TABLE OF CONTENTS



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended March 31, 2003

Commission file number 1-10869

UQM
TECHNOLOGIES,
INC.

(Exact name of registrant as specified in its charter)



|Colorado
    (State or other jurisdiction of 
    incorporation or organization) | 84-0579156(I.R.S. Employer
    Identification No.)
|-------------------------------------------------------------------------------- | --------------------------------------------------

7501 Miller Drive, Frederick, Colorado 80530

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (303) 278-2002

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

Common stock, $.01 par value

Name of each exchange on which registered:

American Stock Exchange

Pacific Stock Exchange

Chicago Stock Exchange

Frankfurt Stock Exchange

Berlin Stock Exchange

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

Common stock, $.01 par value

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. YesX 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.

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

The aggregate market value of the voting stock held by
  nonaffiliates of the registrant (18,482,592 shares) computed by reference to the closing
  price of such stock on the American Stock Exchange, as of May 22, 2003:

$46,945,784

The number of shares outstanding (including shares held by affiliates)
  of each of the registrant's classes of common stock, as of May 22, 2003:

18,845,980
  shares of the

registrant's common stock,

$.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

In Part III certain information is incorporated by reference from the
  Companys definitive Proxy Statement for the August 19, 2003 Annual Meeting of
  Shareholders.



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Table of Contents



PART I.

> Item 1. Business
>   Item 2. Properties
>   Item 3. Legal Proceedings
>   Item 4.
>   Submission of Matters to a Vote of Security Holders

PART II.

> Item 5. Market Price of Common Stock
>   Item 6. Selected Financial Data
>   Item
>   7. Managements Discussion and Analysis of Financial Condition and Results of
>   Operations
>   Item 8. Financial
>   Statements and Supplementary Data

> Consolidated balance sheets as of March 31, 2003
>     and March 31, 2002
>     Consolidated statements of operations
>     for the fiscal years ended March 31, 2003, 2002 and 2001
>     Consolidated
>     statements of stockholders equity and comprehensive income (loss) for the fiscal
>     years ended March 31, 2003, 2002 and 2001
>     Consolidated statements of cash flows
>     for the fiscal years ended March 31, 2003, 2002 and 2001
>     Notes to consolidated financial
>     statements

> Item
>   9. Change In and Disagreements with Independent Accountants on Accounting and Financial
>   Disclosure

PART III.

> Item 10. Directors and Executive
>   Officers
>   Item 11. Executive Compensation
>   Item
>   12. Security Ownership of Certain Beneficial Owners and Management
>   Item 13. Certain
>   Relationships and Related Transactions
>   Item 14. Controls and Procedures
>   Item
>   15. Principal Accountant Fees and Services

PART IV.

> Item
>   16. Exhibits, Financial Statement Schedules and Reports on Form 8-K



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ITEM 1. BUSINESS

This Report contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events or
results. Readers are referred to the Risk Factors section at the end of this Item 1.

General

UQM Technologies, Inc., ("UQM" or the "Company") is
a developer and manufacturer of energy efficient, power dense, electric motors, generators
and power electronic controllers. The primary focus of the Company is incorporating its
advanced technology into products aimed at existing commercial markets for electrically
propelled vehicles such as wheelchairs, golf carts and industrial utility vehicles as well
as emerging markets expected to experience rapid growth including power systems for clean
electric, hybrid electric and fuel cell electric on-road and off-road vehicles, vehicle
auxiliaries including those configured to operate at 42 volts and environmentally
friendly, distributed power generators. The Company operates its business in three
segments: 1) technology - which encompasses the further advancement and application of the
Companys proprietary motors, generators, power electronics and software; 2)
mechanical products  which encompasses the manufacture of motors and generators; and
3) electronic products which encompasses the manufacture of electronic printed circuit
board assemblies, wire harnesses and complete electronic boxes. The Companys $0.01
par value common stock trades on the American, Chicago, Pacific, Frankfurt and Berlin
stock exchanges under the symbol "UQM."

The Companys revenue is derived from two principle sources: 1)
funded contract research and development services performed for strategic partners,
customers and the U.S. government directed toward either the advancement of the
Companys proprietary technology portfolio or the application of proprietary
technology to customers products; and 2) the manufacture and sale of products
engineered by the Company and the contract manufacture of products designed by others.

The Companys objective is to leverage its technology base and
name recognition to develop and manufacture products for its customers that are superior
in performance at competitive prices. To this end, the Company has initially focused its
attention on four market areas that have significant growth potential: 1) electric
propulsion systems, generators and power electronic controllers for electric, hybrid
electric and fuel cell electric vehicles. Virtually every automobile and truck
manufacturer worldwide is developing such vehicles. In the case of hybrid electric
powerplants, additional customers include Tier I and Tier II automotive suppliers who hope
to provide complete hybrid electric systems to their automotive customers; 2) electric
propulsion systems and electronic controllers for small vehicles, such as electric
wheelchairs, golf carts, small industrial vehicles, lawn and ground care equipment and the
like; 3) vehicle auxiliaries including under-the-hood power accessories, such as electric
air conditioning compressors and electric power steering which are expected to replace
existing belt-driven parasitic components now in use as part of the automotive
industrys adoption of a new 42 volt standard and fuel cell components such as air
compressor drive motors and electronic controllers to manage the operation of the fuel
cell and its power generation; and 4) distributed power generation products such as wind
generators, engine generators and power electronic controllers for both residential and
commercial customers that need standby or backup power, remote stand-alone power and
grid-connected power. Fundamental to this strategy is the continual advancement of the
Companys proprietary motor, generator, power electronic controller and software
technology portfolio and the maintenance of a high quality and competitive manufacturing
capability for products developed by the Company. Substantially all of the Companys
research and development activities are the result of projects contracted for and funded
by its customers, and in most cases, the Company maintains all or substantially all of the
intellectual property rights in technology enhancements.

The Company has three principal operating units: 1) UQM Technologies,
Inc., located in Frederick, Colorado, which includes the Corporate Headquarters and
Engineering and Product Development Center; 2) wholly-owned subsidiary UQM Power Products,
Inc.("UQM Power"), also located in Frederick, Colorado, which manufactures
permanent magnet electric motors and generators; and 3) wholly-owned subsidiary UQM
Electronics, Inc. ("UQM Electronics"), located in St. Charles, Missouri which
manufactures electronic printed circuit board assemblies, cable harness assemblies and
complete electronic boxes.

The Company also holds a minority ownership position in Taiwan UQM
Electric Co., Ltd. ("Taiwan UQM"), EV Global Motors Company ("EV
Global"), Windemere Eco Development Limited ("WED") and Aeromax Corporation
("Aero"). The carrying value of all of these investments on the Companys
balance sheet has been reduced to zero because they were impaired under generally accepted
accounting principles. Taiwan UQM is a joint venture with Kwang Yang Motor Company, Ltd.
("KYMCO") and Turn-Luckily Technology Co., Ltd. Taiwan UQM, located in Taipei,
Taiwan, is a licensee of the Company and manufacturer of starter motors and alternators
for gasoline scooters. The Company holds a 38.25 percent ownership interest in Taiwan UQM.
EV Global, based in Los Angeles, is a developer and distributor of electric bicycles. WED
is an environmentally sensitive development of Windemere Island in the Bahamas. Aeromax
Corporation is a developer and manufacturer of wind turbine generators and associated
products for residential use.

Net loss for the fiscal year ended March 31, 2003 was $3,598,650 or
$0.19 per common share on total revenue of $15,486,408 versus a net loss last fiscal year
of $8,592,655 or $0.49 per common share on total revenue of $21,395,240 and a net loss for
the fiscal year ended March 31, 2001 of $3,140,122 or $0.18 per common share on total
revenue of $25,294,650. Loss from continuing operations for the fiscal year ended March
31, 2003 was $3,413,679 or $0.18 per common share versus a loss from continuing operations
$6,271,555 or $0.36 per common share last fiscal year and $2,042,538 or $0.12 per common
share for the fiscal year ended March 31, 2001. The loss from continuing operations for
the fiscal year ended March 31, 2002 includes a charge arising from the write-down of
goodwill in the amount of $4,348,633 or $0.25 per common share.

In April 2002, the Company completed a secondary offering of 1,160,095
shares of its common stock and two-year warrants to purchase an additional 232,019 shares
of common stock at an exercise price of $5.73 per common share to institutional and other
investors in Europe and the United States. The transaction was priced based on the average
closing price of the common stock on the American Stock Exchange for the five trading days
immediately preceding the transaction date. Net cash proceeds to the Company were
$4,435,212, a  portion of which was applied to the  reduction of  debt.

Technology Segment

The technology segment of the Company encompasses the operations of the
Engineering and Product Development Center which shares a 28,000 square foot facility
located in Frederick, Colorado with the Companys motor manufacturing operations
which are reported in the mechanical products segment. The Engineering and Product
Development Center is equipped with research and development laboratories, prototype build
and test facilities for electric motors, generators, power electronic controllers,
software, and vehicle integration activities. The technology segment conducts sponsored
and internally-funded engineering activities directed toward the development of new
products and the engineering of motors, generators, and power electronic controllers to
meet the requirements of customers specific product applications, engineering
services for the Companys mechanical and electronic product segments and the low
volume manufacture of motors, generators and power electronic controllers. During the
fiscal year ended March 31, 2003, total technology segment revenue declined 9 percent to
$3,416,032 versus revenue of $3,747,725 for the fiscal year ended March 31, 2002 and rose
1 percent versus revenue of $3,378,396 for the fiscal year ended March 31, 2001.

Total segment revenue consisted of the following:

|                  | Year
    Ended March
    31,
|----------------- | ----------------------------
|                  |                             
|                  | 2003                        
|                  |                             
|Contract Services | $ 2,985,639                 
|Product Sales     | $    430,393                

Technology segment operations for the fiscal year ended March 31, 2003
resulted in a net loss of $408,831 compared to net earnings of $32,078 and a net loss of
$921,583 for the fiscal year ended March 31, 2002 and 2001, respectively. The net loss in
the current fiscal year is attributable to cost-overruns on development contracts, lower
sales of low volume products and lower levels of other income versus last fiscal year.
Segment earnings for the fiscal year ended March 31, 2002 are primarily attributable to
higher gross profit margins on contract services and higher levels of other income versus
the fiscal year ended March 31, 2001.

Mechanical Products Segment

The mechanical products segment of the Company encompasses the
operations of the Companys wholly-owned subsidiary, UQM Power. UQM Power shares a
28,000 square foot facility located in Frederick, Colorado with the Companys
technology segment. Prior to October 2001, UQM Powers operations consisted of the
volume manufacture of motors and the contract manufacture of gears and gear assemblies.
Due to continuing weak demand in the markets served by the Company, the gear market
generally, and industry trends toward greater sourcing of customer gear requirements
overseas, the Company divested its non-core contract gear manufacturing business. As a
result, in the second quarter of the fiscal year ended March 31, 2002 the Company recorded
a charge for discontinued operations of $1,676,450 reflecting managements estimate
of the difference between the expected liquidation value of the business and its carrying
value and the expected future operating losses to be incurred during the winding down of
operations. As a result, losses attributable to gearing operations were reclassified and
separately presented on the Companys financial statements as discontinued operations
for the fiscal years ended March 31, 2003, 2002 and 2001.

Motor manufacturing operations consist of the high volume manufacture
of the Companys proprietary permanent magnet motors. For the fiscal year ended March
31, 2003, revenue from motor manufacturing operations rose 3 percent to $4,136,328 versus
revenue of $4,001,270 for the fiscal year ended March 31, 2002 and rose 47 percent versus
revenue of $2,805,300 for the fiscal year ended March 31, 2001. Net earnings from motor
manufacturing operations for the year ended March 31, 2003 was $69,527 compared to net
earnings of $23,160 and $219,325 for the fiscal year ended March 31, 2002 and 2001,
respectively. The increase in earnings versus the prior year is
attributable to higher production volumes.Electronic Products Segment

The electronic products segment of the Company encompasses the
operations of the Companys wholly-owned subsidiary UQM Electronics and includes the
manufacture of thru-hole and surface mount electronic printed circuit board assemblies,
wire harness assemblies, value-added component assemblies incorporating either printed
circuit board assemblies, wire harness assemblies or both, and complete turn-key
electronic product builds. UQM Electronics conducts its operations from a 31,000 square
foot manufacturing plant located in St. Charles, Missouri. During the fiscal year ended
March 31, 2003, segment operations continued to be adversely impacted by a broad and
significant business downturn in the contract electronics manufacturing sector, generally,
including a substantial decline in consumer demand for electronic products. Electronic
products segment revenue decreased 42 percent to $7,934,048 for the fiscal year ended
March 31, 2003 versus revenue of $13,646,245 for the fiscal year ended March 31, 2002 and
declined 58 percent versus revenue of $19,110,954 for the fiscal year ended March 31,
2001. Segment net loss for the fiscal year ended March 31, 2003 was $3,074,375 versus a
net loss for the fiscal year ended March 31, 2002 of $6,326,793, which included a charge
for the write-down of goodwill of $4,348,633, and a net loss of $1,340,280 for the fiscal
year ended March 31, 2001.

Technology

The Companys technology base includes a number of proprietary
technologies and patents relating to brushless permanent magnet motors, generators and
power electronic controllers, together with software code to intelligently manage the
operation of the system. See also "Patents" below.

The
typical architecture of a UQM(R) motor consists of a stator winding employing a
high pole count configuration, which allows for high copper utilization (minimizing energy
loss and cost) and a hollow rotor upon which powerful rare earth magnets are mounted on
the outer circumference. The stator is affixed to an aluminum housing containing a
mounting ring and bearings, which allows the rotor to be suspended within the stator.
Commutation of the machine is accomplished electronically by sensing the position of the
rotor in relation to the stator and intelligently pulsing electrical energy into the
stator such that the electric field generated by the stator interacts with the magnetic
field of the rotor producing rotational motion ("motor operation"). Conversely,
the application of rotational motion to the rotor by an external force results in the
generation of electrical power ("generator operation"). UQM(R)
machines can be operated in either a forward or reverse direction of rotation and either
in motor or generator mode and can dynamically change from one mode of operation to
another in millisecond response time. The hollow design of the rotor permits the packaging
of other components such as gears and electromechanical brakes in the interior of the
machine. These design features contribute to lower usage of copper and iron and other
materials generally (due to smaller package dimensions), reducing manufacturing cost over
those for conventional machines of similar power. In addition, the utilization of
neodymium-iron-boron ("NdFeB") magnet material in a wide range of consumer
devices, such as cell phones, disk drives and medical devices, has dramatically improved
the availability, performance and price of this material, allowing the Company to price
its advanced motors and controls competitively with lesser performing conventional motors
which management believes will accelerate the rate of commercialization of the
Companys technology.



Attributes of the Companys permanent magnet motor technology
include brushless electronic commutation; a relatively large air-gap dimension; the use of
powerful rare earth NdFeB magnet material; good heat rejection; low iron content; and low
mechanical losses. As a result, UQM(R) motors have high operating efficiencies
(>90%), high power density (high power output to weight ratio) and generally have
smaller external dimensions and weight for a given power output, improving packageability.

Attributes of the Companys microprocessor-based digital power
electronic controllers include high power operation (600 amps at 400 volts), four quadrant
control (forward/reverse and motoring/generation), reduced switching losses (minimizing
energy loss), intelligent control and controller area network capability.

In
addition, the Company has developed and patented a method of control embodied in
electronic component architecture and software code (Phase Advance Control) which allows
UQM(R) motors to deliver high output torque at low operating speeds and low
torque at high operating speeds from the same machine. Conventional permanent magnet motor
designs are limited to operating at either high torque and low speeds or low torque at
high speeds; but not both. In most vehicle propulsion applications, high torque is
required to launch the vehicle from a standing stop transitioning to high power as the
vehicle is accelerated to highway speeds. In conventional internal combustion engine
powered vehicles, the transition from high torque to high power is typically accomplished
through the multiple gear changes performed by a mechanical transmission. UQM(R)
motors, incorporating phase advance technology, are ideally suited as propulsion drives in
electric, hybrid electric and fuel cell electric vehicles due to the ability to power a
vehicle from a standing stop to highway speeds without mechanical gear changes, thereby
eliminating the size, weight and cost of mechanical transmissions.

In April 2002, the Company announced the successful completion of
testing and the commercial availability of an integrated electric traction system
("INTETS"), the next generation of its motor technology for vehicle propulsion
applications including battery, hybrid and fuel cell electric vehicles. INTETS maximizes
the advantages of the UQM(R) motor architecture by packaging a single speed
gear reduction and differential inside the hollow rotor and integrating the power
electronic controller with the machine. The INTETS system is the electrical equivalent of
a conventional powertrain consisting of an internal combustion engine, transmission and
differential. The INTETS system measures 15 inches (380 mm) in length with an 11 inch
(280mm) diameter (excluding an optional electronic controller), incorporates internal
epicyclic single-stage gearing, off-the-shelf internal differential components and parking
pawl, and delivers continuous power of 30 kW, peak power of 75 kW and peak torque of 1,700
N-m. The optional, fully integrated, intelligent electronic controller can be programmed
to meet a variety of vehicle configurations and incorporates controller area
communications protocol for ease of use and integration by original equipment
manufacturers. The complete system, including electronic controller has a peak efficiency
exceeding 91 percent. In 2003, the operating performance of this system was independently
verified through performance validation testing conducted by the U.S. Department of
Energys Argonne National Laboratory Advanced Powertrain Research Facility.

Similarly, the Company is developing a line of modular motors that are
expected to improve the continuous power output of the Companys existing motors and
generators by about 25 percent without increasing size or weight. Preliminary testing of
initial prototypes is underway and the Company has filed several patent applications
surrounding the design features of its line of modular motors.

In
September 2002, the Company announced that it had developed and successfully tested a
permanent magnet electronic motor system that achieves a 10 to 1 top speed to base speed
ratio (CPSR). The newly developed system provides both high torque and high speed
capability in the same machine at levels greater than twice that of the industrys
best performing motor technology. Many electric motor applications require high torque
capability for starting and low speed operation, but must also achieve high speed. For
military vehicles, high torque at low speed translates into obstacle and grade climbing
capability, while high speed enables pursuit, dash and evasive maneuvers as well as
on-road convoy transport. Many commercial applications have similar requirements.
Conventional vehicles achieve the high torque required for launch and low end acceleration
and the constant power required for high road speed by using a transmission and multiple
gear changes. Prior to the performance breakthrough, UQM(R) systems
incorporating phase advance were able to achieve a top speed to base speed ratio of 4 to
1. Electrically propelled vehicles designed around 4 to 1 limitation, sometimes require
unwanted gearing and/or have less than desired performance. This has particularly been the
case in the more demanding off-highway equipment and military vehicle applications.
Providing vehicle developers with electric propulsion systems capable of a top speed to
base speed ratio of 10 to 1 overcomes a significant limitation and opens up many new
application opportunities for UQM(R) systems.

In February 2003, we were granted an U.S. Patent covering our
innovative and low cost design for accurately sensing the position of rotating shafts, the
technology originally developed and incorporated in proprietary gearless brushless direct
drive wheelchair motors. We believe that the patented technology has potentially broad
application in a wide range of products where resolvers are used and we are pursuing
commercialization of the technology directly with end users and through potential
licensing arrangements.

Substantially all of the Companys research and development
activities are the result of projects contracted for and funded by customers, with the
Company typically retaining intellectual property rights in the resulting technology
developed. Customer funded development activities are recorded as contract services
revenue and the associated development costs are shown as cost of contract services in the
Companys financial statements. For the year ended March 31, 2003, revenues from
customer funded research and development activities were $2,985,639 and internally funded
research and development expenditures were $117,735.

In recent years, the Company has focused its research and development activities on the
development of commercial products and production engineering activities to lower the cost
of manufacture, as well as enhance the performance and capability of its technology
portfolio, as opposed to basic research in the field. Management believes that the
Companys future growth is dependent, in part, on the continued advancement of its
technology portfolio and its ability to commercialize its technology in additional product
applications and markets. Accordingly, the Company expects to continue to pursue
additional customer funded programs to accomplish this objective.

Competition

All of the markets in which the Company operates are highly
competitive. The markets served by the technology segment are additionally characterized
by rapid changes due to technological advances that can render existing technologies and
products obsolete.

The technology segment has developed advanced electric propulsion
systems and components which it hopes to market to vehicle Original Equipment
Manufacturers throughout the world for use in electric, hybrid electric and fuel cell
electric vehicles. At present, the market for such systems is not significant, although
various legislative mandates and incentives are expected to accelerate the development of
a market for vehicles propelled by such systems. There are numerous companies developing
products that do or soon will compete with the Companys drive systems. Some of these
companies possess significantly greater financial, personnel and other resources than the
Company, including established supply arrangements and volume manufacturing operations.

The Company believes its principal competitors include Honda, Toyota,
Hitachi, Matsushita, Siemens, Delphi and Ballard Power Systems.

The mechanical products segment competes primarily in the automotive,
heavy equipment, military, aerospace and medical products industries. Each of these
industries is extremely competitive. The Company will face substantial competition on a
continuing basis from numerous competitors, many of whom possess longer operating
histories, significantly greater financial resources and marketing, distribution and
manufacturing capability. The Company believes its principal competitors include Advanced
DC, Owosso Corporation, Emerson Electric, General Electric, Rockwell International, and
Baldor.

The electronic products segment competes primarily in the automotive,
telecommunications, medical, computer and industrial markets. Each of these markets is
extremely competitive. The Company will face substantial competition on a continuing basis
from numerous competitors, many of whom possess longer operating histories, significantly
greater financial resources, marketing, distribution and manufacturing capability. The
Company believes its principal competitors include Jabil Circuit, Plexus, EFTC
Corporation, Flextronics International, Solectron, Celestica Corporation and Baldwin.

Patents

The Company holds several groups or families of patents. U.S. Patent
Nos. 5,004,944; 5,311,092 and 5,319,844 disclose and claim a lightweight high-power
electromagnetic transducer and method of making the same. Corresponding applications have
been filed and issued in several foreign countries.

U.S. Patent No. 5,107,151 discloses and claims a switching circuit
employing semi-conductor devices in series with an inductor to avoid commutation breakdown
and extending the current range of switching by using IGBT devices. Corresponding
applications have been filed in foreign countries, some of which have issued, and some of
which have been abandoned.

U.S. Patent No. 5,592,731 and U.S. Patent No. 5,382,859 relate to a
stator for high-power density electric motors and generators, and a method of constructing
the same. Corresponding applications have been filed in foreign countries, and most of
these foreign applications have issued as patents.

U.S. Patent No. 5,677,605 discloses and claims a brushless motor
and drive system using phase timing advancement. Corresponding applications have been
filed in foreign countries, some of which are issued, some of which have been abandoned,
and some of which are pending.

U.S. Patent No. 5,982,063 discloses and claims an electric motor having
an internal brake. Corresponding patent applications have been filed in foreign countries.
Some of the foreign applications have issued, and others are still pending.

U.S. Patent No. 6,522,130 discloses and claims a method for controlling
a brushless electric motor having a rotor, and relates to an accurate method for sensing
rotor position and detecting rotational speed over a broad range of speeds. Corresponding
applications have been filed and are pending in several foreign countries.

In 2002, a patent application was filed in the United States for a
rotor cooling apparatus. In addition, corresponding applications have been filed at the
European Patent Office and Canada.

More recently, a U.S. patent application was filed directed to a
segmented machine casing and a method of making the same and an apparatus and method for
connecting parallel stator windings. The deadline for filing foreign applications for
these latter two applications has not yet passed.

During 1994, the Company and Alcan Aluminium Limited
("Alcan") executed an agreement in which Alcan assigned to the Company all of
its rights, title and interests in certain motor technology developed under a program
funded by Alcan.   This agreement further provides that the Company shall pay to
Alcan royalties of one-half of one percent on revenue derived from the manufacture and
sale of products or processes embodying the related technology.

The Company also intends to rely on the unpatented proprietary know-how
it has developed and now utilizes in its products. There can be no assurance that others
will not independently develop, acquire or obtain access to the Company's technology.
Although the Company protects its unpatented proprietary rights by executing
confidentiality agreements with its management, employees and others with access to the
Company's technology, these measures may not be adequate to protect the Company from
disclosure or misappropriation of its proprietary information.

Trademarks

The Company owns three U.S. Trademark Registrations for
"UNIQ" (International Class 7 for power Transducers, Class 12 for Utility Land
Vehicles, and Class 16 for Publications). The Class 12 trademark is subject to renewal in
June 2006; the Class 7 trademark is subject to renewal in August 2006; and the Class 16
trademark is subject to renewal in February 2007.

The Company has registered the letters "UQM" in the U.S.
Patent and Trademark Office. Counterpart applications have been filed in 26 countries
throughout the world and 25 of those countries have granted registrations or indicated
them to be allowable. Those trademarks are directed to the same trademark classes as the
mark "UNIQ". The foreign trademark registrations and applications include major
markets where the Company is doing business or establishing business contacts.

The Company has registered the trademark "POWERPHASE" which
it uses in conjunction with certain of its electronic propulsion systems. Corresponding
applications for trademark registration were filed in 11 countries. The trademark is
registered in the European Community and various other foreign countries.

Backlog

The Companys technology segment had unperformed service contracts
from customers which will provide future revenue to the Company upon completion
aggregating approximately $1.4 million and an order backlog for prototype motors and
controllers of approximately $0.3 million at April 30, 2003 compared to $1.4 million and
$.06 million, respectively at April 30, 2002. All such service contracts are subject to
amendment, modification or cancellation. The Company expects to complete all unperformed
service contracts over the next eight months and ship motor and controller backlog
products over the next six months.

The Companys mechanical products segment had an order backlog of
approximately $1.0 million at April 30, 2003 compared to $3.7 million at April 30, 2002.
The Company expects to ship all backlog products within the next four months.

The Companys electronic products segment had an order backlog of
approximately $1.0 million at April 30, 2003 compared to $5.4 million at April 30, 2002.
The Company expects to ship all backlog products within the next eight months.

Customers and Suppliers

During the fiscal year ended March 31, 2003, the Company had two
significant customers, one of which is a customer of its electronic products segment, Tyco
International, Ltd. which accounted for revenue of $3,874,903 or 25.0 percent of
consolidated total revenue. The other is a customer of its mechanical products segment,
Invacare Corporation, which accounted for revenue of $4,136,328 or 26.7 percent of
consolidated total revenue. These customers, in total, represented 64 percent of total
accounts receivable and 33 percent of inventories at March 31, 2003. Tyco International
has informed us that they will not place additional orders with us after their current
purchase commitment is fulfilled in August, 2003.

Principal raw materials and components purchased by the Company include
iron, steel, electronic components, magnet material and copper wire. Most of the above
items are available from several suppliers and the Company generally relies on more than
one supplier for each item. Certain components used by the Company are custom designs and
if the Companys current supplier no longer made them available to the Company, the
Company could experience production delays.

U.S. Government Contracts

For the year ended March 31, 2003, $1,162,967, or approximately 7.5
percent of the Companys consolidated total revenue was derivedfrom contracts
with agencies of the U.S. Government and from subcontracts with U.S. Government prime
contractors.

For the year ended March 31, 2002, $1,040,251, or approximately 4.9
percent of consolidated total revenue was derived from contracts with agencies of the U.S.
Government and from subcontracts with U.S. Government prime contractors.

For the year ended March 31, 2001, $853,341, or approximately 3.4
percent of consolidated total revenue was derived from contracts with agencies of the U.S.
Government and from subcontracts with U.S. Government prime contractors.

Some of the Companys contracts with the U.S. Government provide
for the reimbursement of costs on a 50 percent cost-sharing basis based on not-to-exceed
billing rates negotiated between the Company and the U.S. Government. Other U.S.
Government business is performed under firm fixed price contracts. On
"cost-share" and "firm fixed price" contracts, the Company can incur
an actual loss in the performance thereof if incurred costs exceed the contract amount.
All U.S. Government contracts with the Company are subject to modification or cancellation
at the convenience of the Government.

Employee and Labor Relations

As of April 30, 2003, the Company had 89 full-time employees. The
Company has entered into employment contracts with two of its executive officers, which
expire December 31, 2007. None of the Companys employees are covered by a collective
bargaining agreement. The Companys management believes that its relationship with
its employees has been generally satisfactory.

In addition to its full-time staff, the Company from time to time engages the services
of outside consultants and contract labor to meet peak workload or specialized program
requirements. The Company does not anticipate any difficulty in locating additional
qualified professional engineers, technicians and production workers, if so required, to
meet expanded research and development or manufacturing operations.

Risk Factors

The following factors and other information in this document and the
information incorporated by reference should be carefully considered before investing in
our securities.

We have incurred significant operating losses and may continue to do so.

We have incurred significant net losses as shown in the following tables:

|         | Fiscal
    Year Ended March
    31,
|-------- | -----------------------------------
|         |                                    
|         | 2003                               
|         |                                    
|Net loss | $ 3,598,650                        

We have had accumulated deficits as follows:

|March 31, 2003 | $ 47,356,028
|-------------- | ------------
|March 31, 2002 | $ 43,757,378

In the future we plan to make additional investments in product
development and commercialization, which is likely to cause us to remain unprofitable.

The current economic downturn has resulted in a reduction in our
contract manufacturing revenue and future reductions could further adversely affect our
financial condition, results of operations and liquidity.

Our electronic products segment manufactures products to customers'
design specifications as a contract manufacturer. We purchase inventory on behalf of
customers for which the customer is financially obligated in the event its production
order with us is cancelled or otherwise not fulfilled. Some of our customers have
experienced downturns in their businesses as a result of deteriorating general economic
conditions and other factors. In addition, our electronics manufacturing contracts
generally do not include minimum purchase requirements and during economic downturns such
as we have experienced in the current fiscal year, some of our customers have reduced and
may continue to reduce their orders for our services and our electronics manufacturing
revenue has declined and may continue to decline. If customers were to experience
financial difficulties, reduce their orders, not honor financial obligations for the
inventory we hold for them, or not pay the accounts receivable due from them, we could
experience a material adverse change in our financial condition, results of operations and
liquidity.

Most of our net sales come from two customers, one of which will no
longer be a customer after August 2003. Reductions in purchases by our remaining
significant customer could further negatively impact our financial condition, results of
operations and liquidity.

A significant portion of our total revenue is currently concentrated
among two large customers, Tyco International and Invacare Corporation. Tyco International
has informed us that they will not place additional orders with us after their current
purchase commitment is fulfilled in August 2003. We expect to realize approximately
$600,000 in revenue between April 2003 and August 2003 upon shipment of the products
currently on order from this customer. Although the Company hopes to replace some or all
of the revenue from the loss of the Tyco International business with orders from new
customers and additional orders from existing customers, there can be no assurance that
the Company will be successful in replacing such revenue. If the Company is not successful
in replacing all the revenue now derived from Tyco International we will experience a
material adverse change in our financial condition, results of operations and liquidity.
The loss of our remaining significant customer, Invacare Corporation or a significant
reduction in revenue from this customer could cause us to experience a material adverse
change in our financial condition, results of operations and liquidity.

The failure by our customers to adapt their products to rapidly
changing competitive conditions could harm our business.

Historically a large portion of our sales have been to companies in the
electronics industry, which is subject to rapid technological change and product
obsolescence. If our customers are unable to create products that keep pace with the
changing technological environment, our customers' products could become obsolete and the
demand for our manufacturing services could decline significantly, causing a material
adverse change in our financial condition, results of operations and liquidity.

Our operating losses and working capital requirements could consume our
current cash balances.

We had a net loss of $3,598,650 during fiscal year 2003. Cash balances
stood at $2,476,276 at March 31, 2003.  If our losses continue at this level, they
could consume some or all of our current cash balances. During several fiscal years prior
to the fiscal years ended March 31, 2003 and 2002, we experienced substantial growth in
our revenue, which increased our working capital requirements. Should future growth resume
at a similar rate or an accelerated rate, the working capital requirements to fund our
operations and pursue acquisition opportunities may consume our existing cash balances.

Our government contracts can be cancelled with little or no notice and
could restrict our ability to commercialize our technology.

Some of our technology has been developed under government funding by
United States government agencies. In some cases, government agencies in the United States
can require us to obtain or produce components for our systems from sources located in the
United States rather than foreign countries. Our contracts with government agencies are
also subject to the risk of termination at the convenience of the contracting agency and
in some cases grant "march-in" rights to the government. March-in rights are the
right of the United States government or the applicable government agency, under limited
circumstances, to exercise a non-exclusive, royalty-free, irrevocable worldwide license to
any technology developed under contracts funded by the government to facilitate
commercialization of technology developed with government funding if we fail to
commercialize the developed technology. The implementation of restrictions on our sourcing
of components or the exercise of march-in rights by the government or an agency of the
government could restrict our ability to commercialize our technology.

We face intense competition in our motor development and may be unable
to compete successfully.

In developing electric motors for use in vehicles, wheelchairs and
other applications, we face competition from very large domestic and international
companies, including the world's largest automobile manufacturers. These companies have
far greater resources to apply to research and development efforts than we have, and they
may independently develop motors that are technologically more advanced than
ours.

If we are unable to protect our patents and other proprietary
technology, we will be unable to prevent third parties from using our technology, which
would impair our competitiveness and ability to commercialize our products. In addition,
the cost of enforcing our proprietary rights may be expensive and result in increased
losses.

Our ability to compete effectively against other companies in our
industry will depend, in part, on our ability to protect our proprietary technology.
Although we have attempted to safeguard and maintain our proprietary rights, we do not
know whether we have been or will be successful in doing so. We have historically pursued
patent protection in a limited number of foreign countries where we believe significant
markets for our products exist or where potentially significant competitors have
operations. It is possible that a substantial market could develop in a country where we
have not received patent protection and under such circumstances our proprietary products
would not be afforded legal protection in these markets. Further, our competitors may
independently develop or patent technologies that are substantially equivalent or superior
to ours. We cannot assure you that additional patents will be issued to us or, if they are
issued, as to the scope of their protection. Patents granted may not provide meaningful
protection from competitors. Even if a competitor's products were to infringe patents
owned by us, it would be costly for us to pursue our rights in an enforcement action, it
would divert funds and resources which otherwise could be used in our operations and we
cannot assure that we would be successful in enforcing our intellectual property rights.
In addition, effective patent, trademark, service mark, copyright and trade secret
protection may not be available in every country where we may operate or sell our products
in the future.

If third parties assert technology infringement claims against us, the
defense of the claims could involve significant legal costs and require our management to
divert time and attention from our business operations. If we are unsuccessful in
defending any claims of infringement, we may be forced to obtain licenses or to pay
royalties to continue to use our technology. We may not be able to obtain any necessary
licenses on commercially reasonable terms or at all. If we fail to obtain necessary
licenses or other rights, or if these licenses are costly, our results of operations may
suffer either from reductions in revenues through our inability to serve customers or from
increases in costs to license third-party technologies.

Use of our motors in vehicles including wheelchairs could subject us to
product liability claims, and product liability insurance claims could cause an increase
in our insurance rates or could exceed our insurance limits, which could impair our
financial condition, results of operations and liquidity.

Because some of our motors are designed to be used in vehicles
including wheelchairs, and because vehicle accidents can cause injury to persons and
property, we are subject to a risk of claims for product liability. We carry product
liability insurance of $1 million covering all of our products. If we were to experience a
large insured loss, it might exceed our coverage limits, or our insurance carriers could
decline to further cover us or raise our insurance rates to unacceptable levels, any of
which could impair our financial position and results of operations.



ITEM 2. PROPERTIES

The Company owns or leases its offices and manufacturing facilities and
believes these facilities to be well maintained, adequately insured and suitable for their
present and intended uses. Information concerning facilities of the Company as of March
31, 2003, is set forth in the table below:

|                     |             |                                           |                                           
|-------------------- | ----------- | ----------------------------------------- | ------------------------------------------
|Location             | Square Feet | Ownership or Expiration Date
    of Lease | Use                                       
|                     |             |                                           |                                           
|Frederick, Colorado  | 28,000      | Own                                       | manufacturing laboratories
    and offices
|                     |             |                                           |                                           
|St.Charles, Missouri | 31,000      | March 2007                                | manufacturing
    and offices             
|                     |             |                                           |                                           



ITEM 3. LEGAL PROCEEDINGS

The Company filed a lawsuit in the Circuit Court of St. Louis County,
Missouri in June 2002 against Hussman Corporation, a wholly-owned subsidiary of Ingersoll
Rand Corporation, a former customer of its electronics product segment seeking payment for
inventory purchased on behalf of Hussman. The Company is seeking damages of approximately
$375,000 plus attorneys fees and other costs. The customer has filed various
counterclaims, including breach of contract. The Company believes it has substantial and
meritorious defenses against the counterclaims and intends to vigorously contest them. In
November 2002, the Company also filed an additional lawsuit against Lumimove, Inc.,
another former customer of its electronics product segment in the Circuit Court of St.
Louis County, Missouri seeking payment for inventory purchased on behalf of Lumimove. The
Company is seeking damages of approximately $180,000 plus attorneys fees and other
costs. Both actions are currently scheduled for trial in the fall of 2003. It is not
possible to predict or determine the outcome of these legal actions, or to provide an
estimate of potential losses, if any, at this time, however, should the court award
damages on the counterclaim in the Hussman matter it could have a material adverse effect
on the Companys financial position, results of operations and liquidity.

In addition, the Company is involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of management, and
based on current available information, the ultimate disposition of these matters is not
expected to have a material adverse effect on the Companys financial position,
results of operations or cash flow, although there can be no assurance that adverse
developments in these matters could not have a material impact on a future reporting
period.



ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders of the
Company during the quarter ended March 31, 2003.



ITEM 5. MARKET PRICE OF COMMON STOCK

The Companys common stock trades on the American, Chicago,
Pacific, Frankfurt and Berlin Stock Exchanges. The high and low closing prices, by fiscal
quarter, as reported by the American Stock Exchange for the last two years are as follows:

2003
    High
    LowFourth Quarter
    $3.64
    $2.57Third Quarter
    $3.35
    $2.40Second Quarter
    $3.90
    $1.85First Quarter
    $4.55
    $3.602002
    High
    LowFourth Quarter
    $ 5.60
    $3.86Third Quarter
    $ 5.67
    $3.95Second Quarter
    $ 6.30
    $3.50First Quarter
    $ 7.49
    $6.25


On May 22, 2003 the closing price of the Companys common stock,
as reported on the American Stock Exchange, was $2.54 per share and there were 902 holders
of record of the Companys common stock.

The Company has not paid any cash dividends on its common stock since
inception and intends for the foreseeable future to retain any earnings to finance the
growth of its business. Future dividend policy will be determined by the Board of
Directors of the Company based upon consideration of the Companys earnings, capital
needs and other factors then relevant.



ITEM 6. SELECTED FINANCIAL DATA

UQM Technologies, Inc.

Consolidated Selected Financial Data

Year
    Ended March
    31,2003
    2002
    2001
    2000
    1999Contract services revenue
    $   2,985,639
    2,999,342
    2,283,292
    1,702,937
    1,517,960Product sales
    $ 12,500,769
    18,395,898
    23,011,358
    17,096,963
    11,402,122Loss from continuingoperations
    before otherincome
    (expense)
    $  (3,710,168)
    (6,337,051)
    (1,805,409)
    (4,892,252)
    (2,527,785)Loss from continuingoperations
    $  (3,413,679)
    (6,271,555)
    (2,042,538)
    (5,504,510)
    (2,992,297)Discontinued operations
    $     (184,971)
    (2,321,100)
    (1,097,584)
    (967,297)
    (761,773)Net loss
    $  (3,598,650)
    (8,592,655)
    (3,140,122)
    (6,471,807)
    (3,754,070)Net loss per
    common share -basic
    and diluted:Continuing
    operations
    $      (.18)
    (.36)
    (.12)
    (.33)
    (.19)Discontinued
    operations
    (.01)
    (.13)
    (.06)
    (.06)
    (.05)$      (.19)
    (.49)
    (.18)
    (.39)
    (.24)Total assets
    $  11,492,562
    16,129,535
    27,481,593
    24,257,843
    27,206,578Long-term obligations (1)
    $    1,189,262
    2,121,738
    3,471,760
    4,394,582
    5,324,828Cash dividend declaredper
    common share
    $        -0-
    -0-
    -0-
    -0-
    -0-


> (1)
>       Includes current portion of long-term obligations.



ITEM
7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This Report contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events or
results. Readers are referred to the Risk Factors section at the end of Item 1.

Financial Condition

Cash and cash equivalents at March 31, 2003 was $2,476,276 and working
capital (the excess of current assets over current liabilities) was $4,110,141 compared
with $1,411,509 and $3,184,735, respectively, at March 31, 2002. The increase in cash and
cash equivalents and working capital is primarily attributable to proceeds from the sale
of common stock during the first quarter, net of subsequent repayments of debt.

Accounts receivable declined $1,628,552 to $1,034,002 at March 31, 2003
from $2,662,554 at March 31, 2002. The decrease is primarily attributable to lower revenue
levels.

Costs and estimated earnings on uncompleted contracts decreased
$254,729 to $187,484 at March 31, 2003 versus $442,213 at March 31, 2002. The decrease is
due to more favorable billing terms on contracts in process at March 31, 2003. Estimated
earnings on contracts in process declined to $619,403 or 24.6 percent of contracts in
process of $1,903,214 at March 31, 2003 compared to estimated earnings on contracts in
process of $1,025,313 or 29.2 percent of contracts in process of $2,486,598 at March 31,
2002. The decrease in estimated margins on contracts in process is attributable to
anticipated cost overruns on certain engineering projects during the fiscal year ended
March 31, 2003.

Inventory obligations of certain customers increased $386,805 to
$789,767 at March 31, 2003 compared to $402,962 at March 31, 2002. The increase is due to
slower than expected resolution of customer legal obligations for this inventory (see
"Item 3 Legal Proceedings" above).

Inventories declined $2,613,088 to $1,620,262 principally due to a
decline in raw material and work-in-process inventories of $2,278,324 and $435,981,
respectively. The decline in raw materials inventories is attributable to reduced stocking
levels, improved inventory turns and higher levels of inventory reserves for slow moving
and obsolete inventory which accounted for $589,019 of the decline. The decline in
work-in-process inventories is attributable to lower production levels in the electronic
products segment.

Equipment of discontinued operations held for sale, net, declined to
zero at March 31, 2003 compared to $1,253,432 at March 31, 2002 reflecting completion of
the divestiture of the assets of the discontinued gear business.

Other current assets declined to zero at March 31, 2003 due to the
recognition of deferred offering costs upon completion of a secondary stock offering
during the first quarter.

The Company invested $304,114 for the acquisition of property and
equipment during the fiscal year compared to $513,973 last fiscal year. The decrease in
capital expenditures is primarily attributable to reduced capital expenditure requirements
at the Companys electronic products segment. In addition, the Company invested
$1,049,692 during the fiscal year for the expansion of its facility in Frederick, Colorado
to accommodate the relocation of the Companys corporate headquarters and engineering
staff from Golden, Colorado.

Accounts payable declined to $975,344 from $2,693,312 at March 31,
2003, primarily due to declining revenue levels and an associated decline in raw material
inventory purchases by the electronics segment during the current fiscal year.

Other current liabilities increased $226,021 to $794,575 at March 31,
2003 from $568,554 at March 31, 2002.The increase is primarily attributable to the
accrual of committed raw material inventory purchases, higher levels of accrued warranty
costs, customer deposits, accrued rents and accrued loss reserves on certain engineering
contracts.

In fiscal year 2001, a limited partnership in which the Company was a
50 percent owner sold its principal asset, the Company's headquarters building in Golden,
Colorado, and was subsequently liquidated. As a result of this transaction, the Company
recorded a deferred gain that was recognized ratably over the remaining term on the Golden
facility lease that expired in September 2002. As a result the current portion of deferred
gain on sale of real estate decreased to zero at March 31, 2003 from $322,139 at March 31,
2002.

In April 2002, the Company completed a secondary offering of 1,160,095
shares of common stock together with two-year warrants to purchase 232,019 shares of
common stock at an exercise price of $5.73 per share. Cash proceeds, net of offering
expenses, were $4,435,212. Immediately following completion of the offering the Company
applied $3,182,947 of the proceeds to the reduction of debt. In November 2002, the Company
re-financed an existing mortgage on its Frederick, Colorado facility including a portion
of the expenditures related to expansion of the facility. As a result of both of these
transactions, current portion of long-term debt decreased $445,122 to $116,921, long-term
debt decreased $35,682 to $1,072,341 and revolving line-of-credit declined $2,254,000 to
zero at March 31, 2003.

Term debt and accrued future losses of discontinued operations
decreased $789,960 to zero at March 31, 2003 due to the repayment of term loans and the
cessation of operations of gear manufacturing operations during the fiscal year ended
March 31, 2003.

Billings in excess of costs and estimated earnings on uncompleted
contracts decreased $159,361 to $223,378 at March 31, 2003 from $382,739 at March 31, 2002
reflecting billings on engineering contracts at a rate slower than the performance of the
associated work during the fiscal year.

Common stock and additional paid-in capital increased to $188,445 and
$55,885,486, respectively, at March 31, 2003 compared to $176,798 and $51,444,359 at March
31, 2002. The increases are primarily attributable to completion of a secondary offering
of common stock during the fiscal year ended March 31, 2003.

Results of Continuing Operations

Continuing operations for the fiscal year ended March 31, 2003,
resulted in a loss of $3,413,679, or $0.18 per common share compared to a loss from
continuing operations of $6,271,555, or $0.36 per common share and $2,042,538, or $0.12
per common share for the fiscal years ended March 31, 2002 and 2001, respectively. Loss
from continuing operations for the fiscal years ended March 31, 2003 and 2001 included
charges of $140,471 and $291,818, respectively, associated with the write-down of assets.
Loss from continuing operations for the fiscal year ended March 31, 2002 included a charge
of $4,348,633 for the write-down of goodwill. In addition to the charges noted above,
operating results for the fiscal year ended March 31, 2003 included a charge to cost of
sales associated with the impairment of $942,733 electronic component raw material
inventory at the Company's electronic product segment.

Revenue from contract services was flat for the fiscal year ended March
31, 2003 at $2,985,639 versus $2,999,342 for the fiscal year ended March 31, 2002
reflecting decreased activity on revenue generating activities during the second half of
the current fiscal year. Revenue from contract services increased $716,050 or 31 percent
for the year ended March 31, 2002 compared to revenue for the year ended March 31, 2001.
The increase was attributable to stronger demand for development programs during the
fiscal year ended March 31, 2002.

Product sales this fiscal year declined 32 percent to $12,500,769
compared to $18,395,898 for the year ended March 31, 2002. Revenue for the fiscal year
ended March 31, 2002 declined 20 percent versus revenue for the year ended March 31, 2001
of $23,011,358. Mechanical products segment revenue for the year ended March 31, 2003
increased $135,058 or 3 percent to $4,136,328 compared to $4,001,270 for fiscal year ended
March 31, 2002. Mechanical products segment revenue for the fiscal year ended March 31,
2002 rose $1,195,970 or 43 percent compared to revenue for the fiscal year ended March 31,
2001 of $2,805,300. The growth in mechanical products segment revenue in each fiscal year
is attributable to increased shipments of wheelchair motors. Mechanical product segment
revenues during the fourth quarter of this fiscal year declined approximately 34 percent
from the average production levels during the preceding three fiscal quarters due to the
economic weakness in major world markets. The Company expects production to continue at
these decreased levels through the first and second quarters of the fiscal year ending
March 31, 2004. Electronic products segment revenue for the fiscal year ended March 31,
2003 decreased 42 percent to $7,934,048 compared to $13,646,245 for fiscal year ended
March 31, 2002. Electronic products segment revenue for the fiscal year ended March 31,
2002 decreased $5,464,709 or 29 percent compared to revenue of $19,110,954 for the fiscal
year ended March 31, 2001. The decline in revenue in both years is attributable to
generally reduced order levels and the loss of significant customers arising from
deteriorating economic conditions following the events of September 11, 2001.
Technology segment product revenue for the fiscal year ended March 31, 2003 decreased 42
percent to $430,393 compared to $748,383 for fiscal year ended March 31, 2002. Technology
segment product revenue for the fiscal year ended March 31, 2002 decreased $346,721 or 32
percent compared to revenue of $1,095,104 for the fiscal year ended March 31, 2001. The
decrease in both years is attributable to reduced demand for proprietary propulsion
systems.

Gross profit on contract services was 13.5 percent this fiscal year
compared to 31.5 and 15.4 percent for the fiscal years ended March 31, 2002 and 2001,
respectively. The decline in contract services margins for the current fiscal year versus
the fiscal years ended March 31, 2002 and 2001 is attributable to cost overruns on certain
engineering contracts this year. Gross profit margins on product sales this fiscal year
was a negative 2.2 percent compared to 6.3 and 10.0 percent in the fiscal years ended
March 31, 2002 and 2001, respectively. The decrease in margins on product sales for this
fiscal year versus each of the two prior comparable fiscal years is attributable to a
charge of $942,733 and $341,632 for the impairment of inventory for 2003 and 2002,
respectively, decreased overhead absorption due to declining revenue levels and a less
favorable product mix.

Research and development expenditures for the fiscal year ended March
31, 2003 increased to $117,735 compared to $98,940 and $103,231 for the fiscal years ended
March 31, 2002 and 2001, respectively. The increase is primarily due to an increase in
cost-share type contracts this fiscal year versus each of the prior two fiscal years.

General and administrative expense this fiscal year was $3,579,407
compared to $3,729,064 and $3,786,669 for the fiscal years ended March 31, 2002 and 2001,
respectively. The decrease in general and administrative expenses for this fiscal year
versus last fiscal year is primarily attributable to lower general and administrative
expense in the Company's electronic products segment and lower professional fees
associated with acquisition activities. The decrease in general and administrative
expenses for the fiscal year ended March 31, 2002 versus the fiscal year ended March 31,
2001 is attributable to professional fees associated with acquisition activities in the
fiscal year 2001.

Write-down of assets for the fiscal year ended March 31, 2003 of
$140,471 is primarily attributable to the impairment and disposal of obsolete equipment.
Write-down of assets for the fiscal year ended March 31, 2001 of $291,818 is attributable
to the retirement of obsolete electronic equipment and the write-down of the
Companys investment in Aeromax Corporation.

Write-down of goodwill for fiscal year ended March 31, 2002 of
$4,348,633 is attributable to the Companys assessment that the fair value of its
electronic products segment exceeded its recorded value at March 31, 2002.

Interest income declined to $28,035 for the current fiscal year
compared to $64,067 and $59,588 for the fiscal years ended March 31, 2002 and 2001,
respectively. The decrease is generally attributable to lower interest rates on invested
funds versus the two prior fiscal years.

Interest expense decreased to $68,050 for the year ended March 31, 2003
compared to $372,084 and $298,690 for the fiscal years ended March 31, 2002 and 2001,
respectively. The decrease for the fiscal year ended March 31, 2003 versus the fiscal year
ended March 31, 2002 is due to the repayment of equipment term loans and line-of-credit
borrowings during the current fiscal year. The increase for the fiscal year ended March
31, 2002 versus the fiscal year March 31, 2001 is attributable to higher interest rates on
borrowings throughout the fiscal year ended March 31, 2002 on the Companys
lines-of-credit.

Gain on sale of real estate was $322,139 for the fiscal year ended
March 31, 2003 compared to $379,997 and $19,286 for each of the two preceding fiscal
years, respectively. The gain is attributable to the recognition of deferred gain through
the remaining lease term arising from the sale of the Companys Golden facility
during the fiscal year ended March 31, 2001 by a partnership of which the Company held a
50 percent ownership stake.

Results of Discontinued Operations

In October 2001, the Company announced its intention to exit its
non-core contract gear manufacturing business. As a result, during the quarter ended
September 30, 2001, the Company recorded a charge of $1,676,450 for the estimated loss on
disposal of the gear division, which included a provision of $663,792 for expected
operating losses during the phase-out period. Additionally, for all periods presented, the
Company reclassified operating results of the gear division to loss from operations of
discontinued gear division, and reclassified all capital equipment and associated term
debt as current under the following balance sheet captions: equipment of discontinued
operations held for sale, net and term debt and accrued future losses of discontinued
operations, respectively. The Company completed the divestiture of the contract gear
manufacturing business during the first quarter of the fiscal year ended March 31, 2003.

Loss from operations of the discontinued gear division for the fiscal
year ended March 31, 2003 was $184,971, or $0.01 per common share compared to a loss of
$2,321,100, or $0.13 per common share and $1,097,584, or $0.06 per common share for the
fiscal years ended March 31, 2002 and 2001, respectively. The decrease in the loss this
fiscal year is attributable to the completion of the divestiture process during the first
quarter of the fiscal year.

Liquidity and Capital Resources

The Companys cash balances and liquidity throughout the fiscal
year ended March 31, 2003 were adequate to meet operating needs, although liquidity
was adversely impacted by a general tightening of bank credit discussed below. At March
31, 2003, the Company had working capital (the excess of current assets over current
liabilities) of $4,110,141 compared to $3,184,735 at March 31, 2002. Working capital
increased by $925,406 primarily due to the proceeds from the Company's secondary offering,
which resulted in cash proceeds, net of offering costs, of $4,435,212. Proceeds from the
stock offering were subsequently partially applied to the repayment of term debt and
revolving line-of-credit borrowings.

For the year ended March 31, 2003 net cash provided by operations
was $488,905 compared to net cash provided by operations of $1,946,936 for the year ended
March 31, 2002. The decline in cash provided by operating activities in this fiscal year
as compared to the prior fiscal year is primarily attributable to and due to lower levels
of cash generated from reductions in the level of accounts payable this fiscal year and
the effect of a charge for the write-down of goodwill last fiscal year. The increase in
cash provided by operating activities of $5,404,130 for the year ended March 31, 2002
versus the fiscal year ended March 31, 2001 was primarily due to cash provided from
decreases in the level of accounts receivable and inventory in the fiscal year ended March
31, 2002 versus cash used on these items in the prior fiscal year.

Cash used by investing activities of continuing operations for the
fiscal year ended March 31, 2003 was $1,418,147 compared to $588,205 for the previous
fiscal year. The increase is primarily attributable to expansion of the Company's
Frederick, Colorado facility, partially offset by lower levels of capital expenditures for
machinery and equipment. Cash used for the acquisition of property and equipment was
$513,973 for the fiscal year ended March 31, 2002 versus $2,151,041 for the fiscal year
ended March 31, 2001. Equipment purchases and net cash used by operating activities during
fiscal 2001 were primarily funded from cash proceeds received from the sale of real
estate, net of distributions to a minority interest, of $1,752,365 and from cash proceeds
from borrowings, net of repayments, which amounted to $3,986,158.

Cash flows provided by financing activities of continuing operations
was $1,716,764 for the fiscal year ended March 31, 2003 versus cash flow used by financing
activities of $1,814,315 for the comparable period last year. The increase this fiscal
year is primarily attributable to completion of a secondary offering that resulted in net
cash proceeds of $4,435,212, offset by repayments of debt and revolving line-of-credit,
net of new borrowings secured by facility, totaling $2,734,804. Cash flows used by
financing activities for the fiscal year ended March 31, 2002 was primarily attributable
to repayments of our revolving line-of-credit and repayments of term debt.

During the first half of the current fiscal year, the Companys
liquidity was adversely impacted by a general tightening of credit in the banking
industry. As a result of these conditions and continued operating losses, the
Companys banking facilities were not renewed requiring the Company to apply
$3,182,947 of its then available cash balances to the repayment of these debt obligations.
Liquidity was additionally negatively impacted by the elimination of then available
additional borrowing availability of approximately $1,200,000 on the lines-of-credit,
which were not renewed. At March 31, 2003, cash and cash equivalents were $2,476,276 and
working capital was $4,110,141. The Company expects to manage its operations and working
capital requirements to minimize the future level of operating losses and working capital
usage, however, we cannot provide assurance that we will be successful in achieving these
objectives. In addition, some of the Company's significant customers have experienced
downturns in their businesses as a result of deteriorating general economic conditions and
other factors. To the extent these customers experience financial difficulties sufficient
to impair their ability to honor their financial commitments or further reduce their
orders for goods and services, the Company could experience a material adverse change in
its financial condition, results of operations and liquidity.

The Company is actively considering possible future acquisitions at any
given time and from time to time enters into non-binding letters of intent with respect to
possible acquisitions. The Company expects to continue its strategy of growing its
business through expanding its product line of permanent magnet motors and controllers,
securing production orders from new and existing customers for electronic assemblies,
designing and introducing new products for manufacture, seeking strategic alliances to
accelerate the commercialization of its technology and pursuing synergistic and accretive
acquisitions. The Company believes its financial resources are sufficient to fund its
operations for at least the next eighteen months. The Company expects to finance its
operations and future growth from existing cash resources, cash flow from operations, if
any, and through the issuance of equity or debt securities or a combination thereof. There
can, however, be no assurance that existing cash resources will be sufficient to fund
these objectives or that financing or equity capital will be available on terms acceptable
to the Company. In the event existing cash resources are not sufficient to fund operations
as currently configured, or financing or equity capital to fund future growth is not
available, the Company will modify its strategy to align its operations with its then
available financial resources.

Critical Accounting Policies

The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in United States requires
management to make judgements, assumptions and estimates that effect the amount reported
in the Consolidated Financial Statements and accompanying notes. Note 1 to the
Consolidated Financial Statements describes the significant accounting policies and
methods used in preparation of the Consolidated Financial Statements. Estimates are used
for but not limited to allowance for doubtful accounts receivables, costs to complete
contracts, collectibility of inventory obligations of certain customers, recoverability of
inventories and warranty costs. Actual results could differ materially from these
estimates. The following critical accounting policies are impacted significantly by
judgements, assumptions and estimates used in preparation of the Consolidated Financial
Statements.

Accounts Receivable

The Companys trade accounts receivable are subject to credit
risks associated with the financial condition of its customers and their liquidity. The
Company evaluates all customers periodically to assess their financial condition and
liquidity and sets appropriate credit limits based on this analysis. As a result, the
collectibility of accounts receivable may change due to changing general economic
conditions and factors associated with each customers particular business. The Company has
established a reserve for potentially uncollectible trade accounts receivable which is
managements best estimate of the amount of trade accounts receivable that it
believes may become uncollectible at a future date due to the foregoing factors. At March
31, 2003, the Company has recorded reserves for uncollectible trade accounts receivable of
$28,756. It is reasonably possible, that future events or changes in circumstances could
cause the realizable value of the Companys trade accounts receivable to decline
materially, resulting in additional material losses.

Inventory Obligations of Certain Customers

The Companys electronic products segment provides contract
manufacturing services for a variety of customers. Typically the Company requires its
customers to contractually commit to pay for any non-returnable or non-cancelable raw
material inventory purchased by the Company on behalf of its customers. The significant
economic downturn in the contract electronics manufacturing industry over the last two
years has caused originally scheduled or anticipated production runs to be reduced or
cancelled by customers resulting in substantial amounts of raw material inventory being
held by the Company for which current or former customers are contractually obligated. To
date several customers have failed to honor their contractual obligation to pay for
non-cancelable and non-returnable raw material purchased by the Company on their behalf.
Accordingly, the Company has reclassified this inventory, together with allowances for the
Companys best estimate of uncollectible amounts, in its financial statements. At
March 31, 2003 such inventory, net of allowances for uncollectible amounts of $367,710,
was $789,767. The Company intends to pursue legal action against those customers who fail
to honor their contractual obligations to the Company and has filed to-date two such
lawsuits, both of which are awaiting trial. Although the Company believes that its
contracts with customers are enforceable, there are inherent risks in litigation and it is
possible the Company will not prevail in these actions, the customer will assert
counterclaims and prevail on such claims or that if the Company does prevail, the customer
will nevertheless not have the financial resources to pay any judgement rendered by the
court. In the event the Company does not prevail in litigation, substantially all of this
inventory obligation could be rendered uncollectible. Such an outcome, should it occur,
could have a materially adverse effect on the Companys results of operations,
financial condition and liquidity.

Inventories

The Company maintains raw material inventories of electronic
components, motor parts and other materials to meet its expected manufacturing needs for
proprietary products and for products manufactured to the design specifications of its
customers. Some of these components may become obsolete or unusable due to design changes.
Accordingly, the Company periodically assesses its raw material inventory for potential
impairment of value based on then available information, expectations and estimates and
establishes impairment reserves for estimated declines in the realizable value of its
inventories. The actual realizable value of the Companys inventories may differ
materially from these estimates based on future occurrences and any resulting change in
the Companys estimates. The Company separately classifies raw material inventory
when the inventory for which the customer is contractually obligated to pay is not
currently being utilized or is not expected to be used at a future date in production
operations (see "Inventory Obligations of Certain Customers" above). At March
31, 2003, the Company has recorded inventory reserves of $1,032,290. It is reasonably
possible, that future events or changes in circumstances could cause the realizable value
of the Companys inventories to decline materially, resulting in additional material
impairment losses.

Percentage of Completion Revenue Recognition on Long-term Contracts:
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts

The Company recognizes revenue on the development projects funded by
its customers using the percentage-of-completion method. Under this method, contract
services revenue is based on the percentage that costs incurred to date bear to
managements best estimate of the total costs to be incurred to complete the project.
Many of these contracts involve the application of the Companys technology to
customers products and other applications with demanding specifications.
Managements best estimates have sometimes been adversely impacted by unexpected
technical challenges requiring, additional analysis and redesign, failure of electronic
components to operate in accordance with manufacturers published performance
specifications, unexpected prototype failures requiring the purchase of additional parts
and a variety of other factors that caused unforeseen delays and additional costs. It is
reasonably possible that total costs to be incurred on any of the projects in process at
March 31, 2003 could be materially different from managements estimates, and any
modification of managements estimate of total project costs to be incurred could
result in material changes in the profitability of affected projects or result in material
losses on any affected projects.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
requires that the purchase method of accounting be used for all business combinations
initiated or completed after June 30, 2001. SFAS No. 141 also specifies criteria that
intangible assets acquired in a purchase method business combination must meet to be
recognized and reported apart from goodwill. SFAS No. 142 required that, beginning April
1, 2002 goodwill would no longer be amortized for any intangible assets determined to have
an indefinite useful life and acquired in a business combination accounted for under the
purchase method and completed prior to June 30, 2001. In addition, the Company was
required to assign goodwill to specific reporting units and then test it for impairment at
least annually under a two step approach designed to compare the carrying value of each
reporting unit to the fair value of the reporting unit. The Company was required to
reassess its intangible assets, including goodwill recorded in connection with earlier
acquisitions accounted for under the purchase method, including their useful lives. The
Company adopted SFAS No. 141 and SFAS No. 142 on March 31, 2002.

In June 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations," which is effective for fiscal years beginning
after June 15, 2002. SFAS 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. On April 1, 2002, the Company early adopted SFAS No.
143 which had no material impact on the Companys financial condition or results of
operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," which is effective for
fiscal years beginning after December 15, 2001. SFAS No. 144 establishes one accounting
model to be used for long-lived assets to be disposed of by sale and broadens the
presentation of discontinued operations to include more disposal transactions. On April 1,
2002, the Company adopted SFAS No. 144 which had no material impact on the Companys
financial condition or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of
FASB Statements No. 4, 44 and 64, and amendment of FASB Statement No. 13, and Technical
Corrections." This Statement, among other things, amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to sale-leaseback
transactions. Certain provisions of SFAS No.145 are effective for fiscal years beginning
after May 15, 2002, and other provisions related to specific transactions are effective
for those transactions occurring after May 15, 2002. On October 1, 2002, the
Company adopted SFAS No. 145 which had no material impact on the Companys financial
condition or results of operations.

In July 2002, the FASB issued SFAS No.146, "Accounting for
Costs Associated with Exit or Disposal Activities."SFAS No.146 applies to costs
associated with (1) an exit activity that does not involve an entity newly acquired in a
business combination or (2) a disposal activity within the scope of SFAS No.144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."Those costs include
(a) certain termination benefits (so-called one-time termination benefits), (b) costs to
terminate a contract that is not a capital lease, and (c) other associated costs including
costs to consolidate facilities or relocate employees. The Statement is effective for exit
or disposal activities that are initiated after December 31, 2002, however earlier
application is encouraged. On October 1, 2002, the Company adopted SFAS No. 146 which had
no material impact on the Companys financial condition or results of operations.

In November 2002 the FASB issued Financial Interpretation No. 45, "Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others  and interpretation of FASB Statements No. 5, 57, and 107 and
rescission of FASB Interpretation No. 34 (FIN 45)." FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial statements about
its obligations under certain guarantees that it has issued. It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. The initial recognition
and initial measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year-end. The disclosure requirements are effective for financial
statements of interim or annual periods ending after December 15, 2002.

In December 2002, the FASB issued SFAS No.148, "Accounting for
Stock-Based Compensation-Transition and Disclosure an amendment of FASB Statement
No.123." SFAS No.148 amends SFAS No.123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee compensation.
In addition, this Statement amends the disclosure requirement of Statement 123 to require
prominent disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method used on
reported results. The Statement is effective for fiscal years beginning after December 15,
2002, however earlier application is encouraged. The provisions of SFAS No. 148 have no
material impact on the Company, as we do not plan to adopt the fair-value method of
accounting for stock options at the current time.

In April 2003, the FASB issued SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149
amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities."This Statement amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities under SFAS No. 133. The Company plans to adopt
SFAS No. 149 on April 1, 2003 and expects that the adoption of SFAS No. 149 will not have
a material impact on its financial condition and results of operations.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the potential loss arising from adverse changes in
market rates and prices, such as foreign currency exchange and interest rates. The Company
does not use financial instruments to any degree to manage these risks and does not hold
or issue financial instruments for trading purposes. All of the Company's product sales,
and related receivables are payable in U.S. dollars. The Company is subject to interest
rate risk on its debt obligations. One of the Companys long-term debt obligations
has a variable rate of interest indexed to the prime rate. The interest rate on these
instruments approximates current market rates as of March 31, 2003. A one
percent change in the prime interest rate would increase or decrease interest expense by
$2,395 on an annual basis on outstanding borrowings at March 31, 2003 on debt with
adjustable interest rate provisions.



---

ITEM 8.
Financial Statements and Supplementary Data



Independent Auditors Report

The Board of Directors

UQM Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of UQM
Technologies, Inc. and subsidiaries (Company) as of March 31, 2003 and 2002, and the
related consolidated statements of operations, stockholders equity and comprehensive
loss, and cash flows for each of the years in the three-year period ended March 31, 2003.
These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated 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, based on our audits, the consolidated financial
statements referred to above present fairly, in all material respects, the financial
position of UQM Technologies, Inc. and subsidiaries as of March 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the years in the three-year
period ended March 31, 2003, in conformity with accounting principles generally
accepted in the United States of America.



KPMG LLP



Denver, Colorado

May 15, 2003



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets





|                                                                            | March 31, 2003  | March 31, 2002
|--------------------------------------------------------------------------- | --------------- | --------------
|                                                                            |                 |               
|Assets                                                                      |                 |               
|                                                                            |                 |               
|Current assets:                                                             |                 |               
|Cash
    and cash equivalents                                               | $     2,476,276 | 1,411,509     
|Accounts
    receivable (notes 13 and 20)                                   | 1,034,002       | 2,662,554     
|Costs
    and estimated earnings in excess of billings on uncompleted       |                 |               
|contracts
    (note 2)                                                      | 187,484         | 442,213       
|Inventory
    obligations of certain customers, net (note 3)                | 789,767         | 402,962       
|Inventories
    (notes 4 and 20)                                            | 1,620,262       | 4,233,350     
|Prepaid
    expenses                                                        | 112,568         | 220,528       
|Equipment
    of discontinued operations held for sale, net (note 14)       | -               | 1,253,432     
|Other                                                                       | -               | 130,934       
|                                                                            |                 |               
|                                                                            |                 |               
|Total
    current assets                                                    | 6,220,359       | 10,757,482    
|                                                                            |                 |               
|Property and equipment, at cost:                                            |                 |               
|Land
    (note 9)                                                           | 181,580         | 181,580       
|Building
    (note 9)                                                       | 2,296,957       | 1,247,265     
|Machinery
    and equipment (notes 7 and 9)                                 | 6,962,596       | 8,622,471     
|                                                                            |                 |               
|                                                                            |                 |               
|                                                                            | 9,441,133       | 10,051,316    
|Less
    accumulated depreciation                                           | (4,944,608)     | (5,482,194)   
|                                                                            |                 |               
|                                                                            |                 |               
|Net
    property and equipment                                              | 4,496,525       | 4,569,122     
|                                                                            |                 |               
|Patent and trademark costs, net of
    accumulated amortization of $276,218 |                 |               
|and $219,084                                                                | 751,473         | 757,059       
|                                                                            |                 |               
|Other assets                                                                | 24,205          | 45,872        
|                                                                            |                 |               
|                                                                            |                 |               
|                                                                            |                 |               
|                                                                            |                 |               
|                                                                            |                 |               
|                                                                            | $   11,492,562  | 16,129,535    
|                                                                            |                 |               

See accompanying notes to consolidated financial statements.

(Continued)

---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets, Continued





|                                                                      | March 31, 2003 | March 31, 2002
|--------------------------------------------------------------------- | -------------- | --------------
|                                                                      |                |               
|Liabilities and Stockholders Equity                                  |                |               
|                                                                      |                |               
|Current liabilities:                                                  |                |               
|Accounts
    payable                                                  | $     975,344  | 2,693,312     
|Other
    current liabilities (notes 8 and 20)                        | 794,575        | 568,554       
|Current
    portion of deferred gain on sale of real estate (note 5)  | -              | 322,139       
|Current
    portion of long-term debt (note 9)                        | 116,921        | 562,043       
|Term debt
    and accrued future losses of discontinued operations    |                |               
|(notes
    9 and 14)                                                  | -              | 789,960       
|Revolving
    line-of-credit (note 9)                                 | -              | 2,254,000     
|Billings
    in excess of costs and estimated earnings on uncompleted |                |               
|contracts
    (note 2)                                                | 223,378        | 382,739       
|                                                                      |                |               
|                                                                      |                |               
|Total
    current liabilities                                         | 2,110,218      | 7,572,747     
|                                                                      |                |               
|                                                                      |                |               
|Long-term debt, less current portion (note 9)                         | 1,072,341      | 1,108,023     
|                                                                      |                |               
|                                                                      |                |               
|Total
    liabilities                                                 | 3,182,559      | 8,680,770     
|                                                                      |                |               
|Stockholders equity (notes 11 and 12):                               |                |               
|Common
    stock, $.01 par value, 50,000,000 shares authorized;       |                |               
|18,844,515
    and 17,679,848 shares issued and outstanding           | 188,445        | 176,798       
|Additional
    paid-in capital                                        | 55,885,486     | 51,444,359    
|Accumulated
    deficit                                               | (47,356,028)   | (43,757,378)  
|Accumulated
    other comprehensive loss                              | (384,300)      | (384,300)     
|Note
    receivable from officer                                      | (23,600)       | (30,714)      
|                                                                      |                |               
|                                                                      |                |               
|Total
    stockholders equity                                        | 8,310,003      | 7,448,765     
|                                                                      |                |               
|                                                                      |                |               
|Commitments (notes 9, 16, and 18)                                     |                |               
|                                                                      |                |               
|                                                                      | $   11,492,562 | 16,129,535    
|                                                                      |                |               

See accompanying notes to consolidated financial statements.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations



|                                                        | Year Ended      | Year Ended     | Year Ended    
|------------------------------------------------------- | --------------- | -------------- | --------------
|                                                        | March 31, 2003  | March 31, 2002 | March 31, 2001
|                                                        |                 |                |               
|Revenue (note 13):                                      |                 |                |               
|Contract
    services                                   | $    2,985,639  | 2,999,342      | 2,283,292     
|Product
    sales                                       | 12,500,769      | 18,395,898     | 23,011,358    
|                                                        |                 |                |               
|                                                        | 15,486,408      | 21,395,240     | 25,294,650    
|                                                        |                 |                |               
|Operating costs and expenses:                           |                 |                |               
|Costs
    of contract services                          | 2,583,889       | 2,053,745      | 1,930,601     
|Costs
    of product sales                              | 12,775,074      | 17,231,561     | 20,717,392    
|Research
    and development                            | 117,735         | 98,940         | 103,231       
|General
    and administrative                          | 3,579,407       | 3,729,064      | 3,786,669     
|Amortization
    of goodwill                            | -               | 270,348        | 270,348       
|Write-down
    of assets (note 7)                       | 140,471         | -              | 291,818       
|Write-down
    of goodwill (note 7)                     | -               | 4,348,633      | -             
|                                                        |                 |                |               
|                                                        | 19,196,576      | 27,732,291     | 27,100,059    
|                                                        |                 |                |               
|                                                        |                 |                |               
|Loss
    from continuing operations before              |                 |                |               
|other
    income (expense)                              | (3,710,168)     | (6,337,051)    | (1,805,409)   
|                                                        |                 |                |               
|Other income (expense):                                 |                 |                |               
|Interest
    income                                     | 28,035          | 64,067         | 59,588        
|Interest
    expense                                    | (68,050)        | (372,084)      | (298,690)     
|Minority
    interest share of earnings of consolidated |                 |                |               
|subsidiary                                              | -               | -              | (65,426)      
|Gain
    on sale of real estate                         | 322,139         | 379,997        | 19,286        
|Other                                                   | 14,365          | (6,484)        | 48,113        
|                                                        |                 |                |               
|                                                        | 296,489         | 65,496         | (237,129)     
|                                                        |                 |                |               
|                                                        |                 |                |               
|Loss
    from continuing operations                     | (3,413,679)     | (6,271,555)    | (2,042,538)   
|                                                        |                 |                |               
|                                                        |                 |                |               
|Discontinued operations (note 14):                      |                 |                |               
|Loss from
    operations of discontinued gear division  | -               | (644,650)      | (1,097,584)   
|Loss on
    disposal of gear division including         |                 |                |               
|operating
    losses during phase-out period            | (184,971)       | (1,676,450)    | -             
|                                                        |                 |                |               
|                                                        | (184,971)       | (2,321,100)    | (1,097,584)   
|                                                        |                 |                |               
|                                                        |                 |                |               
|Net
    loss                                            | $   (3,598,650) | (8,592,655)    | (3,140,122)   
|                                                        |                 |                |               
|                                                        |                 |                |               
|Net
    loss per common share -                         |                 |                |               
|basic
    and diluted (note 1)                          |                 |                |               
|Continuing
    operations                               | $        (.18)  | (.36)          | (.12)         
|Discontinued
    operations                             | (.01)           | (.13)          | (.06)         
|                                                        |                 |                |               
|                                                        | $        (.19)  | (.49)          | (.18)         
|                                                        |                 |                |               
|                                                        |                 |                |               
|Weighted average number of shares of common
    stock   |                 |                |               
|outstanding
     basic and diluted                     | 18,789,243      | 17,548,130     | 17,314,891    
|                                                        |                 |                |               

See accompanying notes to consolidated financial statements.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Consolidated
Statements of Stockholders Equity and Comprehensive Loss

|                                                                 | Number of
    common shares issued | Common stock | Additional
    paid-in capital | Accumulated
    deficit | Accumulated
    other comprehensive loss | Notes
    receivable due from officer | Treasury stock | Total
    stockholders equity
|---------------------------------------------------------------- | ---------------------------------- | ------------ | ------------------------------ | ----------------------- | ---------------------------------------- | ------------------------------------- | -------------- | ------------------------------
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Balances at March 31, 2000                                       | 17,194,192                         | $171,942     | 49,382,877                     | (32,024,601)            | (384,300)                                | -                                     | -              | 17,145,918                    
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Issuance of common stock upon
    exercise of                    |                                    |              |                                |                         |                                          |                                       |                |                               
|employee,
    director and consultant                            |                                    |              |                                |                         |                                          |                                       |                |                               
|options                                                          | 212,408                            | 2,124        | 1,094,961                      | -                       | -                                        | (38,500)                              | (63,864)       | 994,721                       
|Issuance of common stock upon
    exercise                       |                                    |              |                                |                         |                                          |                                       |                |                               
|of warrants                                                      | 12,000                             | 120          | 95,880                         | -                       | -                                        | -                                     | -              | 96,000                        
|Issuance of common stock under                                   |                                    |              |                                |                         |                                          |                                       |                |                               
|employee
    stock purchase plan                                 | 6,774                              | 68           | 29,202                         | -                       | -                                        | -                                     | -              | 29,270                        
|Issuance of common stock for
    services                        | 5,967                              | 59           | 44,944                         | -                       | -                                        | -                                     | -              | 45,003                        
|Compensation expense accrued
    for                             |                                    |              |                                |                         |                                          |                                       |                |                               
|issuance
    of common stock                                     |                                    |              |                                |                         |                                          |                                       |                |                               
|options granted
    for services                                 | -                                  | -            | 42,040                         | -                       | -                                        | -                                     | -              | 42,040                        
|Comprehensive loss:                                              |                                    |              |                                |                         |                                          |                                       |                |                               
|Net
    loss                                                     | -                                  | -            | -                              | (3,140,122)             | -                                        | -                                     | -              | (3,140,122)                   
|Translation
    adjustment                                       | -                                  | -            | -                              | -                       | -                                        | -                                     | -              | -                             
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Total comprehensive loss                                         | -                                  | -            | -                              | (3,140,122)             | -                                        | -                                     | -              | (3,140,122)                   
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Retirement of treasury shares                                    | (7,983)                            | (80)         | (63,784)                       | -                       | -                                        | -                                     | 63,864         | -                             
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Repayment of officers' notes                                     | -                                  | -            | -                              | -                       | -                                        | 1,283                                 | -              | 1,283                         
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Balances at March 31, 2001                                       | 17,423,358                         | 174,233      | 50,626,120                     | (35,164,723)            | (384,300)                                | (37,217)                              | -              | 15,214,113                    
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Issuance of common stock upon                                    |                                    |              |                                |                         |                                          |                                       |                |                               
|exercise of
    employee, director                               |                                    |              |                                |                         |                                          |                                       |                |                               
|and
    consultant options                                       | 301,541                            | 3,015        | 998,042                        | -                       | -                                        | -                                     | (337,696)      | 663,361                       
|Proceeds from extension of
    warrants                          | -                                  | -            | 105,007                        | -                       | -                                        | -                                     | -              | 105,007                       
|Issuance of common stock under                                   |                                    |              |                                |                         |                                          |                                       |                |                               
|employee
    stock purchase plan                                 | 10,799                             | 108          | 42,770                         | -                       | -                                        | -                                     | -              | 42,878                        
|Compensation expense accrued
    for                             |                                    |              |                                |                         |                                          |                                       |                |                               
|issuance
    of common stock                                     |                                    |              |                                |                         |                                          |                                       |                |                               
|options
    granted for services                                 | -                                  | -            | 9,558                          | -                       | -                                        | -                                     | -              | 9,558                         
|Comprehensive loss:                                              |                                    |              |                                |                         |                                          |                                       |                |                               
|Net
    loss                                                     | -                                  | -            | -                              | (8,592,655)             | -                                        | -                                     | -              | (8,592,655)                   
|Translation
    adjustment                                       | -                                  | -            | -                              | -                       | -                                        | -                                     | -              | -                             
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Total comprehensive loss                                         | -                                  | -            | -                              | (8,592,655)             | -                                        | -                                     | -              | (8,592,655)                   
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Retirement of treasury shares                                    | (55,850)                           | (558)        | (337,138)                      | -                       | -                                        | -                                     | 337,696        | -                             
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Repayment of officers' notes                                     | -                                  | -            | -                              | -                       | -                                        | 6,503                                 | -              | 6,503                         
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Balances at March 31, 2002                                       | 17,679,848                         | 176,798      | 51,444,359                     | (43,757,378)            | (384,300)                                | (30,714)                              | -              | 7,448,765                     
|                                                                 |                                    |              |                                |                         |                                          |                                       |               
|Issuance of common stock in
    secondary                        |                                    |              |                                |                         |                                          |                                       |                |                               
|offering, net
    of offering costs                              | 1,160,095                          | 11,601       | 4,423,611                      | -                       | -                                        | -                                     | -              | 4,435,212                     
|Issuance of common stock under                                   |                                    |              |                                |                         |                                          |                                       |                |                               
|employee
    stock purchase plan                                 | 2,572                              | 26           | 9,216                          | -                       | -                                        | -                                     | -              | 9,242                         
|Compensation expense accrued
    for issuance                    |                                    |              |                                |                         |                                          |                                       |                |                               
|of
    common stock options granted for                          |                                    |              |                                |                         |                                          |                                       |                |                               
|services                                                         | 2,000                              | 20           | 8,300                          | -                       | -                                        | -                                     | -              | 8,320                         
|Comprehensive loss:                                              |                                    |              |                                |                         |                                          |                                       |                |                               
|Net
    loss                                                     | -                                  | -            | -                              | (3,598,650)             | -                                        | -                                     | -              | (3,598,650)                   
|Translation
    adjustment                                       | -                                  | -            | -                              | -                       | -                                        | -                                     | -              | -                             
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Total comprehensive loss                                         | -                                  | -            | -                              | (3,598,650)             | -                                        | -                                     | -              | (3,598,650)                   
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Repayment of officers' notes                                     | -                                  | -            | -                              | -                       | -                                        | 7,114                                 | -              | 7,114                         
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|Balances of March 31, 2003                                       | 18,844,515                         | $188,445     | 55,885,486                     | (47,356,028)            | (384,300)                                | (23,600)                              | -              | 8,310,003                     
|                                                                 |                                    |              |                                |                         |                                          |                                       |                |                               
|                                                                
|                                                                
|See accompanying notes to
    consolidated financial statements.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows





|                                                                    | Year Ended     | Year Ended     | Year Ended    
|------------------------------------------------------------------- | -------------- | -------------- | --------------
|                                                                    | March 31, 2003 | March 31, 2002 | March 31, 2001
|                                                                    |                |                |               
|Cash flows from operating activities of
    continuing operations : |                |                |               
|Loss from
    continuing operations                                 | $  (3,413,679) | (6,271,555)    | (2,042,538)   
|Adjustments
    to reconcile loss from continuing operations        |                |                |               
|to
    net cash provided (used) by operating activities             |                |                |               
|of
    continuing operations:                                       |                |                |               
|Loss
    reserves for inventory                                     |                |                |               
|and
    inventory obligations of customers                          | 845,002        | 184,846        | 288,323       
|Depreciation
    and amortization                                   | 1,355,859      | 1,605,916      | 1,439,339     
|Gain
    on sale of real estate by consolidated                     |                |                |               
|subsidiary net
    of minority interest                             | -              | (50,000)       | (771,421)     
|Deferred
    gain on sale of real estate                            | (322,139)      | (379,997)      | 752,136       
|Write-down
    of assets                                            | 140,471        | -              | 291,818       
|Write-down
    of goodwill                                          | -              | 4,348,633      | -             
|Minority
    interest share of earnings of consolidated             |                |                |               
|subsidiary                                                          | -              | -              | 65,426        
|Non-cash
    compensation expense for common stock,                 |                |                |               
|stock
    options and warrants issued for services                  | 8,320          | 9,558          | 87,043        
|Loss
    on disposal of property and equipment                      | -              | 6,493          | 2,917         
|Other                                                               | 21,667         | 2,443          | (5,426)       
|Change
    in operating assets and liabilities:                     |                |                |               
|Accounts
    receivable and costs and estimated                     |                |                |               
|earnings
    in excess of billings on                               |                |                |               
|uncompleted
    contracts                                           | 1,656,013      | 1,182,259      | (1,189,274)   
|Inventory
    obligations of certain customers                      | (642,788)      | (514,689)      | -             
|Inventories                                                         | 2,024,069      | 2,309,346      | (3,873,863)   
|Prepaid
    expenses and other current assets                       | 238,894        | (129,632)      | (54,926)      
|Accounts
    payable and other current liabilities                  | (1,263,423)    | (541,604)      | 1,434,932     
|Billings
    in excess of costs and estimated                       |                |                |               
|earnings
    on uncompleted contracts                               | (159,361)      | 184,919        | 118,320       
|                                                                    |                |                |               
|Net
    cash provided (used) by                                     |                |                |               
|operating
    activities                                            | 488,905        | 1,946,936      | (3,457,194)   
|                                                                    |                |                |               
|                                                                    |                |                |               
|Cash flows from investing activities of
    continuing operations:  |                |                |               
|Acquisition
    of property and equipment                           | (304,114)      | (513,973)      | (2,151,041)   
|Expansion
    of facility                                           | (1,049,692)    | -              | -             
|Increase
    in patent and trademark costs                          | (64,341)       | (74,232)       | (45,551)      
|Proceeds
    from sale of property and equipment                    | -              | -              | 7,000         
|Proceeds
    from sale of real estate by subsidiary, net            | -              | -              | 2,961,158     
|Distribution
    to minority interest on liquidation of             |                |                |               
|consolidated
    subsidiary                                         | -              | -              | (1,208,793)   
|Investment
    in other long-term assets                            | -              | -              | (75,000)      
|Proceeds
    from sale of Germany joint venture                     | -              | -              | 400,000       
|                                                                    |                |                |               
|Net
    cash used by investing activities                           | (1,418,147)    | (588,205)      | (112,227)     
|                                                                    |                |                |               
|                                                                    |                |                |               
|                                                                    |                |                |               
|See accompanying notes to consolidated
    financial statements.    |                |               
|                                                                    |                | (Continued)   



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued



|                                                            | Year Ended         | Year Ended     | Year Ended    
|----------------------------------------------------------- | ------------------ | -------------- | --------------
|                                                            | March 31, 2003     | March 31, 2002 | March 31, 2001
|                                                            |                    |                |               
|Cash flows from financing activities                        |                    |                |               
|of continuing
    operations:                               |                    |                |               
|Borrowings
    (repayment) on revolving line-of-credit, net | (2,254,000)        | (1,783,000)    | 4,037,000     
|Proceeds
    from borrowings                                | 1,225,000          | -              | 700,000       
|Repayment
    of debt                                       | (1,705,804)        | (849,064)      | (750,842)     
|Repayment
    of mortgage on sale of real estate by         |                    |                |               
|subsidiary                                                  | -                  | -              | (581,400)     
|Issuance
    of common stock in secondary offering,         |                    |                |               
|net
    of offering costs                                   | 4,435,212          | -              | -             
|Issuance
    of common stock upon exercise of employee      |                    |                |               
|options,
    net of note repayments                         | 7,114              | 669,864        | 996,004       
|Issuance
    of common stock under employee                 |                    |                |               
|stock
    purchase plan                                     | 9,242              | 42,878         | 29,270        
|Issuance
    of common stock upon exercise of warrants      | -                  | -              | 96,000        
|Proceeds
    from extension of warrants                     | -                  | 105,007        | -             
|Distributions
    paid to holders of minority interest      | -                  | -              | (56,121)      
|                                                            |                    |                |               
|Net
    cash provided (used)                                |                    |                |               
|by
    financing activities                                 | 1,716,764          | (1,814,315)    | 4,469,911     
|                                                            |                    |                |               
|                                                            |                    |                |               
|Cash provided (used) by continuing operations               | 787,522            | (455,584)      | 900,490       
|                                                            |                    |                |               
|Net cash provided (used) by discontinued
    operations     | 277,245            | (531,913)      | (586,599)     
|                                                            |                    |                |               
|                                                            |                    |                |               
|Increase (decrease) in cash and cash
    equivalents        | 1,064,767          | (987,497)      | 313,891       
|                                                            |                    |                |               
|Cash and cash equivalents at beginning of year              | 1,411,509          | 2,399,006      | 2,085,115     
|                                                            |                    |                |               
|                                                            |                    |                |               
|Cash and cash equivalents at end of year                    | $  2,476,276       | 1,411,509      | 2,399,006     
|                                                            |                    |                |               
|                                                            |                    |                |               
|Interest paid in cash during the
    year                   | $   
       93,302 | 389,099        | 429,764       
|                                                            |                    |                |               



Non-Cash Investing and Financing Transactions:

In accordance with the provisions of the Companys stock option
plans, the Company accepts as payment of the exercise price or as repayment of promissory
notes from officers issued under the option plans, mature shares of the Companys
common stock held by the option holder for a period of six months prior to the date of the
option exercise or promissory note repayment. For the years ended March 31, 2002
and 2001, the Company issued 110,059 and 20,045 shares of common stock for an aggregate
exercise price of $337,696 and $63,864 respectively, for which the Company received 55,850
and 7,983 shares of common stock as payment for the exercise price.

Prior to the enactment of the Sabanes-Oxley Act of 2002, the Company
accepted promissory notes from officers of the Company in satisfaction of the exercise
price of options exercised. These notes receivable were recorded as a reduction of
stockholders equity in the consolidated financial statements. For the year ended
March 31, 2001, the Company issued 11,000 shares of common stock for an aggregate exercise
price of $38,500 for which the Company received a promissory note for the same amount.

See accompanying notes to consolidated financial statements.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to
Consolidated Financial Statements





(1) Summary of Significant Accounting Policies

(a)
        Description of Business

UQM Technologies, Inc. and subsidiaries (the "Company")
      is engaged in the research, development and commercialization of permanent magnet electric
      motors and the electronic controls for such motors and the manufacture and sale of
      electronic printed circuit board assemblies, wire harness assemblies and other electronic
      products. Prior to the fiscal year ended March 31, 2002 when operations were discontinued,
      the Company was engaged in the grinding and manufacture of high precision gears (see note
      14 below). The Companys revenue is derived primarily from product sales to customers
      in the automotive, agriculture, telecommunications, industrial, medical and aerospace
      markets, and from contract research and development services. The Company is impacted by
      other factors such as the continued receipt of contracts from industrial and governmental
      parties, its ability to protect and maintain the proprietary nature of its technology, its
      continued product and technological advances and the ability of the Company and its
      partners to commercialize its products and technology.

(b)
        Principles of Consolidation

The consolidated financial statements include the accounts of UQM
      Technologies, Inc. and those of all majority-owned or controlled subsidiaries. All
      significant intercompany accounts and transactions have been eliminated in consolidation.

Investments in affiliated entities in which the Company has less than a
      50 percent ownership interest and the ability to exercise significant influence are
      accounted for by the equity method. Under the equity method, the investment is originally
      recorded at cost and subsequently adjusted to recognize the Companys share of the
      net income or losses of the affiliates. Recognition of any such losses is generally
      limited to the extent of the Companys investment in, advances to, commitments and
      guarantees for the investee.

Other investments, in which the Company has a minimal ownership
      interest and does not exercise significant influence, are carried at cost.

(c)
        Cash and Cash Equivalents

The Company considers cash on hand and investments with original
      maturities of three months or less to be cash equivalents.

(d)             Accounts
Receivables

The Company extends unsecured credit to most of its customers
      following a review of the customers credit history. The Company establishes an allowance
      for doubtful accounts based upon estimates of credit risk, historical trends and other
      information.

(e)
        Inventory Obligations of Certain Customers

The Company separately classifies inventories not currently being
      used or expected to be used in future production operations for which current or former
      customers are contractually obligated. The collectibility of these accounts is
      periodically assessed by management, who establishes appropriate reserves for its
      estimates of potentially uncollectible amounts.





---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



(f)
        Inventories

Inventories are stated at the lower of cost or market. Cost is
      determined by the first-in, first-out method. Inventory reserves are based on the
      Companys assessment of recoverability of slow moving inventory items

(g)
        Property and Equipment

Property and equipment is stated at cost. Depreciation is computed
      using the straight-line method over the estimated useful lives of the assets which range
      from three to seven years, except for buildings, which are depreciated over 31 years.
      Maintenance and repairs are charged to expense as incurred.

(h)
       Patent and Trademark Costs

Patent and trademark costs consist primarily of legal expenses, and
      represent those costs incurred by the Company for the filing of patent and trademark
      applications. Amortization of patent and trademark costs is computed using the
      straight-line method over the estimated useful life of the asset, typically 17 years for
      patents, and 40 years for trademarks.

(i)
        Goodwill

The excess of the consideration exchanged over the fair value of
      the net assets obtained in acquisitions is recorded as goodwill. Prior to fiscal 2003,
      amortization of goodwill was calculated using the straight-line method over a period of 20
      years. Adjusted net loss for the years ended March 31, 2003, 2002 and 2001, assuming
      goodwill amortization had been excluded from net loss, would have been $3,598,650,
      $8,322,307 and $2,869,774, respectively.

(j)
        Impairment of Long-Lived Assets

The Company periodically evaluates whether circumstances or events
      have affected the recoverability of long-lived assets including goodwill and other
      intangible assets. The assessment of possible impairment is based on the Companys
      ability to recover the carrying value of the asset or groups of assets from expected
      future cash flows (undiscounted and without interest charges) estimated by management. If
      expected future cash flows are less than the carrying value, an impairment loss is
      recognized to adjust the asset to fair value as determined by expected future cash flows.

(k)
        Contract Services Revenue and Cost
Recognition

The Company manufactures proprietary products and other products
      based on design specifications provided by its customers. Revenue from sales of products
      are generally recognized at the time title to the goods and the benefits and risks of
      ownership passes to the customer which is typically when products are shipped based on the
      terms of the customer purchase agreement.

Revenue relating to long-term fixed price contracts is recognized using
      the percentage of completion method. Under the percentage of completion method, contract
      revenues and related costs are recognized based on the percentage that costs incurred to
      date bear to total estimated costs.

Changes in job performance, estimated profitability and final contract
      settlements may result in revisions to cost and revenue, and are recognized in the period
      in which the revisions are determined.





---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Contract costs include all direct materials, subcontract and labor
      costs and other indirect costs. General and administrative costs are charged to expense as
      incurred. At the time a loss on a contract becomes known, the entire amount of the
      estimated loss is accrued.

The aggregate of costs incurred and estimated earnings recognized on
      uncompleted contracts in excess of related billings is shown as a current asset, and
      billings on uncompleted contracts in excess of costs incurred and estimated earnings is
      shown as a current liability.

(l)
        Income Taxes

The Company accounts for income taxes in accordance with Statement
      of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the
      asset and liability method of Statement 109, deferred tax assets and liabilities are
      recognized for the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities and their
      respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets
      and liabilities are measured using enacted tax rates expected to apply to taxable income
      in the years in which those temporary differences are expected to be recovered or settled.
      The effect on deferred tax assets and liabilities of a change in tax rates is recognized
      in income in the period that includes the enactment date.

(m)
        Research and Development

Costs of researching and developing new technology or significantly
      altering existing technology are charged to operations as incurred.

(n)
        Equity Compensation

The Company periodically issues common stock or stock options to
      employees and non-employees for services rendered. For common stock issuances, the cost of
      these services is recorded based upon the fair market value of the Companys common
      stock on the date of issuance. For issuances of stock options to employees and directors
      the Company measures compensation costs using the intrinsic value method. Stock options
      granted to non-employees are accounted for under the fair value method.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Had the Company reported compensation costs as determined by the
    fair value method of accounting for option grants to employees and directors, net loss and
    net loss per common share would have been the pro forma amounts indicated in the following
    table:

|                                                    | Year Ended     | Year Ended     | Year Ended    
|--------------------------------------------------- | -------------- | -------------- | --------------
|                                                    | March 31, 2003 | March 31, 2002 | March 31, 2001
|                                                    |                |                |               
|Net loss - as reported                              | $  (3,598,650) | (8,592,655)    | (3,140,122)   
|Deduct: Additional
    stock-based employee         |                |                |               
|compensation
    expense determined under fair      |                |                |               
|value
    method for all awards, net of related tax |                |                |               
|effects:                                            |                |                |               
|Current
    period option grants                    | (63,274)       | (82,981)       | (219,753)     
|Prior
    period option grants                      | (1,062,219)    | (1,283,110)    | (778,689)     
|                                                    |                |                |               
|                                                    |                |                |               
|Pro
    forma net loss                              | $  (4,724,143) | (9,958,746)    | (4,138,564)   
|                                                    |                |                |               
|                                                    |                |                |               
|Earnings per share:                                 |                |                |               
|                                                    |                |                |               
|Basic
    and diluted - as reported                 | $       (.19)  | (.49)          | (.18)         
|                                                    |                |                |               
|Basic
    and diluted - pro forma                   | $       (.25)  | (.57)          | (.24)         
|                                                    |                |                |               

The fair value of stock options granted was calculated
    using the Black Scholes option pricing model based on the following weighted average
    assumptions:

|                                              | Year Ended     | Year Ended      | Year Ended    
|--------------------------------------------- | -------------- | --------------- | --------------
|                                              | March 31, 2003 | March 31, 2002  | March 31, 2001
|                                              |                |                 |               
|Expected volatility                           | 49.6%          | 48.4%           | 48.4%         
|Expected dividend yield                       | 0.0%           | 0.0%            | 0.0%          
|Risk free interest rate                       | 3.3%           | 4.7%            | 5.3%          
|Expected life of option
    granted           | 6
    years    | 6
    years     | 6
    years   
|Fair value of options
    granted as computed |                |                 |               
|under
    the Black Scholes option pricing    |                |                 |               
|models                                        | $ 1.39 per     | $  2.16
    per | $  4.75 per   
|                                              | share          | share           | share         

Future pro forma
    compensation cost by fiscal year, assuming no additional grants by the Company to
    employees and directors, is as follows:

Fiscal Year Ended March 31,
    Pro Forma Compensation Expense2004
    $  797,4602005
    $  393,0622006
    $  146,270


(o)
       Comprehensive Loss

Comprehensive loss consists of net loss and other comprehensive
      loss items which under generally accepted accounting principles are excluded from net loss
      but included as a component of stockholders equity. At March 31, 2003 and 2002, the
      Companys comprehensive loss was equal to its





---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





net loss and accumulated other comprehensive loss consisted entirely of
      unrealized foreign currency losses relating to the Companys investment in Taiwan UQM
      Electric Co., Ltd.

(p)         Loss Per Common
  Share

Statement of Financial Accounting Standards No. 128, Earnings
      per Share ("SFAS 128"), requires presentation of both basic earnings per
      share and diluted earnings per share. Basic earnings per share is computed by dividing
      income or loss available to common shareholders by the weighted average number of common
      shares outstanding during the periods presented. Diluted earnings per share is computed by
      dividing income or loss available to common shareholders by all outstanding and dilutive

potential shares during the periods presented, unless the effect is
      antidilutive. For the fiscal years ended March 31, 2003, 2002 and 2001, outstanding option
      to purchase 2,807,473, 2,820,332 and 2,861,880 shares of its common stock, respectively,
      and warrants to purchase 420,269, 188,250 and 299,375 shares of its common stock,
      respectively, were outstanding. Dilutive options and warrants determined under the
      treasury stock method to acquire 8,683 shares, 332,825 shares and 661,045 shares of common
      stock for the fiscal years ended March 31, 2003, 2002 and 2001, respectively, were not
      included in the computation of diluted loss per share because to do so would be
      antidilutive.

(q)
        Use of Estimates

The preparation of financial statements in conformity with
      generally accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at 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.

(r)
        Reclassifications

Certain prior year amounts have been reclassified to conform to the
      current period presentation.

(s)
        New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB)
      issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business
      Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets."
      SFAS No. 141 requires that the purchase method of accounting be used for all business
      combinations initiated or completed after June 30, 2001. SFAS No. 141 also specifies
      criteria that intangible assets acquired in a purchase method business combination must
      meet to be recognized and reported apart from goodwill. SFAS No. 142 required that,
      beginning April 1, 2002 goodwill would no longer be amortized for any intangible assets
      determined to have an indefinite useful life and acquired in a business combination
      accounted for under the purchase method and completed prior to June 30, 2001. In
      addition, the Company was required to assign goodwill to specific reporting units and then
      test it for impairment at least annually under a two step approach designed to compare the
      carrying value of each reporting unit to the fair value of the reporting unit. The Company
      was required to reassess its intangible assets, including goodwill recorded in connection
      with earlier acquisitions accounted for under the purchase method, including their useful
      lives. The Company adopted SFAS No. 141 and SFAS No. 142 on March 31, 2002.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(2)      Costs and Estimated Earnings in
Excess of Billings on Uncompleted Contracts and Billings in Excess of Costs and Estimated
Earnings on Uncompleted Contracts

At March 31, 2003, the estimated period to complete contracts in
    process ranged from 1 to 9 months, and the Company expects to collect substantially all
    related accounts receivable arising therefrom within ten months.

The following summarizes contracts in process at March 31, 2003, and
    2002:

|                                                            | March 31, 2003       | March 31, 2002
|----------------------------------------------------------- | -------------------- | --------------
|                                                            |                      |               
|Costs incurred on
    uncompleted contracts                 | $   1,903,214        | 2,486,598     
|Estimated earnings                                          | 619,403              | 1,025,313     
|                                                            |                      |               
|                                                            | 2,522,617            | 3,511,911     
|Less billings to date                                       | (2,558,511)          | (3,452,437)   
|                                                            |                      |               
|                                                            |                      |               
|                                                            | $
          (35,894) | 59,474        
|                                                            |                      |               
|Included in the accompanying balance sheets as
    follows: |                      |               
|Costs
    and estimated earnings in excess of billings on   |                      |               
|uncompleted
    contracts                                   | $       187,484      | 442,213       
|Billings
    in excess of costs and estimated earnings on   |                      |               
|uncompleted
    contracts                                   | (223,378)            | (382,739)     
|                                                            |                      |               
|                                                            |                      |               
|                                                            | $       (35,894)     | 59,474        
|                                                            |                      |               



1. Inventory Obligations of Certain Customers

The Company requires substantially all of the customers of its
    electronic products segment to contractually commit to pay for any non-returnable or
    non-cancelable raw material inventory purchased by the Company on behalf of the customer.
    The Company separately classifies raw material inventory covered under these purchase
    commitments that is not currently being used or expected to be used in future production
    operations and is seeking recovery from these customers.

The value of raw materials inventory held pursuant to purchase obligations is as follows:

|                                              | March 31, 2003  | March 31, 2002
|--------------------------------------------- | --------------- | --------------
|                                              |                 |               
|                                              |                 |               
|Inventory obligations of
    customers        | $    1,157,477  | 514,689       
|Less: Allowance for
    uncollectible amounts | (367,710)       | (111,727)     
|                                              |                 |               
|                                              |                 |               
|                                              | $       789,767 | 402,962       
|                                              |                 |               



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(4)     Inventories

Inventories at March
31, 2003, and 2002 consist of:

|                   | March 31, 2003 | March 31, 2002
|------------------ | -------------- | --------------
|                   |                |               
|Raw materials, net | $  1,118,944   | 3,397,268     
|Work in process    | 136,683        | 572,664       
|Finished products  | 364,635        | 263,418       
|                   |                |               
|                   |                |               
|                   | $   1,620,262  | 4,233,350     
|                   |                |               

(5)     Limited Liability Company

In September 1992, the Company and a private investor formed a
    Colorado limited liability company to acquire, own and maintain a 40,000 square-foot
    facility in Golden, Colorado, and the surrounding land. This facility served as the
    Companys corporate headquarters through September 2002. Ownership in this limited
    liability company was divided equally between the Company and the private investor.
    However, the Company was deemed to have a controlling interest in the limited liability
    company by virtue of the operating agreement which authorized the Company to make all
    decisions with respect to the business of the limited liability company, subject only to
    certain protective rights of the private investor, and by virtue of the lease agreement
    with the limited liability Company covering the entire facility.

The limited liability Company was accounted for as a consolidated
    subsidiary. Minority interest in consolidated subsidiary represents the private
    investors allocable portion of the equity of the consolidated subsidiary.

In January 2001, the limited liability company sold the Golden,
    Colorado real estate held by it for $3.0 million in cash. Subsequent to the sale the
    limited liability company was liquidated. Cash proceeds to the Company from the
    transaction and the subsequent liquidation were $1.2 million. Recognition of the
    Companys gain on the transaction of $702,136 was deferred and recognized ratably
    over the remaining term of the Companys lease of the facility. The Companys
    lease on the facility expired in September 2002.



(6)     Investment in Taiwan Joint Venture

The Company has a 38-1/4 percent interest in a joint venture,
    Taiwan UQM Electric Co., Ltd. ("Taiwan UQM"), with Kwang Yang Motor Co., Ltd.,
    and Turn-Luckily Technology Co., Ltd.

Since its inception, Taiwan UQM has incurred substantial operating
    losses and the Company has reported its proportionate share of such losses and foreign
    exchange rate fluctuations as a reduction in the recorded value of its investment in
    Taiwan UQM under the equity method of accounting. On September 30, 1999 the Company wrote
    down the carrying value of this investment from $1,476,233 to zero. Consequently, the
    Company discontinued recording its share of the net losses of the joint venture subsequent
    to the date of the write-down. Prior to the write-down the Company reported its
    proportionate share of the losses of Taiwan UQM under the equity method of accounting.

The cumulative foreign currency translation adjustments with respect to
    the Taiwan joint venture is included in accumulated other comprehensive income until the
    investment is sold or liquidated.



UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



(7)     Impairment of Long-Lived Assets

During the fiscal year ended March 31, 2003, the Company recorded
    total impairment charges of $140,471 for obsolete equipment.

For the fiscal year ended March 31, 2002, the Company determined that
    goodwill associated with the purchase of its electronic products segment was impaired and
    the Company recorded a charge of $4,348,633.

During the fiscal year ended March 31, 2001, the Company recorded an
    impairment charge associated with the retirement of certain manufacturing equipment in the
    amount of $216,818. Also during the year, the Company wrote down the carrying value of its
    investment in Aeromax and associated trade amounts receivable from Aeromax totaling
    $103,583.



(8)     Other Current Liabilities

Other current liabilities at
March 31, 2003 and 2002, consists of:

|                                                    | March 31, 2003 | March 31, 2002
|--------------------------------------------------- | -------------- | --------------
|                                                    |                |               
|                                                    |                |               
|Accrued legal and
    accounting fees               | $      81,300  | 134,200       
|Accrued payroll and
    employee benefits           | 176,101        | 210,255       
|Accrued personal property
    and real estate taxes | 37,323         | 106,109       
|Accrued warranty costs                              | 45,927         | 35,169        
|Accrued raw material purchases                      | 149,376        | -             
|Accrued losses on engineering contracts             | 92,356         | 2,331         
|Customer deposits                                   | 79,188         | 14,500        
|Accrued rents                                       | 32,919         | -             
|Accrued royalties                                   | 18,404         | 19,788        
|Other                                               | 81,681         | 46,202        
|                                                    |                |               
|                                                    | $    794,575   | 568,554       
|                                                    |                |               





---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(9)    Long-term debt

Long-term debt at March 31,
2003 and 2002 consists of:

|                                                                           | March 31, 2003 | March 31,2002
|-------------------------------------------------------------------------- | -------------- | -------------
|                                                                           |                |              
|Note payable to bank,
    payable in monthly installments with interest    |                |              
|at
    8.65%; matures July 2003; secured by land and building              | $            - | 550,914      
|Notes payable to bank,
    payable in monthly installments with interest   |                |              
|at
    8.5%; matures April, September, and November 2005; secured          |                |              
|by
    equipment                                                           | -              | 412,592      
|Note payable to bank,
    payable in monthly installments with interest    |                |              
|at
    9.50%; matures June 2006; secured by equipment                      | -              | 39,080       
|Note payable to bank,
    payable in monthly installments with interest    |                |              
|at
    7.70%; matures March 2004; secured by equipment                     | -              | 667,317      
|Note payable to bank,
    payable in monthly installments with interest    |                |              
|at
    8.75%, matures August 2004                                          | -              | 451,835      
|Note payable to bank,
    payable in monthly installments with interest    |                |              
|at
    7.25%; matures November 2005; secured by land and building          | 949,774        | -            
|Note payable to a
    development partnership in monthly installments with |                |              
|interest
    at national prime interest rate plus 2 percent                |                |              
|(6.25%
    or March 31, 2003) adjusted annually on anniversary of          |                |              
|loan;
    matures December 2007; secured by land and building              | 239,488        | -            
|                                                                           |                |              
|Total
    long-term debt                                                   | 1,189,262      | 2,121,738    
|Less:
    current portion                                                  | 116,921        | 1,013,715    
|                                                                           |                |              
|Long-term
    debt, less current portion                                   | $   1,072,341  | 1,108,023    
|                                                                           |                |              

The loan agreement related to the Companys
    facility in Frederick, Colorado requires the Company to maintain certain financial ratios
    as defined in the agreement. At March 31, 2003, the Company was in compliance with these
    covenants.

The annual aggregate contractual maturities of long-term debt for each
    of the next five fiscal years are as follows:

2004
    $      116,9212005
    125,3022006
    850,7832007
    54,0142008
    42,242$   1,189,262


---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(10)    Income Taxes

Income tax benefit attributable to loss from continuing operations
    differed from the amounts computed by applying the U.S. federal income tax rate of 34% as
    a result of the following:

|                                                      | Year Ended     | Year Ended     | Year Ended    
|----------------------------------------------------- | -------------- | -------------- | --------------
|                                                      | March 31, 2003 | March 31, 2002 | March 31, 2001
|                                                      |                |                |               
|Computed
    "expected" tax benefit                   | $  (1,160,651) | (2,921,503)    | (1,067,641)   
|Increase (decrease) in
    taxes resulting from:      |                |                |               
|Amortization
    of goodwill not deductible           |                |                |               
|for
    tax                                           | -              | 1,570,454      | 91,820        
|Expiration
    of net operating loss (NOL)            |                |                |               
|carry-forwards                                        | -              | -              | 126,992       
|Adjustment
    to deferred tax assets and liabilities |                |                |               
|for
    prior period corrections                      | (2,645,218)    | -              | -             
|Increase
    in valuation allowance for net           |                |                |               
|deferred
    tax assets                               | 3,997,211      | 1,478,996      | 884,072       
|Other,
    net                                        | (191,342)      | (127,947)      | (35,243)      
|                                                      |                |                |               
|                                                      |                |                |               
|Income tax
    benefit                                | $            - | -              | -             
|                                                      |                |                |               
|                                                      |                |                |               

The tax effects of temporary differences that give
rise to significant portions of the net deferred tax asset are presented below:

|                                                        | March 31, 2003  | March 31, 2002
|------------------------------------------------------- | --------------- | --------------
|                                                        |                 |               
|Deferred tax assets:                                    |                 |               
|Research
    and development credit carryforwards       | $        73,628 | 74,215        
|Net
    operating loss carryforwards - Federal          | 14,447,583      | 10,172,169    
|Accruals
    and reserves                               | 611,444         | 260,478       
|Property
    and equipment                              | 802,113         | 655,686       
|Intangible
    Assets                                   | (103,641)       | 671,368       
|Write-down
    of investments                           | 1,170,724       | 1,170,724     
|                                                        |                 |               
|Total
    deferred tax assets                           | 17,001,851      | 13,004,640    
|                                                        |                 |               
|Less
    valuation allowance                            | (17,001,851)    | (13,004,640)  
|                                                        |                 |               
|                                                        |                 |               
|Net
    deferred tax assets, net of valuation allowance | $            -  | -             
|                                                        |                 |               
|                                                        |                 |               

As of March 31, 2003, the Company had net operating loss carryforwards
(NOL) of approximately $45 million for U.S. income tax purposes that expire in varying
amounts through 2023. Approximately $3 million of the net operating loss carryforwards are
attributable to stock options, the benefit of which will be credited to additional paid-in
capital if realized. However, due to the provisions of Section 382 of the Internal Revenue
Code, the utilization of a portion of these NOLs is limited. Future ownership changes
under Section 382 could occur that would result in additional Section 382 limitations,
which would restrict the use of NOLs. In addition, any Section 382 limitation could be
further reduced to zero if the Company fails to satisfy the continuity of business
enterprise requirement for the two-year period following an ownership change.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(11)   Stockholders Equity

In April 2002, the Company completed a secondary offering at
    1,160,095 shares of common stock together with two-year warrants to acquire additional
    232,019 shares of common stock at an exercise price of $5.73 per share. Cash proceeds to
    the Company, net of offering costs were $4,435,212.

(12)  Common Stock Options and Warrants

Incentive and Non-Qualified Option Plans

The Company has 1,078,085 shares of common stock available
    for future grant to key employees, consultants and key suppliers under its 2002 Equity
    Incentive Plan. Under the Plan, the exercise price of each option is set at the fair
    market value of the common stock on the date of grant and the maximum term of the option
    is 10 years from the date of grant. Options granted to employees vest ratably over a
    three-year period. The maximum number of options that may be granted to any eligible
    employee during the term of the 2002 Plan is 500,000 options. Forfeitures under the 2002
    Equity Incentive Plan are available for re-issuance at any time prior to expiration of the
    Plan in 2013. Options granted under the Companys plans to employees require the
    option holder to abide by certain Company policies which restrict their ability to sell
    the underlying common stock. Prior to the adoption of the 2002 Equity Incentive Plan, the
    Company issued stock options under its 1992 Incentive and Non-qualified Option Plan, which
    expired by its terms in 2002. Forfeitures under the 1992 Incentive and Non-qualified
    Option Plan may not be re-issued.

The following table summarizes activity under the plans:

|                              | Shares Under Option | Weighted-Average Exercise Price
|----------------------------- | ------------------- | -------------------------------
|                              |                     |                                
|Outstanding at March 31, 2000 | 3,231,394           | $ 6.01                         
|Granted                       | 472,633             | $ 7.18                         
|Exercised                     | (212,408)           | $ 5.16                         
|Forfeited                     | (676,799)           | $ 7.31                         
|                              |                     |                                
|                              |                     |                                
|Outstanding at March 31, 2001 | 2,814,820           | $ 5.96                         
|Granted                       | 472,500             | $ 4.16                         
|Exercised                     | (301,541)           | $ 3.32                         
|Forfeited                     | (219,583)           | $ 6.96                         
|                              |                     |                                
|Outstanding at March 31, 2002 | 2,766,196           | $ 5.87                         
|Granted                       | 422,500             | $ 2.76                         
|Forfeited                     | (410,568)           | $ 5.77                         
|                              |                     |                                
|Outstanding at March 31, 2003 | 2,778,128           | $ 5.41                         
|                              |                     |                                
|Exercisable at March 31, 2003 | 2,014,807           | $ 6.03                         
|                              |                     |                                



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





The following table presents summarized information about stock
    options outstanding at March 31, 2003:

|                             | Options
    Outstanding           | Options
    Exercisable                        
|---------------------------- | --------------------------------- | -----------------------------------------------
|                             |                                   |                                                
|Range of
    Exercise Prices | Number
    Outstanding at 3/31/03 | Weighted Average Remaining
    Contractual Life
|                             |                                   |                                                
|$2.75 - 3.31                 | 717,613                           | 7.3 years                                      
|$3.59 - 5.00                 | 891,622                           | 5.9 years                                      
|$6.25 - 8.75                 | 1,168,893                         | 4.9 years                                      
|                             |                                   |                                                
|$2.75 - 8.75                 | 2,778,128                         | 5.8
    years                                  
|                             |                                   |                                                



Non-Employee Director Stock Option Plan

In February 1994, the Companys Board of Directors ratified a
Stock Option Plan for Non-Employee Directors pursuant to which Directors may elect to
receive stock options in lieu of cash compensation for their services as directors. The
Company has 253,333 shares of common stock available for future grant under the Plan.
Option terms range from 3 to 10 years from the date of grant. Option prices are equal to
the fair market value of common shares at the date of grant. Forfeitures under the Plan
are available for re-issuance at a future date.

The following table presents summarized activity under the plan:

|                              | Shares Under Option | Weighted - Average Exercise Price
|----------------------------- | ------------------- | ---------------------------------
|                              |                     |                                  
|Outstanding at March 31, 2000 | 41,275              | $ 5.68                           
|Granted                       | 5,785               | $ 7.94                           
|                              |                     |                                  
|                              |                     |                                  
|Outstanding at March 31, 2001 | 47,060              | $ 5.96                           
|Granted                       | 7,076               | $ 5.85                           
|                              |                     |                                  
|Outstanding at March 31, 2002 | 54,136              | $ 5.94                           
|Granted                       | 16,484              | $ 2.55                           
|Forfeited                     | (41,275)            | $ 5.68                           
|                              |                     |                                  
|Outstanding at March 31, 2003 | 29,345              | $ 4.41                           
|                              |                     |                                  
|Exercisable at March 31, 2003 | 27,417              | $ 4.16                           
|                              |                     |                                  



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





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

|                             | Options
    Outstanding           | Options
    Exercisable                        
|---------------------------- | --------------------------------- | -----------------------------------------------
|                             |                                   |                                                
|Range of
    Exercise Prices | Number
    Outstanding at 3/31/03 | Weighted Average Remaining
    Contractual Life
|                             |                                   |                                                
|$2.55  2.55                 | 16,484                            | 2.3 years                                      
|$5.85  8.00                 | 12,861                            | 1.4 years                                      
|                             |                                   |                                                
|$2.55  8.00                 | 29,345                            | 1.9 years                                      
|                             |                                   |                                                

Warrants

In April 2002, the Company completed a secondary offering of 1,160,095
shares of common stock together with two-year warrants to acquire an additional 232,019
shares of the Companys common stock. The warrants have an exercise price of $5.73
per share. All of the warrants were outstanding at March 31, 2003.

The Company completed a private placement in fiscal 1998 of 750,000
units which consisted of one common share and one warrant at an exercise price of $8.00
per share. The warrants were scheduled to expire two years from the date of issuance. In
March 2000, warrants to acquire 299,375 shares of common stock were extended for eighteen
months. Of the originally extended warrants, warrants to purchase 188,250 shares of common
stock were extended for an additional period of two years in fiscal 2002 at the fair value
of such extensions resulting in cash proceeds to the Company of $105,007. The warrants
expire in October 2003. All of the extended warrants were outstanding at March 31, 2003.



(13) Significant Customers

The Company has historically derived significant revenue from a few key
customers. The customers from which more than 10% of total revenue has been derived and
the percentage of revenue is summarized as follows:

|                          | Year Ended         | Year Ended     | Year Ended    
|------------------------- | ------------------ | -------------- | --------------
|                          | March 31, 2003     | March 31, 2002 | March 31, 2001
|                          |                    |                |               
|Tyco International        | $    3,874,903     | 5,397,571      | 4,706,810     
|HandEra, Inc.             | 584,111            | 1,066,190      | 6,427,983     
|Invacare Corporation      | 4,136,328          | 4,001,270      | 2,805,300     
|                          |                    |                |               
|                          | $
       8,595,342 | 10,465,031     | 13,940,093    
|                          |                    |                |               
|                          |                    |                |               
|Percentage of
    revenue | 56%                | 49%            | 55%           
|                          |                    |                |               



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





These customers also represented 64%, 48% and 73% of total accounts
    receivable at March 31, 2003, 2002 and 2001, respectively. Tyco International and HandEra,
    Inc. are customers of the Companys electronic product segment and Invacare
    Corporation is a customer of the mechanical products segment. Tyco International has
    notified the Company that they will not place additional orders with after their current
    purchase commitment is fulfilled in August 2003. The Companys electronic products
    segment manufactures products to customers design specification as a contract
    manufacturer. As such, the Company purchases inventory on behalf of customers based on the
    understanding that the customer is financially obligated in the event their production
    order with the Company is cancelled or otherwise not fulfilled. The amount of raw
    materials inventory held for Tyco International and HandEra, Inc. amounted to $0.3 million
    and $0.15 million as of March 31, 2003. Inventories consisting of raw materials
    work-in-progress and finished goods for Invacare Corporation were approximately $0.2
    million as of March 31, 2003.

Contract services revenue derived from contracts with agencies of the
    U.S. Government and from sub-contracts with U.S. Government prime contractors totaled
    $1,162,967, $1,040,251 and $853,341 for the years ended March 31, 2003, 2002 and 2001,
    respectively.

(14) Discontinued Operations

In October 2001, the Company formalized a plan to close its
    contract gear manufacturing business, which was part of its mechanical products segment.

The operating results of this division for the years ended March 31,
    2003, 2002 and 2001 have been reported separately as discontinued operations together with
    estimated losses on the disposal of division assets. Loss from operations of discontinued
    gear division also includes interest expense on debt used to acquire gear manufacturing
    machinery and equipment but does not include allocations of general corporate overheads,
    which have been allocated to other business segments. All prior periods presented have
    been restated to reflect the contract gear manufacturing division as a discontinued
    operation.

Net sales and net loss from the discontinued gear division are shown in the following
    table. Losses for the nine months phase-out period ended June 30, 2002 were applied as a
    reduction of the liability for accrued future losses of discontinued operations.

|          | For
    The Year Ended March 31,
|--------- | --------------------------------
|          |                                 
|          | 2003                            
|          |                                 
|Net sales | $   127,239                     
|Net loss  | $  (184,971)                    



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Assets and liabilities of the discontinued gear division were as follows:

|                                                      | March 31, 2003 | March 31, 2002
|----------------------------------------------------- | -------------- | --------------
|                                                      |                |               
|Accounts receivable,
    inventories and other assets | $         -    | 227,268       
|Property and equipment, net                           | -              | 1,253,432     
|Goodwill, net                                         | -              | -             
|                                                      |                |               
|                                                      |                |               
|Total assets                                          | -              | 1,480,700     
|                                                      |                |               
|                                                      |                |               
|Accounts payable and other liabilities                | -              | 228,525       
|Accrued future loses of discontinued
    operations   | -              | 338,288       
|Term debt                                             | -              | 451,672       
|                                                      |                |               
|                                                      |                |               
|Total liabilities                                     | -              | 1,018,485     
|                                                      |                |               
|                                                      |                |               
|Net assets of discontinued gear
    division          | $         -    | 462,215       
|                                                      |                |               

(15)    Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the
    fair value of each class of financial instruments:

Cash and cash equivalents, certificates of deposit, accounts
    receivable and accounts payable:

The carrying amounts approximate fair value because of the short
    maturity of these instruments.

Long-term debt and revolving line-of-credit:

The carrying amount of the Companys long-term debt
    approximates fair value since the interest rate on this debt represents the current market
    rate for similar financing available to the Company providing comparable security to the
    lender.

(16)    Employee Benefit Plans

401(k) Plan

The Company has established a 401(k) Savings Plan (the Plan)
    under which eligible employees may contribute up to 15% of their compensation. At the
    direction of the participants, contributions are invested in several investment options
    offered by the Plan. The Company currently matches 33% of participants contributions,
    subject to certain limitations. These contributions vest ratably over a three-year period.
    Matching contributions to the Plan by the Company were $78,621, $97,370 and $99,179 for
    the years ended March 31, 2003, 2002 and 2001, respectively.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Stock Purchase Plan

The Company has established a Stock Purchase Plan, which allows
    eligible employees to purchase, through payroll deductions, shares of the Companys
    common stock at 85% of the fair market value at specified dates. The Company has reserved
    123,542 shares of common stock for issuance under the Stock Purchase Plan. During the
    years ended March 31, 2003, 2002 and 2001, the Company issued 2,572, 10,799 and 6,774
    shares of common stock, respectively, under the Stock Purchase Plan.

(17)    Segments

The Company has three reportable segments: technology, mechanical
    products and electronic products. The technology segment encompasses the Companys
    technology-based operations including core research to advance its technology, application
    engineering and product development and job shop production of prototype components. The
    mechanical products segment encompasses the manufacture and sale of permanent magnet
    motors. As discussed in note 14 the Company discontinued its gear operations in fiscal
    year 2002 and accordingly the financial results of this operation are no longer reported
    in continuing operations of the mechanical products segment in all periods presented. The
    electronic products segment encompasses the manufacture and sale of wire harness
    assemblies, electronic printed circuit board assemblies and electronic products. Salaries
    of the executive officers and corporate general and administrative expense is allocated
    equally to each segment.

Intersegment sales or transfers which were eliminated upon
    consolidation were $128,545, $146,903 and $75,635 for the years ended March 31, 2003, 2002
    and 2001, respectively.

In September 2003, the Technology segment began leasing office,
    production and laboratory space in a building owned by the mechanical products segment,
    based on a negotiated rate for the square footage occupied. Intercompany lease payments
    which amounted to $88,274 for the year ended March 31, 2003 were eliminated upon
    consolidation.

The Companys reportable segments are strategic business units
    that offer different products and services. They are managed separately because each
    business requires different business strategies.



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





The following table summarizes significant financial statement
    information for continuing operations of each of the reportable segments for the year
    ended March 31, 2003:

|                                    | Technology     | Mechanical
    Products | Electronic
    Products | Total      
|----------------------------------- | -------------- | ----------------------- | ----------------------- | -----------
|                                    |                |                         |                         |            
|Revenue                             | $  3,416,032   | 4,136,328               | 7,934,048               | 15,486,408 
|Interest income                     | 26,586         | 1,449                   | -                       | 28,035     
|Interest expense                    | -              | (60,761)                | (7,289)                 | (68,050)   
|Depreciation and
    amortization   | (311,440)      | (203,732)               | (840,687)               | (1,355,859)
|Write-down of other assets          | (15,886)       | (10,498)                | (114,087)               | (140,471)  
|Segment earnings (loss)
    from    |                |                         |                         |            
|continuing
    operations           | (408,831)      | 69,527                  | (3,074,375)             | (3,413,679)
|Net loss                            | (408,831)      | (115,444)               | (3,074,375)             | (3,598,650)
|Total segment assets                | 4,167,175      | 3,055,249               | 4,270,138               | 11,492,562 
|Expenditures for segment
    assets | $    (319,224) | (1,093,430)             | (5,493)                 | (1,418,147)



The following table summarizes significant financial statement
information for continuing operations of each of the reportable segments for the year
ended March 31, 2002:

|                                      | Technology     | Mechanical
    Products | Electronic
    Products | Total      
|------------------------------------- | -------------- | ----------------------- | ----------------------- | -----------
|                                      |                |                         |                         |            
|Revenue                               | $  3,747,725   | 4,001,270               | 13,646,245              | 21,395,240 
|Interest income                       | 61,207         | 2,860                   | -                       | 64,067     
|Interest expense                      | -              | (34,459)                | (337,625)               | (372,084)  
|Depreciation and
    amortization     | (321,466)      | (164,324)               | (849,778)               | (1,335,568)
|Goodwill amortization                 | -              | -                       | (270,348)               | (270,348)  
|Write-down of goodwill                | -              | -                       | (4,348,633)             | (4,348,633)
|Segment earnings (loss)
    from      |                |                         |                         |            
|continuing
    operations             | 32,078         | 23,160                  | (6,326,793)             | (6,271,555)
|Net earnings (loss)                   | 32,078         | (2,297,940)             | (6,326,793)             | (8,592,655)
|Assets of continuing
    operations   | 5,019,416      | 2,755,640               | 6,873,779               | 14,648,835 
|Assets of discontinued
    operations | -              | 1,480,700               | -                       | 1,480,700  
|Total segment assets                  | 5,019,416      | 4,236,340               | 6,873,779               | 16,129,535 
|Expenditures for segment
    assets   | $    (258,079) | (14,454)                | (315,672)               | (588,205)  



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Segment information has been reclassified to reflect corporate overhead
allocation consistent with the current year presentation. The following table summarizes
significant financial statement information for continuing operations of each of the
reportable segments for the year ended March 31, 2001:

|                                           |                |                         |                     |            
|------------------------------------------ | -------------- | ----------------------- | ------------------- | -----------
|                                           | Technology     | Mechanical
    Products | Electronic Products | Total      
|                                           |                |                         |                     |            
|                                           |                |                         |                     |            
|Revenue                                    | $  3,378,396   | 2,805,300               | 19,110,954          | 25,294,650 
|Interest income                            | 58,782         | 806                     | -                   | 59,588     
|Interest expense                           | (45,795)       | (16,847)                | (236,048)           | (298,690)  
|Depreciation and
    amortization          | (398,344)      | (101,418)               | (669,229)           | (1,168,991)
|Goodwill amortization                      | -              | -                       | (270,348)           | (270,348)  
|Write-down of investments and other assets | (75,000)       | -                       | (216,818)           | (291,818)  
|Segment earnings (loss)
    from           |                |                         |                     |            
|continuing
    operations                  | (921,583)      | 219,325                 | (1,340,280)         | (2,042,538)
|Net loss                                   | (921,583)      | (878,259)               | (1,340,280)         | (3,140,122)
|Assets of continuing
    operations        | 5,623,473      | 2,563,612               | 15,880,154          | 24,067,239 
|Assets of discontinued
    operations      | -              | 3,414,354               | -                   | 3,414,354  
|Total segment assets                       | 5,623,473      | 5,977,966               | 15,880,154          | 27,481,593 
|Expenditures for segment
    assets        | $    (401,024) | (7,717)                 | (1,862,851)         | (2,271,592)

(18)    Commitments and Contingencies

Employment Agreements

The Company has entered into employment agreements with two of its
    officers, which expire December 31, 2007. The aggregate future compensation under the
    employment agreements is $2,052,000.

Lease Commitments

The Company has entered into operating lease agreements for office
    space and equipment, which expire at various times through 2007. As of March 31,
    2003, the future minimum lease payments under operating leases with initial noncancelable
    terms in excess of one year are as follows:

Year ending March 31:2004
    $    206,7292005
    299,4052006
    299,3712007
    288,564$ 1,094,069




---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





Rental expense under these leases totaled approximately $378,995,
    $552,883 and $565,109 for the years ended March 31, 2003, 2002 and 2001, respectively.

Litigation

The Company filed a lawsuit in Circuit Court of St. Louis County,
    Missouri in June 2002 against Hussman Corporation, a wholly-owned subsidiary of Ingersoll
    Rand Corporation, a former customer of its electronics product segment seeking payment for
    inventory purchased on behalf of the customer. The Company is seeking damages of
    approximately $375,000 plus attorneys fees and other costs. The customer has filed various
    counterclaims, including breach of contract. The Company believes it has substantial and
    meritorious defenses against the counterclaims and intends to vigorously contest them. In
    November 2002, the Company also filed an additional lawsuit against another former
    customer of its electronics product segment in the Circuit Court of St. Louis County,
    Missouri seeking payment for inventory purchased on behalf of the customer. The Company is
    seeking damages of approximately $180,000 plus attorneys fees and other costs. Both
    actions are currently scheduled for trial in the fall of 2003. It is not possible to
    predict or determine the outcome of these legal actions, or to provide an estimate of
    potential losses, if any, at this time, however, should the court award damages on the
    counterclaim it could have a material adverse effect on the Companys financial
    position, results of operations and liquidity.

In addition, the Company is involved in various claims and legal
    actions arising in the ordinary course of business. In the opinion of management, and
    based on current available information, the ultimate disposition of these matters is not
    expected to have a material adverse effect on the Companys financial position,
    results of operations or cash flow, although there can be no assurance that adverse
    developments in these matters could not have a material impact on a future reporting
    period.

(19)    Interim Financial Data (unaudited)

|                                          | For
    The Quarter
    Ended
|----------------------------------------- | -----------------------------
|                                          |                              
|                                          | June
    30                  
|                                          |                              
|Fiscal year 2003                          |                              
|                                          |                              
|Sales                                     | $  4,772,613                 
|Gross profit (loss)                       | $     377,307                
|Loss from continuing
    operations       | $     (412,920)              
|Net loss                                  | $    (597,891)               
|Loss per common share from
    continuing |                              
|operations
    - basic and diluted        | $        (0.02)              
|Net loss per common share -               |                              
|basic
    and diluted                     | $        (0.03)              
|                                          |                              
|Fiscal year 2002                          |                              
|                                          |                              
|Sales                                     | $   6,509,793                
|Gross profit                              | $      918,101               
|Loss from continuing
    operations       | $     (172,679)              
|Net loss                                  | $    (487,805)               
|Loss per common
    share from continuing |                              
|operations
    - basic and diluted        | $        (0.01)              
|Net loss per
    common share -           |                              
|basic
    and diluted                     | $        (0.03)              



---

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued





(20) Valuation and Qualifying Accounts

|                                     |                                  | Additions                         |                           |           
|------------------------------------ | -------------------------------- | --------------------------------- | ------------------------- | ----------
|                                     |                                  |                                   |                           |           
|                                     |                                  |                                   |                           |           
|                                     |                                  |                                   |                           |           
|                                     | Balance at
    Beginning of Year | Charged to
    Costs and Expenses | Charged to Other Accounts | Deductions
|                                     |                                  |                                   |                           |           
|Year ended March 31,
    2003        |                                  |                                   |                           |           
|                                     |                                  |                                   |                           |           
|Deducted from
    asset accounts:    |                                  |                                   |                           |           
|Allowance
    for doubtful accounts: |                                  |                                   |                           |           
|Accounts
    receivable              | $    33,054                      | -                                 | -                         | 4,298(A)  
|Inventory
    obligations of         |                                  |                                   |                           |           
|certain
    customers, net           | $  111,727                       | 255,983                           | -                         | -         
|Inventory
    obsolescence reserve   | $  443,271                       | 686,750                           | -                         | 97,731(B) 
|Accrued
    warranty cost            | $    35,169                      | 105,144                           | -                         | 94,386(C) 
|                                     |                                  |                                   |                           |           
|Year ended March 31,
    2002        |                                  |                                   |                           |           
|                                     |                                  |                                   |                           |           
|Deducted from
    asset accounts:    |                                  |                                   |                           |           
|Allowance for doubtful
    accounts: |                                  |                                   |                           |           
|Accounts
    receivable              | $    41,540                      | 31,438                            | -                         | 39,924(A) 
|Inventory
    obligations of         |                                  |                                   |                           |           
|certain
    customers, net           | $         -                      | 111,727                           | -                         | -         
|Inventory
    obsolescence reserve   | $  370,152                       | 229,905                           | -                         | 156,786(B)
|Accrued
    warranty cost            | $    34,275                      | 109,209                           | -                         | 108,315(C)
|                                     |                                  |                                   |                           |           
|Year ended March 31,
    2001        |                                  |                                   |                           |           
|                                     |                                  |                                   |                           |           
|Deducted from
    asset accounts:    |                                  |                                   |                           |           
|Allowance
    for doubtful accounts  | $      2,674                     | 57,257                            | -                         | 18,391(A) 
|Inventory
    obsolescence reserve   | $    81,829                      | 400,822                           | -                         | 112,499(B)
|Accrued
    warranty cost            | $      6,473                     | 44,657                            | -                         | 16,855(C) 

Note (A) Uncollectible accounts
written off, net of recoveries.

Note (B) Amounts written off or
payments received on liquidation.

Note (C)  Represents
actual warranty payments for units returned under warranty.





---

ITEM
9.       CHANGE IN AND DISAGREEMENTS WITH
INDEPENDENT ACCOUNTANTS ON  ACCOUNTING AND FINANCIAL DISCLOSURE



None.

PART III





Item 10 Directors
and Executive Officers  Additional information required by Item 10 is
incorporated by reference from and contained under the headings "Election of
Directors", "Management" "Section 16(a) Beneficial Ownership
Compliance" and "Code of Business Ethics" in the Companys definitive
Proxy Statement for the Annual Meeting of Shareholders to be held August 19, 2003.

Item 11 Executive Compensation
- The information required by Item 11 is incorporated by reference from and contained
under the headings "Executive Compensation", "Option Grants during Fiscal
Year 2003" and "Aggregate Option Exercises During Fiscal Year 2003 and Option
Values at the End of Fiscal Year 2003" in the Companys definitive Proxy
Statement for the Annual Meeting of Shareholders to be held August 19, 2003.

Item 12
Security Ownership of Certain Beneficial Owners and Management- The information
required by Item 12 is incorporated by reference from and contained under the heading
"Security Ownership of Certain Owners and Management" in the Companys
definitive Proxy Statement for the Annual Meeting of Shareholders to be held August
19, 2003.

Item
13 Certain Relationships and Related Transactions - The information required by Item
13 is incorporated by reference from and contained under the headings "Compensation
Committee Interlocks and Insider Participation" and "Certain Relationships and
Related Transactions" in the Companys definitive Proxy Statement for the Annual
Meeting of Shareholders to be held August 19, 2003.



ITEM 14. CONTROLS AND
PROCEDURES

Evaluation of Disclosure Controls and Procedures

In response to recent legislation and resulting regulatory rulemaking,
the Company established a disclosure control policy which is designed to ensure that
information required to be disclosed in its filings with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and communicated to the Chief Executive Officer and Chief Financial Officer, as
required, to allow for the filing of required reports within the time periods specified by
the Securities and Exchange Commission. Pursuant to this policy, the Company has
established a Disclosure Control Committee to review potentially reportable items or
events and make recommendations to the Chief Executive Officer as to the appropriate
disposition.

Changes in Internal Control

Internal control is a process, effected by the Companys board of
directors, management and other personnel, designed to provide management with reasonable,
but not absolute, assurance regarding the achievement of objectives in the following
categories: 1) reliability of financial reporting; 2) effectiveness and efficiency of
operations; and 3) compliance with applicable laws and regulations. A system of internal
controls will generally have the objective of ensuring that; 1)transactions are
executed in accordance with managements general or specific authorization; 2)
transactions are properly recorded to permit the preparation of financial statements in
accordance with generally accepted accounting principles and other regulatory requirements
applicable to such statements and maintain accountability for assets; 3) access to assets
is permitted only in accordance with managements authorization; and 4) recorded
assets are compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. In addition, the preparation of financial
statements requires the use of estimates and judgments, which are subjective and relate
largely to future conditions and events. Accordingly, internal controls relating to
estimates and judgments are limited to procedures designed to provide reasonable assurance
those individuals at appropriate levels in the organization review and consider
sufficient, reliable information in making estimates and judgments.

The Companys Chief Executive Officer and Chief Financial Officer
supervised an evaluation of the design and operation of the Companys system of
internal controls within the 90 days proceeding the date of filing of this report. No
significant deficiencies were noted which could affect our ability to record, process,
summarize and report financial data. There have been no significant changes in the
Companys internal controls or in other factors
that could significantly affect these controls subsequent to the date of the evaluation.



ITEM
15.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 15 is incorporated by reference from and contained
under the heading "Relationship with Independent Accountants" in the
Companys definitive Proxy Statement for the annual meeting of shareholders to be
held August 19, 2003.



PART IV



ITEM
16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

> (a)     1.   Financial Statements:

UQM Technologies, Inc. (included in Part II):

Independent Auditors' Report.

Consolidated Balance Sheets, March 31, 2003 and March 31, 2002.

Consolidated Statements of Operations for the years ended
      March 31, 2003, 2002 and 2001.

Consolidated Statements of Stockholders' Equity and Comprehensive
      Income (Loss) for the years ended March 31, 2003, 2002 and 2001.

Consolidated Statements of Cash Flows for the years ended
      March 31, 2003, 2002 and 2001.

Notes to Consolidated Financial Statements.



2.    Financial Statement Schedules.

> None



> (b) Reports on Form 8-K:

> 

Report regarding operating results for the quarter ended June 30, 2002
      filed July 24, 2002.



> (c) Exhibits:

3.1 Bylaws. Reference is made to Exhibit 3.1 of the Company's
Registration Statement on Form S-1 (No. 33-42342) filed August 20, 1991 which is
incorporated herein by reference.

3.2 Restated Articles of Incorporation. Reference is made to Exhibit of
the Company's Quarter Report on Form 10-K for the year ended October 31, 1993 (No. 0-9146)
which is incorporated herein by reference.

4.1 Specimen Stock Certificate. Reference is made to Exhibit 3.1 of the
Company Registration Statement on Form 10, dated February 27, 1980 (No. 0-9146) which is
incorporated herein by reference.

4.2 Form of Warrant Agreement. Reference is made to Exhibit
4.1 of the Companys  Registration
Statement, Amendment  No. 6, on Form S-3/A (File No. 333-75520), filed on April
11, 2002 which is incorporated herein by reference.

10.1 UQM Technologies, Inc. Employee Stock Purchase Plan. Reference is
made to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (No. 33-34612),
which is incorporated herein by reference.

10.2 UQM Technologies, Inc. Stock Option Plan for Non-Employee
Directors. Reference is made to Exhibit 10.39 of the Company's Annual Report on Form 10-K
(No. 0-9146) for the year ended October 31, 1993 which is incorporated herein by
reference.

10.3 Assignment Agreement with Alcan International Limited. Reference
is made to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1994 (No. 0-9146) which is incorporated herein by reference.

10.4         Supply
Agreement between the Company and Invacare Corporation dated April 1, 1999. Portions have
been omitted pursuant to a request for confidential treatment. Reference is made to Exhibit
10.19 in the Company's Annual
Report on Form 10-K/A for the Fiscal Year ended March 31, 2001 (No. 1-10869) filed on
February 15, 2002 which is incorporated herein by reference.

10.5         License
Agreement between the Company and Invacare Corporation July 23, 1997. Portions have been
omitted pursuant to a request for confidential treatment. Reference is made to Exhibit
10.20 in the Company's Annual
Report on Form 10-K/A for the Fiscal Year ended March 31, 2001 (No. 1-10869) filed on
February 15, 2002 which is incorporated herein by reference.

10.6         UQM
Technologies, Inc. 2002 Equity Incentive Plan. Reference is made to Exhibit
10.12 of the Companys Annual
Report on Form 10-K for the fiscal year ended March 31, 2002 (No.1-10869) filed on
June 26, 2002 which is incorporated herein by reference.

10.7         Employment Agreement between the Company and William G.
Rankin.

10.8         Employment Agreement between the Company and Donald A.
French.

10.9         Incentive Stock Option Agreement between the Company
and William G. Rankin.

10.10        Incentive Stock Option Agreement between the Company
and Donald A. French.

10.11        Non-qualified Stock Option Agreement between the
Company and William G. Rankin.

10.12        Non-qualified Stock Option Agreement between the
Company and Donald A. French.

21            Subsidiaries of the Company.

23.1          Consent of KPMG LLP.

99.1          Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.



SIGNATURES



Pursuant to the requirements of Section 13 of the Securities and
Exchange Act of 1934, UQM Technologies, Inc. has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in
Frederick, Colorado on the 27th day of May, 2003.

> UQM TECHNOLOGIES, INC.,
>         a Colorado Corporation
>         By:    "William G. Rankin"William G. Rankin
>         Chairman of the Board of Directors

Pursuant to the requirements of the Securities and Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the following persons on
behalf of UQM Technologies, Inc., in the capacities indicted and on the date indicated.

|Signature                                  | Title                                                                              | Date        
|------------------------------------------ | ---------------------------------------------------------------------------------- | ------------
|"William G.
    Rankin"  William G. Rankin | Chairman of the Board of Directors
    and President (Principal Executive Officer) | May 27, 2003
|"Donald A.
    French"  Donald A. French   | Treasurer and Secretary (Principal
    Financial and Accounting Officer)           | May 27, 2003
|"Ernest H.
    Drew"  Ernest H. Drew       | Director                                                                           | May 27, 2003
|"Stephen J.
    Roy"  Stephen J. Roy       | Director                                                                           | May 27, 2003
|"Jerome
    Granrud"  Jerome Granrud       | Director                                                                           | May 27, 2003
|"Don
    Vanlandingham"  Don Vanlandingham | Director                                                                           | May 27, 2003



---

Certification

I, William G. Rankin, certify that:

1.    I have reviewed this annual report on Form 10-K of UQM
Technologies, Inc.

2.    Based on my knowledge, this annual report does not contain any
untrue statement of 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 the registrant
as of, and for, the periods presented in this annual report;

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

1. designed such disclosure controls and procedures to ensure that material information
      relating to the registrant, including its consolidated subsidiaries, is made known to us
      by others within those entities, particularly during the period in which this annual
      report is being prepared;
2. evaluated the effectiveness of the registrant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
3. 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.    The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons performing the
equivalent function):

1. all significant deficiencies in the design or operation of internal controls which could
      adversely affect the registrants ability to record, process, summarize and report
      financial data and have identified for the registrants auditors any material
      weaknesses in internal control; and
2. any fraud, whether or not material, that involves management or other employees who have
      a significant role in the registrants internal controls; and

6.    The registrant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: May 27, 2003

/s/   William G.
Rankin

William G. Rankin
Chairman, President and
 Chief Executive Officer

---

Certification

I, Donald A. French, certify that:

1.    I have reviewed this annual report on Form 10-K of
UQM Technologies, Inc.

2.    Based on my knowledge, this annual report does not
contain any untrue statement of 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 the
registrant as of, and for, the periods presented in this annual report;



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

a.   designed such disclosure controls and procedures to
    ensure that material information relating to the registrant, including its 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 the
    registrant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.    The registrants other certifying officers
and I have disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of registrant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 the registrants ability
    to record, process, summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal control; and

b.    any fraud, whether or not material, that
    involves management or other employees who have a  significant role in the
    registrants internal controls; and

6.    The registrant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: May 27, 2003

/s/     Donald A.
French

Donald A. French 
Treasurer, Secretary and
Chief Financial Officer