---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-K



(Mark One)

| ̈ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



For the fiscal year ended



or



|x |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from May 1, 2002 to December 31,
2002



Commission File No.: 001-15143



---



IMPCO TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)



|Delaware                                                      |  | 91-1039211                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdictionof incorporation or organization) |  | (IRS EmployerIdentification Number)



16804
Gridley Place Cerritos, California 90703

(Address of principal executive offices, including zip code)



(562) 860-6666

(Registrants telephone number, including area code)



---



Securities registered pursuant to Section 12(b) of the Act:



None



|(Title of each class) |  | (Name of exchange on which registered)
|--------------------- |  | --------------------------------------



Securities registered pursuant to Section 12(g) of the Act:



Common Stock, $0.001 par value per share



---



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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this  Form 10-K.    x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act).    Yes ̈No  x



State the aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most
recently completed second fiscal quarter.



The
aggregate market value of the Common Stock held by non-affiliates of the Registrant as of October 31, 2002 was approximately $52.0 million based upon the closing sale price of the Registrants Common Stock on such date, as reported on the
Nasdaq National Market.



As of March 31, 2003,
the Registrant had 16,433,202 shares of Common Stock, $0.001 par value per share, outstanding.



---



---

FORWARD-LOOKING STATEMENTS



This Transition Report on Form 10-K contains
forward-looking statements that involve risks and uncertainties. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about our industry, our beliefs and assumptions. We
use words such as anticipate, expect, intend, plan, believe, seek, estimate and variations of these words and similar expressions to identify forward-looking
statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties include those described in Managements Discussion and Analysis of Financial Condition and Results of OperationsRisk
Factors and elsewhere in this Transition Report. You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this Transition Report.



PART I



Item 1.Business.



Overview



We design, manufacture and supply advanced systems that store
gaseous fuels and monitor and control the pressure and flow of those fuels for use in internal combustion engines. Our components and systems enable internal combustion engines to operate on natural gas or propane. Our products improve efficiency,
enhance power output, and reduce emissions by electronically sensing and regulating the proper proportion of fuel and air required by the internal combustion engine. Additionally, we have extensive engineering, design and systems integration
experience with our customers requirements for product performance, durability and physical configuration. Based on over 44 years of technology development and expertise in producing cost-effective, safe and durable fuel technology systems, we
believe we are positioned to provide enabling products and technologies in the rapidly expanding alternative fuel industry.



Our customers use our components and systems on engines ranging from one to 4,000 horsepower. We provide gaseous fuel components and
systems to the transportation market and the industrial market, which includes the material handling and stationary and portable power generation markets.



A number of original equipment manufacturers, or OEMs, in the automotive, industrial and power generation industries, who are our
customers, are developing alternative clean power systems using clean burning gaseous fuels, which decrease fuel costs, lessen dependence on crude oil and reduce harmful emissions in internal combustion engines. We offer the following products, kits
and systems to these customers:



| |  |  | fuel deliverypressure regulators, fuel injectors, flow control valves, and other components and systems designed to control the pressure, flow and/or
metering of gaseous fuels;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | electronic controlssolid-state components and proprietary software that monitor and optimize fuel pressure and flow to meet manufacturers engine
requirements; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | systems integrationservices to integrate the gaseous fuel storage, fuel delivery and/or electronic control components and sub-systems to meet OEM and
aftermarket requirements.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We have
been producing and selling gaseous fuel systems and components for over 40 years. We sell these systems and components directly to end users, OEMs and the aftermarket through more than 400 distributors and dealers worldwide.



Our periodic and current reports are available, free of
charge, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC, on our website: www.impco.ws. Contents of our website are not incorporated into this report nor are they filed with or
furnished to the SEC.



2



---



We were
incorporated in Delaware in 1985 after having provided automotive and alternative fuel solutions in a variety of organizational structures since 1959.



Net consolidated revenues for the eight-month period ended December 31, 2002 were approximately $46.4 million with a net loss of
approximately $28.4 million. As discussed below in greater detail, on July 23, 2002 we spun off our Quantum division to our stockholders by distributing one share of Quantum Fuel Systems Technologies Worldwide, Inc. (Quantum), common
stock for every share of IMPCO common stock to holders of record as of July 5, 2002. Since July 23, 2002 we no longer own any interest in Quantum, and we are no longer involved in developing and marketing fuel cell technologies, although we have
entered into a three-year strategic alliance agreement with Quantum, discussed below, under which we and Quantum may use jointly developed technologies in our respective markets. Our net loss for the eight month period ended December 31, 2002,
excluding the effects of our spun off Quantum subsidiary, was approximately $25.3 million, which includes a $24.0 million provision to establish a valuation allowance for deferred tax assets that are unlikely to be utilized in the next three years.
Readers should note that financial data reported in filings before the end of our first fiscal quarter on July 31, 2002 may not present a meaningful comparison with financial data reported in subsequent periods because in periods ending after that
date Quantum will be reported in discontinued operations.



Recent Developments



Quantum Spin-off.



Historically, we organized our business into two operating divisions: the Gaseous Fuel Products division and the Quantum Technologies Worldwide division. On July 23, 2002, we completed the distribution and spin-off of our Quantum
division by distributing one share of Quantum common stock for every share of IMPCO common stock held on the July 5, 2002 record date. As a result of this spin-off we no longer hold any interest in Quantum and we are no longer involved in developing
and marketing fuel cell enabling technologies. However, we have entered into a strategic alliance with Quantum to use jointly developed technologies in our respective markets.



Several business purposes underlie the Quantum spin-off. In particular, Quantum desired to enhance its access
to the capital markets by, among other things, allowing the financial community to focus separately on Quantum. We believe the separation of our businesses and the establishment of Quantum as an independent company will allow management and the
financial community to focus on IMPCOs traditional business, the alternative fuel market. We believe the spin-off will enable us to realize our growth strategy as a separate,  stand-alone entity, based on our core business,
prospective capitalization and financing requirements, acquisition strategies, working capital requirements, and results of operations.



We have included a discussion on the Quantum reporting segment in the Management Discussion and Analysis section since the financial
results of Quantum were included in the transition period ended December 31, 2002 and the fiscal years ended April 30, 2002, 2001 and 2000 consolidated results of operations. As a result of the spin-off of Quantum, we have reported Quantum as a
discontinued operation. During the transition period, beginning May 1, 2002 and ending December 31, 2002, our loss from discontinued operations was approximately $3.1 million.



Capital Transactions.



On May 8, 2002 we sold 1,500,000 shares of our common stock to institutional and accredited investors at a
purchase price of $12.50 per share, which yielded gross proceeds of $18.75 million. We initially expected to use the proceeds of this offering for potential acquisitions, debt repayment, and general corporate purposes; however, owing to a delay in
effecting the Quantum spin-off, we used a portion of these proceeds to fund Quantums continuing operations until the spin-off was complete.



3



---



On October 3,
2002 we entered into an option agreement that, if exercised, would permit us to acquire 50% of the currently outstanding equity interests of B.R.C. Societá a Responsabilitá Limitata, an Italian limited liability company
(BRC). As consideration for the option, we (i) paid to the BRC equity holders US$1,500,000 in cash on October 3, 2002 and (ii) issued to the BRC equity holders 2,309,470 shares of common stock on November 29, 2002, which equals
approximately 16% of our outstanding common stock on a pre-transaction basis. The shares were issued in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Regulation S, and on the
exemption from registration afforded to private placements under Section 4(2) of the Securities Act. Of the shares issued to the BRC equity holders, 1,662,818, or 72%, are subject to a lockup agreement that restricts their resale until certain dates
beginning in August 2004. The following table presents the relevant expiration dates and number of shares as to which the lockup agreement expires.



|Date             |  | Shares Available for Sale
|---------------- |  | -------------------------
|August 1, 2004   |  | 277,691                  
|February 1, 2005 |  | 460,601                  
|August 1, 2005   |  | 460,601                  
|February 1, 2006 |  | 463,925                  



To
exercise the option, we initially were required to give BRC a written notice between January 1 and January 15, 2003, and to pay the BRC equity holders an additional US$4,250,000 plus 1,250,000 in cash no later than January 31, 2003. We also
would be required to pay an additional US$7,000,000 (subject to reduction if certain conditions are not met with respect to BRCs accounts receivable collections) before September 30, 2003. We and the BRC equity holders subsequently agreed to
extend the notice date to February 17, 2003 and the exercise date to April 18, 2003. We gave the required notice on February 13, 2003 and are currently are exploring various alternatives to finance both the April 2003 and September 2003 payments of
the exercise price. If we are unable to obtain financing to pay the required April payment, the BRC equity holders would retain the cash portion of the purchase price paid through March 31, 2003, amounting to approximately $3.8 million and would be
required to return the 2,309,470 shares of common stock.



Change in fiscal year.



Our fiscal year has traditionally ended on April 30, and our fiscal quarters on July 31, October 31 and January 31. On November 14, 2002 we changed our fiscal year so that effective January 1, 2003 our fiscal year will be the
calendar year. As a result, we filed a Quarterly Report on Form 10-Q on December 16, 2002 for the quarterly period ended October 31, 2002, and this transition report on Form 10-K covers the transitional period from May 1, 2002 through December 31,
2002.



Alternative Fuel Industry



Overview.



We focus on the alternative fuel industry. Three independent
market factorseconomics, energy independence and environmental concernsare driving the development of alternative fuel industry technology and markets. We believe the historic price differential between propane or natural gas and
gasoline drives the economics of the alternative fuel market. The price of clean fuels such as natural gas or propane are typically 40% to 60% that of traditional liquid fuels such as gasoline. By converting an internal combustion engine to run on
propane or natural gas customers can capitalize on the fuel price differential and reduce harmful vehicle emissions.



End users typically can recoup the cost of the conversion within six to eighteen months, depending on the fuel cost disparity prevailing
at the time. Transportation companies in various countries, including Australia, Mexico, India and China, are also taking advantage of these economics.



4



---



Among our most
active customers are taxi companies, transit and shuttle bus companies, and delivery fleets such as Coca Cola, Frito-Lay, Pepsi Cola and United Parcel Service. Small and large industrial engine users in the power generation market capitalize on the
cost benefits of using alternative fuels and their low-pollutant capabilities. For example, forklift users often operate equipment indoors where toxic emissions are a concern. In all these situations, it is relatively easy to establish centralized
fueling stations. Because of the global price differential in favor of gaseous fuels compared to gasoline, their availability in third-world markets and their lower pollutants, the alternative fuel industry market potential is growing rapidly.
Approximately 60% of our revenues are derived from sales outside the United States, of which Mexico accounted for 26% of sales and Europe accounted for 23% of sales for the eight-month transition period ended December 31, 2002.



In addition to economics, energy independence is a significant
driver for the alternative fuel market. Many countries have significant natural gas reserves and seek to use alternative fuels to reduce their dependence on imported oil and reduce their unfavorable balance of payments. Natural gas is generally
consumed domestically since it is difficult to transport internationally in a gaseous state and liquefying natural gas tends to be costly. Implementing OEM alternative fuel vehicles that operate on natural gas or propane can lessen the demand for
gasoline. For example, the Egyptian and Chinese governments realized that rather than relying solely on petroleum for its transportation needs, each could use natural gas in vehicles to free some of its oil production for export.



Governmental emission regulations, which support the use of
clean burning alternative fuels, are also expanding industry growth. The negative environmental impact associated with liquid fossil fuels further increases the demand for systems that use clean burning fuels. Internal combustion engines are a major
source of air pollution, which has led to increased government regulation and oversight on vehicle and industrial engine emissions. The U.S. Department of Energy estimates that conventional motor vehicles fueled with natural gas emit 80% less carbon
monoxide and nitrogen oxide than vehicles fueled by reformulated gasoline. Most major international cities are experiencing significant pollution from gasoline and diesel emissions. These cities also have the largest concentrations of fleet
operators, and many of these cities are taking steps to reduce emissions, typically by implementing natural gas or propane-fueled vehicles. For example, in Mexico City the government has taken steps such as prohibiting the use of certain vehicles on
designated days of the week.



In the United
States, legislative and administrative policies such as the Comprehensive National Energy Strategy, the Clean Air Act Amendments of 1990; the Energy Policy Act of 1992; and the Organization for Economic Cooperation and Development (OECD)
Environmental Committees Report on Environmentally Sustainable Transport provide goals for energy efficiency and coupled with the Environmental Protection Agency and the California Air Resource Boards Large Spark Ignited Off-Highway
Emission regulation for industrial equipment afford strict emission standards and promote the development and implementation of alternative fuels and related technologies. All states, including California, Massachusetts, New York and Texas, have
also adopted legislation targeted at reducing harmful emissions from motor vehicles, industrial equipment, industry and consumer products. In addition, several countries, including Argentina, Canada, China, Colombia, Egypt, France, Germany, Greece,
India, Italy, Mexico, Russia and the United Kingdom, have enacted air pollution regulations or programs favoring the use of alternative fuels, including gaseous fuels such as  low-carbon content propane and natural gas.



Markets.



IMPCO is directly involved in three key-energy use market
segments (transportation, industrial equipment and power generation equipment), which have seen growth in the use of clean-burning gaseous fuels in association with other lower-emission fuel-components.



Transportation.    According to the most recent statistics from the World LP Gas Association, the International Association for Natural Gas Vehicles (IANGV) and the
European Natural Gas Association, there are over 5.7 million gaseous fuel vehicles in use worldwide: either for personal mobility, fleet conveyance or public transportation. As the worlds vehicle population increases from 800 million to over
1.3 billion by 2020,



5



---

most growth will occur in developing countries within Asia, North Africa, and areas of the Middle East. These regions currently have the
lowest ratio of vehicles per one thousand people, and are slated to grow rapidly over the next ten years as economic improvements stimulate personal vehicle ownership.



The Energy Information Administration of the U.S. Department of Energy, the World Bank, the Office of
Economic and Community Development, the fifteen countries of the European Union (EU15) and the Asian Development Bank suggests that interest in expanding the use of alternative fuel vehicles is mounting in many parts of the developed and developing
world. Growth projections, reported by the Energy Information Administration and the IANGV in comparison with current data available from the European Natural Gas Vehicle Association, indicate that over two million additional alternative fuel
vehicles will be introduced worldwide by 2010. In Europe, alternative fuel vehicles have rapidly penetrated the transportation market. The European Unions four largest natural gas-consuming members, the United Kingdom, Germany, France, and
Italy, all have introduced incentives for gaseous-fueled vehicles. The European Union has established a target to replace 20% of their liquid fueled vehicles with gaseous fuels by 2020. The Mexican Regulatory Commission of Energy estimates that
Mexico will be able to increase the use of natural gas vehicles from 2,000 in 2000 to 100,000 by 2008.



The Asia region is emerging as a significant growth market for alternative fuel vehicles. China, already the worlds second-largest
energy consumer, will continue to grow in importance on world energy markets as strong economic growth drives up demand.



Industrial.    Equipment such as forklifts, aerial platforms,
sweepers, turf equipment, light-duty construction equipment, mobile wood-processing equipment and other mobile industrial equipment have long been the workhorses of developed countries, and are a significant portion of IMPCOs global
activities. With developed countries such as the United States and the EU15 seeking a broader incorporation of emission sources in an attempt to further reduce air pollution, many countries have and will legislate emission standards for this type of
equipment. In the United States, the Environmental Protection Agency has enacted emission regulations for industrial off-highway equipment starting in 2004 that follows suit with Californias Large Spark Ignited mobile off-highway emission
regulation initiated in 2001.



In North America
alone there are more than 100,000 pieces of industrial equipment manufactured each year that use internal combustion engines. With new emission regulations being imposed, these OEMs will require advanced technologies that permit the use of gaseous
fuels in order to satisfy not only the regulation, but also the customers requirements for durability, performance and reliability. IMPCO has developed and is currently supplying a series of advanced technology fuel systems to the industrial
OEM market under the brand name Spectrum. IMPCO and its industrial brands focus on serving over 70% of the market with fuel systems, services and emission certified engine packages.



Power Generation.    The World Energy
Outlook 2002 projects the global primary energy demand will increase by 1.7% per year from 2000 to 2030, reaching 15.3 billion tons of oil equivalent. Even though the earths energy resources are adequate to meet this demand, the amount of
investment that will be needed for these resources to be exploited is significantly higher than has occurred in the past. For example, investment needs in the power sector are expected to be almost three times larger over the coming three decades
than over the last three. Investment in the oil industry will also have to rise sharply, as demand rises and the surplus capacity in crude oil production and refining that has characterized the industry since the 1970s is used up. Gaseous fuels such
as propane and natural gas have significant reserves available worldwide which are less costly to refine compared to crude oil and have historically been less expensive than liquid fuels. Countries like China, for example, are actively developing
their infrastructure to utilize their natural gas reserves rather than import liquid fuels.



6



---



Competitive Advantages



We believe we can develop a technological
leadership position in the alternative fuel industry based on our history of success in the designing, manufacturing and commercializing advanced fuel delivery systems and components, our relationships with leading companies in transportation and
industrial markets, our financial commitment to research and development and our proven ability to develop and commercialize new products. We believe our competitive strengths include:



Industry Leader.    We have derived a
technology and product leadership position from the broad application and integration of our technologies and enabling systems into the established and expanding alternative fuel industry. Over the past nine years we have invested approximately $130
million in research and development. This investment, coupled with our history and experience in this industry, has provided us with a strong technology base for new product innovation for internal combustion engines, particularly in our industrial
markets. Additionally, we believe our anticipated acquisition of an equity stake in BRC will expand our technology and product leadership position. BRC has been developing, manufacturing and marketing alternative gaseous fuel products and systems
for automobiles for more than twenty years.



Proven Manufacturing Methods.    We have more than four decades of experience in the manufacture, development and integration of alternative fuel technologies and
products. We currently maintain manufacturing and production facilities in the United States, Europe, Mexico and Australia, which produce a broad range of products and services, including components, systems and specialty vehicle assembly. Our U.S.,
Australian and European facilities have achieved ISO-9000 or QS-9000 certification. QS-9000 is the common supplier quality standard for Chrysler Corporation, Ford Motor Company and General Motors. QS-9000 applies to suppliers of production
materials, production and service parts, heat-treating, painting and plating and other finishing services. ISO-9000 is a set of three individual, but related, international standards on quality management and quality assurance. These standards were
developed to document effectively the quality controls necessary to maintain efficient systems.



Strong OEM Customer Relationships.    We currently sell products to more than 100 OEM customers in domestic and international
alternative fuel markets. To date, we have sold over four million fuel systems or  sub-systems globally to our customers. We believe that the successful historic use of our products and our reputation as a leader in our industry provides a
strong competitive position.



Established Systems Integration Expertise.    As more OEMs seek to reduce costs by outsourcing key tasks and reducing the number of suppliers, we have focused
increasingly on capturing additional revenue opportunities by expanding our systems integration capabilities. In 1998, we established our Industrial Engine Systems business in Sterling Heights, Michigan, which provides systems integration of our
low-emission products for engines that are subsequently sold to industrial OEMs. We believe that our systems integration expertise, together with our proprietary and patented technologies, give us a significant advantage in the alternative fuel
markets.



Positioned for Global
Growth.    With ten foreign facilities and over 400 distributors and dealers in more than 30 countries outside the United States, we believe that we are positioned to capitalize on global growth opportunities. We believe that
the alternative fuel markets will grow dramatically internationally, particularly in China, India, Japan, Mexico and Southeast Asia, because of the existing urban pollution problems and economics that favor alternative fuels versus gasoline. Our
anticipated acquisition of BRC strengthens our global position by adding an additional 200 distributors and dealers in all 15 European nations, as well as ten Eastern European countries, and a number of developing countries including Brazil,
Argentina, Chile, Australia, India, China, Thailand and South Korea.



Business Strategy



We
believe that the successful execution of the following strategic objectives will enable us to maintain and expand our leadership position in the advanced fuel technologies industry.



7



---



Capitalize
on our Strong Technology Leadership Position.    We are a leading developer and manufacturer of fuel metering and electronic control systems for the alternative fuel industry. Management believes our position results from our
current technology advantage and our investment in research and development. Our investment has permitted us to develop and supply new technology and products to our target markets, which are transitioning to gaseous-fueled internal combustion
engines, and management believes these trends will continue to grow as liquid fossil fuels become increasingly scarce and expensive to develop. We also plan to develop new technologies and expand our product and system integration capabilities to an
increasingly larger and more diversified customer base.



Focus on Advanced Fuel Technologies and Products.    We intend to focus on advanced electronic and fuel metering technologies and products. We plan to continue our research and product development in fuel
delivery and electronic control systems for alternative fuels. We actively seek to establish joint development programs and strategic alliances with the major engine designers, manufacturers and industry leaders in these markets.



Develop and Expand Key Industry
Relationships.    We plan to utilize the successful technical and business relationships and reputation we have established worldwide with major industry leaders using alternative fuel products to enable
us to establish and maintain strategic alliances, joint product development programs and joint ventures with these companies in our target markets. We will concentrate our efforts on broadening our OEM relationships in an effort to establish strong
top-tier supplier positions based on our belief that OEMs will drive industry growth in the alternative fuel industry.



Expand and Broaden Systems Integration Expertise.    We expect to
continue to broaden our capabilities to provide integration, testing, validation and manufacturing of our products and systems into the transportation, material handling, stationary and portable power generation and general industrial markets. As
more OEMs seek to reduce costs and shorten time to market by outsourcing key tasks and reducing numbers of suppliers, we are focused increasingly on capturing additional revenue opportunities by expanding into value-added services, such as systems
integration. For example, we have established an industrial systems unit in Michigan to integrate for our products into engines that will be sold to industrial OEMs, who in turn will install these engines into end products.



Increase Bases of
Business Operations and Distributor Network in High-Growth Global Regions.    We plan to expand our operating network in high-growth regions, such as Asia, Europe and Latin America, to take
advantage of significant growth opportunities that we believe exist in those areas. We intend to capitalize on these growth opportunities through acquisitions and joint ventures, strengthening of our distributor network and developing key local
business and governmental support and recognition. In addition, our recent joint venture agreements with Minda Industries Limited India and with CNGC, a subsidiary of China National Petroleum Co., expand our presence in the Indian and Chinese
markets, respectively. Additionally, we are developing working relationships with several foreign governments. We believe that working with local governments and establishing joint ventures with local business leaders is essential to expanding into
international markets. For example, our discussions with government officials have led to our involvement in developing regulations in Mexico. Our anticipated acquisition of BRC would further expand our presence in the European transportation
market.



Expand our
Global Manufacturing Operations.    We plan to expand our current QS-9000 manufacturing operations in the United States and Mexico by establishing manufacturing sites in low-cost locations with a
continued focus on quality, timely delivery and operating efficiency.In addition, we anticipate that the manufacturing strengths of BRC, coupled with the additional product volume we hope to derive from the relationship, will result in
productivity improvements.



Customers and Strategic
Relationships



Our customers include some of
the worlds largest OEMs and engine manufacturers, including Ashok Leyland, Boss Manufacturing, Caterpillar, Clark, Cummins, Daewoo, Detroit Diesel, Ford Australia,  GM Holden, Kohler, Komatsu, Mazda, Mitsubishi, Onan, Still and Toyota.



8



---



We are working
with a number of these customers to address their future product and application requirements as they integrate more advanced, certified gaseous fuel systems into their business strategies. Additionally, we continually survey and evaluate the
benefits of joint ventures, acquisitions and strategic alliances with our customers and other participants in the alternative fuel industry to strengthen our global business position.



We have focused our strategic alliances on our marketing strategy and/or on our development strategy. Our
marketing strategy seeks to expand the distribution channels for our gaseous fuel system technologies. Our development strategy is to advance the state of technology and its application.



Quantum Collaboration.    Our three-year agreement with Quantum provides that we
will collaborate with Quantum to identify and conduct research and development programs of mutual interest. As part of those research and development activities, we may develop technology and products separately or jointly with Quantum. The
agreement also allows us to acquire and sell into our alternative fuel markets Quantums advanced technology products, including CNG storage tanks, fuel injectors, in-tank regulators and other products, for use in automotive, bus and truck and
industrial aftermarket applications and in the bus and truck and industrial original equipment manufacturers, or OEM markets. For jointly developed products, we and Quantum will jointly own any patent or other intellectual property
rights and will issue royalty-free cross licenses covering our respective markets. For separately developed products, each party will grant the other a right to sell the affected products in their respective markets. The developing party will retain
sole intellectual property ownership.



We believe
that the Quantum spin-off and the ongoing alliance will expedite the commercialization and integration of advanced gaseous storage and handling systems and products into our broader global alternative fuel markets, including automotive after-market,
material handling, portable and stationary internal combustion engine-based power generation, and general industrial markets. In addition, we believe that the spin-off will enable IMPCO to optimize its growth strategies as a separate, stand-alone
entity, based on its capitalization and financing requirements, acquisition strategies, working capital requirements, projected cash flows from operations and credit ratings.



Management plans to establish similar relationships with leading manufacturers by using our systems
integration capabilities and our leading technology position in gaseous fuel products and systems.



Products and Services



Our products include gaseous fuel regulators, fuel shut-off valves, fuel delivery systems, complete engine systems, and electronic controls for use in internal combustion engines for the
transportation, material handling, stationary and portable power generator and general industrial markets. In addition to these core products, which we manufacture, we also design, assemble and market ancillary components required for complete
systems operation on alternative fuels.



9



---



All of our
products are designed, tested and validated in accordance with our own internal requirements, as well as tested and certified with major regulatory and safety agencies throughout the world, including Underwriters Laboratories (UL) in North America
and TÜV in Europe. The following table describes the features of our products:



|Products               |  | Features                                                                                                                                                                                                                                                                                                                                                           
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      
|Fuel Metering          |  |       Designed to operate on propane,
natural gas or digester gas fuels       Electronic control overlays
allow integration with modern emissions monitoring systems for full emissions compliance capability       Designed for high resistance to poor fuel quality                                                                                           
|                      
|                      
|                      
|Fuel Regulation        |  |       Reduces pressure of gaseous and
liquid fuels       Vaporizes liquid fuels       Handles a wide range of inlet pressures                                                                                                                                                                                                                                   
|                      
|                      
|                      
|Fuel Shut-Off          |  |       Mechanically or electronically
shuts off fuel supply to the regulator and engine       Available for
low-pressure vapor natural gas and high-pressure liquid propane       Designs also incorporate standard fuel filtration to ensure system reliability                                                                                                 
|                      
|                      
|                      
|Electronics & Controls |  |       Provides closed loop fuel
control, allowing integration with existing sensors to ensure low emissions       Integrates gaseous fuel systems with existing engine management functions                                                                                                                                                                      
|                      
|                      
|Engine Systems         |  |       Turnkey kits for a variety of
engine sizes and applications       Customized applications interface
per customer requirements                                                                                                                                                                                                                              
|                      
|                      
|Full Systems           |  |       Complete vehicle and equipment
systems for aftermarket conversion       Complete engine and vehicle
management systems for heavy-duty engine on-highway truck and bus operation on natural gas       Complete engine and vehicle management systems for off-highway and industrial engines used for material handling, pumping and industrial applications
|                      
|                      



Services.    We provide a broad range of services to both our product customer base and the broader service marketplace. These services fall into the following key areas:



|Services                       |  | Capabilities                                                                                                                                                                                                                                                                                                                                                              
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                              
|Design and Systems Integration |  |       Strong team of applications
engineers for component, system and engine level exercises providing support to customers in the application of our gaseous fuel products       Applications engineering services for whole vehicle/machine integration outside of our products       Full three dimensional design modeling and component rapid prototyping
services
|                              
|                              
|                              
|Certification                  |  |       Certification of component
products and services in line with the requirements of California Air Resources Board for off-highway engines       Provide customers with the required tools to manage in-field traceability and other requirements beyond initial emission compliance                                                                                
|                              
|                              
|Testing and Validation         |  |       Component endurance
testing       Component thermal and flow performance cycling
      Engine and vehicle testing and evaluation for performance and
emissions                                                                                                                                                                                                   
|                              
|                              



10



---

|Services                           |  | Capabilities                                                                                                                                                                                                                                                                                                      
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                  
|Sub-System Assembly                |  |       Pre-assembled modules for
direct delivery to customers production lines       Sourcing and
integrating second and third tier supplier components                                                                                                                                                         
|                                  
|                                  
|Training and Technical Service     |  |       Complete technical service
support, including technical literature, web-based information, direct telephone interface (in all major countries) and on-site support       Training services through sponsored programs at approved colleges, at our facilities worldwide and on-site at customer facilities
|                                  
|                                  
|Service Parts and Warranty Support |  |       Access to service parts
network, along with direct support in development of customers own internal service parts programs and procedures       Warranty and replacement services for our customers worldwide                                                                                            
|                                  



Sales and
Distribution



We sell products through a
worldwide network encompassing more than 400 distributors and dealers in over 30 countries and through a sales force that develops sales with OEMs and large end-users. We focus on two markets: 1) the industrial market which includes material
handling OEMs and aftermarket and stationary and portable power generation OEMs and aftermarket, and 2) the transportation OEM and aftermarket. Of these markets, we believe that the greatest potential for immediate growth is in the Latin America and
Asia Pacific regions in the transportation OEM and aftermarket and in North America in the industrial OEM and aftermarket.



For the eight-month transition period beginning May 1, 2002 and ending December 31, 2002, excluding the Quantum division, sales to
distributors (including company-owned distributors) accounted for 56% of our net revenue and sales to OEM customers accounted for approximately 44% of our net revenue. During the transition period beginning May 1, 2002 and ending December 31, 2002,
sales to distributors accounted for a higher percent of total sales as compared to our previous fiscal year. This increase is due the increased percentage of our sales to international markets, which we accomplish through our company-owned
distributors. Distributors generally service the aftermarket conversion business and small-volume OEMs, and are generally specialized and privately owned enterprises. Additionally, many domestic distributors have been our customers for more than
30 years, and many of our export distributors have been our customers for more than 20 years.



Our company-owned distributors are included in our International Operations segment and consist of our subsidiaries located in Europe,
Australia, Mexico, Japan, India and China, which are responsible for sales, application and market development and technical service. Additionally, these subsidiaries provide sales support, application development and technical support to
aftermarket and OEM customers.



Manufacturing



We manufacture and assemble products at our
facilities in Cerritos, California, Sterling Heights, Michigan and at our international facilities. Current manufacturing operations consist primarily of mechanical assembly and light machining. We rely on outside suppliers for parts and components
and obtain components for products from a variety of domestic and foreign automotive and electronics suppliers, die casters, stamping operations, specialized diaphragm manufacturers and machine shops. For the transition period beginning May 1, 2002
and ending December 31, 2002, excluding the Quantum division, ten suppliers accounted for approximately 34% of our raw material purchases. During our fiscal year 2000, 2001, 2002, and transition period ended December 31, 2002 General Motors
Corporation, and affiliates of General Motors, accounted for approximately 25%, 29%, 9% and 12%, respectively, of purchases. During our fiscal year 2000, 2001, 2002, and transition period ended December 31, 2002, Rangers Die Casting Company
accounted for approximately 20%, 12%, 8% and 8%, respectively, of purchases.



Material costs and machined die cast aluminum parts represent the major components of cost of sales. Coordination with suppliers for quality control and timely shipments is a high priority to maximize
inventory



11



---

management. We use a computerized material requirement planning system to schedule material flow and balance the competing demands of timely
shipments, productivity and inventory management. All of our U.S. manufacturing facilities are ISO-9001 or QS-9001 certified.



Research and Development



In 2002, we opened a new research and development facility near Seattle, Washington, which is dedicated to the research and development of
systems and products that support the use of gaseous fuels in internal combustion engines. This facility has sophisticated, state-of-the-art research laboratories, emissions control equipment, and testing equipment. Our research and development is
focused on fuel delivery and electronic control systems and products for motor vehicles, engines, forklifts, stationary engines and small industrial engines.



We have the following technical capabilities:



| |  |  | Electronic Control Systems.    Specialization in hardware design and selection, engine modeling, calibration and software design for
engine and emission controls.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mechanical Design and Development.    Specialization in pneumatic, kinematics, hydraulic components and systems and advanced materials,
structural, flow and thermal analysis.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Advanced Catalysts.    Catalyst and emission testing.
| | - |  | -----------------------------------------------------



| |  |  | Advanced Products.    Injectors, pressure sensors and bi-directional mass flow sensors, fuel management, mass flow sensors for natural gas
measurement and smart sensors using 8-bit micro-controllers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Component and Subsystem Test Facilities.    Extended vibrations, shock loads and accelerations, flow simulations and pneumatic leak
checks.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



We believe this facility
is a critical component in our ability to maintain our technological leadership position in alternative fuel enabling systems.



We conduct alternative fuel application development at the following facilities:



| |  |  | Cerritos, California for the power generation market;
| | - |  | -----------------------------------------------------



| |  |  | Seattle, Washington for the transportation market; and
| | - |  | ------------------------------------------------------



| |  |  | Sterling Heights, Michigan for the industrial market.
| | - |  | -----------------------------------------------------



| |  |  | Rijswijk, Holland for the industrial and transportation market; and
| | - |  | -------------------------------------------------------------------



| |  |  | Cheltenham, Australia for the transportation market.
| | - |  | ----------------------------------------------------



These facilities encompass a total of approximately 100,000 square feet of laboratory space, and we have more than 50 employees at these
facilities.



Competition



We are a leading provider of alternative fuel systems. We
provide products and integrated services for all gaseous fuels in our target markets for use in all end user applications in the alternative fuel industry.



Our key competitors in gaseous fuel delivery products, accessory components and engine conversions markets include Aisan, Koltec-Necam,
Landi Renzo, Lovato, OMVL and Tartarini, which together with us account for a majority of the world market for alternative fuel products and services. These competitors compete with us primarily in the transportation markets. In the future, we may
face competition from traditional



12



---

automotive component suppliers, such as Bosch, Delphi, Siemens and Visteon, and from motor vehicle OEMs that develop fuel systems internally.



We believe that our competitive advantage over
current and future competitors is our technology leadership derived from many years of experience with alternative gaseous fuels. Our current competitors typically focus on fuel injection and individual components. We are unique in being able to
offer complete integrated fuel systems based on our own advanced technologies, including gaseous fuel storage, fuel metering, and electronic controls.



Product Certification



We must obtain emission compliance certification from the Environmental Protection Agency to sell certain of our products in the United
States and from the California Air Resources Board to sell certain products in California. Each car, truck or van sold in the U.S. market must be certified by the Environmental Protection Agency before it can be introduced into commerce and its
products must meet component, subsystem and system level durability, emission, refueling and various idle tests. In California, both on-road and off-road vehicles have emission compliance regulation. We have also obtained international emissions
compliance certification in Argentina, Australia, Brazil, Canada, Chile, Europe and Mexico.



We strive to meet stringent industry standards set by various regulatory bodies, including the Federal Motor Vehicle Safety Standards of the United States, the National Highway and Transportation
Safety Administration, the National Fire Protection Association, Underwriters Laboratories and American Gas. Approvals enhance the acceptability of our products in the domestic marketplace. Many foreign countries also accept these agency approvals
as satisfying the approval for sale requirements in their markets.



Backlog



As of February
28, 2003, our backlog for our products was $13.5 million. We measure backlog for our product sales from the time orders become irrevocable, which generally occurs 90 days prior to the planned delivery date.



Employees



As of December 31, 2002, we employed approximately 376 persons. Of these employees, approximately 205 were
employed by our U.S. Operations and 171 were employed by our International Operations. None of our employees are represented in a collective bargaining agreement. Management considers our relations with our employees to be good.



Intellectual Property



We currently rely primarily on patent and trade secret laws
to protect our intellectual property. We currently have 11 U.S. patents and 18 foreign patents issued. Our U.S. patents began expiring in October 2002 and will expire on various dates until May 2020. We do not expect the expiration of our patents to
have a material affect on our revenues.



We also
rely on a combination of trademark, trade secret and other intellectual property laws and various contract rights to protect our proprietary rights. However, we cannot be sure that these intellectual property rights provide sufficient protection
from competition. We believe that copyright, trademark and trade secret protection are less significant than our patents and that our growth and future success will be more dependent on factors such as the knowledge, ability and experience of our
personnel, new product introductions and continued emphasis on research and development. We believe that establishing and maintaining strong strategic relationships with valued customers and OEMs are the most significant factors protecting us from
new competitors.



13



---

Item 2.Properties.



Facilities



Our executive offices and our Gaseous Fuel Products division
are located in Cerritos, California. We currently lease additional manufacturing, research and development and general office facilities in the following locations set forth below:



|Location                   |  | Principal Uses                                                    |  | Square Footage
|-------------------------- |  | ----------------------------------------------------------------- |  | --------------
|Cerritos, California       |  | Corporate offices; manufacturing; design, development and testing |  | 105,000       
|Sterling Heights, Michigan |  | Sales, marketing application, development and assembly            |  | 78,000        
|Seattle, Washington        |  | Research and development                                          |  | 26,000        
|Rijswijk, Holland          |  | Sales, marketing application, development and assembly            |  | 16,000        
|Cheltenham, Australia      |  | Sales, marketing application, development and assembly            |  | 15,000        
|Sydney, Australia          |  | Sales, marketing and assembly                                     |  | 7,500         
|Mexico City, Mexico        |  | Sales, marketing application, development and assembly            |  | 12,000        
|Gurgaon, India             |  | Sales, marketing application, development and assembly            |  | 18,000        
|Longquanyi, China          |  | Sales, marketing and assembly                                     |  | 14,000        
|Fukuoka, Japan             |  | Sales, marketing and assembly                                     |  | 4,000         



We also
lease nominal amounts of office space in France, the United Kingdom and Queensland, Australia.



We believe our facilities are presently adequate for our current core product manufacturing operations and OEM development programs and production.



Item 3.Legal Proceedings.



We are not currently a party to any
material legal proceeding. However, we may from time to time become involved in litigation relating to claims arising in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial
and managerial resources.



Item
4.Submission of Matters to a Vote of Security Holders.



During the transition period ended December 31, 2002, our shareholders met on November 14, 2002 and re-elected Norman L. Bryan and Don J.
Simplot to three-year terms, approved our 2002 Stock Option Plan for Employees and our 2002 Stock Option Plan for Non-Employee Directors and ratified the appointment of Ernst & Young LLP as our independent auditors.



14



---

PART II



Item 5.Market for Companys Common Equity and Related Stockholder
Matters.



Our common stock is
traded on the Nasdaq National Market under the symbol IMCO. The following table sets forth, for the periods indicated, the closing high and low sale prices of our common stock as reported on the Nasdaq National Market. Closing high and
low sale prices for fiscal years 2001 and 2002 have been adjusted for the Quantum spin-off on July 23, 2002.



|                                           |  | High |       | Low
|------------------------------------------ |  | ---- | ----- | ---
|Fiscal Year Ended April 30, 2001:          |  |      |       |    
|First Quarter                              |  | $    | 23.84 |    
|Second Quarter                             |  |      | 18.04 |    
|Third Quarter                              |  |      | 12.45 |    
|Fourth Quarter                             |  |      | 14.87 |    
|                                          
|Fiscal Year Ended April 30, 2002:          |  |      |       |    
|First Quarter                              |  | $    | 22.40 |    
|Second Quarter                             |  |      | 16.48 |    
|Third Quarter                              |  |      | 9.84  |    
|Fourth Quarter                             |  |      | 9.43  |    
|                                          
|Transition Period Ended December 31, 2002: |  |      |       |    
|First Quarter                              |  | $    | 7.95  |    
|Second Quarter                             |  |      | 5.51  |    
|November & December                        |  |      | 4.95  |    



As of
March 15, 2003, there were approximately 534 stockholders of record.



Dividend Policy



The
Company has never paid dividends on its common stock. We previously paid cumulative cash dividends to the holders of our 1993 Series 1 Preferred Stock. On March 31, 1999, each share of preferred stock was converted into shares of our common stock.
As a result, after March 31, 1999, we have no shares of preferred stock outstanding and have no obligation to pay any further dividends on those shares.



We currently intend to retain any earnings for use in developing and growing our business and do not anticipate paying any cash dividends
on our common stock in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent on our results of operations, financial condition, contractual restrictions,
restrictions imposed by applicable law and other factors deemed relevant by the board of directors.



Item 6.Selected Financial Data.



The following table sets forth our selected consolidated financial data for each of the five fiscal years ended April 30, 2002, 2001,
2000, 1999 and 1998 and for the eight-month transition period ended December 31, 2002, as well as a comparative eight-month period ended December 31, 2001. With the exception of the comparative eight month period ended December 31, 2001, which has
been derived from our unaudited financial data, this data has been derived from our audited consolidated financial statements and should be read in conjunction with the consolidated financial statements, related notes and other financial information
included herein. The financial results of Quantum are shown below as a loss on discontinued operation, net of tax.



15



---



|                                                          |  | Year Ended April 30,                      |        |   | Transition |  
|--------------------------------------------------------- |  | ----------------------------------------- | ------ | - | ---------- | -
|                                                          |  | 1998                                      |        |   | 1999       |  
|Statement of Operations:                                  |  | (in thousands, except for per share data)
|Revenue:                                                  |  |                                           |        |   |            |  
|Net revenue                                               |  | $                                         | 58,755 |   |            | $
|Cost and expenses:                                        |  |                                           |        |   |            |  
|Cost of sales                                             |  |                                           | 33,363 |   |            |  
|Research and development expense                          |  |                                           | 1,173  |   |            |  
|Selling, general and administrative                       |  |                                           | 10,290 |   |            |  
|Operating income (loss)                                   |  |                                           | 13,929 |   |            |  
|Interest expense                                          |  |                                           | 938    |   |            |  
|Interest income                                           |  |                                           | 3      |   |            |  
|Gain on sale of subsidiary (1)                            |  |                                           |       |   |            |  
|Income (loss) from continuing operations (net of tax) (4) |  |                                           | 10,677 |   |            |  
|Loss on discontinued operation (net of tax)               |  |                                           | (5,812 | ) |            |  
|Net income (loss)                                         |  |                                           | 4,865  |   |            |  
|Dividends on preferred stock                              |  |                                           | 595    |   |            |  
|Net income (loss) applicable to common stock              |  | $                                         | 4,270  |   |            | $
|Net income (loss) per share (1)(2):                       |  |                                           |        |   |            |  
|Basic:                                                    |  |                                           |        |   |            |  
|Income (loss) from continuing operations                  |  | $                                         | 1.69   |   |            | $
|Loss from discontinued operation                          |  |                                           | (0.92  | ) |            |  
|Net income (loss)                                         |  |                                           | 0.67   |   |            |  
|Diluted:                                                  |  |                                           |        |   |            |  
|Income (loss) from continuing operations                  |  | $                                         | 1.31   |   |            | $
|Loss from discontinued operations                         |  |                                           | (0.71  | ) |            |  
|Net income (loss)                                         |  |                                           | 0.60   |   |            |  
|Number of shares used in per share computation (2)(3):    |  |                                           |        |   |            |  
|Basic                                                     |  |                                           | 6,334  |   |            |  
|Diluted                                                   |  |                                           | 8,155  |   |            |  
|Balance Sheet Data:                                       |  |                                           |        |   |            |  
|Total current assets                                      |  | $                                         | 38,817 |   |            | $
|Total assets                                              |  |                                           | 58,178 |   |            |  
|Total current liabilities                                 |  |                                           | 11,417 |   |            |  
|Long-term obligations, less current portion               |  |                                           | 11,387 |   |            |  
|Stockholders equity                                      |  |                                           | 34,305 |   |            |  

---

|(1) |  | Represents gain on sale of 49% interest in IMPCO BV by BERU Aktiengesellschaft during fiscal 1999. We recorded a pre-tax gain of $2.2 million and an after-tax gain
of $1.8 million or $0.20 per share.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | During fiscal year 1998, shares assumed to be issued upon conversion of our preferred stock were included in the calculation of shares outstanding since the
conversion resulted in reportable dilution. During fiscal year 1999, all of our preferred stock was converted to common stock and the diluted earnings per share was calculated as though the conversion occurred at the beginning of fiscal year 1999.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | See note 1 of the notes to the consolidated financial statements included elsewhere in this Form 10-K for an explanation of the method used to determine the number
of shares used to compute the net income per share.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Includes in the eight months ended December 31, 2002 a $24.0 million valuation allowance to establish a reserve for the deferred tax assets that are unlikely to be
realized in the next three years (See Critical Accounting Policies beginning at p. 19 below)
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



---



Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.



You should read this discussion together with the financial statements and notes thereto and the other
financial information included in this Transition Report on Form 10-K.



Overview



We design,
manufacture and supply components that store gaseous fuels and monitor and control the pressure and flow of those fuels for use in internal combustion engines. Historically, most of our revenues have been derived from the sale of the products that
enable traditional internal combustion engines to run on clean burning alternative fuels such as propane and natural gas instead of gasoline. Based on over 44 years of technology development and expertise in producing cost-effective, safe, and
durable fuel technology systems for engines, we believe that we are positioned to provide enabling products and technologies in the rapidly expanding alternative fuel industry.



Prior to the Quantum spin-off on July 23, 2002, we classified our business operations into three reporting
segments: our Quantum division, the Gaseous Fuel Products division and International Operations. As a result of the spin-off of Quantum, we have reported Quantum as a discontinued operation and have renamed our Gaseous Fuel Products division, U.S.
Operations division. Our U.S. Operations division sells products, including parts and conversion systems, for applications in the transportation and industrial markets, which include the material handling, stationary and portable power generator and
general industrial markets. Our International Operations division provides distribution for our products in Asia, Australia, Europe, India, Japan and Mexico, predominantly from our U.S. Operations division and some product assembly.



Corporate expenses represent a sub-category of selling,
general and administrative expense. Corporate expenses consist of general and administrative expense incurred at the corporate level and includes the amortization of goodwill, except for the transition period ended December 31, 2002, and other
intangible assets. Intersegment eliminations are primarily the result of intercompany sales from our U.S. Operations to our International Operations.



We expense all research and development when incurred. Research and development expense includes both customer-funded research and
development and company-sponsored research and development. Customer funded research and development consists primarily of expenses associated with contract revenue.



Recent Developments



Quantum Spin-off.



On July 23, 2002, we completed the distribution and spin-off of our Quantum subsidiary by distributing one share of Quantum common stock
for every share of IMPCO common stock held on the record date, which was July 5, 2002. Since we completed the Quantum spin-off in July 2002 we no longer are engaged in fuel cell technology research, although we do have a continuing collaboration
arrangement for certain research and development activities. We believe that the spin-off enables IMPCO to optimize its growth strategies as a separate, stand-alone entity, based on its prospective capitalization and financing requirements,
acquisition strategies, working capital requirements, projected cash flows from operations and desired credit ratings.



We have included a discussion on the Quantum reporting segment since the financial results of Quantum were included in the transition
period ended December 31, 2002 and our fiscal years ended April 30, 2000, 2001 and 2002 consolidated results of operations. As a result of the spin-off of Quantum, we have reported Quantum as a discontinued operation. Readers should note that
financial data that includes periods before the Quantum spin-off may not present a meaningful comparison with later periods because of the effect of the discontinued



17



---

operation. Management expects the Quantum spin-off to have a favorable effect on our results of operations and cash flows from operations.



Capital Transactions.



On May 8, 2002 we sold 1,500,000 shares of our common stock
to institutional and accredited investors at a purchase price of $12.50 per share, for gross proceeds of $18.75 million. We initially expected to use the proceeds of this offering for potential acquisitions, debt repayment, and general corporate
purposes; however, owing to a delay in effecting the Quantum spin-off, we used a portion of these proceeds to fund Quantums continuing operations until its separation from our core business.



On October 3, 2002 we entered into an option agreement that,
if exercised, would permit us to acquire 50% of the currently outstanding equity interests of B.R.C. Societá a Responsabilitá Limitata, an Italian limited liability company (BRC). As consideration for the option, we (i)
paid to the BRC equity holders US$1,500,000 in cash on October 3, 2002 and (ii) issued to the BRC equity holders 2,309,470 shares of common stock on November 29, 2002, which equals approximately 16% of our outstanding common stock on a
pre-transaction basis. The shares were issued in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Regulation S, and on the exemption from registration afforded to private placements
under Section 4(2) of the Securities Act. Of the shares issued to the BRC equity holders, 1,662,818, or 72%, are subject to a lockup agreement that restricts their resale until certain dates beginning in August 2004. The following table presents the
relevant expiration dates and number of shares as to which the lockup agreement expires. See also Plan of Distribution.





|Date             |  | Shares Available for Sale
|---------------- |  | -------------------------
|August 1, 2004   |  | 277,691                  
|February 1, 2005 |  | 460,601                  
|August 1, 2005   |  | 460,601                  
|February 1, 2006 |  | 463,925                  



To
exercise the option, we initially were required to give BRC a written notice between January 1 and January 15, 2003, and to pay the selling stockholders an additional US$4,250,000 plus 1,250,000 in cash no later than January 31, 2003. We also
would be required to pay an additional US$7,000,000 (subject to reduction if certain conditions are not met with respect to BRCs accounts receivable collections) before September 30, 2003. We and the selling stockholders subsequently entered
into an agreement extending the notice date to February 17, 2003 and the exercise date to April 18, 2003. We gave the required notice on February 15, 2003 and currently are exploring various alternatives to finance both the April 2003 and September
2003 payments of the purchase price. If we are unable to obtain financing to pay the required April payment, the selling shareholders would retain the cash portion of the purchase price paid through March 31, 2003 of approximately $3.8 million and
would be required to return the 2,309,470 shares of common stock.



We believe the option affords us a valuable strategic opportunity, and if exercised, that we would recognize significant benefits. M.T.M. S.r.l., a subsidiary of BRC, has been developing, manufacturing and marketing
alternative gaseous fuel products and systems for automobiles for more than twenty years. Management believes BRC is a leader in the transportation sector of the gaseous fuels products market. BRC conducts business in all fifteen European Union
nations, as well as ten Eastern European countries and a number of developing nations including Brazil, Argentina, Chile, Australia, India, China, Thailand and South Korea. We believe this relationship with BRC will enable us to expand our position
in end user markets across a vast portion of the world. In addition, we anticipate that the manufacturing strengths of BRC, coupled with the additional product volume we hope to derive from the relationship, should result in significant productivity
improvements. Furthermore, we believe that this agreement places us in the position to exploit our combined technology and product strengths through a strong global representation in the emerging alternative fuels industry.



18



---



Change of
Fiscal Year



Our fiscal year has
traditionally ended on April 30, and our fiscal quarters on July 31, October 31 and January 31. On November 14, 2002 we changed our fiscal year so that effective January 1, 2003 our fiscal year will be the calendar year. As a result, we filed a
Quarterly Report on Form 10-Q on December 16, 2002 for the quarterly period ended October 31, 2002, and this transition report on Form 10-K covers the transition period from May 1, 2002 through December 31, 2002.



Critical Accounting Policies and Estimates



The discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to
bad debts, goodwill, taxes, inventories, warranty obligations, long-term service contracts, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.



We believe the
following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:



We recognize revenue for product sales when title is transferred, ordinarily when products are shipped, and
when management is reasonably assured of collectibility.



We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our component
suppliers, our warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from
our estimates, revisions to the estimated warranty liability would be required.



We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future
demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our
customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required.



We operate wholly owned and majority owned subsidiaries. We
recorded goodwill at the time of purchase for the amount of the purchase price over the fair value of the assets and liabilities acquired. Future adverse changes in market conditions or poor operating results of underlying investments could result
in losses or an inability to recover the carrying value of the goodwill, thereby possibly requiring an impairment charge in the future.



We have recorded a deferred tax asset and have recorded a $24.0 million valuation allowance for that portion of the asset that we believe
is not likely to be realized in the next three years. We considered our recent operating results, future taxable income and ongoing prudent and feasible tax planning strategies in determining the amount of the valuation allowance required for the
portion of the deferred tax asset that is not likely to be



19



---

realized in the next three years, notwithstanding that a significant portion of our deferred tax assets may have a longer life under
applicable tax laws. On a quarterly basis, we will continue to analyze the deferred tax asset and the reserve required for the portion of the asset that is unlikely to be realized in the next three years. Future adverse changes in market conditions,
poor operating results or a decline in our projections about future profitability may affect our assessment of the adequacy of the reserve. In the event that we determine that it is more likely than not that we would be unable to realize an
additional portion of our net deferred tax asset, an additional adjustment to the deferred tax asset valuation allowance would be charged to income in the period such determination was made.



Results of Operations



Eight-Month Periods Ended December 31, 2002 and 2001



Net revenues and operating income for our reporting segments
for the eight-month period ended December 31, 2002 (2002) or transition period and the corresponding period of 2001 are as follows:





|                          |  | Revenues Eight Months Ended December 31, |         |   | Operating Income (Loss) Eight Months Ended December 31, |  
|------------------------- |  | ---------------------------------------- | ------- | - | ------------------------------------------------------- | -
|                          |  | 2001                                     |         |   | 2002                                                    |  
|                          |  | (in thousands)                           |        
|U.S. Operations           |  | $                                        | 35,868  |   |                                                         | $
|International Operations  |  |                                          | 22,222  |   |                                                         |  
|Corporate Expense         |  |                                          |        |   |                                                         |  
|Intersegment Eliminations |  |                                          | (12,383 | ) |                                                         |  
|                          |  |                                          |         |   |                                                         |  
|Totals                    |  | $                                        | 45,707  |   |                                                         | $
|                          |  |                                          |         |   |                                                         |  



The
following table sets forth our product revenues by application across all reporting segments for the transition period and the corresponding period of 2001:



|               |  | Revenues Eight Months Ended December 31,
|-------------- |  | ----------------------------------------
|               |  | 2001                                    
|Industrial     |  | $                                       
|Transportation |  |                                         
|               |  |                                         
|Totals         |  | $                                       
|               |  |                                         



During
the transition period and the corresponding period of 2001, our revenue was generated in the following geographic regions by percent proportions:



|                         |  | Eight-month Period Ended December 31, |  
|------------------------ |  | ------------------------------------- | -
|                         |  | 2001                                  |  
|United States and Canada |  | 42.7                                  | %
|Asia & Pacific Rim       |  | 10.9                                  | %
|Europe                   |  | 30.3                                  | %
|Latin America            |  | 16.1                                  | %



Net
revenue increased $0.7 million, or 1.6%, to $46.4 million in the transition period from $45.7 million in 2001. The revenue increase was primarily due to a $5.7 million increase in net sales of our products to the transportation market partially
offset by a $5.0 million decline in net sales of our products to the industrial



20



---

market. The decline in the industrial market was due primarily to the continued economic slowdown affecting the industrial markets in the
United States, particularly following the events of September 11, 2001. We believe our sales into the transportation market have continued to grow, particularly in Mexico, due to a favorable price differential between conventional and alternative
fuels.



Our operating loss increased by
approximately $0.9 million, or 352.5% from a $0.3 million loss in 2001 to a $1.2 million operating loss in 2002. The increase in operating loss in 2002 is due primarily to reduced gross profit on product shipments from both the U.S. and
International operations partially offset by reduced expenses for research and development and selling, general and administrative expenses.



U.S. Operations.    Net revenues from U.S. Operations decreased $2.7 million, or 7.6%, to $33.2 million in the
eight-month transition period ended December 31, 2002 from net revenues of $35.9 million in the same period in 2001. The decrease in sales during the current period is due primarily to a $9.0 million decline in gross revenue for the industrial
market offset by a $6.3 million increase in revenues for the transportation market.



Gross profit in this segment decreased $2.5 million, or 24.7%, to $7.6 million in the transition period of 2002 from $10.0 million in 2001. Approximately $0.8 million of the decline in gross profit was
due to a decline in revenue and approximately $1.7 million of the decline was due to comparably lower margins in the transportation market than the industrial market.



For the transition period ended 2002, operating income decreased by $1.2 million, or 41%, as compared to the
same period in 2001. The reduction in operating profit was due to a reduction in gross profit of $2.5 million offset by a reduction in operating expenses of $1.3 million. Approximately $1.0 million of the reduction in operating expenses was due to
lower research and development expenses.



International Operations.    For the eight months ended December 31, 2002, net revenue increased by approximately $3.1 million to $25.3 million, compared to $22.2 million reported for the same period in the
prior calendar year. The growth in revenue was due primarily to a 97% increase in revenues from our Mexican subsidiary offset by a reduction of 24% in revenues from our European subsidiary. By market segment, the increase in sales during 2002 was
caused primarily by a $5.0 million increase in gross revenue from the transportation market offset by a $1.9 million decline in revenues from the industrial market.



Gross profit for the transition period of 2002 decreased approximately $0.4 million, or 5.9%, as compared to
the same period in 2001. Approximately $1.2 million of the decline in gross profit was due to changes in product mix offset by approximately $0.8 million attributable to the increase in revenue.



During the transition period of 2002, operating income
decreased by approximately $0.4 million, or 37.3%, as compared to the same periods in the prior calendar year. The reduction in operating profit was due to a reduction in gross profit of $0.4 million.



Corporate Expenses.    Corporate
expenses consists of general and administrative expenses at the corporate level to support our operating segments in areas such as executive management, finance, human resources, management information systems, legal services and investor relations.
As of May 1, 2002, the amortization of goodwill and other intangible assets is no longer recorded as a corporate expense due to the implementation of Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible
Assets. During 2001, approximately $0.5 million of amortization of goodwill and other intangibles was charged to corporate expense. Corporate expenses for 2002 were approximately $1.0 million less than the corresponding period of calendar year
2001 and are attributable to legal and consulting expenses totaling approximately $1.2 million that were incurred during 2001 in connection with Quantum spin-off costs and an S-3 registration statement filing that was withdrawn on September 20, 2001
offset by higher one-time expenses for severance, accelerated accruals for audit fees and investor relations expenses due to the change in the fiscal year and not recognized in



21



---

the eight months ended December 31, 2001, and other non-recurring expenses related to employee training expenses, insurance and
administrative costs.



Interest
Expense.    Netinterest expense for 2002 was $0.7 million compared to $0.8 million for the corresponding period of 2001. As of December 31, 2002 and April 30, 2002, total amounts due for bank lines of credit and term
loans were $14.2 million and $19.4 million, respectively.



Provision For Income Taxes.    We established a $24.0 million valuation allowance for deferred tax assets in the current year, which affected our estimated effective annual tax rate of 1,111.7% for the
transition period ended December 31, 2002. We believe it is more likely than not that a portion of our deferred tax asset will not be realized and established a reserve for those assets that are not likely to be utilized in the next three years,
notwithstanding that some of these may have longer lives under applicable tax laws. Federal net operating loss carryforwards of $66.5 million expire in 2020 and 2021. We have federal and state research and development credit carryforwards
aggregating approximately $10.9 million. Federal research and development credits totaling $6.2 million expire from 2008 to 2020. State research and development credits of $3.6 million have no expiration. As of December 31, 2002, the deferred
tax asset, net of the $24.0 million reserve, was $9.4 million. We believe that, based on our history of prior operating earnings, our completed spin-off of Quantum and our expectations for the future, our operating income will more likely than not
be sufficient to recognize fully the net deferred tax assets within the next three years. Future adverse changes in market conditions, poor operating results or a decline in our projections about future profitability may affect our assessment of the
adequacy of the reserve. In the event that we determine that it is more likely than not that we would be unable to realize an additional portion of our net deferred tax asset, an additional adjustment to the deferred tax asset valuation allowance
would be charged to income in the period such determination was made.



Discontinued Operation.    We completed the spin-off of Quantum on July 23, 2002. The loss from discontinued operation during the transition period ended December 31, 2002 was $5.2 million
or $3.1 million, net of a $2.1 million tax benefit. For the same period ended December 31, 2001, the loss from discontinued operation was approximately $28.7 million or $17.2 million, net of a $11.5 million tax benefit.



Years Ended April 30, 2001 and 2002



Net revenues and operating income for our reporting segments
for the twelve-month period ended April 30, 2001 and 2002 are as follows (in thousands):



|                          |  | RevenuesFiscal Year Ended April 30, |         |   | Operating Income (Loss)
Fiscal Year Ended April 30, |  
|------------------------- |  | ----------------------------------- | ------- | - | --------------------------------------------------- | -
|                          |  | 2001                                |         |   | 2002                                                |  
|U.S. Operations           |  | $                                   | 66,925  |   |                                                     | $
|International Operations  |  |                                     | 31,132  |   |                                                     |  
|Corporate Expense         |  |                                     |        |   |                                                     |  
|Intersegment Eliminations |  |                                     | (17,518 | ) |                                                     |  
|                          |  |                                     |         |   |                                                     |  
|Totals                    |  | $                                   | 80,539  |   |                                                     | $
|                          |  |                                     |         |   |                                                     |  



Net
revenue decreased $12.8 million, or 15.9%, to $67.7 million in the twelve-month period ended April 30, 2002 from $80.5 million in the twelve-month period ended April 30, 2001. This decrease was primarily due to the decline in sales of conversion
kits and components to the material handling market, which were attributable to unfavorable economic conditions.



22



---



The following
table sets forth our product revenues by application across all reporting segments:



|               |  | Revenues Fiscal Year Ended April 30,
|-------------- |  | ------------------------------------
|               |  | 2001                                
|Industrial     |  | $                                   
|Transportation |  |                                     
|               |  |                                     
|Totals         |  | $                                   
|               |  |                                     



During
fiscal years 2001 and 2002, our revenue was generated in the following geographic regions in the following percent proportions:



|                         |  | Twelve-month Period Ended April 30, |  
|------------------------ |  | ----------------------------------- | -
|                         |  | 2001                                |  
|United States and Canada |  | 55.0                                | %
|Asia & Pacific Rim       |  | 13.0                                | %
|Europe                   |  | 20.2                                | %
|Latin America            |  | 11.8                                | %



U.S.
Operations.    Net revenues in this segment decreased $14.9 million, or 22.2%, to $52.1 million in the twelve-month period ended April 30, 2002 from $66.9 million in the twelve-month period ended April 30, 2001. Revenues were
lower primarily due to the decline in sales of our products to the material handling market. We believe this decline in sales was caused by the current economic slowdown. The increase in our large stationary engine market was largely offset by the
decline in our small industrial engine market.



Gross profit in this segment decreased $8.0 million, or 35.9%, to $14.3 million in the twelve-month period ended April 30, 2002 from $22.3 million in the twelve-month period ended April 30, 2001. The decline in revenues negatively
impacted gross profit by $5.0 million. The remaining $3.0 million decline in gross profit was due to product mix consisting of a higher percentage of lower margin complete engine systems sales and lower margin sales to our foreign subsidiaries.



Operating income in this segment decreased $7.7
million, or 69.4%, to $3.4 million in the twelve-month period ended April 30, 2002 from $11.1 million in the twelve-month period ended April 30, 2001. This decrease was due to lower gross profits offset by a net $0.3 million reduction in operating
expenses.



International
Operations.    Net revenues in this segment increased by $1.7 million, or 5.5%, to $32.8 million in the twelve-month period ended April 30, 2002 from $31.1 million in the twelve-month period ended April 30, 2001. In the
twelve-month period ended April 30, 2002, net revenues increased $4.1 million at our Mexico subsidiary, $0.7 million in Asia, and $0.4 million at our European subsidiary. These increases were partially offset by decreases of $2.5 million at our
Australian subsidiary and $1.0 million at our Japan subsidiary. In the twelve-month period ended April 30, 2002, revenues for our International Operations segment would have increased an additional $0.4 million if not for the strengthening of the
U.S. Dollar. A strong U.S. Dollar has a negative effect on the conversion of foreign currency denominated sales.



Gross profit in this segment decreased $0.6 million, or 6.2%, to $8.3 million in the twelve-month period ended April 30, 2002 from $8.9
million in the twelve-month period ended April 30, 2001. Gross profit declined $1.1 million due to lower margins due to differences in product mix, which was partially offset by a $0.5 million increase in gross profit due to higher revenues.



Operating income for this segment decreased $0.8
million, or 57.1%, to $0.6 million in the twelve-month period ended April 30, 2002 from $1.4 million in the twelve-month period ended April 30, 2001 as all foreign subsidiaries except Mexico experienced lower operating income. This was primarily a
result of lower gross



23



---

margins due to the higher cost of U.S. goods purchased with their weakening local currencies. Additionally, we added marketing and technical
personnel to support new and expanding markets in Asia, which resulted in increased operating expenses in the twelve-month period ended April 30, 2002 as compared to the twelve-month period ended April 30, 2001.



Corporate Expenses.    Corporate
expenses consists of general and administrative expenses at the corporate level to support our operating segments in areas such as executive management, finance, human resources, management information systems, legal services and investor relations.
Additionally, amortization of goodwill and other intangible assets was recorded as a corporate expense. Corporate expenses increased $0.9 million, or 15.3%, to $6.8 million in the twelve-month period ended April 30, 2002 from $5.9 million in the
twelve-month period ended April 30, 2001. During the twelve month period ended April 30, 2002, the increase in corporate expenses were attributable to $1.2 million in legal fees and consulting services primarily related to Quantum spin-off
costs and our From S-3 filing in connection with a follow-on equity offering, which was withdrawn on September 20, 2001.



Interest Expense (Net).    Net interest expense increased by $0.8 million, to $0.9 million, in the twelve-month
period ended April 30, 2002 from $0.1 million in the twelve-month period ended April 30, 2001. The increase was primarily due to a higher outstanding balance from our line of credit with Bank of America, as compared to the interest income generated
from the proceeds of the July 2000 equity offering in the first quarter of the prior fiscal year.



Provision for Income Taxes.    The estimated effective annual tax benefit rate of 40% for the twelve-month
period ended April 30, 2002 was less than the tax benefit rate of 41% in the twelve-month period ended April 30, 2001. The effective tax benefit rate represents the federal statutory income tax rate, state income taxes and foreign income taxes
increased by research and development credits. For the twelve-month period ended April 30, 2002, including the effects of the discontinued operation, we have incurred a $45.5 million loss before income taxes and minority interest. Also, we had
federal and state research and development credit carryforwards aggregating approximately $10.7 million. Federal research and development credits totaling $6.4 million expire from 2010 to 2022. State research and development credits of $4.2 million
have no expiration date. As of April 30, 2002, the net deferred tax asset was $31.9 million.



Discontinued Operation.    Prior to the completed spin-off of Quantum on July 23, 2002, the loss from discontinued operation during the fiscal year ended April 31,
2002 was $41.7 million, or $25.0 million net of a $16.7 million tax benefit. For the same period ended April 30, 2001, the loss from discontinued operation was approximately $28.6 million, or $16.8 million net of a $11.8 million tax benefit.



Fiscal Years Ended April 30, 2001 and 2000



Net revenues and operating income for our reporting segments
for the fiscal years ended April 30, 2000 and 2001 are as follows:



|                          |  | Revenues Fiscal Year Ended April 30, |         |   | Operating Income(Loss)
Fiscal Year Ended April 30, |  
|------------------------- |  | ------------------------------------ | ------- | - | -------------------------------------------------- | -
|                          |  | 2000                                 |         |   | 2001                                               |  
|U.S. Operations           |  | $                                    | 76,831  |   |                                                    | $
|International Operations  |  |                                      | 29,991  |   |                                                    |  
|Corporate Expense         |  |                                      |        |   |                                                    |  
|Intersegment Eliminations |  |                                      | (16,347 | ) |                                                    |  
|                          |  |                                      |         |   |                                                    |  
|Totals                    |  | $                                    | 90,475  |   |                                                    | $
|                          |  |                                      |         |   |                                                    |  



24



---



The following
table sets forth our revenues by application across all reporting segments:



|               |  | Revenues Fiscal Year Ended April 30,
|-------------- |  | ------------------------------------
|               |  | 2000                                
|Industrial     |  | $                                   
|Transportation |  |                                     
|               |  |                                     
|Totals         |  | $                                   
|               |  |                                     



During
fiscal years 2000 and 2001, our revenue was generated in the following geographic regions in the following percent proportions:



|                         |  | Year Ended April 30, |  
|------------------------ |  | -------------------- | -
|                         |  | 2000                 |  
|United States and Canada |  | 54.5                 | %
|Asia & Pacific Rim       |  | 10.6                 | %
|Europe                   |  | 15.6                 | %
|Latin America            |  | 19.3                 | %



Net
revenue decreased $9.9 million, or 11.0%, to $80.5 million in fiscal year 2001 from $90.5 million in fiscal year 2000. Revenues into the industrial marketplace, which consisted of forklifts, material handling engine systems, and large industrial
engine systems increased slightly by 0.7% to $54.1 million while revenues into the transportation marketplace declined by 28% to $24.4 million. This decrease was primarily due to short-term declines in the transportation aftermarket end use due to
less favorable alternative fuel prices and the decline in small industrial engine sales related to year 2000 (Y2K) preparedness.



U.S. Operations.    Net revenues from our United States Operations decreased $9.9 million, or 12.9%, to $66.9
million in fiscal year 2001 from $76.8 million in fiscal year 2000. Revenues were lower primarily due to an $8.1 million slowdown in sales to distributors in Mexico for transportation aftermarket sales. These lower shipments were caused primarily by
reduced volumes in aftermarket public transportation programs, a reduction in prices due to increased competition and a reduction in demand in the Mexican market primarily due to higher propane prices. Additionally, revenues were lower due to a $4.5
million decline in small engine sales related to year 2000 preparedness. These decreases were partially offset by $4.5 million in higher sales of material handling engine systems and for large industrial engine end uses at our engine systems
business.



Gross profit in this segment decreased
$4.3 million, or 16.2%, to $22.3 million in fiscal year 2001 from $26.6 million in fiscal year 2000. The decline in revenues negatively impacted gross profit by $3.4 million. The higher percentage of sales to our foreign subsidiaries, which involve
lower margins, adversely affected gross profit by approximately $0.8 million.



Operating income for this segment decreased $8.3 million, or 42.7%, to $11.1 million in fiscal year 2001 from $19.5 million in fiscal year 2000. This decrease was primarily due to lower gross profits
of $4.3 million and higher application development expenses of $4.2 million as compared to the prior fiscal year. The increase in product application development expenses are primarily related to the development of the next generation
 fuel/engine management systems for the material handling and industrial engine market.



International Operations.    Net revenues in this segment increased by $1.1 million, or 3.7%, to $31.1 million in fiscal year 2001 from $30.0 million in fiscal year
2000. In fiscal year 2001, revenues for our International Operations segment would have increased an additional $3.2 million, if not for the strengthening of the U.S. Dollar. A strong U.S. Dollar has a negative effect on the conversion of foreign
currency denominated sales.



Operating income for
this segment decreased $1.2 million, or 46.2%, to $1.4 million in fiscal year 2001 from $2.6 million in fiscal year 2000 as all foreign subsidiaries experienced lower operating income. This was



25



---

primarily a result of lower gross margins due to the higher cost of U.S. goods purchased with their weakening local currencies. Additionally,
we added marketing and technical personnel to support these aspects of the business, which resulted in increasing operating expenses compared to the prior fiscal year.



Corporate Expenses.    Corporate expenses consists of general and administrative
expenses at the corporate level to support our operating segments in areas such as executive management, finance, human resources, management information systems, legal services and investor relations. Additionally, amortization of goodwill and
other intangible assets was recorded as a corporate expense. Corporate expenses remained flat from fiscal year 2000 to fiscal year 2001. Higher legal expenses of $0.6 million relating to our patent infringement lawsuit against GFI Control Systems,
Inc., higher costs pertaining to investor relations of $0.2 million and higher personnel costs of $0.2 million relating to European business development activities were offset by high one-time legal expenses incurred in the previous year.



Interest
Expense.    Interest expense decreased $0.4 million, or 26.7%, to $1.1 million in fiscal year 2001 as compared with the $1.5 million reported in fiscal year 2000. $1.3 million in interest income offset interest expense in
fiscal year 2001, which was attributable to the proceeds from our July 2000 equity offering that provided us with net proceeds equal to $53.5 million. We paid off the Bank of America working capital line of credit at the end of the first quarter and
we invested the remaining amount in short-term investments and money market accounts.



Provision for Income Taxes.    We recorded an effective annual tax benefit rate of 41% for fiscal year 2001. The effective tax benefit rate represents the federal statutory
income tax rate, state income taxes and foreign income taxes increased by research and development credits. For fiscal year 2001, including the effect of the discontinued operation, we had incurred a $23.0 million loss before income taxes and
minority interest. We carried a portion of this NOL back to the prior two taxable years resulting in $1.5 million in tax refunds. Research and development credits, freed up by the NOL carryback, may be carried forward to future taxable years. At the
end of fiscal year 2001, federal and state research and development credit carryforwards were  $6.6 million. Federal research and development credits totaling $4.7 million expire between 2009 and 2021. State research and development credits of
$1.9 million have no expiration. At the end of fiscal year 2001, our net deferred tax assets were $12.8 million.



Discontinued Operation.    Prior to the completed spin-off of Quantum on July 23, 2002, the loss from
discontinued operation during the fiscal year ended April 31, 2001 was $28.6 million or $16.8 million, net of a $11.8 million tax benefit. For the same period ended April 30, 2000, the loss from discontinued operation was approximately $9.2 million
or $7.0 million, net of a $2.2 million tax benefit.



Liquidity
and Capital Resources



Our ongoing
operations are funded by cash generated from operations, debt financings and sales of our equity securities. In addition, these sources of cash provide for capital expenditures and research and development, as well as to invest in and operate our
existing operations and prospective new lines of business.



As of December 31, 2002, our cash and cash equivalents totaled slightly less than $2.0 million, compared to cash and cash equivalents of $10.4 million at April 30, 2002. Our revolving credit facility, which had a balance of $5.9
million at December 31, 2002, matures on May 31, 2003, and as discussed below, if we exercise the BRC option we will be required to pay the BRC equity holders an additional $3.0 million on April 18, 2003. One of our directors has agreed to provide
us a loan of up to $8.0 million to repay the Bank of America loan, and we are exploring various alternatives for additional debt financing.



The decline in liquid assets during the transition period was due in part to our lenders requirements that we reduce our amounts
outstanding under, and to establish cash collateral for our secured credit facilities, which resulted in net cash outflows of $5.9 million. Our ratio of current assets to current liabilities was 1.5:1 at the end of the eight-month period ended
December 31, 2002 and 1.9:1 at the end of our last fiscal year on April 30, 2002. During this same period our total working capital decreased by $17.5 million from $28.7 million at April 30, 2002 to $11.2 million at December 31, 2002.



We experienced an $8.4 million net decrease in liquid assets
during the eight-month period ended December 31, 2002. Net cash provided by operating activities for the eight-month period ended December 31, 2002 was $1.7 million, compared to net cash provided by operating activities for the fiscal year ended
April 30, 2002 of $5.3



26



---

million. The decrease in cash flow provided by operating activities for the eight month period ended December 31, 2002 resulted primarily
from the net loss from continuing operations of $25.3 million offset by positive cash flows generated by decreases in accounts receivable ($1.5 million), inventory ($1.3 million), and deferred taxes including the effect of the $24.0 million
valuation ($23.4 million); and an increase in depreciation and amortization ($1.4 million). For the fiscal year ended April 30, 2002, cash provided by operating activities of $5.3 million was due primarily to a net loss from continuing operations of
$2.2 million and an increase in deferred taxes of $2.3 million offset by positive cash flows generated from inventories ($4.0 million), accounts receivable ($2.1 million), and depreciation and amortization ($3.0 million).



Net cash used in investing activities in the eight-month
period ended December 31, 2002 was $4.2 million, an increase of $0.9 million from the fiscal year ended April 30, 2002. This increase is due primarily to acquisition costs related to BRC. During the fiscal years ended April 30, 2002 and 2001, our
net cash used in investing activities was $3.3 and $3.6 million, respectively.



Net cash provided by financing activities for the eight-month period ended December 31, 2002 was $11.5 million or a decrease of $18.5 million from the last fiscal year ended on April 30, 2002.
During the fiscal years ended April 30, 2002 and 2001 net cash from financing activities was $30.0 and $39.7 million, respectively. The cash provided by financing activities during the transition period resulted primarily from the net proceeds of
our private placement of $17.4 million partially offset by term loan principal payments of $1.8 million, net payments under our lines of credit of $2.8 million, and an increase in restricted cash of $1.0 million.



For the transition period ended December 31, 2002, cash
provided by continuing operations totaled $9.0 million and cash used in discontinued operation totaled $18.3 million for a net use of cash after the effect of translation adjustments of $8.4 million. For the fiscal year ended April 30, 2002, the net
use of cash was $6.2 million consisting of $32.0 million provided by continuing operations offset by $38.3 million used in discontinued operation.



In May 2002, we completed a private placement of common stock with net proceeds of $17.4 million. We initially expected to use the
proceeds of this offering for potential acquisitions, debt repayment, and general corporate purposes; however, due to the delay in effecting the Quantum spin-off, we were forced to use a portion of these proceeds to fund Quantums continuing
operations until its separation from our core business. On the July 23, 2002 effective date of the Quantum spin-off, we released Quantum from liability relating to our $8.6 million line of credit with Bank of America and contributed $15 million
in cash to Quantum to supply liquidity to meet their short-term operating needs.



At December 31, 2002, approximately $5.9 million was outstanding under our revolving line of credit with Bank of America. In June 2002, the credit facility with Bank of America was amended to reduce
the available line of credit from $9.5 million to $8.0 million by June 30, 2002, to $7.0 million by September 30, 2002, to $6.0 million by December 31, 2002, and to $5.0 million by March 31, 2003 (subsequently extended to April 30, 2003). The
amendment also extended the maturity date of the Companys line of credit to May 31, 2003. In addition, the amended facility provided for a $1.0 million non-revolving line of credit for future capital expenditures, of which $0.8 million was
outstanding at December 31, 2002. The Bank of America facility contains covenants that require us to satisfy certain financial tests, including a funded debt to EBITDA ratio, debt service coverage, and current ratio beginning with the fiscal quarter
ending July 31, 2002. In March 2003, Bank of America amended its agreement to (1) waive the funded debt to earnings before interest, taxes, depreciation and amortization ratio and the debt service coverage ratio for the period ending January
31, 2003 (2) increase the prime rate margin on all loans to 5% (3) terminate the swap agreement and (4) defer the $1.0 million March 31, 2003 line of credit reduction to April 30, 2003. As a result of obtaining the waiver from Bank of
America, the Company is in compliance with all covenants and conditions under this credit facility at December 31, 2002. The Bank of America credit facility is secured by substantially all of the Companys assets. While our non-revolving
capital expenditure line expires on May 31, 2003, we have the option to convert it to a term loan, requiring quarterly principal reductions, which would extend the maturity date to March 31, 2005.



27



---



In addition,
our subsidiary in the Netherlands has a Euro 2.3 million (US$2.3 million at December 31, 2002) credit facility with Fortis Bank. At December 31, 2002, there was an outstanding balance under this credit facility of US$0.7 million.



Our subsidiary in Japan has a ¥64 million (US$0.5 million
at December 31, 2002) short-term loan facility with the Hong Kong and Shanghai Banking Corporation Ltd., Osaka Branch. At December 31, 2002, a balance of US$0.5 million was outstanding.



On October 3, 2002, the Company entered into an option agreement with the equity holders of B.R.C.
Societá a Responsabilita Limitata (BRC) under which the Company was granted an option to acquire a 50% ownership interest in BRC. The price to acquire this option included a $1.5 million payment and the issuance of 2.3 million
shares of our common stock (which the parties acknowledged and agreed were valued at $10.0 million), BRC is the parent company of M.T.M. S.r.l of Italy, a supplier for alternative fuel products and systems used in automobiles throughout Europe and
in Africa and Central and South America. To exercise the option, we initially were required to give BRC a written notice between January 1 and January 15, 2003, and to pay the BRC equity holders an additional US $4,250,000 plus 1,250,000 in
cash not later than January 31, 2003. We and the BRC equity holders subsequently entered into an amendment extending the notice date to February 17, 2003 and the exercise date to April 18, 2003. We gave the required notice on February 13, 2003. A
deferred payment of $7.0 million is due in September 2003. We are currently exploring various alternatives to finance both the April 2003 and September 2003 payments of the purchase price. If we are unable to obtain financing to pay the required
April payment, the BRC equity holders would retain the cash portion of the purchase price paid through March 31, 2003 of approximately $3.8 million and would be required to return the 2,309,470 shares of common stock.



Our $5.9 million line of credit with Bank of America matures
on May 31, 2003, and we do not currently have the liquidity to repay this obligation. We are exploring senior and subordinated debt arrangements that would permit us to pay off our Bank of America debt prior to its maturity and to pay the $3 million
portion of the exercise price due in April 2003 under our BRC option agreement. One of our directors has committed to provide an $8.0 million loan to repay the Bank of America obligation if the Company is unable to find alternative sources. Until
additional sources of funding become available, we will be limited in our ability to capitalize on opportunities that we believe to exist in the alternative fuel market and to invest in long-term business opportunities. We cannot assure readers that
such additional sources of financing will be available on acceptable terms, if at all. If additional sources of financing are not available, we plan to implement measures to conserve cash and reduce costs, which may affect our ability to capitalize
on strategic growth opportunities, complete the BRC acquisition and to pursue our research and development plans. Moreover, if we cannot refinance our senior credit facilities and pay our debts as they come due in the ordinary course of business, we
may be forced to restructure our operations or to take other actions that would materially and adversely impact our business, financial conditions and results of operations.



In light of the decreases in cash flow and our current liquid asset position, we expect that we will need to
raise additional capital in the near future in order to meet our existing liabilities, supply working capital, payoff our banking obligations and provide funds to complete the BRC acquisition. We cannot assure readers that such capital will be
available on reasonable terms or otherwise.



Derivative
Financial Instruments



We use derivative
financial instruments for the purpose of reducing our exposure to adverse fluctuations in interest and foreign exchange rates. While these hedging instruments are subject to fluctuations in value, such fluctuations are generally offset by the value
of the underlying exposures being hedged. We are not a party to leveraged derivatives and do not hold or issue financial instruments for speculative purposes.



Foreign Currency Management.    The results and financial condition of our international operations are
affected by changes in exchange rates between certain foreign currencies and the U.S. Dollar. Our exposure to fluctuations in currency exchange rates has increased as a result of the growth of our international subsidiaries.



28



---

The functional currency for all of our international subsidiaries is the local currency of the subsidiary. An increase in the value of the
U.S. Dollar increases the costs incurred by our subsidiaries because most of our international subsidiaries inventory purchases are U.S. Dollar denominated. We monitor this risk and attempt to minimize the exposure through forward currency
contracts and the management of cash disbursements in local currencies. At December 31, 2002, we had no forward currency contracts. We seek to manage our foreign currency economic risk by minimizing our U.S. Dollar investment in foreign operations
using foreign currency term-loans to finance the operations of our foreign subsidiaries.



Interest Rate Management.    We use interest rate swap agreements with Bank of America to manage our exposure to interest rate changes and to stabilize the cost of borrowed
funds. When this type of agreement is executed, the swap is generally linked to a specific debt instrument. At December 31, 2002 we had approximately $4.4 million secured under a fixed interest rate agreement with a fixed interest rate of 10.6%.
Absent this fixed rate agreement the variable rate for this debt at December 31, 2002 would have been 6.4%. At December 31, 2002 the fair value of the interest rate swap agreement was $(0.2) million. In March 2003, we subsequently cancelled the
swap agreement, which had previously been treated as a cash flow hedge with the loss on fair value included in other comprehensive income, and charged to expense the carrying value of the swap as interest expense as of December 31, 2002.



Debt
Obligations.    The following table summarizes our debt obligations at December 31, 2002. The interest rates represent weighted average rates, with the period end rate used for the variable rate debt obligations. The fair
value of the debt obligations approximated the recorded value as of December 31, 2002.



|                                                  |  | 2003                  |     |   | 2004 |   | 2005 |  | 2006 |   | Thereafter |   | Total |  | Fair Value 12/31/02
|------------------------------------------------- |  | --------------------- | --- | - | ---- | - | ---- |  | ---- | - | ---------- | - | ----- |  | -------------------
|                                                  |  | (Dollars in millions)
|Debt denominated in US dollars:                   |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Line of credit                                    |  | $                     | 5.9 |   |      | $ |      |  | $    |   |            | $ |       |  | $                  
|Term loans, including current portion:            |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Variable rate                                     |  | $                     | 6.8 |   |      | $ |      |  | $    |   |            | $ |       |  | $                  
|Average interest rate                             |  |                       | 8.0 | % |      |   | %    |  |      | % |            |   | %     |  |                    
|Long term debt denominated in foreign currencies: |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Euros                                             |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Line of Credit                                    |  | $                     | 0.7 |   |      | $ |      |  | $    |   |            | $ |       |  | $                  
|Japanese Yen                                      |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Line of Credit                                    |  | $                     | 0.5 |   |      | $ |      |  | $    |   |            | $ |       |  | $                  
|Interest rate derivative financial instruments:   |  |                       |     |   |      |   |      |  |      |   |            |   |       |  |                    
|Pay fixed/receive variable                        |  | $                     | 4.4 |   |      | $ |      |  | $    |   |            | $ |       |  | $                  
|Average pay rate                                  |  |                       | 5.6 | % |      |   | %    |  |      | % |            |   | %     |  |                    
|Average receive rate                              |  |                       | 1.4 | % |      |   | %    |  |      | % |            |   | %     |  |                    



Recent Accounting
Pronouncements



In December 2002, the
Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, Accounting For Stock Based Compensation Transition and Disclosure. SFAS No. 148 amends SFAS No. 123 Accounting For Stock-Based
Compensation, to provide new guidance concerning the transition when a company changes from the intrinsic-value method to the fair-value method of accounting for employee stock-based compensation cost. As amended by SFAS No. 148, SFAS No. 123
also requires additional disclosure regarding such cost in annual financial statements and in condensed interim financial statements. Certain disclosure provisions of SFAS No. 148 were adopted by the Company in its financial statements prepared



29



---

as of December 31, 2002. The Company believes that the adoption of SFAS No. 148 will not have a material impact on the Companys
financial position or results of operations.



In
August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations For a Disposal of a Segment of a Business. SFAS No. 144 is effective for fiscal years beginning after  December 15, 2001, with earlier application encouraged. We adopted SFAS
No.144 as of May 1, 2002 and the adoption of the Statement did not have a significant impact on our financial position and results of operations, except that the Quantum operations are presented as a discontinued operation.



In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and issued Statements of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill is no longer amortized but is subject to annual impairment tests in accordance with the Statements. Other intangible assets continue to be amortized over their useful lives.



We adopted the new rules on accounting for goodwill and other
intangible assets beginning with the transition period ended December 31, 2002. Application of the nonamortization provisions of the Statement resulted in an increase in net income on an annual basis of approximately $0.4 million ($.03 per share).
We performed the first of the required impairment tests of goodwill and indefinite lived intangible assets effective May 1, 2002 and determined that there was no impact on the Companys financial position during the period ended July 31, 2002.
We also conducted the goodwill impairment tests as of December 31, 2002 and similarly determined that there was no impact on the financial position of the Company.



Contractual Obligations



The following table contains supplemental information regarding total contractual obligations as of December 31, 2002. The capital lease
obligations are undiscounted and represent total minimum lease payments. The term loan payable includes an amount of $0.2 million classified as a derivative instrument and due in the current period (see Note 3 of the Notes to Consolidated Financial
Statements).



|                            |  | Payments due by period
|--------------------------- |  | ----------------------
|Contractual Obligations     |  | Total                 
|Revolving Line of Credit    |  | $                     
|Term Loan Payable           |  |                       
|Capital Lease Obligations   |  |                       
|Operating Lease Obligations |  |                       
|Employment Agreements       |  |                       
|                            |  |                       
|Total                       |  | $                     
|                            |  |                       



Risk Factors



The preceding discussion contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. We face a number of risks and uncertainties in any forward-looking statement. Factors that
could cause or contribute to such differences include, but are not limited to, the following:



30



---



We recently have
experienced, and in the near term we will continue to experience, significant cash flow outflows that may limit our ability to grow and may materially and adversely impact our prospective revenues.



Since completing the spin-off of our former Quantum
operations on July 2002, we have continued to experience operating losses and net cash outflows. At December 31, 2002, our cash and cash equivalents totaled approximately $2.0 million, compared with $10.4 million at April 30, 2002. During the
eight-month period ended December 31, 2002, our working capital decreased by $17.5 million to $11.2 million from $28.7 million at April 30, 2002. During the period between May 1 and December 31, 2002 we incurred an operating loss of $1.2 million
owing in large part to non-recurring expenses relating to our change from a fiscal year ending in April 30, to a calendar year, Quantum spin-off costs, a downturn in our primary market and to generally unfavorable economic conditions. In addition to
these losses, we have experienced significant cash outflows in connection with our purchase of an equity interest in BRC and as a result in a reduction in our borrowing ability under our primary credit facilities and a requirement by our lender that
we reduce the amount outstanding under the related loans. The amounts that we have paid to reduce our outstanding loans and increase our cash collateral account during the period between May 1 and December 31, 2002 totaled $5.9 million and we paid
the BRC equity holders approximately $2.3 million in cash in connection with the acquisition and exercise of the BRC option. Additionally, we will be required to pay approximately $4.5 million if we exercise the BRC purchase option in April
2003, and we may be required to make substantial payments to Bank of America in May 2003 in connection with the maturity of our credit facility. Our current cash position and upcoming cash obligations especially if combined with stagnant or
declining revenues, may force us to take steps such as personnel reductions or curtailment of growth as a means to manage our liquidity, and those measures could have an adverse impact on research and development activities, our production capacity
or other aspects of our business that might have a material adverse impact on results of operations. In some instances these impacts may well last beyond the term of the immediate cash shortfall.



Prevailing economic conditions and international dissension may
disproportionately affect our business.



Because we depend heavily on sales to developing nations, and because our business is based on fossil fuel markets, the effects of the Iraq conflict, as well as uncertainty and the direction of the prevailing U.S. and global
economies, may cause our customers to delay orders, may result in interruptions in shipments to some customers or from some suppliers, or may have other effects that may decrease our revenues or increase our costs. This situation, whether alone or
in combination with one or more risk factors discussed in this report, may affect our business materially or adversely.



We may not be able to meet the terms and conditions of the Bank of America long-term financing arrangement.



On December 31, 2002, approximately $12.6 million was
outstanding under our credit facilities with  Bank of America. In June 2002, the credit, term loan and capital expenditure and lease facilities with Bank of America was amended to reduce the available line of credit from $9.5 million to $8.0
million by June 30, 2002, to $7.0 million by September 30, 2002 and to $6 million by December 31, 2002. The amendment also extended the maturity date of our line of credit and term loans to May 31, 2003. In addition, the amended facility also
provided for a $1.0 million non-revolving line of credit for capital expenditures. The Bank of America facility is secured by substantially all of our assets. For the quarters ended July 31, 2002, October 31, 2002 and January 31, 2002 Bank of
America waived our funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio and the debt service coverage ratio covenants, as defined in the agreement. There can be no assurance that further waivers would be
granted for future measurement dates.



For the
most recent description of our indebtedness, please see Managements Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Transition Report. Subject to certain restrictions set forth in
our credit facility, we may incur additional indebtedness in the future, including indebtedness incurred to finance, or which is assumed in connection with, acquisitions. In the future, we may



31



---

renegotiate or refinance our revolving line of credit with Bank of America with agreements that have different or more stringent terms or
split our Bank of America facility into two or more facilities with different terms. The level of our indebtedness could:



| |  |  | limit cash flow available for general corporate purposes, such as acquisitions and capital expenditures, due to the ongoing cash flow requirements for debt service;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our ability to obtain, or obtain on favorable terms, additional debt financing in the future for working capital, capital expenditures or acquisitions;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in reacting to competitive and other changes in the industry and economic conditions generally;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | expose us to a risk that a substantial decrease in net operating cash flows due to economic developments or adverse developments in our business could make it
difficult to meet debt service requirements; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | expose us to risks inherent in interest rate fluctuations because the existing borrowings are and any new borrowings may be at variable rates of interest, which
could result in higher interest expense in the event of increases in interest rates.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our ability to make scheduled payments of principal of, to pay interest on, or to refinance our indebtedness and to satisfy our other debt
obligations will depend upon our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. We cannot control many of these factors, such
as the economic conditions in the markets in which we operate and initiatives taken by our competitors. In addition, there can be no assurance that future borrowings or equity financing will be available for the payment or refinancing of our
indebtedness. If we are unable to service our indebtedness, whether in the ordinary course of business or upon acceleration of such indebtedness, we may be forced to pursue one or more alternative strategies, such as restructuring or refinancing our
indebtedness, selling assets, reducing or delaying capital expenditures or seeking additional equity capital. There can be no assurance that any of these strategies could be affected on satisfactory terms, if at all.



We may be unable to raise sufficient cash to fund our exercise of the
option to acquire the BRC interest.



As
currently structured, we exercised our option to acquire the BRC interest on February 15, 2003, and on or before April 18, 2003 we must make payments of approximately $3.0 million. Additionally, on or before September 30, 2003 we must make a final
payment of US$7,000,000 (subject to certain reductions based upon BRCs accounts receivable collections). We do not presently have sufficient current assets to pay the exercise price, nor do we have committed sources of additional capital to
fund the acquisition. While we are presently negotiating for the capital that would be required to permit us to exercise the option, we do not yet have a commitment from any debt or equity funding source, and we cannot make assurances that the
necessary funding will be available on satisfactory terms, or at all. If we cannot (or elect not to) exercise the option we may be required to write-off amounts previously capitalized.



We have completed a series of financing transactions that, if aggregated under Nasdaq rules, would require us to obtain
stockholder approval.



Under Nasdaq
corporate governance rules, a company with securities listed on the Nasdaq National Market generally must obtain stockholder approval before issuing securities that aggregate to 20% or more of the issuers outstanding common stock if the sale
price is less than the greater of book or market value.



In January 2002, we issued 2,000,000 shares of common stock, which amounted to approximately 19% of our then outstanding common stock, at a price of $11.25 per share, which was an 11% discount to the then current market price of our
common stock. The transaction was structured as a private placement to institutional



32



---

and accredited investors and included warrants to purchase 200,000 shares of our common stock at an exercise price 18% greater than the
market price. The purpose of this transaction was to raise additional working capital.



On May 8, 2002 we sold 1,500,000 shares of our common stock at a price of $12.50 per share, yielding gross proceeds of $18.75 million. The issue price in this offering represented a 1% discount to the
closing price of our common stock on that date. We issued these shares in a private placement to provide working capital, to address a potential acquisition strategy and to reduce our debt, although, owing to a delay in our effecting the Quantum
spin-off we found it necessary to use a portion of those proceeds to fund our combined operations until the spin-off was completed on July 23, 2002.



On October 3, 2002 we entered into an option agreement to acquire an equity interest in BRC pursuant to which we issued 2,309,470 shares
of common stock, amounting to 16% of our outstanding common stock, to the selling stockholders at an effective price of $4.33 per share, representing a 60% premium over the then current market price and a 7% discount from book value per share as of
July 31, 2002 (unaudited).



If the Nasdaq were to
take the position that one or more of these issuances should be integrated with one or more other transactions, we would have violated the Nasdaq rules requiring stockholder approval. We believe that the offer and sale of our common stock in these
transactions should not be integrated under the Commissions guidance respecting integration of multiple sales. However, we have not obtained any formal guidance from Nasdaq to that effect. If Nasdaq were to determine that the offer and sale of
our common stock in these transactions requires stockholder approval, Nasdaq could halt trading of our common stock and initiate delisting of our common stock from the Nasdaq National Market. A delisting by Nasdaq, if it were to occur, would
materially impair the liquidity of our securities and would adversely affect the trading price of our common stock.



We have completed a series of financing transactions that we treated as exempt from federal securities registration and, if those transactions were
aggregated, we might face rescission liability to certain stockholders and potential enforcement action from the Commission.



The sale of our common stock in the May 8, 2002 private placement transaction occurred less than six months after our January 2002 private
placement and the resale registration statement on Form S-3 relating to the shares and warrants issued in the January private placement remained effective at the time of the May transaction. As a result, the two private placements do not fall within
the six month safe-harbor provided by Regulation D promulgated under the Securities Act to avoid potential integration of the offerings. As a result, there is a risk that investors in either offering may claim that the May private placement should
be integrated with the January private placement and that, as a result, they would be entitled to rescission of that purchase. If the Commission were to take a similar position, we also might be subject to enforcement proceedings for failing to
affect a registration of this transaction in violation of Section 5 of the Securities Act.



Similarly, the issuance of common stock to the selling stockholders on November 29, 2002 was pursuant to an agreement reached with the selling stockholders on October 3, 2002, less than six months
after the May 8, 2002 private placement and at a time when the registration statement for the resale of shares issued in the May transaction remained effective. This issuance was effected under the exemption from registration provided in Regulation
S of the Securities Act for certain sales to persons not resident in the United States, and under the exemption for private placements afforded by Section 4(2) of the Securities Act. Although the issuance of the shares was more than six months after
the May 2002 private placement transaction, the agreement under which the shares were issued was less than six months after that transaction and, as a result, the Commission or one or more of the purchasers in either the May 2002 or the November
2002 issuance (or both) might take the position that the sales should be integrated and that the private placement exemption is unavailable. If such a person were to prevail on that argument, and if we were found not to have perfected a Regulation S
exemption, we might face rescission liability to the purchasers or enforcement action by the Commission.



33



---



If a court
were to determine that the offers and sales of our common stock in the January and May 2002 transactions, or May 2002 transaction and the issuance of common stock to the selling stockholders, should be integrated or treated as a single offering,
then the selling stockholders, investors in the January and May private placements, or both may be entitled to recover the consideration paid for the shares they purchased with interest thereon, or for damages (if the investor no longer owns the
shares).



Our spin-off of our Quantum subsidiary is subject to
tax risks for us and our stockholders, including restrictions on our or Quantums issuance of equity securities in order to maintain the tax-free status of the spin-off.



At the time of our spin-off of Quantum on July 23, 2002 we received an opinion of Morrison &
Foerster LLP to the effect that the spin-off was tax-free to our stockholders for federal income tax purposes. The opinion of Morrison & Foerster LLP is not binding on the Internal Revenue Service and no assurance can be given that the
Internal Revenue Service or the courts will agree with their opinion. The opinion was also subject to specific assumptions and the accuracy and completeness of specific factual representations and statements made by Quantum and us, and we are
subject to certain limitations on changes in our capital structure following the Quantum transaction. If these assumptions, representations or statements are incorrect or incomplete in any material respect, the conclusions set forth in the opinion
may not be correct. Similarly, we can provide no assurances that our issuance of stock to the selling stockholders will not adversely impact the tax-free character of the Quantum spin-off.



Even if the spin-off is tax-free to our stockholders, it will be taxable to us if Section 355(e) of the
Internal Revenue Code applies to the spin-off. Section 355(e) of the Internal Revenue Code will apply if 50% or more of our stock or Quantum stock, by vote or value, is acquired by one or more persons, other than our historic stockholders who
receive Quantum common stock in the spin-off, acting pursuant to a plan or a series of related transactions that includes the spin-off. We cannot provide you any assurance that Section 355(e) of the Internal Revenue Code will not apply to the
spin-off. Risk of the applicability of Section 355(e) of the Internal Revenue Code may also discourage, delay or prevent a merger, change of control, or other strategic or capital raising transactions involving our outstanding equity or issuance of
new equity.



The growth of the alternative fuel market will
have a significant impact on our business.



Our future success depends on the continued expansion of the alternative fuel industry, which has not yet expanded broadly. In the United States and certain of our other target markets, alternative fuel such as natural gas currently
cannot be readily obtained by consumers for motor vehicle use and only a small percentage of motor vehicles manufactured in 2001 was equipped to use alternative fuels. We cannot assure you that the market for gaseous alternative fuel engines will
expand broadly or, if it does, that it will result in increased sales of our advanced fuel system products. In addition, we have designed many of our products for alternative fuel vehicles powered by internal combustion engines, but not currently
for alternative power sources, such as electricity or alternate forms of those power sources. If the major growth in the alternative fuel market relates solely to those power sources, our revenues may not increase and may decline.



Users of gaseous alternative fueled vehicles may not be able to obtain fuel
conveniently and affordably, which may adversely affect the demand for our products.



Vehicles and equipment powered by gaseous alternative fuels currently run primarily on natural gas or propane. The construction of a distribution system to deliver natural gas and propane will require
significant investment by third parties. An adequate fuel distribution infrastructure may not be built. We are relying on third parties, most of which are committed to the existing gasoline infrastructure, to build this infrastructure. If these
parties build a fuel distribution infrastructure, the fuel delivered through it, both due to the cost of the delivery system and the cost of the fuel itself, may have a higher price than users are willing to pay. If users cannot obtain



34



---

fuel conveniently or affordably, a mass market for vehicles and equipment powered by gaseous alternative fuels or fuel cells is unlikely to
develop.



Our ability to attract customers and
sell products successfully in the alternative fuel industry also depends on a price differential between liquid fuels, such as petroleum and gasoline, and gaseous fuels, such as propane and natural gas. This price differential may not exist. Should
this differential narrow or disappear, it could adversely affect the demand of our products.



We currently face and will continue to face significant competition, which could result in a decrease in our revenue.



We currently compete with companies that manufacture products to convert internal combustion engines
operating on liquid fuels to gaseous fuels. Increases in the market for alternative fueled vehicles may cause automobile or engine manufacturers to develop and produce their own fuel conversion or fuel management equipment rather than purchasing the
equipment from suppliers such as us. In addition, greater acceptance of alternative fuel engines may result in new competitors. Should any of these events occur, the total potential demand for our products could be adversely affected and cause us to
lose existing business.



We face risks associated with
marketing, distributing and servicing our products internationally.



We currently operate in Australia, Europe, India, China, Japan and Mexico and market our products and technologies in other international markets, including both industrialized and developing countries. Our international
operations are subject to various risks common to international activities, such as the following:



| |  |  | exposure to currency fluctuations;
| | - |  | ----------------------------------



| |  |  | managing potential difficulties in enforcing contractual obligations and intellectual property rights;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | the burden of complying with a wide variety of laws and regulations, including product certification, environmental and import and export laws;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | political instability; and
| | - |  | --------------------------



| |  |  | difficulties collecting international accounts receivable.
| | - |  | ----------------------------------------------------------



Any significant increase in the value of the dollar against currencies in foreign markets in which we do business may impact negatively
our competitiveness in international markets.



Our business
may be subject to product liability claims, which could be expensive and could result in a diversion of managements attention.



The automotive industry experiences significant product liability claims. As a supplier, we face an inherent exposure to product liability
claims if our products (or the equipment into which our products are incorporated) malfunction, resulting in personal injury or death. We may be named in product liability claims even if there is no evidence that our systems or components caused a
loss. Product liability claims could result in significant losses from defense costs or damages awards. The sale of systems and components for the transportation industry entails a high risk of these claims. In addition, we may be required to
participate in a recall involving these systems if any of our systems prove to be defective, or we may voluntarily initiate a recall or make payments related to such claims as a result of various industry or business practices or the need to
maintain good customer relationships. Each of these actions would likely harm our reputation and lead to substantial expense. We cannot assure you that our product liability insurance will be sufficient to cover all product liability claims, that
such claims will not exceed our insurance coverage limits or that such insurance will continue to be available on commercially reasonable terms, if at all. Any product liability claim brought against us could have a material adverse effect on our
reputation and business.



35



---



Our business may become
subject to future product certification regulations that may impair our ability to market our products.



We must obtain product certification from governmental agencies, such as the Environmental Protection Agency and the California Air
Resources Board, to sell certain of our products in the United States. A significant portion of our future sales will depend upon sales of fuel management products that are certified to meet existing and future air quality and energy standards. We
cannot assure you that our products will continue to meet these standards. The failure to comply with these certification requirements could result in the recall of our products, civil penalties or criminal penalties.



Any new government regulation that affects our advanced fuel
technologies, whether at the foreign, federal, state or local level, including any regulations relating to installation and servicing of these systems, may increase our costs and the price of our systems. As a result, these regulations may have a
negative impact on our revenues and profitability and thereby harm our business, prospects, and results of operations or financial condition.



New technologies could render our existing products obsolete.



New developments in technology may negatively affect the development or sale of some or all of our products
or make our products obsolete. Our inability to enhance existing products in a timely manner or to develop and introduce new products that incorporate new technologies, conform to increasingly stringent emission standards and performance
requirements, and achieve market acceptance in a timely manner could negatively impact our competitive position. New product development or modification is costly; involves significant research, development, time and expense; and may not necessarily
result in the successful commercialization of any new products.



We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.



We rely on patent, trademark and copyright law, trade secret protection, and confidentiality and other
agreements with our employees, customers, partners and others to protect our intellectual property. However, some of our intellectual property is not covered by any patent or patent application and, despite our precautions, it may be possible for
third parties to obtain and use our intellectual property without authorization.



We do not know whether the scopes of our issued patents are sufficiently broad to protect our technologies or processes or whether the reissue examination will be in our favor. Moreover issued patents
may be challenged or invalidated. We could incur substantial costs in prosecuting or defending patent infringement suits. Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent, as do the laws
of the United States. For instance, it may be difficult for us to enforce certain of our intellectual property rights against third parties who may have inappropriately acquired interests in our intellectual property rights by filing unauthorized
trademark applications in foreign countries to register the marks that we use because of their familiarity with our worldwide operations.



As part of our confidentiality procedures, we generally have entered into non-disclosure agreements with our employees, consultants and
corporate partners and have attempted to control access to and distribution of our technologies, documentation and other proprietary information. We plan to continue these procedures. Despite these procedures, third parties could copy or otherwise
obtain and make unauthorized use of our technologies or independently develop similar technologies. The steps we have taken and that we may take in the future may not prevent misappropriation of our solutions or technologies, particularly in foreign
countries where laws or law enforcement practices may not protect our proprietary rights as fully as in the United States.



36



---



We cannot
assure you that we will be successful in protecting our proprietary rights. Any infringement on any of our intellectual rights could have an adverse effect on our ability to develop and sell successfully commercially competitive systems and
components.



If third parties claim that our products infringe
their intellectual property rights, we may be forced to expend significant financial resources and management time and our operating results would suffer.



Third parties may claim that our products and systems infringe on third-party patents and other intellectual property rights. Identifying
third-party patent rights can be particularly difficult, especially since patent applications are not published until 18 months after their filing dates. In the event a competitor were to challenge our patents, or assert that our products or
processes infringe its patent or other intellectual property rights, we could incur substantial litigation costs, be forced to make expensive products, pay substantial damages, or even be forced to cease our operations. Third-party infringement
claims, regardless of their outcome, would not only drain our financial resources but also divert the time and effort of our management and could result in our customers or potential customers deferring or limiting their purchase or use of the
affected products or services until resolution of the litigation.



We depend on third-party suppliers for the supply of key materials and components for our products.



We have established relationships with third-party suppliers, which provide materials and components for our products. A suppliers
failure to supply materials or components in a timely manner or to supply materials and components that meet our quality, quantity or cost requirements, combined with a delay in our ability to obtain substitute sources for these materials and
components in a timely manner or on terms acceptable to us, would harm our ability to manufacture our products or would significantly increase our production costs, which could negatively impact our results of operations and business.



Potential fluctuations in our financial results could cause our stock price
to decline.



Our revenue and operating
results are subject to annual and quarterly fluctuations as a result of a variety of factors, including the following:



| |  |  | budget cycles and funding arrangements of governmental agencies;
| | - |  | ----------------------------------------------------------------



| |  |  | purchasing cycles of fleet operators and other customers;
| | - |  | ---------------------------------------------------------



| |  |  | the uncertainty of timing of deliveries of vehicles and other equipment on which our products are installed;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | the timing of implementation of government regulations promoting the use of our products; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | general economic factors.
| | - |  | -------------------------



It is possible that our operating results in one or more future quarters may fall below the expectations of securities analysts and
investors. If this occurs, the trading price of our common stock might be materially and adversely affected.



We could lose or fail to attract the personnel necessary to run our business.



Our success depends in large part on our ability to attract and retain key management, engineering, scientific, manufacturing and
operating personnel. We lost some of our executive management in the Quantum spin-off, and it will take time for us to hire or train replacement personnel. Recruiting personnel for the industries in which we engage is highly competitive, and the
failure to attract or retain qualified personnel could have a material adverse effect on our business.



37



---



Our business could be
harmed if we fail to meet OEM specifications.



We offer integrated alternative fuel systems, which include tanks, brackets, electronics, software and other components required to allow these products to operate in alternative fuel applications. Customers for these systems require
that these products meet strict OEM standards. Our compliance with these requirements has resulted in increased development, manufacturing, warranty and administrative costs. A significant increase in these costs could adversely affect our
profitability. If we fail to meet OEM specifications on a timely basis, our relationships with OEMs may be harmed.



We may be subject to increased warranty claims.



In response to consumer demand, OEM, vehicle and industrial equipment manufacturers have been providing, and may continue to provide,
increasingly longer warranty periods for their products. As a consequence, these manufacturers require their suppliers, such as us, to provide correspondingly longer product warranties. As a result, we could incur substantially greater warranty
claims in the future.



We may experience unionized labor
disputes at OEM facilities.



As we become
more dependent on vehicle conversion programs with OEMs, we will become increasingly dependent on OEM production and the associated labor forces at OEM sites. Labor unions represent most of the labor forces at OEM facilities. Labor disputes could
occur at OEM facilities, which could adversely impact our direct OEM product sales. For example, in 1998, as a result of a strike at one of our OEMs facilities, we experienced lower sales of our products used in General Motors pick-up trucks
than we had expected for our 1999 fiscal year.



Changes in
environmental policies could hurt the market for our products.



The market for alternative fueled vehicles and equipment, and the demand for our products are driven, to a significant degree, by local, state and federal regulations in the United States that relate to air quality and
require the purchase of motor vehicles and equipment operating on alternative fuels. Similarly, foreign governmental regulations also affect our international business. These laws and regulations may change, which could result in transportation or
equipment manufacturers abandoning their interest in alternative fueled powered vehicles. In addition, a failure by authorities to enforce current domestic and foreign laws or to adopt additional environmental laws could reduce the demand for our
products.



Although many governments have
identified as a significant priority the development of alternative energy sources, we cannot assure you that governments will not change their priorities or that any change they make would not materially affect our revenue or the development of our
products.



We may be subject to litigation if our stock price
is volatile.



Our common stock has
experienced in the past, and may experience in the future, price and volume fluctuations. Many factors may cause the market price for our common stock to decline, perhaps substantially, including the following:



| |  |  | failure to meet our product development and commercialization milestones;
| | - |  | -------------------------------------------------------------------------



| |  |  | demand for our common stock;
| | - |  | ----------------------------



| |  |  | failure of our revenue and operating results to meet the expectations of securities analysts or investors in any quarter;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | downward revisions in securities analysts estimates or changes in general market conditions;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | technological innovations by competitors or in competing technologies;
| | - |  | ----------------------------------------------------------------------



38



---



| |  |  | investor perception of our industry or our prospects; or
| | - |  | --------------------------------------------------------



| |  |  | general technology or economic or regulatory trends.
| | - |  | ----------------------------------------------------



In the past, companies that have experienced declines in the market price of their stock have been the subject of securities class action
litigation. We may become involved in a securities class action litigation in the future. Litigation of this type often results in substantial costs and a diversion of managements attention and resources, which could harm our business,
prospects, results of operations or financial condition.



Provisions of Delaware law and of our charter and bylaws may make a takeover more difficult.



Provisions in our certificate of incorporation and bylaws and in the Delaware corporation law may make it difficult and expensive for a
third party to pursue a tender offer, change in control or takeover attempt that our management and Board of Directors oppose. Public stockholders that might desire to participate in one of these transactions may not have an opportunity to do so. We
also have a staggered Board of Directors, which makes it difficult for stockholders to change the composition of the Board of Directors in any one-year. These anti-takeover provisions could substantially impede the ability of public
stockholders to benefit from a change in control or to change our management and Board of Directors.



We have a stockholder protection rights agreement that provides for a dividend of one right for each outstanding share of our common
stock. Upon the occurrence of some events, including a person or entitys acquisition of 15% or more of our common stock, each right will entitle the holder to purchase, at an exercise price of $45 per share, common stock with a value equal to
twice the exercise price, which could cause substantial dilution. The rights agreement may have the effect of deterring, delaying or preventing a change in control that might otherwise be in the best interests of our stockholders.



Future sales of our common stock could adversely affect our stock price.



Substantial sales of our common stock,
including shares issued upon exercise of our outstanding options, in the public market or the perception by the market that these sales could occur, could lower our stock price or make it difficult for us to raise additional equity. As of March 15,
2003, we had 16,433,202 shares of common stock outstanding. Of these shares, 14,788,689 shares are currently freely tradable. In addition, the shares registered in our Form S-3 offering in connection with our planned acquisition of BRC will be
freely tradable upon their sale. Furthermore, as of February 28, 2003, up to 2,128,185 shares were issuable upon the exercise of options and up to 300,000 shares were issuable upon exercise of warrants outstanding as of that date, and those shares
may become available for sale in the public markets. In the case of outstanding options and warrants that have exercise prices less than the market price of our common stock from time to time, investors would experience dilution. We cannot predict
if future sales of our common stock, or the availability of our common stock for sale, will harm the market price of our common stock or our ability to raise capital by offering equity securities.



Item 7A.Quantitative and Qualitative
Disclosures about Market Risk



Information relating to Quantitative and Qualitative Disclosures About Market Risk appear under the heading Derivative Financial Instruments which is included in Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operation.



Item
8.Financial Statements and Supplementary Data.



See pages F-1 through F-27 of this Transition Report on Form 10-K.



Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



None.



39



---

PART III



The SEC allows us to incorporate by reference the information we file with them, which means that
we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Annual Report. We incorporate by reference in Items 10 to 13 below certain sections of our
definitive proxy statement, to be filed pursuant to Regulation 14A with the SEC within 120 days after December 31, 2002.



Item 10.Directors and Executive Officers of the Registrant



The following table sets forth certain information regarding
our directors and executive officers as of March 31, 2003:



|Name                   |  | Age |  | Position                                                                 
|---------------------- |  | --- |  | -------------------------------------------------------------------------
|Robert M. Stemmler (3) |  | 67  |  | Chairman of the Board of Directors, President and Chief Executive Officer
|                      
|Dale L. Rasmussen      |  | 53  |  | Senior Vice President and Secretary                                      
|                      
|Brad E. Garner         |  | 40  |  | General Manager & Director, Gaseous Fuel Products Division               
|                      
|Timothy S. Stone       |  | 42  |  | Acting Chief Financial Officer and Treasurer                             
|                      
|Norman L. Bryan (1)    |  | 61  |  | Director                                                                 
|                      
|Nickolai A. Gerde (1)  |  | 58  |  | Director                                                                 
|                      
|Paul Mlotok (1)(2)     |  | 58  |  | Director                                                                 
|                      
|J. David Power III (2) |  | 71  |  | Director                                                                 
|                      
|Don J. Simplot (2)(3)  |  | 67  |  | Director                                                                 

---

|(1) |  | Member of the Audit Committee
|--- |  | -----------------------------

|(2) |  | Member of the Compensation Committee
|--- |  | ------------------------------------

|(3) |  | Member of the Nominating Committee
|--- |  | ----------------------------------



Robert M. Stemmlerhas served as our President and Chief Executive Officer since May 1993. He has also been a director since May
1993, and the Chairman of our Board of Directors since June 1998. From December 1992 until July 1993, Mr. Stemmler was a full time consultant to our company. He served as our General Manager from 1982 to 1985 and has held various management and
executive positions throughout his career at Celanese Corp. (now Hoechst-Celanese), an international chemical and fibers manufacturer; A.J. Industries, a holding company for aircraft, trucking and heating equipment companies; and Sargent Fletcher
Company, a manufacturer of military aircraft fuel tanks and in-flight refueling systems. He holds an M.B.A. degree from Seton Hall University and a B.S. degree in mechanical engineering from Washington University in St. Louis.



Dale L. Rasmussenhas served as our Senior Vice
President and Secretary since June 1989. He joined us in April 1984 as Vice President of Finance and Administration and Corporate Secretary. Prior to joining us, Mr. Rasmussen was a commercial banker for 12 years at banks that were acquired by Key
Bank and U.S. Bank. He received his B.A. degree in Business Administration and Economics from Western Washington University and is a graduate of the Pacific Coast Banking School. Mr. Rasmussen serves as the Chairman of the Board of Directors of
Quantum Fuel Systems Technologies Worldwide, Inc.



Brad E. Garnerhas served as General Manager & Director, Gaseous Fuel Products Division since April 2002. Mr. Garner joined IMPCO in July 1994 as Regional Sales Manager for the U.S. Midwest and Canada



40



---

Regions. In February 1996, he was promoted to Manager of Applications & Field Engineering. Mr. Garner also held the roles of Engineering
Manager and General Manager for the Industrial Engines business unit of the Gaseous Fuel Products Division. Prior to joining IMPCO, Mr. Garner held a position with Superior Propane as Senior Auto Propane Sales & Technical Manager. Prior to his
employment at Superior, Mr. Garner was the owner and operator of Advanced Automotive Technology, one of the largest alternative fuels conversion centers in Canada. Mr. Garner is a graduate of Fanshawe College of Technology in Canada with an
equivalent to an Associates Degree in Mechanical Engineering.



Timothy S. Stone has served as acting Chief Financial Officer & Treasurer since August 2002. He originally joined IMPCO in February 2000 and had been serving as corporate controller since July 2000. While at IMPCO, Mr.
Stone has also had a leading role in matters concerning SEC and NASDAQ financial reporting regulations. Prior to joining IMPCO, Mr. Stone consulted for the Capital Guardian Trust Company in their personal investment management division and was a
financial institution examiner with the Federal Deposit Insurance Corporation. Mr. Stone holds a BS degree in Finance from California State University Long Beach and an MBA degree in Finance and Economic Policy from the University of Southern
California. Mr. Stone is a Chartered Financial Analyst. He is also a member of the Association of Investment Management and Research and member and previous director of the Orange County Society of Investment Managers.



Norman L. Bryanhas served as a director since November
1993 and is Chair of the Audit Committee. He has been a consultant since January 1995. Mr. Bryan has been employed as the Senior Vice President of Sales and Marketing of EIT, Inc., an electric meter manufacturing company, since October 1998. Prior
to retiring in 1994 from Pacific Gas and Electric Company, he was Vice President, Marketing from February 1993 until December 1994, and was Vice President, Clean Air Vehicles from February 1991 to February 1993. Mr. Bryan holds an M.A. degree in
business from Stanford University and a B.S.M.E. degree in mechanical engineering from California State University in San Jose.



Nickolai A. Gerde was appointed a Director of Impco in February 2003. Mr. Gerde is a former CPA, currently providing business and
financial consulting services. He was previously the Vice President Finance and CFO for seven years of Pacific Aerospace & Electronics, Inc. a publicly traded NASDAQ international aerospace supplier. He has held a number of senior financial
management positions in both public and private businesses including telecommunications; economic development and business recruitment; manufacturing; long term healthcare; and public accounting. Mr. Gerde earned a cum laude bachelors degree from
the University of Washington Business School, a summa cum laude associates degree from Bellevue Community College and served honorably in the U.S. Army in the U.S. and Europe. He has served on the boards of a number of civic organizations, recently
completing a three-year board position on the Greater Wenatchee Valley Chamber of Commerce.



Paul Mlotokhas served as a director since April 1997 and is Chair of the Compensation Committee. Since 1995, he has been a Senior Practitioner with the consulting firm Global Business Network,
which specializes in the areas of energy, natural resources and finance. From 1989 to 1995, he was a Principal and oil industry analyst at Morgan Stanley & Co. He has a B.A. degree in economics from Cornell University and a Ph.D. in economics
from Brown University.



J. David Power IIIhas served as a director since August 2000. He is the founder of J.D. Power and Associates where he has served as Chairman since 1996. Mr. Power has previously worked with Ford Motor Company, General Motors Corporation, and J.I. Case Company.
Mr. Power was a recipient of the Automotive Hall of Fames Distinguished Service Citation. Mr. Power graduated from the College of Holy Cross, has an M.B.A. from The Wharton School of Finance at the University of Pennsylvania, and holds
honorary doctorate degrees from College of the Holy Cross, California Lutheran University, and California State University, Northridge.



Don J. Simplothas served as a director since May 1978 and is Chair of the Nominating Committee. He is the President of Simplot
Industries, Inc., which is engaged in agricultural enterprises, and a Director member of



41



---

the office of the chair of J.R. Simplot Company, which is also engaged in agricultural enterprises. Mr. Simplot is a director of Micron
Technology, Inc., a designer and manufacturer of semiconductor memory components primarily used in various computer applications.



The Board of Directors is divided into three classes, each consisting of three directors, with the three classes serving staggered
three-year terms. Each director will hold office until the first meeting of stockholders immediately following expiration of his three year term of office and until his successor is qualified and elected.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires
the Companys Directors and executive officers, and persons who own more than 10% of the Companys Common Stock to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive officers, Directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. To the
Companys knowledge, based solely on review of the copies of such reports furnished to the Company or advice that no filings were required, during the transition period ended December 31, 2002 all executive officers, Directors and greater than
10% beneficial owners complied with the Section 16(a) filing requirements.



Item 11.Executive Compensation



Information required by this Item 11 is incorporated by reference in this Annual Report from our definitive proxy statement to be filed
pursuant to Regulation 14A with the SEC within 120 days after December 31, 2002.



Item 12.Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters



Information
required by this Item 12 is incorporated by reference in this Annual Report from our definitive proxy statement to be filed pursuant to Regulation 14A with the SEC within 120 days after December 31, 2002.



Item 13.Certain Relationships and Related
Transactions



Information
required by this Item 13 is incorporated by reference in this Annual Report from our definitive proxy statement to be filed pursuant to Regulation 14A with the SEC within 120 days after December 31, 2002.



Item 14.Controls and
Procedures.



Within 90 days prior
to the date of this transition report on Form 10-K, the Company carried out an evaluation under the supervision of management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of
the Companys disclosure controls and procedures. Based upon the evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them
to material information required to be included in our periodic SEC filings. There were no significant changes to the Companys internal controls or in other factors known to management that could significantly affect such internal controls
subsequent to the date that the Company carried out its evaluation.



42



---

PART IV



Item 15.Exhibits, Financial Statement Schedules, and Reports on Form 8-K.



(a)    Documents filed as part of
this report:



(1)    Consolidated Financial Statements:



Report of independent auditors.

Consolidated balance sheets as of April 30, 2000, 2001 and 2002 and December 31, 2002.

Consolidated statements of operations for the years ended April 30, 2000, 2001, and 2002 and the eight-month period ended
December 31, 2002.

Consolidated statements of stockholders equity for the years ended April 30, 2000,
2001, and 2002 and the eight-month period ended December 31, 2002.

Consolidated statements of cash flows for
years ended April 30, 2000, 2001, and 2002 and the  eight-month period ended December 31, 2002.

Notes
to consolidated financial statements.



(2)    Supplemental Financial Statement Schedules:



Schedule IIValuation and Qualifying Accounts



SCHEDULE IIVALUATION ACCOUNTS



|                                                      |  | Balance at beginning of period |           | Additions charged (credited) to costs and expenses |   | Write-offs and other adjustments |  |   | Balance atend ofperiod
|----------------------------------------------------- |  | ------------------------------ | --------- | -------------------------------------------------- | - | -------------------------------- |  | - | ----------------------
|Allowance for doubtful accounts for the period ended: |  |                                |           |                                                    |   |                                  |  |   |                       
|December 31, 2002                                     |  | $                              | 875,289   |                                                    | $ | 539,090                          |  | $ | (119,728              
|April 30, 2002                                        |  |                                | 981,353   |                                                    |   | 364,659                          |  |   | (470,723              
|April 30, 2001                                        |  |                                | 525,597   |                                                    |   | 654,932                          |  |   | (199,176              
|April 30, 2000                                        |  |                                | 495,824   |                                                    |   | 352,053                          |  |   | (322,280              
|                                                     
|Inventory valuation reserve for the period ended:     |  |                                |           |                                                    |   |                                  |  |   |                       
|December 31, 2002                                     |  | $                              | 1,581,944 |                                                    | $ | 319,610                          |  | $ | (236,003              
|April 30, 2002                                        |  |                                | 1,738,849 |                                                    |   | 507,550                          |  |   | (664,455              
|April 30, 2001                                        |  |                                | 1,561,859 |                                                    |   | 583,956                          |  |   | (406,966              
|April 30, 2000                                        |  |                                | 1,390,492 |                                                    |   | 284,996                          |  |   | (113,629              
|                                                     
|Warranty reserve for the period ended:                |  |                                |           |                                                    |   |                                  |  |   |                       
|December 31, 2002                                     |  | $                              | 284,845   |                                                    | $ | 233,416                          |  | $ | (66,230               
|April 30, 2002                                        |  |                                | 227,153   |                                                    |   | 170,217                          |  |   | (112,525              
|April 30, 2001                                        |  |                                | 426,987   |                                                    |   | 73,117                           |  |   | (272,951              
|April 30, 2000                                        |  |                                | 241,980   |                                                    |   | 411,454                          |  |   | (226,447              
|                                                     
|Product liability reserve for the period ended:       |  |                                |           |                                                    |   |                                  |  |   |                       
|December 31, 2002                                     |  | $                              | 1,000     |                                                    | $ |                                 |  | $ |                      
|April 30, 2002                                        |  |                                | 1,000     |                                                    |   |                                 |  |   |                      
|April 30, 2001                                        |  |                                | 1,000     |                                                    |   |                                 |  |   |                      
|April 30, 2000                                        |  |                                | 1,000     |                                                    |   |                                 |  |   |                      
|                                                     
|Deferred tax valuation reserve for the period ended:  |  |                                |           |                                                    |   |                                  |  |   |                       
|December 31, 2002                                     |  | $                              |          |                                                    | $ | 24,000,000                       |  | $ |                      



43



---



Item
15.Exhibit List



(3) Exhibits:



|ExhibitNo. |  | Description                                                                                                                                                                                      |  | Note No. |  
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | -
|          
|2.1        |  | Deed of Sale of Business by and among IMPCO Technologies Pty. Limited, as buyer, and
Ateco Automotive Pty Limited, as seller, dated as of July 1, 1996.                                          |  | (7       | )
|          
|2.2        |  | Deed of Release by and among IMPCO Technologies, Inc. and Ateco Automotive Pty
Limited dated as of July 1, 1996.                                                                                 |  | (7       | )
|          
|2.3        |  | Shareholders Agreement for Gas Parts (NSW) Pty Limited by and among IMPCO
Technologies Pty. Limited, Gas Parts Pty Limited and Gas Parts (NSW) Pty. Limited, dated as of July 4, 1996.           |  | (7       | )
|          
|2.4        |  | Option Agreement between IMPCO Technologies, Inc. and the controlling shareholders of
B.R.C. Societa a Responabilita Limitata of Italy, dated as of October 3, 2002.                             |  | (31      | )
|          
|3.1        |  | Certificate of Incorporation, as currently in effect.                                                                                                                                            |  | (28      | )
|          
|3.2        |  | Bylaws adopted July 22, 1998.                                                                                                                                                                    |  | (13      | )
|          
|4.1        |  | Stockholders Protection Rights Agreement dated as of June 30, 1999 between
IMPCO Technologies, Inc. and ChaseMellon Stockholder Services, L.L.C., as Rights Agent.                              |  | (12      | )
|          
|10.1       |  | Lease between L-W Income Properties and IMPCO Technologies, Inc. dated May 10,
1989.                                                                                                             |  | (2       | )
|          
|10.2+      |  | 1989 Incentive Stock Option Plan.                                                                                                                                                                |  | (3       | )
|          
|10.3+      |  | 1991 Executive Stock Option Plan dated November 5, 1991, among AirSensors, Inc., as
the Company, and Bertram R. Martin, James J. Mantras and Dale L. Rasmussen, as Optionees.                    |  | (4       | )
|          
|10.4       |  | First Amendment to Lease dated April 19, 1993, between L-W Income Properties and
IMPCO Technologies, Inc.                                                                                        |  | (5       | )
|          
|10.5+      |  | 1993 Stock Option Plan for Non-employee Directors.                                                                                                                                               |  | (6       | )
|          
|10.6+      |  | Amendment to 1989 Incentive Stock Option Plan.                                                                                                                                                   |  | (6       | )
|          
|10.7+      |  | 1996 Incentive Stock Option Plan.                                                                                                                                                                |  | (8       | )
|          
|10.8+      |  | 1997 Incentive Stock Option Plan.                                                                                                                                                                |  | (9       | )
|          
|10.9       |  | Lease between Klein Investments, Family Limited Partnership, as lessor, and IMPCO
Technologies, Inc., as lessee, dated August 18, 1997.                                                          |  | (10      | )
|          
|10.10      |  | Amendment dated March 18, 1998 to Loan agreement dated October 7, 1998 between Bank
of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.             |  | (10      | )
|          
|10.11      |  | Amendment dated April 29, 1998 to Loan agreement dated October 7, 1998 between Bank
of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.             |  | (10      | )
|          
|10.12      |  | Loan Agreement for IMPCO Technologies, B.V. as borrower, and Bank of America National
Trust and Savings Association, acting through its Amsterdam branch, as lender, dated as of April 27, 1998. |  | (10      | )
|          
|10.13      |  | Loan Agreement dated September 11, 1998 between Bank of America National Trust and
Savings Association, as lender, and IMPCO Technologies, Inc., as the borrower.                                |  | (11      | )
|          
|10.14      |  | Intentionally Omitted.                                                                                                                                                                           |  |          |  
|          
|10.15      |  | Loan Agreement between IMPCO Tech Japan KK, as borrower, and, Hongkong and Shanghai
Banking Corporation Ltd., Osaka Branch., as lender, dated as of March 29, 1999.                              |  | (13      | )



44



---

|Exhibit No. |  | Description                                                                                                                                                               |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|10.16+      |  | Employment Agreement dated April 1, 1999, between IMPCO Technologies, Inc., as the
Company, and Robert M. Stemmler, as the Employee.                                      |  | (13      | )
|           
|10.17       |  | Amended Loan Agreement between IMPCO Technologies, Inc., as borrower and Bank of
America N.A. as lender, dated September 13, 1999.                                        |  | (14      | )
|           
|10.18       |  | Intentionally Omitted.                                                                                                                                                    |  |          |  
|           
|10.19       |  | Amendment No. 3 to Business Loan Agreement by and between Bank of America, N.A. and
IMPCO Technologies, Inc. dated as of June 13, 2000.                                   |  | (15      | )
|           
|10.20       |  | Lease dated as of March 31, 2000, by and between Braden Court Associates and IMPCO
Technologies, Inc.                                                                     |  | (16      | )
|           
|10.21       |  | Amendment No. 4 to Business Loan Agreement by and between Bank of America, N.A. and
IMPCO Technologies, Inc. dated as of September 12, 2000.                              |  | (18      | )
|           
|10.22       |  | Amendment No. 5 to Business Loan Agreement between Bank of America, N.A. and IMPCO
Technologies, Inc. dated as of December 13, 2000.                                      |  | (18      | )
|           
|10.23       |  | Amendment No. 6 to Business Loan Agreement between Bank of America, N.A. and IMPCO
Technologies, Inc. dated as of March 12, 2001.                                         |  | (19      | )
|           
|10.24       |  | Promissory Note Issued by Robert Stemmler to Registrant dated March 15,
2001.                                                                                             |  | (17      | )
|           
|10.25       |  | Promissory Note Issued by Dale Rasmussen to Registrant dated March 15,
2001.                                                                                              |  | (17      | )
|           
|10.26       |  | Promissory Note Issued by Syed Hussain to Registrant dated March 15,
2001.                                                                                                |  | (17      | )
|           
|10.27       |  | Security Agreement and Agreement Not to Exercise Options entered into between Robert
Stemmler and Registrant dated March 15, 2001.                                        |  | (17      | )
|           
|10.28       |  | Security Agreement and Agreement Not to Exercise Options entered into between Dale
Rasmussen and Registrant dated March 15, 2001.                                         |  | (17      | )
|           
|10.29       |  | Security Agreement and Agreement Not to Exercise Options entered into between Syed
Hussain and Registrant dated March 15, 2001.                                           |  | (17      | )
|           
|10.30       |  | Deed of Trust Executed by Dale Rasmussen regarding personal
residence.                                                                                                    |  | (17      | )
|           
|10.31      |  | Corporate Alliance Agreement dated June 12, 2001 between Quantum Technologies
Worldwide, Inc. and General Motors Corporation.                                             |  | (21      | )
|           
|10.32       |  | Master Technical Agreement dated June 12, 2001 between Quantum Technologies
Worldwide, Inc. and General Motors Corporation.                                               |  | (21      | )
|           
|10.33       |  | Stock Transfer Agreement dated June 12, 2001 between Quantum Technologies Worldwide,
Inc. and General Motors Corporation.                                                 |  | (21      | )
|           
|10.34       |  | Registration Rights Agreement dated June 12, 2001 between Quantum Technologies
Worldwide, Inc. and General Motors Corporation.                                            |  | (21      | )
|           
|10.35       |  | Amended and Restated Business Loan Agreement dated as of April 30, 2001 among the
Registrant, Quantum Technologies, Inc. and Bank of America, N.A.                        |  | (28      | )
|           
|10.36+      |  | 2000 Incentive Stock Option Plan.                                                                                                                                         |  | (20      | )
|           
|10.37       |  | IMPCO and GM Teaming Agreement dated July 30, 1997 by the Registrant and General
Motors Corporation.                                                                      |  | (22      | )
|           
|10.38       |  | Amendment No. 1 to Amended and Related Business Loan Agreement, dated as of September
5, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc. |  | (23      | )



45



---

|Exhibit No. |  | Description                                                                                                                                                                                       |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|10.39       |  | Amendment No. 2 to Amended and Restated Business Loan Agreement, dated as of October
8, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                          |  | (24      | )
|           
|10.40       |  | Amendment No. 3 to Amended and Restated Business Loan Agreement, dated as of November
9, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                         |  | (24      | )
|           
|10.41       |  | Amendment No. 4 to Amended and Restated Business Loan Agreement, dated as of December
12, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                        |  | (24      | )
|           
|10.42       |  | Common Stock and Warrants Purchase Agreement, dated January 11, 2002.                                                                                                                             |  | (25      | )
|           
|10.43       |  | Registration Rights Agreement, Dated January 11, 2002.                                                                                                                                            |  | (25      | )
|           
|10.44       |  | Form of Stock Purchase Warrant, Dated January 11, 2002.                                                                                                                                           |  | (25      | )
|           
|10.45       |  | Amendment No. 5 to Amended and Restated Business Loan Agreement, dated as of January,
2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                            |  | (26      | )
|           
|10.46       |  | Amendment No. 6 to Amended and Restated Business Loan Agreement, dated as of January
31, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                         |  | (26      | )
|           
|10.47       |  | Amendment No. 7 to Amended and Restated Business Loan Agreement, dated as of February
28, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc. |  | (26      | )
|           
|10.48       |  | Stock Purchase Agreement, dated May 3, 2002.                                                                                                                                                      |  | (27      | )
|           
|10.49       |  | Amendment No. 8 to Amended and Restated Business Loan Agreement, dated as of March
31, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.    |  | (30      | )
|           
|10.50       |  | Amendment No. 9 to Amended and Restated Business Loan Agreement, dated as of April
30, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.    |  | (30      | )
|           
|10.51       |  | Second Amended and Restated Business Loan Agreement, dated June 24, 2002, between
Bank of America, N.A., and the Registrant.                                                                      |  | (30      | )
|           
|10.52       |  | Employment Agreement dated April 1, 2002, between the Registrant and Robert M.
Stemmler.                                                                                                          |  | (30      | )
|           
|10.53       |  | Employment Agreement dated April 1, 2002, between the Registrant and W. Brian
Olson.                                                                                                              |  | (30      | )
|           
|10.54       |  | Employment Agreement dated April 1, 2002, between the Registrant and Dale L.
Rasmussen.                                                                                                           |  | (30      | )
|           
|10.55       |  | Contribution and Distribution Agreement between the Registrant and Quantum Fuel
Systems Technologies Worldwide, Inc., dated July 23, 2002.                                                        |  | (29      | )
|           
|10.56       |  | Tax Allocation and Indemnification Agreement between the Registrant and Quantum Fuel
Systems Technologies Worldwide Inc., dated July 23, 2002.                                                    |  | (29      | )
|           
|10.57       |  | Transition Services Agreement between the Registrant and Quantum Fuel Systems
Technologies Worldwide, Inc., dated July 23, 2002.                                                                  |  | (29      | )
|           
|10.58       |  | Employee Benefit Matters Agreement between the Registrant and Quantum Fuel Systems
Technologies Worldwide, Inc., dated July 23, 2002.                                                             |  | (29      | )
|           
|10.59       |  | Lease dated July 18, 2001 by and between Property Reserve, Inc. and the
Registrant.                                                                                                               |  | (30      | )
|           
|10.60       |  | The 2002 Stock Option Plan for Employees                                                                                                                                                          |  | (32      | )



46



---

|Exhibit No. |  | Description                                                                                                                                             |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|           
|10.61       |  | The 2002 Stock Option Plan for Non-employee Directors                                                                                                   |  | (32      | )
|           
|10.62       |  | Amendment No. 1 to Second Amended and Restated Business Loan Agreement , dated as of
December 10, 2002, among Bank of America, N.A., and the Registrant |  | (31      | )
|           
|10.63       |  | Amendment No. 2 to Second Amended and Restated Business Loan Agreement , dated as of
March 24, 2003, among Bank of America, N.A., and the Registrant    |  | (1       | )
|           
|10.64       |  | Equity Joint Venture Contract, dated December 31, 2002, among China Natural Gas Co.
Ltd., and the Registrant                                            |  | (1       | )
|           
|10.65       |  | Joint Venture Agreement Minda IMPCO Technologies, Limited, dated May 18, 2001 among
Minda Industries Limited and Mr. Nirmal K. Minda and the Registrant |  | (1       | )
|           
|10.66       |  | Joint Venture Agreement Minda IMPCO Limited, dated May 18, 2001 among Minda
Industries and Mr. Nirmal K. Minda and the Registrant                       |  | (1       | )
|           
|10.67       |  | Letter of commitment, dated March 26, 2003, among Don J. Simplot and the
Registrant                                                                     |  | (1       | )
|           
|21.1        |  | Subsidiaries of the Company.                                                                                                                            |  | (1       | )
|           
|23.1        |  | Consent of Ernst & Young LLP.                                                                                                                           |  | (1       | )
|           
|99.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C.
§1350.                                                                                   |  | (1       | )
|           
|99.2        |  | Certification of Acting Chief Financial Officer pursuant to 18 U.S.C.
§1350.                                                                            |  | (1       | )

---

|(1) |  | Filed herewith.
|--- |  | ---------------

|(2) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1989.
|--- |  | -----------------------------------------------------------------------------

|(3) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1990.
|--- |  | -----------------------------------------------------------------------------

|(4) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1992.
|--- |  | -----------------------------------------------------------------------------

|(5) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1993.
|--- |  | -----------------------------------------------------------------------------

|(6) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1994.
|--- |  | -----------------------------------------------------------------------------

|(7) |  | Incorporated by reference to the Registrants Form 8-K/A dated July 1, 1996.
|--- |  | ----------------------------------------------------------------------------

|(8) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1997.
|--- |  | -----------------------------------------------------------------------------

|(9) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 1997.
|--- |  | -----------------------------------------------------------------------------------

|(10) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1998.
|---- |  | -----------------------------------------------------------------------------

|(11) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 1998.
|---- |  | ----------------------------------------------------------------------------------------------

|(12) |  | Incorporated by reference to the Registrants Form 8-K dated June 30, 1999.
|---- |  | ---------------------------------------------------------------------------

|(13) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1999.
|---- |  | -----------------------------------------------------------------------------

|(14) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended December 7, 1999.
|---- |  | ----------------------------------------------------------------------------------------------

|(15) |  | Incorporated by reference to the Registrants Form S-3/A (File No. 333-34366), filed with the Commission on June 14, 2000.
|---- |  | --------------------------------------------------------------------------------------------------------------------------

|(16) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2000.
|---- |  | -----------------------------------------------------------------------------

|(17) |  | Incorporated by reference to the Registrants Form 8-K dated March 26, 2001.
|---- |  | ----------------------------------------------------------------------------

|(18) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2000.
|---- |  | ----------------------------------------------------------------------------------------------

|(19) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended January 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(20) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 2000.
|---- |  | -----------------------------------------------------------------------------------

|(21) |  | Incorporated by reference to the Registrants Form S-3/A (File No. 333-63726), filed with the Commission on July 9, 2001.
|---- |  | -------------------------------------------------------------------------------------------------------------------------

|(22) |  | Incorporated by reference to the Registrants Form S-3 (File No. 333-34366), filed with the Commission on April 7, 2000.
|---- |  | ------------------------------------------------------------------------------------------------------------------------

|(23) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended July 31, 2001.
|---- |  | -------------------------------------------------------------------------------------------

|(24) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(25) |  | Incorporated by reference to the Registrants Form 8-K filed on January 11, 2002.
|---- |  | ---------------------------------------------------------------------------------

|(26) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended January 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(27) |  | Incorporated by reference to the Registrants Form 8-K filed on May 10, 2002.
|---- |  | -----------------------------------------------------------------------------

|(28) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2001.
|---- |  | -----------------------------------------------------------------------------

|(29) |  | Incorporated by reference to the Form 10-K filed by Quantum Fuel Systems Technologies, Inc., for fiscal year 2002.
|---- |  | ------------------------------------------------------------------------------------------------------------------

|(30) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2002.
|---- |  | -----------------------------------------------------------------------------

|(31) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2002.
|---- |  | ----------------------------------------------------------------------------------------------

|(32) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 2002.
|---- |  | -----------------------------------------------------------------------------------

|+ |  | Management contract or compensatory plan or arrangement.
|- |  | --------------------------------------------------------

| |  | Certain information in this exhibit has been omitted and filed separately with The Securities and Exchange Commission. Confidential treatment has been requested with
respect to the omitted portions.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



47



---



(b)    Reports on Form 8-K:



| | (1) |  | The Company filed a report on Form 8-K on January 11, 2002 during the third quarter ended January 31, 2002. Information regarding the items reported on is as
follows:
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item Reported on



| |  |  | Common Stock and Warrants Purchase Agreement, dated January 11, 2002.
| | - |  | ---------------------------------------------------------------------



| |  |  | Registration Rights Agreement, dated January 11, 2002.
| | - |  | ------------------------------------------------------



| |  |  | Form of Stock Purchase Warrant, dated January 11, 2002.
| | - |  | -------------------------------------------------------



| | (2) |  | The Company filed a report on Form 8-K on May 10, 2002 during the fourth quarter ended April 31, 2002. Information regarding the items reported on is as follows:
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



Item Reported on



| |  |  | Stock Purchase Agreement, dated May 3, 2002.
| | - |  | --------------------------------------------



| | (3) |  | The Company filed a report on Form 8-K on June 20, 2002 during the first quarter ended July 31, 2002. Information regarding the items reported on is as follows:
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Item Reported on



| |  |  | Special dividend to IMPCO stockholders, effective after the close of business on July 23, 2002, to distribute all of the shares of Quantum owned by IMPCO to
IMPCOs stockholders of record on July 5, 2002.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) |  | The Company filed a report on Form 8-K on August 1, 2002 during the second quarter ended October 31, 2002. Information regarding the items reported on is as follows:
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item Reported on



| |  |  | Unaudited pro forma condensed financial information relating to the spin-off of Quantum.
| | - |  | ----------------------------------------------------------------------------------------



| | (5) |  | The Company filed a report on Form 8-K on November 29, 2002 during the third quarter ended January 31, 2002. Information regarding the items reported on is as
follows:
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item Reported on



| |  |  | Change of fiscal year end from April 30 to December 31. The new fiscal year end will begin on January 1 and end on December 31 of each year, effective with the year
beginning January 1, 2003
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



48



---

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on April 15, 2003.



IMPCO TECHNOLOGIES, INC.By:

/s/    ROBERT M. STEMMLERName:  Robert M. StemmlerTitle:    Chief Executive Officer andChairman of the
Board




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|Signature                                   |  | Title                                                                          |  | Date          
|------------------------------------------- |  | ------------------------------------------------------------------------------ |  | --------------
|                                           
|/s/    ROBERT M.
STEMMLERRobert M. Stemmler |  | Chief Executive Officer andChairman of the Board
(Principal Executive Officer) |  | April 15, 2003
|                                           
|/s/    TIMOTHY S.
STONETimothy S. Stone     |  | Acting Chief Financial Officer and Treasurer (Principal Financial
Officer)     |  | April 15, 2003
|                                           
|/s/    RICHARD T.
FOGARTYRichard T. Fogarty |  | Corporate Controller (Principal Accounting Officer)                            |  | April 15, 2003
|                                           
|/s/    NORMAN L.
BRYANNorman L. Bryan       |  | Director                                                                       |  | April 15, 2003
|                                           
|/s/    PAUL
MLOTOKPaul Mlotok               |  | Director                                                                       |  | April 15, 2003
|                                           
|/s/    J. DAVID POWER
IIIJ. David Power
III |  | Director                                                                       |  | April 15, 2003
|                                           
|/s/    DON J. SIMPLOTDon J. Simplot         |  | Director                                                                       |  | April 15, 2003
|                                           
|/s/    NICHOLAI A. GERDENicholai A. Gerde   |  | Director                                                                       |  | April 15, 2003



49



---

CERTIFICATION



I, Robert M. Stemmler, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of IMPCO Technologies, Inc. (IMPCO);
|-- |  | --------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of IMPCO as of, and for, the periods presented in this annual report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | IMPCOs other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 of the Exchange Act) for IMPCO and we have:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to IMPCO, including our consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of IMPCOs disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | IMPCOs other certifying officers and I have disclosed, based on our most recent evaluation, to IMPCOs auditors and the audit committee of IMPCOs
board of directors (or persons performing the equivalent function):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect IMPCOs ability to record, process, summarize and
report financial data and have identified for IMPCOs auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in IMPCOs internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | IMPCOs other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date:  April 15, 2003



/s/    ROBERT M.
STEMMLERRobert M. StemmlerPresident and Chief Executive
Officer




50



---

CERTIFICATION



I, Timothy S. Stone, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of IMPCO Technologies, Inc. (IMPCO);
|-- |  | --------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of IMPCO as of, and for, the periods presented in this annual report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | IMPCOs other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 of the Exchange Act) for IMPCO and we have:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to IMPCO, including our consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of IMPCOs disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | IMPCOs other certifying officers and I have disclosed, based on our most recent evaluation, to IMPCOs auditors and the audit committee of IMPCOs
board of directors (or persons performing the equivalent function):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect IMPCOs ability to record, process, summarize and
report financial data and have identified for IMPCOs auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in IMPCOs internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | IMPCOs other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date:  April 15, 2003



/s/    TIMOTHY S.
STONETimothy S. StoneActing Chief Financial Officer and
Treasurer






51



---

IMPCO TECHNOLOGIES, INC.



INDEX TO FINANCIAL STATEMENTS



|                                                |  | Page
|----------------------------------------------- |  | ----
|CONSOLIDATED FINANCIAL STATEMENTS               |  |     
|                                               
|Report of Independent Auditors                  |  | F-2 
|                                               
|Consolidated Balance Sheets                     |  | F-3 
|                                               
|Consolidated Statements of Operations           |  | F-4 
|                                               
|Consolidated Statements of Stockholders Equity |  | F-5 
|                                               
|Consolidated Statements of Cash Flows           |  | F-6 
|                                               
|Notes to Consolidated Financial Statements      |  | F-7 



F-1



---

REPORT OF INDEPENDENT AUDITORS



The
Board of Directors and Stockholders

IMPCO Technologies, Inc.



We have audited the accompanying consolidated balance sheets of IMPCO Technologies, Inc. and subsidiaries as
of April 30, 2001 and 2002 and December 31, 2002, and the related consolidated statements of operations, stockholders equity, and cash flows for each of the three years in the period ended April 30, 2002 and the eight months ended December 31,
2002. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of IMPCO Technologies, Inc. and subsidiaries at April 30, 2001 and 2002 and December 31, 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended April 30, 2002 and the eight months
ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth herein.



As more fully described in Note 16 to the consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets.



/s/    ERNST & YOUNG LLP



Long Beach, California

March 12, 2003, except for the 6th paragraph of Note 1 and the 2nd paragraph of Note 8 (c)

as to which the date is March 28, 2003 and the 1st paragraph of Note 3

as to which the date is March 24, 2003



F-2



---

IMPCO TECHNOLOGIES, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                               |  | April 30, 2001 |             |   | April 30, 2002 |   |             | December 31, 2002 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ----------- | - | -------------- | - | ----------- | ----------------- | 
|ASSETS                                                                                                                                                                                                                         |  |                |             |   |                |   |             |                   | 
|Current assets:                                                                                                                                                                                                                |  |                |             |   |                |   |             |                   | 
|Cash and cash equivalents                                                                                                                                                                                                      |  | $              | 16,587,115  |   |                | $ | 10,413,499  |                   | 
|Restricted cash                                                                                                                                                                                                                |  |                |            |   |                |   | 576,837     |                   | 
|Accounts receivable                                                                                                                                                                                                            |  |                | 16,219,713  |   |                |   | 13,979,629  |                   | 
|Less allowance for doubtful accounts                                                                                                                                                                                           |  |                | 981,353     |   |                |   | 875,289     |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Net accounts receivable                                                                                                                                                                                                        |  |                | 15,238,360  |   |                |   | 13,104,340  |                   | 
|Inventories:                                                                                                                                                                                                                   |  |                |             |   |                |   |             |                   | 
|Raw materials and parts                                                                                                                                                                                                        |  |                | 11,949,709  |   |                |   | 7,724,386   |                   | 
|Work-in-process                                                                                                                                                                                                                |  |                | 493,924     |   |                |   | 236,471     |                   | 
|Finished goods                                                                                                                                                                                                                 |  |                | 9,781,364   |   |                |   | 10,695,102  |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Total inventories                                                                                                                                                                                                              |  |                | 22,224,997  |   |                |   | 18,655,959  |                   | 
|Deferred tax assets                                                                                                                                                                                                            |  |                | 2,168,679   |   |                |   | 2,807,677   |                   | 
|Other current assets                                                                                                                                                                                                           |  |                | 3,303,073   |   |                |   | 1,880,691   |                   | 
|Current assets from discontinued operation                                                                                                                                                                                     |  |                | 20,113,864  |   |                |   | 14,386,071  |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Total current assets                                                                                                                                                                                                           |  |                | 79,636,088  |   |                |   | 61,825,074  |                   | 
|Equipment and leasehold improvements:                                                                                                                                                                                          |  |                |             |   |                |   |             |                   | 
|Dies, molds and patterns                                                                                                                                                                                                       |  |                | 5,294,220   |   |                |   | 6,061,226   |                   | 
|Machinery and equipment                                                                                                                                                                                                        |  |                | 5,863,331   |   |                |   | 6,125,925   |                   | 
|Office furnishings and equipment                                                                                                                                                                                               |  |                | 6,878,824   |   |                |   | 8,737,403   |                   | 
|Automobiles and trucks                                                                                                                                                                                                         |  |                | 347,882     |   |                |   | 415,585     |                   | 
|Leasehold improvements                                                                                                                                                                                                         |  |                | 2,286,160   |   |                |   | 2,347,572   |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|                                                                                                                                                                                                                               |  |                | 20,670,417  |   |                |   | 23,687,711  |                   | 
|Less accumulated depreciation and amortization                                                                                                                                                                                 |  |                | 13,318,529  |   |                |   | 15,242,731  |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Net equipment and leasehold improvements                                                                                                                                                                                       |  |                | 7,351,888   |   |                |   | 8,444,980   |                   | 
|Goodwill and intangibles                                                                                                                                                                                                       |  |                | 9,534,994   |   |                |   | 8,921,254   |                   | 
|Deferred tax assets, net                                                                                                                                                                                                       |  |                | 10,601,227  |   |                |   | 29,128,539  |                   | 
|Business acquisition costs                                                                                                                                                                                                     |  |                |            |   |                |   | 157,491     |                   | 
|Other assets                                                                                                                                                                                                                   |  |                | 936,843     |   |                |   | 1,198,234   |                   | 
|Non-current assets from discontinued operation                                                                                                                                                                                 |  |                | 12,701,624  |   |                |   | 13,773,353  |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|                                                                                                                                                                                                                               |  | $              | 120,762,664 |   |                | $ | 123,448,925 |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|                                                                                                                                                                                                                              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                           |  |                |             |   |                |   |             |                   | 
|Current liabilities:                                                                                                                                                                                                           |  |                |             |   |                |   |             |                   | 
|Accounts payable                                                                                                                                                                                                               |  | $              | 5,040,585   |   |                | $ | 5,240,379   |                   | 
|Accrued payroll obligations                                                                                                                                                                                                    |  |                | 2,612,728   |   |                |   | 2,885,652   |                   | 
|Other accrued expenses                                                                                                                                                                                                         |  |                | 2,131,637   |   |                |   | 1,750,006   |                   | 
|Current lines of credit                                                                                                                                                                                                        |  |                | 6,078,205   |   |                |   | 8,625,000   |                   | 
|Current maturities of long-term debt and capital leases                                                                                                                                                                        |  |                | 1,832,568   |   |                |   | 5,472,800   |                   | 
|Current liabilities from discontinued operation                                                                                                                                                                                |  |                | 10,393,348  |   |                |   | 9,136,522   |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Total current liabilities                                                                                                                                                                                                      |  |                | 28,089,071  |   |                |   | 33,110,359  |                   | 
|Term loans                                                                                                                                                                                                                     |  |                | 6,870,693   |   |                |   | 4,889,962   |                   | 
|Capital leases                                                                                                                                                                                                                 |  |                | 947,050     |   |                |   | 376,026     |                   | 
|Non-current liabilities of discontinued operation                                                                                                                                                                              |  |                | 180,533     |   |                |   | 127,355     |                   | 
|Minority interest                                                                                                                                                                                                              |  |                | 2,044,122   |   |                |   | 2,268,093   |                   | 
|Commitments and contingencies                                                                                                                                                                                                  |  |                |            |   |                |   |            |                   | 
|Stockholders equity:                                                                                                                                                                                                          |  |                |             |   |                |   |             |                   | 
|Preferred stock, $.001 par value, authorized 500,000 shares; none issued and outstanding
at April 30, 2001 and 2002 and December 31, 2002                                                                                      |  |                |            |   |                |   |            |                   | 
|Common stock, $.001 par value, authorized 100,000,000 shares; 10,294,377 issued and
outstanding at April 30, 2001; 12,622,836 issued and outstanding at April 30, 2002; 16,433,202 issued and outstanding at December 31, 2002 |  |                | 10,294      |   |                |   | 12,622      |                   | 
|Additional paid-in capital relating to common stock                                                                                                                                                                            |  |                | 102,831,566 |   |                |   | 126,315,507 |                   | 
|Shares held in trust                                                                                                                                                                                                           |  |                | (142,710    | ) |                |   | (321,858    | )                 | 
|Notes receivable from officers                                                                                                                                                                                                 |  |                | (3,913,854  | ) |                |   |            |                   | 
|Accumulated deficit                                                                                                                                                                                                            |  |                | (12,434,966 | ) |                |   | (39,671,014 | )                 | 
|Accumulated other comprehensive income                                                                                                                                                                                         |  |                | (3,719,135  | ) |                |   | (3,658,127  | )                 | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|Total stockholders equity                                                                                                                                                                                                     |  |                | 82,631,195  |   |                |   | 82,677,130  |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 
|                                                                                                                                                                                                                               |  | $              | 120,762,664 |   |                | $ | 123,448,925 |                   | 
|                                                                                                                                                                                                                               |  |                |             |   |                |   |             |                   | 



See
accompanying notes to consolidated financial statements.



F-3



---

IMPCO TECHNOLOGIES, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                          |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31, 2002 |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ------------------------------------ | -
|                                                                                                          |  | 2000                         |            |   | 2001                                 |  
|Net revenue                                                                                               |  | $                            | 90,474,975 |   |                                      | $
|Costs and expenses:                                                                                       |  |                              |            |   |                                      |  
|Cost of sales                                                                                             |  |                              | 54,717,794 |   |                                      |  
|Research and development expense                                                                          |  |                              | 2,620,049  |   |                                      |  
|Selling, general and administrative expense                                                               |  |                              | 17,848,569 |   |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  
|Total costs and expenses                                                                                  |  |                              | 75,186,412 |   |                                      |  
|Operating income (loss)                                                                                   |  |                              | 15,288,563 |   |                                      |  
|Interest expense                                                                                          |  |                              | 1,523,648  |   |                                      |  
|Interest income                                                                                           |  |                              | (81,504    | ) |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  
|Income (loss) before income taxes, minority interest in income of consolidated
subsidiaries and dividends |  |                              | 13,846,419 |   |                                      |  
|Income tax expense (benefit)                                                                              |  |                              | 3,350,050  |   |                                      |  
|Minority interest in (income) loss of consolidated subsidiaries                                           |  |                              | 463,233    |   |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                                  |  |                              | 10,033,136 |   |                                      |  
|Loss from discontinued operation (Note 6)                                                                 |  |                              | (6,967,640 | ) |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  
|Net income (loss) applicable to common stock                                                              |  | $                            | 3,065,496  |   |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Net income (loss) per share:                                                                              |  |                              |            |   |                                      |  
|Basic:                                                                                                    |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                                  |  | $                            | 1.18       |   |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Loss from discontinued operation                                                                          |  | $                            | (0.82      | ) |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Net income (loss)                                                                                         |  | $                            | 0.36       |   |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Diluted:                                                                                                  |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                                  |  | $                            | 1.09       |   |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Loss from discontinued operation                                                                          |  | $                            | (0.76      | ) |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Net income (loss)                                                                                         |  | $                            | 0.33       |   |                                      | $
|                                                                                                          |  |                              |            |   |                                      |  
|Number of shares used in per share calculation:                                                           |  |                              |            |   |                                      |  
|Basic                                                                                                     |  |                              | 8,489,229  |   |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  
|Diluted                                                                                                   |  |                              | 9,232,299  |   |                                      |  
|                                                                                                          |  |                              |            |   |                                      |  



See
accompanying notes to consolidated financial statements.



F-4



---

IMPCO TECHNOLOGIES, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                                                                                                 |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31,2002 |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ----------------------------------- | -
|                                                                                                                                 |  | 2000                         |            |   | 2001                                |  
|Common Stock:                                                                                                                    |  |                              |            |   |                                     |  
|Beginning balance                                                                                                                |  | $                            | 8,408      |   |                                     | $
|Issuance of common stock (163,326, 97,572, 328,459 and 19,200 shares, respectively)
resulting from the exercise of stock options |  |                              | 164        |   |                                     |  
|Issuance of common stock (0, 1,625,000, 2,000,000 and 1,500,000) shares, respectively)
resulting from equity offering            |  |                              |           |   |                                     |  
|Issuance of common stock (0, 0,0 and 2,309,470 shares, respectively) in connection with
an option to acquire a business          |  |                              |           |   |                                     |  
|                                                                                                                                 |  |                              |            |   |                                     |  
|Ending balance                                                                                                                   |  |                              | 8,572      |   |                                     |  
|Additional paid-in capital relating to common stock:                                                                             |  |                              |            |   |                                     |  
|Beginning balance                                                                                                                |  | $                            | 45,375,995 |   |                                     | $
|Issuance of common stock resulting from the exercise of stock options                                                            |  |                              | 1,173,088  |   |                                     |  
|Issuance of common stock resulting from equity offering                                                                          |  |                              |           |   |                                     |  
|Issuance of common stock in connection with option to acquire a business                                                         |  |                              |           |   |                                     |  
|Reduction in current tax liability related to stock options                                                                      |  |                              | 989,954    |   |                                     |  
|Spin-off of Quantum subsidiary                                                                                                   |  |                              |           |   |                                     |  
|                                                                                                                                 |  |                              |            |   |                                     |  
|Ending balance                                                                                                                   |  | $                            | 47,539,037 |   |                                     | $
|Shares held in trust for deferred compensation plan, at cost (2,878, 4,137, 15,870 and
18,224 shares, respectively)              |  |                              | (110,320   | ) |                                     |  
|Notes receivable from officers                                                                                                   |  |                              |           |   |                                     |  
|Retained earnings (accumulated deficit):                                                                                         |  |                              |            |   |                                     |  
|Beginning balance                                                                                                                |  | $                            | (2,397,813 | ) |                                     | $
|Net income (loss) income applicable to common stock                                                                              |  |                              | 3,065,496  |   |                                     |  
|                                                                                                                                 |  |                              |            |   |                                     |  
|Ending balance                                                                                                                   |  | $                            | 667,683    |   |                                     | $
|Accumulated other comprehensive income:                                                                                          |  |                              |            |   |                                     |  
|Beginning balance                                                                                                                |  | $                            | (1,468,525 | ) |                                     | $
|Foreign currency translation adjustment                                                                                          |  |                              | (1,257,104 | ) |                                     |  
|Unrealized loss on derivative instrument                                                                                         |  |                              |           |   |                                     |  
|Unrealized loss on marketable securitiesavailable-for-sale                                                                       |  |                              |           |   |                                     |  
|                                                                                                                                 |  |                              |            |   |                                     |  
|Ending balance                                                                                                                   |  | $                            | (2,725,629 | ) |                                     | $
|                                                                                                                                 |  |                              |            |   |                                     |  
|Total stockholders equity                                                                                                       |  | $                            | 45,379,343 |   |                                     | $
|                                                                                                                                 |  |                              |            |   |                                     |  
|Comprehensive Income:                                                                                                            |  |                              |            |   |                                     |  
|Net income (loss)                                                                                                                |  | $                            | 3,065,496  |   |                                     | $
|Foreign currency translation adjustment                                                                                          |  |                              | (1,257,104 | ) |                                     |  
|Unrealized loss on derivative instrument                                                                                         |  |                              |           |   |                                     |  
|Unrealized loss on marketable securitiesavailable-for-sale                                                                       |  |                              |           |   |                                     |  
|                                                                                                                                 |  |                              |            |   |                                     |  
|Comprehensive income (loss)                                                                                                      |  | $                            | 1,808,392  |   |                                     | $
|                                                                                                                                 |  |                              |            |   |                                     |  



See
accompanying notes to consolidated financial statements.





F-5



---

IMPCO TECHNOLOGIES, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                  |  | Fiscal Years Ended April 30, |             |   | Eight Months Ended December 31, 2002 |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ----------- | - | ------------------------------------ | -
|                                                                                  |  | 2000                         |             |   | 2001                                 |  
|Cash flows from operating activities:                                             |  |                              |             |   |                                      |  
|Net income (loss) from continuing operations                                      |  | $                            | 10,033,136  |   |                                      | $
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                              |             |   |                                      |  
|Amortization of intangibles arising from acquisition                              |  |                              | 736,937     |   |                                      |  
|Depreciation and other amortization                                               |  |                              | 1,829,904   |   |                                      |  
|Valuation allowance for deferred taxes                                            |  |                              |            |   |                                      |  
|(Gain) loss on disposal of assets                                                 |  |                              | (74,343     | ) |                                      |  
|(Gain) loss from sale of available-for-sale securities                            |  |                              |            |   |                                      |  
|(Increase) decrease in deferred income taxes                                      |  |                              | 1,376,929   |   |                                      |  
|(Increase) decrease in accounts receivable                                        |  |                              | (7,826,277  | ) |                                      |  
|(Increase) decrease in inventories                                                |  |                              | (8,931,714  | ) |                                      |  
|Increase (decrease) in accounts payable                                           |  |                              | 4,571,265   |   |                                      |  
|Increase in accrued expenses                                                      |  |                              | 2,358,903   |   |                                      |  
|Minority interests in income of consolidated subsidiaries                         |  |                              | 463,233     |   |                                      |  
|Other, net                                                                        |  |                              | (386,270    | ) |                                      |  
|                                                                                  |  |                              |             |   |                                      |  
|Net cash provided by operating activities                                         |  |                              | 4,151,703   |   |                                      |  
|                                                                                 
|Cash flows from investing activities:                                             |  |                              |             |   |                                      |  
|Purchases of equipment and leasehold improvements                                 |  |                              | (1,791,768  | ) |                                      |  
|Purchases of businesses                                                           |  |                              | (410,927    | ) |                                      |  
|Proceeds from sales of equipment                                                  |  |                              | 102,802     |   |                                      |  
|Purchase of available-for-sale securities                                         |  |                              |            |   |                                      |  
|Sale of available-for-sale securities                                             |  |                              |            |   |                                      |  
|                                                                                  |  |                              |             |   |                                      |  
|Net cash used in investing activities                                             |  |                              | (2,099,893  | ) |                                      |  
|                                                                                 
|Cash flows from financing activities:                                             |  |                              |             |   |                                      |  
|Increase (decrease) in borrowings under lines of credit                           |  |                              | 14,264,949  |   |                                      |  
|Payments on term loans                                                            |  |                              | (2,733,967  | ) |                                      |  
|Increase in restricted cash                                                       |  |                              |            |   |                                      |  
|Payments for shares held in trust                                                 |  |                              |            |   |                                      |  
|Proceeds from issuance of bank term loans                                         |  |                              |            |   |                                      |  
|Payments of capital lease obligations                                             |  |                              | (769,395    | ) |                                      |  
|Proceeds from issuance of common stock                                            |  |                              | 1,131,878   |   |                                      |  
|Increase (decrease) on notes receivable from officers                             |  |                              |            |   |                                      |  
|                                                                                  |  |                              |             |   |                                      |  
|Net cash provided by financing activities                                         |  |                              | 11,893,465  |   |                                      |  
|Net cash provided by continuing operations                                        |  |                              | 13,945,275  |   |                                      |  
|Net cash used in discontinued operation                                           |  |                              | (12,683,235 | ) |                                      |  
|Translation adjustment                                                            |  |                              | (259,780    | ) |                                      |  
|                                                                                  |  |                              |             |   |                                      |  
|Net increase (decrease) in cash and cash equivalents                              |  |                              | 1,002,260   |   |                                      |  
|Cash and cash equivalents at beginning of period                                  |  |                              | 2,008,208   |   |                                      |  
|                                                                                  |  |                              |             |   |                                      |  
|Cash and cash equivalents at end of period                                        |  | $                            | 3,010,468   |   |                                      | $
|                                                                                  |  |                              |             |   |                                      |  



See
accompanying notes to consolidated financial statements.



F-6



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.    Summary of Significant Accounting Policies



(a)Basis of presentation and description of the businessThe consolidated financial statements of IMPCO Technologies, Inc. (IMPCO or the Company) include
the accounts of the Company and its majority owned subsidiary IMPCO-BERU Technologies B.V. (IMPCO BV), its majority owned subsidiary Grupo I.M.P.C.O. Mexicano, S. de R.L. de C.V. (IMPCO Mexicano) and its wholly owned
subsidiaries IMPCO Technologies, Pty. Limited (IMPCO Pty), IMPCO Tech Japan K.K. (IMPCO Japan), and a joint venture Minda IMPCO Technologies Limited. The Company has a forty percent ownership in Minda IMPCO Limited and uses
the equity method of consolidation to recognize the financial results of Minda IMPCO Limited. All significant intercompany accounts and transactions have been eliminated in consolidation.



The Company is a designer, manufacturer and supplier of components and systems that store gaseous fuels and
monitor and control the pressure and flow of those fuels for use in primarily internal combustion engines.



On July 23, 2002, the Company completed the distribution and spin-off of Quantum Technologies Worldwide, Inc. (Quantum), a
wholly owned subsidiary, by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, July 5, 2002. As a result of the spin-off, the Company no longer holds any continuing interest in Quantum and
has reported Quantum as a discontinued operation in the consolidated financial statements for all periods presented.



On November 14, 2002, the Company changed its fiscal calendar from April 30 to December 31. The consolidated financial statements and the
accompanying notes include the transition period for the eight months ended December 31, 2002.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of
accounting contemplates the recovery of the Companys assets and the satisfaction of its liabilities in the normal course of conducting business. The Company uses cash generated from operations, bank financings and sales of its equity
securities to fund capital expenditures and research and development, as well as to invest in and operate existing operations and new businesses. In May 2002, the Company completed an private placement of common stock in which it received $18.8
million in gross proceeds. In July 2002, the Company spun off its Quantum division and released Quantum from its liability related to the $8.6 million line of credit with Bank of America and contributed cash of $15.0 million to supply liquidity and
Quantums short-term operating needs.



It is
currently anticipated that the Company will require additional sources of financing in order to capitalize on opportunities that management believes to exist in the alternative fuel market, to invest in long-term business opportunities including the
pending acquisition of BRC, and to pay off the $6 million Bank of America line of credit, which matures in May 2003. These additional sources of financing may include bank borrowings or public or private offerings of equity or debt securities. No
assurance can be given that such additional sources of financing will be available on acceptable terms, if at all. If additional sources of financing are not available, we plan to implement measures to conserve cash and reduce costs, which may
affect our ability to capitalize on strategic growth opportunities. Additionally, if the Company is unable to raise sufficient funds to pay off the Bank of America line of credit and is unable to extend this facility, the Company would be in default
with the bank, which could significantly affect its liquidity. However, one of our directors has committed to provide an $8.0 million loan to meet the Bank of America obligation if the Company is unable to find alternative sources (see Note 8(c)).



Management believes that its existing working
capital and the commitment of funds from one of its directors are sufficient to fund its operations at least through December 31, 2003.



(b)Cash and Cash EquivalentsThe Company considers all highly liquid investments with maturity of three months or
less when purchased to be cash equivalents.



F-7



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





(c)Restricted CashThe Company classifies cash and cash equivalents that are restricted from operating use for the next twelve months as restricted cash. Amounts restricted for longer than twelve months are
classified as other assets. When the restrictions are no longer in-place, the amounts are reclassified to cash and cash equivalents.



(d)InventoriesInventories are valued at the lower of cost or market. Cost is determined by the first-in,
first-out (FIFO) method while market is determined by replacement cost for raw materials and parts and net realizable value for work-in-process and finished goods.



(e)Equipment and leasehold improvementsEquipment and leasehold improvements are
stated on the basis of historical cost. Depreciation of equipment is provided using the straight-line method over the assets estimated useful lives, ranging from three to seven years. Amortization of leasehold improvements and equipment under
capital leases is provided using the straight-line method over the shorter of the assets estimated useful lives or the lease terms.



(f)Intangibles arising from acquisitionsIntangibles arising from acquisitions, primarily goodwill, are recorded
based on the excess of the acquisition cost over the fair value of amounts assigned to tangible assets and liabilities. Goodwill and other unidentifiable intangible assets that arise from acquisitions are subject to an annual evaluation in
accordance with SFAS No. 142 Goodwill and Other Intangible Assets for the purpose of determining any impairment and would be recognized as goodwill expense.



In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards
No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill is no longer amortized but is subject to
annual impairment tests in accordance with the Statement. Other identifiable intangible assets will continue to be amortized over their useful lives.



The Company has applied the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of the
transition period ended December 31, 2002. Application of the nonamortization provisions of the Statement has resulted in an increase in net income of approximately $0.5 million ($.03 per share) for the transition period ended December 31, 2002. The
Company has completed the impairment tests as required upon adoption of SFAS No. 142 and the annual evaluation thereof for impairment and has determined that there is no impairment to its recorded goodwill balance as of December 31, 2002.



(g)Warranty
costsEstimated future warranty obligations related to certain products are provided by charges to operations in the period in which the related revenue is recognized. Estimates are based, in part, on historical experience.



(h)Research and development
costsResearch and development costs are charged to expense as incurred. Equipment used in research and development with alternative future uses is capitalized.



(i)Revenue recognitionRevenue is recognized when title is transferred, ordinarily
when products are shipped, and when management is reasonably assured of collectibility. Also, in accordance with Emerging Issues Task Force No. 00-10, the Company includes the costs of shipping and handling, when incurred, in cost of goods sold.



(j)Minority interests in
subsidiariesThe balance sheet amounts in minority interest at December 31, 2002 represent 49% of the equity held by the single minority stockholder in IMPCO BV, 10% of the equity held by the single minority stockholder in IMPCO Mexicano,
49% of the equity held by a single minority stockholder in IMPCO Fuel Systems, a subsidiary of IMPCO Pty, 40% of the equity held by a joint venture partner in Minda



F-8



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Impco, Limited. Minority interest represents the minority stockholders proportionate share of equity in those subsidiaries.



(k)Net income per
shareBasic income per share is computed by dividing net income applicable to common stock by the weighted average shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average
number of shares of common stock outstanding, and if dilutive, all common stock equivalents. In addition to net income (loss) per share, basic and diluted earnings per share are also presented for income (loss) from continuing operations and income
(loss) from discontinued operation as appropriate.



(l)Stock based compensationIn October 1995, the Financial Accounting Standards Board issued SFAS No. 123 Accounting of Stock Based Compensation, which established accounting and reporting
standards for stock based employee compensation plans effective after fiscal year 1996. SFAS No. 123 encourages entities to adopt the fair value based method of accounting; however, it also allows an entity to continue to measure compensation cost
using the intrinsic value based method prescribed by Accounting Principles Board No. 25. Entities electing to remain on the intrinsic value based method must make certain pro forma disclosures as if the new fair value method had been
applied. At this time, the Company has not adopted the recognition provision of SFAS No. 123, but has provided pro forma disclosures (see note 8(b)).



In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, Accounting
For Stock Based CompensationTransition and Disclosure. SFAS No. 148 amended SFAS No. 123 Accounting For Stock-Based Compensation, to provide new guidance concerning the transition when a company changes from the
intrinsic-value method to the fair-value method of accounting for employee stock-based compensation cost. As amended by SFAS No. 148, SFAS No. 123 also requires additional disclosure regarding such cost in annual financial statements and in
condensed interim financial statements. Certain disclosure provisions of SFAS No. 148 were adopted by the Company in its financial statements prepared as of December 31, 2002.



SFAS No. 123, as amended by SFAS No. 148, requires pro forma information regarding net income and net income
per share to be disclosed for new options granted after fiscal year 1996. The fair value of these options was determined at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:



|                                     |  | Fiscal Years Ended April 30, |   |  | Eight Months Ended December 31, 2002 |  
|------------------------------------ |  | ---------------------------- | - |  | ------------------------------------ | -
|                                     |  | 2000                         |   |  | 2001                                 |  
|Expected dividend yield              |  | 0.0                          | % |  | 0.0                                  | %
|Calculated volatility                |  | .729                         |   |  | .683                                 |  
|Risk-free interest rate              |  | 3.0                          | % |  | 5.0                                  | %
|Expected life of the option in years |  | 8.82                         |   |  | 7.45                                 |  



F-9



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The
estimated fair value of the options is amortized to expense over the options vesting period for pro forma disclosures. The per share pro forma for the effects of SFAS No. 123, as amended by SFAS 148, is not indicative of the
effects on reported net income/loss for future years. The Companys reported and pro forma information for the periods April 30, 2000, 2001, and 2002 and at December 31, 2002 are as follows:



|                                                                                                                                                |  | Fiscal Years Ended April 30, |           |   | Eight Months Ended December 31, 2002 |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | --------- | - | ------------------------------------ | -
|                                                                                                                                                |  | 2000                         |           |   | 2001                                 |  
|Net income (loss), as reported                                                                                                                  |  | $                            | 3,065,496 |   |                                      | $
|Deduct: Total stock-based employee compensation expense determined under the fair value
based method for all awards, net of related tax effects |  |                              | (172,000  | ) |                                      |  
|                                                                                                                                                |  |                              |           |   |                                      |  
|Pro forma net income (loss)                                                                                                                     |  | $                            | 2,893,496 |   |                                      | $
|                                                                                                                                                |  |                              |           |   |                                      |  
|Basic earnings per share:                                                                                                                       |  |                              |           |   |                                      |  
|Net income (loss) as reported                                                                                                                   |  | $                            | 0.36      |   |                                      | $
|Net income (loss) pro forma                                                                                                                     |  | $                            | 0.34      |   |                                      | $
|Diluted earnings per share:                                                                                                                     |  |                              |           |   |                                      |  
|Net income (loss) as reported                                                                                                                   |  | $                            | 0.33      |   |                                      | $
|Net income (loss) pro forma                                                                                                                     |  | $                            | 0.31      |   |                                      | $



The
Financial Accounting Standards Board has also issued Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation. The Interpretation addresses implementation practice issues in accounting for compensation
costs under existing rules prescribed by Accounting Principles Board No. 25. The rules are applied prospectively to all new awards, modifications to outstanding awards and changes in grantee status after July 1, 2000, with certain exceptions. The
Company considers the impact of these rules when adopting new stock option plans and when granting any options.



(m)Impairment of long-lived assets and long-lived assets to be disposed ofImpairment losses are recorded on
long-lived assets used in operations when an indicator of impairment (significant decrease in market value of an asset, significant change in extent or manner in which the asset is used or significant physical change to the asset) is present and the
undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount. The Company has not experienced any significant changes in the business climate or in the use of assets that would require the Company
to write down the value of the assets recorded in the balance sheet.



In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), which addresses
financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of Operations For a Disposal of a Segment of a Business. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, with earlier application
encouraged. We adopted SFAS No. 144 as of May 1, 2002, which did not have a significant impact on the Companys financial position and results of operations, except that the Quantum operations is presented as a discontinued operation.



(n)Use of estimatesThe
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



F-10



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





(o)ReclassificationsCertain prior year amounts have been reclassified to conform to current presentations. As a result of the Quantum spin-off in July 2002, the consolidated financial statements and the
accompanying notes to the consolidated financial statements have been restated to reflect Quantum as a discontinued operation.



(p)Foreign currency translationAssets and liabilities of the Companys foreign subsidiaries are generally
translated at current exchange rates, and related revenues and expenses are translated at average exchange rates in effect during the period. Resulting translation adjustments are recorded as a foreign currency component of other comprehensive
income in stockholders equity. The results and financial condition of the Companys international operations are affected by changes in exchange rates between certain foreign currencies and the U.S. Dollar. The functional currency for all
of the Companys international subsidiaries is the local currency of the subsidiary. An increase in the value of the U.S. Dollar increases costs incurred by the subsidiaries because most of its international subsidiaries inventory
purchases are U.S. Dollar denominated. The Company seeks to manage its foreign currency economic risk by minimizing its U.S. Dollar investment in foreign operations using foreign currency term loans and lines of credit to finance the operations of
its foreign subsidiaries.



Transaction gains and
losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, except those transactions that operate as a hedge of an identifiable foreign currency commitment, are included in the
results of operations as incurred.



(q)Financial instrumentsAt December 31, 2002, the Companys financial instruments recorded on the balance sheet include cash equivalents, interest rate swap agreement, capital lease obligations,
short-term bank debt, and restricted cash. Because of the short maturity, short-term bank debt approximates fair value. At December 31, 2002, the fair value of the Companys long-term debt and capital lease obligations approximated carrying
value.



The Company periodically enters into
foreign currency forward contracts and interest rate swap agreements. When the Company enters into foreign currency forward contracts, it does so to hedge identifiable foreign currency commitments. Foreign currency contracts reduce the
Companys exposure to unfavorable fluctuations in foreign currencies versus the U.S. dollar. Realized gains and losses on these contracts are included in the measurement of the related foreign currency transaction. The Company, from time to
time, uses interest rate swap agreements to manage interest rate risk on its floating rate debt portfolio. Each interest rate swap is matched as a hedge against a specific debt instrument and has the same notional amount and tenor as the related
debt instrument principle. (See Note 3(a)).



The
Financial Accounting Standards Board has issued SFAS No. 133, Accounting for Derivative Instruments and for Hedging Activities, as amended by SFAS No. 138 Accounting for Certain Derivative Instruments and Certain Hedging
Activities-An Amendment of SFASB No. 133, which require the Company to recognize all derivatives on the balance sheet at fair market value. Derivatives that are not designated as hedges must be adjusted to fair value though income. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in
other comprehensive income until the hedged item in recognized in earnings. The ineffective portion of a derivatives change in fair value will be immediately recognized in earnings.



It is the Companys policy to enter into interest rate swap contracts only to the extent necessary to
reduce exposure to fluctuations in interest rates. The Company does not enter into interest rate swap contracts for speculative purposes. In the unlikely event that a counter party to a swap agreement fails to meet the terms of an interest rate swap
contract, the Companys exposure is limited to the interest rate differential on the notional



F-11



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



amount. The Company does not anticipate non-performance by the counter party. As of December 31, 2002, the Company had entered into one
interest rate swap contract, which matures on September 30, 2004. On March 31, 2003, the Company cancelled the interest rate swap and recognized a loss in the carrying value of the swap, which had been accounted for as a cash flow hedge and included
as part of accumulated other comprehensive income, and charged to interest expense in the consolidated statement of operations for the transition period ended December 31, 2002. See Note 3.



2.    Acquisitions



IMPCO Fuel Systems.    In March
2000, the Companys subsidiary, IMPCO Technologies, Pty Ltd, and LPM Corporation Pty Ltd, a corporation incorporated under the laws of the state of New South Wales, Australia, established IMPCO Fuel Systems, a corporation incorporated under the
laws of the state of New South Wales, Australia. IMPCO Technologies, Pty Ltd has a 51% ownership interest in IMPCO Fuel Systems and paid $300,000 in the purchase of goodwill of LPMs gaseous fuel equipment business and $110,000 in certain
assets, inventory and equipment of LPM. This acquisition was accounted for under the purchase method of accounting and has been included in the consolidated financial statements since the date of acquisition.



B.R.C. Societá a Responsibilitá
Limitata.    In October 2002, the Company entered into an option agreement that, if exercised, would permit it to acquire 50% of the outstanding equity interest of B.R.C. Societá a Responsibilitá Limitata
(BRC), an Italian company that supplies alternative fuel products and systems to be used in automobiles. As consideration for the option, the Company (i) made a non-refundable $1.5 million payment to the BRC equity holders on October 3,
2002, which is included in business acquisition costs on the consolidated balance sheet for the period ended December 31, 2002 and (ii) issued to BRC equity holders 2,309,470 shares of common stock on November 29, 2002 valued at $10.0 million and
also included in business acquisition costs on the consolidated balance sheet as of December 31, 2002. The BRC shares are subject to a lockup agreement providing that 1,662,818, or 72%, of those shares may not be resold until certain dates
commencing on August 1, 2004. The option agreement as initially structured required the Company to give the BRC equity holders notice of its intent to exercise on or before January 15, 2003, and to pay the selling shareholders an additional
$4,250,000 plus EUR 1,250,000 on or before January 31, 2003. The Company and the selling shareholders subsequently entered into an amendment extending the notice date to February 17, 2003 and the exercise date to April 18, 2003 and the Company has
made additional down payments of $2.3 million. If the option is exercised, the Company will be required to pay an additional installment of $7.0 million (subject to reduction if certain conditions are not met with respect to BRCs accounts
receivable collections) on or before September 30, 2003. The Company gave the required notice on February 13, 2003 and is currently exploring various alternatives to finance both the April and September payments. If we are unable to obtain financing
to pay the required April payment, the selling shareholders would retain the cash portion of the purchase price paid through March 31, 2003 of approximately $3.8 million and would be required to return the 2,309,470 shares of common stock.



F-12



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





3.    Debt Payable



The Companys debt payable is summarized as follows:



|                                                                 |  | April 30 2001 |            | April 30 2002 |   | December 31 2002
|---------------------------------------------------------------- |  | ------------- | ---------- | ------------- | - | ----------------
|(a)  Bank of America NT&SA                                       |  |               |            |               |   |                 
|Revolving line of credit                                         |  | $             | 3,914,000  |               | $ | 8,625,000       
|Mexican peso line of credit                                      |  |               | 541,000    |               |   |                
|Term loan                                                        |  |               | 8,894,000  |               |   | 6,353,000       
|Capital lease and capital expenditure lines of credit facilities |  |               | 1,436,000  |               |   | 1,516,000       
|(b)  Credit facilityFortis Bank (formerly Mees Pierson)         |  |               | 1,461,000  |               |   | 1,068,000       
|(c)  The Hong Kong and Shanghai Banking Corporation Ltd.         |  |               |            |               |   |                 
|Term loan for acquisition of Mikuni                              |  |               | 776,000    |               |   | 500,000         
|Line of credit                                                   |  |               | 162,000    |               |   |                
|Other capital leases                                             |  |               | 572,000    |               |   | 1,423,000       
|Derivative instruments                                           |  |               |           |               |   | 195,000         
|                                                                 |  |               |            |               |   |                 
|                                                                 |  |               | 17,756,000 |               |   | 19,680,000      
|Less current portion                                             |  |               | 9,758,000  |               |   | 14,287,000      
|                                                                 |  |               |            |               |   |                 
|                                                                 |  | $             | 7,998,000  |               | $ | 5,393,000       
|                                                                 |  |               |            |               |   |                 



(a)  Bank of America NT&SA



Loan Covenants and Collateral.    The Bank of America credit facility contains certain restrictions, as well as limitations on other indebtedness, and is secured by substantially all of the Companys
assets including a $1.0 million cash collateral account, which is included as part of restricted cash in the consolidated balance sheet as of December 31, 2002. In June 2002, the credit facility with Bank of America was amended to extend the
maturity date of the Companys line of credit and term loans to May 31, 2003 and to reduce the available line of credit from $9.5 million to $8.0 million at the end of June 2002. The terms of this amendment also require the line of credit to be
reduced by $1.0 million on each of September 30, 2002, December 31, 2002 and March 31, 2003. On March 24, 2003, Bank of America amended its agreement to (1) waive the funded debt to earnings before interest, taxes, depreciation and amortization
ratio and the debt service coverage ratio for the period ending January 31, 2003 (2) increase the interest rate on all loans to prime plus five percentage points (3) terminate the swap agreement and (4) defer the $1.0 million March 31, 2003 line of
credit reduction to April 30, 2003. As a result of obtaining the waiver from Bank of America, the Company is in compliance with all covenants and conditions under this credit facility at December 31, 2002.



The Company entered into one interest rate swap contract with
Bank of America NT&SA to manage its exposure to interest rate changes and stabilize the cost of borrowed funds. The interest rate swap is matched as a hedge to a specific term loan and has the same notional amount and tenor as the related debt
instrument principal. This swap was cancelled on March 24, 2003. At December 31, 2002, the notional amount of the swap was approximately $4.4 million with a fixed payment rate of 5.6% and a fluctuating receiving rate based upon LIBOR. The
Companys weighted-average cost of funds was 7.4%, absent this swap agreement the weighted-average cost of funds would have been 6.1%. At December 31, 2002 the carrying value of the interest rate swap was $182,000 and is recorded as a
liability. During the transition period ended December 31, 2002, the Company recorded a loss of $109,000 in other comprehensive income in order to account for the change in fair value. Since the swap is no longer effective, the Company reclassified
the amount from other comprehensive income to interest expense during the transition period ended December 31, 2002.



Revolving Line of Credit.    The $6 million revolving line of credit bears interest, payable monthly, at a
fluctuating rate per annum equal to the Banks reference rate plus up to three-quarters of one percentage point, depending on certain financial ratios. At December 31, 2002, the outstanding line of credit balance was $5,860,000, which was
subject to an offshore rate of 6.5%.



F-13



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Term
Loan.    The Companys credit facility agreement and line of credit with Bank of America will expire as of May 31, 2003. As a result, all of the term and capital expenditure loans issued by the Bank have been classified
as current debt as of December 31, 2002 even though portions of the term loan debt do not mature in calendar year 2003. The Company intends to terminate its relationship with the Bank no later than May 31, 2003 and expects to secure a new credit
facility from a different senior lender before that time. It is anticipated that all of the Companys debt with Bank of America will be refinanced by the new credit facility.



The term loan bears interest, payable on a monthly basis, at the Banks reference rate plus up to
three-quarters of one percentage point and matures September 30, 2004. The Company may elect to have all or portions of the term loan bear interest at an alternative interest rate agreed upon by the Bank and IMPCO for periods of not less than 30
days nor more than one year. The alternative interest rate is based on the offshore rate plus 5.0%, which was 10.6% at December 31, 2002. Each alternative rate portion must be for an amount not less than $500,000 and may not include any portion of
principal that is scheduled to be repaid before the last day of the applicable interest period.



Capital Leases and Capital Expenditure Lines of Credit Facilities.    The Company has two non-revolving capital expenditure line of credit facilities and two capital leases
with Bank of America. The interest rate for each of the capital expenditure lines of credit is prime plus 2.25%. At December 31, 2002, one line of credit had a balance of approximately $1,141,000 and an interest rate of 6.5%. The other line of
credit had a limit of $1,000,000 and matures on May 31, 2003. Upon the date of maturity, this line of credit may be converted into a term loan due on May 31, 2005 and may be prepaid, in whole or in part, at any time. At December 31, 2002, this line
of credit had a balance of $790,000 bearing an interest rate of 6.5%. Both of these credit facilities are classified on the balance sheet as of December 31, 2002 as part of current maturities of long-term debt and capital leases.



The Companys capital lease obligations as of December
31, 2002 with Bank of America are approximately $78,000 and $318,000 and bear interest rates of 3.5% and 3.4%, respectively. These obligations are classified on the balance sheet as of December 31, 2002 as part of current maturities of long-term
debt and capital leases with the exception of approximately $101,000, which is classified as capital leases.



(b)  Credit FacilityFortis Bank



IMPCO BV has secured a EUR 2,300,000 (US$2,100,000) revocable credit facility with Fortis Bank in the
Netherlands. The interest rate is determined on weekly based on a weighted average of several money market indices. IMPCO BVs borrowings under this facility may not exceed the combined total of 70 % of the book value of its accounts receivable
(not older than 90 days) and 50% of the book value of its inventory (or the current market value when lower) with a maximum of EUR 1,000,000. At December 31, 2002, the interest rate was 4.9% and the outstanding balance was $715,000.



(c)  The Hong Kong and Shanghai Banking
Corporation Ltd.



Line of
Credit.    In April 2002, IMPCO Japan secured a ¥64,000,000 (US$500,000) line of credit facility with the Hong Kong and Shanghai Banking Corporation Ltd., Osaka Branch. This line of credit has a fixed interest rate for a
period of 12 months and matures in June 2003. The line of credit is secured with cash from IMPCO Australia that has been placed in a restricted account with National Australian Bank Limited. National Australian Bank has issued a stand-by letter of
credit to HSBC as collateral for the line of credit. At December 31, 2002, the outstanding loan balance of ¥64,000,000 (US$540,000) bore an interest rate of 1.702%.



At December 31, 2002, the weighted average interest rate for all of the Companys debt was 7.4%.



F-14



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Management
has made the decision to secure funding from a new senior lender other than Bank of America prior to May 31, 2003. Consequently, all Bank of America debt and all other debt with the exception of capital leases have been classified as current. If the
Company chooses to keep Bank of America as its senior lender, and is able to continue to obtain waivers with respect certain of its loan covenants, annual maturities of long-term debt, excluding capital leases, for the five years subsequent to
December 31, 2002 will be as follows: 2003$9,276,000; 2004$2,821,000; 2005$141,000; thereafter$0.



4.    Marketable Securities



The Companys deferred compensation plan acquired 17,978 shares of Quantum common stock at an average price of $9.12 per share in
accordance with the Quantum spin-off, dated July 23, 2002. These shares were classified as marketable securities available-for-sale and are included as part of other assets on the consolidated balance sheet as of December 31, 2002. In accordance
with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, unrealized and realized losses are recognized respectively as a component of other accumulated comprehensive income in the equity section of the
consolidated balance sheet and as part of selling, and general and administrative expense on the consolidated statements of operations. A realized loss of $16,527 was recognized during the eight months ended December 31, 2002 based on the sale of
2,600 shares and an unrealized loss of $104,304 is carried in other comprehensive income recognizing the decline in share price of 14,752 shares of Quantum stock as of December 31, 2002. No tax benefit was recognized because the assessment was that
a tax benefit would likely not be realized in a future period in accordance with SFAS No. 109, Accounting for Income Taxes.



5.    Income Taxes



The provision for (benefit from) income taxes consists of the following:



|                                                                          |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31, 2002 |  
|------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ------------------------------------ | -
|                                                                          |  | 2000                         |            |   | 2001                                 |  
|Current:                                                                  |  |                              |            |   |                                      |  
|Federal                                                                   |  | $                            | 715,274    |   |                                      | $
|State                                                                     |  |                              | 258,787    |   |                                      |  
|Foreign                                                                   |  |                              | 999,060    |   |                                      |  
|                                                                          |  |                              |            |   |                                      |  
|                                                                          |  |                              | 1,973,121  |   |                                      |  
|Deferred:                                                                 |  |                              |            |   |                                      |  
|Federal and State                                                         |  |                              | 1,376,929  |   |                                      |  
|Change in Valuation Allowance                                             |  |                              |           |   |                                      |  
|                                                                          |  |                              |            |   |                                      |  
|Total provision (benefit) for income taxes for continuing operations      |  | $                            | 3,350,050  |   |                                      | $
|                                                                          |  |                              |            |   |                                      |  
|Provision (benefit) for income taxes for discountinued operation (Note
6) |  | $                            | (2,223,811 | ) |                                      | $
|                                                                          |  |                              |            |   |                                      |  



F-15



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Income
(loss) before income taxes and minority interest of consolidated subsidiaries and dividends for U.S. and foreign-based operations is shown below:



|                                                                            |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31, 2002 |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ------------------------------------ | -
|                                                                            |  | 2000                         |            |   | 2001                                 |  
|Continuing Operations                                                       |  |                              |            |   |                                      |  
|U.S                                                                         |  | $                            | 11,773,231 |   |                                      | $
|Foreign                                                                     |  |                              | 2,073,188  |   |                                      |  
|                                                                            |  |                              |            |   |                                      |  
|Total Continuing Operations                                                 |  | $                            | 13,846,419 |   |                                      | $
|Discontinued Operations (Note 6)                                            |  |                              | (9,191,451 | ) |                                      |  
|                                                                            |  |                              |            |   |                                      |  
|Total income (loss) before income taxes and minority interest and
dividends |  | $                            | 4,654,968  |   |                                      | $
|                                                                            |  |                              |            |   |                                      |  



As of
December 31, 2002, the Company established a $24.0 million deferred tax asset valuation allowance. The allowance was recognized based on the weight of available evidence that it is more likely than not that this portion of the deferred tax asset
will not be realized within the next three years, notwithstanding that some of those assets may have longer lives under applicable tax laws. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes. The Company believes, based on its history of prior operating earnings, its spin-off of the Quantum division and its expectations of future earnings, that operating income of the Company will
more likely than not be sufficient to realize the future benefits of the amount classified as net deferred tax asset. Future adverse changes in market conditions, poor operating results or a decline in our projections about future profitability may
affect the Company assessment of the adequacy of the reserve and, consequently, the net carrying value of net deferred tax assets. In the event that the Company determines that it is more likely than not that it would be unable to realize an
additional portion of the net deferred tax asset, an additional adjustment to the deferred tax asset valuation allowance would be charged to income in the period such determination was made.



A reconciliation of income taxes computed at the federal
statutory income tax rate to income taxes reported in the consolidated statements of operations is as follows:



|                                  |  | Fiscal Years Ended April 30, |   |  | Eight Months Ended December 31, 2002 |   
|--------------------------------- |  | ---------------------------- | - |  | ------------------------------------ | --
|                                  |  | 2000                         |   |  | 2001                                 |   
|Federal statutory income tax rate |  | 34.0                         | % |  | (34.0                                | )%
|Permanent differences             |  | 1.8                          |   |  | 3.5                                  |   
|State tax, net                    |  | 4.9                          |   |  | (1.6                                 | ) 
|Foreign tax, net                  |  | 6.3                          |   |  | 1.6                                  |   
|Research and development credit   |  | (22.8                        | ) |  | (10.5                                | ) 
|Valuation Allowance               |  |                             |   |  |                                     |   
|                                  |  |                              |   |  |                                      |   
|Effective tax rate                |  | 24.2                         | % |  | (41.0                                | )%
|                                  |  |                              |   |  |                                      |   



F-16



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The
components of the Companys deferred tax liabilities and assets is as follows:



|                                        |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31, 2002 |  
|--------------------------------------- |  | ---------------------------- | ---------- | - | ------------------------------------ | -
|                                        |  | 2001                         |            |   | 2002                                 |  
|Deferred tax liabilities:               |  |                              |            |   |                                      |  
|Tax over book depreciation              |  | $                            | (1,203,278 | ) |                                      | $
|Other                                   |  |                              | (1,791,365 | ) |                                      |  
|                                        |  |                              |            |   |                                      |  
|                                        |  |                              | (2,994,643 | ) |                                      |  
|Deferred tax assets:                    |  |                              |            |   |                                      |  
|Tax credit carryforwards                |  |                              | 7,944,427  |   |                                      |  
|Net operating loss carryforwards        |  |                              | 5,117,935  |   |                                      |  
|Inventory reserves                      |  |                              | 961,488    |   |                                      |  
|Other provisions for estimated expenses |  |                              | 1,740,699  |   |                                      |  
|                                        |  |                              |            |   |                                      |  
|                                        |  | $                            | 15,764,549 |   |                                      | $
|Valuation Allowance                     |  |                              |           |   |                                      |  
|                                        |  |                              |            |   |                                      |  
|Net deferred tax assets                 |  | $                            | 12,769,906 |   |                                      | $
|Less: deferred tax assets-current       |  |                              | 2,168,679  |   |                                      |  
|                                        |  |                              |            |   |                                      |  
|Deferred tax assets non-current         |  | $                            | 10,601,227 |   |                                      | $
|                                        |  |                              |            |   |                                      |  



For the
transition period ended December 31, 2002, the Company has a federal research and development tax credit carryforward available for federal income tax purposes of approximately $4,933,000 that, if not used, expires between 2010 to 2022. Federal net
operating loss carryforwards of $66.5 million expire between 2020 and 2021. Additionally, the Company has an alternative minimum tax credit carryforward available for federal income tax purposes of approximately $173,000 and a foreign tax credit of
$666,000 that expires in 2003 if not utilized. The Company also has research and development credit carryforwards for state income tax purposes of approximately $4,379,000, which do not expire for tax reporting purposes. State net operating loss
carryforwards of $29.1 million expire between 2010 and 2012.



6.    Discontinued Operation



On July 23, 2002, the Company completed the distribution and spin-off of its Quantum subsidiary by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, which was July
5, 2002. The Company assumed approximately $8.6 million outstanding under the line of credit with Bank of America and also made a contribution in cash of $15.0 million to Quantum as part of the spin-off transaction and was presented in net cash used
in discontinued operations in the consolidated statements of cash flows for. As a result of the spin-off of Quantum, the Company no longer holds any continuing interest in Quantum.



The Company adopted Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, effective as of May 1, 2002. Under the provisions of SFAS No. 144, the results of operations of Quantum are presented as discontinued operations in the Companys consolidated balance sheets.



F-17



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Operating
results of discontinued operations for the period May 1, 2002 to the date of the Quantum spin-off, July 23, 2002, and for the preceding fiscal years ended April 30, 2002, 2001, and 2000 are as follows:



|                                            |  | Fiscal Years Ended April 30, |            |   | May 1  July 23, 2002 |  
|------------------------------------------- |  | ---------------------------- | ---------- | - | --------------------- | -
|                                            |  | 2000                         |            |   | 2001                  |  
|Revenue                                     |  | $                            | 22,340,778 |   |                       | $
|Costs and expenses:                         |  |                              |            |   |                       |  
|Cost of sales                               |  |                              | 15,081,039 |   |                       |  
|Research and development expense            |  |                              | 12,956,426 |   |                       |  
|Selling, general and administrative expense |  |                              | 3,494,764  |   |                       |  
|                                            |  |                              |            |   |                       |  
|Total costs and expenses                    |  |                              | 31,532,229 |   |                       |  
|Operating loss                              |  |                              | (9,191,451 | ) |                       |  
|Net interest expense                        |  |                              |           |   |                       |  
|Loss before income tax (benefit)            |  |                              | (9,191,451 | ) |                       |  
|Income tax benefit                          |  |                              | (2,223,811 | ) |                       |  
|                                            |  |                              |            |   |                       |  
|Loss from discontinued operation            |  | $                            | (6,967,640 | ) |                       | $
|                                            |  |                              |            |   |                       |  



7.    Commitments and Contingencies



(a)  Leases



The Company has certain non-cancelable operating leases for facilities and equipment, and non-cancelable capital leases for machinery, equipment and motor vehicles. Future minimum lease commitments
under non-cancelable leases at December 31, 2002 are as follows:



|Fiscal years ending December 31,               |                | Lease Obligations
|---------------------------------------------- | -------------- | -----------------
|                                               | Capital Leases |                  
|2003                                           |                | $                
|2004                                           |                |                  
|2005                                           |                |                  
|2006                                           |                |                  
|2007                                           |                |                  
|Thereafter                                     |                |                  
|                                               |                |                  
|Total minimum lease payments                   |                |                  
|                                               |                |                  
|Less imputed interest                          |                |                  
|                                               |                |                  
|Present value of future minimum lease payments |                |                  
|Less current portion                           |                |                  
|                                               |                |                  
|Long-term capital lease obligation             |                | $                
|                                               |                |                  



Total
rental expense under the operating leases for fiscal years ended April 30, 2000, 2001, and 2002 and the transition period ended December 31, 2002 were approximately $1,345,000, $1,639,000, $1,696,000 and $1,449,000, respectively. These leases are
non-cancelable and certain leases have renewal options and escalation clauses.



At April 30, 2000, 2001, and 2002 and the transition period ended December 31, 2002, approximately $2,281,000, $1,730,000, $1,107,000 and $617,590 were outstanding under the Companys capital
lease facility, respectively. At April 30, 2002, the gross and net assets acquired under the capital lease facility were approximately $3,177,000 and $420,000, respectively. At December 31, 2002, the gross and net assets acquired



F-18



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



under the capital lease facility were approximately $3,177,000 and $591,000, respectively. Amortization of these assets is included in
depreciation expense.



(b)  Contingencies



The Company is currently subject to certain legal proceedings and claims arising in the ordinary course of business. Based on advice from legal counsel, management does not believe that the outcome of any of these matters will have a
material adverse effect on the Companys consolidated financial statements.



In August 2000, the Company initiated legal action in federal court (Eastern District of Michigan) against GFI Control Systems Inc. and Dynetek Industries Ltd. claiming that those entities infringed
the Companys patent covering a compressed gas fuel system that includes a tank with an internal pressure regulator. GFI Control Systems Inc. and Dynetek Industries Ltd. filed a counter-suit for patent infringement. In connection with the
spin-off, the Company assigned its rights in this litigation to Quantum and Quantum assumed all liabilities in this matter.



(c)  Investment and Tax Savings Plan



The Companys Investment and Tax Savings Plan (the Plan) is a defined contribution plan,
which is qualified under Internal Revenue Service Code Section 401(k). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. All employees who are at least age twenty-one or older are eligible to participate
in the Plan on the first day of employment with the Company. Employees of the Company who elect to participate in the Plan may contribute into the Plan not less than 1% nor more than 15% of compensation. The Companys matching contributions are
discretionary and match elective salary deferrals up to 3.0% of compensation. Approximately 65% of eligible employees were enrolled in the 401(k) plan at December 31, 2002. Employer contributions approximated $482,000, $593,000, $632,000, and
$189,000 for fiscal years ended 2000, 2001, 2002, and the transition period ended December 31, 2002, respectively.



8.    Stockholders Equity



(a)  Stockholder Protection Rights Agreement



On June 30, 1999, the Companys Board of Directors adopted a Stockholder Protection Rights
Agreement and declared a dividend of one right on each outstanding share of IMPCO common stock. Each right entitles the holder, upon certain events, to purchase, at an exercise price of $45 per share, shares of common stock with a value equal to
twice the exercise price. The dividend was paid on July 26, 1999 to stockholders of record on July 12, 1999.



(b)  Stock options



The Company has six stock option plans that provide for the issuance of options to key employees and directors of the Company at the fair
market value at the time of grant. Options under the plans generally vest in four or five years and are generally exercisable while the individual is an employee or a director, or ordinarily within one month following termination of employment. In
no event may options be exercised more than ten years after date of grant. On November 14, 2002, the stockholders of IMPCO approved the 2002 Stock Option Plan for Employees and the 2002 Stock Option Plan for Nonemployee Directors, which provides for
the issuance of stock options initially covering up to 500,000 and 200,000 shares of common stock, respectively.



In connection with the spin-off of Quantum, all stock options outstanding on the spin-off date were split into one option of IMPCO and one
option of Quantum stock. The exercise price of both the IMPCO and Quantum



F-19



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



stock options was adjusted based on the relative market values of both companies on the first trading day following the spin-off. Options
exercised prior to the spin-off of Quantum were made at the exercise price prior to such adjustment. All vesting schedules remain the same and the option holders are not required to exercise their options concurrently.



|                                         |  | Number of Shares |   |  | Weighted Average Exercise Price
|---------------------------------------- |  | ---------------- | - |  | -------------------------------
|Outstanding at April 30, 1999            |  | 1,502,658        |   |  | $                              
|Granted                                  |  | 104,974          |   |  |                                
|Exercised                                |  | (163,326         | ) |  |                                
|Forfeited                                |  | (122,375         | ) |  |                                
|                                         |  |                  |   |  |                                
|Options outstanding at April 30, 2000    |  | 1,321,931        |   |  | $                              
|Granted                                  |  | 416,453          |   |  |                                
|Exercised                                |  | (97,572          | ) |  |                                
|Forfeited                                |  | (46,047          | ) |  |                                
|                                         |  |                  |   |  |                                
|Options outstanding at April 30, 2001    |  | 1,594,765        |   |  | $                              
|Granted                                  |  | 232,000          |   |  |                                
|Exercised                                |  | (328,459         | ) |  |                                
|Forfeited                                |  | (120,826         | ) |  |                                
|                                         |  |                  |   |  |                                
|Options outstanding at April 30, 2002    |  | 1,377,480        |   |  | $                              
|Granted                                  |  | 819,000          |   |  |                                
|Exercised                                |  | (19,200          | ) |  |                                
|Forfeited                                |  | (98,787          | ) |  |                                
|                                         |  |                  |   |  |                                
|Options outstanding at December 31, 2002 |  | 2,078,493        |   |  | $                              
|Shares exercisable at April 30, 2000     |  | 685,334          |   |  | $                              
|Shares exercisable at April 30, 2001     |  | 774,889          |   |  | $                              
|Shares exercisable at April 30, 2002     |  | 666,623          |   |  | $                              
|Shares exercisable at December 31, 2002  |  | 818,107          |   |  | $                              



The
following table sets forth summarized information with respect to stock options outstanding and exercisable at December 31, 2002:



|                     |  | Outstanding      |  | Exercisable 
|-------------------- |  | ---------------- |  | ------------
|Exercise Price Range |  | Number of Shares |  | Average Life
|$1.50 to $3.00       |  | 36,428           |  | 0.4         
|$3.01 to $4.50       |  | 1,274,583        |  | 7.6         
|$4.51 to $6.00       |  | 121,396          |  | 4.8         
|$6.01 to $7.50       |  | 575,202          |  | 6.9         
|$7.51 to $9.00       |  | 55,684           |  | 8.1         
|$9.01 to $15.00      |  | 15,200           |  | 7.6         
|                     |  |                  |  |             
|                     |  | 2,078,493        |  | 7.2         



At
December 31, 2002, there were 45,209 shares available for grant.



The Company has elected to account for its employee stock options under Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations in accounting for employee
stock options. No compensation expense is recorded under APB 25 because the exercise price of the Companys employee common stock options equals the market price of the underlying common stock on the grant date.



F-20



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





(c)  Warrants



On January 11, 2002, the Company completed a private placement of 2,000,000 shares of common stock at a price of $11.25 per share for $22.5 million. The Company also issued to the investors warrants to purchase an aggregate of
200,000 shares of common stock at an exercise price of $13.25 per share. Each purchaser was issued a warrant to purchase one-tenth of a share of common stock for each share of common stock purchased under the agreement. In addition, the Company
issued warrants to purchase an aggregate of 100,000 shares of common stock to the placement agent in connection with the transaction. The total of 300,000 warrants were outstanding at December 31, 2002 and the warrants are exercisable at any time
until January 11, 2006.



In connection with the
$8.0 million loan commitment from a director expiring May 31, 2003 (if exercised interest payable monthly at 12% with a maturity of January 31, 2004) obtained March 28, 2003, the Company granted 200,000 warrants to purchase IMPCO stock at a price of
$2.51, which expire in four years. If the commitment is exercised, the Company will grant 600,000 warrants on similar terms.



(d)  Notes receivable from officers



On March 2, 2001, the Board of Directors authorized loans to three officers of the Company for the exercise
of options to purchase Company stock from former stockholders. The loans accrued interest at 9% and were fully collateralized by a security interest in and lien upon shares of common stock of the Company and certain vested Company nonqualified stock
options issued to the officers. Additionally, the loans were secured by the personal residence of one of the officers and were cross-collateralized. Each of these loans was repaid in full in July 2001.



9.    Earnings Per Share



The following table sets forth the computation of basic and diluted
earnings per share:



|                                                                                                    |  | Fiscal Years Ended April 30, |            |   | Eight Months Ended December 31, 2002 |  
|--------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ------------------------------------ | -
|                                                                                                    |  | 2000                         |            |   | 2001                                 |  
|Numerator:                                                                                          |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                            |  | $                            | 10,033,136 |   |                                      | $
|Loss from discontinued operations, net of tax benefit                                               |  |                              | (6,967,640 | ) |                                      |  
|                                                                                                    |  |                              |            |   |                                      |  
|Net income (loss)                                                                                   |  | $                            | 3,065,496  |   |                                      | $
|Denominator:                                                                                        |  |                              |            |   |                                      |  
|Denominator for basic earnings per share                                                            |  |                              |            |   |                                      |  
|Weighted average number of shares                                                                   |  |                              | 8,489,229  |   |                                      |  
|Effect of dilutive securities:                                                                      |  |                              |            |   |                                      |  
|Employee stock options                                                                              |  |                              | 743,070    |   |                                      |  
|                                                                                                    |  |                              |            |   |                                      |  
|Dilutive potential common shares                                                                    |  |                              | 743,070    |   |                                      |  
|Denominator for diluted earnings per shareadjusted weighted-average shares and
assumed conversions |  |                              | 9,232,299  |   |                                      |  
|Basic earnings per share:                                                                           |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                            |  | $                            | 1.18       |   |                                      | $
|Loss from discontinued operation, net of tax benefit                                                |  | $                            | (0.82      | ) |                                      | $
|Net income (loss)                                                                                   |  | $                            | 0.36       |   |                                      | $
|Diluted earnings per share:                                                                         |  |                              |            |   |                                      |  
|Income (loss) from continuing operations                                                            |  | $                            | 1.09       |   |                                      | $
|Loss from discontinued operation, net of tax benefit                                                |  | $                            | (0.76      | ) |                                      | $
|Net income (loss)                                                                                   |  | $                            | 0.33       |   |                                      | $



F-21



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





For the
transition period ended December 31, 2002, options to purchase approximately 2,078,000 shares of common stock and 300,000 stock warrants were excluded in the computation of diluted net income per share, as the effect would be anti-dilutive. For the
fiscal years ended April 30, 2000, 2001, and 2002 options to purchase approximately 579,000, 480,000, and 1,377,000 shares, respectively, of common stock were excluded in the computation of diluted net income per share, as the effect would be
anti-dilutive.



10.    Revenues



During fiscal year 2000, IMPCO BV, IMPCO
Pty, Grupo IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 15%, 7%, 7% and less than 3% of total consolidated revenues, respectively. During fiscal year 2001, IMPCO BV, IMPCO Pty, Grupo IMPCO Mexicano and IMPCO Japan
subsidiaries accounted for approximately 18%, 8%, 9% and 4% of total consolidated revenues, respectively. During fiscal year 2002, IMPCO BV, IMPCO Pty, Grupo IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 22%, 6%, 16%, and
3% of total consolidated revenues, respectively. During the eight months ended December 31, 2002, IMPCO BV, IMPCO Pty, Grupo IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 18%, 6%, 26%, and 3% of total consolidated revenues,
respectively.



The Company routinely sells
products to a broad base of domestic and international customers, which includes distributors and original equipment manufacturers. Based on the nature of these customers, credit is generally granted without collateral being required. The Company
does not anticipate that a significant credit risk exists as a result of these customer relationships.



During the 8 month period ended December 31, 2002, the Company had one customer with net revenues greater than ten percent of consolidated
net revenues. Revenues for this customer as a percentage of total revenues were 14.4%, 7.9%, 7.3%, and 6.5% for the eight months ended December 31, 2002, and the fiscal years ended April 30, 2002, 2001, and 2000, respectively.



11.    Business Segment and Geographic Information



Business
Segments.    The Company currently has two reporting segments organized along geographical boundaries: a domestic segment consisting of U.S. Operations and the rest of the world known as the International segment. Previously,
the U.S. Operations segment was called the Gaseous Fuel Products Division. The domestic segment sells products including parts and conversion systems to OEMs and the aftermarket. The Companys International Operations in Australia, Europe,
Japan, India, and Mexico provide distribution for the Companys products, predominantly from its domestic division and some product assembly.



Corporate expenses consist of general and administrative expenses at the corporate level and include the amortization of identifiable
intangibles. Intersegment eliminations are primarily the result of intercompany sales from our domestic division to our International Operations.



All research and development is expensed as incurred. Research and development expense includes both customer-funded research and
development and Company sponsored research and development.



The Company evaluates performance based on profit or loss from operations before interest and income taxes. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting
Policies.



F-22



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Financial Information by Business Segment.    Financial information by business segment for continuing operations follows (in thousands):



|                               |  | Fiscal Years Ended April 30, |         |   | Eight Months Ended December 31, 2002 |  
|------------------------------ |  | ---------------------------- | ------- | - | ------------------------------------ | -
|Revenues:                      |  | 2000                         |         |   | 2001                                 |  
|U.S. Operations                |  | $                            | 76,831  |   |                                      | $
|International Operations       |  |                              | 29,991  |   |                                      |  
|Intersegment Eliminations      |  |                              | (16,347 | ) |                                      |  
|                               |  |                              |         |   |                                      |  
|Total                          |  | $                            | 90,475  |   |                                      | $
|                               |  |                              |         |   |                                      |  
|                              
|                               |  | Fiscal Years Ended April 30, |         |   | Eight Months Ended December 31, 2002 |  
|Operating Income (Loss):       |  | 2000                         |         |   | 2001                                 |  
|U.S. Operations                |  | $                            | 19,451  |   |                                      | $
|International Operations       |  |                              | 2,623   |   |                                      |  
|Corporate Expenses             |  |                              | (6,360  | ) |                                      |  
|Intersegment Eliminations      |  |                              | (425    | ) |                                      |  
|                               |  |                              |         |   |                                      |  
|Total                          |  | $                            | 15,289  |   |                                      | $
|                               |  |                              |         |   |                                      |  
|                              
|                               |  | Fiscal Years Ended April 30, |         |   | Eight Months Ended December 31, 2002 |  
|Identifiable Assets:           |  | 2000                         |         |   | 2001                                 |  
|U.S. Operations                |  | $                            | 37,169  |   |                                      | $
|International Operations       |  |                              | 24,904  |   |                                      |  
|Corporate                      |  |                              | 12,893  |   |                                      |  
|Discontinued Operation         |  |                              | 20,050  |   |                                      |  
|                               |  |                              |         |   |                                      |  
|Total                          |  | $                            | 95,016  |   |                                      | $
|                               |  |                              |         |   |                                      |  
|                              
|                               |  | Fiscal Years Ended April 30, |         |   | Eight Months Ended December 31, 2002 |  
|Capital Expenditures:          |  | 2000                         |         |   | 2001                                 |  
|U.S. Operations                |  | $                            | 1,076   |   |                                      | $
|International Operations       |  |                              | 600     |   |                                      |  
|Corporate                      |  |                              | 115     |   |                                      |  
|Discontinued Operation         |  |                              | 1,891   |   |                                      |  
|                               |  |                              |         |   |                                      |  
|Total                          |  | $                            | 3,682   |   |                                      | $
|                               |  |                              |         |   |                                      |  
|                              
|                               |  | Fiscal Years Ended April 30, |         |   | Eight Months Ended December 31, 2002 |  
|Depreciation and Amortization: |  | 2000                         |         |   | 2001                                 |  
|U.S. Operations                |  | $                            | 1,258   |   |                                      | $
|International Operations       |  |                              | 602     |   |                                      |  
|Corporate                      |  |                              | 705     |   |                                      |  
|Discontinued Operation         |  |                              | 1,219   |   |                                      |  
|                               |  |                              |         |   |                                      |  
|Total                          |  | $                            | 3,784   |   |                                      | $
|                               |  |                              |         |   |                                      |  



F-23



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Product
Revenues by Application.    The Companys product revenues by application across all business segments follows (in thousands):



|               |  | Fiscal Years Ended April 30, |        | Eight Months Ended December 31, 2002
|-------------- |  | ---------------------------- | ------ | ------------------------------------
|Revenues:      |  | 2000                         |        | 2001                                
|Transportation |  | $                            | 36,717 |                                     
|Industrial     |  |                              | 53,758 |                                     
|               |  |                              |        |                                     
|Total          |  | $                            | 90,475 |                                     
|               |  |                              |        |                                     



Geographic Information.    The Companys geographic information for revenues to unaffiliated customers and long-lived assets is shown below. The basis for determining revenues is the geographic
location of the  end-user. Long-lived assets, excluding those classified under discontinued operation, represent long-term tangible assets that are physically located in the region as indicated (in thousands):



|                         |  | Fiscal Years Ended April 30, |        | Eight Months Ended December 31, 2002
|------------------------ |  | ---------------------------- | ------ | ------------------------------------
|Revenues:                |  | 2000                         |        | 2001                                
|United States and Canada |  | $                            | 49,309 |                                     
|Europe                   |  |                              | 14,114 |                                     
|Asia & Pacific Rim       |  |                              | 9,590  |                                     
|Latin America            |  |                              | 17,462 |                                     
|                         |  |                              |        |                                     
|Total                    |  | $                            | 90,475 |                                     
|                         |  |                              |        |                                     
|                        
|                         |  | Fiscal Years Ended April 30, |        | Eight Months Ended December 31, 2002
|Long-Lived Assets:       |  | 2000                         |        | 2001                                
|United States            |  | $                            | 4,586  |                                     
|Europe                   |  |                              | 323    |                                     
|Asia & Pacific Rim       |  |                              | 222    |                                     
|Latin America            |  |                              | 441    |                                     
|                         |  |                              |        |                                     
|Total                    |  | $                            | 5,572  |                                     
|                         |  |                              |        |                                     



12.    Warranties



Estimated future warranty obligations related to certain products are provided by charges to operations in the period in which the related revenue is recognized. Estimates are based, in part, on historical experience. Changes in the
Companys product warranty liability during the fiscal years ended April 30, 2000, 2001, and 2002 and the eight months ended December 31, 2002 are as follows:



|                                       |  | Balance at Beginning of Period |         | New Warranties Issued |   | Warranties Settled |  |   | Balance at End of Period
|-------------------------------------- |  | ------------------------------ | ------- | --------------------- | - | ------------------ |  | - | ------------------------
|Warranty reserve for the period ended: |  |                                |         |                       |   |                    |  |   |                         
|December 31, 2002                      |  | $                              | 284,845 |                       | $ | 233,416            |  | $ | (66,230                 
|April 30, 2002                         |  |                                | 227,153 |                       |   | 170,217            |  |   | (112,525                
|April 30, 2001                         |  |                                | 426,987 |                       |   | 73,117             |  |   | (272,951                
|April 30, 2000                         |  |                                | 241,980 |                       |   | 411,454            |  |   | (226,447                



F-24



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





13.    Purchases



During fiscal years 2000, 2001, and 2002, and the transition period ended December 31, 2002 purchases from two vendors constituted approximately 44%, 41%, 17%, and 19% of consolidated net inventory purchases, respectively. In fiscal
year 2000, 2001, and 2002, and the transition period ended December 31, 2002, 10 suppliers accounted for approximately 74%, 67%, 28%, and 34% respectively, of consolidated net inventory purchases.



14.    Supplementary Cash Flow Information



For fiscal years 2000, 2001, 2002, and the
transition period ended December 31, 2002, the Company incurred capital lease obligations of approximately $100,000, $550,000, $367,000, and $27,000, respectively.



Interest and income taxes paid for fiscal years 2000, 2001, and 2002, and the transition period ended
December 31, 2002 are as follows:



|                                       |  | Fiscal Years Ended April 30, |           | Eight Months Ended December 31, 2002
|-------------------------------------- |  | ---------------------------- | --------- | ------------------------------------
|                                       |  | 2000                         |           | 2001                                
|Interest paid                          |  | $                            | 1,452,000 |                                     
|Taxes paid (including franchise taxes) |  |                              | 2,379,000 |                                     



Payments
made by Quantum for interest and taxes were not material for the periods indicated.



On November 29, 2002, the Company issued 2,309,470 shares of the Companys common stock to the equity holders of BRC valued at $10,000,000 as a down payment towards an option to acquire a 50%
ownership in BRC.



F-25



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





15.    Fiscal Year Change



On November 14, 2002, the Company changed its fiscal year from April 30 to December 31. The table below summarizes selected data for the unaudited eight months ended December 31, 2001 and the eight months ended December 31,
2002 (in thousands except for earnings per share).



|                                                      |  | Eight Months Ended December 31, |        
|----------------------------------------------------- |  | ------------------------------- | -------
|                                                      |  | 2001                            |        
|                                                      |  | (unaudited)                     |        
|Statement of Operations:                              |  |                                 |        
|Revenue:                                              |  |                                 |        
|Net revenue                                           |  | $                               | 45,707 
|Cost and expenses:                                    |  |                                 |        
|Cost of sales                                         |  |                                 | 29,185 
|Research and development expense                      |  |                                 | 3,712  
|Selling, general and administrative                   |  |                                 | 13,075 
|Operating income (loss)                               |  |                                 | (266   
|Interest expense                                      |  |                                 | 933    
|Interest income                                       |  |                                 | 112    
|Income (loss) from continuing operations (net of tax) |  |                                 | (908   
|Loss on discontinued operation (net of tax)           |  |                                 | (17,908
|                                                      |  |                                 |        
|Net income (loss) applicable to common stock          |  | $                               | (18,816
|                                                      |  |                                 |        
|Net income (loss) per share:                          |  |                                 |        
|Basic:                                                |  |                                 |        
|Income (loss) from continuing operations              |  | $                               | (0.09  
|Loss from discontinued operation                      |  |                                 | (1.71  
|Net income (loss)                                     |  | $                               | (1.80  
|Diluted:                                              |  |                                 |        
|Income (loss) from continuing operations              |  | $                               | (0.09  
|Loss from discontinued operations                     |  |                                 | (1.71  
|Net income (loss)                                     |  | $                               | (1.80  
|Number of shares used in per share computation:       |  |                                 |        
|Basic                                                 |  |                                 | 10,445 
|Diluted                                               |  |                                 | 10,445 
|                                                     
|Balance Sheet Data:                                   |  |                                 |        
|Total current assets                                  |  | $                               | 60,439 
|Total assets                                          |  |                                 | 117,270
|Total current liabilities                             |  |                                 | 20,332 
|Long-term obligations, less current portion           |  |                                 | 25,236 
|Stockholders equity                                  |  | $                               | 69,401 



F-26



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





16.    Goodwill



In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, amortization of goodwill is no longer permitted. No such amortization expense for goodwill was recognized for the eight-month period ended December
31, 2002. The following data shows the effect on net income (loss) and net income (loss) per share of common stock if the provisions of SFAS No. 142 had been in effect for the fiscal years ended April 30, 2000, 2001, and 2002.



|                                                                                                                                 |  | Fiscal Years Ended April 30, |           |      | Eight Months Ended December 31, 2002 |            
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | --------- | ---- | ------------------------------------ | -----------
|                                                                                                                                 |  | 2000                         |           | 2001 |                                      |            
|Net income (loss), as reported                                                                                                   |  | $                            | 3,065,496 |      | $                                    | (13,102,649
|Add: Amortization of goodwill expense recorded during fiscal years prior to adoption of
SFAS No. 142, net of related tax effects |  |                              | 491,278   |      |                                      | 436,900    
|                                                                                                                                 |  |                              |           |      |                                      |            
|Pro forma net income (loss)                                                                                                      |  | $                            | 3,556,774 |      | $                                    | (12,665,749
|Basic earnings per share:                                                                                                        |  |                              |           |      |                                      |            
|Net income (loss) as reported                                                                                                    |  | $                            | 0.36      |      | $                                    | (1.32      
|Goodwill amortization                                                                                                            |  |                              | 0.06      |      |                                      | 0.04       
|                                                                                                                                 |  |                              |           |      |                                      |            
|Net income (loss) pro forma                                                                                                      |  | $                            | 0.42      |      | $                                    | (1.28      
|Diluted earnings per share:                                                                                                      |  |                              |           |      |                                      |            
|Net income (loss) as reported                                                                                                    |  | $                            | 0.33      |      | $                                    | (1.32      
|Goodwill amortization                                                                                                            |  |                              | 0.06      |      |                                      | 0.04       
|                                                                                                                                 |  |                              |           |      |                                      |            
|Net income (loss) pro forma                                                                                                      |  | $                            | 0.39      |      | $                                    | (1.28      
|                                                                                                                                 |  |                              |           |      |                                      |            



F-27



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





17.    Quarterly Results Of Operations (Unaudited)



A summary of the unaudited quarterly results of operations follows (in thousands, except per share amounts):



|                                         |  | First Qtr. |        |   | Second Qtr. |   |        | Third Qtr. |  |   | Fourth Qtr. |  
|---------------------------------------- |  | ---------- | ------ | - | ----------- | - | ------ | ---------- |  | - | ----------- | -
|Fiscal Year 2001                         |  |            |        |   |             |   |        |            |  |   |             |  
|Revenue                                  |  | $          | 22,276 |   |             | $ | 20,485 |            |  | $ | 18,145      |  
|Gross profit                             |  |            | 9,220  |   |             |   | 7,865  |            |  |   | 6,611       |  
|Operating income                         |  |            | 2,799  |   |             |   | 1,954  |            |  |   | 737         |  
|Income from continuing operations        |  |            | 1,249  |   |             |   | 1,389  |            |  |   | 821         |  
|Loss on discontinued operation           |  |            | (1,857 | ) |             |   | (2,771 | )          |  |   | (5,172      | )
|Net income (loss)                        |  |            | (608   | ) |             |   | (1,382 | )          |  |   | (4,351      | )
|Net income (loss) per share: (1)         |  |            |        |   |             |   |        |            |  |   |             |  
|Basic:                                   |  |            |        |   |             |   |        |            |  |   |             |  
|Income from continuing operations        |  | $          | 0.14   |   |             | $ | 0.13   |            |  | $ | 0.08        |  
|Loss from discontinued operation         |  | $          | (0.21  | ) |             | $ | (0.26  | )          |  | $ | (0.50       | )
|Net loss                                 |  | $          | (0.07  | ) |             | $ | (0.13  | )          |  | $ | (0.42       | )
|Diluted:                                 |  |            |        |   |             |   |        |            |  |   |             |  
|Income from continuing operations        |  | $          | 0.13   |   |             | $ | 0.12   |            |  | $ | 0.07        |  
|Loss from discontinued operation         |  | $          | (0.19  | ) |             | $ | (0.24  | )          |  | $ | (0.46       | )
|Net loss                                 |  | $          | (0.06  | ) |             | $ | (0.12  | )          |  | $ | (0.39       | )
|                                        
|Fiscal Year 2002                         |  |            |        |   |             |   |        |            |  |   |             |  
|Revenue                                  |  | $          | 18,920 |   |             | $ | 18,223 |            |  | $ | 13,799      |  
|Gross profit                             |  |            | 7,836  |   |             |   | 6,056  |            |  |   | 4,143       |  
|Operating income                         |  |            | 1,891  |   |             |   | (696   | )          |  |   | (1,817      | )
|Income (loss) from continuing operations |  |            | 843    |   |             |   | (789   | )          |  |   | (1,069      | )
|Loss on discontinued operation           |  |            | (6,439 | ) |             |   | (7,943 | )          |  |   | (5,951      | )
|Net income (loss)                        |  |            | (5,596 | ) |             |   | (8,732 | )          |  |   | (7,020      | )
|Net income (loss) per share: (1)         |  |            |        |   |             |   |        |            |  |   |             |  
|Basic:                                   |  |            |        |   |             |   |        |            |  |   |             |  
|Income (loss) from continuing operations |  | $          | 0.08   |   |             | $ | (0.07  | )          |  | $ | (0.10       | )
|Loss from discontinued operation         |  | $          | (0.62  | ) |             | $ | (0.76  | )          |  | $ | (0.54       | )
|Net loss                                 |  | $          | (0.54  | ) |             | $ | (0.83  | )          |  | $ | (0.64       | )
|Diluted:                                 |  |            |        |   |             |   |        |            |  |   |             |  
|Income from continuing operations        |  | $          | 0.07   |   |             | $ | (0.07  | )          |  | $ | (0.10       | )
|Loss from discontinued operation         |  | $          | (0.56  | ) |             | $ | (0.76  | )          |  | $ | (0.54       | )
|Net loss                                 |  | $          | (0.49  | ) |             | $ | (0.83  | )          |  | $ | (0.64       | )



F-28



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





|                                          |  | First Qtr. |        |   | Second Qtr. |   |        | November & December | 
|----------------------------------------- |  | ---------- | ------ | - | ----------- | - | ------ | ------------------- | 
|Transition Period Ended December 31, 2002 |  |            |        |   |             |   |        |                     | 
|Revenue                                   |  | $          | 19,475 |   |             | $ | 18,771 |                     | 
|Gross profit                              |  |            | 5,826  |   |             |   | 5,191  |                     | 
|Operating income                          |  |            | 385    |   |             |   | 97     |                     | 
|Income (loss) from continuing operations  |  |            | 115    |   |             |   | (163   | )                   | 
|Loss on discontinued operation            |  |            | (2,884 | ) |             |   | (2     | )                   | 
|Net income (loss)                         |  |            | (2,769 | ) |             |   | (165   | )                   | 
|Net income (loss) per share: (1)          |  |            |        |   |             |   |        |                     | 
|Basic:                                    |  |            |        |   |             |   |        |                     | 
|Income (loss) from continuing operations  |  | $          | 0.01   |   |             | $ | (0.01  | )                   | 
|Loss from discontinued operation          |  | $          | (0.21  | ) |             | $ | (0.00  | )                   | 
|Net loss                                  |  | $          | (0.20  | ) |             | $ | (0.01  | )                   | 
|Diluted:                                  |  |            |        |   |             |   |        |                     | 
|Income from continuing operations         |  | $          | 0.01   |   |             | $ | (0.01  | )                   | 
|Loss from discontinued operation          |  | $          | (0.20  | ) |             | $ | (0.00  | )                   | 
|Net loss                                  |  | $          | (0.19  | ) |             | $ | (0.01  | )                   | 

---

|(1) |  | Per common share amounts for the quarters and full years have each been calculated separately. Accordingly, quarterly amounts may not add to the annual amounts
because of differences in the average common shares outstanding during each period and, with regard to diluted per common share amounts only, because of the effect of potentially dilutive securities only in the periods in which the effect would have
been dilutive.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-29



---

EXHIBIT INDEX



|Exhibit No. |  | Description                                                                                                                                                                                      |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | -
|           
|2.1         |  | Deed of Sale of Business by and among IMPCO Technologies Pty. Limited, as buyer, and
Ateco Automotive Pty Limited, as seller, dated as of July 1, 1996.                                          |  | (7       | )
|           
|2.2         |  | Deed of Release by and among IMPCO Technologies, Inc. and Ateco Automotive Pty
Limited dated as of July 1, 1996.                                                                                 |  | (7       | )
|           
|2.3         |  | Shareholders Agreement for Gas Parts (NSW) Pty Limited by and among IMPCO
Technologies Pty. Limited, Gas Parts Pty Limited and Gas Parts (NSW) Pty. Limited, dated as of July 4, 1996.           |  | (7       | )
|           
|2.4         |  | Option Agreement between IMPCO Technologies, Inc. and the controlling shareholders of
B.R.C. Societa a Responabilita Limitata of Italy, dated as of October 3, 2002.                             |  | (31      | )
|           
|3.1         |  | Certificate of Incorporation, as currently in effect.                                                                                                                                            |  | (28      | )
|           
|3.2         |  | Bylaws adopted July 22, 1998.                                                                                                                                                                    |  | (13      | )
|           
|4.1         |  | Stockholders Protection Rights Agreement dated as of June 30, 1999 between
IMPCO Technologies, Inc. and ChaseMellon Stockholder Services, L.L.C., as Rights Agent.                              |  | (12      | )
|           
|10.1        |  | Lease between L-W Income Properties and IMPCO Technologies, Inc. dated May 10,
1989.                                                                                                             |  | (2       | )
|           
|10.2+       |  | 1989 Incentive Stock Option Plan.                                                                                                                                                                |  | (3       | )
|           
|10.3+       |  | 1991 Executive Stock Option Plan dated November 5, 1991, among AirSensors, Inc., as
the Company, and Bertram R. Martin, James J. Mantras and Dale L. Rasmussen, as Optionees.                    |  | (4       | )
|           
|10.4        |  | First Amendment to Lease dated April 19, 1993, between L-W Income Properties and
IMPCO Technologies, Inc.                                                                                        |  | (5       | )
|           
|10.5+       |  | 1993 Stock Option Plan for Non-employee Directors.                                                                                                                                               |  | (6       | )
|           
|10.6+       |  | Amendment to 1989 Incentive Stock Option Plan.                                                                                                                                                   |  | (6       | )
|           
|10.7+       |  | 1996 Incentive Stock Option Plan.                                                                                                                                                                |  | (8       | )
|           
|10.8+       |  | 1997 Incentive Stock Option Plan.                                                                                                                                                                |  | (9       | )
|           
|10.9        |  | Lease between Klein Investments, Family Limited Partnership, as lessor, and
IMPCO Technologies, Inc., as lessee, dated August 18, 1997.                                                          |  | (10      | )
|           
|10.10       |  | Amendment dated March 18, 1998 to Loan agreement dated October 7, 1998 between
Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.             |  | (10      | )
|           
|10.11       |  | Amendment dated April 29, 1998 to Loan agreement dated October 7, 1998 between
Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.             |  | (10      | )
|           
|10.12       |  | Loan Agreement for IMPCO Technologies, B.V. as borrower, and Bank of America National
Trust and Savings Association, acting through its Amsterdam branch, as lender, dated as of April 27, 1998. |  | (10      | )
|           
|10.13       |  | Loan Agreement dated September 11, 1998 between Bank of America National Trust and
Savings Association, as lender, and IMPCO Technologies, Inc., as the borrower.                                |  | (11      | )
|           
|10.14       |  | Intentionally Omitted.                                                                                                                                                                           |  |          |  



---

|Exhibit No. |  | Description                                                                                                                                                               |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|           
|10.15       |  | Loan Agreement between IMPCO Tech Japan KK, as borrower, and, Hongkong and Shanghai
Banking Corporation Ltd., Osaka Branch., as lender, dated as of March 29, 1999.       |  | (13      | )
|           
|10.16+      |  | Employment Agreement dated April 1, 1999, between IMPCO Technologies, Inc., as the
Company, and Robert M. Stemmler, as the Employee.                                      |  | (13      | )
|           
|10.17       |  | Amended Loan Agreement between IMPCO Technologies, Inc., as borrower and
Bank of America N.A. as lender, dated September 13, 1999.                                        |  | (14      | )
|           
|10.18       |  | Intentionally omitted.                                                                                                                                                    |  |          |  
|           
|10.19       |  | Amendment No. 3 to Business Loan Agreement by and between Bank of America, N.A. and
IMPCO Technologies, Inc. dated as of June 13, 2000.                                   |  | (15      | )
|           
|10.20       |  | Lease dated as of March 31, 2000, by and between Braden Court Associates and IMPCO
Technologies, Inc.                                                                     |  | (16      | )
|           
|10.21       |  | Amendment No. 4 to Business Loan Agreement by and between Bank of America, N.A. and
IMPCO Technologies, Inc. dated as of September 12, 2000.                              |  | (18      | )
|           
|10.22       |  | Amendment No. 5 to Business Loan Agreement between Bank of America, N.A. and IMPCO
Technologies, Inc. dated as of December 13, 2000.                                      |  | (18      | )
|           
|10.23       |  | Amendment No. 6 to Business Loan Agreement between Bank of America, N.A. and IMPCO
Technologies, Inc. dated as of March 12, 2001.                                         |  | (19      | )
|           
|10.24       |  | Promissory Note Issued by Robert Stemmler to Registrant dated March 15,
2001.                                                                                             |  | (17      | )
|           
|10.25       |  | Promissory Note Issued by Dale Rasmussen to Registrant dated March 15,
2001.                                                                                              |  | (17      | )
|           
|10.26       |  | Promissory Note Issued by Syed Hussain to Registrant dated March 15,
2001.                                                                                                |  | (17      | )
|           
|10.27       |  | Security Agreement and Agreement Not to Exercise Options entered into between
Robert Stemmler and Registrant dated March 15, 2001.                                        |  | (17      | )
|           
|10.28       |  | Security Agreement and Agreement Not to Exercise Options entered into between
Dale Rasmussen and Registrant dated March 15, 2001.                                         |  | (17      | )
|           
|10.29       |  | Security Agreement and Agreement Not to Exercise Options entered into between
Syed Hussain and Registrant dated March 15, 2001.                                           |  | (17      | )
|           
|10.30       |  | Deed of Trust Executed by Dale Rasmussen regarding personal
residence.                                                                                                    |  | (17      | )
|           
|10.31      |  | Corporate Alliance Agreement dated June 12, 2001 between
Quantum Technologies Worldwide, Inc. and General Motors Corporation.                                             |  | (21      | )
|           
|10.32       |  | Master Technical Agreement dated June 12, 2001 between
Quantum Technologies Worldwide, Inc. and General Motors Corporation.                                               |  | (21      | )
|           
|10.33       |  | Stock Transfer Agreement dated June 12, 2001 between
Quantum Technologies Worldwide, Inc. and General Motors Corporation.                                                 |  | (21      | )
|           
|10.34       |  | Registration Rights Agreement dated June 12, 2001 between
Quantum Technologies Worldwide, Inc. and General Motors Corporation.                                            |  | (21      | )
|           
|10.35       |  | Amended and Restated Business Loan Agreement dated as of April 30, 2001 among the
Registrant, Quantum Technologies, Inc. and Bank of America, N.A.                        |  | (28      | )
|           
|10.36+      |  | 2000 Incentive Stock Option Plan.                                                                                                                                         |  | (20      | )
|           
|10.37       |  | IMPCO and GM Teaming Agreement dated July 30, 1997 by the Registrant and
General Motors Corporation.                                                                      |  | (22      | )
|           
|10.38       |  | Amendment No. 1 to Amended and Related Business Loan Agreement, dated as of September
5, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc. |  | (23      | )



---

|Exhibit No. |  | Description                                                                                                                                                                                       |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|           
|10.39       |  | Amendment No. 2 to Amended and Restated Business Loan Agreement, dated as of October
8, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                          |  | (24      | )
|           
|10.40       |  | Amendment No. 3 to Amended and Restated Business Loan Agreement, dated as of November
9, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                         |  | (24      | )
|           
|10.41       |  | Amendment No. 4 to Amended and Restated Business Loan Agreement, dated as of December
12, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                        |  | (24      | )
|           
|10.42       |  | Common Stock and Warrants Purchase Agreement, dated January 11, 2002.                                                                                                                             |  | (25      | )
|           
|10.43       |  | Registration Rights Agreement, Dated January 11, 2002.                                                                                                                                            |  | (25      | )
|           
|10.44       |  | Form of Stock Purchase Warrant, Dated January 11, 2002.                                                                                                                                           |  | (25      | )
|           
|10.45       |  | Amendment No. 5 to Amended and Restated Business Loan Agreement, dated as of January,
2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                            |  | (26      | )
|           
|10.46       |  | Amendment No. 6 to Amended and Restated Business Loan Agreement, dated as of
January 31, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.                         |  | (26      | )
|           
|10.47       |  | Amendment No. 7 to Amended and Restated Business Loan Agreement, dated as of February
28, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc. |  | (26      | )
|           
|10.48       |  | Stock Purchase Agreement, dated May 3, 2002.                                                                                                                                                      |  | (27      | )
|           
|10.49       |  | Amendment No. 8 to Amended and Restated Business Loan Agreement, dated as of
March 31, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.    |  | (30      | )
|           
|10.50       |  | Amendment No. 9 to Amended and Restated Business Loan Agreement, dated as of
April 30, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.    |  | (30      | )
|           
|10.51       |  | Second Amended and Restated Business Loan Agreement, dated June 24, 2002, between
Bank of America, N.A., and the Registrant.                                                                      |  | (30      | )
|           
|10.52       |  | Employment Agreement dated April 1, 2002, between the Registrant and
Robert M. Stemmler.                                                                                                          |  | (30      | )
|           
|10.53       |  | Employment Agreement dated April 1, 2002, between the Registrant and W. Brian
Olson.                                                                                                              |  | (30      | )
|           
|10.54       |  | Employment Agreement dated April 1, 2002, between the Registrant and
Dale L. Rasmussen.                                                                                                           |  | (30      | )
|           
|10.55       |  | Contribution and Distribution Agreement between the Registrant and
Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.                                                        |  | (29      | )
|           
|10.56       |  | Tax Allocation and Indemnification Agreement between the Registrant and
Quantum Fuel Systems Technologies Worldwide Inc., dated July 23, 2002.                                                    |  | (29      | )
|           
|10.57       |  | Transition Services Agreement between the Registrant and Quantum Fuel Systems
Technologies Worldwide, Inc., dated July 23, 2002.                                                                  |  | (29      | )
|           
|10.58       |  | Employee Benefit Matters Agreement between the Registrant and Quantum Fuel Systems
Technologies Worldwide, Inc., dated July 23, 2002.                                                             |  | (29      | )
|           
|10.59       |  | Lease dated July 18, 2001 by and between Property Reserve, Inc. and the
Registrant.                                                                                                               |  | (30      | )
|           
|10.60       |  | The 2002 Stock Option Plan for Employees                                                                                                                                                          |  | (32      | )
|           
|10.61       |  | The 2002 Stock Option Plan for Non-employee Directors                                                                                                                                             |  | (32      | )



---

|Exhibit No. |  | Description                                                                                                                                             |  | Note No. |  
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -
|           
|10.62       |  | Amendment No. 1 to Second Amended and Restated Business Loan Agreement, dated as of
December 10, 2002, among Bank of America, N.A., and the Registrant. |  | (31      | )
|           
|10.63       |  | Amendment No. 2 to Second Amended and Restated Business Loan Agreement, dated as of
March 24, 2003, among Bank of America, N.A., and the Registrant.    |  | (1       | )
|           
|10.64       |  | Equity Joint Venture Contract, dated as of December 16, 2002, among China Natural Gas
Co. Ltd., and the Registrant.                                     |  | (1       | )
|           
|10.65       |  | Joint Venture Agreement Minda IMPCO Technologies, Limited, dated May 18, 2001 among
Minda Industries Limited and Mr. Nirmal K. Minda and the Registrant |  | (1       | )
|           
|10.66       |  | Joint Venture Agreement Minda IMPCO Limited, dated May 18, 2001 among Minda
Industries and Mr. Nirmal K. Minda and the Registrant                       |  | (1       | )
|           
|10.67       |  | Letter of commitment, dated March 26, 2003, among Don J. Simplott and the
Registrant                                                                    |  | (1       | )
|           
|21.1        |  | Subsidiaries of the Company.                                                                                                                            |  | (1       | )
|           
|23.1        |  | Consent of Ernst & Young LLP.                                                                                                                           |  | (1       | )
|           
|99.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C.
§1350.                                                                                   |  | (1       | )
|           
|99.2        |  | Certification of Acting Chief Financial Officer pursuant to 18 U.S.C.
§1350.                                                                            |  | (1       | )

---

|(1) |  | Filed herewith.
|--- |  | ---------------

|(2) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1989.
|--- |  | -----------------------------------------------------------------------------

|(3) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1990.
|--- |  | -----------------------------------------------------------------------------

|(4) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1992.
|--- |  | -----------------------------------------------------------------------------

|(5) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1993.
|--- |  | -----------------------------------------------------------------------------

|(6) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1994.
|--- |  | -----------------------------------------------------------------------------

|(7) |  | Incorporated by reference to the Registrants Form 8-K/A dated July 1, 1996.
|--- |  | ----------------------------------------------------------------------------

|(8) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1997.
|--- |  | -----------------------------------------------------------------------------

|(9) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 1997.
|--- |  | -----------------------------------------------------------------------------------

|(10) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1998.
|---- |  | -----------------------------------------------------------------------------

|(11) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 1998.
|---- |  | ----------------------------------------------------------------------------------------------

|(12) |  | Incorporated by reference to the Registrants Form 8-K dated June 30, 1999.
|---- |  | ---------------------------------------------------------------------------

|(13) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 1999.
|---- |  | -----------------------------------------------------------------------------

|(14) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended December 7, 1999.
|---- |  | ----------------------------------------------------------------------------------------------

|(15) |  | Incorporated by reference to the Registrants Form S-3/A (File No. 333-34366), filed with the Commission on June 14, 2000.
|---- |  | --------------------------------------------------------------------------------------------------------------------------

|(16) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2000.
|---- |  | -----------------------------------------------------------------------------

|(17) |  | Incorporated by reference to the Registrants Form 8-K dated March 26, 2001.
|---- |  | ----------------------------------------------------------------------------

|(18) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2000.
|---- |  | ----------------------------------------------------------------------------------------------

|(19) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended January 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(20) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 2000.
|---- |  | -----------------------------------------------------------------------------------

|(21) |  | Incorporated by reference to the Registrants Form S-3/A (File No. 333-63726), filed with the Commission on July 9, 2001.
|---- |  | -------------------------------------------------------------------------------------------------------------------------

|(22) |  | Incorporated by reference to the Registrants Form S-3 (File No. 333-34366), filed with the Commission on April 7, 2000.
|---- |  | ------------------------------------------------------------------------------------------------------------------------

|(23) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended July 31, 2001.
|---- |  | -------------------------------------------------------------------------------------------

|(24) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(25) |  | Incorporated by reference to the Registrants Form 8-K filed on January 11, 2002.
|---- |  | ---------------------------------------------------------------------------------

|(26) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended January 31, 2001.
|---- |  | ----------------------------------------------------------------------------------------------

|(27) |  | Incorporated by reference to the Registrants Form 8-K filed on May 10, 2002.
|---- |  | -----------------------------------------------------------------------------

|(28) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2001.
|---- |  | -----------------------------------------------------------------------------

|(29) |  | Incorporated by reference to the Form 10-K filed by Quantum Fuel Systems Technologies, Inc., for fiscal year 2002.
|---- |  | ------------------------------------------------------------------------------------------------------------------

|(30) |  | Incorporated by reference to the Registrants Form 10-K for fiscal year 2002.
|---- |  | -----------------------------------------------------------------------------

|(31) |  | Incorporated by reference to the Registrants Form 10-Q for the period ended October 31, 2002.
|---- |  | ----------------------------------------------------------------------------------------------

|(32) |  | Incorporated by reference to the Registrants Proxy Statement for fiscal year 2002.
|---- |  | -----------------------------------------------------------------------------------

|+ |  | Management contract or compensatory plan or arrangement.
|- |  | --------------------------------------------------------

| |  | Certain information in this exhibit has been omitted and filed separately with The Securities and Exchange Commission. Confidential treatment has been requested with
respect to the omitted portions.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------