Form 10-Q UQM TECHNOLOGIES INC For: Sep 30

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, 2016

 

[  ] 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)

 

 

    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 and posted on its corporate website, if any, every interactive data file required to be submitted and posted 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 and post such files).

Yes   X    No           Not Applicable        .

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.   See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

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 November 9, 2016 was 48,534,719.

 

TABLE OF CONTENTS

 

 

 

Part I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited)

 

 

 

 

See accompanying notes to consolidated condensed financial statements.

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited), Continued

 

 

See accompanying notes to consolidated condensed financial statements.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (unaudited)

 

 

See accompanying notes to consolidated condensed financial statements.

 

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (unaudited)

 

 

See accompanying notes to consolidated condensed financial statements.

 

(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 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 fiscal year ended March 31, 2016.

 

(2)  Change in Fiscal Year

 

During the second quarter of fiscal year 2017, the Company decided to change its fiscal year from one ending on March 31st to one ending on December 31st.  This will be effective as of December 31, 2016.

 

(3)   New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard 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.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 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. The impact on our financial statements cannot be determined at this time.

 

In August 2014, the FASB issued guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We expect the new standard to increase the disclosures we provide regarding our liquidity and cash obligations.

 

In July 2015, the FASB issued guidance on simplifying the measurement of inventory from the lower of cost or market to the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation.  This guidance is effective for years beginning after December 15, 2016, including interim periods within those fiscal years.  Prospective application is allowed as of the beginning of an interim or annual reporting period.  An entity is only required to disclose the nature of and reason for the change in accounting principle in the first interim and annual period of adoption.  The impact of this guidance on our financial statements cannot be determined at this time.

 

In March 2016, the FASB issued guidance on improvements to employee share-based payment accounting for stock compensation.  The new standard addresses the topics of accounting for income taxes, classification of excess tax benefits on the Statement of Cash Flows, forfeitures, minimum statutory tax withholding requirements, and classification of employee taxes paid on the Statement of Cash Flows when an employer withholds shares for tax withholding purposes.  This is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods.  Early adoption is permitted within any interim or annual period.  Any adjustments should be reflective as of the beginning of the fiscal year that includes that interim period.  An entity that elects early adoption must adopt all the amendments in the same period.  The impact of this guidance on our financial statements cannot be determined at this time.

 

(4)   Contracts in Process

 

At September 30, 2016 and March 31, 2016, the estimated period to complete contracts in process ranged from one to three months (to complete final reports for the Department of Energy) and one to six months, respectively.  We expect to collect all accounts receivable arising from these contracts within sixty days of billing.

 

The following summarizes contracts in process:

 

 

 

 

(5)   Inventories

 

Inventories at September 30, 2016 and March 31, 2016 consisted of:

 

 

 

 

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. We concluded that there were no impairments for obsolete inventory during the six month periods ended September 30, 2016 and 2015, and we had no reserve for obsolete inventory as of September 30, 2016 or March 31, 2016.

 

As of September 30, 2016, inventory of $6,727,706 shown on the Consolidated Condensed Balance Sheet as a noncurrent asset represents that portion of the inventory in excess of amounts expected to be sold in the next twelve months. Management believes that there will be adequate demand for this noncurrent inventory.

 

 

(6)   Other Current Liabilities

 

Other current liabilities at September 30, 2016 and March 31, 2016 consist of:

 

 

 

 

(7)   Stock-Based Compensation

 

Share-Based Compensation Expense

 

The table below shows total share-based compensation expense for the quarters and six months ended September 30, 2016 and 2015 and the classification of these expenses:

 

 

Stock Option Plans Activity

 

Additional information with respect to stock option activity during the six months ended September 30, 2016 under our Stock Option Plans is as follows:

 

 

 

 

 

As of September 30, 2016, there was $394,981 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-nine months.  The total fair value of stock options that vested during the six months ended September 30, 2016 and 2015 was $165,665 and 308,951, respectively.

 

Stock Bonus Plan Activity

 

Activity with respect to non-vested shares under the Stock Bonus Plan as of September 30, 2016 and 2015 and changes during the six months ended September 30, 2016 and 2015 are presented below:

 

 

As of September 30, 2016, there was $62,766 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan.  The unrecognized compensation cost at September 30, 2016 is expected to be recognized over a weighted-average period of twenty-nine months. 

 

Stock Purchase Plan Activity

 

During the six months ended September 30, 2016 and 2015, we issued 44,272 and 34,508 shares of common stock, respectively, under the Stock Purchase Plan.  Cash received by us upon the purchase of shares under the Stock Purchase Plan for the six months ended September 30, 2016 and 2015 was $22,679 and $23,125, respectively.

(8)   Stockholders’ Equity

 

Changes in the components of stockholders’ equity during the six month period ended September 30, 2016 were as follows: 

 

 

In February 2014, we completed a follow-on offering consisting of 2,864,872 shares of our common stock, and common stock purchase warrants to purchase 1,432,436 shares of our common stock. The warrants have an exercise price of $2.1275 per whole share of common stock and are exercisable on or after August 6, 2014 and on or before August 5, 2018.  In addition, the placement agent was issued warrants to purchase 57,297 shares of common stock, on substantially the same terms as the warrants issued to the purchasers. Warrants from this offering to acquire 1,489,733 shares of our common stock were outstanding at both September 30, 2016 and March 31, 2016.

 

In October 2015, we completed a follow-on offering consisting of 8,000,000 shares of our common stock, and common stock warrants to purchase 4,000,000 shares of our common stock. The warrants have an exercise price of $1.31 per whole share of common stock and are exercisable for a period beginning April 30, 2016 through October 30, 2020. Warrants from this offering to acquire 4,000,000 and zero shares were outstanding at September 30, 2016 and March 31, 2016, respectively.

(9)   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 ended September 30, 2016 and 2015:

 

 

The following table summarizes accounts receivable from significant customers as of September 30, 2016 and March 31, 2016:

 

 

 

(10) Income Taxes

 

The Company currently has a full valuation allowance against its deferred tax assets, as it is management’s judgment that it is more-likely-than-not that net deferred tax assets will not be realized to reduce future taxable income. 

 

We recognize interest and penalties related to uncertain tax positions in “Other Income (expense),” net.  As of September 30, 2016 and 2015, we had no provisions for interest or penalties related to uncertain tax positions. 

 

The Company is subject to taxation in the U.S. and various state jurisdictions. As of September 30, 2016, the Company’s tax years for 2012 to 2015 are subject to examination by the tax authorities.