Company Quick10K Filing
Quick10K
UQM Technologies
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$1.66 54 $90
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
8-K 2019-01-21 Enter Agreement, Regulation FD, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-10-17 Shareholder Vote, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-05-09 Regulation FD, Exhibits
8-K 2018-03-05 Regulation FD, Exhibits
8-K 2017-07-12 Officers
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BE Bloom Energy
ATKR Atkore
KAI Kadant
IVAC Intevac
LBY Libbey
ASYS Amtech Systems
DPW DPW Holdings
UQM 2018-09-30
Part I – Financial Information
Item 1. 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 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 uqm-20180930ex311018e86.htm
EX-31.2 uqm-20180930ex3128667e5.htm
EX-32.1 uqm-20180930ex321e2cf3c.htm

UQM Technologies Earnings 2018-09-30

UQM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 uqm-20180930x10q.htm 10-Q uqm_Current_Folio_10Q_Taxonomy2018

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 September  30, 2018

 

[  ] 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                 

    

     84-0579156     

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

    4120 Specialty Place, Longmont, Colorado 80504    

(Address of principal executive offices) (Zip code)

 

                                (303) 682-4900                               

(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 has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   X    No             

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.   See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

[  ]  Large accelerated filer

[  ]  Accelerated filer

[X]  Non-accelerated filer

[X]  Smaller reporting company

 

[  ]  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended Annual period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        

 

Indicate by check mark whether the registrant is a shell company (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 October 29,  2018 was 54,253,731.

 

i


 

TABLE OF CONTENTS

 

 

 

 

 

    

Page No.

PART I Financial Information 

 

1

 

 

 

Item 1.   Financial Statements (unaudited) 

 

 

 

 

 

Consolidated Condensed Balance Sheets as of September 30, 2018 and December 31, 2017 

 

1

 

 

 

Consolidated Condensed Statements of Operations for the quarters and nine months ended September 30, 2018 and 2017 

 

3

 

 

 

Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 

 

4

 

 

 

Notes to Consolidated Condensed Financial Statements 

 

5

 

 

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 

17

 

 

 

Item 3.   Quantitative and Qualitative Disclosures About Market Risk 

 

22

 

 

 

Item 4.   Controls and Procedures 

 

22

 

 

 

PART II Other Information 

 

23

 

 

 

Item 1.     Legal Proceedings 

 

23

 

 

 

Item 1A.  Risk Factors 

 

23

 

 

 

Item 2.    Unregistered Sales of Equity Securities 

 

24

 

 

 

Item 3.     Defaults Upon Senior Securities 

 

24

 

 

 

Item 4.     Mine Safety Disclosures 

 

24

 

 

 

Item 5.    Other Information 

 

24

 

 

 

Item 6.       Exhibits 

 

25

 

 

 

 

 

i


 

Part I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited)

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

    

2018

    

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,487,132

 

$

6,309,269

Restricted cash

 

 

358,627

 

 

176,193

Accounts receivable

 

 

1,287,194

 

 

823,793

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

45,850

 

 

 -

Inventories, net

 

 

4,575,472

 

 

2,341,360

Prepaid expenses and other current assets

 

 

452,307

 

 

233,566

Total current assets 

 

 

9,206,582

 

 

9,884,181

 

 

 

 

 

 

 

Property and equipment, at cost:

 

 

 

 

 

 

Land

 

 

896,388

 

 

896,388

Building

 

 

4,516,301

 

 

4,516,301

Machinery and equipment

 

 

7,413,005

 

 

7,136,578

 

 

 

12,825,694

 

 

12,549,267

Less accumulated depreciation

 

 

(8,182,410)

 

 

(7,936,056)

Net property and equipment

 

 

4,643,284

 

 

4,613,211

 

 

 

 

 

 

 

Patent costs, net of accumulated amortization of $968,891 and $953,491, respectively

 

 

252,134

 

 

222,461

Trademark costs, net of accumulated amortization of $88,753 and $85,381, respectively

 

 

87,088

 

 

90,460

Restricted cash

 

 

 -

 

 

323,863

Total assets

 

$

14,189,088

 

$

15,134,176

 

 

 

See accompanying notes to consolidated condensed financial statements.

1


 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited), Continued

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2018

 

2017

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,644,797

 

$

948,875

Unearned revenue

 

 

2,201,597

 

 

153,944

Other current liabilities

 

 

1,018,172

 

 

819,839

Billings in excess of costs and estimated earnings on engineering services contracts

 

 

277,967

 

 

199,160

Current portion of long-term debt, net of deferred financing costs of
$17,099 and $0, respectively

 

 

3,147,430

 

 

 -

Total current liabilities

 

 

9,289,963

 

 

2,121,818

 

 

 

 

 

 

 

Long-term debt, net of deferred financing costs of $0 and $45,079, respectively

 

 

 -

 

 

3,119,450

Other long-term liabilities

 

 

106,667

 

 

121,667

Total long-term liabilities

 

 

106,667

 

 

3,241,117

 

 

 

 

 

 

 

Total liabilities

 

 

9,396,630

 

 

5,362,935

 

 

 

 

 

 

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value, 175,000,000 shares authorized; 54,228,955 and 54,108,510  shares issued and outstanding, respectively

 

 

542,290

 

 

541,085

Additional paid-in capital

 

 

134,465,515

 

 

133,901,406

Accumulated deficit

 

 

(130,215,347)

 

 

(124,671,250)

Total stockholders’ equity

 

 

4,792,458

 

 

9,771,241

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

14,189,088

 

$

15,134,176

 

See accompanying notes to consolidated condensed financial statements.

2


 

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

3,747,846

 

$

2,752,554

 

$

7,497,209

 

$

5,169,479

Contract services

 

 

637,576

 

 

 -

 

 

1,201,442

 

 

387,075

 

 

 

4,385,422

 

 

2,752,554

 

 

8,698,651

 

 

5,556,554

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Costs of product sales

 

 

2,999,394

 

 

1,471,334

 

 

6,061,505

 

 

3,085,822

Costs of contract services

 

 

346,775

 

 

 -

 

 

570,738

 

 

161,616

Research and development

 

 

396,690

 

 

403,273

 

 

1,902,324

 

 

1,591,520

Selling, general and administrative

 

 

1,839,872

 

 

1,983,450

 

 

5,678,428

 

 

4,757,571

 

 

 

5,582,731

 

 

3,858,057

 

 

14,212,995

 

 

9,596,529

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,197,309)

 

 

(1,105,503)

 

 

(5,514,344)

 

 

(4,039,975)

       Other income (expense), net

 

 

55,731

 

 

(43,904)

 

 

(29,753)

 

 

(63,679)

Gain on sale of long-lived assets

 

 

 -

 

 

606,006

 

 

 -

 

 

606,006

Net loss

 

$

(1,141,578)

 

$

(543,401)

 

$

(5,544,097)

 

$

(3,497,648)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

 

$

(0.02)

 

$

(0.01)

 

$

(0.10)

 

$

(0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares of common stock outstanding - basic and diluted

 

 

54,208,477

 

 

48,941,702

 

 

54,158,607

 

 

48,677,423

 

See accompanying notes to consolidated condensed financial statements.

3


 

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (unaudited)

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

2018

    

2017

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 Net loss

$

(5,544,097)

 

$

(3,497,648)

 Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

    Depreciation and amortization

 

323,241

 

 

302,385

    Non-cash equity based compensation

 

525,624

 

 

269,891

    Gain on sale of long-lived assets

 

 -

 

 

(606,006)

    Change in operating assets and liabilities:

 

 

 

 

 

        Accounts receivable

 

(463,401)

 

 

529,208

        Costs and estimated earnings on uncompleted contracts

 

(45,850)

 

 

29,917

        Inventories

 

(2,234,112)

 

 

(939,197)

        Prepaid expenses and other current assets

 

(218,741)

 

 

(43,198)

        Accounts payable and other current liabilities

 

1,894,255

 

 

375,298

        Unearned revenue

 

2,047,653

 

 

470,633

        Billings in excess of costs and estimated earnings on

 

 

 

 

 

           engineering services contracts

 

78,807

 

 

25,378

        Other long-term liabilities

 

(15,000)

 

 

(15,000)

               Net cash used in operating activities

 

(3,651,621)

 

 

(3,098,339)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 Acquisition of property and equipment, net

 

(306,561)

 

 

(46,158)

 Cash paid for patent and trademark fees

 

(45,074)

 

 

(13,411)

 Cash proceeds from the sale of long-lived assets

 

 -

 

 

1,392,948

               Net cash (used in) / provided by investing activities

 

(351,635)

 

 

1,333,379

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 Cash received for shares exercised under employee stock purchase plan

 

32,881

 

 

36,327

 Proceeds from line of credit

 

 -

 

 

3,100,000

 Payment of employee tax withholdings in exchange for return
of common stock

 

(10,462)

 

 

(12,381)

 Issuance of common stock upon definitive stock
purchase agreement

 

 -

 

 

5,099,898

 Issuance of common stock upon exercise of employee and
directors options

 

17,271

 

 

18,763

             Net cash provided by financing activities

 

39,690

 

 

8,242,607

 

 

 

 

 

 

(Decrease) / increase in cash, cash equivalents, and restricted cash

 

(3,963,566)

 

 

6,477,647

Cash, cash equivalents, and restricted cash at beginning of period

 

6,809,325

 

 

2,100,089

Cash, cash equivalents, and restricted cash  at end of period

$

2,845,759

 

$

8,577,736

 

See accompanying notes to consolidated condensed financial statements.

 

4


 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(unaudited)

 

(1)   Basis of Presentation

 

The accompanying Consolidated Condensed 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.  The results for the interim periods are not necessarily indicative of the results to be expected for the year.  The Notes contained herein should be read in conjunction with the Notes to our Consolidated Financial Statements filed with our Annual Report on Form 10-K for the year ended December 31, 2017.

 

(2)  Segment Reporting

 

UQM Technologies, Inc. (the “Company”, “UQM”, “we”, or “us”) has performed its quarterly assessment to determine if additional disclosures are required for segment reporting.  Management has determined that the Company has one operating segment because the chief operating decision maker and management make business decisions based on product and contract services revenues taken as a whole. Therefore, no further disclosure is required at this time. Management will perform an assessment quarterly to determine if additional disclosures around this standard are needed in the future.

 

(3)   New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard, ASU 2014-09, to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for us for the first fiscal year beginning after December 15, 2017.  The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application and providing additional disclosures. The Company has adopted this standard effective January 1, 2018 using the retrospective method with the cumulative effect and additional disclosures.    See Note 5.

 

In February 2016, the FASB issued a new standard, ASU 2016-02, in which the lessee should recognize an asset and liability that arise from leases no matter the type of lease the company enters into.  A lessee should recognize in the statement of financial position a liability allocated on a straight-line basis over the lease term to make lease payments and a right-of-use asset measured at the present value of the lease payments representing its right to use the underlying asset for the lease term.  All cash payments should be classified in the operating activities section of the statement of cash flows.  Another requirement under the new standard is that a company must separate the lease components from the nonlease components in a contract.  Only the lease components are subject to ASU 2016-02 recognition and measurement.  Lessees may make an accounting policy election to not separate lease components from nonlease components.  Both qualitative and quantitative disclosures are required.  Recognition and measurement is required at the beginning of the earliest period presented using a modified retrospective or cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company entered into a new operating lease in the quarter ended September 30, 2018 and is currently evaluating the effect on its financial statements.  See Note 17 for current disclosures.

 

In

5


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

(4)   Going Concern

 

These Consolidated Condensed Financial Statements are presented assuming that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of September 30, 2018, the Company had sustained recurring losses from continuing operations, had a  working capital deficit of $83,381, and accumulated deficit of $130,215,347. 

 

On May 9, 2018, the Company announced that the Committee on Foreign Investment in the United States would likely not approve the second stage investment as anticipated in the Stock Purchase Agreement with China National Heavy Duty Truck Co., Ltd, which would have brought approximately $23 million of cash to the Company.  Since that announcement, the Company has been investigating other potentially favorable funding alternatives.

 

As of the date of the filing of this Form 10-Q, management has assessed the liquidity position of the Company per the requirements of ASU No. 2014-15 “Presentation of the Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.”   Management’s cash flow forecast for the next twelve months, based on expectations of the receipt of new customer orders and revenues, indicates that the Company should be able to meet its obligations, but there can be no assurance that this will happen.  Therefore, with the losses that the Company has sustained, and its working capital deficit at September 30, 2018, substantial doubt exists about the Company’s ability to continue as a going concern without taking additional actions and/or finalizing orders that are currently in the negotiation stage.  Management believes that additional funding may be necessary, and is evaluating numerous options, including but not limited to:

 

·

Renegotiation of the maturity date of Company’s line of credit with its bank;

·

Sale and leaseback transaction related to the Company’s facility;

·

Investments from strategic partners; and

·

Capital market investment.

 

Management does not believe that there is an immediate need to raise capital given the recent improvements in revenues.  Management believes that it is likely that additional funding will be available at the appropriate time given these options, however, there can be no assurance that outside capital will ultimately be available to the Company on reasonable terms, if at all.

 

The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern.

 

(5) Revenue Recognition

 

Accounting Policies

 

Product Sales- Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied.  The majority of the Company’s contracts have a single performance obligation to transfer products.  Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products.  Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated fixed price.  The Company sells its products directly to customers under agreements with payment terms of prepayment or generally net 30 days for credit qualified customers.

 

Contract Services-  The majority of the Company’s contracts have a single performance obligation to transfer products or an agreed-upon task(s) over time.  Accordingly, revenue is recognized using cost input methods, which recognize revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs of the contract, as the performance obligations

6


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

are satisfied. Costs incurred towards contract completion may include costs associated with direct materials, labor, subcontractors, and other indirect costs.

 

Shipping and Handling Costs- We account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products.  Accordingly, we record customer payment of shipping and handling costs as a component of net sales, and classify such costs as a component of cost of sales.

 

Product Warranties- Our standard product warranty is for one year and provides assurance to the customer that the purchased product will function as intended and complies with agreed-upon specifications.  A customer can negotiate an extended warranty period from four months up to four years.  The cost of the warranty can be included in the price of the unit or separately stated as a line item in the contract.  A majority of our customers have the warranty included in the sales price of the product which is then accounted for as a guarantee.  Warranties that are stated as a separate line item in the contract are considered a single performance obligation which is recognized by the time elapsed input method. 

 

Unearned Revenue- When we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, we record unearned revenue, which represents a contract liability.  We recognize unearned revenue as net sales after we have transferred control of the goods or services to the customer and all revenue recognition criteria are met.

 

License Agreements- We account for our license agreements as multi-element arrangements.  Each element in the arrangement is considered a single performance obligation and is treated accordingly.  Revenue recognition for the licensing element in the agreement is recognized by the time elapsed input method. Revenue recognition for the product sales element follows the revenue recognition rules as noted above for product sales.

 

The effect of the adoption of new revenue recognition standard (ASC 606) on our Consolidated Statement of Operations and Balance Sheet as of December 31, 2017 as reported in our Annual Report on Form 10-K was immaterial.

 

Disaggregation of Revenue

 

In the following table, revenue is disaggregated by geographic region (using the location of the client as the basis of attributing revenues to the individual regions):

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

    

2018

    

2017

United States & Canada

 

$

5,050,379

 

$

3,093,034

Asia Pacific

 

 

3,504,679

 

 

2,227,800

Europe

 

 

143,593

 

 

235,720

Total Revenues

 

$

8,698,651

 

$

5,556,554

 

 

 

7


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

(6)   Cash, cash equivalents, and restricted cash

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the Consolidated Condensed Statements of Cash Flows.

 

 

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

    

2018

    

2017

Cash and cash equivalents

 

$

2,487,132

 

$

8,035,754

Restricted cash, current

 

 

358,627

 

 

165,575

Restricted cash, long-term

 

 

 -

 

 

376,407

Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statements of Cash Flows

 

$

2,845,759

 

$

8,577,736

 

Restricted cash classified as a current asset on the Consolidated Condensed Balance Sheets represents the amount required to be set aside pursuant to a contractual agreement with the Company’s lender for the payment of interest on borrowings from the line of credit that is expected to be paid within the next twelve months.   In addition, restricted cash included in other long-term assets on the Consolidated Condensed Balance Sheets represents interest due on the line of credit more than twelve months from the date of the financial statements as contractually required by the lender.  The restrictions will lapse when the related debt is paid back in full.

 

(7)   Contracts in Process

 

At September 30, 2018 and December 31, 2017, the estimated period to complete contracts in process ranged from one to five and one to three months, respectively.  We expect to collect all accounts receivable arising from these contracts within ninety days of billing.

 

The following summarizes contracts in process:

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

    

2018

    

2017

Costs incurred on engineering services contracts

 

$

158,047

 

$

56,175

Estimated earnings

 

 

445,236

 

 

144,665

 

 

 

603,283

 

 

200,840

Less billings to date

 

 

(835,400)

 

 

(400,000)

 

 

 

 

 

 

 

Contracts in process

 

$

(232,117)

 

$

(199,160)

 

 

 

 

 

 

 

Included in the accompanying Consolidated Condensed Balance Sheets is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

$

45,850

 

$

 -

Billings in excess of costs and estimated earnings on engineering services contracts

 

 

(277,967)

 

 

(199,160)

Contracts in process

 

$

(232,117)

 

$

(199,160)

 

8


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

 

(8)   Inventories

 

Inventories at September 30, 2018 and December 31, 2017 consisted of:

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

    

2018

    

2017

Raw materials

 

$

9,178,495

 

$

7,679,922

Work-in-process

 

 

1,073,612

 

 

289,848

Finished products

 

 

1,298,089

 

 

1,390,200

Reserve for excess and obsolete inventory

 

 

(6,974,724)

 

 

(7,018,610)

 

 

$

4,575,472

 

$

2,341,360

 

 

We maintain raw material inventories of electronic components, motor parts and other materials to meet our expected manufacturing needs for proprietary products and for products manufactured to the design specifications of our customers. Some of these components may become obsolete or impaired due to bulk purchases in excess of customer requirements. Accordingly, we periodically assess our raw material and finished product inventories for potential impairment of value based on then available information, expectations and estimates and establish impairment reserves as appropriate.    During the quarter and nine months ended September 30, 2018, no additional reserve was required.

 

 

(9)   Other Current Liabilities

 

Other current liabilities at September 30, 2018 and December 31, 2017 consisted of:

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

    

2018

    

2017

Accrued payroll and employee benefits

 

$

216,103

 

$

94,680

Accrued personal property and real estate taxes

 

 

176,350

 

 

235,133

Accrued warranty costs

 

 

470,283

 

 

333,431

Accrued royalties

 

 

48,336

 

 

48,336

Accrued import duties

 

 

87,100

 

 

87,100

Other

 

 

20,000

 

 

21,159

 

 

$

1,018,172

 

$

819,839

 

 

 

 

9


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

 

(10)  Debt

 

On March 15, 2017, the Company entered into a non-revolving line of credit for $5.6 million.  The loan is collateralized by the Company’s headquarter facility.  The interest rate is variable based upon the one month LIBOR rate plus 4.0% per annum on the outstanding balance, which was 6.26% as of September 30, 2018.  As a condition of the loan, $600,000 was immediately drawn on the line of credit to be used for monthly interest payments on borrowings over the life of the loan.  This is reported as restricted cash on the Consolidated Condensed Balance Sheets as of September 30, 2018 and December 31, 2017.  For additional information, see Note 6 to the Consolidated Condensed Financial Statements.  The covenants under the debt agreement require the Company to have liquid assets of a minimum of $1.5 million with the lender.  In addition, financial statements are to be presented no later than 45 days after the end of each quarter and 90 days after the end of each fiscal year.  These covenants took effect for the quarter ending June 30, 2017.  As of September 30, 2018, the Company was in compliance with its covenants. The non-revolving line of credit will expire on March 15, 2019, and the amounts repaid during the term of the loan may not be re-borrowed. At the expiry date, all outstanding principal and interest are due. As of September 30, 2018,  $3,164,529 was drawn on the line of credit.  The Company incurred deferred financing costs of $73,060 upon securing the line of credit which are amortized over the term using the effective interest rate method.

 

(11)   Stock-Based Compensation

 

Stock-Based Compensation Expense

 

The table below shows total stock-based compensation expense for the quarters and nine months ended September 30, 2018 and 2017, and the classification of these expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended September 30,

 

Nine Months Ended September 30,

 

    

2018

    

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of product sales

 

$

9,637

 

$

9,300

 

$

25,695

 

$

16,627

Costs of contract services

 

 

6,900

 

 

 -

 

 

12,107

    

 

2,097

Research and development

 

 

16,275

 

 

18,521

 

 

53,772

 

 

37,422

Selling, general and administrative

 

 

116,685

 

 

113,522

 

 

434,050

 

 

213,745

 

 

$

149,497

 

$

141,343

 

$

525,624

 

$

269,891

 

10


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

Stock Option Plans Activity

 

Additional information with respect to stock option activity during the nine months ended September 30, 2018 under our two separate stock option plans is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

Shares

 

Average

 

Remaining

 

Aggregate

 

 

Under

 

Exercise

 

Contractual

 

Intrinsic

 

    

Option

    

Price

    

Life

    

Value

Outstanding at December 31, 2017

 

3,295,502

 

$

1.16

 

 

6.3 years

 

$

1,383,525

Granted

 

1,068,322

 

$

1.25

 

 

 

 

 

 -

Exercised

 

(23,964)

 

$

0.72

 

 

 

 

 

 -

Forfeited

 

(145,778)

 

$

1.89

 

 

 

 

 

7,178

Outstanding at September 30, 2018

 

4,194,082

 

$

1.16

 

 

6.7 years

 

$

1,225,225

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2018

 

2,730,432

 

$

1.19

 

 

5.4 years

 

$

921,790

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest at September 30, 2018

 

3,449,842

 

$

1.25

 

 

6.4 years

 

$

812,630

 

 

 

 

As of September 30, 2018, there was $969,934 of total unrecognized compensation cost related to stock options granted under our stock option plans.  The unrecognized compensation cost is expected to be recognized over a weighted-average period of twenty-four months.  The total fair value of stock options that vested during the nine months ended September 30, 2018 and 2017 was $325,898 and $236,328, respectively.

 

Stock Bonus Plan Activity

 

Activity with respect to non-vested shares under the Stock Bonus Plan as of September 30, 2018 and 2017 and changes during the nine months ended September 30, 2018 and 2017 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

2018

 

2017

 

 

 

 

Weighted-Average

 

 

 

Weighted-Average

 

 

Shares Under

 

Grant Date

 

Shares Under

 

Grant Date

 

    

Contract

    

Fair Value

    

Contract

    

Fair Value

Unvested at beginning of period

 

57,760

 

$

0.68

 

102,048

 

$

0.84

Granted

 

188,191

 

$

1.25

 

23,735

 

$

0.87

Vested

 

(76,079)

 

$

1.03

 

(68,023)

 

$

0.98

Forfeited

 

 -

 

$

 -

 

 -

 

$

 -

Unvested at end of period

 

169,872

 

$

1.15

 

57,760

 

$

0.68

 

As of September 30, 2018, there was $156,335 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan.  The unrecognized compensation cost at September 30, 2018 is expected to be recognized over a weighted-average period of twenty-six months.

 

11


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

Employee Stock Purchase Plan Activity

 

During the nine months ended September 30, 2018 and 2017, we issued 31,187 and 45,849 shares of common stock, respectively, under the Employee Stock Purchase Plan.  Cash received by us upon the purchase of shares under the Employee Stock Purchase Plan for the nine months ended September 30, 2018 and 2017 was $32,881 and $17,881, respectively. As of September 30, 2018,  25,609 options had been purchased under this plan but the employee(s) had not exercised their right to acquire the common stock under the terms of the Employee Stock Purchase Plan.

 

(12)   Stockholders’ Equity

 

Changes in the components of stockholders’ equity during the nine months ended September 30, 2018 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common

 

 

 

 

Additional 

 

 

 

 

Total

 

 

shares

 

Common 

 

paid-in

 

Accumulated 

 

stockholders’

 

    

issued

    

stock

    

capital

    

deficit

    

equity

Balances at December 31, 2017

 

 

54,108,510

 

$

541,085

 

$

133,901,406

 

$

(124,671,250)

 

$

9,771,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

 

18,138

 

 

181

 

 

17,776

 

 

 -

 

 

17,957

Compensation expense from employee and director stock option and common stock grants

 

 

 -

 

 

 -

 

 

73,361

 

 

 -

 

 

73,361

Net loss

 

 

 -

 

 

 -

 

 

 -

 

 

(1,932,798)

 

 

(1,932,798)

Balances at March 31, 2018

 

 

54,126,648

 

$

541,266

 

$

133,992,543

 

$

(126,604,048)

 

$

7,929,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

 

11,654

 

 

117

 

 

13,286

 

 

 -

 

 

13,403

Issuance of common stock upon exercise of employee and director options

 

 

2,200

 

 

22

 

 

1,470

 

 

 -

 

 

1,492

Retirement of vested shares

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 -

Compensation expense from employee and director stock option and common stock grants

 

 

 -

 

 

 -

 

 

302,766

 

 

 -

 

 

302,766

Net loss

 

 

 -

 

 

 -

 

 

 -

 

 

(2,469,721)

 

 

(2,469,721)

Balances at June 30, 2018

 

 

54,140,502

 

$

541,405

 

$

134,310,065

 

$

(129,073,769)

 

$

5,777,701

Issuance of common stock upon exercise of employee and director options

 

 

21,764

 

 

218

 

 

15,561

 

 

 -

 

 

15,779

Issuance of common stock under employee stock purchase plan

 

 

1,395

 

 

14

 

 

1,507

 

 

 -

 

 

1,521

Issuance of common stock under stock bonus plan

 

 

76,079

 

 

761

 

 

(761)

 

 

 -

 

 

 -

Common stock used for tax withholdings

 

 

(10,785)

 

 

(108)

 

 

(10,354)

 

 

 -

 

 

(10,462)

Compensation expense from employee and director stock option and common stock grants

 

 

 -

 

 

 -

 

 

149,497

 

 

 -

 

 

149,497

Net loss

 

 

 -

 

 

 -

 

 

 -

 

 

(1,141,578)

 

 

(1,141,578)

Balances at September 30, 2018

 

 

54,228,955

 

$

542,290

 

$

134,465,515

 

$

(130,215,347)

 

$

4,792,458

 

12


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

The Company has warrants outstanding as follows:

 

 

 

 

 

 

 

Common Stock

Warrants

 

 

 

Follow-on Offering

Under Option

Earliest

 

Offering Date

(Shares)

(Shares)

Exercise Date

Expiration Date

October, 2015

8,000,000

4,000,000

April 30, 2016

October 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

Weighted-

 

Average

 

 

Warrants

 

Average

 

Remaining

 

 

Under

 

Exercise

 

Contractual

 

    

Option

    

Price

    

Life

Outstanding at December 31, 2017

 

5,489,733

 

$

1.53

 

 

2.3 years

Granted

 

 -

 

$

 -

 

 

 

Exercised

 

 -

 

$

 -

 

 

 

Forfeited

 

(1,489,733)

 

$

2.13

 

 

 

Outstanding at September 30, 2018

 

4,000,000

 

$

1.31

 

 

2.1 years

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2018

 

4,000,000

 

$

1.31

 

 

2.1 years

 

13


 

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

 

 

(13)   Significant Customers 

 

We have historically derived significant revenue from a few key customers.  The following table summarizes revenue and percent of total revenue from significant customers for the quarters and nine months ended September 30, 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

    

 

 

    

 

    

 

 

 

    

 

    

 

 

 

 

 

 

 

 

 

 

 

 

Customer A

    

$

269,576

    

 6

%  

 

$

52,364

    

 2

%

 

$

879,215

    

10

%  

 

$

227,502

    

 4

%  

Customer B

 

$

418,313

 

10

%  

 

$

 -

 

 -

%

 

$

1,110,042

 

13

%  

 

$

300,000

 

 5

%  

Customer C

 

$

426,026

 

10

%  

 

$

 -

 

 -

%

 

$

782,028

 

 9

%  

 

$

 -

 

 -

%  

Customer D

 

$

793,506

 

18

%  

 

$

308,341

 

11

%

 

$

1,730,414

 

20

%  

 

$

1,714,876

 

31

%  

Customer E

 

$

1,275,000

 

29