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 March 31, 2011
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR      15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period      from                       to                 
Commission file number 1-10869
               UQM      TECHNOLOGIES,      INC.               
(Exact name of registrant as specified in its      charter)**______________________
Colorado
84-0579156
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
4120 Specialty Place, Longmont, Colorado
80504
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including      area code: (303) 682-4900
SECURITIES REGISTERED PURSUANT TO SECTION      12(b) OF THE ACT:
Name of each exchange on which registered
Title of each class
NYSE Amex
Common Stock
Pacific Stock Exchange
Chicago Stock Exchange
Frankfurt Stock Exchange
Berlin Stock Exchange
Stuttgart Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION      12(g) OF THE ACT:
None.
Indicate by check mark if the registrant is a      well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  [  ]   No  [X]
Indicate by check mark if the registrant is      not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes  [  ]   No  [X]
Indicate by check mark whether the      registrant: (1) has filed all reports required to be filed by Section 13      or 15(d) of the Securities Exchange Act of 1934 during the preceding 12      months (or for such shorter period that the registrant was required to      file such reports),
and (2) has been subject to such filing      requirements for the past 90 days.
Yes [X]   No  [  ]
Indicate by check mark whether the registrant      has submitted electronically and posted on its corporate website, if any,      every interactive data file required to be submitted and posted pursuant      to Rule 405 of Regulation S-T during the preceding 12 months (or for such      shorter
period that the registrant was required to      submit and post such files).
Yes  [  ]   No  [  ]
Indicate by check mark if disclosure of      delinquent filers pursuant to Item 405 of Regulation S-K is not contained      herein, and will not be contained, to the best of registrant's      knowledge, in definitive proxy or information statements incorporated by      reference in Part III of this Form 10-K or any amendment to this Form      10-K.  [ ]
Indicate by check mark whether the registrant      is a large accelerated filer, an accelerated filer, a non-accelerated      filer, or a smaller reporting company. See the definitions of "large      accelerated filer," "accelerated filer" and "smaller      reporting company" in Rule 12b-2 of the Exchange Act.
 [  ]  Large      accelerated filer
[X]  Accelerated filer
[  ]  Non-accelerated filer
[  ]  Smaller reporting      company
Indicate by check mark whether the registrant      is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  [  ]   No  [X]
The aggregate market value of the registrant's      common stock ("Common Stock") held by non-affiliates as of      September 30, 2010, based on the closing price of the Common Stock as      reported by the NYSE Amex on such date was approximately $91,253,990.      As of May 31, 2011, there were 36,290,287 shares of the registrant's      Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document
Parts Into Which Incorporated
Portions of the Proxy Statement for the Annual      Meeting of Shareholders to be held August 3, 2011.
Part III
 

 

**Table of Contents    **  PART I.       
Item 1.
Business      
Item 1A.
Risk Factors      
Item 1B.
Unresolved Staff Comments      
Item 2.
Properties      
Item 3.
Legal Proceedings      
Item 4.
Submission of Matters to a Vote of Security      Holders     **  PART II.       
Item 5.
Market for Registrant's Common Equity, Related      Stockholder Matters and Issuer Purchases    
of Equity Securities      
Item 6.
Selected Consolidated Financial Data      
Item 7.
Management's Discussion and Analysis of      Financial Condition and Results of Operations      
Item 7A.
Quantitative and Qualitative Disclosures About      Market Risk      
Item 8.
Financial Statements and Supplementary Data        
Reports of Independent Registered Public      Accounting Firm        
Consolidated Balance Sheets as of March 31, 2011      and March 31, 2010        
Consolidated Statements of Operations for the      Fiscal Years ended March 31, 2011, 2010     
and 2009        
Consolidated Statements of Stockholders'      Equity for the Fiscal Years     
ended March 31, 2011, 2010 and 2009        
Consolidated Statements of Cash Flows      for the Fiscal Years ended March 31, 2011, 2010     
and 2009        
Notes to Consolidated Financial Statements      
Item 9.
Change In and Disagreements with Accountants on      Accounting and Financial Disclosure      
Item 9A.
Controls and Procedures      
Item 9B.
Other Information     **  PART III.       
Item 10.
Directors, Executive Officers and Corporate      Governance      
Item 11.
Executive Compensation      
Item 12.
Security Ownership of Certain Beneficial Owners      and Management and Related Stockholder    
Matters     
Item 13.
Certain Relationships and Related Transactions,      and Director Independence     
Item 14.
Principal Accountant Fees and Services     **  PART IV.       
Item 15.
Exhibits and Financial Statement Schedules and      Reports on Form 8-K 
 

 

 

 
**
 
** 

PART I  **ITEM 1.**BUSINESS*****This Report contains statements that constitute"forward-looking statements" within the meaning of Section 27A of theSecurities Act and Section 21E of the Securities Exchange Act. These statementsappear in a number of places in this Report and include statements regarding ourplans, beliefs or current expectations; including those plans, beliefs andexpectations of our officers and directors with respect to, among other things,orders to be received under our supply agreement with CODA Automotive, ourability to successfully expand our manufacturing facilities and the continuedgrowth of the electric-powered vehicle industry. Important Risk Factors thatcould cause actual results to differ from those contained in the forward-lookingstatements are listed below in Part I, Item 1A. Risk Factors.***Overview**
UQM Technologies, Inc., ("UQM") is adeveloper and manufacturer of power dense, high efficiency electric motors,generators and power electronic controllers for the automotive, aerospace,military and industrial markets. Our primary focus is incorporating our advancedtechnology into products for the growing market for increasingly cleaner andmore fuel efficient vehicles that is expected to experience rapid growth overthe next ten years and beyond. Key to this objective is the development ofproducts for clean vehicles including propulsion systems for electric, hybridelectric, plug-in hybrid electric and fuel cell electric vehicles, onboardcharging products, under-the-hood power accessories and other vehicle auxiliarycomponents. Our headquarters and manufacturing facility is located in Longmont,Colorado.

The global automotive market is experiencingsubstantial change driven by a number of factors including changing consumerpreferences, global macro-economic and geo-political developments, the highprice of gasoline, increasing competition and additional governmental regulationand incentives. As a result of these factors, particularly, carbon dioxidestandards in Europe and the Corporate Average Fuel Economy ("CAFE")standards in the United States, automakers are developing and introducing, orplanning to introduce additional vehicle models with increasing levels ofelectrification including serial and parallel hybrid-electric vehicles ("HEV's"),plug-in hybrid electric vehicles ("PHEV's") and all-electricvehicles ("EV's"). These vehicles offer improved energy equivalentgas mileage, lower operating and repair costs and reduced or no tailpipeemissions. Further, governments around the globe have launched initiatives tosubsidize the cost of developing clean vehicles and the components used by themincluding motors and generators, batteries, and power management systems.Government incentives have also been adopted to encourage the purchase of HEV's,PHEV's and EV's by consumers in many developed nations around the world,including a $7,500 federal tax credit in the United States and tax credits inseveral states of up to $6,000 for purchases of qualifying vehicles, in Europefifteen of twenty-seven European Union member states provide tax incentives forelectrically chargeable vehicles and China has a trial program to offerincentives of up to 60,000 Yuan (approximately $9,240 USD) for the privatepurchase of a new battery electric vehicle and 50,000 Yuan (approximately $7,700USD) for the purchase of PHEV in five cities. Several automobile manufacturers have indicated that they expect these factors to resultin the growth of hybrid vehicle models to over 20% of vehicle sales in 2020 andone international automaker has stated that it expects all-electric vehicles tocapture up to a 5% market share by 2020.

We make propulsion system products, generators andrelated auxiliary components for EV's HEV's and PHEV's. We market ourproducts in many segments of the transportation sector including passengervehicles and light trucks, commercial trucks and buses, off-road vehiclesincluding agricultural and construction equipment and military vehicles. Webelieve our proprietary permanent magnet propulsion motor and motor controltechnology delivers exceptional performance at a highly competitive cost. Ourprincipal products include propulsion motors and generators with power ratingsfrom 50 kilowatts to 200 kilowatts, auxiliary motors and electronic controls,DC-to-DC converters and DC-to-AC inverters that convert direct current to usablealternating current. The principal attributes of our products that we believedifferentiate our proprietary products are compact size, high torque delivery,high power density (the ratio of power output to weight) and high energyefficiency.

We believe we are well-positioned to participate inthe expanding worldwide market for clean vehicles. In addition to our portfolioof high performance products, we have taken a number of steps over the lastseveral years to position the company to meet the needs of our automotivecustomers including; 1) adding additional technical and manufacturing resourcesand capability; 2) designing, installing and qualifying volume production linesfor our motors and generators and their related electronic controllers; 3)establishing a global sourcing capability; 4) enhancing our logistics,production and administrative processes to support higher volumes ofmanufacturing operations, and 5) relocating our headquarters and manufacturingoperations into a 129,304 square foot, world-class facility with 15 adjacentacres for future expansion.

In June, 2010 we entered into a ten year SupplyAgreement with CODA Automotive to supply UQM PowerPhase Pro®electric propulsion systems for CODA's all-electric four-door sedan.Throughout FY 2011 we delivered preproduction systems that have beenincorporated in development and test vehicles and other test fleet and marketingvehicles. CODA has announced that it expects to begin sales of its passenger car to fleets andconsumers in the State of California in the second half of calendar year 2011.We have also completed supply agreements and began shipments to Proterra, Inc.,a developer and manufacturer of all-electric composite transit buses andElectric Vehicles International a developer and manufacturer of all-electricmedium-duty delivery trucks.

Our electric propulsion systems are poweringseveral development vehicles including the all-electric Audi A1 e-tron, Saab 9-3ePower and the Rolls Royce 102EX Phantom car. Our propulsion system andgenerator have also been used by Citroen in a hybrid-electric rally car. Inaddition to these programs, the company is supplying its electric propulsionsystems and generators to numerous other international automakers andentrepreneurial automobile developers as part of their HEV, PHEV and EV vehicledevelopment programs.

We have been awarded a $45.1 million grant from theU.S. Department of Energy ("DOE") under the American Recovery andReinvestment Act ("ARRA"). The objective of the grant is to acceleratethe commercialization of products and the installation of manufacturinginfrastructure necessary for the deployment of electric vehicles, batteries andcomponents in the United States. Capital expenditures for facilities, toolingand manufacturing equipment and the qualification and testing of productsassociated with the launch of volume production for CODA Automotive and otherproduction intent customers qualify for 50 percent reimbursement under the DOEprogram. Our ability to utilize funding from this grant has allowed us toaccelerate the productionization of our product portfolio and install volumeproduction lines and other infrastructure providing us with a significantadvantage over other motor manufactures and competitors who do not have accessto such funds.

We also have a marketing collaboration withBorgWarner (NYSE:BWA) on electric powertrain products for all-electric andhybrid electric passenger automobiles. Under this arrangement, our respectivecompanies provide leads to and recommend each other's products whereappropriate, to those customers seeking electric powertrain products. We expectthat BorgWarner's global reach in the automotive industry will bring a higherlevel of visibility to our electric propulsion system products and result inadditional business opportunities with automobile customers worldwide. Inaddition, we have forged relationships with several vehicle integrationcompanies around the world who have developed extensive knowledge about theperformance characteristics and capability of our proprietary products. Vehicleintegration companies are typically retained by automobile manufacturers todevelop concept cars and technology development vehicles. Our relationships withintegration companies provide an invaluable marketing channel for the placementof our products in early-stage development vehicles, which we believe, greatlyenhances the opportunity for our products to be selected for the productionlaunch of many of these vehicles.

We derive our revenue from two principal sources:1) the manufacture and sale of products engineered by us; and 2) funded contractresearch and development services performed for strategic partners, customersand the U.S. government directed toward either the advancement of ourproprietary technology portfolio or the application of our proprietarytechnology to customers' products. For the fiscal year ended March 31, 2011total revenue rose 3.8 percent to $9,021,302 and our net loss for the fiscalyear declined by 51.9 percent to $1,992,358 or $0.06 per common share.
**Electrification of Vehicles**
Potentially large markets are developing as aresult of the electrification of a wide-range of vehicle platforms. Increasedelectrification is being pursued for a variety of application specific reasonsincluding: 1) changing consumer preferences, 2) global macro-economic andgeo-political developments, 3) the high price of gasoline, 4) increasingcompetition, and 5) additional governmental regulation and incentives. Of thesereasons, additional governmental regulations and incentives has emerged as asignificant factor in the development and potential rate of growth of theemerging vehicle electrification markets and is being reinforced by rising crudeoil prices and higher gasoline and diesel prices. This trend toward higher fuelprices is expected to continue for the foreseeable future, driven by tightsupply levels, geopolitical turmoil in key oil producing countries and expectedfuture increases in world demand, driven principally by escalating consumptionof fossil fuels by developing countries such as China and India. In addition,government regulations mandating reductions in pollutants from diesel enginesare expected to further accelerate the trend toward electrification asincreasingly stringent regulations continue to be proposed and adopted. In 2010,the U.S. government announced its intention to implement new regulationsextending fuel economy standards to medium- and heavy-duty trucks for the firsttime beginning with model year 2014. CAFE standards willincrease by 40 percent requiring the average fuel economy of each manufacturer'spassenger car and light truck model offerings to be 34.1 miles per gallon by2016. Preliminary rulemaking for stricter standards in later years is currentlyunderway.

Other recent U.S. Government legislation providesincentives for the production and sale of environmentally friendly vehicles,including the Advanced Technology Vehicles Manufacturing Incentive Program andthe American Recovery and Reinvestment Act of 2010. A partial listing of some ofthe more notable provisions of this legislation includes:
-  Federal and state tax credits for the purchase of environmentally friendly    vehiclesLow cost loans to manufacturers and component suppliers to purchase    infrastructure and develop manufacturing capacity for clean vehicles and    components used in these vehiclesFunding for government agencies to acquire environmentally friendly    vehiclesGrants for the development of clean vehicles and clean vehicle component    technologyGrants for the development of a "smart" electric grid
In November 2010, General Electric announced itsplan to purchase 25,000 electrified vehicles by 2015, representing the largestcommercial order for environmentally friendly vehicles ever placed.

In March, 2011 President Obama announced adirective to government agencies to ensure that by 2015, allnew vehicles they purchase will be alternative-fuel vehicles, including hybridand electric vehicles. The Federal government operates more than 600,000 fleetvehicles

In addition, China is in the process of approving aplan that would provide $100 billion Yuan (approximately $15 billion USD) overten years for investment in core technologies related to all-electric and hybridelectric vehicles.

The electrification of conventional vehicles,ranging from passenger vehicles and over-the-road trucks, to off-road vehiclessuch as agricultural tractors, construction equipment and military vehicles, canpotentially offer improvements in fuel economy and emissions. Theelectrification of vehicles can range from simply replacing inefficient belt andgear driven under-the-hood auxiliaries (water pump, power steering, HVACcompressor drives, cooling fans etc.) with efficient electric powered ones, toeliminating the internal combustion engine entirely and replacing it with fullelectric propulsion such as in a battery or fuel cell powered vehicle.Improvements to fuel efficiency resulting from electrification will initiallyadd to the cost of a vehicle, although part of this cost will be offset by loweroperating and maintenance costs. With rising fuel prices and governmentincentives, vehicle makers are finding it much more feasible to justify thisadded complexity and cost.

Numerous studies have been conducted over the lastseveral years indicating the potential for electric vehicles to capturesignificant market share over the next five to ten years. Table 1 summarizes theforecasts of these studies:

We believe that the trend toward increasingelectrification of vehicles will continue at an accelerated pace providing asubstantial opportunity for the broad commercial application of our products.
**Technology**
Our technology base includes a number ofproprietary technologies and patents related to brushless permanent magnetmotors, generators and power electronic controllers, together with software codeto intelligently manage the operation of our systems.

The operating characteristics of electric motorsfor vehicle propulsion are different from those of more conventional industrialmotors. Propulsion motors ideally deliver high levels of torque efficiently atvariable rotational speeds and possess the ability to transition from hightorque to high speed over a relatively constant power curve allowing, in manycases, the elimination of conventional transmissions. Our proprietary propulsionsystems have been specifically developed for these applications and deliverexceptional torque and high rotational speeds in a compact, energy efficientmachine.

The typical architecture of a UQM®electric machine (motor/generator) consists of a stator winding employing a highpole count configuration, which allows for high copper utilization (minimizingenergy loss and cost), and a rotor that contains powerful rare earth permanentmagnets. Commutation of the machine is accomplished electronically by sensingthe position of the rotor in relation to the stator and intelligently pulsingelectrical energy into the stator such that the electric field generated by thestator interacts with the magnetic field of the rotor, producing rotationalmotion (motor operation). Conversely, the application of rotational motion by anexternal force results in the generation of electrical power (generatoroperation). UQM® machines can be operated in eithera forward or reverse direction of rotation and either in motor or generator modeand can dynamically change from one mode of operation to another in millisecondresponse time. The design features inherent to the electric machine contributeto lower usage of copper, iron and other materials generally (due to smallerpackage dimensions), reducing manufacturing costs compared to conventionalmachines of similar power. UQM® machines have high operatingefficiencies, high power density (high power output to weight ratio) andgenerally have smaller external dimensions and weight for a given power output,improving packaging. These attributes have allowed us to price our advancedmotors and controls competitively with lesser performing conventional motors andcontrols, which we believe will accelerate the rate of commercialization of ourtechnology.

Attributes of our microprocessor-based digitalpower electronic controllers include high power operation (up to 600 amps at 400volts), four-quadrant control (forward/reverse and motoring/generating), reducedswitching losses relative to conventional technology, adaptive switch timingcontrol and controller area network ("CAN") capability. As a result,UQM® controllers have high operating efficiencies, high powerdensity (high power output to weight ratio) and generally have smaller externaldimensions and weight for a given power output, improving packaging.

The UQM® embeddeddigital signal processor (DSP) software is the intelligence that coordinates theinteraction between the motor/generator and controller, as well as interfacingwith a vehicle controller. Software control algorithms are an important part ofthe Company's intellectual property portfolio. One aspect of the software is apatented method of control referred to as Phase Timing Advancement that enablesUQM® motors to deliver both high output torque atlow operating speeds and high power at increasing operating speeds. We haveextended the capability of Phase Advance Control by using Adaptive Controltechniques. These proprietary software algorithms alter the switching strategyas a function of DC voltage, operating speed, output power and temperature tooptimize system performance under dynamically changing conditions. The result ismaximized output and efficiency that decreases fuel consumption in hybridelectric vehicles and increases the range of battery electric vehicles. TheCompany's software also optimizes the output per unit of voltage and current,maximizing the utilization of the onboard stored energy and other electricaldevices by extracting power from substantially the entire electrical cycle ofthe motor/generator. The development and application of these proprietarycontrol algorithms have allowed us to continue increasing the peak andcontinuous power output and the efficiency of our systems. In addition, ourcontrollers now have user configurable functionality and increased datatransmission speeds and response times, improving vehicle capability. Includedin this functionality is the ability to switch between torque, speed, andvoltage control dynamically, which is especially useful for parallel hybrids andgenerator applications of our technology. For vehicle developers, our GraphicalUser Interface provides the means to tailor UQM®systems to create the desired driving experience.

Desired propulsion attributes consist of hightorque to launch the vehicle from a standing-stop, with a subsequent transitionto high power as the vehicle is accelerated to highway speeds. In the majorityof conventional internal combustion engine powered vehicles, the transition fromhigh torque to high power is accomplished through the multiple gear changesperformed by a mechanical transmission. UQM®systems, incorporating proprietary DSP software technology , are suited aspropulsion drives in HEV's, PHEV's and EV's due to their ability to powera vehicle from a standing-stop to highway speeds without mechanical gearchanges, thereby eliminating the size, weight, complexity and cost ofmulti-speed mechanical transmissions.

The ability to provide both high torque and hightop speed creates additional advantages in military vehicles. High torque at lowspeed translates into obstacle and grade climbing capability that is morechallenging in an off-road environment, while high speed enables pursuit, dashand evasive maneuvers as well as convoy transport. Conventional propulsionsystems meet the high torque and high road speed requirements by using atransmission and additional gearing beyond that used for commercial vehicles.

We have also developed auxiliary electronicproducts that perform other functions on HEV's, PHEV's and EV's. Wecurrently manufacture proprietary DC-to-DC converters that reduce the voltagelevel of a 250 volt to 450 volt vehicle battery pack to 12 or 24 volts poweringlower voltage devices onboard these vehicles. We also offer a high voltageDC-to-AC inverter, which converts DC power stored in vehicle battery packs tohigh quality 110 volt AC power. This device has an output efficiency of up to 93percent. We also offer a high voltage DC-to-AC inverter, which converts DC powerstored in vehicle battery packs (250 volt to 450 volt) to high quality 110/120volt AC power.  This device provides 5 kW of sinusoidal output (40 amps)with an efficiency of up to 93 percent.  It powers devices that aretypically plugged into a standard wall outlet and its high power quality willhandle sensitive loads, including communication systems and power tools.

We have two U.S. patent applications pendingrelated to new technology: one that relates to electric machines and anotherthat relates to inverters. In addition, we have submitted two additionalprovisional applications. We are also performing internally funded research anddevelopment to continually improve the functionality of the microprocessorsoftware we use to intelligently control our motor/controller system.

The majority of our research and developmentactivities are the result of projects contracted with and funded by customers,for which we typically retain intellectual property rights in the resultingtechnology developed. Customer funded development activities are recorded in ourfinancial statements as contract services revenue and the associated developmentcosts are shown as costs of contract services. Internally-funded research anddevelopment expenditures are charged to research and development expense whenincurred.

In recent years, we have focused our research anddevelopment activities on the development of commercial products and productionengineering activities to lower the cost of manufacture, as well as enhance theperformance and capability of our systems, as opposed to basic research in thefield. We believe our future growth is dependent, in part, on the continuedadvancement of our technology portfolio and our ability to commercialize ourtechnology in additional product applications and markets. Accordingly, weexpect to continue to pursue additional customer funded programs and toselectively invest in internally funded development projects to accomplish theseobjectives.
**Markets for our Products**
We believe that our technology and products arewell-suited for application in a wide-range of vehicles as the trend towardelectrification continues to gain momentum. In this regard, we have focused ourattention on several markets where we believe we can most effectively competeand which we expect will have higher than average rates of growth and expansion.A brief description of each of these markets follows:
***Passenger automobiles and light trucks - Inpast years, more than 50 million passenger automobiles and light trucks weresold worldwide of which 11 to 17 million units were sold in the United States.Over the last several years a market has developed for automobiles that arepowered by hybrid electric powertrains. These vehicles have good performance andprovide above average fuel economy compared to conventional automobiles. Severalestablished automakers have introduced vehicle models incorporating hybridelectric powertrains including Toyota, Nissan, Honda, Ford and General Motors**.**Several automakers have also introduced or announced plans to introduceall-electric passenger vehicles in the coming years, including Nissan,Mitsubishi, Ford and CODA Automotive. The CODA all-electric passenger car ispowered by a UQM® electric propulsion system.

We have announced that Audi, Saab and Rolls Roycehave either development test fleets or development vehicles in place that arepowered by UQM® electric propulsion systems.

In addition to established automakers, there are avariety of small entrepreneurial companies that are developing and haveintroduced or intend to introduce all-electric, hybrid-electric or plug-inhybrid-electric cars. Most visible of these companies is our customer, CODAAutomotive, who plans to introduce an all-electric passenger vehicle in calendar2011 (see also "the CODA Program" below), Tesla, who has introduced anall-electric sports car and hopes to introduce an all-electric passenger car ina few years and Fisker Automotive, who has introduced a plug-in hybrid sportscar and also hopes to introduce a plug-in hybrid passenger car in a few years.Although many of these entrepreneurial companies lack substantial financialresources and/or significant automobile industry experience, they are pursuing avariety of strategies to introduce these types of automobiles into either nichemarkets, such as for fleet users or high-end luxury sports car buyers, or theconsumer vehicle market generally. Should any of these companies be successfulin commercializing their product offerings, it could cause the growth rate ofthis market to accelerate. These companies are generally using electric orhybrid electric powertrains that they have developed themselves or have beendeveloped by other entrepreneurial companies.
***Trucks, Buses and Recreational Vehicles -****The U.S. Department of Energy estimated that in 2007, trucks consumed 6.3million barrels of crude oil per day and they project that by 2030, trucks willconsume approximately 55 percent of all crude oil used in transportation, or 10million barrels of crude oil per day.

In recent years, approximately 6 million trucks,buses and other medium and heavy-duty on-road vehicles were sold in the UnitedStates each year, although these quantities have declined over the last coupleof years. The market for these vehicles is characterized by a large number ofsuppliers, a wide-range of vehicle designs and configurations, diverse power andperformance levels and relatively low production volumes for each model. As aresult, the typical truck, bus and other medium and heavy-duty vehiclemanufacturer have traditionally out-sourced many of these components and willlikely continue to do so for the components necessary to electrify theirvehicles. Accordingly, we expect these manufacturers to purchase products fromsuppliers who have developed technologically advanced electric motors;generators and power electronic energy management controls that can be appliedto their vehicles. Recently, a subsector of this market has begun to develop formedium-duty delivery trucks that operate on a well-defined route where averagedaily mileage requirements have little variability. In this subsector, truckmanufacturers are beginning to offer delivery trucks with custom designedbattery capacity whereby the delivery vehicle has only the battery contentonboard that is necessary to achieve its route mileage plus a small increment ofadditional energy for contingencies. For these trucks, the optimized amount ofenergy stored in batteries reduces the cost of the batteries onboard anall-electric truck to a point where the vehicle is nearly competitively priced,on a life-cycle cost basis, with a conventional internal combustion powereddelivery truck of the same size. We believe this pricing parity will acceleratethe growth of this subsector in the near term.

We are currently supplying an automotive qualifiedDC-to-DC converter to Eaton Corporation which is used onboard medium andheavy-duty hybrid trucks sold by Freightliner, International and Paccar and weoffer for sale a DC-to-AC inverter to meet the growing onboard and export powerrequirements of hybrid trucks. We are supplying electric propulsion systemsunder a supply agreement to Electric Vehicles International, who has developedan all-electric medium-duty delivery truck. We expect the medium and heavy-dutyhybrid electric truck market to grow at an accelerating rate as potentialcustomers for these vehicles gain a greater understanding of their operational,environmental and economic advantages.

Several truck manufacturers are also consideringother electrically-based products that either enhance the utility of theirvehicles, such as the ability to generate large amounts of exportable electricpower, or that may be necessary to meet regulatory mandates, such as dieselengine emission standards and restrictions on emissions arising from dieselengine idling. We intend to continue to aggressively pursue thecommercialization of our products for these and other applications in the marketfor electric and hybrid trucks as it emerges over the next several years.

We are also supplying propulsion systems forelectric buses being developed and produced by Proterra, Inc. under a supplyagreement. The 37-foot Proterra composite body bus is being developed in both anall-electric battery and plug-in hybrid configuration. Proterra recentlyannounced their plans to build a 200,000 square foot bus manufacturing facilityin South Carolina.
***Off-road vehicles-****There are awide-range of off-road vehicles sold in the United States each year. Thesevehicles range from small - wheelchairs, golf carts, fork trucks, riding lawnmowers, snowmobiles, all-terrain vehicles, etc., - to large construction,agricultural and mining equipment. The markets for small vehicles are typicallycharacterized by relatively high volumes, low power levels and commoditypricing. We expect to continue to compete selectively in small off-road vehiclemarkets where the customer requires advanced technology or superior performanceand where acceptable gross profit margins are obtainable.

The market for large equipment - tractors,construction, mining and other specialty equipment - possesses many of the samecharacteristics as the over-the-road truck market described above. In recentyears, it is estimated that approximately 500,000 of these vehicles were sold inthe United States annually. Accordingly, we expect these vehicle manufacturersto purchase products with similar specifications as those required in theover-the-road truck and bus markets from suppliers who have developedtechnologically advanced electric motors and power electronic energy managementcontrols that can be applied to their vehicles. Although these vehicles areproduced in relatively lower volumes, they nevertheless represent a substantialopportunity due to higher power levels, substantial technical complexity andtherefore substantially higher product content and dollar value per vehicle. Wehave provided systems to several large off-road vehicle developers for bothelectric propulsion and under-the-hood auxiliary applications.

We have also developed electric power products forthe aircraft and aerospace market and the boat and marine market. In the boatmarket, we have developed generators for onboard power production inhybrid-electric boats as well as electric propulsion systems. We believe thatthe fuel efficiency benefits of vehicle electrification can be realized in theboat and marine market. Although our focus is primarily on-road applications, wewill continue to leverage our technology and products in these potentially largeniche markets as opportunities present themselves.
***Military vehicles-****The U.S.military purchases a wide-range of ground vehicles each year including combatvehicles such as tanks, self-propelled artillery and armored personnel carriers,as well as a variety of light, medium and heavy-duty trucks for convoy andsupply operations and for the transport of fuel used on the battlefield. Themilitary is particularly interested in the electrification of vehicles becausethe attributes that these vehicles possess offer exceptional potential for themilitary to achieve its long-term objectives of developing a highly mobile,lethal fighting force. Fuel economy improvements in military vehicles transferinto substantial savings in support infrastructure and transportation costsassociated with transporting fuel to the battlefield, which is typicallythousands of miles from the United States. For example, if fuel economyimprovements of 25 percent are achieved in the average truck, a correspondingamount of fuel does not have to be transported and therefore a correspondingnumber of airplanes or tankers are not required in the transportation process.Also, the availability of onboard electrical power on military vehicles opens upnew opportunities for the development of sophisticated surveillance, detectionand battlefield monitoring equipment and for laser, microwave and electricalpulse weapon systems. It is estimated that the military purchases approximately8,000 trucks per year and greater numbers during periods of armed conflict. Asis the case with large off-road equipment, these vehicles are produced inrelatively lower volumes, operate at higher power levels, have substantialtechnical complexity and therefore substantially higher product content anddollar value per vehicle. We have, over the last several years, been workingwith a number of military contractors and vehicle makers including DRSTechnologies, AM General, BAE Systems, Boeing, General Dynamics and others, onprototype hybrid electric vehicles, high export power generators, electricauxiliaries, DC-to-DC converters and DC-to-AC inverters. Although this markethas not yet emerged, we believe that it may begin to soon, driven by theavailability of hybrid electric components in the commercial truck market thatoperate at similar power levels as those required by many military vehicles.
**Marketing Channels and Sales**
We market our products in a variety of differentways depending on the end market and the complexity of the product. In theautomotive sector we market our electric propulsion systems and generatorsthrough the following channels:
-  Direct SalesVehicle Integrators - This marketing channel is characterized by the    development of a relationship with companies that perform vehicle    development activities for automobile companies worldwide. Many of these    companies have substantial autonomy to source vehicle components at the    earliest stages of a vehicle development program. As a result of our    multi-year relationships supplying many of these companies with our    products, we have been able to develop and foster within their organizations    a confidence in the performance characteristics, ease of application and    durability of our products that have led to additional early stage    placements of our products in automakers vehicle development programs.Cooperative Marketing Arrangements - These arrangements typically are    characterized by nonexclusive marketing cooperation with other vehicle    component developers and manufacturers where marketing partners introduce    UQM® products to prospective customers who are considering a    component being sold by our marketing partner and vice versa. For example,    we currently have an active cooperative marketing arrangement with    BorgWarner, who has developed a transaxle for all-electric and hybrid    vehicles that is matched to our PowerPhase Pro®    100 kW propulsion motor and a three speed transmission matched to our    PowerPhase HD® 150 kW propulsion motor.
We opportunistically market our technology inwell-established markets for products that incorporate electric motors,generators and power electronic controllers where added-value can be provided tothe end product user by adopting our technology. Examples of existing electricvehicle markets that we believe may present opportunities for thecommercialization of our proprietary technology include electric aircraft tugsand other support equipment, commercial floor cleaning equipment and othersimilar markets where the product application generally requires high torque andvariable speed operation. In addition, there are a multitude of electricauxiliary motors used on aircraft and automobiles such as HVAC compressors, fanblower motors that provide a further opportunity for replacement by our systems.

We have developed and commercialized severalproducts for existing markets. These products include a fan blower motor and acompressor drive motor that are used in aircraft air conditioning systemsmanufactured by Keith Products, Inc. and an electric brake actuation motor thatis used in selected golf carts manufactured by Club Car, Inc.

We expect to continue to commercialize bothtechnologically advanced and low cost products that we develop to customerspecifications in selected large, established markets.

Funded development projects are typically marketedthrough a technical selling process that encompasses the submission of anengineering proposal by our engineering staff in response to a request forproposal or from other methods designed to find and identify customer fundeddevelopment opportunities within our area of expertise.
**CODA Automotive Program**
We have a ten year Supply Agreement with CODAAutomotive to supply UQM PowerPhase Pro® electricpropulsion systems for their all-electric passenger sedan that is expected to beintroduced in California in the second half of calendar year 2011. The supplyagreement provides a framework for CODA or CODA's manufacturing partners topurchase 20,000 electric propulsion systems from us over the first two years ofthe program. Under the terms of the Agreement, CODA or CODA's manufacturingpartner will issue blanket purchase orders covering their annual purchaserequirements and issue thereunder noncancellable delivery releases against theblanket order.

CODA Automotive has announced that to date it hasraised over $200 million in capital to facilitate the execution of its businessplan and is currently pursuing an additional $50 million in equity capital. CODAhas stated that it hopes to sell 10,000 to 14,000 vehicles in the first twelve months following thevehicle's introduction.

The CODA all-electric sedan was developed by CODA'sinternal team of engineers working with multiple external engineering partners,including Porsche Engineering. The vehicle is expected to have a base price of $32,400after applying a $7,500 federal tax credit and a $5,000 state tax credit fromCalifornia for qualifying buyers. CODA has also announced its plan to sell thevehicle in the state of Hawaii and in China. The car is powered by a 100 kW UQMPowerPhase Pro® electric propulsion system, and hasa 33.8 kWh lithium-ion battery pack which CODA expects will provide a vehiclerange between charges of 90 to 120 miles depending on individual driving habits.The onboard charger plugs into a 110V or a 220V outlet and can charge for a40-mile commute in approximately two hours (full charge in less than six hours)at 220V. CODA advertises that the CODA sedan is backed by a three-year/36,000mile warranty and an eight-year/100,000 mile battery warranty.

The CODA electric sedan chassis will be assembledand tested, incorporating the UQM® power-train on anassembly line operated by Harbin HaFei Automobile Industry Group Co., Ltd.("Haifei"), a wholly owned subsidiary of Chang An, one of China'slargest and most respected automobile manufacturers. Hafei has over 575,000square meters of production facilities and 11,000 employees.

CODA has announced that the battery system for theCODA passenger car is being supplied by a joint venture between CODA Automotiveand Tianjin Lishen Battery Co. ("Lishen"). Lishen is one of theworld's largest manufacturers of lithium-ion cells and a key supplier to Apple,Motorola, Samsung and Vodafone, among others. CODA is working to establish U.S.based manufacturing of their joint venture batteries and final vehicle assemblyoperations.

CODA's stated strategy is to design, brand,market and distribute electric vehicles utilizing manufacturing partnershipswhich allow it to develop vehicles rapidly in a flexible manner - avoiding thetraditionally capital-intensive nature of the automobile business. CODA expectsto employ a direct distribution model. CODA expects that vehicle maintenance andservice operations will be performed through an outsourced network comprised ofbrand name car service partners.

Other announced suppliers to the CODA programinclude: Continental (electronic stability control); Delphi (DC to DC converterand electric power steering); BorgWarner (transaxle); Hella (electric vacuumpump); Energy CS (battery management system); Lear (battery charger); OMITEC(main controller); and Mitsubishi (electric AC compressor).

Our Agreement with CODA also provides that if CODAor its manufacturing partners, if any, do not collectively purchase 15,000 unitswithin the first two years following the launch of production, they will berequired to make specific payments to us.
**U.S. Department of Energy Stimulus Grant**
We have been awarded a $45,145,534 grant (the"Grant") from the U.S. Department of Energy ("DOE") underthe American Recovery and Reinvestment Act (the "Stimulus Act"). TheGrant provides funds to facilitate the manufacture and deployment of electricdrive vehicles, batteries and electric drive vehicle components in the UnitedStates. We are one of seven component manufacturers selected for an award andthe only small business under the component category. Pursuant to the terms ofour Assistance Agreement, the DOE will reimburse 50 percent of qualifying costsincurred for the purchase of facilities, tooling and manufacturing equipment,and for engineering expenditures related to product qualification and testing ofour electric propulsion systems and other products. The initial period of theGrant is through January 12, 2013.

The $45.1 million size of the Grant is based on theestimated cost of a project to implement high volume manufacturing operationsprovided in our application to the DOE under the Electric Drive Vehicle Batteryand Component Manufacturing Initiative. Funding for qualifying project costs iscurrently limited to $32 million until July 13, 2011, at which time we arerequired to provide the DOE with an updated total estimated cost of the projectalong with evidence of firm commitments for our 50 percent share of the totalestimated cost of the project in excess of our currently accepted cost sharematch of $32 million. If an extension or modification of this requirement hasnot occurred or all such funds have not been secured, we must submit, by suchdate, a funding plan to obtain the remainder of such funds, which is acceptableto the DOE, or the award may be terminated.

The Grant is also subject to our compliance withcertain reporting requirements. As specified in the Act, we are required to usethe Grant funds in a manner that maximizes job creation and economic benefits.The Stimulus Act and the Agreement impose minimum construction wages and laborstandards for projects funded by the Grant and some sourcing restrictions.

If we dispose of assets acquired using Grantfunding, we may be required to reimburse the DOE upon such sale date if the fairvalue of the asset on the date of disposition exceeds $5,000. The amount of anysuch reimbursement shall be equal to 50 percent of the fair value of the asseton the date of disposition.

While UQM has exclusive patent ownership rights forany technology developed with Grant funds, we are required to grant the DOE anon-exclusive, non-transferable, paid-up license to use such technology.

The Grant has numerous benefits to the Company andits shareholders including: 1) substantially reducing the Company's cost ofcapital; 2) substantially mitigating the financial risk of productionizing ourproducts and acquiring the facilities and equipment necessary to support volumeproduction of our products; 3) substantially reducing our product qualificationand testing costs; and 4) improving product margins on products manufactured onequipment subsidized by the Grant.

At March 31, 2011 we had received reimbursementsfrom the DOE under the Grant totaling $10,409,083 of which $7,310,336 was forcapital assets and $3,098,747 was reimbursements of product qualification andtesting costs. We also had an amount receivable from the DOE at March 31, 2011of $1,552,528 of which $662,620 represented reimbursement of capital assetpurchases and $889,908 was reimbursements for product qualification and testingcosts incurred.

The application of grant funds to eligible capitalasset purchases under the Grant as of March 31, 2011 is as follows:

 
Purchase Cost
Grant Funding
Recorded Value
Land
$     896,388  
448,194  
448,194  
Building
9,611,560  
4,805,780  
4,805,780  
Machinery and Equipment
  5,437,965  
2,718,982  
2,718,983  
$15,945,913  
7,972,956  
7,972,957  **Manufacturing**
It is our primary objective to become a majormanufacturer of electric motor, generator and other power electronic productsthat incorporate our proprietary technology and to supply these products toelectric, hybrid electric and fuel cell electric vehicle manufacturers and/ortheir Tier 1 suppliers. To this end, in December 2009 we acquired a 129,304square foot facility on 15 acres together with 15 acres of adjacent vacant landin Longmont, Colorado to support our expected growth in manufacturingoperations. We have installed and qualified two semi-automated production cellsat this facility with a two shift capacity to produce 40,000 units a years ofour automotive 100 kW and 135 kW PowerPhase Pro®electric motor and motor controller. We expect to add additional productioncapacity in this facility coincident with future demand.

Over the last several years we have established aproduction engineering group with decades of manufacturing design and productionexperience, much of which is specific to the electric motor or automotiveindustries. We have adopted the Advanced Product Quality Planning ("APQP")automotive procedures for the development and volume production of our productsand we are continuing to expand our production engineering group coincident withthe growth in our customer base and the number of customer programs we believewill proceed to full scale production. We are also upgrading our softwaresystems and enhancing our internal processes in preparation in anticipation ofpotentially rapid growth in our production volumes.

We also have a production cell for the assembly ofour larger frame size, higher power, lower volume prototype motors. The annualcapacity of this cell is approximately 5,000 systems per shift per year.

We also manufacture a truck qualified DC-to-DCconverter for Eaton Corporation as part of their hybrid electric power systemfor the heavy truck market, as well as for other electric and hybrid electricvehicle manufacturers. We have a dedicated manufacturing cell for theseelectronic boxes that includes the robotic application of sealant, sixteen hoursof burn-in cycling between hot and cold temperature extremes, pressure testingfor cooling leaks and complete functional testing.

In order to ensure our cost competitiveness, wehave adopted a manufacturing strategy for the near term of designing all productcomponents and then sourcing these parts with quality suppliers. Final assembly,testing, pack-out and shipping of the product are performed at our Coloradofacility. We have established relationships with many high-quality, low-costsuppliers, including a number of international companies. Future plans are tocontinue the development and introduction of more advanced and automatedmanufacturing systems which we believe will ensure our competitiveness in newand growing markets.

Our manufacturing operations are certified to theISO 9001:2000 standard. Over the next several years we expect to qualify ourmanufacturing operations under the more difficult TS 16 standard for theautomotive sector.
**Our Opportunity**
We have developed a range of products includingelectric propulsion motors, generators, power electronic controllers and otherpower electronic products that we believe are ideally suited to the growingmarkets for electric, hybrid electric and fuel cell electric vehicles.

We believe that the launch of high volumemanufacturing of our PowerPhase Pro® 100 kW electricpropulsion system for CODA Automotive later this calendar year will give us asubstantial "first mover" advantage as a Tier 1 supplier to the cleanvehicle market. Specifically, the introduction of our products that have beenfully automotive qualified in commercial quantities will provide substantialeconomies of scale, permitting us to achieve production costs and pricing thatwill be difficult for others who have not launched similar high volumeproduction to compete with. We expect that this pricing and product availabilityadvantage will allow us to further expand the roster of automobile makers whoselect our propulsion systems for their future vehicle programs.

In addition to the passenger automobile market,vehicle makers of all types have been evaluating the potential of applyingelectric and hybrid electric technology to their vehicle platforms. Of thesemanufacturers, medium and heavy-duty truck and bus builders and militarymanufacturers have been the most active, driven by the performance and fueleconomy advantages available from this technology, the need for large amounts ofonboard and exportable power and new federal standards requiring fuel economyimprovements of 10% to 20 %. We believe that these industry developments signalthe beginning of a potentially large-scale deployment of electric propulsion andrelated electronic products into markets beyond mass-market passengerautomobiles. Should these products receive broad customer acceptance, as weexpect they will, additional opportunities will likely develop over time for ourcompany.

In the past, we have supplied our electricpropulsion systems and generators to small niche developers of electricallypowered vehicles or as part of technology development and assessment programs bythe U.S. government, and larger commercial customers. However, over the last fewyears, we have supplied our propulsion systems to numerous internationalautomotive manufacturers as part of their electric and hybrid electric vehicledevelopment activities, including publicly announced fleet build or vehicledevelopment programs with Audi, Saab, Citroen and Rolls Royce. Should any ofthese automakers elect to utilize our products in future model launches, itwould have a material impact on our future rate of growth.

We are currently investing substantial amounts ofhuman resource and capital on establishing the manufacturing infrastructure tomeet CODA Automotive's requirements as well as the potential productionrequirements of our other existing and future customers. As the markets for ourcustomers' clean vehicles expand, we expect to make additional investments insupport of our strategy to aggressively introduce automotive certified productsto satisfy our customers' requirements.

We also expect to experience potentially rapidgrowth in our revenue coincident with the introduction of electric products byour customers. In parallel to these activities in the automotive market, weexpect to continue to pursue additional production opportunities for ourproprietary technology in existing markets where the performance of our productscan provide our customers with a competitive advantage in the markets theyserve.
**Business Segments**
At March 31, 2011, we had two reportable segments.These reportable segments are strategic business units that offer differentproducts and services and are managed separately because of their differentbusiness strategies.
***Technology Segment

Our technology segment encompasses the operationsof our Engineering and Product Development Group. The Engineering and ProductDevelopment Group is equipped with research and development laboratories,prototype build and test facilities for electric motors, generators, powerelectronic controllers, software, and vehicle integration activities. Thetechnology segment conducts customer funded and internally-funded research andengineering activities directed toward: 1) the development of new motors,generators, and power electronic controllers to meet the requirements ofcustomers' specific product applications; 2) integration of our motors,generators and power electronic controllers into customers' products; and 3)support of our power products segment and the low volume manufacture of motors,generators and power electronic controllers.
***Power Products Segment***
Our power products segment encompasses theoperations of our wholly-owned subsidiary, UQM Power Products, Inc. UQM PowerProducts, Inc. is the manufacturer of our proprietary products in higher volumesand is an ISO 9001:2000 quality certified manufacturer of motors and electronicproducts designed by the company.

Effective April 1, 2011 we merged UQM PowerProducts, Inc. into UQM Technologies, Inc.
**Competition**
All of the markets in which we operate are highlycompetitive. The markets served by the technology segment are additionallycharacterized by rapid changes due to technological advances that can renderexisting technologies and products obsolete.

The technology segment has developed advancedelectric propulsion systems and components which we hope to market to vehicleOriginal Equipment Manufacturers ("OEMs") and their Tier 1 suppliersthroughout the world for use in electric, hybrid electric, plug-in hybridelectric and fuel cell electric vehicles. In recent years, the market for hybridelectric automobiles has begun to emerge, led by the introduction and marketsuccess of hybrid electric vehicles manufactured by Toyota, Honda, Ford andGeneral Motors and others. In the larger vehicle markets, International Truckand Engine Corporation, Freightliner Trucks and Paccar offer hybrid electricmedium-duty trucks and Caterpillar, Inc. produces a belt-less engine/electrictracked bulldozer. As a result, additional vehicle makers in both on-road andoff-road markets are expected to develop and introduce a variety of hybridelectric and all-electric vehicles as the market acceptance of these vehiclescontinues to grow. We cannot assure that we will be able to compete successfullyin this market or any other market that now exists or may develop in the future.There are numerous companies developing products that do or soon will competewith our systems. Some of these companies possess significantly greaterfinancial, personnel and other resources than we do, including establishedsupply arrangements and volume manufacturing operations. We believe ourprincipal competitors include Toyota, Honda, General Motors, Hitachi, Toshiba,Siemens, Delphi, Danaher, Enova, Continental, Magna, Remy, Bosch and AzureDynamics.

The power products segment competes primarily inthe automotive, heavy equipment, military and aerospace industries. Each ofthese industries is extremely competitive. We face substantial competition on acontinuing basis from numerous companies, many of whom possess longer operatinghistories, significantly greater financial resources and marketing, distributionand manufacturing capability. We believe our principal competitors includeAdvanced DC Motors, General Electric, Rockwell International, Hitachi, Hyundai,Toshiba, Siemens, Delphi, Danaher, L-3 Communications, Enova, Continental,Magna, Remy, Bosch and Azure Dynamics.
**Patents**
We hold several groups or families of patents.

U.S. Patent Nos. 5,311,092 and 5,319,844 discloseand claim a lightweight high-power electromagnetic transducer and method ofmaking the same. The corresponding foreign patents have expired.

U.S. Patent No. 5,592,731 and U.S. Patent No.5,382,859 relate to a stator for high-power density electric motors andgenerators, and a method of constructing the same. Corresponding applicationshave been filed and issued in several foreign countries.

U.S. Patent No. 5,677,605 discloses and claims abrushless motor and drive system using phase timing advancement. Correspondingapplications have been filed and issued in several foreign countries.

U.S. Patent No. 5,982,063 discloses and claims anelectric motor having an internal brake. Corresponding applications have beenfiled and issued in several foreign countries.

U.S. Patent No. 6,522,130 discloses and claims amethod for controlling a brushless electric motor having a rotor, and relates toan accurate method for sensing rotor position and detecting rotational speedover a broad range of speeds. U.S. Patent No. 6,693,422 is a related U.S. patententitled "Accurate Rotor Position Sensor and Method Using Magnet andSensors Mounted Adjacent to the Magnet and Motor". Correspondingapplications have been filed and issued in several foreign countries.

In 2007, we filed patent applications for a statordesign in the United States, Canada, and Europe. The U.S. and Canadianapplications have granted as U.S. Patent No. 7,755,244 and CA 2,615,111,respectively. The European application is currently pending.

In 2007, we filed patent applications for apermanent magnet rotor geometry for permanent magnet electric motors in theUnited States, Canada, and Europe. The United States application issued as U.S.Patent No. 7,598,645. The Canadian and European applications are currentlypending.

In January 2010, we filed a U.S. patent applicationfor a distributed generation power system having an integrated electric utilitymeter and inverter system, including the physical design, placement andinterconnection of the integrated electric utility and inverter system.Corresponding patent applications have been filed in Europe and Canada.

In November 2010, we filed a US patent applicationfor a rotor for a permanent magnet electric machine. This application ispending. Corresponding patent applications have been filed in Europe and Canada.

In addition, we have submitted two additionalprovisional applications.

In 1994, we executed an agreement with AlcanAluminium Limited ("Alcan") in which Alcan assigned to us all of itsrights, title and interests in certain motor technology developed under aprogram funded by Alcan.  This agreement further provides that we shall payto Alcan royalties of one-half of one percent on revenue derived from themanufacture and sale of products or processes embodying the related technology.The agreement expires on January 14, 2014. Royalty payments under this agreementfor the fiscal years ended March 31, 2011, 2010 and 2009 were $36,882, $25,349and $39,850, respectively.

We also intend to rely on the unpatentedproprietary know-how we have developed and now utilize in our products. Wecannot provide assurance that others will not independently develop, acquire orobtain access to our technology. Although we protect our unpatented proprietaryrights by executing confidentiality agreements with our management, employeesand others with access to our technology, these measures may not be adequate toprotect us from disclosure or misappropriation of our proprietary information.
**Trademarks**
We have registered the letters "UQM" inthe U.S. Patent and Trademark Office. Counterpart applications have been filedin numerous countries throughout the world, most of which have grantedregistrations or indicated them to be allowable. We own three U.S. TrademarkRegistrations for "UQM" (International Class 7 for power transducers,Class 12 for utility land vehicles, and Class 16 for publications). The foreigntrademark registrations and applications include major markets where we aredoing business or establishing business contacts.

We have also registered the trademark"POWERPHASE" which we use in conjunction with certain of ourpropulsion systems. The trademark is registered in the European Community andseveral other foreign countries.
**Backlog**
Our technology segment had unperformed servicecontracts from customers, which will provide future revenue upon completiontotaling approximately $0.3 million at April 30, 2011 versus $1.1 million atApril 30, 2010. Our order backlog for prototype motors and controllers at April30, 2011 was approximately $1.2 million versus $1.9 million at April 30, 2010.All such service contracts are subject to amendment, modification orcancellation. We expect to complete all unperformed service contracts over thenext fourteen months and ship motor and controller backlog products over thenext twelve months.

Our power products segment had an order backlog ofapproximately $2.2 million at April 30, 2011 compared to $3.1 million at April30, 2010. Many orders are issued to us as blanket purchase orders subject to theissuance of subsequent release orders which direct the number and timing ofactual deliveries. Substantially all of the backlog amounts at April 30, 2011and 2010 are subject to amendment, modification or cancellation. We expect toship all backlog products within the next twelve months.
**Customers and Suppliers**
We have historically derived significant revenuefrom a few key customers. Revenue from CODA Automotive, which is a customer ofour power products segment, was $1,301,224, $573,250, and $22,850 for the fiscalyears ended March 31, 2011, 2010 and 2009, respectively, representing 14percent, 7 percent and nil of consolidated total revenue, respectively. Thiscustomer also represented 16 percent and 3 percent of consolidated totalaccounts receivable at March 31, 2011 and 2010, respectively. Inventoriesconsisting of raw materials, work-in-process and finished goods for CODAAutomotive were 38 percent and 27 percent of consolidated total inventories atMarch 31, 2011 and 2010, respectively. Revenue from Quantum Fuel SystemsTechnologies Worldwide Inc., which is also a customer of our power productssegment, was $12,000, $13,115, and $1,360,909 for the fiscal years ended March31, 2011, 2010 and 2009, respectively, representing nil, nil and 16 percent ofconsolidated total revenue, respectively. This customer also represented nil and3 percent of total accounts receivable at March 31, 2011 and 2010, respectively.We did not have any raw materials, work-in-process or finished goods inventoryfor Quantum Fuel Systems Technologies Worldwide Inc. at March 31, 2011 and 2010.

Principal raw materials and components purchased byus include iron, steel, electronic components, magnets and copper wire. Most ofthese items are available from several suppliers. Certain components used by usare custom designs and if our current supplier no longer made them available tous, we could experience production delays.
**U.S. Government Contracts**
Revenue derived from contracts with agencies of theU.S. Government and from subcontracts with U.S. Government prime contractors was$1,112,307, or 12 percent of our consolidated total revenue, for the year endedMarch 31, 2011, $2,488,321 or 29 percent of our consolidated total revenue, forthe year ended March 31, 2010 and $1,989,872, or 23 percent of consolidatedtotal revenue, for the year ended March 31, 2009. Accounts receivable fromgovernment-funded contracts represented 49 percent and 8 percent of totalaccounts receivable as of March 31, 2011 and 2010, respectively. Of theseamounts, revenue derived from subcontracts with AM General LLC totaled $792,508,$1,807,063 and $434,181 which represented 9 percent, 21 percent and 5 percent ofour consolidated total revenue for the fiscal years ended March 31, 2011, 2010and 2009, respectively. This customer also represented nil and 8 percent ofconsolidated total accounts receivable at March 31, 2011 and 2010, respectively.Inventories consisting of raw materials, work-in-process and finished goods forAM General LLC were nil and 13 percent of consolidated total inventories atMarch 31, 2011 and 2010, respectively.

Some of our business with the U.S. Government wasperformed on a cost plus fixed fee basis. These contracts provide forreimbursement of costs, to the extent allocable and allowable under applicableregulations, and payment of a fee. Certain other contracts with the U.S.Government provide for the reimbursement of costs on a 50 percent cost-sharingbasis and have not-to-exceed billing rates negotiated between the U.S.Government and us. Other U.S. Government business is performed under firm fixedprice contracts. On "cost-share" and "firm fixed price"contracts, we can incur an actual loss in the performance thereof if incurredcosts exceed the contract amount. All of our U.S. Government contracts aresubject to modification or cancellation at the convenience of the Government.

We have an Assistance Agreement ("Grant")for $45,145,534 with the U.S. Department of Energy ("DOE") under theAmerican Recovery and Reinvestment Act (the "Stimulus Act"). The Grantprovides funds to facilitate the manufacture and deployment of electric drivevehicles, batteries and electric drive vehicle components in the United States.Pursuant to the terms of the Agreement, the DOE will reimburse us for 50 percentof qualifying costs incurred for the purchase of facilities, tooling andmanufacturing equipment, and for engineering related to product qualificationand testing of our electric propulsion systems and other products. The initialperiod of the Grant is through January 12, 2013.

Funding for qualifying project costs incurred iscurrently limited to $32.0 million until July 13, 2011 at which time we arerequired to provide the DOE an updated total estimated cost of the project alongwith evidence of firm commitments for our 50 percent share of the totalestimated cost of the project in excess of our currently accepted cost-sharematch of $32.0 million. If an extension or modification of this requirement hasnot occurred or all such funds have not been secured, we must submit by suchdate, a funding plan to obtain the remainder of such funds, which is acceptableto the DOE, or the award may be terminated.

If we dispose of assets acquired using Grantfunding, we may be required to reimburse the DOE upon such sale date if the fairvalue of the asset on the date of disposition exceeds $5,000. The amount of anysuch reimbursement shall be equal to 50 percent of the fair value of the asseton the date of disposition.

At March 31, 2011 we had received reimbursementsfrom the DOE under the Stimulus Grant totaling $10,409,083 of which $7,310,336was for capital assets and $3,098,747 was reimbursements of productqualification and testing costs. We also had an amount receivable from the DOEat March 31, 2011 of $1,552,528 of which $889,908 represented reimbursement forproduct qualification and testing costs incurred. The application of grant fundsto eligible capital asset purchases under the Grant as of March 31, 2011 is asfollows:

  
Purchase Cost     
Grant Funding      
Recorded Value       
Land
$      896,388          
448,194            
448,194             
Building
9,611,560          
4,805,780            
4,805,780             
Machining and Equipment
   5,437,965          
2,718,982            
2,718,983              
$ 15,945,913          
7,972,956            
7,972,957                 
The application of Grant funds to eligible capitalassets purchases under the Grant as of March 31, 2010 is as follows:

 
Purchase Cost     
Grant Funding      
Recorded Value       
Land
$    896,388          
448,194            
448,194             
Building
6,772,314          
3,386,157            
3,386,157             
Machining and Equipment
  470,936          
   235,468            
   235,468              
$ 8,139,638          
4,069,819            
4,069,819             **Employee and Labor Relations**
As of April 30, 2011, we had 80 total employees, ofwhom 79 are full-time employees. We have entered into employment contracts withfour of our executive officers. Three of these contracts expire on August 22,2012 and one expires on August 31, 2015. None of our employees are covered by acollective bargaining agreement. We believe our relationship with employees hasbeen generally satisfactory.

In addition to our full-time staff, we from time totime engage the services of outside consultants and contract employees to meetpeak workload or specialized program requirements. We do not anticipate anydifficulty in locating additional qualified engineers, technicians andproduction workers, if so required, to meet expanded research and development ormanufacturing operations.
**Available Information**
We file annual, quarterly and current reports,proxy statements and other information with the Securities and ExchangeCommission ("SEC"). Anyone seeking information about our business canreceive copies of our FY2011 Annual Report on Form 10-K, Annual Report toShareholders, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, allamendments to those reports and other documents, filed with the SEC at thepublic reference section of the SEC at 100 F Street, NE, Room 1580, Washington,D.C. 20549. These documents also may be obtained, free of charge, by: contactingour Investor Relations office by e-mail at investor@uqm.com;by phone at (303) 682-4900; writing to UQM Technologies, Inc., InvestorRelations, 4120 Specialty Place, Longmont, CO 80504-5400; or accessing ourwebsite at ,select "Investor Relations" and "SEC Filings." Our websitealso includes our Audit Committee Charter and Code of Business Conduct andEthics as well as the procedures for reporting a violation of business ethics.**ITEM 1A.**RISK FACTORS
Our business is subject to a number of risks anduncertainties, many of which are outside of our control.
**We have incurred significant losses and maycontinue to do so.**
We have incurred significant net losses as shown inthe following tables:

    
                Fiscal      Year Ended March      31,           
      2011      
      2010     
     2009          
Net loss
$   1,992,358 
$   4,140,872 
$   4,402,019 
As of March 31, 2011 we had an accumulated deficit of$75,558,469.

In the future, we plan to make additionalinvestments in product development, facilities and equipment and other costsrelated to the commercialization of our products. As a result, we expect tocontinue to incur net losses at least through March 31, 2012 and potentiallybeyond.
**Our operating losses, anticipated capitalexpenditures and working capital requirements in the longer term may exceed ourcurrent cash balances.**
Our net loss for the fiscal year ended March 31,2011 was $1,992,358 versus a net loss for the fiscal years ended March 31, 2010and 2009 of $4,140,872 and $4,402,019, respectively.At March 31, 2011, our cash and short-term investments totaled $24,211,275. Weexpect our losses to continue through at least March 31, 2012 and potentiallybeyond. Our existing cash resources, together with funding expected from ourARRA grant should be sufficient to complete our business plan for at least thenext eighteen months. Should those resources be insufficient, we may need tosecure additional debt or equity funding, which may not be available on termsacceptable to us, if at all.**If we do not satisfy the terms of ourU.S. Department of Energy grant, we may not receive all or any portion ofthe $45.1 million grant we were awarded and may be required to returnamounts already paid to us under the grant.**
We have a $45.1 million award under theAmerican Recovery and Reinvestment Act's Electric Drive Vehicle Battery andComponent Manufacturing Initiative with the U.S. Department of Energy. ThisAward is subject to terms and conditions specified in the agreement between usand the DOE. We are required to make a cash investment on a dollar-for-dollarmatching basis to receive funds under this Award. If we are unable to match thetotal amount of the $45.1 million award with funding from non-Federalsources, we will be unable to take advantage of the entire Award, and couldbecome ineligible for continued participation in the program. The reimbursementof qualified costs under the award is currently limited to $32.0 million. On orbefore July 13, 2011, we are required to provide to the DOE an updated totalestimated cost of the project along with firm commitments to fund our 50 percentshare of the total estimated cost of the project above the $32.0 million ofmatching funds we have previously received credit for. If an extension ormodification of this requirement has not occurred or all such funds have notbeen secured, we must submit, by such date, a funding plan to obtain theremainder of such funds, which is acceptable to the DOE, or the award may beterminated. In addition, the award may be terminated at any time at theconvenience of the government. Although we expect to satisfy the requirement inthe award, we cannot assure that this requirement will be satisfied and thecontract will not be terminated prior to receiving all of the proceeds.
**CODA may not purchase from us all or any portion ofthe 20,000 systems provided for under its supply agreement.**
We have executed a supply agreement with CODA thatprovides a framework for CODA, or its manufacturing partner, to purchase from us20,000 electric propulsion systems for use in automobiles to be manufactured byCODA during the initial two-year term of the agreement. Under the terms of thisagreement, CODA, or its manufacturing partner HaFei, will issue blanket purchaseorders covering their annual purchase requirements and specifying the timing ofdelivery for such units, with a portion of the delivery schedule considered tobe "firm" and noncancellable. We have not yet received a productionpurchase order under the CODA supply agreement. If CODA, or its manufacturingpartner, does not purchase at least 15,000 units under the CODA supplyagreement, CODA may be required to make specific payments to us. For example, ifCODA is unsuccessful in the development of its electric automobile, CODA orHaFei would not be obligated to purchase electric propulsion systems from us,but CODA would then be obligated to make the payments specified in the contractto us. While these specific payments would cover much of our costs in preparingto supply electric propulsion systems to CODA, the payments are substantiallyless than the amount we would receive for sales of systems under the supplyagreement. In addition, CODA may not have adequate funds to make any suchpayments to us or may otherwise contest its obligation to pay, and as a resultit is possible that we may never receive any such funds. CODA may also terminatethe supply agreement for any number of reasons.
**We may experience challenges in launchingproduction of electric propulsion systems on the scale envisioned under the CODAsupply agreement.**
Although we have installed and qualified productionlines, we have not ever produced electric propulsion systems on the scalenecessary to fulfill our obligations under the CODA supply agreement. We alsoneed to hire additional personnel as production volumes for CODA increase. Wemay encounter difficulties and challenges in ramping-up our operations. If weare unable to successfully increase our production volumes coincidence with CODA'sdelivery requirements we could breach our Supply Agreement. If any suchdifficulties are encountered during production launch it could have a materialadverse effect on our financial condition and results of operations.
**Our revenue is highly concentrated among a smallnumber of customers.**
A large percentage of our revenue is typicallyderived from a small number of customers, and we expect this trend to continueand intensify as we begin production under the CODA supply agreement. CODA maybecome the source of a substantial portion of our revenue in at least thenear-term. The magnitude of this revenue is dependent on CODA's ability tointroduce and sell its passenger vehicle in commercial volumes.

Our customer arrangements generally arenon-exclusive, have no long-term volume commitments and are often done on apurchase order basis. We cannot be certain that customers that have accountedfor significant revenue in past periods will continue to purchase our products.Accordingly, our revenue and results of operations may vary substantially fromperiod to period. We are also subject to credit risk associated with theconcentration of our accounts receivable from our customers. If one or more ofour significant customers were to cease doing business with us, significantlyreduce or delay its purchases from us or fail to pay us on a timely basis, ourbusiness, financial condition and results of operations could be materiallyadversely affected.
**Our business relies on third parties, whose successwe cannot predict.

As amanufacturer of motors, generators, and other component parts, our businessmodel depends on the ability of third parties in our industry to develop,produce and market products that include or are compatible with our technologyand then to sell these products into the marketplace. Our ability to generaterevenue depends significantly on the commercial success of our customers andpartners. Failure of these third parties to achieve significant sales ofproducts incorporating our products and fluctuations in the timing and volume ofsuch sales could have a material adverse effect on our business, financialcondition and results of operations.**Our electric propulsion systems use rare earthminerals and unavailability or limited supply of these minerals could prevent usfrom manufacturing our products in production quantities or increase our costs.**
Neodymium, a rare earth mineral, is a keyingredient used in the production of magnets that are a component of ourelectric propulsion systems. We currently source our magnets from China, andChina has indicated its intent to retain more of this mineral for the use ofChinese companies, rather than exporting it. To the extent that we buy magnetsas a finished product from a Chinese supplier, these potential limitations onneodymium ore may not impact us. Although neodymium iron boron magnets areavailable from other sources, these alternative sources are currently morecostly. Reduced availability of neodymium from China could adversely affect ourability to obtain magnets in sufficient quantities, or in a timely manner, tomeet our production plans. In the event that China's actions cause us to seekalternate sources of supply for magnets, it could cause an increase in ourproduction costs thereby reducing our profit margin on electric propulsionsystems if we are unable to pass the increase in our production costs on to ourcustomers.
**Some of our contracts can be cancelled with littleor no notice and could restrict our ability to commercialize our technology.**
Our contracts with government agencies are subjectto the risk of termination at the convenience of the contracting agency and insome cases grant "march-in" rights to the government. March-in rightsare the right of the United States government or the applicable governmentagency, under limited circumstances, to exercise a non-exclusive, royalty-free,irrevocable worldwide license to any technology developed under contracts fundedby the government to facilitate commercialization of technology developed withgovernment funding. March-in rights can be exercised if we fail to commercializethe developed technology. The exercise of march-in rights by the government oran agency of the government could restrict our ability to commercialize ourtechnology.

Some of our orders for the future delivery ofproducts are placed under blanket purchase orders which may be cancelled by ourcustomers at any time. The amount payable to us, if any, upon cancellation bythe customer varies by customer. Accordingly, we may not recognize as revenueall or any portion of the amount of outstanding order backlog we have reported.
**We face intense competition and may be unable tocompete successfully.**
In developing electric motors for use in vehiclesand other applications, we face competition from very large domestic andinternational companies, including the world's largest automobile manufacturers.Many of our competitors have far greater resources to apply to research anddevelopment efforts than we have, and they may independently develop motors thatare technologically more advanced than ours. These competitors also have muchgreater experience in and resources for marketing their products. For thesereasons, potential customers may choose to purchase electric motors from ourcompetitors rather than from us. In addition, the U.S. government hasawarded substantial financial grants under the stimulus bill to several largecompanies who compete with us. To the extent that some of these competitorsreceived awards under the stimulus bill in amounts greater than we have, couldadversely impact our ability to compete.
**Our business depends, in part, on the expansion ofthe market for hybrid electric vehicles and the future introduction and growthof a market for all-electric vehicles.**
Although our electric propulsion systems may beused in a wide variety of products, the market for electric and hybrid vehiclesis fairly new. At the present time, batteries used to power electric motors havelimited life and require several hours to charge, and charging stations forelectric motors are not widely available. Electric and hybrid vehicles also tendto be priced higher than comparable gasoline-powered vehicles. As a result,consumers may experience concerns about driving range limitations, batterycharging time and higher purchase costs of electric or hybrid automobiles. Ifconsumer preferences shift to vehicles powered by other alternative methods, orif concerns about the availability of charging stations cannot be overcome, themarket for all-electric cars, and therefore our electric propulsion systems, maybe limited. In addition, our electric propulsion systems are incorporated inbuses used for mass transit in several U.S. cities. If passenger traffic inthese mass transit systems declines or government funding to transportationdistricts declines from current levels, demand for our products may alsodecrease.

The popularity of alternative fuel based vehiclesand "green energy" initiatives are highly dependent on macro-economicconditions, including oil prices and the overall health of the economy. When oilprices fall, interest in and resources allocated to the development of advancedtechnology vehicles and propulsion systems may diminish. The recent downturn inthe world economy also has severely impacted the automotive industry, slowingthe demand for vehicles generally and reducing consumers' willingness to paymore for environmentally friendly technology.
**If our products do not achieve market acceptance,our business may not grow.**
Although we believe our proprietary systems aresuited for a wide-range of vehicle electrification applications, our businessand financial plan relies heavily on the introduction of new products that havelimited testing in the marketplace. We are currently making substantialinvestments in human resources, manufacturing facilities and equipment,production and application engineering, among other things, to ramp up ourproduction capacity in order to capitalize on the anticipated expansion indemand for electric propulsion systems and generators in the automobile andlight truck markets. Our sales of electric propulsion systems and generators inthe automobile and light truck markets to date have consisted of limitedquantities of preproduction evaluation and field test units. We are not certainthat our existing products will achieve broad market acceptance, or that we willbe able to develop new products or product enhancements that will achieve broadmarket acceptance.
**Changes in environmental policies could hurt themarket for our products.**
The market for electric and other alternative fuelvehicles and equipment and the demand for our products are influenced, to adegree, by federal, state and local regulations relating to air quality,greenhouse gases and pollutants. These laws and regulations may change, whichcould result in transportation or equipment manufacturers abandoning or delayingtheir interest in electric or hybrid electric vehicles or equipment. Inaddition, a failure by authorities to enforce current laws and regulations or toadopt additional environmental laws or regulations could limit the demand forour products.

Although many governments have identified as asignificant priority the development of alternative energy sources, governmentsmay change their priorities, and any change they make could materially affectour revenue or the development of our products.
**If we are unable to protect our patents and otherproprietary technology, we will be unable to prevent third parties from usingour technology, which would impair our competitiveness and ability tocommercialize our products. In addition, the cost of enforcing our proprietaryrights may be expensive and result in increased losses.**
Our ability to compete effectively against othercompanies in our industry will depend, in part, on our ability to protect ourproprietary technology. Although we have attempted to safeguard and maintain ourproprietary rights, we do not know whether we have been or will be successful indoing so. We have historically pursued patent protection in the United Statesand a limited number of foreign countries where we believe significant marketsfor our products exist or where potentially significant competitors haveoperations. It is possible that a substantial market could develop in a countrywhere we have not received patent protection and under such circumstances ourproprietary products would not be afforded legal protection in these markets.Further, our competitors may independently develop or patent technologies thatare substantially equivalent or superior to ours. We cannot assure thatadditional patents will be issued to us or, if they are issued, as to the scopeof their protection. Patents granted may not provide meaningful protection fromcompetitors. Even if a competitor's products were to infringe patents owned byus, it would be costly for us to pursue our rights in an enforcement action, itwould divert funds and resources which otherwise could be used in our operationsand we may not be successful in enforcing our intellectual property rights. Inaddition, effective patent, trademark, service mark, copyright and trade secretprotection may not be available in every country where we may operate or sellour products in the future. If third parties assert technology infringementclaims against us, the defense of the claims could involve significant legalcosts and require our management to divert time and attention from our businessoperations. If we are unsuccessful in defending any claims of infringement, wemay be forced to obtain licenses or to pay royalties to continue to use ourtechnology. We may not be able to obtain any necessary licenses on commerciallyreasonable terms or at all. If we fail to obtain necessary licenses or otherrights, or if these licenses are costly, our results of operations may suffereither from reductions in revenues through our inability to serve customers orfrom increases in costs to license third-party technologies.
**Use of our motors in vehicles could subject us toproduct liability claims or product recalls, and product liability insuranceclaims could cause an increase in our insurance rates or could exceed ourinsurance limits, which could impair our financial condition, results ofoperations and liquidity.**
The automotive industry experiences significantproduct liability claims. As a supplier of electric propulsion systems or otherproducts to vehicle OEMs, we face an inherent business risk of exposure toproduct liability claims in the event that our products, or the equipment intowhich our products are incorporated, malfunction and result in personal injuryor death. We may be named in product liability claims even if there is noevidence that our systems or components caused an accident. Product liabilityclaims could result in significant losses as a result of expenses incurred indefending claims or the award of damages. The sale of systems and components forthe transportation industry entails a high risk of these claims, which mayincrease as our production and sales increase. In addition, we may be requiredto participate in recalls involving these systems if any of our systems prove tobe defective, or we may voluntarily initiate a recall or make payments relatedto such claims as a result of various industry or business practices or the needto maintain good customer relationships.

We carry product liability insurance of$10 million covering most of our products. If we were to experience a largeinsured loss, it might exceed our coverage limits, or our insurance carrierscould decline to further cover us or raise our insurance rates to unacceptablelevels, any of which could impair our financial position and results ofoperations. Any product liability claim brought against us also could have amaterial adverse effect on our reputation.
**We may be subject to warranty claims, and ourprovision for warranty costs may not be sufficient.**
We may be subject to warranty claims for defects oralleged defects in our products, and the risk of such claims arising willincrease as our production and sales increase. In addition, in response toconsumer demand, vehicle manufacturers have been providing, and may continue toprovide, increasingly longer warranty periods for their products. As aconsequence, these manufacturers may require their suppliers, such as us, toprovide correspondingly longer product warranties. As a result, we could incursubstantially greater warranty claims in the future.

 
**ITEM 1B.**UNRESOLVED STAFF COMMENTS****
None.
** ****ITEM 2.**PROPERTIES
We own our offices and manufacturing facilities andbelieve these facilities to be well maintained, adequately insured and suitablefor their present and intended uses. Information concerning our facilities as ofMarch 31, 2011 is set forth in the table below:

  
Ownership or 
          Location           
Square Feet
Expiration Date of Lease
                             Use                            
Longmont, Colorado
129,304         
Own
Manufacturing, laboratories and offices
Frederick, Colorado
28,000         
Own
Manufacturing, laboratories and offices
 
**ITEM 3.**LEGAL PROCEEDINGS**Litigation**
We are involved in various claims and legal actionsarising in the ordinary course of business. In the opinion of management, andbased on current available information, the ultimate disposition of thesematters is not expected to have a material adverse effect on our financialposition, results of operations or cash flow, although adverse developments inthese matters could have a material impact on a future reporting period.

 
**ITEM 4.**SUBMISSION OF MATTERS TO A VOTE OF SECURITY    HOLDERS
There were no matters submitted to a vote ofsecurity holders of the Company during the quarter ended March 31, 2011.

 
**PART II  **ITEM 5.**MARKET FOR REGISTRANT'S COMMON EQUITY,      RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades on the NYSE Amex, Chicago,Pacific Stock, Frankfurt, Berlin and Stuttgart Stock Exchanges. The high and lowtrade prices, by fiscal quarter, as reported by the NYSE Amex Stock Exchange forthe last two fiscal years are as follows:

2011
 High
 Low
Fourth Quarter
$3.83
$2.22
Third Quarter
$2.85
$1.89
Second Quarter
$4.19
$2.06
First Quarter
$4.64
$3.10   
2010
 High
 Low
Fourth Quarter
$7.13
$3.46
Third Quarter
$7.45
$4.27
Second Quarter
$6.55
$2.30
First Quarter
$2.64
$1.42   
On May 31, 2011 the closing price of our commonstock, as reported on the NYSE Amex, was $2.62 per share and there were 652 holders of record of our common stock.

We have not paid any cash dividends on our commonstock since inception and we intend for the foreseeable future to retain anyearnings to finance the growth of our business. Future dividend policy will bedetermined by the Board of Directors based upon consideration of our earnings,capital needs and other factors thenrelevant.                                     

 

 

**PERFORMANCE GRAPH2**  

The followinggraph represents the yearly percentage change in the cumulative total return onthe common stock of UQM Technologies, Inc., the group of companies comprisingthe S&P Electrical Equipment Index, and those companies comprising theS&P 500 Index for the five year period from 2007 through 2011:
 

  

 * *3/06*3/07*3/08*3/09*3/10*3/11
UQM Technologies, Inc.
100.00
91.54
37.64
36.53
93.76
66.37
S&P 500
100.00
111.83
106.15
65.72
98.43
113.83
S&P Electrical Components & Equipment
100.00
102.37
115.48
64.39
114.84
150.74
 

*$100 invested on 3/31/06 in stock or index,      including reinvestment of dividends
Fiscal year ending March 31.****
2 The stock price performance graph depictedis not "soliciting material," is not deemed "filed" with theSEC, and is not to be incorporated by reference into any filing of the Companyunder the Securities Act of 1933, as amended, or the Exchange Act, whether madebefore or after the date hereof and irrespective of any general incorporationcontained in such filing.

 

**ITEM 6.**SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presentedbelow should be read in conjunction with our consolidated financial statementsand related notes included elsewhere in this document.

UQM Technologies, Inc. 
Selected Consolidated Financial Data  
                                                  Years      Ended March      31,                                              
        2011     
        2010     
       2009     
     2008     
     2007     
Contract services revenue
$      608,204 
$   1,384,599 
2,717,246 
2,591,939 
2,907,536 
Product sales
$   8,413,098 
$   7,307,354 
6,011,065 
4,916,383 
3,745,658 
Loss before other income
(expense)
$ (2,349,174)
$ (4,201,091)
(4,479,743)
 (4,995,242)
 (3,800,722)
Net loss
$ (1,992,358)
$ (4,140,872)
(4,402,019)
(4,586,105)
(3,431,357)      
Net loss per common share -     
basic and diluted
$     (0.06)     
$     (0.13)     
 (0.17)     
(0.18)     
(0.14)     
       
       
        
    
    
Total assets
$ 41,803,920 
$ 42,682,573 
12,422,832 
16,402,546 
14,012,607       
Long-term obligations (1)
$   1,316,372 
$   1,155,416 
1,490,472 
1,520,798 
1,167,224       
Cash dividend declared per      
common share
$        -0-       
-0-       
-0-       
-0-       
-0-             
(1) Includes current portion of long-term      obligations.
 
**ITEM 7.**MANAGEMENT'S DISCUSSION AND ANALYSIS OF      FINANCIAL CONDITION AND RESULTS OF OPERATIONS*This Report contains statements that constitute"forward-looking statements" within the meaning of Section 27A of theSecurities Act and Section 21E of the Securities Exchange Act. These statementsappear in a number of places in this Report and include statements regarding ourplans, beliefs or current expectations; including those plans, beliefs andexpectations of our officers and directors with respect to, among other things,orders to be received under our supply agreement with CODA, our ability tosuccessfully expand our manufacturing facilities, and the continued growth ofthe electric-powered vehicle industry. Important Risk Factors that could causeactual results to differ from those contained in the forward-looking statementsare listed above in Part I, Item 1A. Risk Factors.***Introduction**
We generate revenue from two principal activities:1) research, development and application engineering services that are paid forby our customers; and 2) the sale of motors, generators and electronic controls.The sources of engineering revenue typically vary from year to year andindividual projects may vary substantially in their periods of performance andaggregate dollar value. Our product sales consist of both prototype low volumesales, which are generally sold to a broad range of customers, and annuallyrecurring higher volume production. During the fiscal year ended March 31, 2011our product sales increased 15 percent to $8,413,098, driven primarily by anincrease in demand for propulsion systems.

We have entered into a ten year Supply Agreementwith CODA Automotive to supply UQM PowerPhase Pro®electric propulsion systems to CODA for their all-electric passenger automobilewhich is scheduled to be introduced in California later this calendar year. The CODAvehicle is propelled by a 100 kW UQM® PowerPhase Pro®electric propulsion system and is being sold for $32,400 after a $7,500 Federaltax credit and a $5,000 credit from the State of California. Powered by a 33.8kWh lithium-ion battery, the vehicle is expected to have a range between chargesof 90 to 120 miles depending on individual driving habits. CODA has alsoannounced their plan to sell the vehicle in the State of Hawaii and in China.

We delivered pre-production systems to CODA fortheir demonstration and engineering vehicle fleets throughout FY 2011. Initialshipments of production systems under the supply agreement are expected to beginlater this calendar year prior to the planned start of vehicle production in China in ofthe second half of CY2011. CODA has stated that it hopes to sell between 10,000 and 14,000 vehiclesin the first year following introduction of the vehicle. If CODA achieves theirsales objectives we expect our revenue from the sale of propulsion systems toCODA and our working capital requirements to increase materially.

We also have supply agreements with Proterra, Inc.,a developer and manufacturer of all-electric composite transit buses andElectric Vehicles International, a developer and manufacturer of all-electricmedium-duty delivery trucks. During FY2011 we commenced shipments under both ofthese agreements.

Our electric propulsion systems are being used inseveral development vehicles including the Audi A1 e-tron all-electric car, theall-electric Saab 9-3 ePower and the Rolls Royce all-electric 102EX Phantom car.In addition to these programs, the company is supplying its electric propulsionsystems and generators to numerous other international automakers andentrepreneurial automobile developers as part of their HEV, PHEV and EV vehicledevelopment programs.

We also have a marketing collaboration withBorgWarner on electric powertrain products for all-electric and hybrid electricpassenger automobiles. As a result of BorgWarner's global presence we expectthis collaboration to continue to bring a higher level of visibility to ourelectric propulsion system products and result in additional businessopportunities with automobile customers worldwide.

We have a $45.1 million Grant from the U.S.Department of Energy ("DOE") under the American Recovery andReinvestment Act ("ARRA") to accelerate the manufacturing anddeployment of electric vehicles, batteries and components in the United States.The Grant provides for a 50 percent cost-share by the Company. Capitalexpenditures for facilities, tooling and manufacturing equipment and thequalification and testing of products associated with the launch of volumeproduction for CODA Automotive, Proterra, Electric Vehicles International andother customers are eligible for reimbursement under the DOE program. Werecorded reimbursements under the DOE Grant through March 31, 2011 for capitalassets acquired of $8.0 million, which were recorded as a reduction in the costbasis of the assets acquired. We also recorded reimbursements of productqualification and testing costs under the Grant during FY 2011 totaling $4.0million which included costs incurred in the prior fiscal year of $1.5 million.

In July 2010 we relocated our operations to a newlyacquired 129,304 square foot facility in Longmont, Colorado to support ourexpected growth in manufacturing operations. The facility, which includesapproximately 30,000 square feet of office space, houses our engineering andheadquarters staff in addition to the company's high volume motor andelectronic manufacturing operations. We expect to list our former facility forsale later this summer.

Throughout the fiscal year we experienced broaddemand for our electric propulsion systems and related products from awide-range of customers worldwide. We believe that the increased demand is due,in part, to an expansion in the number of all-electric and hybrid electricvehicle platforms being developed for potential introduction in the passengerautomobile market and the amount of government grants and loans available toencourage the development and introduction of clean vehicles. In the truckmarket, we are continuing to supply DC-to-DC converters to Eaton Corporation aspart of their hybrid electric propulsion system which powers medium duty hybridtrucks manufactured by International Truck and Engine Corporation, PACCAR andFreightliner Trucks. We expect to see further improvements in deliveries tothese markets as the global economy continues to improve. In addition, we expectthat demand for our electric propulsion system and generator products willremain strong for the foreseeable future as vehicle makers continue to focus onthe development and introduction of electric and hybrid electric vehicles aspart of the restructuring of the global automotive industry to provide a broaderselection of highly fuel efficient vehicles to consumers.

Product sales revenue for the fiscal year endedMarch 31, 2011 increased 15.1 percent to $8,413,098 versus $7,307,354 lastfiscal year. The increase is due to pre-production shipments to CODA, shipmentsto Audi for their fleet test program and stronger demand for electric propulsionsystems and generators, generally.

Revenue from funded engineering activities for thefiscal year ended March 31, 2011 declined to $608,204 versus $1,384,599 lastfiscal year. The decrease is primarily due to the allocation of otherwisebillable engineering resources to support production launch activities for theCODA program and lower levels of funded development programs.

Gross profit margins on product sales for thefiscal year decreased to 27.6 percent versus 30.5 percent last fiscal year, dueto lower margins on pre-production units for CODA. Gross profit contributiondollars decreased to $2,392,703 versus $2,717,133 last fiscal year.

Net loss for the fiscal year ended March 31, 2011decreased to $1,992,358, or $0.06 per common share on consolidated total revenueof $9,021,302, versus a net loss of $4,140,872, or $0.13 per common share onconsolidated total revenue of $8,691,953 for the previous fiscal year. Thedecrease in net loss is primarily attributable to reimbursements from the DOEfor qualifying costs incurred in the prior fiscal year, a recovery from abankruptcy proceeding and lower internally-funded research and developmentexpenditures.

Our liquidity throughout the fiscal year wassufficient to meet our operating requirements. At March 31, 2011 we had cash andshort-term investments totaling $24,211,275. Net cash used in operatingactivities and net capital expenditures for property and equipment for thefiscal year were $2,284,396 and $3,652,569 versus $2,428,007 and $5,636,172 lastfiscal year.

As the markets for electrified vehicles continue toemerge and expand into additional vehicle platforms over the next several years,we expect to experience potentially rapid growth in our revenue coincident withthe introduction of electric products for our customers. Should theseexpectations be realized, our existing cash and short-term investments may notbe adequate to fund our anticipated growth and, as a result, we may need toraise additional capital. The decrease in working capital is primarilyattributable to operating losses and higher levels of capital expenditures whichwere partially offset by higher levels of accounts receivables and inventories.
**Financial Condition**
Cash and cash equivalents and short-terminvestments at March 31, 2011 were $24,211,275 and working capital (the excessof current assets over current liabilities) was $27,413,664 compared with$30,148,783 and $31,001,650, respectively, at March 31, 2010. The decrease incash and short-term investments is primarily attributable tohigher levels of accounts receivables, inventories and capital expenditures andreduced levels of accounts payable which were partially offset by loweroperating losses and reduced levels of costs in excess of billings onuncompleted contracts. The decrease in working capital is primarily attributableto operating losses and higher levels of capital expenditures, which werepartially offset by higher levels of accounts receivables and inventories.

Accounts receivable increased $1,831,416 to$3,527,054 at March 31, 2011 from $1,695,638 at March 31, 2010. The increase isprimarily attributable to higher levels of billings under our DOE ARRA stimulusgrant as of March 31, 2011. Substantially all of our customers are largewell-established companies of high credit quality. Our sales are conductedthrough acceptance of customer purchase orders or in some cases through supplyagreements. For credit qualified customers our standard terms are net 30 days.For international customers and customers without an adequate credit rating ourtypical terms are irrevocable letter of credit or cash payment in advance ofdelivery. No allowance for bad debts was deemed necessary at March 31, 2011 or2010. In light of current economic conditions, however, we may need to establishan allowance for bad debts in the future.

Costs and estimated earnings on uncompletedcontracts decreased to $126,775 at March 31, 2011 versus $680,746 at March 31,2010. The decrease is due to improved billings on certain contracts in processat March 31, 2011 versus March 31, 2010. Estimated earnings on contracts inprocess decreased to $424,184 or 9.4 percent of contracts in process of$4,530,042 at March 31, 2011 compared to estimated earnings on contracts inprocess of $544,417 or 11.8 percent of contracts in process of $4,607,545 atMarch 31, 2010. The decrease in estimated margins on contracts in process isattributable to lower expected margin on certain contracts in process at March31, 2011.

Inventories increased $922,115 to $2,213,441 atMarch 31, 2011 as compared to $1,291,326 at March 31, 2010 principally due toincreased levels of raw materials and finished goods inventories. Raw materialsand finished goods inventory increased $1,257,042 and $20,951, respectively;reflecting higher levels of inventories to meet CODA's pre-production productrequirements and purchases of selected long lead-time components in anticipationof the launch of volume production for CODA. Work-in-process inventory decreased$355,878 reflecting reduced levels of lower volume product builds in process atMarch 31, 2011.

Prepaid expenses and other current assets increasedto $367,154 at March 31, 2011 from $140,285 at March 31, 2010 primarily due toprepayments on raw material inventories at the end of the current fiscal yearversus the prior fiscal year end.

We invested $7,388,288 for the acquisition ofproperty and equipment during the fiscal year of which $3,735,719 was reimbursedunder our DOE Grant. This compares to $9,210,789 last fiscal year of which3,574,617 was reimbursed under our DOE Grant. The decrease in gross capitalexpenditures is primarily attributable to the purchase of a new headquarters andproduction facility during the prior fiscal year.

Patent costs decreased $33,532 to $264,091 at March31, 2011 as compared to $297,623 at March 31, 2010 due to systematicamortization of patent issuance costs, which was partially offset by the costsassociated with the filing and prosecuting of new patent applications.

Trademark costs decreased $4,487 to $118,331 atMarch 31, 2011 as compared to $122,818 at March 31, 2010 due to systematicamortization of trademark issuance costs.

Other assets decreased $420,620 to $223,364 atMarch 31, 2011 from $643,984 at March 31, 2010 due to lower levels ofprepayments on capital equipment purchases at the end of the current fiscal yearversus the prior fiscal year end.

Accounts payable decreased $48,376 to $1,373,403 atMarch 31, 2011 from $1,421,779 at March 31, 2010, primarily due to lower levelsof capital asset purchases and reduced outstanding construction draws associatedwith the renovation of our recently acquired facility at the end of the currentfiscal year versus the prior fiscal year end.

Other current liabilities decreased $145,537 to$903,706 at March 31, 2011 from $1,049,243 at March 31, 2010. The decrease isprimarily attributable to lower levels of customer deposits outstanding at March31, 2011.

Short-term deferred compensation under executiveemployment agreements increased to $739,200 at March 31, 2011 versus $432,554 atMarch 31, 2010 primarily due to the accrual of a retirement payment to theCompany's former chief executive officer.

Billings in excess of costs and estimated earningson uncompleted contracts decreased $35,826 to $15,726 at March 31, 2011 from$51,552 at March 31, 2010 reflecting decreased levels of billings on certainengineering contracts in process at the end of the fiscal year ended March 31,2011 in advance of the performance of the associated work versus the priorfiscal year.

Long-term deferred compensation under executiveemployment agreements decreased $145,690 to $577,172 at March 31, 2011 from$722,862 at March 31, 2010 reflecting the reclassification of a retirementpayment to our former chief executive officer to short-term, partially offset byperiodic accruals of future severance obligations under executive employmentagreements.

Common stock and additional paid-in capitalincreased to $362,133 and $113,391,049, respectively, at March 31, 2011 comparedto $359,467 and $112,211,227 at March 31, 2010. The increase in common stock andadditional paid-in capital was primarily attributable to share issuances underour employee stock purchase plan, equity incentive plan, and stock bonus plan.
**Results of Operations**
Operations for the fiscal year ended March 31,2011, resulted in a net loss of $1,992,358, or $0.06 per common share, comparedto a net loss of $4,140,872, or $0.13 per common share, and $4,402,019, or $0.17per common share, for the fiscal years ended March 31, 2010 and 2009,respectively. The reduction in the current year net loss is primarilyattributable to reimbursements from the DOE for qualifying costs incurred in theprior fiscal year, a recovery from a bankruptcy proceeding and lowerinternally-funded research and development expenditures.

Revenue from contract services decreased $776,395,or 56.1 percent, to $608,204 for the fiscal year ended March 31, 2011 versus$1,384,599 for the fiscal year ended March 31, 2010. The decrease is primarilyattributable to the allocation of otherwise billable engineering resources tosupport production launch activities for the CODA program and lower levels offunded development programs. Revenue from contract services decreased to$1,384,599 for the fiscal year ended March 31, 2010 compared to $2,717,246 forthe fiscal year ended March 31, 2009. The decrease is primarily attributable tolower levels of funded development programs and the application of engineeringresources from the contract services group to support production engineering,low volume production and internally funded research and development activities.

Product sales this fiscal year increased 15.1percent to $8,413,098 compared to $7,307,354 for the fiscal year ended March 31,2010. Product sales for the fiscal year ended March 31, 2010 increased 21.6percent to $7,307,354 compared to $6,011,065 for the fiscal year ended March 31,2009. Power products segment revenue for the current fiscal year increased to$3,136,816 versus $2,455,776 for fiscal year ended March 31, 2010 primarily dueto shipments of propulsion systems under the CODA, Proterra and EVI supplyagreements and the fleet build program with Saab. Power products segment revenuefor the year ended March 31, 2010 decreased to $2,455,776 compared to $3,272,377for fiscal year ended March 31, 2009 due to decreased shipments of DC-to-DCconverters and electric propulsion systems. Technology segment product revenuefor this fiscal year increased $424,704, or 8.8 percent, to $5,276,282 comparedto $4,851,578 for fiscal year ended March 31, 2010 due to increased shipments ofPowerPhase Select® electric propulsion systems andshipments of propulsion systems under the fleet build program with Audi.Technology segment product revenue for the fiscal year ended March 31, 2010increased 77.1 percent to $4,851,578 compared to $2,738,688 for fiscal yearended March 31, 2009 due to increased shipments of low volume electricpropulsion systems.

Gross profit margins for the current fiscal yeardecreased to 26.5 percent compared to 31.3 percent for the fiscal year endedMarch 31, 2010. Gross profit margins for the fiscal year ended March 31, 2010increased to 31.3 percent compared to 20.2 percent for the fiscal year endedMarch 31, 2009. Gross profit margins on contract services decreased to 11.0percent this fiscal year compared to 35.5 percent for the fiscal year endedMarch 31, 2010 due to reduced overhead absorption and higher incurred costs thanplanned on certain engineering contracts in process. Gross profit margins oncontract services increased to 35.5 percent for the fiscal year ended March 31,2010 compared to 16.1 percent for the fiscal year ended March 31, 2009 due toimproved pricing on certain engineering contracts in process during the fiscalyear ended March 31, 2010. Gross profit margins on product sales this fiscalyear decreased to 27.6 percent compared to 30.5 percent for fiscal 2010. Thedecrease is primarily due to lower margins on pre-production units shipped toCODA. Gross profit margins on product sales for the fiscal year ended March 31,2010 increased to 30.5 percent compared to 22.1 percent for the fiscal yearended March 31, 2009. The improvement was primarily due to lower material costsand improved overhead absorption arising from higher production levels duringthe fiscal year ended March 31, 2010.

Research and development expenditures for thefiscal year ended March 31, 2011 were $292,865 compared to $576,341 and $593,209for the fiscal years ended March 31, 2010 and 2009, respectively. The decreasein research and development expenditures for the fiscal year ended March 31,2011 compared to the prior fiscal year was primarily due to reduced levels ofinternally funded programs. The decrease in research and developmentexpenditures for fiscal 2010 versus fiscal 2009 was primarily due to reducedlevels of internally funded programs.

Production engineering costs were $3,536,287 forthe fiscal year ended March 31, 2011 versus $2,908,334 and $1,869,848 for theprior two fiscal years. The increase for the current fiscal year versus fiscalyear 2010 is primarily attributable to the utilization of engineering resourcesfrom our contract services group, and expansion of the production engineeringgroup and its activities in preparation for the launch of higher volumemanufacturing operations for CODA. The increase for the fiscal year ended March31, 2010 versus fiscal 2009 was primarily attributable to engineering activitiesassociated with the design and installation of a new production cell for ourPowerPhase Pro® propulsion motors and productiondesign activities on our motor and controller products.

Reimbursement of costs under the DOE Grant were$3,988,655 versus zero for each of the two prior fiscal years. The increase isdue to reimbursements of qualified product development and testing costsincurred during the fiscal year together with qualifying costs incurred lastfiscal year subsequent to August 5, 2009 of $1,546,446 that were not eligiblefor recognition last fiscal year.

Selling, general and administrative expenses thisfiscal year were $4,884,373 compared to $3,433,549 and $3,782,840 for the fiscalyears ended March 31, 2010 and 2009, respectively. The increase for this fiscalyear is primarily attributable to higher levels of annual cash and non-cashincentive compensation grants, costs arising from the recruitment and relocationof a new Chief Executive Officer and moving expenses associated with ourrelocation to a new facility. The decrease for fiscal 2010 versus fiscal 2009 isprimarily attributable to lower levels of legal expenses.

Interest income increased to $91,342 for thecurrent fiscal year compared to $64,916 and $198,947 for the fiscal years endedMarch 31, 2010 and 2009, respectively. The increase for fiscal 2011 versusfiscal 2010 is attributable to higher yields on invested balances due to agreater mix of investments with a longer period to maturity. The decrease forfiscal 2010 versus fiscal 2009 is attributable to lower invested balances andlower yields during the fiscal year ended March 31, 2010.

Interest expense was zero for the year ended March31, 2011 compared to $15,697 and $33,387 for the fiscal years ended March 31,2010 and 2009, respectively. The decrease this year is due to the payoff of themortgage on the company's former facility during the fiscal year ended March31, 2010. The decrease for fiscal 2010 versus fiscal 2009 is due to loweraverage mortgage borrowings outstanding throughout the fiscal year.

Other income for the fiscal year ended March 31,2011 was $265,474 versus $11,000 and $1,533 for the fiscal years ended March 31,2010 and 2009, respectively. The increase is attributable to a recovery receivedfrom a bankruptcy proceeding during the current fiscal year.
**Liquidity and Capital Resources**
Our cash balances and liquidity throughout thefiscal year ended March 31, 2011 were adequate to meet operating needs. At March31, 2011, we had cash and short-term investments of $24,211,275 and workingcapital (the excess of current assets over current liabilities) of $27,413,664compared to $30,148,783 and $31,001,650 at March 31, 2010, respectively.

For the year ended March 31, 2011, net cash used inoperating activities was $2,284,396 compared to net cash used in operatingactivities of $2,428,007 and $3,065,281 for the years ended March 31, 2010 and2009, respectively. The decrease in cash used for the year ended March 31, 2011is primarily attributable to lower operating losses, offset by higher levels ofaccounts receivable and inventories at the end of the fiscal year. The decreasein cash used in operating activities in fiscal 2010 versus fiscal 2009 isprimarily attributable to lower operating losses, higher levels of accountspayable, partially offset by increased levels of accounts receivable.

Net cash provided by investing activities for thefiscal year ended March 31, 2011 was $475,688 compared to cash used in investingactivities of $14,793,339 for the previous fiscal year and cash provided byinvesting activities of $2,620,118 for fiscal 2009, respectively. The increasethis fiscal year is due to reimbursements received from the DOE under the Grant,higher levels of investment maturities and reduced levels of capitalexpenditures. The increase in net cash used in investing activities in fiscalyear 2010 versus fiscal 2009 was primarily due to increased levels of short-terminvestments and higher levels of capital expenditures associated with thepurchase of a new facility and the establishment of high volume manufacturingcapability and capacity for the CODA vehicle launch.

Net cash used in financing activities was $52,140for the fiscal year ended March 31, 2011 versus cash provided by financingactivities of $32,458,947 and cash used in financing activities of $228,922 forthe fiscal years ended March 31, 2010 and 2009, respectively. The decrease infiscal 2011 versus fiscal 2010 and the increase in fiscal 2010 versus fiscal2009 is primarily attributable to the completion of a follow-on public offeringin the third quarter of fiscal 2010 which resulted in cash proceeds of$31,664,373.

We expect to fund our operations over the next yearfrom existing cash and short-term investment balances and from available bankfinancing, if any. We may need to invest substantially greater financialresources during fiscal 2012 on the commercialization of our products in theautomotive market, including a significant increase in human resources, andincreased expenditures for equipment, tooling and facilities. These capitalrequirements may be substantially reduced by funding available under our DOEGrant which may reimburse us for 50 percent of qualified capital expendituresand for product qualification and testing costs. We expect our working capitalrequirements to increase substantially beginning several months prior to theintroduction of the CODA all-electric passenger car in the California marketlater this calendar year and continuing thereafter. We believe we havesufficient cash resources to meet our requirements, including those we expect toarise from the launch of high volume production for CODA, for at least the nexteighteen months.

We expect to manage our operations and workingcapital requirements to minimize the future level of operating losses andworking capital usage consistent with the execution of our business plan,although it is possible that with higher than expected growth next year andbeyond, our working capital requirements could consume a substantial portion ofour cash reserves at March 31, 2011. If customer demand acceleratessubstantially, our losses over the short-term may increase together with ourworking capital requirements. If our existing financial resources are notsufficient to execute our business plan, we may issue equity or debt securitiesin the future, although we cannot assure that we will be able to secureadditional capital should it be required to implement our current business plan.In the event financing or equity capital to fund future growth is not availableon terms acceptable to us, or at all, we will modify our strategy to align ouroperation with then available financial resources.
**Contractual Obligations**
The following table presents information about ourcontractual obligations and commitments as of March 31, 2011:

  **                                        Payments      due by      Period                                          ** 

              

       Total  ** 

 Less Than

    1 Year  
 
** 

2 - 3 Years
 

 
**4 - 5 Years**More than 

  5 Years   
Purchase obligations
3,058,571  
3,058,571   
-         
-         
-         
Executive employment agreements (1)
1,316,372  
   739,200   
490,600   
      -         
86,572   
Total
4,374,943  
3,797,771   
490,600   
      -         
86,572   (1) Includes severance pay obligations under executive employment agreements    contingently payable upon six months' notice by four officers of the    company, but not annual cash compensation under the agreements.   **Off-Balance Sheet Arrangements**
None.
**Critical Accounting Policies**
The preparation of financial statements and relateddisclosures in conformity with accounting principles generally accepted in theUnited States of America requires management to make judgments, assumptions andestimates that affect the dollar values reported in the consolidated financialstatements and accompanying notes. Note 1 to the consolidated financialstatements describes the significant accounting policies and methods used inpreparation of the consolidated financial statements. Estimates are used for,but not limited to, allowance for doubtful accounts receivables, costs tocomplete contracts, the recoverability of inventories and the fair value offinancial and long-lived assets. Actual results could differ materially fromthese estimates. The following critical accounting policies are impactedsignificantly by judgments, assumptions and estimates used in preparation of theconsolidated financial statements.
***Accounts Receivable***
Our trade accounts receivable are subject to creditrisks associated with the financial condition of our customers and theirliquidity. We evaluate all customers periodically to assess their financialcondition and liquidity and set appropriate credit limits based on thisanalysis. As a result, the collectability of accounts receivable may change dueto changing general economic conditions and factors associated with eachcustomer's particular business. Because substantially all of our customers arelarge well-established companies with excellent credit worthiness, we have notestablished a reserve at March 31, 2011 and 2010 for potentially uncollectibletrade accounts receivable. In light of current economic conditions we may needto establish an allowance for bad debts in the future. It is also reasonablypossible, that future events or changes in circumstances could cause therealizable value of our trade accounts receivable to decline materially,resulting in material losses.
***Inventories***
We maintain raw material inventories of electroniccomponents, motor parts and other materials to meet our expected manufacturingneeds for proprietary products and for products manufactured to the designspecifications of our customers. Some of these components may become obsolete orimpaired due to bulk purchases in excess of customer requirements. Accordingly,we periodically assesses our raw material inventory for potential impairment ofvalue based on then available information, expectations and estimates andestablish impairment reserves for estimated declines in the realizable value ofour inventories. The actual realizable value of our inventories may differmaterially from these estimates based on future occurrences. It is reasonablypossible that future events or changes in circumstances could cause therealizable value of our inventories to decline materially, resulting inadditional material impairment losses. During the fiscal years ended March 31,2011, 2010 and 2009, we recorded inventory impairments of $10,160, $26,714 and$41,613, respectively.
***Percentage of Completion Revenue Recognition onLong-term Contracts: Costs and Estimated Earnings in Excess of Billings on***Uncompleted Contracts***
We recognize revenue on development projects fundedby our customers using the percentage-of-completion method. Under this method,contract services revenue is based on the percentage that costs incurred to datebear to management's best estimate of the total costs to be incurred tocomplete the project. Many of these contracts involve the application of ourtechnology to customers' products and other applications with demandingspecifications. Management's best estimates have sometimes been adverselyimpacted by unexpected technical challenges requiring additional analysis andredesign, failure of electronic components to operate in accordance withmanufacturers published performance specifications, unexpected prototypefailures requiring the purchase of additional parts and a variety of otherfactors that may cause unforeseen delays and additional costs. It is reasonablypossible that total costs to be incurred on any of the projects in process atMarch 31, 2011 could be materially different from management's estimates, andany modification of management's estimate of total project costs to beincurred could result in material changes in the profitability of affectedprojects or result in material losses on any affected projects.
***Fair Value Measurements and Asset Impairment***
Some of our assets and liabilities may be subjectto analysis as to whether the asset or liability should be marked to fair valueand some assets may be evaluated for potential impairment in value. Thedetermination of fair value for those assets that do not have quoted prices inactive markets is highly judgmental. These estimates and judgments may includefair value determinations based upon the extrapolation of quoted prices forsimilar assets and liabilities in active or inactive markets, for observableitems other than the asset or liability itself, for observable items bycorrelation or other statistical analysis, or from our assumptions about theassumptions market participants would use in valuing an asset or liability whenno observable market data is available. Similarly, management evaluates bothtangible and intangible assets for potential impairments in value. In conductingthis evaluation, management may rely on a number of factors to value anticipatedfuture cash flows including operating results, business plans and present valuetechniques. Rates used to value and discount cash flows may include assumptionsabout interest rates and the cost of capital at a point in time. There areinherent uncertainties related to these factors and management's judgment inapplying them to the analysis of asset impairment. Changes in any of theforegoing estimates and assumptions or a change in market conditions couldresult in a material change in the value of an asset or liability resulting in amaterial adverse change in our operating results.
**New Accounting Pronouncements**
In October 2010, the FASB issuednew standards for revenue recognition with multiple deliverables. These newstandards impact the determination of when the individual deliverables includedin a multiple-element arrangement may be treated as separate units ofaccounting. Additionally, these new standards modify the manner in which thetransaction consideration is allocated across the separately identifieddeliverables by no longer permitting the residual method of allocatingarrangement consideration. These new standards are required to be adopted in thefirst quarter of FY 2012; however, early adoption is permitted. We do not expectthese new standards to significantly impact our consolidated financialstatements, results of operations, or cash flows.
In October 2010, the FASB issued new standards forthe accounting for certain revenue arrangements that include software elements.These new standards amend the scope of pre-existing software revenue guidance byremoving from the guidance non-software components of tangible products andcertain software components of tangible products. These new standards arerequired to be adopted in the first quarter of FY 2012; however, early adoptionis permitted. We do not expect these new standards to significantly impact ourconsolidated financial statements, results of operations, or cash flows.

In January 2011, the FASB issued amended standardsthat require additional fair value disclosures. These amended standards requiredisclosures about inputs and valuation techniques used to measure fair value aswell as disclosures about significant transfers, beginning in the first quarterof 2011. Additionally, these amended standards require presentation ofdisaggregated activity within the reconciliation for fair value measurementsusing significant unobservable inputs (Level 3), beginning in the first quarterof FY 2012. We do not expect these new standards to significantly impact ourconsolidated financial statements, results of operations, or cash flows.

In May 2011, The FASB issued amendments to fairvalue measurement standards to achieve common fair value measurement anddisclosure requirements in U.S. Generally Accepted Accounting Principles andInternational Financial Reporting Standards. The amended standards clarify theintent regarding the application of existing fair value measurements anddisclosures, and change certain principles and requirements for measuring fairvalue or for disclosing information about fair value measurements. These newstandards are required to be adopted in the fourth quarter of FY 2012. We do notexpect these new standards to significantly impact our consolidated financialstatements.

 
**ITEM 7A.**QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT    MARKET RISK
Market risk is the potential loss arising fromadverse changes in market rates and prices, such as foreign currency exchangeand interest rates. We do not use financial instruments to any degree to managethese risks and do not hold or issue financial instruments for trading purposes.All of our product sales, and related receivables are payable in U.S. dollars.

 

 
**ITEM 8.**FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**
 

Report of Independent RegisteredPublic Accounting Firm

Board of Directors and

Shareholders of UQM Technologies, Inc.

We have audited the accompanying consolidatedbalance sheets of UQM Technologies, Inc. (a Colorado Corporation) andsubsidiaries (collectively, the "Company") as of March 31, 2011 and2010, and the related consolidated statements of operations, stockholders'equity and cash flows for each of the three years in the period ended March 31,2011. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, 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 financialstatements referred to above present fairly, in all material respects, thefinancial position of UQM Technologies, Inc. and subsidiaries as of March 31,2011 and 2010, and the results of their operations and their cash flows for eachof the three years in the period ended March 31, 2011 in conformity withaccounting principles generally accepted in the United States of America.

We also have audited, in accordance with thestandards of the Public Company Accounting Oversight Board (United States), UQMTechnologies, Inc. and subsidiaries' internal control over financial reportingas of March 31, 2011, based on criteria established in *Internal Control – Integrated Framework*  issued by the Committee of Sponsoring Organizations ofthe Treadway Commission (COSO) and our report dated June 1, 2011 expressed anunqualified opinion.

/s/ GRANT THORNTON LLP

 

Denver, Colorado

June 1,  2011
 

Report of Independent RegisteredPublic Accounting Firm

 

Board of Directors and

Shareholders of UQM Technologies, Inc.

 

We have audited UQM Technologies, Inc. (a ColoradoCorporation) and subsidiaries' (collectively, the "Company")internal control over financial reporting as of March 31, 2011, based oncriteria established in*Internal Control – Integrated Framework* issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). TheCompany's management is responsible for maintaining effective internal controlover financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting, included in the accompanying *Management Reporton Internal Control over Financial Reporting* appearing under Item 9A. Ourresponsibility is to express an opinion on the Company's internal control overfinancial reporting based on our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the riskthat a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performingsuch other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.

A company's internal control over financialreporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accountingprinciples. A company's internal control over financial reporting includesthose policies and procedures that (1) pertain to the maintenance of recordsthat, in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company's assets that could have amaterial effect on the financial statements.

Because of its inherent limitations, internal controlover financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures maydeteriorate.

In our opinion, UQM Technologies, Inc. andsubsidiaries maintained, in all material respects, effective internal controlover financial reporting as of March 31, 2011, based on criteria established in *InternalControl**– Integrated Framework*issued by COSO.

We also have audited, in accordance with thestandards of the Public Company Accounting Oversight Board (United States), theconsolidated balance sheets of UQM Technologies, Inc. and subsidiaries as ofMarch 31, 2011 and 2010, and the related consolidated statements of operations,stockholders' equity and cash flows for each of the three years in the periodended March 31, 2011 and our report dated June 1, 2011, expressed an unqualifiedopinion.

/s/ GRANT THORNTON LLP

 

Denver, Colorado

June1, 2011

 

 

 
**Consolidated Balance Sheets**** ** 
March 31, 2011
March 31, 2010**Assets     
Current assets:   
Cash and cash equivalents
$ 15,878,752 
17,739,600  
Short-term investments
8,332,523 
12,409,183  
Accounts receivable
3,527,054 
1,695,638  
Costs and estimated earnings in excess of      billings on    
uncompleted contracts
126,775 
680,746  
Inventories
2,213,441 
1,291,326  
Prepaid expenses and other current assets
     367,154 
     140,285       
Total current assets 
30,445,699 
33,956,778    
Property and equipment, at cost:   
Land
1,859,988 
1,825,968  
Building
6,822,850 
5,402,176  
Machinery and equipment
  6,766,539 
  4,524,188  
15,449,377 
11,752,332  
Less accumulated depreciation
(4,696,942)
(4,090,962)      
Net property and equipment
10,752,435 
  7,661,370    
Patent costs, net of accumulated amortization   
of $781,608 and $738,556
264,091 
297,623    
Trademark costs, net of accumulated amortization      of $55,256 and $50,769
     118,331 
    122,818        
Other assets
      223,364 
     643,984    
Total assets
$ 41,803,920 
42,682,573  
 
   
(Continued)
See accompanying notes to consolidated financialstatements.

 
** 

Consolidated Balance Sheets, Continued

 

 ** 
March 31, 2011 
March 31, 2010 **Liabilities and Stockholders' Equity     
Current liabilities:   
Accounts payable
$     1,373,403 
1,421,779  
Other current liabilities
903,706 
1,049,243  
Short-term deferred compensation under executive      employment    
agreements
739,200 
432,554  Billings in excess of costs and estimated      earnings on    
uncompleted contracts
         15,726 
         51,552       
Total current liabilities
    3,032,035 
    2,955,128       
Long-term deferred compensation under executive      employment agreements
      577,172 
      722,862       
Total liabilities
   3,609,207 
   3,677,990    
Commitments and contingencies     
Stockholders' equity:   
Common stock, $0.01 par value, 50,000,000 shares  
authorized; 36,213,293 and 35,946,738 shares
issued and outstanding
362,133 
359,467 
Additional paid-in capital
113,391,049 
112,211,227  
Accumulated deficit
(75,558,469)
(73,566,111)   
Total stockholders' equity
  38,194,713 
  39,004,583       
Total liabilities and stockholders' equity
$   41,803,920 
  42,682,573 
See accompanying notes to consolidated financialstatements.
** ****Consolidated Statements ofOperations

 

 ** 
Year Ended   
Year Ended   
Year Ended    
March 31, 2011
March 31, 2010
March 31, 2009
Revenue:    
Contract services
$     608,204   
1,384,599   
2,717,246    
Product sales
  8,413,098   
  7,307,354   
  6,011,065    
  9,021,302   
  8,691,953   
  8,728,311   
Operating costs and expenses: 
Costs of contract services
541,214   
892,649   
2,279,956    
Costs of product sales
6,087,385   
5,082,171   
4,682,711    
Research and development
292,865   
576,341   
593,209    
Production engineering
3,536,287   
2,908,334   
1,869,848    
Reimbursement of costs under DOE grant
(3,988,655) 
-         
-          
Selling, general and administrative
4,884,373   
3,433,549   
3,782,840    
Loss (gain) on disposal of assets
      17,007    
           -         
          (510)  
11,370,476   
12,893,044   
13,208,054           
Loss before other income (expense)
(2,349,174)  
(4,201,091)  
(4,479,743)        
Other income (expense):    
Interest income
91,342   
64,916   
198,947    
Interest expense
-         
(15,697)  
(33,387)   
Impairment of investment
-         
-         
(89,369)   
Other
     265,474   
       11,000   
         1,533     
     356,816   
       60,219   
       77,724          
Net loss
$ (1,992,358)  
(4,140,872)  
(4,402,019)    
 
    
Net loss per common share-basic and diluted:
$(0.06)       
(0.13)       
(0.17)         
  
    
Weighted average number of shares of common   
stock outstanding - basic and diluted
36,070,364   
30,720,368   
26,651,130   
See accompanying notes to consolidated financialstatements.
** 

 ****Consolidated Statements ofStockholders' Equity

 

 ** 
Number of     
common   
Additional  
Total        
shares    
Common 
paid-in   
Accumulated 
stockholders' 
    issued    
    stock    
    capital    
     deficit       
     equity      **Balances at April 1, 2008
26,526,737 
$ 265,267  
77,819,041  
(65,023,220)
13,061,088 
Issuance of common stock under
employee stock purchase plan
22,268 
223 
33,994  
-       
34,217 
Purchase of treasury stock
(70,269)
(703)
(156,434)
-       
(157,137)
Issuance of common stock under
stock bonus plan
248,958 
2,490 
(2,490)
-       
-       
Compensation expense from
employee and director stock
option and common stock grants
-       
-        
1,073,043 
-       
1,073,043 
Net loss
          -       
     -        
            -      
 (4,402,019) 
 (4,402,019)**Balances at March 31, 2009
26,727,694 
   267,277  
  78,767,154 
(69,425,239)
   9,609,192 
Issuance of common stock in follow-on
offering, net of offering costs
8,625,000 
86,250 
31,578,123 
-       
31,664,373 
Issuance of common stock under
employee stock purchase plan
61,362 
613 
106,000 
-       
106,613 
Purchase of treasury stock
(38,750)
(388)
(159,787)*************************************************************************************************************