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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

For the quarterly period ended December 31, 2004

[  ] Transition Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

 Commission File Number 1-10869

 

                   UQM TECHNOLOGIES, INC.               

(Exact name of registrant as specified in its charter)

                Colorado                  

(State or other jurisdiction of

incorporation or organization)

      84-0579156      

(I.R.S. Employer

Identification No.)

        7501 Miller Drive, Frederick, Colorado 80530       

(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       

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)

Yes        No   X  

The number of shares outstanding (including shares held by affiliates) of the registrant’s common stock, par value $0.01 per share at January 24, 2005 was 23,175,829.

 

TABLE OF CONTENTS
Part  I Financial Information
Item 1 Financial Statements
Consolidated balance sheets as of December 31, 2004 and March 31, 2004
Consolidated statements of operations for the quarters and nine months ended December 31,
2004 and 2003
Consolidated statements of cash flows for the nine months ended December 31, 2004 and
2003
Notes to consolidated financial statements
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Item 4 Controls and Procedures
Part II Other Information
Item 1 Legal Proceedings
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K

 

PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
December 31, 2004

March 31, 2004

(unaudited)  
Assets
Current assets:
Cash and cash equivalents

$   7,530,856 

2,958,590 
Short-term investment (note 2)

1,024,669 

47,119 
Accounts receivable (note 7)

789,930 

512,995 
Costs and estimated earnings in excess of billings on
uncompleted contracts (note 3)

399,720 

245,984 
Inventories (notes 4 and 7)

741,974 

428,438 
Prepaid expenses and other current assets

145,825 

72,649 
Assets of discontinued operations (note 8)

         -        

  1,226,943 
Total current assets

10,632,974 

  5,492,718 
Property and equipment, at cost:
Land

181,580 

181,580 
Building

2,292,687 

2,292,687 
Machinery and equipment

  2,787,087 

  2,793,343 

5,261,354 

5,267,610 
Less accumulated depreciation

(2,846,095)

(2,732,291)
Net property and equipment

  2,415,259 

  2,535,319 
Patent and trademark costs, net of accumulated
amortization of $424,832 and $360,266

661,325 

692,371 
Other assets

             850 

            850 

$ 13,710,408 

  8,721,258 

(Continued) 
See accompanying notes to consolidated financial statements.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets, Continued

 

December 31, 2004

March 31, 2004

(unaudited)  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable

$      721,506 

392,474 
Other current liabilities (note 5)

275,617 

258,258 
Current portion of long-term debt

134,319 

125,611 
Liabilities and commitments of discontinued
operations (notes 8 and 11)

148,744 

554,564 
Billings in excess of costs and estimated
earnings on uncompleted contracts (note 3)

     161,189 

     189,252 
Total current liabilities

  1,441,375 

  1,520,159 
Long-term debt, less current portion

844,432 

946,423 
Long-term portion of accrued lease obligation
(notes 8 and 11)

       70,745 

     192,118 

     915,177 

  1,138,541 
Total liabilities

  2,356,552 

  2,658,700 
Commitments and contingencies (note 11)
Stockholders’ equity (note 6):
Common stock, $.01 par value, 50,000,000
shares authorized; 23,174,843 and
19,572,625 shares issued and outstanding

231,748 

195,726 
Additional paid-in capital

64,762,728 

58,025,631 
Accumulated deficit

(53,631,115)

(52,142,981)
Note receivable from officer

       (9,505)

     (15,818)

11,353,856 

  6,062,558 

$ 13,710,408 

  8,721,258 
See accompanying notes to consolidated financial statements.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (unaudited)

 Quarter Ended December 31, 

Nine Months Ended December 31,

     2004      

     2003      

     2004      

     2003      
Revenue (note 7):
Contract services

$    598,323 

870,210 

1,605,622 

2,209,514 
Product sales

     709,260 

     316,971 

  1,620,434 

  2,066,586 

  1,307,583 

  1,187,181 

  3,226,056 

  4,276,100 
Operating costs and expenses:
Costs of contract services

612,544 

645,401 

1,776,612 

1,685,198 
Costs of product sales

581,591 

280,196 

1,366,324 

1,739,669 
Research and development

42,875 

97,892 

138,550 

394,405 
Production engineering

93,479 

           -       

93,479 

           -       
General and administrative

     357,062 

     410,815 

  1,295,053 

  1,313,242 

  1,687,551 

  1,434,304 

  4,670,018 

  5,132,514 
Loss from continuing operations
before other income (expense)

(379,968)

(247,123)

(1,443,962)

(856,414)
Other income (expense):
Interest income

30,947 

7,886 

47,736 

18,956 
Interest expense

(18,151)

(21,315)

(57,128)

(65,916)
Other

          -       

           -       

       10,000 

            600 

       12,796 

      (13,429)

            608 

      (46,360)
Loss from continuing operations

(367,172)

(260,552)

(1,443,354)

(902,774)
Discontinued operations (note 8):
Loss from operations of discontinued
electronic products segment

     (25,808)

 (1,251,216)

      (44,780)

 (2,001,301)
Net loss

$   (392,980)

(1,511,768)

(1,488,134)

(2,904,075)
Net loss per common share - basic
and diluted (note 9):
Continuing operations

$ (0.02)    

(0.02)    

(0.07)    

(0.05)    
Discontinued operations

   -        

(0.06)    

   -        

(0.10)    

$ (0.02)    

(0.08)    

(0.07)    

(0.15)    
Weighted average number of shares of common
stock outstanding - basic and diluted (note 9)

21,805,231 

19,423,379 

20,320,749 

19,040,352 
See accompanying notes to consolidated financial statements.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

Nine Months Ended December 31,

    2004     

     2003     
Cash flows from operating activities of continuing operations:
Loss from continuing operations

$ (1,443,354)

(902,774)
Adjustments to reconcile loss from continuing operations to net cash
used in operating activities of continuing operations:
Depreciation and amortization

266,908 

326,144 
Other expense

2,234 

2,164 
Non-cash compensation expense for common stock issued
for services

  -       

5,180 
(Gain) loss on disposal of property and equipment

(10,000)

27,603 
Change in operating assets and liabilities:
Accounts receivable and costs and estimated earnings in
excess of billings on uncompleted contracts

(430,671)

(344,523)
Inventories

(313,536)

182,127 
Prepaid expenses and other current assets

(73,176)

(74,355)
Accounts payable and other current liabilities

346,391 

(218,406)
Billings in excess of costs and estimated earnings on
uncompleted contracts

    (28,063)

   105,423 
Net cash used in operating activities

(1,683,267)

  (891,417)
Cash flows from investing activities of continuing operations:
Purchase of short-term investments

(977,550)

-       
Acquisition of property and equipment

(82,614)

(107,204)
Proceeds from sale of property and equipment

10,000 

600 
Increase in patent and trademark costs

(35,422)

(51,172)
Cash proceeds from the sale of assets of discontinued operations, net

   895,000 

        -        
Net cash used in investing activities

  (190,586)

  (157,776)
Cash flows from financing activities of continuing operations:
Repayment of debt

(237,245)

(328,677)
Proceeds from borrowing

143,962 

242,606 
Issuance of common stock in follow-on offering, net of offering costs

6,767,596 

2,127,401 
Issuance of common stock upon exercise of employee stock options

726 

-       
Issuance of common stock under employee stock purchase plan

4,797 

14,157 
Principal payments on note receivable from officer

       6,313 

       5,770 
Net cash provided by financing activities

6,686,149 

2,061,257 
Cash provided by continuing operations

4,812,296 

1,012,064 
Net cash used in discontinued operations

 (240,030)

   (31,979)
Increase in cash and cash equivalents

4,572,266 

980,085 
Cash and cash equivalents at beginning of period

2,958,590 

2,476,276 
Cash and cash equivalents at end of period

$  7,530,856 

3,456,361 
Interest paid in cash during the period

$       57,504 

     71,566 

Non-Cash Investing and Financing Transactions:

During the nine months ended December 31, 2004, we retired property and equipment with an original cost of $88,870 and accumulated depreciation of $88,538.

See accompanying notes to consolidated financial statements.

 

UQM TECHNOLOGIES, 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 periods, have been made. Certain prior year amounts have been reclassified to conform to the current period presentation. The results for the interim periods are not necessarily indicative of the results to be expected for the fiscal year. The Notes contained herein should be read in conjunction with the Notes to our Consolidated Financial Statements filed on Form 10-K for the year ended March 31, 2004.

( 2)

Investments are comprised of marketable securities and consist primarily of commercial paper, asset-backed and mortgage-backed notes and bank certificates of deposits with original maturities beyond three months. All marketable securities are held in the Company’s name at two major financial institutions who hold custody of the investments. All of the Company’s investments are held-to-maturity investments that the Company has the positive intent and ability to hold until maturity. These securities are recorded at amortized cost, which approximates fair value. Investments with an original maturity of less than one year from the balance sheet date are classified as short-term.

( 3)

At December 31, 2004, the estimated period to complete contracts in process ranged from one to nineteen months and we expect to collect substantially all related accounts receivable arising therefrom within twenty months. Contracts in process consist of the following:

 

December 31, 2004

March 31, 2004

(unaudited)
Costs incurred on uncompleted contracts

$ 2,846,844 

2,194,116 
Estimated earnings

   224,560 

   305,943 

3,071,404 

2,500,059 
Less billings to date

(2,832,873)

(2,443,327)

$    238,531 

     56,732 
Included in the accompanying balance sheets as follows:
Costs and estimated earnings in excess of billings on
uncompleted contracts

$    399,720 

245,984 
Billings in excess of costs and estimated earnings on
uncompleted contracts

 (161,189)

 (189,252)

$    238,531 

     56,732 

 

( 4)  Inventories consist of:

December 31, 2004

March 31, 2004

(unaudited)
Raw materials

$    587,231 

285,485 
Work-in-process

113,760 

108,338 
Finished products

    40,983 

    34,615 

$    741,974 

  428,438 

Our raw material inventory is subject to obsolescence and potential impairment due to bulk purchases in excess of customers’ requirements. We periodically assess our inventory for recovery of its carrying value based on available information, expectations and estimates and adjust inventory-carrying values to the lower of cost or market for estimated declines in the realizable value of our inventories.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(unaudited)

( 5)

 Other current liabilities consist of:

December 31, 2004

March 31, 2004

(unaudited)
Accrued legal and accounting fees

$   60,975 

95,000 
Accrued payroll and employee benefits

31,276 

46,368 
Accrued personal property and real estate taxes

66,087 

16,877 
Accrued warranty costs

37,569 

65,496 
Accrued losses on engineering contracts

19,146 

21,654 
Customer deposits

50,000 

-       
Accrued royalties

5,976 

8,886 
Other

    4,588 

    3,977 

$ 275,617 

258,258 

 

( 6)

 Common Stock, Common Stock Options and Warrants

Follow-on Common Stock Offering

In November 2004, we completed a follow-on offering of 3,600,000 shares of our common stock to investors in North America and Europe which resulted in cash proceeds, net of the offering costs, of $6,767,596 and a corresponding increase in shareholder’s equity.

Incentive and Non-Qualified Option Plans

As of December 31, 2004, the Company has 373,873 shares of common stock available for future grant to employees, consultants and key suppliers under its 2002 Equity Incentive Plan. Under the Plan, the exercise price of each option is set at the fair value of the common stock on the date of grant and the maximum term of the option is 10 years from the date of grant. Options granted to employees generally 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 2002 Plan is 500,000 options. Forfeitures under the 2002 Equity Incentive Plan are available for re-issuance at any time prior to expiration of the Plan in 2013. Options granted under our plans to employees require the optionholder to abide by certain Company policies which restrict their ability to sell the underlying common stock. Prior to the adoption of the 2002 Equity Incentive Plan, we issued stock options under our 1992 Incentive and Non-qualified Option Plan, which expired by its terms in 2002. Forfeitures under the 1992 Incentive and Non-qualified Option Plan may not be re-issued.

The following table summarizes activity under the plans for the nine months ended December 31, 2004:

Weighted

Shares

Average

Under

Exercise

  Option  

   Price   
Outstanding at March 31, 2004

2,994,453 

$4.85
Granted

395,000 

$2.21
Exercised

(264)

$2.75
Forfeited

 (526,183)

$5.57
Outstanding at December 31, 2004

2,863,006 

$4.35
Exercisable at December 31, 2004

1,741,253 

$5.53

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(unaudited)

The following table presents summarized information about stock options outstanding at December 31, 2004:

                   Options Outstanding                   

     Options Exercisable    

Weighted

Weighted

Weighted

Average

Average

Average

Range of

Number

Remaining

Exercise

Number

Exercise

Exercise Prices

Outstanding

Contractual Life

   Price   

Exercisable

   Price   

$2.16 – 3.31   

1,429,061 

7.6 years

$2.61

392,969 

$3.18

$4.13 – 5.00   

728,459 

3.9 years

$4.28

642,798 

$4.30

$7.13 – 8.75   

   705,486 

4.6 years

$7.96

   705,486 

$7.96

$2.16 – 8.75   

2,863,006 

5.9 years

$4.35

1,741,253 

$5.53

Non-Employee Director Stock Option Plan

In February 1994, our 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. As of December 31, 2004, the Company has 411,891 shares of common stock available for future grant under the Plan. Option terms range from 3 to 10 years from the date of grant. Option prices are equal to the fair value of common shares at the date of grant. Forfeitures under the Plan are available for re-issuance at a future date.

The following table summarizes activity under the plan for the nine months ended December 31, 2004:

Weighted

Shares

Average

Under

Exercise

Option

   Price   
Outstanding at March 31, 2004

42,133 

$3.58
Granted

27,777 

$2.30
Forfeited

(7,076)

$5.85
Outstanding at December 31, 2004

62,834 

$2.76
Exercisable at December 31, 2004

62,834 

$2.76

 

The following table presents summarized information about stock options outstanding for non-employee directors:

                   Options Outstanding                   

     Options Exercisable    

Weighted

Weighted