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
             For the fiscal year ended October 31, 1996
                                
       [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 
            15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                                
                 Commission file number 1-10869
                                
                      UNIQUE MOBILITY, INC.                
     (Exact name of registrant as specified in its charter)
                                
               Colorado                     84-0579156    
       (State or other jurisdiction of   (I.R.S. Employer
       incorporation or organization)     Identification No.)
                                
          425 Corporate Circle, Golden, Colorado  80401    
     (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
                     Boston Stock Exchange 
                     Pacific 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.  Yes   X     No     .

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

The aggregate market value of the voting stock held by nonaffiliates of the
registrant (9,435,876 shares) computed by reference to the closing price of such
stock on the American Stock Exchange, as of January 24, 1997:

                          $38,922,989

The number of shares outstanding (including shares held by affiliates) of each
of the registrant's classes of common stock, as of January 24, 1997:

                    11,711,665 shares of the
                   registrant's common stock,
                        $.01 par value.
                                
              DOCUMENTS INCORPORATED BY REFERENCE
         In Part III certain documents are incorporated
                 by reference from other documents

<PAGE>
ITEM 1.     BUSINESS

General

Unique Mobility, Inc. ("Unique" or the "Company") was organized in 1967 and
presently develops and manufactures high efficiency permanent magnet (PM) motors
and controls for automotive, industrial and aerospace applications. Since 1990,
the Company's focus has been to apply its products to several types of electric
(EV) and hybrid electric vehicle (HEV) propulsion systems. The Company's
objective is to leverage its technology base and name recognition to serve a
number of high potential niche markets in the near-term, and automotive mass
markets in the longer-term. The Company's common stock trades on the American,
Boston and Pacific Stock Exchanges under the symbol "UQM".     

Historically, the Company's revenue has been derived from contract research and
development services. These sponsored research and development activities have
supplemented internally funded product development programs and have added
significantly to the Company's technology base. Now, the Company, its affiliates
and its licensees hope to begin commercial production of products that the
Company hopes will generate a more consistent and greater revenue stream than
that of prior years. The Company's future commercial products are expected to
include:

   Wheelchair Motors:  Proprietary PM wheelchair motors that are compact and 
   energy efficient for application in motorized wheelchair products.

   Scooter Motors: Advanced hub-mounted PM traction motors and controls for
   motor scooter applications. These matched systems deliver high performance
   over a wide power range with programmable control and regenerative braking.
   They will be manufactured in Taiwan  by the Company's licensee for Kwang
   Yang Motor Co., Ltd. (KYMCO), one of the world's largest producers of motor
   scooters.
   
   Golf Cart Motors:  Higher power (5-10 kW) variations of the scooter motor
   and controller designed  to reach existing markets for small electric
   vehicles such as golf carts, light industrial vehicles and lawn care
   products.
   
   EV and HEV Motors: The UQM  PowerPhase  System, has been developed for
   on-road EV and HEV applications and is currently offered for sale on a
   prototype low volume basis.  The system includes a 53 kW PM motor, matching
   controller and single stage transaxle with differential gearing and parking
   lock. Larger versions (63-100 kW) are currently offered or under development
   for bus and truck applications.

Management believes that the innovative designs, carefully selected materials 
and advanced manufacturing processes used in UQM  products provide a number of
benefits. These benefits include high power density (packageability), high
efficiency over a wide range of operation, and simplified construction that is
capable of achieving cost benefits at higher production levels. High power
density and efficiency are critical attributes in any application where space is
at a premium and the energy supply is limited.

Unique's relationships with major original equipment manufacturers (OEMs) and
other industry leaders has enabled the Company to obtain partial funding for
product development while still retaining substantially all rights to its
intellectual property. In some cases, these funding sources are, or are expected
to become, manufacturing partners, customers or licensees of the developed
products. Such is the case with KYMCO, co-funder and licensee of the Company's
electric scooter power system, who is also the Company's partner in a Taiwan
based joint venture company. 

<PAGE>

The Company intends to continue to advance its technology base and to develop
new products that have a high potential for commercialization. Key among these 
are the development of 75 and 100 kW traction drive systems for trucks and 
buses; an advanced  high speed motor for flywheels, spindle drives and vacuum 
pumps; electric and hybrid electric passenger car conversion projects for
customers in Korea and Taiwan; and the application of the Company's electric 
scooter power system to small vehicles for customers in India and Italy. In 
addition, the UQM powered Ethos 3 EV electric car has been completed and is 
being demonstrated to potential licensees in collaboration with the Pininfarina
Group of Turin, Italy (Pininfarina).

During fiscal 1996, the Company placed 1,057,708 shares of its common stock with
institutional and private investors in Europe pursuant to offerings under
Regulation S of the Securities and Exchange Act. Net proceeds to the Company
from the above placements, after deducting expenses, amounted to an aggregate of
$3,909,379. To date, the Company has used a portion of these proceeds to fund
product development and to meet  capital calls for its Taiwan joint venture
See also "Liquidity and Capital Resources" below.

Unique believes that its technology, its developed products, its cadre of
strategic partners and its key management and technical personnel have 
positioned the Company to potentially capitalize on existing niche markets and
global mass markets, should they develop, for energy-efficient clean vehicles
and related products.

Recent Developments

During fiscal 1996, the Company continued to strengthen its strategic
relationships with Invacare Corporation (Invacare), KYMCO, and Pininfarina,
all of which management deems critical to future manufacturing programs.
In addition, the Company was awarded several contracts during the year by
various other organizations and agencies of the U.S. Government. Recent
developments pertaining to these relationships and contract awards are
summarized below:

Strategic Alliance with Invacare:  In January 1996, Invacare became a 
shareholder of the Company with the purchase of 129,032 shares of the Company's
common stock at $3.88 per share for a total capital contribution of $500,000.
Proceeds of the issuance were applied to the development of an advanced 
wheelchair motor.  Invacare is a leading U.S. based manufacturer and marketer
of home medical equipment with products that include a complete line of
wheelchairs, patient aids, seating and positioning products, home and 
institutional beds, and respiratory assistance products. Concurrent with 
Invacare's stock purchase,  Mr. J. B. Richey became a member of the Company's 
board of directors. Mr. Richey is Invacare's top technical executive and holds 
the dual positions of Senior Vice President-Total Quality Management and 
President of Invacare Technologies, a wholly owned subsidiary of Invacare. 

<PAGE>

Taiwan Joint Venture:  During the fourth fiscal quarter of 1996, Taiwan UQM
Electric Co., Ltd. (Taiwan UQM), a Taiwan corporation owned jointly by the
Company, KYMCO and Turn Luckily Technology Co., Ltd. (TLT), began construction
of a factory for the manufacture of products under license from the Company. The
45,000 square foot facility and adjacent 25,000 square foot office building is
being constructed on approximately three acres of prime industrial property that
was acquired in 1995 pursuant to a Taiwanese government incentive program.
Construction is expected to be completed in April 1997 to support the
commencement of manufacturing operations in June 1997. Initial production will
be confined to the manufacture of conventional starter motors and generators for
KYMCO and other automotive customers. Taiwan UQM plans to later expand into the
manufacture of electric scooter power systems for KYMCO and eventually a full
line of UQM  motors and controllers for other Asian automotive and industrial
customers.

Previously, the Company, KYMCO and TLT had entered into an agreement whereby
KYMCO funded the Company's capital call obligations required to maintain its
equity in Taiwan UQM. Pursuant to the agreement, KYMCO purchased 3,783,000
shares of Taiwan UQM for the amount of NT$33,783,000 (U.S.$1,403,493) and 
granted the Company the option to purchase the shares for a like amount plus 
interest at 10 percent per annum. In November 1996, the Company exercised its 
option to purchase the shares for the agreed upon purchase price (including 
interest and transfer taxes)of NT$44,175,505 (U.S.$1,612,539) with funds 
obtained from its recent Regulation S financing. Upon completion of the
transaction, the equity positions of the Company and  KYMCO were equal at 39 
percent, with the remaining 22 percent held by TLT.  See also "Liquidity and 
Capital Resources" below. 

The Pininfarina Ethos 3 EV:  With its partner Pininfarina, the Company has
developed the Ethos 3 EV electric car demonstrator that was completed in
September 1996. Since that time, the Ethos project team has been investigating
new body configurations,  battery chemistries,  powertrain options and low cost
assembly methods. It is the objective of the Unique/Pininfarina collaboration to
secure one or more funded programs to create a family of "clean" vehicles that
can be industrialized, and distributed by automotive clients for sale to the
general public in several models in many markets.

The Ethos 3 EV demonstrator made its public debut in October at the 13th
International Electric Vehicle Symposium (EVS-13) in Osaka, Japan. Following 
EVS-13, the car was shipped to Taipei at the invitation of the Taiwanese 
government which, together with Asia Pacific Investment Corporation (APIC), a 
collaboration of over 200 corporate investors under the auspices of the Taiwan
government, is preparing plans to establish a domestic automobile industry. 
Private demonstrations were also conducted during this period for several 
Detroit and Japanese automakers. In December 1996, the Ethos 3 EV participated 
in an industry sponsored ride and drive session at the North American Electric 
Vehicle and Infrastructure Conference in San Diego, California.

<PAGE>

Throughout these demonstrations the Ethos 3 EV received many favorable comments.
Its performance, drivability and comfort were highly regarded. The car reaches
60 mph in  11.2 seconds and can accelerate quickly up a six percent grade 
through 70 mph. It is maneuverable in traffic and with its  nickel metal-
hydride batteries, can carry four passengers approximately 150 miles between
charges at an average speed of 45 m.p.h.  Early in 1997, the Ethos 3 EV will be
transported to Italy where Pininfarina will demonstrate the vehicle to 
interested European automakers.

Neither Unique nor Pinanfarina intends to sell and service vehicles directly to
the retail market.

Research and Development Contracts:  In October 1996, the Company was awarded
two cost share contracts totaling $680,000 by the U.S. Department of Defense 
Advanced Research Projects Agency (DARPA) for high speed flywheel testing and 
development of a 75 kW vehicle traction motor. Separately, Koyo Seiko Co., Ltd.
(Japan) authorized the Company to begin a $150,000 project to build and test a
custom designed high speed PM flywheel motor and drive.

In November 1996, Kia Motor Corporation (KIA) authorized the Company to begin a
$645,000 project to convert five Kia Sephia sedans to electric drive using the
UQM  PowerPhase  system. Kia is the second largest Korean automobile company.

In October 1996, the Company received a $360,000 contract from Pan Asia
Technology Co., Ltd. (Taiwan)(Pan Asia) to develop an experimental hybrid
electric passenger car for test and evaluation. Pan Asia is a subsidiary of 
APIC.  The Formosa Plastic Group, Taiwan's largest industrial conglomerate, is
APIC's largest shareholder and Mr. Y.C. Wang, chairman of Formosa Plastic, is 
also chairman of APIC. 

In December 1996, the U.S. Agency for International Development  (US AID)
authorized a $100,000 project to study the feasibility of applying the Company's
electric scooter power system to three wheeled "Autorickshaw" passenger vehicles
manufactured by Bajaj Auto Ltd. (India). Separately, the Company received a
$35,000 contract from Piaggio Veicoli S.p.A. (Italy) to install an electric 
power system in a Piaggio scooter.

In January 1997, the Company received a  $1.23 million contract from the
Metropolitan Transit Authority of Harris County Texas (Houston Metro) to supply
an advanced traction drive system for the "Advanced Technology Transit Bus" 
being developed collaboratively by Northrop Grumman Corporation, Houston Metro
and the U.S. Department of Transportation. The contract involves a sixteen month
effort to develop a 107 kW state-of-the-art PM motor, controller, gear reduction
and braking system capable of supplying motive power not only for transit buses
but also for heavy duty vehicles of all types. 

Patents and Trademarks:  During fiscal 1996, the Company was awarded a patent 
for a new compact, highly efficient PM motor by the European Patent Office. 
Motors covered by this patent could be used for heavy duty military applications
and large off-highway industrial vehicles. The corresponding U.S. patent 
application is pending. See also "Patents and Trademarks" below.

<PAGE>

Products/Technology

The Company has an aggressive strategy to commercialize its technologies and
develop products to provide for future growth. Initial product offerings are
being directed primarily toward near term markets for low voltage small vehicle
traction applications and will be followed by an expansion into the markets,
should they develop, for larger, high voltage vehicle propulsion systems. Small
vehicle applications include wheelchairs, motor scooters, small industrial
vehicles, golf carts and lawn care products that generally require power levels
from 1 kW to 10 kW at voltages from 12 Vdc to 48 Vdc. Large vehicle applications
include electric and hybrid electric passenger cars, commercial trucks and urban
transit buses that generally require power levels from 20 kW to 100 kW at
voltages from 96 Vdc to 400 Vdc. 
 
The Company's current product offerings typically utilize a number of 
proprietary technologies, several of which are patented, including high pole-
count PM motor design with six step commutation and phase advanced control. 
The high pole-count, together with a relatively large air-gap diameter, creates
a higher torque, lower speed motor than that of more conventional architectures.
Higher torque at lower speed allows for a lower gear ratio, fewer mechanical 
losses and higher efficiency at light "cruising" loads. These designs have 
excellent heat rejection capability, high copper utilization (i.e. tight end 
turns), and a "hollow" profile that provides room to package other components 
inside the motor. Six step commutation enables the use of low cost rotor 
positioning sensing mechanisms and reduces switching losses to improve inverter
efficiency. Phase advanced control is a technique for manipulating current to
allow the motor to run faster and thus deliver more power without having to 
increase the current supply.

Currently developed products include:

Wheelchair Motor:  A proprietary PM motor has been developed for the Invacare
powered wheelchair product line.  The motor is compact and energy efficient.
While it was developed specifically for powered wheelchair applications,
management believes that scaled-up versions of the motor can serve several other
markets for electrically powered vehicles.  The Company is currently negotiating
with Invacare to manufacture motors for its wheelchairs; however, there can be
no assurance that such negotiations will be successful.

                                
   Fig. 1  Invacare  Storm' Wheelchair and PM Wheelchair Motor  
                                
                                
Scooter Motor and Controller:  A 3.6 kW hub-mounted PM motor and full authority
48 kW controller with integrated charger and dc-dc converter has been developed
for the KYMCO electric scooter product line. This system is air-cooled, compact
and efficient over a wide operating range. It delivers torque at a wide range of
speeds and provides regenerative braking down to zero rpm. While the scooter
motor system was developed for KYMCO's exclusive use in most Asian markets, the
Company has reserved commercial rights in Japan and India and in all markets
outside Asia. 

<PAGE>

  FIG. 2  KYMCO  Prototype Electric Scooter and Traction System


Golf Cart Motor and Controller:  A higher power (5-10 kW) variation of the KYMCO
scooter motor and controller is being developed to reach existing markets for
small electric vehicles such as golf carts, light industrial vehicles and lawn
care products. The golf cart motor is longer in dimension than the scooter 
motor, but has the same diameter stator core and can be built from the same 
tooling.  Its features of merit are similar to those of the scooter motor, 
but at power levels up to 10 kW. Management believes this product can be 
marketed as an aftermarket  replacement motor as well as original equipment, 
and for this reason universal motor mounts have been designed for easy "drop-in"
installation. 


                  Fig. 3  Golf Cart Motor


PowerPhase  System:  A high power modular traction drive system for on-road
electric and hybrid electric vehicle applications. The PowerPhase  system was
initially developed for the Ethos 3 EV demonstrator vehicle, but has application
as a power system for all types of  passenger cars and light trucks. The system
includes a matched set of components composed of a 53 kW liquid cooled PM motor,
a 180-400 Vdc microprocessor based programmable controller with phase advance
control, and a single stage transaxle with differential and a mechanical parking
lock. The transaxle connects the output shaft of the motor to the road wheels in
a variety of front or rear wheel drive configurations. A 63 kW motor and
controller of the same frame size is offered with in-line gear reduction for bus
and heavy truck applications.

<PAGE>

                  Fig. 4   53 kW PowerPhase   System


Ethos 3 EV Demonstrator

In partnership with Pininfarina the Company has developed the system 
architecture for the Ethos 3 EV electric car. The Ethos 3 EV is a four-door, 
four-passenger hatchback sedan, styled as a wedge-like aerodynamic cube. It has
a rectangular base, short in length, but wide and tall to provide a roomy 
interior. The split tailgate simplifies the loading of cargo from above, 
particularly when the car is parked bumper to bumper along the curb. The 
McPherson-type front suspension has telescoping arms and coil springs, while 
the rear suspension has interconnected trailing arms. Steering is by rack and 
pinion and the braking system incorporates full regenerative braking 
supplemented by discs on the front and drums on the rear. 


        Fig. 5   Ethos 3 EV Demonstrator and Space Frame Structure


The Ethos 3EV is built on an extruded aluminum space frame that forms a sturdy
cage to give a high level of occupant protection. Impact beams are incorporated
in the doors. The front seats are fitted with pre-tensioned seat belts and a
driver's side air bag. Instruments and controls include a speedometer, a battery
state-of-charge gauge, shift lever, an engine-on light, and a main power
disconnect switch. Integrated into the dash panel is an efficient heating,
cooling and ventilating system specially developed for the Ethos 3 EV by 
Calsonic International, one of the world's largest suppliers of automotive 
climate control systems.

At the heart of the Ethos 3 EV is the front mounted UQM  PowerPhase  traction
drive system that provides 53 kW maximum power and 150 Nm of continuous torque.
The motor drives through a 6.8 to 1 single stage transaxle with a mechanical
differential and parking brake. Electric current is supplied to the motor by a
400 Vdc, 300 Amp inverter using IGBT power switching modules with digital
microprocessor control. Proprietary software provides for smooth, quick
acceleration with phase advance control for extended power and full regenerative
braking for extended range. 

<PAGE>

The UQM  PowerPhase  system is matched to a high-performance energy storage
system that uses 26 Ovonic nickel metal-hydride (NiMH) batteries. NiMH batteries
are characterized by high power, long cycle life, no memory effect, few
maintenance problems and they are totally recyclable. GM Ovonic, a joint venture
between General Motors and Ovonic Battery Company is the manufacturing agent. 
In the Ethos 3 EV, the batteries are housed in three compartments, two under the
front seats and one under the rear cargo area. They have a specific energy of 70
Wh/kg, a specific power of 220 W/kg and are connected in series to provide 312
Vdc with 85 Amp hours of capacity.  This system permits the Ethos 3 EV to travel
more than twice as far per charge as would lead-acid batteries of the same size
and weight, or approximately 150 miles at 45 mph. 

Marketing/Markets

The Company's marketing strategy is to build on its technology base to become a
leading supplier of advanced vehicle power systems for energy efficient,
environmentally clean surface transportation throughout the world. In the near
term, the Company's focus is being directed toward existing markets for low-
voltage systems used in small vehicles such as wheelchairs, electric scooters,
golf carts, light industrial vehicles and lawn care equipment. This effort will
be followed by initiatives to reach the market for larger, high-voltage systems
required for on-road passenger cars, trucks and buses, should such a market
develop.

Near Term Markets

Wheelchair Motors:  The Company hopes to manufacture wheelchair motors
for Invacare. Powered wheelchairs typically require two motors. Invacare is the
country's largest manufacturer of home health care and mobility products. It
holds the No. 1 position  in powered wheelchairs with approximately 60 percent
of the market and is No. 2 in Europe. The Company is currently negotiating
with Invacare to manufacture motors for its wheelchairs; however, there can be
no assurance that such negotiations will be successful.

Scooter Motors and Controllers:  The Company's electric scooter power system is
expected to be manufactured by Taiwan UQM for KYMCO and possibly for other
scooter manufacturers in markets where KYMCO does not have exclusive rights
(i.e., Japan, India and all markets outside Asia). KYMCO is Taiwan's largest
producer of two-wheeled vehicles with approximately one third of the market.
Timing for the production launch of the KYMCO electric scooter has not as yet
been released, but the launch is scheduled to occur no later than 1999 to meet
a government mandate requiring two percent of all scooters sold in Taiwan to be
electric.  There can be no assurance that the government mandates will not be
modified or rescinded.

The Taiwan Ministry of Transportation and Communication reports that 1994
domestic sales of gasoline powered two-wheeled vehicles totaled 1,192,503 units
with approximately 500,000 additional units being produced for export, primarily
to the People's Republic of China. This would indicate a Taiwanese market of 
23,850 electric scooters by the year 2000, assuming a flat sales rate from now
until then. Other potential markets for electric scooters and/or power system
components include China, India and Indonesia, all of which have larger usage of
two-wheeled vehicles than Taiwan.

Golf Cart Motors and Controllers: Motors used to power golf carts are also used
for other commercial vehicle applications.  To better understand the potential,
the Company commissioned Markowitz & McNaughton, Inc., a Reston, Virginia,
consulting firm, to define and quantify the U.S. market for golf cart motors and
controllers.

<PAGE>

The golf cart market is defined as vehicles sold to golf courses, golf
communities and resorts for the transport of one or more persons around a golf
course or residential community. Also included are golf carts operating as
utility vehicles for on-site and in-plant materials transport and security 
patrol vehicles. The domestic market for golf carts is approximately 190,000 
units annually, with 65,000 being electric. Environmental concerns are expected
to rapidly increase the percentage of electric models in future years. 

Neighborhood electric vehicles (NEVs) are an outgrowth of electric golf carts.
They are used for personal transportation, primarily to carry two or four 
persons around closed residential subdivisions, resorts, and town centers. 
Current market size is estimated at 15,000 units annually, with most being some
type of modified golf cart. Growth of this segment is expected to come from the
(retired) residential community market that is being served by a combination of
new NEV manufacturers and the golf cart industry.

Industrial personnel and cargo carriers also represent a market for golf cart
motors.  These vehicles are used for towing, materials handling and people
transport in plants, industrial parks, warehouses and other close proximity
manufacturing and industrial settings. Generally, they are electrically driven
by brushed dc motors that often require expensive brush replacement maintenance
during the life of the vehicle. Market size of this segment is estimated at 
6,000 units annually.

Lawn tractors, riding mowers and turf equipment are used for residential or
commercial groundskeeping. They are almost exclusively gasoline powered and
current vehicle design  is not oriented toward electric motor use. However, the
demand for electric equipment could escalate with environmental regulation and
advances in battery technology. Electric versions would require at least two
motors, one or more for the cutting blade and one for propulsion. Current U.S.
market size is estimated at 135,000 riding mowers and 1,000,000 riding tractors,
not including farm equipment.

At present, the Company does not have distribution channels in place to reach 
the described markets for golf cart motors and controllers. It is the Company's
goal, however,  to establish distribution either directly or by a joint venture
or licensing arrangement with a major original equipment manufacturer during
calendar 1997.

Emerging Growth Markets

In a world that produces over 50 million cars, trucks and buses every year, the
Company believes that the potential for electric and hybrid electric vehicle
power systems is substantial, especially in those markets that place a premium
on fuel efficiency and good air quality. The Company's long term goal has been,
and is, to become a leading provider to this emerging segment of the automotive
industry. However, the electric vehicle market has been slow to develop and the
hybrid electric vehicle market could take even longer. Early product offerings
are costly,  advanced batteries are not yet in mass production  and battery
charging infrastructure is virtually non-existent. 

<PAGE>

Recently, a joint study by the Electric Vehicle Association of the Americas
(EVAA) and the Electric Transportation Coalition (ETC) attempted to project a
timetable for the emergence of a sustainable market for electric vehicles. The
conclusions drawn from this study reveal an anticipated three-phase growth
pattern:

     Phase I:  Entry of electric vehicles into limited early markets, primarily
     fleets; time frame 1996-1998 with production of low thousands of units
     over the period.

     Phase II:  Expansion to additional markets with improved technology
     (batteries); time frame 1999-2002 with production of tens of thousands of
     units over the period.

     Phase III:  Broad based market launch of commercially competitive electric
     vehicles; time frame 2003-2006 with production of 50,000 units or more.

Several market drivers such as advanced battery development, government
incentives and the degree to which the market accepts early product offerings
could speed up or slow down this timetable, making accurate forecasting 
extremely difficult. The Company believes that its technology, as evidenced by
the Ethos 3 EV and the UQM  PowerPhase  system, has positioned it well to 
capitalize on this potential, should such a market develop.

Environmental Initiatives and Legislation

The major driving force behind the commercialization of electric and hybrid
electric vehicles in the United States is the demand for clean urban air. The
federal government has responded with the Clean Air Act, the Energy Policy Act
and other initiatives directed toward reducing vehicular emissions. Some state
governments, California, Massachusetts and New York in particular, have done
likewise. California, for example,  mandated that beginning in 1998, at least 
two percent of all cars and light trucks offered for sale by major automakers 
must be zero emission vehicles (ZEVs). The requirement was to increase to five
percent in 2001 and to ten percent in 2003. Massachusetts and New York adopted
similar regulations.

During 1996, California canceled the mandates for ZEVs until 2003 when all
automakers that sell more than 3,000 vehicles in California will be required to
meet the ten percent ZEV requirement. Massachusetts has announced its intention
to follow California, but New York has not. In lieu of the earlier mandates, the
California Air Resources Board (CARB) opted for a market-based approach whereby
the major automakers agreed to install limited ZEV manufacturing capacity prior
to 2003, and CARB would grant credit for early ZEV sales toward the 2003 
mandate.  As of December 31, 1996, six manufacturers --- GM, Ford, Chrysler, 
Toyota, Nissan and Honda --- have announced plans to market limited numbers of
ZEVs  beginning in the first quarter of 1997.

Also during 1996, the U.S. Department of Energy modified its rules governing how
certain state government and utility/fuel provider fleets covered by the Energy
Policy Act of 1992 must comply with the Act's requirements for the use of
alternative fuels. Under the modified rules, covered fleets must make
increasingly higher purchases of alternatively fueled light duty vehicles (which
may include electric) over the 1997-2001 period. A fleet is covered by the Act
if the fleet has 50 or more light-duty vehicles (under 8,500 GVW). The current
fleet acquisition formula is as follows:

             Model              Utility/Fuel     State Government
             Year              Provider Fleets        Fleets      

             1997                     30%               10%
             1998                     50%               15%
             1999                     70%               25%
             2000                     90%               50%
             2001                     90%               75%
                                         
The Company views the relaxation of the California ZEV mandates as a positive
step in the development of the EV industry. While the ZEV mandates were
instrumental in jump starting the development of several new technologies, they
have the potential to force manufacturers to offer poorly performing products at
prohibitive costs that may not be accepted in the marketplace. Management
believes such a result would create an artificial market and would seriously
damage the ultimate acceptance of electric vehicles.   There can be no assurance
that the state and federal mandates will not be further modified or rescinded.

<PAGE>

License Agreements

The Company and Alcan Aluminium Limited (Alcan) have entered into an agreement
(Assignment Agreement) wherein Alcan assigned to the Company all of its rights,
title and interest in all technology previously developed by the Company for or
on behalf of Alcan.  The Assignment Agreement further provides that the Company
shall pay to Alcan royalties on revenue derived from the manufacture and sale of
products or processes embodying PM technology, subject to an offset in the 
amount of one-half of the Company's patent application and maintenance fees 
related to the PM technology.

In May 1996, the Company entered into a License and Technical Assistance
Agreement with Taiwan UQM, a joint venture company in which the Company has a 39
percent equity interest.  Pursuant to the agreement, Taiwan UQM was granted a
license to make, use and sell the Company's electric motors and controls
exclusively in Taiwan, exclusively in the People's Republic of China with 
respect to the propulsion system developed for KYMCO, and non-exclusively
throughout Asia. The license is royalty bearing except for propulsion systems 
manufactured by Taiwan UQM for KYMCO.

In November 1996, KYMCO entered into a supply agreement with Taiwan UQM relating
to the purchase from Taiwan UQM of propulsion systems developed by the Company.
With the execution of the supply agreement, the grant of license contained in
the Company's Product Development and License Agreement with KYMCO became 
effective.  Pursuant thereto, KYMCO has a worldwide, royalty-free license, 
exclusive in Asia except for Japan and India, to sell scooters with propulsion
systems manufactured by Taiwan UQM using the Company's technology.  

Competition

The automotive, industrial and commercial markets into which the Company hopes
to introduce and market its products are all highly competitive and 
characterized by rapid changes due to technological improvements. The 
automotive industry, in particular, is currently being driven by legislation 
and other initiatives to develop low-emission, fuel efficient vehicle propulsion
systems. The Company is aware of efforts by many companies, including large
automotive OEMs, to develop electric and hybrid electric vehicles. The Company
 believes that its principal competitors in the automotive supply sector 
include Auxilec, Delco Power Electronics, Fuji Electric, Hitachi, Matsushita
and Siemans. Principal competitors in the industrial and commercial sectors
include Advanced DC, Emerson Electric, General Electric and the Reliance 
Division of Rockwell International.  The Company is aware of other companies, 
both large and small, that have entered or may enter the market and expects
competition to intensify as demand increases for high efficiency PM motors.

Although the Company is not as well capitalized as many of its competitors, its
strategy is to compete with larger companies on the basis of technical skills,
proprietary know-how and its affiliation with large and well-financed strategic
partners. 

<PAGE>

Patents and Trademarks

The Company filed a motor patent application with the U.S. Patent Office in
December 1985, and similar applications are being prosecuted in many other
countries throughout the world.  As a result of the original U.S. Application,
U.S. Patent No. 5,004,944 was issued on April 2, 1991, containing one 
independent claim and three dependent claims.  A Continuing Application of the
1985 application was filed in October 1990 to pursue subject matter that was not
allowed in the original U.S. Patent.  As a result, U.S. Patent 5,311,092 issued
on May 10, 1994, with four independent claims and one dependent claim.  Of the
foreign applications, a patent has been published covering thirteen European
member countries of the European Patent Office (EPO), and an opposition thereto
has been resolved.  In addition, corresponding patents have been issued in
Australia, Brazil, Canada, India, Israel, South Korea, Mexico, New Zealand, 
South Africa and Taiwan.  Several other foreign applications remain pending, 
three of which have been indicated to be allowable.

In August 1989, the Company filed a separate application with the U.S. Patent
Office to cover certain proprietary aspects of its electronic control circuitry.
Additional claims were added by means of a Continuation in Part (CIP) filed in
May 1990.  In April 1992, the Company was issued U.S. Patent No. 5,107,151 as a
result of the CIP Application.  In August 1990, an International Patent
Application corresponding to the U.S. Application and the CIP was filed under 
the provisions of the Patent Cooperation Treaty (PCT) which includes the EPO, 
Japan and South Korea, among others.  National applications were also filed in
eight additional countries including India, Taiwan and Israel; patents have been
granted in Mexico, Taiwan, India and Israel.  Applications remain pending in
Japan and Korea but the EPO Application has been withdrawn.

In March 1990, a Continuing Application was filed to claim the method of
constructing the motor as disclosed in U.S. Patent No. 5,004,944.  The 
Continuing Application resulted in U.S. Patent 5,319,844 issued June 14, 1994.
In March 1991, the Company filed an International Patent Application 
corresponding to the U.S. Application; as a result, a patent has been granted 
in Australia and there are eight applications pending in foreign countries and
one pending application in the EPO which designates the European group of 
countries.

In September 1992, the Company filed a separate application with the U.S. Patent
Office titled "Stator and Method of Constructing Same for High Power Density
Electric Motors and Generators" which has resulted in issuance of U.S. Patent
5,382,859 in January 1995.  This patent embodies the Company's most recent
enhancement to its motor technology which utilizes a segmented iron power stator
ring developed specifically for brushless permanent magnet stator cores.  A
Divisional U.S. Patent Application has been filed to pursue a second invention
disclosed in the original application; that divisional application has been
allowed and the patent is expected to issue in February 1997.  Patent
Applications in Canada, Europe, Japan and Korea are pending as designated in a
counterpart PCT International Patent Application.

The Company currently holds a patent issued by the United States Patent Office,
in August 1980, which covers certain mechanical features of the ElecTrek
automobile, principally its composite unibody structure and battery trays.  This
patent expires in August 1997.  The Company no longer produces or markets its
ElecTrek automobile.

In July 1994, the Company filed an application in the U.S. Patent Office titled
"Brushless DC Motor using Phase Timing Advance" which embodies a low cost method
of controlling the drive current to a motor to achieve operating characteristics
ideal for vehicle traction drives.  This application is still pending.  In June
1995, a counterpart PCT International Patent Application was filed and various
foreign country patent applications are now being filed.

<PAGE>

During 1994, the Company acquired the assets of Everton Developments of
Birmingham, England, including all rights under PCT Application WO 92/22121
published December 10, 1992, and patent applications filed thereunder are still
pending in five countries including the United States.  Corresponding patents
have been granted in Australia and in Europe where the patent is effective as to
France, Germany, Italy, Switzerland, Liechtenstein and the United Kingdom.  This
technology is similar to that developed by the Company but is complementary to
it, thus broadening the Company's range of products.

The Company owns the trademark "UM," which is registered with the United States
Patent and Trademark Office and is subject to renewal in October 2000.  This
trademark is available for use in connection with the products and publications
of Unique.  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 also initiated registration of the letters UQM and a stylized
version thereof as its new trademark in the U.S. and 26 countries throughout the
world.  Two U.S. Trademark Registrations and 20 out of 26 of the foreign
countries have granted registrations or indicated them to be allowable.  These
trademarks are directed to the same trademark classes as for the marks "UM" and
"UNIQ."  The foreign trademark registrations and applications include major
markets where the Company is doing business or anticipates doing business.

An application for trademark registration of the "PowerPhase" mark was filed in
the United States in September 1996 and is still pending.  The Company expects
to file similar applications seeking registration of this mark in major foreign
markets in the near future.

In November 1994, the Company and Alcan completed an assignment agreement which
provided, among other things, that for so long as Alcan beneficially owns at
least five percent of the Company's common stock, it shall be obligated to pay
one-half of the patent application and maintenance fees (including reasonable
attorney's fees related thereto) associated with the Company's PM technology in
an amount not to exceed the aggregate amount of royalty revenue derived from the
PM technology. See also "License Agreements" above.

The Company's future success depends, in part, on the diligent prosecution of 
its issued and pending motor and electronic patents, as well as the filing and
prosecution of patents on future technological advances, if any.  There can be
no assurance that the Company will possess the financial resources necessary to
prosecute and maintain existing applications or to pursue additional patents. 
If the Company is not able to prosecute and maintain its existing patent
applications, they will lapse.  There can be no assurance that the Company's
patents will not be circumvented, invalidated or infringed, or that the Company
will possess the financial resources to enforce its existing patents and patent
applications in the event of an infringement.  Further, new technology may be
developed by third parties or may already exist unknown to the Company causing
the Company's proprietary technology to be obsolete.

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 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.

<PAGE>

Manufacturing

To date, the Company has manufactured all of its products at its facility in
Golden, Colorado. The Company anticipates investing in manufacturing equipment
to further develop the manufacturing capacity at this facility at such time as
the Company secures a commitment for the volume purchase of its products.
The Golden facility has current available capacity of approximately 15,000
square feet which can be dedicated to manufacturing operations without
significant alteration. Although the Company has no prior experience in
delivering large volumes of its products, it is currently in the process of
establishing the capacity to meet such high volume production requirements and
has retained talented personnel with experience in motor manufacturing to assist
in the launch of such operations. The Company believes additional manufacturing
space and equipment is readily
available. 

Backlog

At January 28,1997, the Company had unperformed service contracts from customers
which will provide payments to the Company upon completion aggregating
approximately $2,750,000.  All such contracts are subject to amendment,
modification or cancellation.

In addition, the Company had an order backlog for motors and electronic controls
at January 28, 1997, with an aggregate sales value of approximately $70,000.

Customers and Suppliers

A significant portion of the Company's revenue for the fiscal year ended October
31, 1996, was derived from Hyundai Corporation, Ford Motor Company, Pentastar
Electronics Company, and KYMCO. Revenue of $911,533 or 63 percent of
contract services revenue was derived from these customers.

Principal raw materials purchased by the Company include iron, steel, copper
wire, neodymium boron iron alloy, fiberglass and epoxy resins.  All of the above
items are available from several suppliers and the Company generally relies on
more than one for each item.  Principal purchased products include power
electronic switching devices and magnet material which are available from 
several suppliers.

US Government Contracts

For the year ended October 31, 1996, $800,208 or 56 percent of the
Company's contract service 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 business with the U.S. Government was performed on a cost
plus fixed fee basis.  These contracts provide for reimbursement of costs, to 
the extent allocable and allowable under applicable regulations, and payment 
of a fee. Certain other 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.

<PAGE>

Employee and Labor Relations

As of October 31, 1996, the Company had 31 full-time employees.  The Company has
entered into employment contracts with its three executive officers which expire
in December 1999.  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.

ITEM 2.   PROPERTIES

Facilities

The Company leases a 40,000 square foot office/laboratory/warehouse building in
Golden, Colorado, from a limited liability company of which the Company and an
investor are equal owners.  The Company has entered into a ten-year lease of the
building at $21,667 per month with an option for an additional five years at the
then market rate.  The Company is required to pay all taxes, maintenance and
insurance.  The Company currently subleases 12,500 square feet of this facility
for $7,031 per month plus an allocable share of taxes, maintenance and insurance
costs.  The Company believes its existing facilities are adequate to meet its
operational needs for the foreseeable future.

The Company also owns the basic tools and equipment, including computer hardware
and software, necessary for the conduct of its production, research and
development and vehicle prototyping activities.


ITEM 3.   LEGAL PROCEEDINGS

There is no material litigation with respect to which the Company is a party.


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

There were no matters submitted for vote by security holders of the Company
during the fourth quarter of fiscal 1996.

<PAGE>

ITEM 5.   MARKET PRICE OF COMMON STOCK

The Company's common stock trades on the American, Boston and Pacific Stock
Exchanges.  The high and low closing prices, by fiscal quarter, as reported by
the American Stock Exchange for the last three years are as follows:

1996                                                     High       Low
Fourth Quarter. . . . . . . . . . . . . . . . . . . . . .$5.19     $3.81
Third Quarter . . . . . . . . . . . . . . . . . . . . . .$5.00     $3.50
Second Quarter. . . . . . . . . . . . . . . . . . . . . .$5.13     $4.19
First Quarter . . . . . . . . . . . . . . . . . . . . . .$4.50     $3.31

1995
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $5.38     $3.63
Third Quarter. . . . . . . . . . . . . . . . . . . . . . $5.56     $3.83
Second Quarter . . . . . . . . . . . . . . . . . . . . . $5.63     $3.75
First Quarter. . . . . . . . . . . . . . . . . . . . . . $5.75     $4.75

1994
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . $7.00     $4.88
Third Quarter. . . . . . . . . . . . . . . . . . . . . . $6.88     $4.88
Second Quarter . . . . . . . . . . . . . . . . . . . . . $7.88     $5.75
First Quarter. . . . . . . . . . . . . . . . . . . . . . $8.63     $7.00


On January 24, 1997 the closing price of the Company's common stock, as reported
on the American Stock Exchange, was $4.13 per share and there were 908 holders
of record of the 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


                      Unique Mobility, Inc.
              Consolidated Selected Financial Data


                  1996           1995         1994         1993        1992    
Contract
Services 
Revenue        $ 1,436,484    4,031,951    1,643,203    1,461,568   2,306,070

Product   
Sales          $   611,213      701,700      708,917      695,300     468,508

Operating
Loss           $(2,744,606)  (1,134,338)  (3,367,873)  (2,446,574) (2,240,170)

Net Loss       $(2,904,743)  (1,330,433)  (3,395,356)  (2,473,804) (2,217,207)

Net Loss
Per Common
Share          $   (.26)        (.13)         (.35)         (.28)      (.33)

Total 
Assets        $ 8,712,649     7,626,178    5,903,551    7,791,826   4,700,507 

Long-term 
Obligations   $   744,389       807,003      886,996      921,758   2,161,376

Cash Divi-
dend Declared
Per Common
Share         $     -0-           -0-          -0-          -0-         -0-
                    
<PAGE>


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.  The Company's actual results could differ materially from those
discussed in this Report.  Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this report and
any documents incorporated herein by reference, as well as, in the Company's
Registration Statement on Form S-3 dated October 10, 1996.  These forward-
looking statements represent the Company's judgment as of the date of this
Report.  The Company disclaims, however, any intent or obligation to update
these forward-looking statements.

The Company has changed its fiscal year end from October 31 to March 31.  This
change results in a five month transition period for financial reporting 
purposes commencing on November 1, 1996, and ending on March 31, 1997.  During
the transition period the Company will report on operations for the quarter 
ended January 31, 1997, through the filing of a quarterly report on Form 10-Q
This will be followed by a transition period report on Form 10-K for the five 
month period ended March 31, 1997.  The Company will also defer its annual 
meeting of shareholders until the summer of 1997 in order to conform the 
meeting date to the new fiscal year end.  Relevant information normally 
contained in the Company's year end proxy statement may be found in Part III 
of this Form 10-K below.

Throughout  fiscal 1996, the Company invested significant amounts of capital in
the development of a proprietary motor for powered wheelchairs for Invacare as
well as in the development of manufacturing processes and facility layout 
necessary for its manufacture.  Primarily as a result, research and development
expenditures rose 26 percent to $1,628,646 for fiscal year 1996 compared to
$1,292,803  for fiscal 1995.

Financial Condition

The Company's financial condition strengthened somewhat during fiscal 1996 as a
result of capital raising activities conducted throughout the year. During 
fiscal 1996, the company received net proceeds from the sale of common stock in
the amount of $4,060,211.  Shareholders' equity rose from $4,397,047 to 
$5,592,876. Current assets rose to $4,453,461 from $3,173,642.  Working capital
(the excess of current assets over current liabilities) increased from 
$1,140,579 to $2,469,197.  Cash and certificates of deposit were $3,230,246 at 
fiscal 1996 year end compared to $2,115,499 at fiscal 1995 year end.

Accounts receivable rose to $569,562 at October 31, 1996, compared to $337,849
at the prior year end, reflecting slower than expected collection on certain
commercial and government accounts.

Costs and estimated earnings on uncompleted contracts declined $82,931 to
$179,483  from the fiscal 1995 year end level of $262,414. The decline was due
to accelerated billings on certain commercial contracts.

Finished products inventories declined approximately 38 percent due to lower
stocking levels.  Raw material and work in process inventories rose, reflecting
somewhat higher production levels and stockpiling of long lead time parts.

The Company invested $182,011 for the acquisition of property and equipment
during fiscal 1996 compared to $440,079 and $413,907 in each of the prior two
fiscal years, respectively.  The decrease was generally attributable to reduced
purchases of computer hardware and test equipment.

<PAGE>

Investment in Taiwan joint venture declined to $1,366,540 at fiscal 1996 year 
end from $1,432,735 at the beginning of the fiscal year.  The decrease was due
to foreign currency exchange rate fluctuations and operating losses of Taiwan 
UQM, which are recorded using the equity method of accounting for the Company's
minority ownership position.

Patent and trademark costs, net of accumulated amortization, increased $69,572
over the prior year level. The increase reflects prosecution of patent
applications in the United States and Europe and the worldwide registration 
costs associated with the trademark UQM .

Other assets declined to $7,552 due to the sale of a parcel of real estate
previously held by the Company for investment.

Accounts payable rose to $121,790 from $83,859 at the end of fiscal 1995 due to 
purchases of components and materials for projects in process in the normal
course of operation.

Other current liabilities declined to $400,574 at October 31, 1996, from 
$464,186 at October 31, 1995.  The decrease was attributable to a reduction in
accrued amounts due to subcontractors on a contract with the U.S. Government.
Accrued interest rose to $214,002 from $93,698 reflecting interest accruals 
under the waiver and option agreement with KYMCO. See also "Liquidity and 
Capital Resources" below.

Note payable to Taiwan joint venture participant declined to $1,375,121 at
October 31, 1996, from $1,403,493 at the prior year end.  The decline was solely
due to foreign currency exchange rate fluctuations between the respective
balance sheet dates.

Billings in excess of costs and estimated earnings on uncompleted contracts rose
to $25,685 at fiscal 1996 year end due to billings in advance of the performance
of the associated work.

Long-term debt declined $62,614 during fiscal 1996 due to scheduled principal
payments on the mortgage debt associated with the Company's facility.

Common stock and additional paid-in capital increased to $117,514 and 
$23,021,339 at October 31, 1996, respectively, compared to $105,720 and 
$18,887,886 at October 31, 1995.  The increases were due to sales of common 
stock to institutional investors of $3,909,379; sales of common stock to 
employees through the company's benefit plans of $150,832; and the issuance of 
common stock for services of $61,391.

Results of Operations

Operations for the year ended October 31, 1996, resulted in a net loss of
$2,904,743 or $0.26 per share.  This compares to a net loss of $1,330,433 or
$0.13 for the year ended October 31,1995, and a net loss of $3,395,356 or $0.35
per share of the year ended October 31, 1994.

Revenue derived from contract services in fiscal 1996 declined 64 percent or
$2,595,467 from the fiscal 1995 level, and 13 percent or $206,719 from the 
fiscal 1994 level. The decrease in revenue from fiscal 1995 was attributable 
principally to a reduced level of work performed for Ford Motor Company and the
U.S. Department of Energy. 

Product sales during fiscal 1996 declined 13 percent from the fiscal 1995 level
and 14 percent from the fiscal 1994 level.  The decrease is attributable to
price reductions on the Company's high voltage prototype products and decreased
sales to the solar racing market.

<PAGE>

Gross profit margins for fiscal 1996 declined to 20.9 percent compared to 31.7
percent for fiscal 1995 and were 6.6 percent higher than the fiscal 1994 margin
of 14.3 percent.  The fiscal 1996 decline is attributable to price reductions in
the Company's high voltage product line and decreased absorption of overhead
costs on sponsored development contracts. 

Research and development expenditures in fiscal 1996 rose $335,843 over the
fiscal 1995 level and declined $459,671 from the amount expended during fiscal
1994.  The fiscal 1996 increase is attributable primarily to production and
facilitization engineering activities associated with the planned launch of
volume manufacturing operations for Invacare.  The decrease from fiscal 1994
expenditures is attributable to a decline in "cost sharing" development
contracts.

General and administrative expense for fiscal 1996 rose $185,417 over the fiscal
1995 level and declined $173,705 from the amount expended in fiscal 1994.  The
fiscal 1996 increase was primarily attributable to higher levels of professional
services costs, commission expenses associated with the sublease of a portion of
the Company's facility, and an adverse arbitration award.  The decrease from the
fiscal 1994 expenditure level was primarily attributable to lower levels of 
legal expenses and reduced staffing of administrative functions.

Depreciation and amortization expense increased to $375,590 during fiscal 1996. 
The increase reflects depreciation of a commercial vehicle owned and leased by
the Company's leasing subsidiary and the amortization of intellectual property
in an expanded number of countries.

Royalty expense declined to $9,497 in fiscal 1996 reflecting lower levels of
royalty bearing content in the sale of products and services.

Interest income increased to $113,582 in fiscal 1996 compared to $50,890 and
$98,228 for fiscal 1995 and 1994, respectively.  The increases were primarily
attributable to higher levels of invested cash during fiscal 1996.

Interest expense rose to $202,798 during fiscal 1996 due to increased loan value
underlying leases issued by UQM Leasing, Inc. and interest accruals under the
waiver and option agreement with KYMCO.  See also "Liquidity and Capital
Resources" below.

Equity in loss of Taiwan joint venture rose to $45,164 in fiscal 1996 compared
to $11,952 and $3,888 for fiscal 1995 and 1994, respectively.  The increases 
were due to expanded staffing and operations at Taiwan UQM preparatory to the 
launch of manufacturing operations.

Other income rose to $43,643 in fiscal 1996 primarily as a result of a gain on
the sale of real estate held for investment and foreign currency exchange gains.

Liquidity and Capital Resources

The Company's cash balances and liquidity throughout fiscal 1996 were adequate
to meet operating needs. Net cash used by operating activities rose to 
$2,584,034 in fiscal 1996, compared to $940,459 in fiscal 1995, due primarily
to higher operating losses.  Cash requirements were funded primarily through 
the sale of common stock.

In January 1996, Invacare purchased 129,032 shares of common stock at a price of
$3.88 per share.  Net proceeds to the Company were $500,000, all of which were
applied to fund the development of a wheelchair motor for Invacare.  Contingent
on development milestones, Invacare has further agreed to purchase additional
shares at market price the proceeds of which would be used, in part, to fund
the Company's anticipated capital investment in motor manufacturing tools and
equipment.

<PAGE>

During fiscal 1996, the Company also completed two offerings of its common stock
to overseas individual and institutional investors under Regulation S.  Pursuant
to the offerings, the Company placed 1,057,708 shares of common stock and
received cash proceeds, net of offering expenses, of $3,909,379.  

In fiscal 1994, the Company, KYMCO and TLT entered into a joint venture 
agreement which provided for the formation, capitalization and operation of 
Taiwan UQM, a company organized under the laws of the Republic of China.  The 
Company purchased 39 percent of the initial stock of Taiwan UQM for NT$1,170,000
(US$45,082 on the transaction date).  Pursuant to the joint venture agreement, 
the venture partners are obligated to meet future capital calls as the Board of
Directors of Taiwan UQM, by unanimous vote, determines.  During fiscal 1995, the
company was unable to fund its capital call obligations.  In June 1995, the 
Company, KYMCO and TLT entered into a waiver and option agreement pursuant to 
which KYMCO agreed to purchase those shares of Taiwan UQM underlying the 
Company's capital call obligations.  The purchase price of such shares was 
NT$37,830,000 (U.S.$1,403,493 at October 31, 1995).  The Company was granted 
the option to repurchase the shares for the original capital call amount plus 
10 percent interest and associated transfer taxes.  In November 1996, the 
Company exercised its option and subsequently repurchased the shares from KYMCO,
thus maintaining the Company's ownership position at 39 percent of the then
outstanding shares of Taiwan UQM.  The repurchase price plus interest and taxes
totaled NT$44,175,505 (US$1,612,539 on the transaction date).

In November 1996, the Board of Directors of Taiwan UQM announced an additional
capital call to provide cash to fund facility construction and the launch of
electric component production.  The Company's capital call obligation pursuant
thereto is NT$37,050,000 (US$1,347,879 as of December 31, 1996), plus interest
at the rate of 10 percent per annum on the outstanding amount from December 1,
1996, through the due date.  The obligation is due and payable in two equal
installments on March 1, 1997 and June 1, 1997. 

The Company does not currently possess the financial resources to meet its
capital call obligations to Taiwan UQM, although it is management's intent to
meet such obligations if capital becomes available on terms acceptable to the
Company.  Accordingly, during the first quarter of fiscal 1997, the Company will
record an increase in its investment in the Taiwan joint venture and will record
a note payable to the joint venture in an amount equal to the capital call
obligation.  There can be no assurance that the Company can secure the capital
required to meet this obligation.  Should the Company be unable to do so, the
remaining joint venture partners have the right to purchase the shares otherwise
designated for sale to the Company.  In that event the Company's equity interest
would be reduced from 39 percent to approximately 20 percent.

Over the next several months, the Company expects to invest substantially 
greater amounts of capital to launch manufacturing operations for Invacare,
should Invacare elect to purchase motors from the Company. Anticipated capital
expenditures for production tooling and fixtures, production machinery,
equipment, computer hardware and software are expected to exceed $1.5
million. There can be no assurance, however, that the Company will launch volume
manufacturing operations for Invacare or others. The Company does not currently
possess sufficient cash to make the capital investment necessary to launch
manufacturing operations and there can be no assurance that the Company can
obtain the capital it requires on terms acceptable to the Company.

The Company believes that it has cash sufficient to fund non-manufacturing
operations through July 31, 1997.

The Company hopes to meet its future cash requirements for Taiwan UQM, the
launch of manufacturing operations, and non-manufacturing operations through
sponsored research and development activities, the issuance of equity or debt
securities, or a combination thereof, although there can be no assurance that
such sponsorship or financing can be arranged.

In the event the Company is unwilling or unable to arrange such sponsorship or 
financing, management would defer, or forego its future cash contributions
to Taiwan UQM, as well as its expected investment in the launch of manufacturing
operations, and modify non-manufacturing operations to a level commensurate with
the then available cash resources.

<PAGE>
                                
                         Independent Auditors' Report




The Board of Directors and Stockholders
Unique Mobility, Inc.:


We have  audited  the  accompanying  consolidated  balance  sheets  of  Unique
Mobility,  Inc. and  Subsidiaries  as of  October 31,  1996 and 1995,  and the
related consolidated statements of operations,  stockholders' equity, and cash
flows for each of the years in the three-year period ended  October 31,  1996.
These  consolidated   financial  statements  are  the  responsibility  of  the
Company's  management.  Our  responsibility  is to express an opinion on these
consolidated financial statements based on our audits.

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

In our  opinion,  the  consolidated  financial  statements  referred  to above
present fairly,  in all material  respects,  the financial  position of Unique
Mobility,  Inc. and  Subsidiaries  as of  October 31,  1996 and 1995,  and the
results of their  operations and their cash flows for each of the years in the
three-year  period  ended  October 31,  1996,  in  conformity  with  generally
accepted accounting principles.




                                       KPMG Peat Marwick LLP


Denver, Colorado
January 10, 1997

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Balance Sheets

October 31, 1996 and 1995
                                                                            

Assets                                                  1996           1995

Current assets:
   Cash and cash equivalents                        $ 3,230,246      1,796,392
   Certificates of deposit                                -            319,107
   Accounts receivable (notes 7 and 12)                 569,562        337,849
   Costs and estimated earnings in excess of
     billings on uncompleted contracts (note 2)         179,483        262,414
   Inventories (note 3)                                 408,145        404,701
   Prepaid expenses                                      37,848         35,397
   Other current assets                                  28,177         17,782

         Total current assets                         4,453,461      3,173,642

Property and equipment, at cost (note 7):
   Land (note 4)                                        335,500        335,500
   Building (note 4)                                  1,364,500      1,364,500
   Molds                                                102,113        102,113
   Transportation equipment                             258,675        251,175
   Machinery and equipment                            1,918,128      1,763,818
                                                      3,978,916      3,817,106
   Less accumulated depreciation                     (1,613,786)    (1,275,530)

         Net property and equipment                   2,365,130      2,541,576

Investment in Taiwan joint venture (note 5)           1,366,540      1,432,735

Patent and trademark  costs,  net of  accumulated
   amortization of $40,030 and $25,491 (note 11)        519,966        450,394
 Other assets                                             7,552         27,831

                                                    $ 8,712,649      7,626,178

                                                                   (Continued)
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Balance Sheets, Continued

                                                                              

Liabilities and Stockholders' Equity                      1996          1995

Current liabilities:
   Accounts payable                                 $    121,790        83,859
   Note payable to Taiwan joint venture                1,375,121     1,403,493
       participant (note 5)
   Other current liabilities (note 6)                    400,574       464,186
   Current portion of long-term debt (note 7)             61,094        81,525
   Billings in excess of costs and estimated
       earnings on uncompleted contracts (note 2)         25,685         -

         Total current liabilities                     1,984,264     2,033,063

Long-term debt, less current portion (note 7)            744,389       807,003

         Total liabilities                             2,728,653     2,840,066

Minority interest in consolidated subsidiary (note 4)    391,120       389,065

Stockholders' equity (notes 9 and 10):
   Common stock, $.01 par value, 50,000,000 shares
     authorized; 11,751,365 and 10,571,953 shares        117,514       105,720
     issued
   Additional paid-in capital                         23,021,339    18,887,886
   Accumulated deficit                               (17,331,279)  (14,426,536)
   Notes receivable from officers                        (65,816)      (52,421)
   Cumulative translation adjustment                     (21,030)        - 
   Treasury stock, at cost, 39,341 and 37,341 shares    (127,852)     (117,602)


         Total stockholders equity                    5,592,876     4,397,047

Commitments (notes 5, 14 and 15)

                                                    $  8,712,649     7,626,178


See accompanying notes to consolidated financial statements.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Operations

Years Ended October 31, 1996, 1995 and 1994
                                                                               

                                           1996          1995          1994
Revenue:
   Contract services (note 12)         $  1,436,484     4,031,951    1,643,203
   Product sales                            611,213       701,700      708,917
                                          2,047,697     4,733,651    2,352,120

Operating costs and expenses:
   Costs of revenue                       1,620,743     3,232,786    2,016,914
   Research and development               1,628,646     1,292,803    2,088,317
   General and administration             1,157,827       972,410    1,331,532
   Depreciation and amortization            375,590       346,567      271,772
   Royalty (note 11)                          9,497        23,423       11,458
                                          4,792,303     5,867,989    5,719,993

       Operating loss                    (2,744,606)   (1,134,338)  (3,367,873)

Other income (expense):
   Minority interest share of earnings of
      consolidated subsidiary               (69,400)      (64,627)     (69,517)
   Interest income                          113,582        50,890       98,228
   Interest expense                        (202,798)     (177,051)     (73,813)
   Equity in loss of Taiwan joint
      venture (note 5)                      (45,164)      (11,952)      (3,888)
   Other                                     43,643         6,645       21,507
                                           (160,137)     (196,095)     (27,483)

       Net loss                        $ (2,904,743)   (1,330,433)  (3,395,356)

       Net loss per common share           $(.26)         (.13)        (.35)

Weighted average number of shares of
  common stock outstanding               11,021,742    10,090,778    9,763,391


See accompanying notes to consolidated financial statements.

<PAGE>

                                                                              
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

Years Ended October 31, 1996, 1995 and 1994
                                                                             
<TABLE>                                                                                                Notes
<CAPTION>                                      Number of          Additional  Cumulative  Accumu-   receivable          Total    
                                                shares    Common    paid-in   translation  lated     due from  Treasury stockholders
                                                issued     stock    capital   adjustment  deficit    officers  stock     equity
<S>                                          <C>        <C>       <C>        <C>         <C>         <C>      <C>       <C>     
Balances at October 31, 1993                  9,461,385 $  94,614 15,557,205     -       (9,700,747) (31,944) (41,823)  5,877,305

Issuance of common stock upon exercise
    of Alcan preemptive right (note 9)          111,395     1,114     199,397     -         -           -        -         200,511
Issuance of common stock upon exercise
    of underwriter warrants (note 10)           20,000       200      46,400     -         -           -        -          46,600
Issuance of common stock upon exercise
    of employee options                        325,133     3,251     936,996     -         -         (18,727) (53,649)    867,871
Issuance of common stock for directors'
    compensation                                 6,000        60      42,490     -         -           -        -          42,550
Issuance of common stock under
    employee stock purchase plan                 1,632        16       8,507     -         -           -        -           8,523
Net loss                                         -            -        -         -     (3,395,356)     -        -      (3,395,356)
Balances at October 31, 1994                 9,925,545    99,255  16,790,995     -    (13,096,103)   (50,671)  (95,472) 3,648,004

Issuance of common stock, net of offering costs
     of $141,446                               581,111     5,812   1,944,742     -         -           -        -       1,950,554
Issuance of common stock upon exercise of
     employee options                           64,786       648      99,628     -         -          (1,750)  (22,130)    76,396
Issuance of common stock under employee stock
     purchase plan                                 511         5       2,521     -         -           -         -          2,526
Issuance of warrants for services                -            -       50,000     -         -           -         -         50,000
Net loss                                         -            -        -         -     (1,330,433)     -         -     (1,330,433)

Balances at October 31, 1995                10,571,953   105,720  18,887,886     -    (14,426,536)   (52,421)  (117,602)4,397,047

Issuance of common stock, net of offering costs
     of $247,309                             1,057,708    10,577   3,898,802     -         -           -         -      3,909,379
Issuance of common stock upon exercise of
     employee options                          100,542     1,005     153,205     -         -         (13,395)   (10,250)  130,565
Issuance of common stock under employee  stock
     purchase plan                               6,668        67      20,200     -         -           -          -        20,267
Issuance of common stock for services           14,494       145      61,246     -         -           -          -        61,391
Cumulative translation adjustment                -            -        -       (21,030)    -           -          -       (21,030)
Net loss                                         -            -        -         -      (2,904,743)    -          -    (2,904,743)

Balances at October 31, 1996                11,751,365 $ 117,514  23,021,339   (21,030)(17,331,279)  (65,816)  (127,852)5,592,876
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>


UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended October 31, 1996, 1995 and 1994
                                                                              

                                              1996         1995        1994

Cash  flows from (used  by) operating
    activities:
   Net loss                                $(2,904,743) (1,330,433) (3,395,356)
   Adjustments to reconcile net loss to
     net cash used by operating
     activities:
       Depreciation and amortization           375,590     346,567     271,772
       Minority interest share of earnings
          of consolidated subsidiary            69,400      64,627      69,517
       Noncash compensation expense for
          common stock and warrants issued
          for services                          61,391      50,000      42,550
       Equity in loss of Taiwan joint         
          venture                               45,164      11,952       3,888
       Gain on sale of property and      
          equipment                            (45,676)     (3,534)       -
       Other                                   (20,092)       (466)     35,919
       Change in operating assets and
          liabilities:
         Accounts receivable and costs
           and estimated earnings in excess
           of billings on uncompleted     
           contracts                          (148,782)    161,223      28,995
         Inventories                            (3,444)     70,450      52,215
         Prepaid expenses and other
            current assets                     (12,846)     27,105      28,660
         Accounts payable and other
            current liabilities                (25,681)   (200,703)    276,212
         Billings in excess of costs and
            estimated earnings on          
            uncompleted contracts               25,685    (137,247)     74,060

              Net cash used by operating  
                 activities                 (2,584,034)   (940,459) (2,511,568)

Cash from (used by) investing activities:
   Acquisition of property and equipment      (182,011)   (440,079)   (413,907)
   Increase in patent and trademark costs      (92,390)    (64,766)   (131,652)
   Investment in Taiwan joint venture            -           -         (45,082)
   Proceeds from sale of certificates of
      deposit and other investments            319,107     117,127       -
   Proceeds from sale of property and   
      equipment                                 63,361       -           -   
              Net cash from (used by)
                investing activities           108,067    (387,718)   (590,641)
             

                                                                    (Continued)
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
                                                                              

                                               1996          1995        1994
Cash flows provided by financing
  activities:
   Proceeds from borrowings                  $   -          212,337      -
   Repayment of debt                           (83,045)    (250,905)   (36,077)
   Proceeds from sale of common stock, net   3,909,379    1,950,554      -
   Issuance of common stock upon exercise
     of employee options                       130,565       76,396    867,871
   Issuance of common stock under
      employee stock purchase plan              20,267        2,526      8,523
     purchase plan
   Issuance of common stock upon exercise  
     of underwriter warrants                     -            -         46,600
   Issuance of common stock upon  exercise
     of Alcan preemptive right                   -            -        200,511
   Distributions paid to holders of          
     minority interest                         (67,345)     (67,347)   (60,613)
            Net cash provided by financing
              activities                     3,909,821    1,923,561  1,026,815
            Increase (decrease) in cash
              and cash equivalents           1,433,854      595,384 (2,075,394)
Cash and cash equivalents at beginning of   
   year                                      1,796,392    1,201,008  3,276,402

Cash and cash equivalents at end of year   $ 3,230,246    1,796,392  1,201,008

Interest paid in cash during the year      $    82,494       89,133     72,638

Non-cash investing and financing transactions:

   In 1995,  the Company  financed  its  additional  investment  in the Taiwan
   joint  venture  through  the  issuance  of a note  payable in the amount of
   $1,403,493 (see note 5).

   In accordance with the provisions of the Company's stock option plans,  the
   Company  accepts as payment of the  exercise  price,  mature  shares of the
   Company's  common stock held by the option  holder for a period of 6 months
   prior  to  the  date  of the  option  exercise.  The  shares  received  are
   recorded at cost as treasury  stock.  In fiscal  1996,  1995 and 1994,  the
   Company  issued  13,666,  32,130  and  24,364  shares of  common  stock for
   options exercised for an aggregate  exercise price of $10,250,  $22,130 and
   $53,649,  respectively,  for which the Company  received  2,000,  5,365 and
   6,813 shares of common stock.

   In accordance  with the  provisions of the Company's  stock options  plans,
   the Company may, and has,  accepted  promissory  notes from officers of the
   Company in satisfaction of the exercise price of options  exercised.  These
   notes receivable are recorded as a reduction of shareholders  equity in the
   consolidated  financial  statements.  In fiscal  1996,  1995 and 1994,  the
   Company  issued  13,395,  2,900 and 48,352  shares of common  stock with an
   aggregate exercise price of $13,395, $1,750 and $18,727,  respectively, for
   which the Company received promissory notes for the same amount.


See accompanying notes to consolidated financial statements.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

October 31, 1996 and 1995
                                                                              

(1)  Summary of Significant Accounting Policies

      (a) General Business

          Unique Mobility,  Inc. and  Subsidiaries  (the "Company") is engaged
          in the research,  development and  commercialization of electric and
          hybrid electric vehicles,  propulsion systems for such vehicles,  as
          well as other non-automotive  applications of its technologies.  The
          Company's  revenue is derived  primarily from contract  research and
          development  services  and  sales of  products  developed  from such
          technology.

          The  Company's  operations  are based in the  United  States  with a
          significant investment in a joint venture in Taiwan.

      (b) Principles of Consolidation

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

          The minority  interests as of October 31,  1996 and 1995,  consisted
          of the other  stockholders' ownership  interests in a subsidiary of
          the Company.

      (c) Cash, Cash Equivalents and Certificates of Deposit

          The Company  considers  cash on hand and  investments  with original
          maturities  of  three  months  or  less  to  be  cash   equivalents.
          Certificates of deposit are carried at cost.

      (d) Inventories

          Inventories  are  stated  at the  lower of cost or  market.  Cost is
          determined by the first-in, first-out method.

      (e) 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 five  years  except for the
          building  which  is  depreciated  over  31  years.  Maintenance  and
          repairs are charged to expense as incurred.

      (f) Investment in Taiwan Joint Venture

          The Company's  investment  in a joint  venture  located in Taiwan is
          accounted  for under the  equity  method of  accounting.  Under this
          method, the investment,  originally recorded at cost, is adjusted to
          recognize the  Company's  share of the net earnings or losses of the
          joint venture as they occur.  Income or loss  recognition is limited
          to the  extent  of the  Company's  investment  in,  advances  to and
          guarantees of the joint venture.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

 (1)  Summary of Significant Accounting Policies (continued)

      (g) 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  and the  maintenance  of patents
          issued.  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.

      (h) Long-Lived Assets

          In March 1995,  the  Financial  Accounting  Standards  Board  issued
          Statement of Financial  Accounting Standards No. 121, Accounting for
          the Impairment of Long-Lived  Assets and for Long-Lived Assets to Be
          Disposed Of ("SFAS 121").  SFAS 121 requires that long-lived  assets
          and  certain  identifiable  intangibles  to be held  and  used by an
          entity be  reviewed  for  impairment  whenever  events or changes in
          circumstances  indicate that the carrying amount of an asset may not
          be  recoverable.  The  Company  adopted  SFAS  121 in  1996  and the
          adoption  of SFAS  121  did not  have  an  effect  on the  Company's
          financial statements.

      (i) Contract Services

          Revenue  relating  to service  contracts,  the terms of which is one
          year or less, is  recognized  using the  completed-contract  method.
          Revenue  relating to long-term  fixed price  contracts is recognized
          using the  percentage  of  completion  method.  Revenue  relating to
          cost-plus  type  contracts is  recognized  as costs are incurred and
          billed to the  customer.  Revenue  related  to  milestone  billing
          contracts is recognized  upon the  completion  of certain  stages of
          the project based upon previously agreed amounts.

      (j) 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.  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.  Under  Statement  109,  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.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

      (k) Research and Development

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

      (l) Foreign Currency Translation

          The  net  assets  of  the  foreign  investment  of  the  Company  is
          translated at the  appropriate  period-end  exchange  rates.  Income
          and expense  accounts are  translated  at average  monthly  exchange
          rates.   Net   exchange   gains  or  losses   resulting   from  such
          translation  are excluded from results of operations and accumulated
          in a separate  component of stockholders'  equity.  Gains and losses
          from  foreign  currency  transactions  are  included in other income
          (expense).

      (m) Loss Per Common Share

          Loss per common  share is based on the  weighted  average  number of
          shares of common stock  outstanding  during each year.  Common stock
          equivalents  were not  included in the  computations  because  their
          effect was anti-dilutive.

      (n) 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.

      (o) Reclassifications

          Certain prior year amounts have been  reclassified to conform to the
          1996 presentation.

 (2)  Revenue in Excess of Billings and Billings in Excess of Revenue

      At October 31,  1996,  the  estimated  period to complete  contracts  in
      process  ranges from one to eight  months,  and the  Company  expects to
      collect  substantially  all related  accounts  receivable  and costs and
      estimated  earnings  in  excess of  billings  on  uncompleted  contracts
      within one year.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

      The following summarizes contracts in process at October 31:

                                                    1996         1995

           Costs incurred on uncompleted       
              contracts                        $ 1,081,352      904,934 
           Estimated earnings                      596,765      272,851
                                                 1,678,117    1,177,785

           Less billings to date                 1,524,319      915,371

                                               $   153,798      262,414

           Included in the accompanying
             balance sheets as follows:
                Costs and estimated earnings
                   in excess of billings on     
                   on uncompleted contracts    $   179,483      262,414
                Billings in excess of costs
                   and estimated earnings on
                   estimated earnings on    
                   uncompleted contracts           (25,685)       -
                  
                                               $   153,798      262,414

 (3)  Inventories

      Inventories at October 31, consists of:

                                                    1996         1995

               Raw materials                     $ 273,527      247,225
               Work in process                      55,996       31,525
               Finished products                    78,622      125,951

                                                 $ 408,145      404,701

 (4)  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   serves  as  the  Company's   corporate   headquarters.
      Ownership in this limited  liability  company is divided equally between
      the Company and the private investor;  however, the Company is deemed to
      have a controlling  interest in the limited  liability company by virtue
      of its management  responsibilities  and the limited  liability  company
      is,  therefore,  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.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

 (5)  Investment in Taiwan Joint Venture

      On January 29,  1994 the Company,  Kwang Yang Motor Co. Ltd.  ("KYMCO"),
      and Turn  Luckily  Technology  Co. Ltd.  ("TLT"),  entered  into a joint
      venture  agreement  (the "Joint  Venture  Agreement")  providing for the
      formation,  funding, and operation of Taiwan UQM Electric Company, Ltd.,
      a company  organized  under the laws of the  Republic of China  ("Taiwan
      UQM").  Taiwan UQM was incorporated in April 1995.

      In 1994,  the Company  purchased  39% of the initial  equity  capital of
      Taiwan  UQM for  $45,082,  and  agreed to invest  39% of any  additional
      capital calls.  Pursuant to the Joint Venture  Agreement,  the venturers
      are required to invest  additional  funds in Taiwan UQM, as the board of
      directors of Taiwan UQM by unanimous vote determines to be required.

      During  1995,  the Company was unable to make  payments  for  additional
      capital  call  obligations  under  the  Joint  Venture  Agreement.   The
      Company,  KYMCO and TLT entered into a Waiver and Option  Agreement (the
      "Option  Agreement")  on June 12,  1995,  whereby  KYMCO agreed to first
      purchase those shares of Taiwan UQM underlying the Company's  additional
      capital call  obligations in the amount of $1,403,493.  Under the Option
      Agreement,  the Company has the option to  repurchase  these shares from
      KYMCO for the additional  capital call amount,  plus interest at 10% per
      annum.  It was the intent of  management  of the  Company to  repurchase
      the shares and maintain the Company's  equity  interest in Taiwan UQM at
      39%.  The  purchase  by KYMCO of the  shares  related  to the  Company's
      additional  capital  call  obligations  has  been  accounted  for  as  a
      financing  arrangement.  Accordingly,  for financial reporting purposes,
      as of October 31,  1995, the Company recorded  $1,403,493 as an addition
      to its  investment  in the joint  venture  and as a note  payable to the
      joint venture  participant.  The note payable  remained  outstanding  at
      October 31,  1996, with the decrease in its recorded value to $1,375,121
      due to exchange rate fluctuations.

      The  Company  exercised  its  option  prior  to  the  November 30,  1996
      expiration  date of the option and tendered  cash to repay the principal
      amount due to the joint venture  participant.  The related  interest and
      taxes due under the Option  Agreement were also paid in conjunction with
      the  payment of the  principal  amount.  The  exercise  of the option to
      repurchase  the shares of Taiwan  UQM from KYMCO and the  payment of the
      amounts due allowed the Company to maintain  its 39% equity  interest in
      Taiwan UQM.

      Summarized unaudited financial information for Taiwan UQM is as follows:

          Financial Position                             October 31, 1996

          Current assets                                    $   330,826
          Noncurrent assets - land and construction           3,196,300
          in process

                Total assets                                $ 3,527,126


                                                                   (Continued)
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

          Current liabilities                               $    19,816
          Noncurrent liabilities                                  3,361
          Stockholders' equity                                3,503,949

                Total liabilities and equity                $ 3,527,126

                                                            Year ended
          Results of Operations                          October 31, 1996

          Revenue                                            $     - 
          Expenses                                              128,214

          Net loss                                            $(128,214)

 (6)  Other Current Liabilities

      Other current liabilities at October 31, consists of:
                                                           1996          1995
 
          Accrued subcontractor expense                $    -          174,781
          Accrued interest                                214,002       93,698
          Accrued legal and accounting fees                45,237       48,611
          Accrued payroll, consulting,  personal
          property and real estate taxes                   52,585       44,882
          Other                                            88,750      102,214

                                                        $ 400,574      464,186

 (7)  Long-term Debt

      Long-term debt at October 31, consists of:            1996        1995

      Note  payable to bank, in  monthly installments
         with interest at the bank's prime rate plus
         1.0% (9.25% at October 31, 1996); matures
         October 2007; secured by land and building      $ 789,793     829,714
         with a net book value of $1,521,304
      Note payable to bank, in monthly installments
         with interest at 12%; matures November 1997;
         secured by all of the  Company's accounts at
         the bank and all accounts receivable and           15,690      58,814
         certain equipment with a net book value of
         $644,562

               Total long-term debt                        805,483     888,528

         Less current portion                               61,094      81,525

               Long-term debt, less current portion      $ 744,389     807,003

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
                                                                              

      Effective  December 1,  1996, the Company refinanced its note payable to
      the bank  (maturing  October 2007).  The full amount of the  outstanding
      note balance was refinanced with a new note payable bearing  interest at
      a fixed rate of 9.1% per annum.

      Considering  the  effects  of this  refinancing,  the  annual  aggregate
      maturities of long-term  debt for each of the next five fiscal years and
      thereafter are as follows:

                   1997                                 $  59,485
                   1998                                    47,681
                   1999                                    52,271
                   2000                                    57,303
                   2001                                    62,819
                   Thereafter                             525,924

                                                        $ 805,483

 (8)  Income Taxes

      At October 31,  1996,  temporary  differences that give rise to deferred
      tax  assets  and  deferred  tax  liabilities   principally  include  net
      operating  loss   carryforwards  and  research  and  development  credit
      carryforwards   for   income   tax   purposes.   Deferred   tax   assets
      attributable to net operating loss  carryforwards  and other tax credits
      are offset in full by a valuation allowance.

      At October 31,  1996,  the Company had net operating loss  carryforwards
      for  income  tax  purposes  aggregating   approximately  $17.1  million.
      Approximately  $1.4 million of the net operating loss  carryforwards  is
      attributable to stock options,  the benefit of which will be credited to
      additional   paid-in   capital   if   realized.   Net   operating   loss
      carryforwards  are  subject  to  certain  rules  limiting  their  annual
      usage.  These  carryforwards will expire in varying amounts between 1998
      and 2011.

 (9)  Stockholders' Equity

      Alcan  Aluminum  Limited  (Alcan)  and  certain   affiliates  of  Advent
      International  Corporation  (Advent)  and  Techno-Venture  U.S.A.,  Inc.
      (Techno),  significant  stockholders,  have preemptive rights to acquire
      16.7%, 13.1% and 2.1%,  respectively,  of the Company's shares of common
      stock  offered  in any  offering  for so long as they hold any shares of
      the Company s common stock.

      Additionally,  Alcan  has the right of first  refusal  to  purchase  any
      private  placement  equity  securities  to be  issued  or sold to  third
      parties  if such  issuance  would  cause  such  parties  to  became  the
      beneficial  owner of more than 5% of any class of the  Company's  equity
      securities.  Separately,  the Company's  Chairman,  who holds or has the
      right to acquire  904,438  shares of the  Company's  common  stock,  has
      granted  Alcan a right of first  refusal  to  purchase  any shares to be
      sold or transferred by the Chairman in any public or private sale.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

(10)  Common Stock Options and Warrants

      Incentive and Non-Qualified Option Plans

      The  Company  has  reserved  4,104,000  shares of  common  stock for key
      employees,  consultants,  and key  suppliers  under  its  Incentive  and
      Non-Qualified  Option plans.  Options  become  exercisable as determined
      by the Board of  Directors  and expire  within 10 years from the date of
      grant.  The  maximum  number  of  shares  that  may  be  granted  to any
      eligible  employee  during the term of the Plan is 500,000  shares.  The
      options  require  holders to abide by certain  Company  policies  on the
      trading of Company's common stock.

      The following table summarizes activity under the plans:
                                                   Shares under      Per share
                                                      option       option price

      Outstanding at October 31, 1993                 1,712,865   $ .375 - 8.00
      Granted                                           618,333     5.00 - 8.13
      Exercised                                        (325,133)    .375 - 3.50
      Forfeited                                         (91,532)    3.50 - 6.88

      Outstanding at October 31, 1994                 1,914,533      .50 - 8.13
      Granted                                           100,000            5.00
      Exercised                                         (64,786)     .50 - 3.50
      Forfeited                                         (97,515)    3.50 - 6.88

      Outstanding at October 31, 1995                 1,852,232      .50 - 8.13
      Granted                                           590,000     4.13 - 4.75
      Exercised                                        (100,542)     .50 - 3.50
      Forfeited                                        (315,978)    3.50 - 8.13

      Outstanding at October 31, 1996                 2,025,712      .50 - 8.13

      Exercisable at October 31, 1996                 1,616,820

      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  reserved  250,000  shares of
      common stock for issuance  pursuant to the exercise of options under the
      Plan.  The options vest ratably over a three-year  period  beginning one
      year from the date of grant and are  exercisable  for 10 years  from the
      date of  grant.  Option  prices  are equal to the fair  market  value of
      common shares at the date of grant.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

(10)  Common Stock Options and Warrants (continued)

      The following table summarizes activity under the plan:

                                                         Shares     Per share
                                                          under     exercise 
                                                         option       price

          Granted during 1994 and outstanding at
             October 31, 1994                             48,000    5.38 - 6.25
          Granted                                         61,333    5.00 - 5.13

          Outstanding at October 31, 1995                109,333    5.00 - 6.25
          Granted                                         32,000    4.38

          Outstanding at October 31, 1996                141,333    4.38 - 6.25

      At October 31, 1996 options to purchase 52,444 shares were exercisable.

      Warrants

      In connection with a 1991 common stock issuance,  the underwriters  were
      issued warrants to acquire 140,000 shares of the Company's  common stock
      at $2.32 per share.  During  fiscal  1993,  the  underwriters  exercised
      warrants  for  120,000  shares of the  Company's  common  stock.  During
      fiscal 1994, the underwriters  exercised the remaining warrants and were
      issued 20,000 shares of the Company's common stock.

      In connection with a 1992 common stock issuance,  the underwriters  were
      issued warrants to acquire 100,000 shares of the Company's  common stock
      at $6.00 per share.  These warrants  expired  unexercised on December 2,
      1995.

      In  connection  with  the  original  issuance  of  certain  subordinated
      convertible term notes to Advent and Techno,  the Company granted Advent
      and Techno  warrants to acquire  790,000 shares of the Company's  common
      stock at the lower of $2.40 per share or the market  price of the common
      stock averaged over the 30 trading days  immediately  preceding the date
      of exercise.  The warrants  expire August 1997, and allow for a cashless
      exercise of the warrants into common shares based on the spread  between
      the market  price of the common  stock on the date of  exercise  and the
      $2.40  exercise  price.  All of these  warrants  remain  outstanding  at
      October 31, 1996.

      The Company has  reserved  300,000  shares of common  stock for issuance
      pursuant to a warrant  agreement  with an  investment  banking  company.
      Warrants  to  acquire   200,000   shares  of  common   stock  vested  on
      January 20,  1994 and the remaining 100,000 shares vested on January 20,
      1995.  The  warrants  were  exercisable  for a  period  of  five  years,
      expiring on  January 19,  1999, at a price of $7.63 per share.  Further,
      the warrants were  redeemable on a one-time basis only through  June 30,
      1994, for a like number of warrants.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

      at the then  current  fair market  value of the  Company's  common stock
      with otherwise  identical  terms.  On April 18,  1994, the warrants were
      redeemed in  accordance  with the above  provision  for a like number of
      warrants  which  are  exercisable  at a price of $6.00  per  share.  The
      warrants   contain   transfer   restrictions   and  provisions  for  the
      adjustment  of the exercise  price and the number and type of securities
      issuable upon exercise  based on the occurrence of certain  events.  All
      of these warrants remain outstanding at October 31, 1996.

      In connection with the 1995 common stock  issuance,  the placement agent
      was issued warrants  expiring  July 21,  1998, to acquire 150,000 shares
      of the  Company's  common  stock  at  $5.75  per  share.  All  of  these
      warrants remain outstanding at October 31, 1996.

      In connection  with the 1996 private  placements,  the placement  agents
      were issued  warrants to acquire 50,000 shares of the Company's stock at
      $4.75 per share on  February 27,  1996,  38,100  shares of the Company's
      stock at $5.00 per share on May 31,  1996 and 50,000 shares at $4.25 per
      share on September 30,  1996, being the market price of the common stock
      of the  Company  at the  date of each  respective  grant.  The  warrants
      expire  three  years from the date of  issuance.  All of these  warrants
      remain outstanding at October 31, 1996.

      Financial Accounting Standards No. 123

      In  October  1995,  the  Financial  Accounting  Standards  Board  issued
      Statement of Financial  Accounting  Standards  No. 123,  Accounting  for
      Stock-Based  Compensation  ("SFAS  123"),  effective  for  fiscal  years
      beginning after  December 15,  1995. This statement defines a fair value
      method of accounting for employee stock options and encourages  entities
      to adopt that method of  accounting  for its stock  compensation  plans.
      SFAS 123 allows an entity to continue to measure  compensation costs for
      those  plans  using the  intrinsic  value  based  method  of  accounting
      prescribed  by  Accounting   Pronouncement   Bulletin  Opinion  No.  25,
      Accounting  for Stock  Issued to Employees  ("APB 25").  The Company has
      elected to  continue  to account  for its  employee  stock  compensation
      plans  as   prescribed   under  APB 25  and  will  make  the  pro  forma
      disclosures  of net income and earnings  per share  required by SFAS 123
      beginning with its annual financial statements for fiscal 1997.

(11)  Alcan Agreements

      The Company had previously  entered into  agreements  with Alcan.  Under
      terms of the  agreements,  the Company's then existing motor  technology
      and  technology  resulting  from  development  projects  for Alcan  were
      cross-licensed  between  Alcan  and  the  Company.  Royalties  from  the
      manufacture  and sale of licensed  products  and a portion of  royalties
      received  from the  sub-licensing  of  technology  to third parties were
      payable  by the  licensing  party  to the  other if the  technology  was
      commercialized.  During  1994,  the Company and Alcan  executed  another
      agreement,  in which  Alcan  assigned  to the Company all of its rights,
      title and  interests  in all  technology  developed  under the  original
      agreements  between Alcan and the Company.  The 1994  agreement  further
      provides  that the  Company  shall  pay to Alcan  royalties  on  revenue
      derived  from  the   manufacture  and  sale  of  products  or  processes
      embodying  the  related  technology.  In  addition,  subject  to certain
      conditions,  Alcan has agreed to  reimburse  the  Company for 50% of its
      patent application and maintenance expenditures,  up to an amount not to
      exceed the annual royalties from the Company.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

      During fiscal 1996, 1995 and 1994, the Company  recorded royalty expense
      of $9,497, $23,423 and $11,458,  respectively,  all of which was applied
      to the reduction of patent application and maintenance expenditures.

(12)  Significant Customers

      The Company  has  historically  derived  significant  contract  services
      revenue  from a few key  customers.  During the year  ended  October 31,
      1996, the Company  derived  $911,533 of contract  services  revenue from
      four  customers,  representing  63%  of  revenue  earned  from  contract
      services.   Accounts   receivable   from  these  four   customers   also
      represented 38% of total accounts receivable at October 31, 1996.

      In the years  ended  October 31,  1995 and  1994,  the  Company  derived
      $3,258,097  and $966,831,  respectively,  of contract  services  revenue
      from three and three customers, respectively,  representing 81% and 59%,
      respectively,  of revenue  earned from  contract  services.  These three
      customers also  represented 32% and 39% of total accounts  receivable at
      October 31, 1995 and 1994, respectively.

      Contract  services  revenue  derived from contracts with agencies of the
      U.S.  Government  and from  sub-contracts  with  U.S.  Government  prime
      contractors,  certain  portions of which are  included  in revenue  from
      other key  customers  above,  totaled  $800,208 and  $2,478,350  for the
      years ended October 31, 1996 and 1995, respectively.

(13)  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,   notes  payable  to  joint  venture  participant,   and
          accounts payable:

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

          Long-term debt:

          The carrying  amount of the Company's  long-term  debt  approximates
          fair  value  since the  interest  rate on the debt is at a  variable
          rate.

(14)  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  including
      the   Company's   common   stock.   The  Company   matches   participant
      contributions  on  a   dollar-for-dollar   basis  on  the  participant's
      contributions up to 5% of the participant's

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

                                                                              

      salary and 25% of  participant  contributions  in excess of this  limit,
      subject to certain  limitations.  These  contributions vest ratably over
      a three-year period.  Matching  contributions to the Plan by the Company
      were $90,935, $98,441 and $95,257 for the years ended October 31,  1996,
      1995 and 1994, respectively.

      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  200,000  shares of common  stock for
      issuance  under  the  stock  purchase  plan.   During  the  years  ended
      October 31,  1996,  1995 and 1994, the Company issued 6,668 shares,  511
      shares and 1,632 shares of common stock,  respectively,  under the stock
      purchase plan.

(15)  Subsequent Events

      Additional Capital Call

      In November  1996, the board of directors of Taiwan UQM resolved to make
      an  additional   capital  call  on  all  joint   venture   partners  due
      December 1,  1996.  The  Company's  additional  capital call  obligation
      approximates  $1.35  million as of  December 1,  1996.  The  Company has
      reached an agreement  with the joint venture  partners to meet this call
      obligation  by paying 50% of the  obligation  by  March 1,  1997 and the
      remaining  50% by June 1,  1997.  The Company  will pay  interest at 10%
      per annum to Taiwan  UQM on the  outstanding  capital  call  obligation.
      Should  the  Company  be  unable to meet  these  call  obligations,  the
      remaining  joint  venture  participants  have the right to purchase  the
      shares  otherwise  designated  for sale to the  Company.  In that event,
      the Company's  equity  interest  would be reduced from 39% to 20%. It is
      the  intent of the  management  of the  Company  to meet  these  revised
      capital call  payments and maintain  the  Company's  equity  interest in
      Taiwan UQM at 39%.

      Stock Option Grant

      Effective as of January 1,  1997,  the Company  entered into  three-year
      employment  agreements  with  its  three  executive  officers,   Messrs.
      Geddes,   Rankin  and  French.  In  conjunction  with  these  employment
      agreements,  the Company  issued  78,000,  127,459 and 94,541 options to
      Messrs.  Geddes, Rankin and French,  respectively,  under its 1992 Stock
      Option Plan.  The options vest  equally on the  anniversary  date of the
      agreements  over  the  three-year  vesting  period;  provided  that if a
      change of control event occurs and each individual  remains  continually
      employed  by the  Company  through  the  date of such  event,  then  all
      options  that have not vested will become  vested as of the date of such
      event.

<PAGE>

ITEM 9.   CHANGE IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.


          None.

<PAGE>

                             PART III


ITEM 10.  Directors and Executive Officers of the Registrant

The following table contains information concerning the members of the Board of
Directors of the Company:

                                         Officer            
                   Position with       or Director        
  Name      Age     the Company           Since        Business Experience

Ray A.      64    Chairman of the Board    1981      President from 1991 through
Geddes            and Chief Executive                1995, Chairman of the Board
                  Officer; Member of                 of Directors and Chief
                  Executive Committee                Executive Officer since
                  and Compensation &                 1984
                  Benefits Committee
                                      

Frank       58   Director and Member       1993      Consultant to industry and
Hodsoll          of Compensation and                 government since 1992;
                 Benefits Committee,                 Deputy Director for Manage-
                 Stock Option Committee              ment and Budget (Washington
                 and Audit Committee                 D. C.) from 1991 through
                                                     1992; Executive Associate
                                                     Director and Chief
                                                     Financial Officer, United
                                                     States Office of
                                                     Management and Budget
                                                     from 1989 through 1991;
                                                     Chairman, National
                                                     Endowment for the Arts
                                                     from 1981 through 1989.

William    53    Director, President       1992      President and Chief
G. Rankin        and Chief Operating                 Operating Officer since
                 Officer                             January 1996; Executive
                                                     Vice President-Operations 
                                                     from 1992 through 1995; 
                                                     General Manager-Deere Tech
                                                     Services, a division of
                                                     Deere and Company
                                                     (Moline, IL), a
                                                     manufacturer of
                                                     agricultural,
                                                     construction and
                                                     consumer equipment from
                                                     1986 through 1992.

H. J.       67   Director and Member      1994      Senior Counselor, Kearns
Young            of Executive Committee,            & West (Washington, D. C.),
                 Compensation & Benefits            an international public
                 Committee, and Audit               relations firm since 1994;
                 Committee                          Senior Vice President,
                                                    Edison Electric Institute   
                                                    (Washington, D.C.) from  
                                                    1982 through 1994.

<PAGE>
                                              
J. B.       60   Director, Member of      1995      President, Invacare
Richey           Executive Committee,               Technologies & Senior       
                 Stock Option Committee             Management, Invacare 
                                                    Corporation, since 1992,
                                                    Senior Vice-President and  
                                                    American Operations,
                                                    Invacare Corporation, from
                                                    1989 to 1992 and Senior
                                                    Vice President-Product 
                                                    Development, Invacare 
                                                    Corporation, from 1984 to
                                                    1992. Director, Invacare
                                                    Corporation, Steris
                                                    Corporation and Royal
                                                    Appliance Manufacuring   
                                                    Company.


No family relationship exists between any director, executive officer,
significant employee or person nominated or chosen by the Company to become a
director or executive officer.

There are no arrangements or understandings between any director and any other
person pursuant to which any director was nominated as a director except as
follows:

The Company has executed a note and warrant purchase agreement with affiliates
of Advent International Corporation ("Advent Group") and Techno-Venture U.S.A.,
Inc. (Techno) whereby the Company has agreed to nominate and recommend for
election to the Company's Board of Directors one person designated by the Advent
Group and Techno for so long as warrants convertible into not less than 5 
percent of the Company's common stock are outstanding.  The Advent Group and 
Techno have waived their right pursuant to this agreement.

The Company has executed a stock purchase agreement with Invacare Corporation
whereby the Company has agreed to nominate and recommend for election to the
Company's Board of Directors one person designated by Invacare for so long as
Invacare owns at least 100,000 shares of the Company's common stock and is not
in default of certain agreements.  Mr. Richey currently serves on the Board of
Directors pursuant to this agreement.

<PAGE>

MANAGEMENT

The executive officers of the Company are:

Name                   Age       Position

Ray A. Geddes          64        Chairman of the Board of Directors and
                                 Chief Executive Officer

William G. Rankin      53        Director, President and Chief
                                 Operating Officer

Donald A. French       41        Treasurer, Controller and Chief
                                 Financial Officer


Ray A. Geddes, a director since 1981, joined the Company as Chairman of the
Board, Chief Executive Officer and Treasurer in 1984.  From 1991 through 1995,
Mr. Geddes held the additional office of President.  Prior to joining the
Company, Mr. Geddes was an independent consultant to the automotive industry 
from 1974 through 1984.  For twelve years prior to that, Mr. Geddes was employed
by Ford Motor Company in various management capacities including Executive Vice
President of Ford's Italian Automobile Group where he was responsible for the
production and marketing of the Ford Pantera sports car and Program Manager for
the production, marketing, and field support activities for several specialty
vehicles, including the Shelby Mustang, Ford Cobra and Ford GT sports racing 
car. Mr. Geddes holds a Masters in Business Administration and Juris Doctor 
Degree from the University of Michigan.  He is Treasurer and a member of the 
board of directors of the Electric Vehicle Association of the Americas and a 
member of The Society of Automotive Engineers.

William G. Rankin, President and Chief Operating Officer since January 1996,
Executive Vice President-Operations and member of the Board of Directors from
1994 through 1995, joined the Company in 1992.  Prior to joining the Company,
Mr. Rankin held a variety of management positions with Deere and Company, a
manufacturer of agricultural, construction, and consumer equipment.  From 1986
to 1992, Mr. Rankin served as General Manager of Deere Tech Services, a 
division of Deere and Company which developed, installed and marketed computer
integrated manufacturing technologies; from 1982 through 1986, as Manager of 
Computer-Aided Manufacturing Services; and from 1976 through 1982, as Manager 
of Materials Management Research and Planning.

Donald A. French, Treasurer, Controller and Chief Financial Officer, joined the
Company in 1987.  Mr. French served as Corporate Secretary from 1987 through
1988.  Prior to joining the Company, Mr. French was a practicing Certified 
Public Accountant from 1985 to 1986.  Prior to that Mr. French served as Vice 
President and General Manager of Gaechter, Inc., an importer and distributor of
apparel and eyewear from 1983 to 1984.  From 1981 to 1982, Mr. French served as
Supervisor of Financial Accounting for Husky Oil Company, a multinational oil
and gas company.

Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities laws of the United States, the Company's directors, its
executive (and certain other) officers, and any persons holding more than 10
percent of the Company's common stock are required to report their ownership of
the Company's common stock and any changes in that ownership to the Securities
and Exchange Commission, the American Stock Exchange, the Boston Stock Exchange
and the Pacific Stock Exchange.  The Company is required to report in this
statement any failure to file timely reports during fiscal 1996.  All such
required reports were timely filed during fiscal 1996.

<PAGE>

ITEM 11.  Executive Compensation

The following table sets forth information concerning compensation earned by the
Chief Executive Officer and any other executive officer whose total annual 
salary and bonus exceeded $100,000 for each of the last three fiscal years:


                    Summary Compensation Table
                                 
                                           Long-term
                                          Compensation
                                             Awards   
                                           Number of
                                           Securities
Name of                                    Underlying
Individual       Fiscal       Annual         Options        Other
and Position      Year     Compensation      Granted       Compensation
                         Salary     Bonus

Ray A. Geddes,
Chairman and      1996   $162,533   $ -0-     98,926       $17,870 (1)
Chief Executive   1995   $152,375   $ -0-      -0-         $16,975 (1)
Officer           1994   $151,556   $ -0-    150,000       $17,107 (1)
    
William G.
Rankin, 
Director, and     1996   $136,873   $ -0-     80,478       $ 6,978 (2)
Chief Operat-     1995   $123,960   $ -0-      -0-         $ 7,128 (2)
ing Officer       1994   $123,300   $ -0-    100,000       $ 6,600 (2)


(1) Represents matching contributions to the Company's 401(k) Savings Plan
    and Company paid car allowance. 

(2) Represents matching contributions to the Company's 401(k) Savings Plan.


The foregoing compensation tables do not include certain fringe benefits made
available on a non-discriminatory basis to all Company employees such as group
health insurance, dental insurance, long-term disability insurance, vacation
and sick leave.

<PAGE>

                Options Grants During Fiscal 1996
                                 
                                                                 Potential
                                                                Realizable
                                                                 Value at
                                Percentage                       Assumed
                                of Total                        Annual Rates
                 Number of       Options                         of Stock
                Securities      Granted to                         Price
Name of         of Underlying   Employees   Exercise   Expira-  Appreciation
Individual        Options       in Fiscal   Price Per   tion       for the 
and Position     Granted(1)       1996       Share      Date     Option Term   
                                                              5%(2)      10%(3)

Ray A. Geddes          
Chairman and
Chief Execu-
tive Officer      98,926          18.0      $4.13   12-07-05  $267,439  $651,641

William G.             
Rankin
Director,
President and
Chief Operat-
ing Officer       80,478          14.6       $4.13  12-07-05  $209,431  $531,121


(1) Represents options granted pursuant to the 1992 Stock Option Plan.  The
    options granted vest as to one-third of the aggregate number of
    underlying shares on December 8, 1996, December 8, 1997 and December 8,
    1998, respectively.  Additionally, the options are subject to forfeiture
    and have limitations as to marketability.

(2) The market capitalization of the Company, as determined by multiplying
    the outstanding number of shares of common stock at fiscal 1996 year end
    by the potential realizable share value achieved by applying the price
    appreciation methodology utilized in this table, would be approximately
    $79 million versus a market capitalization of approximately $54 million
    at October 31, 1996.  Accordingly, the potential realizable value at
    assumed annual rates of stock price appreciation over the ten-year term
    to all shareholders is approximately $25 million assuming no increase in
    the number of shares of common stock outstanding over the ten-year term.

(3) The market capitalization of the Company, as determined by multiplying
    the outstanding number of shares of common stock at fiscal 1996 year end
    by the potential realizable share value achieved by applying the price
    appreciation methodology utilized in this table, would be approximately
    $126 million versus a market capitalization of approximately $54 million
    at October 31, 1996.  Accordingly, the potential realizable value at
    assumed annual rates of stock price appreciation over the ten-year term
    to all shareholders is approximately $72 million assuming no increase in
    the number of shares of common stock outstanding over the ten-year term.

<PAGE>

          Aggregate Option Exercises in Fiscal Year 1996
         and Option Values at the End of Fiscal Year 1996

                                                               Value of     
                                    Number of Securities      Unexercised
                                     Underlying Unexer-       in-the-money
                                      cised Options at        Options at
              Number of               Fiscal Year End       Fiscal Year End 
  Name of       Shares    
 Individual    Acquired      Value    Exer-    Unexer-     Exer-     Unexer-
and Position   on Exercise  Realized  cisable  cisable     cisable   cisable

Ray A. Geddes,
Chairman and
Chief Executive
Officer          -0-          -0-    330,936   148,926     $304,803  $ 49,463

William G.
Rankin,
Director,
President and
Chief Operat-
ing Officer        -0-        -0-    330,124   113,811     $388,362  $ 40,239 



                  Compensation and Benefits Committee and
          Stock Option Committee Report on Executive Compensation 1         
                                  
                                  
This report combines reports of both the Compensation and Benefits Committee 
and the Stock Option Committee.

The Compensation and Benefits Committee of the Board of Directors is responsible
for establishing Company policy regarding executive compensation. The 
Compensation and Benefits Committee currently consists of Messrs. Young, Geddes,
and Hodsoll. 

The Stock Option Committee administers the 1992 Stock Option Plan and determines
how many options will be granted to executive officers and other employees of 
the Company as a group.  The Stock Option Committee currently consists of
Messrs. Hodsoll, Richey and Young. 

The Compensation and Benefits Committee determines all elements of executive
compensation except  grants of stock options. Mr. Geddes does not participate
in deliberations regarding the grant of options to executive officers or other 
employees of the Company.  Mr. Geddes also does not participate in Compensation
and Benefit Committee deliberations and recommendations as to his own 
compensation.

<PAGE>                                                                 
                               Policy
                                  
The Company's compensation program for its Chief Executive Officer is based on
beliefs and principles designed to align compensation with business strategy,
company values, and management initiatives.  The program:

     Rewards the Chief Executive Officer for long-term strategic management and 
     the enhancement of shareholder value by cash remuneration and by delivering
     appropriate ownership in the Company through the grant of options.

     Integrates compensation programs with both the Company's annual and longer-
     term strategic planning processes.

     Supports a performance-oriented environment that rewards performance with
     respect to Company goals.

     Attracts and retains key executives critical to the long-term success of 
     the Company.

The Company's Compensation package for employees generally and executive 
officers in particular consists of both cash remuneration and equity based 
compensation.  The Company maintains a variety of benefit programs which are 
designed to allow the Company to attract and retain talented individuals in a 
variety of disciplines.  All employees may participate in the following benefit
plans upon the attainment of certain entrance requirements:

     Unique Mobility Health Benefit Plan
     401(K) Savings Plan of Unique Mobility, Inc.
     Unique Mobility, Inc. Stock Purchase Plan (not available to Mr. Geddes)

In addition, employees may be eligible for participation in the following 
benefit plans at the discretion of the Company's Board of Directors:

     Unique Mobility, Inc. 1992 Stock Option Plan
     Unique Mobility, Inc. Employee Stock Bonus Plan

The Board of Directors believes that equity based compensation is critical to 
the Company's ability to attract and retain qualified employees.  The Company's
equity based compensation plans are designed to encourage and create ownership
in the Company's common stock, not only by executive officers, but by all 
employees generally.  The Board believes that the equity based plans of the 
Company meet the objective of aligning key employees' long-range interests with
those of shareholders by providing key employees with the opportunity to build
a meaningful stake in the Company.  The principal Company plans used to 
facilitate this objective are the 1992 Stock Option Plan and the Employee Stock
Purchase Plan.  Under the 1992 Stock Option Plan, employees are granted the 
right to acquire shares of the Company's common stock at a fixed price over a 
term not to exceed ten years. To further the Company's goal of encouraging 
equity ownership, all options granted under the 1992 Stock Option Plan since
October 1994 provide that option holders may not sell stock received through 
employee benefit programs if the sale of such stock  exceeds 10% of the total 
trading volume of the stock on the date of sale by the option holder
on any stock exchange and in the over-the-counter market.  The 1992 Stock 
Option Plan also provides for incremental vesting of stock options and restricts
trading by option holders to specified  periods throughout the Company's 
fiscal year.  

<PAGE>

          Performance Evaluation of Chief Executive Officer

The Compensation and Benefits Committee meets at least once with respect to each
fiscal year, without the Chief Executive Officer present, to evaluate his
performance.

The Chief Executive Officer's performance is evaluated based principally on the
following criteria:

  The achievement of the Company's long-term business goals and objectives 
  during the immediately preceding one year period.

  The achievement of specified individual and overall Company objectives durin
  the immediately preceding one year period.

  The performance of the Company's common stock during the preceding one year
  period.

In view of the Company's stage of development, the measure of achievement 
against goals and objectives tends to be subjective and the performance of the
Company's common stock in the marketplace tends to be based on factors other 
than the widely-recognized financial performance measures of product sales, 
net profits and dividends.  Accordingly, the Committee has relied in its review
of the Chief Executive Officer's compensation on the following objective
measures of performance against goals and  objectives, which are listed below
in descending order of importance:

  The number and quality of strategic alliances initiated and/or completed as
  measured against targeted goals.  It is the Company's plan to form strategic
  alliances with one or more major companies in order to  develop products and
  commercialize developed products as a means of accelerating the Company's 
  growth in existing commercial markets and the high investment, high risk 
  market for mass produced vehicle traction drives for the automotive sector. 
  During fiscal 1996, the Company initiated discussions with several prospective
  strategic alliance   partners and entered into a strategic alliance with 
  Northrop Grumman Corporation and Invacare Corporation.  The Company also
  continued to participate actively in its strategic alliance with KYMCO for the
  development and commercialization of an electric propulsion system for 
  application to motor scooters and the establishment of manufacturing 
  operations for such systems and conventional starters and alternators through
  a Taiwanese joint venture company, Taiwan UQM.  Further, the Company 
  successfully extended its agreement with KYMCO which allowed the Company to
  defer its previously required investments in Taiwan UQM until the first
  quarter of fiscal 1997.  In addition, the Company continued its
  relationship with Pininfarina, leading to the successful development and
  demonstration of the Ethos 3 EV vehicle to automotive manufacturers around the
  world.

  The capitalization and financial resources available to the Company as 
  measured against targeted objectives.  The Company completed two offerings of
  its common stock under Regulation S during fiscal 1996 which resulted in net 
  proceeds to the Company of $3,909,379.  From these proceeds, the Company 
  exercised its option to maintain its 39 percent ownership interest in Taiwan
  UQM.  In addition, the   Company generally maintained an adequate 
  capitalization and possessed adequate financial resources to support 
  operations throughout fiscal 1996.

  The number and quality of sponsored development programs and their 
  contribution   to the technical objectives of the Company. The Company 
  achieved lower levels of   revenue from sponsored development programs during
  fiscal 1996.  However, this   reduction was attributable, in great part, to 
  the Company's focus on accepting contracts which, upon completion of the 
  development activity, have product manufacturing opportunities.

<PAGE>

  Technology advances and enhancements arising during the measurement period 
  from internally funded research and development activities. The Company 
  successfully extended its high voltage and low voltage product offerings 
  during fiscal 1996   as a result of internally funded, and sponsored research
  and development activities.  The Compensation and Benefits Committee also 
  reviewed other   technological advances that are not the subject of patents 
  and that the Company chooses not to make public at this time because they are
  confidential business information, the disclosure of which would have an 
  adverse effect on the Company.

Based on these factors, the Compensation and Benefits Committee elected to
renew the employment contract of the Chief Executive Officer for an additional 
three-year term, increase the Chief Executive Officer's  salary five percent
to $172,793 and grant the Chief Executive Officer options to acquire 78,000 
shares of the Company's common stock at the prevailing market price on the date
of grant under the 1992 Stock Option Plan.  

                       Additional Information

The compensation of the executive officers other than the Chief Executive
Officer is set by the Compensation and Benefits Committee and Stock Option 
Committee based on the recommendations of the Chief Executive Officer, who 
evaluates subjectively and objectively their performance against assigned 
responsibilities and tasks. 

The Company has executed employment agreements with two executive officers and 
Mr. Geddes.  The employment agreements provide for the payment of severance 
benefits to the executive officers if the executive is terminated "without 
cause", (as such term is defined in the employment agreements)(see also 
"Employment Agreements" below).  The Compensation and Benefits Committee 
believes it advisable to provide compensation to executive managers upon
termination of employment to encourage the executive to commit his services for
the longer duration of the Employment Agreements.  The Compensation and Benefits
Committee established the salaries in the employment agreements applying the
criteria discussed above, and the employment agreements themselves were not a
factor in determining salaries.

During fiscal 1996 the Stock Option Committee granted options to acquire 500,000
shares of common stock to employees of the Company, of which options to acquire,
300,000 shares of common stock, or 60 percent, were granted to executive 
officers as a group.  In addition, the Company granted options to acquire 90,000
shares of common stock to consultants.  All options granted during fiscal 1996 
to employees and consultants are exercisable at an amount equal to the fair 
market value of the Company's common stock on the date of grant.

The Compensation and Benefits Committee of the Board of Directors:

  Jack Young
  Ray A. Geddes
  Frank Hodsoll

The Stock Option Committee of the Board of Directors:

  Frank Hodsoll
  J. B. Richey
  Jack Young

<PAGE>

    COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation and Benefits Committee currently consists of three
directors (Messrs. Geddes, Young and Hodsoll) and the Stock Option Committee
currently consists of three outside directors (Messrs. Hodsoll, Young and 
Richey). The purpose of the Compensation and Benefits Committee is to determine
compensation and benefits for executive officers of the Company (except stock
options).  The Compensation and Benefits Committee held one meeting during
fiscal 1996.  The purpose of the Stock Option Committee is to administer the 
Company's Stock Option Plans and make recommendations to the Board of Directors
on the grant of stock options.  The Stock Option Committee met three times 
during fiscal 1996. 

Mr. Geddes is Chairman of the Board and Chief Executive Officer.

Mr. Young is a consultant to Kearns & West, a public relations firm retained by
the Company periodically.  In fiscal 1996, the Company paid $22,563 to this 
firm for consulting services.

Mr. Richey is an officer and director of Invacare, which owns 1.10 percent of
the Company's common stock.

                       Employment Agreements
                                  
The Company has entered into Employment Agreements with Messrs. Geddes, Rankin 
and French pursuant to which each has agreed to serve in his present capacity 
for a term expiring December 31, 1999.  The Employment Agreements provide that
Messrs. Geddes, Rankin and French will receive an annual base salary of 
$172,793, $146,428 and $108,612, respectively.  Messrs. Geddes and Rankin also 
receive the use of an automobile.  Messrs. Geddes, Rankin and French may receive
bonuses and stock options and were granted 78,000, 127,459 and 94,541 options,
respectively, upon execution of the employment agreements.

If employment is terminated by the Company without cause during or after the 
term of the agreement (after three months' notice) or upon retirement after age
65, the officer shall receive one month's salary for each year of full-time 
employment, but not less than 12 months salary and not more than 24 months 
salary.  If the officer terminates employment, he shall receive three months 
salary, unless the Company is in default, which shall be considered termination
by the Company without cause.  On a termination by the Company following a 
change of control of the Company, the officer shall have the option of receiving
all amounts remaining due in the agreement or twice the payment due on a 
termination by the Company in the absence of a change of control.  If an officer
dies during employment, his estate shall receive three months compensation.

The employment agreements further provide that the Company shall maintain at its
expense, life insurance coverage on Messrs. Geddes, Rankin and French payable to
their designees in an amount equal to three times the annual compensation 
payable to each executive.

Pursuant to the Employment Agreements, Messrs. Geddes, Rankin and French have 
agreed to at no time disclose to others any confidential information relating 
to the business affairs of the Company for any purpose other than the conduct 
of the Company's business and each has agreed to assign to the Company all 
right, title and interest in any inventions and patents developed in whole or 
in part by them, individually or with others, at any time during the term of 
the Employment Agreements, or six months thereafter, which relate to the 
business of the Company.

The Employment Agreements further provide that Messrs. Geddes, Rankin and 
French, for a period of one year after the term of their respective Employment
Agreements, will not become affiliated with any person, firm or corporation 
whose business is similar to or in competition with the Company nor, for a 
period of one year after such term, induce or attempt to induce any employee of
the Company to leave the employ of the Company; nor will they induce or attempt
to induce any customer, supplier or licensee to cease doing business with the
Company.

<PAGE>

                  BOARD OF DIRECTORS COMPENSATION

In fiscal 1993, the Board of Directors of the Company established the Unique
Mobility, Inc. Stock Option Plan for Non-Employee Directors which is designed to
encourage directors to participate in the ownership of the Company and therefore
to more closely align their interests with those of the Company's shareholders.
The plan was approved by the Company's shareholders in February 1994.  Directors
of the Company who are not officers may elect to receive an annual retainer of
$12,000 in cash or the grant of options to acquire 16,000 shares of the 
Company's common stock in accordance with the terms of the Unique Mobility, Inc.
Stock Option Plan for Non-Employee Directors, plus reimbursement for ordinar
and necessary expenses of attending meetings.  In addition, directors upon their
initial election to the Board of Directions, are awarded 2,000 shares of the 
Company's common stock at a purchase price of $0.01 per share.  Directors who 
are full-time officers of the Company are not entitled to additional 
compensation for their service as directors.

The following table sets forth information concerning remuneration to directors
of the Company during fiscal 1996:

                    Number of
                    Securities
                    Underlying                                    Share of     
                     Options        Price      Expiration       Common Stock
Name of Director    Granted(3)    Per Share      Date             Awarded   

Ray A. Geddes(1)        -             -           -                 -

Frank Hodsoll        16,000        $4.38       3-19-06              -

H. J. Young          16,000        $4.38       3-19-06              -
  
J. B. Richey(2)         -             -           -                 -
 
William G. Rankin(1)    -             -           -                 -

Michel A. Bell(3)       -             -           -                 -

(1) Serves without compensation in his capacity as an officer of the Company.

(2) Serves without compensation in his capacity as a representative of Invacare
    Corporation.

(3) Served without compensation in his capacity as a representative of Alcan
    until his resignation on September 15, 1996.

All directors who were eligible to receive compensation as a director for the
term of service beginning March 20, 1996, elected to receive stock options in
lieu of cash payments.

<PAGE>

Performance Graph

The following graph represents the yearly percentage change in the cumulative 
total return on the common stock of Unique Mobility, Inc., the group of 
companies comprising the S&P Electrical Equipment Index, and those companies 
comprising the S&P 500 Index for the five year period from 1991 through 1996:

                            Graph of the following information:
                                       Indexed Returns
                                        Years Ending
                            Base
                           Period                                
Company/Index              Oct91   Oct92    Oct93    Oct 94    Oct 95    Oct 96
Unique Mobility, Inc.       100    254.78   509.56   326.44    234.84    294.59
Electrical Equipment        100    111.66   136.85   143.87    182.97    271.75
S & P 500 Index             100    109.95   126.39   131.27    165.98    205.97


ITEM 12. SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

The following table shows the ownership of the Company's $0.01 par value common
stock by (i) beneficial owners of 5 percent or more of the Company's common 
stock (ii) each director, (iii) the Chief Executive Officer, (iv) each executive
officer whose annual salary and bonus exceeds $100,000 and (v) all directors 
and executive officers as a group, as of January 24, 1997.  Unless otherwise 
noted, each shareholder exercises sole voting and investment power with respect
to the shares beneficially owned:

                                           Number of
                                         Common Shares        Percent of
Name of Shareholder                    Beneficially Owned      Class (1 )

Alcan Aluminum Limited (2)                 1,401,925             11.97%
Adval Limited Partnership (3)                182,379              1.54%
Advent Future Limited Partnership (4)        398,947              3.34%
Adwest Limited Partnership (5)               227,972              1.92%
Advent Performance Materials                            
  Limited Partnership (6)                    227,973              1.92% 
Advent Omnibus Limited Partnership (7)       102,591               .87%
Ray A. Geddes (8)                            874,101              7.13%
William G. Rankin                            573,311              4.67%
Frank Hodsoll                                 50,000               .43%
Jack Young                                    50,000               .40%
J. B. Richey (9)                              47,333                - %

Directors and Executive
  Officers as a Group (6 persons)          1,915,982             14.48%

<PAGE>

(1) Calculated separately for each holder on the basis of the actual number of
    outstanding shares as of January 24, 1997.  Assumes that shares issuable
    upon exercise of options and warrants held by such person (but not by anyone
    else) and exercisable within 60 days from the date of this document have
    been issued as of such date.

(2) Alcan's principal executive offices are located at 1188 Sherbrook Street
    West, Montreal, Quebec, Canada H3A 3G2.

(3) Member of the Advent Group, which beneficially owns 1,139,862 shares
    (9.21%).  Its address is c/o Advent International Corporation, 101 Federal
    Street, Boston, MA 02110.  Includes 105,335 shares issuable upon the
    exercise of warrants.

(4) Member of The Advent Group, which beneficially owns 1,139,862 shares
    (9.21%).  Its address is c/o Advent International Corporation, 101 Federal
    Street, Boston MA 02110.  Includes 230,412 shares issuable upon the exercise
    of warrants.

(5) Member of The Advent Group, which owns 1,139,862 shares (9.21%).  Its
    address is c/o Advent International Corporation, 101 Federal Street, Boston,
    MA 02110.  Includes 131,667 shares issuable upon the exercise of warrants.

(6) Member of The Advent Group, which beneficially owns 1,139,862 shares
    (9.21%).  Its address is c/o Advent International Corporation, 101 Federal
    Street, Boston MA 02110.  Includes 131,668 shares issuable upon the exercise
    of warrants.

(7) Member of The Advent Group, which owns 1,139,862 shares (9.21%).  Its
    address is c/o Advent International Corporation, 101 Federal Street, Boston,
    MA 02110.  Includes 59,251 shares issuable upon the exercise of warrants.

(8) Mr. Geddes' address is 425 Corporate Circle, Golden, Colorado 80401.

(9) Mr. Richey is an affiliate of Invacare Corporation which owns 129,032 shares
    (1.10%).  Mr. Richey disclaims beneficial ownership of Invacare
    Corporation's shares.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Compensation Committee Interlocks and Insider Participation" above.

<PAGE>

                              PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
       
       (a)   1. Financial Statements:
       
             Independent Auditors' Report.
            
             Consolidated Balance Sheets, October 31, 1996 and 1995.
            
             Consolidated Statements of Operations for the years ended 
                     October 31, 1996, 1995 and 1994.

              Consolidated Statements of Stockholders' Equity for the years
                     ended October 31, 1996, 1995 and 1994.
            
              Consolidated Statements of Cash Flows for the years ended 
                      October 31, 1996, 1995 and 1994.

              Notes to Consolidated Financial Statements.
            

             2.  Financial Statement Schedules:

              None.

       (b)   Reports on Form 8-K:

              Report detailing Cooperation Agreement with Northrop Grumman
                Corporation dated March 19, 1996
       
              Report detailing change in the Company's fiscal year end 
                from October 31 to March 31.
       
       (c)    Exhibits   

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

3.2   Restated Articles of Incorporation.  Reference is made to Exhibit 3.2 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.

10.1  Shareholder Agreement by and among Alcan International Limited, Ray A.
      Geddes and Unique Mobility, Inc. dated June 7, 1988.  Reference is made to
      Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the 
      quarter ended April 30, 1988 (No. 0-9146) which is incorporated herein by
      reference.
     
10.2  Unique Mobility, Inc. Incentive and Non-qualified Stock Option Plan 
      (amended and restated effective January 1, 1988).  Reference is made to 
      Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q for the
      quarter ended April 30, 1988 (No. 0-9146).

<PAGE>

10.3  Unique Mobility, Inc. 1992 Stock Option Plan.  Reference is made to 
      Exhibit 4.1 to the Company's Registration Statement on Form S-8 
      (No. 33-47454), which is incorporated herein by reference.
          
10.4  Unique Mobility, 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.
    
10.5  401(k) Savings Plan of Unique Mobility, Inc.  Reference is made to Exhibit
      4.3 to the Company's Registration Statement on Form S-8 (No. 33-34613),
      which is incorporated herein by reference.
          
10.6  Note and Warrant Purchase Agreement dated March 25, 1992 between Unique
      Mobility, Inc. and affiliates of Advent International Corporation and
      Techno-Venture U.S.A., Inc.  Reference is made to Exhibit 19.1 to the
      Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 
      1992 (No. 0-9146) which is incorporated herein by reference.
          
10.7  Warrant Agreements dated March 25, 1992 between Unique Mobility, Inc. and
      affiliates of Advent International Corporation and Techno-Venture U.S.A.,
      Inc.  Reference is made to Exhibit 19.3 to the Company's Quarterly Report
      on Form 10-Q for the quarter ended April 30, 1992 (No. 0-9146) which is
      incorporated herein by reference.
          
10.8  Stock Restriction Agreement dated March 25, 1992 between Ray A. Geddes and
      affiliates of Advent International Corporation and Techno-Venture U.S.A.,
      Inc.  Reference is made to Exhibit 19.5 to the Company's Quarterly Report
      on Form 10-Q for the quarter ended April 30, 1992 (No. 0-9146) which is
      incorporated herein by reference.
          
10.9  Amendment to Shareholder Agreement dated March 25, 1992 between Unique
      Mobility, Inc., Ray A. Geddes and Alcan International Limited.  Reference
      is made to Exhibit 19.7 to the Company's Quarterly Report on Form 10-Q for
      the quarter ended April 30, 1992 (No. 0-9146) which is incorporated herein
      by reference.
          
10.10 Unique Building Partners, Ltd. Liability Co. Operating Agreement dated
      September 16, 1992.  Reference is made to Exhibit 10.33 of the Company's
      Registration Statement on Form S-2 (No. 33-53376), which is incorporated
      herein by reference.
          
10.11 Lease between the Company and Unique Building Partners, Ltd. Liability Co.
      dated September 22, 1992.  Reference is made to Exhibit 10.34 of the
      Company's Registration Statement on Form S-2 (No. 33-53376), which is
      incorporated herein by reference. 

<PAGE>
          
10.12 Amended Warrant Agreements between Unique Mobility, Inc. and affiliates of
      Advent International Corporation and Techno-Venture U.S.A., Inc.  
      Reference is made to exhibits 10.1 through 10.7 to the Company's Quarterly
      Report on Form 10-Q for the quarter ended April 30, 1993, (No. 0-9146) 
      which is incorporated herein by reference.

10.13 Registration agreement between Unique Mobility, Inc. and affiliates of
      Advent International Corporation and Techno-Venture U.S.A., Inc.  
      Reference is made to exhibit 10.8 to the Company's Quarterly Report on 
      Form 10-Q for the quarter ended April 30, 1993, which is incorporated 
      herein by reference.
          
10.14 Unique Mobility, Inc. Stock Option Plan for Non-Employee Directors. 
      Reference is made to Exhibit 10.39 of the Company's Quarter Report on Form
      10-K (No. 0-9146) for the year ended October 31, 1993 which is 
      incorporated herein by reference. 
         
10.15 Warrant Agreement with Arnhold and S. Bleichroeder, Inc.  Reference is 
      made to Exhibit 10.41 of the Company's Quarter Report on Form 10-K 
      (No. 0-9146) for the year ended October 31, 1993 which is incorporated 
      herein by reference. 
          
10.16 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.
          
10.17 Amendment to the 1992 Stock Option Plan of Unique Mobility, Inc.  
      Reference is made to Exhibit 10.4 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. 

10.18 Amendment to the 401(k) Savings Plan of Unique Mobility, Inc. dated 
      January 18, 1995.  Reference is made to Exhibit 10.1 in the Company's 
      Quarterly Report on Form 10-Q for the Quarter ended  January 31, 1995 
      (No. 0-9146) which is incorporated herein by reference. 
          
10.19 Amendment to the 1992 Stock Option Plan of Unique Mobility, Inc. dated
      December 7, 1994.  Reference is made to Exhibit 10.2 in the Company's
      Quarterly Report on Form 10-Q for the Quarter ended  January 31, 1995 (No.
      0-9146) which is incorporated herein by reference. 
               
10.20 Stock Purchase Agreement by and among Unique Mobility, Inc. and Invacare
      Corporation dated December 7, 1995.  Reference is made to exhibit 10.36 in
      the Company's Annual Report on Form 10-K for the fiscal year ended October
      31, 1995, (No. 1-10869)which is incorporated herein for reference.

<PAGE>
     
10.21  Amendment to the Stock Purchase Agreement by and among Unique Mobility 
       Inc. and Invacare Corporation. Referenced is made to exhibit 10.3 in the
       Company's Quarterly Report on Form 10-Q for the quarter ended April 30,
       1996, (No. 0-9146) which is incorporated herein by reference.

23    Consent of KPMG Peat Marwick LLP.

27    Financial Data Schedule

    (d) Financial Statement Schedules

       None.

<PAGE>

                              SIGNATURES
                      
Pursuant to the requirements of Section 13 of the Securities and Exchange Act of
1934, Unique Mobility, Inc. has duly caused this Annual Report on Form 10-K to 
be signed on its behalf by the undersigned, thereunto duly authorized, in 
Golden, Colorado on the 28th day of January, 1997.

                       UNIQUE MOBILITY, INC.,
                       a Colorado Corporation
                                  
                    By: "Ray A. Geddes"         
                        Ray A. Geddes, 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 Unique Mobility, Inc., in the capacities indicted and on the date 
indicated.

Signature                            Title                           Date

                     
                         Chairman of the Board of Directors
"Ray A. Geddes"          (Principal Executive Officer)         January 28, 1997
 Ray A. Geddes 

                         Treasurer and Controller
                         (Principal Financial and
"Donald A. French"       Accounting Officer)                   January 28, 1997
 Donald A. French


"William G. Rankin"      President and Director                January 28, 1997
 William G. Rankin  


"Francis S.M. Hodsoll"   Director                              January 27, 1997
 Francis S.M. Hodsoll


"H. J. Young"            Director                              January 27, 1997
 H. J. Young


"J. B. Richey"           Director                              January 27, 1997
 J. B. Richey