchase plan 17,061 4,412
Issuance of common stock upon exercise of warrants 96,000 55,250
Distributions paid to holders of minority interest (16,835) (16,835)
Net cash provided by financing
activities 969,229 1,066,460
Increase (decrease) in cash and cash equivalents 539,477 (331,706)
Cash and cash equivalents at beginning of quarter 2,085,115 1,537,453
Cash and cash equivalents at end of quarter $ 2,624,592 1,205,747
Interest paid in cash during the period $ 98,151 127,064
</TABLE>
Non-cash investing and financing transactions:
Cumulative translation adjustment of $40,936 was recorded for the quarter ended
June 30, 1999. No cumulative translation adjustment was recorded for the quarter
ended June 30, 2000.
During the quarter ended June 30, 1999, the Company acquired a 33.6 percent
ownership interest in a German company. Pursuant to this transaction the Company
issued 208,333 shares of common stock with an aggregate value of $1,149,894 in
exchange for its ownership interest.
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. The
Notes contained herein should be read in conjunction with the Notes to the
Company's Consolidated Financial Statements filed on Form 10-K for the year
ended March 31, 2000.
(2) Certain financial statement amounts have been reclassified for comparative
purposes.
(3) The estimated period to complete contracts in process ranged from one to
twenty-four months at June 30, 2000, and from one to seventeen months at
March 31, 2000. The Company expects to collect substantially all related
accounts receivable and costs and estimated earnings in excess of billings
on uncompleted contracts within twenty-five months. Contracts in process
consist of the following:
<TABLE>
June 30, 2000 March 31, 2000
(unaudited)
<CAPTION>
<S> <C> <C>
Costs incurred on uncompleted
contracts $ 981,805 645,425
Estimated earnings 238,070 180,293
1,219,875 825,718
Less billings to date (881,648) (576,106)
$ 338,227 249,612
Included in the accompanying balance
sheets as follows:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 379,316 329,111
Billings in excess of costs and
estimated earnings on
uncompleted contracts (41,089) (79,499)
$ 338,227 249,612
</TABLE>
(4) Inventories consist of:
<TABLE>
June 30, 2000 March 31, 2000
(unaudited)
<CAPTION>
<S> <C> <C>
Raw materials $ 3,744,399 2,446,779
Work in process 661,751 627,131
Finished products 62,194 46,369
$ 4,468,344 3,120,279
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(5) Other current liabilities consist of:
<TABLE>
June 30, 2000 March 31, 1999
(unaudited) (unaudited)
<CAPTION>
<S> <C> <C>
Accrued interest $ 19,622 21,360
Accrued legal and accounting fees 28,663 71,275
Accrued payroll, consulting, personal
property taxes and real estate taxes 497,019 339,263
Accrued material purchases 507,000 327,828
Other 174,327 85,736
$ 1,226,631 845,462
</TABLE>
(6) Lines of credit
The Company has lines of credit of $.75 million and $2.5 million. At June
30, 2000, the Company borrowed $978,000 against these lines, leaving
available borrowing capacity of approximately $.75 million and $1.5
million, respectively. The $.75 million line of credit expires in October
2000. The $2.5 million line of credit is due on demand, but if no demand is
made, it is due August 15, 2000. Interest on the lines of credit is payable
monthly at prime plus .75% (10.25% at June 30, 2000) and prime less .50%
(9.00% at June 30, 2000), 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. Outstanding borrowings under both lines of credit are
secured by accounts receivable, inventory and general intangibles, and are
limited to certain percentages of eligible accounts receivable and
inventory.
(7) Common Stock Options and Warrants
Incentive and Non-Qualified Option Plans
The Company has reserved 6,104,000 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 for the quarter
ended June 30, 2000:
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
<TABLE>
Shares Under Weighted-Average
Option Exercise Price
<CAPTION>
<S> <C> <C>
Outstanding at March 31, 2000 3,231,394 $ 6.01
Granted 20,000 7.63
Exercised (22,135) 6.02
Outstanding at June 30, 2000 3,229,259 $ 6.02
Exercisable at June 30, 2000 2,201,247 $ 5.56
</TABLE>
The following table presents summarized information about stock options
outstanding at June 30, 2000:
<TABLE>
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstanding Remaining Exercise Exercisable Exercise
Exercise Prices at 6/30/00 Contractual Life Price at 6/30/00 Price
<CAPTION>
<S> <C> <C> <C> <C> <C>
$0.50 - 1.00 18,959 0.7 years $0.75 18,959 $0.75
$2.25 - 3.31 470,360 5.3 years $3.03 470,360 $3.03
$3.50 - 5.00 1,014,156 6.2 years $4.26 651,113 $4.09
$5.38 - 8.13 1,725,784 6.7 years $7.94 1,060,815 $7.62
$0.50 - 8.13 3,229,259 6.3 years $6.02 2,201,247 $5.56
</TABLE>
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 for the
quarter ended June 30, 2000:
<TABLE>
Shares Under Weighted Average
Option Exercise Price
<CAPTION>
<S> <C> <C>
Outstanding at March 31, 2000 41,275 $ 5.68
Granted 977 7.63
Outstanding at June 30, 2000 42,252 $ 5.73
Exercisable at June 30, 2000 16,000 $ 6.44
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
The following table presents summarized information about stock options
outstanding for non-employee directors:
<TABLE>
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstanding Remaining Exercise Exercisable Exercise
Exercise Prices at 6/30/00 Contractual Life Price at 6/30/00 Price
<CAPTION>
<S> <C> <C> <C> <C> <C>
$4.38 - 5.13 25,275 8.6 years $4.76 5,333 $5.06
$7.13 - 7.63 16,977 7.3 years $7.16 10,667 $7.13
$4.38 - 7.63 42,252 8.1 years $5.73 16,000 $6.44
</TABLE>
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 continue to measure
compensation costs using the intrinsic value methods prescribed by APB 25.
The Company accounts for stock options granted to employees and directors
of the Company under the intrinsic value method. Stock options granted to
non-employees under the Company's 1992 Stock Option Plan 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 and directors, net loss and net loss per common share would have
been the pro forma amounts indicated in the following table:
<TABLE>
Quarter Ended June 30,
2000 1999
<CAPTION>
<S> <C> <C>
Net loss - as reported $(332,878) (345,751)
Compensation expense - current
quarter option grants (8,950) -
Compensation expense - prior
period option grants (326,054) (418,552)
Net loss - pro forma $(667,882) (764,303)
Net loss per common share -
as reported $ (.02) (.02)
Net loss per common share -
pro forma $ (.04) (.05)
</TABLE>
The fair value of stock options granted was calculated using the Black
Scholes option pricing model based on the following weighted average
assumptions:
<TABLE>
Quarter Ended June 30,
2000 1999
<CAPTION>
<S> <C> <C>
Expected volatility 45.7% -
Expected dividend yield 0.0% -
Risk free interest rate 6.6% -
Expected life of option granted 6 years -
Fair value of options granted
as computed under the Black
Scholes option pricing models $5.12 per share -
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
Future pro forma compensation cost by fiscal year, assuming no additional
grants by the Company to employees and directors, is as follows:
<TABLE>
Fiscal Year Pro Forma
Ended Compensation
March 31, Expense
<CAPTION>
<S> <C> <C>
2001 $ 1,005,013
2002 $ 1,207,784
2003 $ 576,613
</TABLE>
Warrants
The Company completed a private placement in fiscal 1998 of 750,000 units
consisting of one common share and one warrant. 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 at an exercise price
of $8.00 per share. The warrants expire two years from the date of
issuance. During April, 2000 warrants to acquire 12,000 shares of the
Company's common stock at $8.00 per share were exercised resulting in cash
proceeds to the Company of $96,000. Warrants to purchase 299,375 shares of
common stock were extended for a period of eighteen months at the fair
value of such extension and remain outstanding as of June 30, 2000.
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 warrants expire three years from the date of
issuance. During May 1999, warrants to acquire 13,000 shares of the
Company's common stock at $4.25 per share were exercised resulting in cash
proceeds to the Company of $55,250. None of the foregoing warrants were
outstanding as of June 30, 2000.
(8) The Company has historically derived significant revenue from a few key
customers. One customer accounted for $1,247,769 and $1,141,489 in revenue
for the quarter ended June 30, 2000 and 1999, respectively, representing 19
percent and 20 percent of total revenue, respectively. This customer also
represented 30% and 15% of total accounts receivable at June 30, 2000 and
1999, respectively.
Contract services revenue derived from contracts with agencies of the U.S.
Government and from sub-contracts with U.S. Government prime contractors
totaled $168,155 and $88,262 for the quarter ended June 30, 2000 and 1999,
respectively.
(9) Net loss per common share amounts are based on the weighted average number
of common shares outstanding during the quarters ended June 30, 2000 and
1999. Outstanding common stock options and warrants were not included in
the computation because the effect of such inclusion would be antidilutive.
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(10) 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.
During the quarter ended June 30, 2000, 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 June 30, 2000:
<TABLE>
Mechanical Electronic
Technology Products Products Total
<CAPTION>
<S> <C> <C> <C> <C>
Revenue $ 798,117 1,087,941 4,579,432 6,465,490
Interest income 24,048 2,665 - 26,713
Interest expense (14,100) (43,874) (38,440) (96,414)
Depreciation and
amortization (95,017) (235,789) (140,502) (471,308)
Goodwill amortization - (15,579) (67,587) (83,166)
Segment earnings (loss) (101,590) (335,095) 103,807 (332,878)
Segment assets 7,519,832 6,408,733 13,582,512 27,511,077
Expenditures for
segment assets $ (182,762) (6,060) (994,657) (1,183,479)
</TABLE>
The following table summarizes significant financial statement information
for each of the reportable segments for the quarter ended June 30, 1999:
<TABLE>
Mechanical Electronic
Technology Products Products Total
<CAPTION>
<S> <C> <C> <C> <C>
Revenue $ 540,608 1,411,500 3,812,303 5,764,411
Interest income 15,549 847 - 16,396
Interest expense (10,978) (50,069 (56,105) (117,152)
Depreciation and
amortization (90,572) (230,875) (122,133) (443,580)
Goodwill amortization - (15,579) (67,300) (82,879)
Equity in loss of
joint ventures (140,568) - - (140,568)
Segment earnings (loss) (417,374) (124,082) 195,705 (345,751)
Segment assets 9,026,677 7,281,793 12,177,864 28,486,334
Expenditures for
segment assets $ (557,766) (7,297) (44,836) (609,899)
</TABLE>
<PAGE>
UNIQUE MOBILITY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(unaudited)
(11) Commitments and Contingencies
Employment Agreements
The Company has entered into employment agreement with three of its
officers, one of which resigned on July 8, 2000. The aggregate future
compensation under the two remaining employment agreements is $995,807.
Lease Commitments
The Company has entered into operating lease agreements for office space
and equipment which expire at various times through 2007. As of June 30,
2000, the future minimum lease payments under operating leases with initial
noncancelable terms in excess of one year for the remainder of the fiscal
year and each fiscal year thereafter are as follows:
2001 $ 225,888
2002 272,597
2003 251,444
2004 253,961
2005 252,140
Thereafter 504,280
$ 1,760,310
Rental expense under these leases totaled approximately $75,749 and $71,793
for the quarter ended June 30, 2000 and 1999, respectively.
(12) Comprehensive Loss
The following table summarizes the Company's comprehensive loss for the
quarter ended June 30, 2000 and 1999:
<TABLE>
Quarter Ended June 30,
2000 1999
<CAPTION>
<S> <C> <C>
Net loss $(332,878) (345,751)
Other comprehensive income -
translation adjustment - 40,936
Comprehensive loss $(332,878) (304,815)
</TABLE>
Changes in accumulated comprehensive loss, which relates to the Company's
investments in Taiwan UQM, during the quarter ended June 30,2000 were as
follows:
Accumulated comprehensive
loss at beginning of quarter $ 384,300
Other comprehensive income -
translation adjustment -
Accumulated comprehensive loss
at end of quarter $ 384,300
<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. 333-78525) 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 ability to be profitable, its ability to obtain additional financing,
the Company's reliance on major customers and suppliers and the possibility that
product liability insurance may become unavailable. 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
Cash and cash equivalents at June 30, 2000 was $2,624,592 and working capital
(the excess of current assets over current liabilities) was $4,743,855 compared
with $2,085,115 and $5,672,559, respectively, at March 31, 2000. Current assets
rose to $11,575,747 at June 30, 2000 from $8,948,959 at March 31, 2000
principally due to increasing levels of inventories and accounts receivable
associated with the launch of new production orders in the Company's electronic
products segment and higher revenue levels for the quarter generally. The growth
in current assets during the quarter was funded principally through the
expansion of trade accounts payable and other current liabilities and borrowings
on the Company's revolving line-of-credit.
Accounts receivable rose $1,134,917 to $3,956,811 at June 30, 2000 from
$2,821,894 at March 31, 2000. The increase is primarily attributable to record
revenue levels during the quarter and an increase in the number of days accounts
receivable are outstanding ratio at June 30, 2000 arising from slow payments by
a major customer.
Costs and estimated earnings on uncompleted contracts increased $50,205 to
$379,316 at June 30, 2000 from the fiscal 2000 year end level of $329,111. The
increase was due to the performance of work on engineering contracts at a rate
greater than the associated billing arrangements. Estimated earnings on
contracts in process rose to $238,070 at June 30, 2000 on costs incurred on
contracts in process of $1,219,875 compared to estimated earnings on contracts
in process of $180,293 on costs incurred on contracts in process of $825,718 at
March 31, 2000. The increase is attributable to an expanded amount of work.
Raw materials, work in process and finished products inventories rose by
$1,297,620, $34,620 and $15,825, respectively, to $3,744,399, $661,751 and
$62,194, respectively, at June 30, 2000. Raw materials, work in process and
finished products inventories rose primarily as a result of the launch of new
production orders and higher revenue levels in the Company's electronic products
segment
Prepaid expenses declined to $145,427 at June 30, 2000 from $192,492 at March
31, 2000 reflecting the periodic expensing of prepaid insurance premium costs on
the Company's commercial insurance coverage.
Other current assets declined $398,811 to $1,257 at June 30, 2000 reflecting the
collection of amounts due from the disposition of the Company's remaining equity
interest in its Germany joint venture.
The Company invested $1,083,982 for the acquisition of property and equipment
during the first quarter compared to $84,009 for the comparable quarter last
year. The increase in capital expenditures is primarily attributable to
expenditures during the first quarter for manufacturing equipment at the
Company's electronic products segment.
<PAGE>
Patent and trademark costs rose $12,994 to $744,276 at June 30, 2000 reflecting
expenditures for the filing and prosecution of trademarks and patents during the
quarter, net of amortization on existing patents and trademarks.
Goodwill, net of accumulated amortization, declined $83,166 to $5,912,297 at
June 30, 2000 due to the amortization of this asset over its 20 year useful
life.
Other assets increased $82,358 to $122,804 at quarter end due primarily due to
the Company's purchase of a minority equity interest in Aeromax Corporation and
amounts receivable but retained against performance on a long-term development
program.
Accounts payable rose $2,222,665 to $3,601,981 at June 30, 2000 from $1,379,316
at March 31, 2000. The increase is primarily attributable to higher levels of
inventory purchases from suppliers to support higher levels of product
shipments.
Other current liabilities rose $381,169 to $1,226,631 at the end of the first
quarter from $845,462 at March 31, 2000. The increase is primarily attributable
to generally higher levels of accrued compensation, property taxes, professional
fees and material purchases.
Revolving line-of-credit rose from $0 to $978,000 at June 30, 2000. The increase
is attributable to greater working capital requirements during the quarter
arising from higher revenue levels.
Long-term debt decreased $250,354 to $3,172,105 at June 30, 2000 reflecting
principal repayments on the Company's term bank debt during the quarter.
Common stock and additional paid-in capital increased to $172,353 and
$49,660,690 at June 30, 2000, respectively, compared to $171,942 and $49,382,877
at March 31, 2000. The increases were due to proceeds received upon the exercise
of stock options by employees of $133,289; and proceeds received upon the
exercise of warrants of $96,000.
Results of Operations
Operations for the quarter ended June 30, 2000, resulted in a net loss of
$332,878 or $.02 per share compared to a net loss of $345,751 or $0.02 per share
for the quarter ended June 30, 1999. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the first quarter improved by
$20,150 to $318,010 or $0.02 per share compared to $297,860 or $0.02 per share
for the first quarter last year. The improvement in net loss and EBITDA for the
quarter is generally attributable to improved financial performance in the
Company's technology segment.
Total revenue for the first quarter rose $701,079 or 12 percent to a record
$6,465,490 compared to $5,764,411 for the comparable quarter last year. Contract
services revenue rose $111,579 or 26 percent to $545,018 compared to $433,439
for the first quarter last year. The increase in contract services revenue is
attributable to improved demand for development projects. Product sales overall
rose $589,500 or 11 percent to $5,920,472 for the quarter compared to $5,330,972
for the comparable quarter last year, despite weakness in the Company's gear
manufacturing operations which resulted in a $323,559 or 23 percent decline in
mechanical products segment revenue for the quarter versus the comparable
quarter last year. Electronic product segment revenue rose $767,129 or 20
percent to $4,579,432 from $3,812,303 for the first quarter last year. The
growth in revenue at the electronic products segment was attributable to the
launch of new customer orders during the quarter.
Gross profit margins for the first quarter decreased to 12.1 percent compared to
15.5 percent for the comparable quarter last year. Gross profit margin on
contract services improved to 10.9 percent for the quarter ended June 30, 2000
compared to negative 2.3 percent for the first quarter last year. The
improvement in gross profit margin on contract services during the first quarter
is attributable to cost overruns on various development programs which
<PAGE>
negatively impacted margins in the prior years comparable quarter. Gross profit
margins on product sales during the first quarter declined to 12.2 percent
compared to gross profit margins of 17.0 percent for the comparable quarter last
year. The decrease in margins on product sales is primarily attributable to
lower production volume at the Company's gear manufacturing operations and lower
margins in the electronic product segment associated with start-up costs on new
production orders.
Research and development expenditures during the first quarter rose to $37,909
compared to $26,179 for the quarter ended June 30, 1999. The increase is
attributable to higher levels of internally-funded product development.
General and administrative expense for the quarter ended June 30, 2000 rose to
$900,733 compared to $874,001 for the comparable quarter last year. The increase
is attributable to additional business development costs and higher legal
expense associated with the sale of the Company's equity interest in its Germany
joint venture.
Interest income rose to $26,713 for the quarter ended June 30, 2000 compared to
$16,396 for the quarter ended June 30, 1999. The increase is attributable to
higher levels of invested cash.
Interest expense was $96,414 for the first quarter, a decrease of $20,738 over
the comparable amount for the first quarter last year. The decrease is
attributable to lower levels of borrowing on the Company's revolving
line-of-credit and decreased levels of long-term debt.
Equity in loss of joint ventures was $0 for the quarter ended June 30, 2000
compared to $140,568 for the quarter ended June 30, 1999. The company impaired
the carrying value of these investments in the second quarter last year and has
not recorded its pro rata share of the earnings or loss of these entities since
that time.
Liquidity and Capital Resources
The Company's cash balances and liquidity throughout the first quarter were
adequate to meet operating needs. Net cash provided by operating activities was
$346,727 for the quarter ended June 30, 2000 versus net cash used by operating
activities of $788,267 for the comparable prior year quarter. Cash requirements
throughout the quarter were funded from existing cash balances, cash generated
from operations, cash proceeds from the exercise of warrants and employee stock
options and from borrowings on the Company's revolving lines-of-credit. At June
30, 2000, the Company had approximately $2.25 million of borrowing availability
on its lines-of-credit with commercial banks.
During the first quarter the Company experienced a significant increase in its
working capital requirements as the result of higher levels of inventories which
rose $1,348,065 during the quarter and accounts receivable which rose $1,192,480
during the quarter. The increase in inventories, principally raw materials
inventory, was driven by the launch of new customer production orders in the
Company's electronic products segment and higher revenue levels generally. The
increase in accounts receivables is primarily attributable to record revenue
levels during the quarter and an increase in the number of days accounts
receivable are outstanding ratio at June 30, 2000 arising from slow payments by
a major customer. The Company funded its working capital requirements from a
combination of cash balances on hand, increases in accounts payable and other
current liabilities and borrowings on its revolving lines-of-credit. The Company
believes that existing cash balances and available bank facilities are
sufficient to fund its expected continued rapid growth in revenue and working
capital over the near term.
During the first quarter the Company invested $1,083,982 for the purchase of
additional manufacturing equipment at electronic products segment to support its
current and anticipated future growth in revenue. Over the remainder of the
fiscal year the Company expects to invest a similar amount on additional
<PAGE>
equipment to improve its manufacturing capability and capacity, which it expects
to fund from a combination of existing cash and borrowings of long-term debt.
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, 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 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 will modify its strategy to align its
operations with its then available financial resources.
PART II - OTHER INFORMATION
Item 3. Quantitative and Qualitative Disclosure About Market Risks
Market risk is the potential loss arising from adverse changes in market rates
and prices, such as foreign currency exchange and interest rates. The Company
does not use financial instruments to any degree to manage these risks and does
not hold or issue financial instruments for trading purposes. Subsequently, all
of the Company's product sales, and related receivables are payable in U.S.
dollars. The Company is subject to interest rate risk on its debt obligations.
Long-term debt obligations have fixed interest rates and the Company's revolving
lines-of-credit have variable rates of interest indexed to the prime rate.
Interest rates on these instruments approximate current market rates as of June
30, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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: August 10, 2000 By:/s/ Donald A. French
Donald A. French
Treasurer
(Principal Financial and
Accounting Officer)
