0001372000
2006-12-01
2006-12-20
0001372000
us-gaap:ParentCompanyMember
2006-12-01
2006-12-20
0001372000
upg:NonEmployeeStockOptionsMember
2007-03-01
2007-03-21
0001372000
us-gaap:LimitedLiabilityCompanyMember
2009-01-08
0001372000
upg:ProgressiveTechnologiesIncMember
2011-04-20
0001372000
upg:EmployeesMember
us-gaap:RestrictedStockMember
upg:LargestShareholderMember
2011-06-01
2011-06-24
0001372000
us-gaap:LimitedLiabilityCompanyMember
2012-05-04
0001372000
us-gaap:LimitedLiabilityCompanyMember
2012-05-01
2012-05-04
0001372000
2012-04-01
2012-06-30
0001372000
us-gaap:EmployeeStockOptionMember
2012-04-01
2012-06-30
0001372000
2012-01-01
2012-06-30
0001372000
upg:EmployeesMember
us-gaap:RestrictedStockMember
upg:LargestShareholderMember
2012-01-01
2012-06-30
0001372000
us-gaap:EmployeeStockOptionMember
2012-01-01
2012-06-30
0001372000
upg:WellsFargoBankMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:MaximumMember
2012-12-20
0001372000
upg:ComericaMember
us-gaap:RevolvingCreditFacilityMember
2012-12-20
0001372000
upg:ComericaMember
2012-12-20
0001372000
upg:ComericaMember
upg:TermLoanMember
2012-12-20
0001372000
2012-12-31
0001372000
2013-04-01
2013-06-30
0001372000
us-gaap:EmployeeStockOptionMember
2013-04-01
2013-06-30
0001372000
2013-01-01
2013-06-30
0001372000
upg:EmployeesMember
us-gaap:RestrictedStockMember
upg:LargestShareholderMember
2013-01-01
2013-06-30
0001372000
upg:ComericaMember
upg:TermLoanMember
2013-01-01
2013-06-30
0001372000
us-gaap:EmployeeStockOptionMember
2013-01-01
2013-06-30
0001372000
2013-06-30
0001372000
upg:ComericaMember
upg:TermLoanMember
2013-06-30
0001372000
us-gaap:EmployeeStockOptionMember
upg:EquityIncentiveCompensationPlan2006Member
2013-06-30
0001372000
2013-08-09
0001372000
2011-12-31
0001372000
2012-06-30
xbrli:shares
iso4217:USD
iso4217:USDxbrli:shares
xbrli:pure
upg:Segments
upg:Installment
UNIVERSAL POWER GROUP INC.
0001372000
upg
--12-31
Smaller Reporting Company
5020000
10-Q
2013-06-30
false
2013
Q2
2069000
1001000
283000
302000
8847000
12345000
455000
141000
30396000
27816000
838000
978000
512000
316000
970000
1468000
44087000
44065000
1908000
1877000
709000
484000
518000
911000
395000
954000
111000
1000
3641000
4227000
3173000
2513000
468000
1714000
1387000
1387000
593000
504000
155000
165000
357000
277000
2492000
2333000
47047000
48112000
12188000
11969000
7231000
6662000
386000
875000
620000
730000
20425000
20549000
3608000
3517000
3608000
4333000
24033000
24882000
50000
50000
16390000
16396000
6574000
6784000
23014000
23230000
47047000
48112000
324000
403000
423000
538000
0.01
0.01
50000000
50000000
5020000
5020000
5020000
5020000
23583000
49921000
21176000
41634000
19392000
41077000
17073000
33097000
4191000
8844000
4103000
8537000
3487000
7572000
3970000
7901000
704000
1272000
133000
636000
153000
296000
116000
201000
127000
12000
-38000
-153000
-169000
-104000
-239000
551000
1103000
29000
397000
1450002000
3000030000
187000187000
406000
742000
-1000
210000
-646000
-707000
-143000
-160000
-503000
-547000
-97000
195000
-1000
210000
0.08
0.15
0.00
0.04
-0.10
-0.11
-0.02
0.04
0.00
0.04
0.08
0.14
0.00
0.04
-0.10
-0.10
-0.02
0.04
0.00
0.04
5020000
5020000
5020000
5020000
5194000
5198000
5094000
5112000
20000
48000
-77000
243000
-1000
210000
239000
219000
38000
338000
320000
208000
-44000
-249000
-60000
6000
6000
192000
3836000
-44000
-319000
15120000
-2372000
413000
196000
210000
508000
6317000
-569000
-4000
489000
-241000
-7842000
-375000
8000
51000
172000
-11000
-164000
7928000
-219000
56000
310000
7872000
-529000
19000
-1068000
65000
50000
297000
200000
932000
345000
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE A — BASIS OF PRESENTATION</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The condensed consolidated interim unaudited financial statements of Universal Power Group, Inc. (“UPG” or the “Company”), a Texas corporation, included in this quarterly report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included for the three and six-month periods ended June 30, 2013 and 2012. The results for the three and six-month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the full year. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. The unaudited condensed consolidated financial statements included in this filing should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2013. The condensed consolidated balance sheet of the Company as of December 31, 2012 has been derived from the audited consolidated balance sheet as of that date.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation<font style="display: inline; font-size: 10pt;">.</font></font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE B — ORGANIZATION</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 12pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">UPG is a distributor and supplier of batteries and related power accessories to a diverse range of industries, and a provider of third-party fulfillment and logistics services and value-added solutions. The Company’s primary logistics center is located in Coppell, Texas and regional logistic centers are located in Las Vegas, Nevada and Atlanta, Georgia. The Company’s customers are primarily located in the United States. A small portion of the Company’s sales is to customers located in the United Kingdom, Australia, Ireland, Japan, China, Canada and Latin America.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 12pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">Until December 20, 2006, the Company was a wholly owned consolidated subsidiary of Zunicom, Inc. (“Zunicom”), a Texas corporation, whose stock is quoted on the OTC Bulletin Board under the symbol “ZNCM.OB.” On December 20, 2006, the U.S. Securities and Exchange Commission declared effective a registration statement filed by the Company registering the sale of 3,000,000 shares of its common stock, including 1,000,000 shares owned by Zunicom (the “IPO”). As a result of the IPO, Zunicom’s interest in the Company was reduced to 40%. Zunicom no longer owns a controlling interest in UPG; however, as the largest shareholder, Zunicom does have significant influence over UPG.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On January 8, 2009, the Company formed a limited liability company under the name Monarch Outdoor Adventures LLC d/b/a Monarch Hunting (“Monarch”), through which it acquired all of the tangible and intangible assets of a manufacturer and retailer of high-quality hunting products including battery and solar powered deer feeders, hunting blinds, stands and accessories for approximately $892,000. Monarch is located in Arlington, Texas and has customers throughout the United States. Monarch’s revenue and assets are not material to the Company’s consolidated financial statements On May 4, 2012, the Company sold Monarch for $130,000. See Note K.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On April 20, 2011, the Company completed an acquisition of substantially all of the business assets of Progressive Technologies, Inc. (“PTI”), a North Carolina company that designs and builds custom battery packs. The acquisition consideration totaled approximately $3.3 million. PTI’s expertise in lithium-ion battery packs, among other chemistries, further enhances the Company’s product and service offerings. In addition, PTI’s products will strengthen the Company’s position in the medical field and other market segments. On September 1, 2011, PTI changed its legal name to ProTechnologies, Inc.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On January 9, 2013, the Company became the sole member of a newly formed entity, SAM Security, LLC (“SAM”). SAM provides a do-it-yourself (“DIY”) home security system to retailers throughout the U.S.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE C — STOCK-BASED COMPENSATION</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">At June 30, 2013, common shares reserved for future issuance include 1,980,000 shares issuable under the 2006 Stock Option Plan, as amended, as well as 20,000 shares issuable upon exercise of options not granted under the 2006 Stock Option Plan. At June 30, 2013, there were 1,433,842 options outstanding under the 2006 Stock Option Plan, and 546,158 options are available for future grants.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">There were no options granted during the six months ended June 30, 2013 or 2012.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">At June 30, 2013, the aggregate intrinsic value of options outstanding and exercisable was $0.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">At June 30, 2013, all outstanding options under the 2006 Stock Option Plan were fully vested with no remaining unrecognized compensation expense.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On June 25, 2007, Zunicom issued restricted stock to certain employees of UPG for past and future services. The Company amortized the fair value of 398,144 shares, which had not been forfeited, and all compensation expense has been previously recorded.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On June 24, 2011, Zunicom issued an additional 99,538 restricted shares of its common stock to the same Company employees who received a grant in June 2007 and who were still employed by the Company. As a condition to this grant, the grantees agreed to extend the restricted period on the shares issued in June 2007 for an additional three years. As a result, all 497,682 shares will vest on June 24, 2014. The Company is amortizing the fair value as compensation expense over the 36-month vesting period in accordance with ASC Topic 718, Compensation – Stock Compensation. Approximately $5,700 compensation expense related to these shares was recorded during the six-month periods ended for both June 30, 2013 and 2012. At June 30, 2013, there is approximately $11,400 of remaining unrecognized compensation expense associated with this grant.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On March 21, 2007, the Company issued stock options to non-employees to purchase 20,000 shares of the Company’s common stock at an exercise price of $7.00 per share vesting over three years and expiring December 19, 2016. These stock options remain outstanding as of June 30, 2013.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE D — NET INCOME (LOSS) PER SHARE</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding for the period. The Company’s common stock equivalents include all common stock issuable upon the exercise of outstanding stock options and warrants.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">For the three-month and six-month periods ended June 30, 2013, the dilutive effect of 852,592 stock options is included in the calculation and 601,250 stock options are excluded from the calculation as they are antidilutive.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">For the three-month and six-month periods ended June 30, 2012, the dilutive effect of 852,592 stock options is included in the calculation and 571,250 stock options are excluded from the calculation as they are antidilutive.</font></div>
<div style="text-indent: 0pt; display: block;">
<div style="text-indent: 0pt; display: block;">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE E — CREDIT AGREEMENT</font></div>
</div>
</div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">Effective December 20, 2012, the Company entered into a credit agreement with Comerica Bank under which it may borrow up to $34.0 million, including a $30.0 million revolving line of credit (“Credit Line”) and $4.0 million term loan (“Term Loan”). The Credit Line replaced the credit facility that the Company had with Wells Fargo. All borrowings are secured by a first lien on all of the Company’s assets. In addition, the Company may request an increase in the maximum Credit Line to $40.0 million. Its borrowing availability is dependent upon its level of accounts receivable and inventory. With respect to the interest rate for each borrowing, the Company has the option to choose a “LIBOR-base Rate” or “Daily Adjusted LIBOR-based Rate” plus an “Applicable LIBOR Margin.” Under the Credit Line, interest is payable monthly and the outstanding principal is due at maturity, on December 20, 2016 (the “Maturity Date”). Under the Term Loan, principal is payable in equal monthly installments of $47,619, plus interest beginning on February 1, 2013 with the entire unpaid principal amount due on the Maturity Date. At June 30, 2013, approximately $12.0 million was outstanding under the Credit Line and $3.8 million was outstanding under the Term Loan. Both the Credit Line and Term Loan were accruing interest at the rate of 2.07% per annum at June 30, 2013.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The credit agreement contains customary negative covenants restricting the Company’s ability to take certain actions without Comerica’s consent, including incurring additional indebtedness, transferring or encumbering assets, and acquiring other businesses. If there is an “event of default”, including failure to pay, bankruptcy, breach of covenants and breach of representations and warranties, all amounts outstanding under the Credit Agreement will become immediately due and payable. In addition, the Company must maintain certain financial covenants on a quarterly basis.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="font-style: italic; display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2"><font style="display: inline; text-decoration: underline;">Interest Rate Swap</font></font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">In connection with the Credit Agreement, the Company terminated an Interest Swap Agreement (“ISA”) it had with its previous lender and, consequently, discontinued hedge accounting as of December 16, 2009. The Company incurred interest expense commensurate with its original, hedged risk. The realized losses related to the ISA was not recognized immediately and was in accumulated other comprehensive income (loss). These losses are reclassified into interest expense over the original contractual term of the ISA starting as of December 16, 2009 through July 5, 2012.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE F — CONCENTRATIONS</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 12pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">At June 30, 2013, there were no customers with 10% or more of accounts receivable. For the three and six months ended June 30, 2013 and 2012, there were no customers with 10% or more of net sales. </font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE G — LEGAL PROCEEDINGS</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The Company is not currently party to any legal proceedings than those arising in the ordinary course of business, which management does not believe will have a material adverse effect on the Company’s financial position, operating results, or cash flows.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE H — INCOME TAXES</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The Company files income tax returns in the U.S. federal jurisdiction and various states. With a few exceptions, the Company is no longer subject to U.S. state and local income tax examinations by tax authorities for the years before 2008.</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The Company recorded income expense of approximately $30,000 and $2,000 for the three-month periods ended June 30, 2013 and 2012, respectively. The income tax expense for the six-month periods ended June 30, 2013 and 2012 was $187,000 and $201,000, respectively. The Company’s effective tax rate was 103.4% and 1.0% for the three months ended June 30, 2013 and 2012, respectively. The Company’s effective tax rate was 47.1% and 50.6% for the six months ended June 30, 2013, and 2012, respectively. The taxes are different than the federal statutory rate of 34% primary as a result of state income taxes and items not deductible for income tax reporting.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE I— GOODWILL</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired business. Goodwill is tested annually for impairment and when events or circumstances change to suggest that the carrying amount may not be recoverable. For purposes of impairment testing, goodwill is allocated to reporting units, which are either at the operating segment level or one reporting level below the operating segment. Goodwill is recorded in the financial statements at cost less accumulated impairment losses. In the second quarter of 2013, management performed the required annual impairment test under the qualitative assessment methodology and determined that goodwill was not impaired.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE J — SEGMENT AND GEOGRAPHIC INFORMATION</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">The accounting standard for segment reporting requires enterprises to report financial information and descriptive information about reportable operating segments. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company evaluated the accounting standard for segment reporting and determined that the Company operates in only one segment.</font></div>
<div align="left" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; font-weight: bold; ; font-family: times new roman,times;" size="2">NOTE K — DISCONTINUED OPERATIONS</font></div>
<div style="text-indent: 0pt; display: block;"> </div>
<div align="left" style="text-indent: 18pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt; ; font-family: times new roman,times;" size="2">On May 4, 2012, pursuant to a Securities Purchase Agreement, dated as of May 4, 2012 (the “Agreement”), the Company sold all of the issued and outstanding membership interests of Monarch for $130,000. Of the purchase price, $50,000 was paid in cash at closing and $80,000 was evidenced by a 6% secured promissory note maturing May 1, 2014. The principal amount of the note and all accrued interest thereon is payable in 24 equal monthly installments of $3,692 beginning on June 1, 2012. The note is secured by a pledge of all of the membership interests in Monarch as well as a lien on all of Monarch’s assets. The purchasers also agreed to sublet from the Company for a minimum term of two years the premises used by Monarch at an annual rental of $42,000. The Agreement contains representations and warranties, covenants and indemnification provisions typical of those in these types of transactions. UPG realized a pre-tax loss of approximately $600,000 related to the sale of Monarch including lease obligations retained for the manufacturing facility.</font></div>
3000000
1000000
892000
130000
3300000
1433842
546158
0
1980000
20000
99538
P3Y
P36M
497682
5700
5700
7.00
2016-12-19
20000
852592
852592
852592
852592
571250
571250
601250
601250
40000000
30000000
34000000
4000000
47619
Monthly
3800000
0.0207
0.010
0.506
1.034
0.471
0.34
1
50000
P2Y
42000
600000
-616000
40000
313000
816000
-14000
197000
361000201000
0.40
0001372000upg:EmployeesMemberupg:LargestShareholderMemberus-gaap:RestrictedStockMember2007-06-012007-06-25
398144
P3Y
0001372000us-gaap:RevolvingCreditFacilityMemberupg:ComericaMember2013-06-30
12000000
0001372000us-gaap:RevolvingCreditFacilityMemberupg:ComericaMember2013-01-012013-06-30
0.0207
0001372000us-gaap:SalesRevenueGoodsNetMemberus-gaap:CustomerConcentrationRiskMember2013-04-012013-06-30
0001372000us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2013-01-012013-06-30
0001372000us-gaap:SalesRevenueGoodsNetMember
us-gaap:CustomerConcentrationRiskMember
2012-01-012012-06-30
<div>10% or more</div>
<div>no customers with 10% or more of accounts receivable</div>
<div>10% or more</div>
<div>no customers with 10% or more of net sales</div>
<div>10% or more</div>
<div>no customers with 10% or more of net sales</div>
0001372000upg:SecuredPromissoryNoteMemberus-gaap:LimitedLiabilityCompanyMember2012-05-012012-05-04
0001372000us-gaap:LimitedLiabilityCompanyMemberupg:SecuredPromissoryNoteMember2012-05-04
80000
0.06
24
3692
Monthly
0001372000upg:EmployeesMemberupg:LargestShareholderMemberus-gaap:RestrictedStockMember2013-06-30
11400
0001372000us-gaap:SalesRevenueGoodsNetMemberus-gaap:CustomerConcentrationRiskMember2012-04-012012-06-30
0001372000us-gaap:SalesRevenueGoodsNetMemberus-gaap:CustomerConcentrationRiskMember2013-01-012013-06-30
<div>10% or more</div>
<div>10% or more</div>
<div>no customer with 10% or more of net sales</div>
<div>no customers with 10% or more of net sales</div>