UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the Year Ended March 31, 1999

                         Commission file number 1-10869

                              UNIQUE MOBILITY, INC.
             (Exact name of registrant as specified in its charter)

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

                425 Corporate Circle, Golden, Colorado 80401
               (Address of principal executive offices) (Zip Code)

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

           Securities registered pursuant to Section 12(b) of the Act:
                          Common stock, $.01 par value

                   Name of each exchange on which registered:
                             American Stock Exchange
                              Boston Stock Exchange
                             Pacific Stock Exchange
                             Chicago Stock Exchange
                            Frankfurt Stock Exchange
                              Berlin Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                          Common stock, $.01 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No .

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

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
registrant  (14,852,062  shares)  computed by reference to the closing  price of
such stock on the American Stock Exchange, as of June 14, 1999:

                                   $70,547,295

The number of shares  outstanding  (including shares held by affiliates) of each
of the registrant's classes of common stock, as of June 14, 1999:

                            16,568,522 shares of the
                           registrant's common stock,
                                 $.01 par value.

DOCUMENTS   INCORPORATED  BY  REFERENCE  In  Part  III  certain  information  is
incorporated by reference from the Company's  definitive Proxy Statement for the
August 11, 1999 Annual Meeting of Shareholders.
<PAGE>
ITEM 1.     BUSINESS

This  Report may  contain  forward-looking  statements  that  involve  risks and
uncertainties.  These statements may differ materially from actual future events
or results. Readers are referred to the Risk Factors section of the Registration
Statement  on Form S-3 (File No.  333-78525)  filed by the Company with the SEC,
which  identifies  important  risk factors  that could cause  actual  results to
differ from those  contained in the  forward-looking  statements,  including the
Company's  ability to obtain  additional  financing,  the  Company's  ability to
integrate acquired businesses into existing  operations,  potential impacts from
Year 2000 issues and the possibility that product liability insurance may become
unavailable.  These forward-looking  statements represent the Company's judgment
as of the date of this Report.  The Company  disclaims,  however,  any intent or
obligation to update these forward-looking statements.

General

Unique Mobility,  Inc. ("Unique" or the "Company") was incorporated in 1967. The
Company's $0.01 par value common stock trades on the American,  Boston, Chicago,
Pacific, Frankfurt and Berlin stock exchanges under the symbol "UQM".

Historically,  the Company's revenue has been derived from contract research and
development  services  performed  for  strategic  partners  and  clients and the
limited production and sale of power dense, energy efficient propulsion systems.
Sponsored  research and  development  activities  have  supplemented  internally
funded product development programs.

Over the last fifteen months the Company's operations have expanded to encompass
three  business  segments,   technology,   mechanical  products  and  electronic
products.  The Company has three principal  operating  units:  Unique  Mobility,
Inc., located in Golden,  Colorado, which operates as the corporate headquarters
and engineering and product development  center;  wholly owned subsidiary Unique
Power Products,  Inc. ("Unique Power"),  located in Frederick,  Colorado,  which
manufactures  permanent  magnet  electric  motors,   precision  gears  and  gear
assemblies;   and  wholly  owned  subsidiary  Franklin   Manufacturing   Company
("Franklin"), located in St Charles, Missouri which manufactures printed circuit
board  assemblies,  cable harness  assemblies and complete  electronic boxes. In
addition,  the Company  holds a 38.25 percent  ownership  interest in Taiwan UQM
Electric  Co.,  Ltd.  ("Taiwan  UQM"),  a joint  venture  with  Kwang Yang Motor
Company,  Ltd.  ("KYMCO") and  Turn-Luckily  Technology  Co.,  Ltd.  Taiwan UQM,
located in Taipei,  Taiwan,  is a licensee of the Company  and  manufacturer  of
starter motors and  alternators  for gasoline  scooters and electric  propulsion
systems  for an all  electric  scooter.  The  Company  also  holds a 33  percent
ownership interest in Unique Mobility Europa Gmbh ("Unique Europa"),  a recently
formed joint venture with EV Global Motors Company,  Energy  Conversion  Devices
and Haco Trading, Ltd. Unique Europa, located in Mittweida,  Germany, is seeking
funding to develop and manufacture a battery-electric,  hybrid-electric and fuel
cell-electric two-passenger cargo van and a six-passenger commuter vehicle.

The Company's  objective is to leverage its technology base and name recognition
to develop,  manufacture and market products in a number of high potential niche
markets in the near  term,  and  automotive  mass  markets  in the longer  term.
Fundamental  to this strategy is the creation of  manufacturing  capability  for
products developed by the Company.

Coincident  with the objective of  establishing  manufacturing  capability,  the
Company acquired Aerocom Industries, Inc. ("Aerocom"), a Boulder, Colorado based
manufacturer  of precision  gears and gear assemblies for cash and shares of the

<PAGE>

Company's  common stock  totaling  $3,377,020.  Following the  acquisition,  the
Company relocated Aerocom's operations to a newly constructed 25,000 square foot
manufacturing  facility in Frederick,  Colorado and merged its  operations  with
those of Unique Power, which had been incorporated in January 1997 to launch the
Company's manufacturing  operations for permanent magnet electric motors. During
fiscal 1999 Unique Power  invested  $1.2 million for new equipment to expand its
gear  manufacturing  capability and capacity.  Unique Power's product  shipments
commenced during the fourth quarter pursuant to a supply agreement with Invacare
Corporation for the supply of a newly developed  gearless brushless direct drive
wheelchair motor. Product shipments of wheelchair motors, in accordance with the
customers planned product  introduction  schedule,  are expected to achieve full
run rate in the first half of fiscal  2000.  For the fiscal year ended March 31,
1999 Unique Power operations generated revenue of $3,532,871, or 22.4 percent of
consolidated revenue, and resulted in a net loss of $1,205,556.  Earnings before
interest, taxes, depreciation and amortization (EBITDA) was a negative $174,155.
Unique  Power's  fiscal  1999  revenue and  operating  results  were  negatively
impacted by the  economic  downturn in the  agricultural  sector  which  reduced
orders from a significant customer, Funk Manufacturing,  a subsidiary of Deere &
Co. Nevertheless,  revenue from gearing operations nearly doubled over Aerocom's
preacquisition annual sales level.

In April 1998 the Company  acquired  Franklin,  a St.  Charles,  Missouri  based
manufacturer of printed circuit board assemblies,  cable harness  assemblies and
complete  electronic  boxes,  for cash and shares of the Company's  common stock
amounting to $6,247,316.  Franklin serves the automotive,  industrial,  computer
and telecommunications market. During fiscal 1999 Franklin invested $1.6 million
to  expand  its  production  and  testing  capability.  Two  new  surface  mount
production  lines were installed.  The new lines increased  Franklin's  capacity
nearly  three-fold  from 37,000  components  per hour to 110,000  components per
hour.  During the first half of fiscal 1999  Franklin's  revenues and operations
were  adversely  impacted by the United Auto  Workers  extended  strike  against
General  Motors  Corporation.  Revenue  for  the  eleven  months  following  its
acquisition and ending March 31, 1999 was $10,129,729. Operations for the eleven
month period  resulted in net  earnings of $97,928.  EBITDA for the eleven month
period ended March 31, 1999 was $763,117.

The  technology  segment  of  the  Company  encompasses  the  operations  of the
Engineering and Product Development Center and the corporate  headquarters staff
and senior executives.  The Company's Engineering and Product Development Center
and  corporate  headquarters  is located in Golden,  Colorado in a 40,000 square
foot building equipped with research and development  laboratories and prototype
build and test facilities for electric motors,  electronic  controls,  software,
and vehicle integration  activities.  During fiscal 1999, the technology segment
generated  revenue of $2,135,818  consisting of $1,517,960 of contract  services
revenue and $617,858 from the sale of prototype  products.  Operating losses for
the technology segment amounted to $2,646,442  compared to $3,243,204 last year.
The costs associated with the operation of the corporate headquarters, including
the  salaries of the  executive  officers  and other costs  attributable  to the
consolidated  company  generally are absorbed by the technology  segment and are
not allocated to the mechanical products or electronic products segments.

Technology

The Company's technology base includes a number of proprietary  technologies and
patents relating to brushless permanent magnet motors, generators and electronic
controls,  together with software code and computer area network design utilized
to manage individual  components and the flow of energy between  components in a
system.  During fiscal 1999 the Company filed two additional patent applications
covering the packaging of an  electromechanical  brake inside a motor and a high

<PAGE>

accuracy  method of detecting  motor rotor  position  using low cost  electronic
parts. Both of these patent applications remain pending.

Attributes  of the  Company's  permanent  magnet motor  technology  include high
operating  efficiencies  (>90%),  packageability  (small  and  lightweight)  and
two-way   operation   as  either  a  motor  or   generator.   High  pole   count
configurations,  together with a relatively large air-gap  dimension,  creates a
higher  torque,   lower  speed  motor  than  possible  with  more   conventional
architectures.  Typically,  the Company's motors feature high copper utilization
(which minimizes energy loss);  hollow  construction (for the interior packaging
of other  components  such as gears  and  electromechanical  brakes);  good heat
rejection; lower iron content; and minimal mechanical losses.

Attributes  of  the  Company's  microprocessor-based  controllers  include  four
quadrant control  (forward/reverse  and power in/power out),  reduced  switching
losses (which minimizes energy loss) and intelligent control. Patented circuitry
and software  (Phase  Advance  Control)  dynamically  adjusts the phase angle of
current into the motor  windings to increase  base speed by a factor of three to
four times.

The  Company's  technology  portfolio  represents  a  cumulative  investment  of
approximately  $40  million  in  the  development  of  systems  and  components,
manufacturing processes and software. Approximately 60 percent of the investment
was funded by strategic  partners and customers  under  research  grants,  "cost
share"    contracts   or    sponsored    application    engineering    programs.
Internally-funded research and development costs are expensed in the period they
are incurred. Income from sponsored development is recorded as contract services
revenue  and the  associated  development  costs are  shown as cost of  contract
services in the Company's financial statements.  Internally-funded  research and
development  expenditures  amounted to $667,989  for the fiscal year ended March
31,  1999,  a decline of  approximately  26 percent from the prior year level of
$902,407.  The decline is  attributable  to lower  levels of  internally  funded
development programs, including cost-share type sponsored development programs.

In recent  years,  the Company has focused the major portion of its research and
development  activities on the development of commercial  products as opposed to
basic  research in the field.  Management  believes  that the  Company's  future
growth  is  dependent,  in  part,  on the  continued  advancement  of  its  core
technology,  the extension of its technological  capabilities and its ability to
develop  additional  products.  Accordingly,  the Company expects to continue to
invest in research and development at approximately  the same levels as in prior
years.

Competition

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

The  technology  segment  has  developed  advanced  electric  drive  systems and
components  which it hopes to market to vehicle OEM's  throughout  the world for
use in electric and hybrid electric  vehicles.  At present,  the market for such
systems is not significant, although various legislative mandates and incentives
are expected to accelerate the development of a market for vehicles propelled by
such systems.  There are numerous companies  developing products that do or soon

<PAGE>

will compete with the Company's drive systems.  Some of these companies  possess
significantly greater financial, personnel and other resources than the Company,
including established supply arrangements and volume manufacturing operations.

The Company  believes its principal  competitors  include  Hitachi,  Matsushita,
Siemens, Delphi, and Visteon.

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

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

Patents and Trademarks

The Company  filed a motor patent  application  with the U.S.  Patent  Office in
December 1985, and similar  applications were prosecuted in many other countries
throughout the world. As a result of the original U.S. Application,  U.S. Patent
No.  5,009,944 was issued on April 2, 1991 containing one independent  claim and
three dependent  claims.  A Continuing  Application of the 1985  application was
filed in  October  1990 to pursue  subject  matter  that was not  allowed in the
original  U.S.  Patent.  As a  result,  U.S.  Patent  5,311,092  was  issued  on
May 10, 1994  with four  independent  claims  and one  dependent  claim.  Of the
foreign  applications,  a patent has been issued and  validated in twelve member
countries of the European  Patent  Office (EPO),  and an opposition  thereto has
been  resolved.  In addition,  corresponding  patents have issued in  Australia,
Brazil, Canada, India, Ireland, Israel, Japan, South Korea, Mexico, New Zealand,
South Africa and Taiwan. Four other foreign  applications remain pending,  three
of which have been indicated to be allowable.

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

In March  1990,  a  Continuing  Application  was  filed to claim  the  method of
constructing the motor as disclosed in U.S. Patent No. 5,004,944. The Continuing
Application resulted in U.S. Patent No. 5,319,844 issued June 14, 1994. In March

<PAGE>

1991, the Company filed an International Patent Application corresponding to the
U.S. Application;  as a result a patent has been granted in Australia, Japan and
Russia.  Five  applications  are  pending in foreign  countries  and one pending
application  in the European  Patent Office (EPO) which  designates the European
group of countries.

In September 1992, the Company filed a separate application with the U.S. Patent
Office  titled  "Stator and Method of  Constructing  Same for High Power Density
Electric  Motors and  Generators"  which has resulted in issuance of U.S. Patent
No.  5,382,859  in January,  1995.  This patent  embodies the  Company's  recent
enhancement  to its motor  technology  which  utilizes a  segmented  iron powder
stator ring developed  specifically for brushless permanent magnet stator cores.
A Divisional  U.S.  Patent  Application  was filed to pursue a second  invention
disclosed in the original application;  that divisional application has resulted
in U.S. Patent No.  5,592,731  issued January 14, 1997.  Patent  Applications in
Canada,  Japan  and  Korea  are  pending  as  a  result  of  a  counterpart  PCT
International Patent Application; the European application has been patented and
validated in Austria,  France,  Germany,  Ireland,  Italy,  Switzerland  and the
United Kingdom.

In July 1994, the company filed an application in the U.S.  Patent Office titled
"Brushless DC Motor Using Phase Timing Advance" which embodies a low cost method
of controlling the drive current to a motor to achieve operating characteristics
ideal for vehicle traction drives.  This application has resulted in U.S. Patent
No. 5,677,605 of October 14, 1997. In June 1995, a counterpart PCT International
Patent  Application was filed.  Applications  have been filed in Canada,  China,
Finland, Hong Kong, Japan, Korea, Mexico, Norway and Europe.

In December 1997, the Company filed a new patent  application titled "Motor with
Internal  Brake"  in  connection  with  its  current  developments  in  electric
wheelchair  drives.  In December 1998, a counterpart  International  Application
under the PCT was filed.

In July 1998, the Company filed a new U.S. patent  application  titled "Accurate
Rotor Position Sensor and Method Using Magnet Ring and Linear Output Hall Effect
Sensors."

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

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

<PAGE>

Backlog

The  Company's   technology  segment  had  unperformed  service  contracts  from
customers which will provide payments to the Company upon completion aggregating
approximately  $476,264 and  $1,315,310 at May 31, 1999 and 1998,  respectively.
The  technology  segment  also had an order  backlog  for  prototype  motors and
controls  of  approximately  $696,602  and  $516,512  at May 31,  1999 and 1998,
respectively.  All such  contracts  are subject to  amendment,  modification  or
cancellation.  The Company expects to perform all unperformed  service contracts
over the next twelve months.

The Company's  mechanical products segment had an order backlog of approximately
$8.5 and $16.5  million  at May 31,  1999 and 1998,  respectively.  The  Company
expects to ship all backlog products within the next twenty-two months.

The Company's  electronic products segment had an order backlog of approximately
$9.0 million at May 31, 1999. The Company  expects to ship all backlog  products
within the next twelve months.

Customers and Suppliers

The Company has one  significant  customer in its electronic  products  segment,
Siemens, which accounted for revenue of $3,108,929,  or approximately 20 percent
of consolidated revenue.

Principal raw materials and  components  purchased by the Company  include iron,
steel, electronic components,  magnet material and copper wire. All of the above
items are available from several  suppliers and the Company  generally relies on
more than one supplier for each item.


U.S. Government Contracts

For the year ended March 31, 1999,  $758,853,  or approximately 5 percent of the
Company's  consolidated  revenue was derived from contracts with agencies of the
U.S. Government and from subcontracts with U.S. Government prime contractors.

For the year ended March 31,  1998,  $846,740,  or  approximately  21 percent of
consolidated  revenue  was  derived  from  contracts  with  agencies of the U.S.
Government and from subcontracts with U.S. Government prime contractors.

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

<PAGE>

Employee and Labor Relations

As of May 31, 1999,  the Company had 189  full-time  employees.  The Company has
entered into  employment  contracts with its four executive  officers,  three of
which expire in December,  1999 and one of which expires in April, 2001. None of
the Company's employees are covered by a collective  bargaining  agreement.  The
Company's  management believes that its relationship with its employees has been
generally satisfactory.

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

<PAGE>

ITEM 2.  PROPERTIES

The Company owns or leases its offices and manufacturing facilities and believes
these  facilities  to be well  maintained,  adequately  insured and suitable for
their  present and  intended  uses.  Information  concerning  facilities  of the
Company as of May 31, 1999, is set forth in the table below:

                                 Ownership or
                         Square Expiration Date     Renewal
Location                  Feet      of Lease        Option           Use

Golden, Colorado         40,000     Own              Yes         manufacturing,
                                                                 laboratories
                                                                 and offices

Frederick, Colorado      25,000     Own               -          manufacturing
                                                                 and offices

St. Charles, Missouri    31,000     March 2007       No          manufacturing,
                                                                 warehouse and
                                                                 offices


ITEM 3.  LEGAL PROCEEDINGS

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


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

There were no matters  submitted  for vote by  security  holders of the  Company
during the quarter ended March 31, 1999.

<PAGE>

ITEM 5.  MARKET PRICE OF COMMON STOCK

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

1999                                                 High             Low
Fourth Quarter                                      $6.13            $4.25
Third Quarter                                       $6.19            $4.39
Second Quarter                                      $7.25            $4.39
First Quarter                                       $8.31            $6.50

1998
Fourth Quarter                                      $8.88            $7.44
Third Quarter                                       $9.44            $6.94
Second Quarter                                      $9.50            $5.81
First Quarter                                       $7.25            $3.06

On June 14, 1999 the closing price of the Company's common stock, as reported on
the American Stock  Exchange,  was $4.75 per share and there were 961 holders of
record of the common stock.

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

ITEM 6.  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                              Unique Mobility, Inc.
                      Consolidated Selected Financial Data

                       Year       Year      Five Months
                       Ended      Ended       Ended
                     March 31,  March 31,    March 31,   Year Ended October 31,
                       1999       1998         1997       1996       1995        1994
<S>              <C>          <C>          <C>       <C>        <C>        <C>
Contract Services
Revenue          $  1,517,960   2,790,496     700,132  1,436,484  4,031,951  1,643,203

Product Sales    $ 14,280,458   1,274,236     152,016    611,213    701,700    708,917

Operating
Loss             $ (3,144,592) (3,007,599) (1,120,900)(2,744,606)(1,134,338)(3,367,873)

Net Loss         $ (3,754,070) (3,266,360) (1,201,085)(2,904,743)(1,330,433)(3,395,356)

Net Loss
Per Common Share $     (.24)       (.23)        (.12)      (.26)      (.13)      (.35)

Total
Assets           $ 27,206,578  19,585,551  12,370,699  8,712,649  7,626,178  5,903,551

Long-Term
Obligations      $  4,396,127   1,029,924     726,218    744,389    807,003    886,996

Cash Dividend
Declared
Per Common
Share            $     -0-         -0--          -0-       -0-        -0-         -0-
</TABLE>
<PAGE>

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

The Company  changed its fiscal year end from October 31 to March 31  commencing
with  periods  beginning  after  October 31,  1996.  This  change  resulted in a
five-month  transition  period for financial  reporting  purposes  commencing on
November 1, 1996, and ending on March 31, 1997. This report covers the Company's
financial  condition  at March  31,  1999 and  March  31,  1998 and  results  of
operations,  changes in  stockholders'  equity and changes in cash flows for the
year ended March 31, 1999 and 1998, the five-month transition period ended March
31, 1997 and the fiscal year ended October 31, 1996.

Financial Condition

The Company's financial condition remained strong throughout fiscal 1999. During
the year the Company issued 123,125 shares of common stock in private  offerings
resulting in net proceeds to the Company of $951,329,  issued a total of 401,059
shares of common stock upon the exercise of stock options and warrants resulting
in net  proceeds to the Company of  $464,764.  Interest-bearing  recourse  loans
granted to officers of the Company in  conjunction  with such  exercises  net of
repayments,  was $454,063. The cash generated from these transactions,  together
with cash  balances on hand at the  beginning of the fiscal  year,  were applied
principally to the acquisition of Franklin ($3,848,640), for the construction of
a manufacturing  plant in Frederick,  Colorado and the purchase of machinery and
equipment for the Frederick  facility and the Company's  other  operating  units
($4,399,114)  and to fund  operating  losses and  working  capital  requirements
($2,334,761).  As a result, cash and cash equivalents  declined to $1,537,453 at
March 31, 1999 from $7,005,533 at March 31, 1998 and  shareholders'  equity rose
to  $17,116,124  at March 31, 1999  compared to  $16,731,132  at March 31, 1998.
Working capital (the excess of current assets over current liabilities) declined
to  $2,395,261 at March 31, 1999 from  $7,566,627 at March 31, 1998,  reflecting
the application of cash balances, in part, to the purchase of capital assets and
new subsidiaries.

Accounts  receivable  rose  $1,496,528  to  $2,601,994  at March  31,  1999 from
$1,105,466 at March 31, 1998. The increase is attributable to the acquisition of
Franklin and increased sales at Unique Power.

Costs and estimated  earnings on  uncompleted  contracts  decreased  $281,281 to
$173,457 at March 31, 1999 from the fiscal 1998 year end level of $454,738.  The
decrease  was due to  decreased  levels of  contract  services  in  process  and
improved  billings and collections  arrangements  on such  contracts.  Estimated
earnings on contracts in process declined to $285,804 at March 31, 1999 on costs
incurred on contracts in process of $1,457,955 compared to estimated earnings on
contracts  in process of $515,782 on costs  incurred on  contracts in process of
$1,724,552 at March 31, 1998.  The decrease is  attributable  to lower levels of
contract services revenue and reduced margins on contracts in process associated
with anticipated cost overruns.

Raw  materials,  work in  process  and  finished  products  inventories  rose by
$2,128,665,  $292,828 and $112,584,  respectively,  to $2,205,042,  $452,653 and
$130,299,  respectively,  at March 31, 1999  compared to $76,377,  $159,825  and
$17,715,  respectively,  at the  beginning  of  Fiscal  1999.  The  increase  is
primarily  attributable to the acquisition of Franklin and increased  production
levels at Unique Power.

Other  current  assets rose to $340,658 at March 31, 1999 from  $18,361 at March
31, 1998.  The  increase is due to the  acquisition  of Franklin  and  increased
levels of non-trade receivables.
<PAGE>

In April,  1998,  the Company  acquired all of the  outstanding  common stock of
Franklin for  $6,247,316.  The purchase price consisted of a net cash payment of
$3,848,640 and the issuance of 286,282 shares of the Company's common stock. The
acquisition  was accounted for under the purchase  method of  accounting.  Under
this method,  the excess of the purchase  price over the net assets  acquired is
first  allocated to increase the recorded value of the tangible  assets acquired
to their fair market  value,  with any excess then  recorded  as  goodwill.  The
excess of the purchase price over the net assets  acquired of Franklin  resulted
in an increase in the recorded value of Franklin's tangible assets in the amount
of $655,183 with the excess of $5,383,811 being recorded as goodwill.

The Company  invested  $4,399,114 for the  acquisition of property and equipment
during Fiscal 1999  compared to $703,562 in the prior fiscal year.  The increase
in capital  expenditures  is primarily  attributable  to the  construction  of a
manufacturing  plant in Frederick,  Colorado to house Unique Power's operations,
the  purchase  of  manufacturing  equipment  by  Unique  Power to  expand  their
manufacturing  capabilities  and the investment in two new  production  lines by
Franklin which increased their component placement  capability nearly three-fold
to 110,000 components per hour.

Investment  in Taiwan joint  venture  declined to $1,595,432 at fiscal 1999 year
end from  $2,044,393  at the  beginning  of the fiscal  year.  The  decrease  is
attributable  to the  Company's  proportionate  share of operating  losses which
amounted  to  $417,801  during  Fiscal  1999 and  foreign  currency  translation
adjustments which accounted for $31,159 of the decrease.

Patent and trademark  costs,  net of accumulated  amortization,  was $686,195 at
March 31, 1999  an increase of $110,210 from the fiscal 1998 year end level. The
increase is primarily attributable to increased legal fees, application fees and
other fees which  amounted  to  $137,537  and  $110,411 in fiscal 1999 and 1998,
respectively.  Prior to June 1997, Alcan Aluminium  Limited paid one-half of the
Company's  qualifying  patent  prosecution  costs.  Subsequent  to June 1997 the
Company has paid all such expenses,  contributing,  in part, to increased levels
of patent and trademark expenditures since that time.

Accounts  payable rose to  $2,244,144 at March 31, 1999 from $389,791 at the end
of fiscal 1998.  The increase is primarily  attributable  to the  acquisition of
Franklin and increased production levels at Unique Power.

Other  current  liabilities  increased to $952,498 at fiscal 1999 year end, from
$876,357 at March 31,  1998.  The  increase  is  primarily  attributable  to the
acquisition of Franklin which was partially  offset by the payment for equipment
purchases at Unique Power which had been accrued and unpaid at March 31, 1998.

The current  portion of  long-term  debt rose  $765,147 to $928,701 at March 31,
1999 from  $163,554.  The increase is due to the  acquisition  of Franklin,  the
addition  of  the  current  portion  of the  mortgage  financing  on  the  newly
constructed  manufacturing  facility  for Unique  Power and the  addition of the
current  portion of the term  equipment  debt  incurred by Unique  Power for the
purchase of machinery and equipment.

Revolving  line-of-credit  rose to  $1,100,000  at March  31,  1999 from zero at
March 31, 1998. The increase is attributable to the
acquisition of Franklin.

Billings in excess of costs and estimated earnings on uncompleted contracts rose
$68,943  from $450 at March 31,  1998 to  $69,393  at March 31,  1999 due to the
achievement of billing milestones on certain development  contracts prior to the
incurrence of planned costs to achieve the contractual milestone.

<PAGE>

Long-term debt rose $3,366,203  during fiscal 1999 due to the assumption of debt
upon the acquisition of Franklin,  mortgage  financing on the newly  constructed
manufacturing  facility for Unique  Power and term  equipment  debt  incurred by
Unique Power for the purchase of machinery and equipment.

Common  stock  and  additional   paid-in  capital   increased  to  $162,230  and
$43,412,390  at  March  31,  1999,   respectively,   compared  to  $153,946  and
$38,852,446  at March 31,  1998.  The  increases  were due to the sale of common
stock in private  offerings which amounted to $951,329;  proceeds  received upon
the  exercise of warrants of $298,375;  sales of common  stock to employees  and
consultants  through the Company's  benefit plans and the exercise of options of
$166,389;  the  issuance  of common  stock for the  acquisition  of  Franklin of
$2,247,312;  and the  issuance  of common  stock and  options  for  services  of
$110,482.

Notes  receivable from officers rose $398,007 to $454,063 at March 31, 1999 from
$56,056 at March 31, 1998. The increase is  attributable to new loans granted to
officers for the exercise of stock  options of $794,341  during fiscal 1999 less
principal payments received against such notes during the year of $396,334.

Results of Operations

Operations  for the  year  ended  March  31,  1999,  resulted  in a net  loss of
$3,754,070,  or $0.24 per share,  compared to a net loss of  $3,266,360 or $0.23
per share for the year ended March 31, 1998, a net loss of  $1,201,085  or $0.12
per share for the  five-month  transition  period ended March 31, 1997 and a net
loss of $2,904,743 or $0.26 per share for the year ended October 31, 1996.

Revenue from contract  services  declined 46 percent to $1,517,960 during fiscal
1999 compared to $2,790,496 for the year ended March 31, 1998,  $700,132 for the
five month transition  period ended March 31, 1997 and $1,436,484 for the fiscal
year ended  October 31, 1996,  respectively.  The decrease in contract  services
revenue  compared  to the prior year and the  annualized  fiscal  1997 amount is
attributable  to the Company's  focus on executing  sponsored  development  that
result in commercial production opportunities. The increase in contract services
revenue in fiscal 1999 over the fiscal 1996 level is  attributable  to increased
levels of sponsored development activities.

Product sales during fiscal 1999 rose over eleven fold to  $14,280,458  compared
to $1,274,236  for the year ended March 31, 1998,  and rose  substantially  from
product  revenue for the five month  transition  period  ended March 31, 1997 of
$152,016  and for the fiscal  year  ended  October  31,  1996 of  $611,213.  The
increase  is due,  in part,  to product  sales by Unique  Power  resulting  from
internal  growth  as  well  as a full  year  of the  results  of  acquired  gear
operations  versus three months of operations  last year.  Increased  revenue at
Unique Power accounted for $2,957,725 of the increase.  Similarly, product sales
include  the  operations  of  Franklin  for  the  eleven  months  following  its
acquisition which account for $10,129,729 of the increase.  Product sales by the
technology segment remained at approximately the same levels as in prior years.

Gross  profit  margins  from all  operations  for fiscal 1999  decreased  to 8.2
percent  compared to a margin of 11.0  percent for fiscal 1998, a margin of 10.3
percent for the five-month  transition  period ended March 31, 1997 and a margin
of 15.1 percent for fiscal 1996, respectively. Gross profit on contract services
was 3.0  percent for fiscal 1999  compared to 5.6 percent for fiscal  1998,  9.8
percent for the  five-month  transition  period ended March 31,  1997,  and 18.6
percent for the fiscal year ended October 31, 1996, respectively. The decline in
gross  profit  margins  during  fiscal  1999  compared  to all prior  periods is
attributable to cost overruns on several development  programs and lower average

<PAGE>

billing rates on certain high potential commercial  development programs.  Gross
profit on product sales in fiscal 1999 was 8.7 percent  compared to 23.1 percent
in fiscal 1998,  12.9 percent for the five-month  transition  period ended March
31,  1997,  and  6.7  percent  for the  fiscal  year  ended  October  31,  1996,
respectively.  The  decrease  in  margins  on  product  sales in fiscal  1999 is
primarily attributable to higher levels of depreciation charges on manufacturing
equipment arising from the acquisition of Aerocom and Franklin which are charged
to cost of product sales. Depreciation charged to cost of product sales amounted
to $1,117,397 in fiscal 1999.

Research  and  development  expenditures  in fiscal  1999  declined  to $667,989
compared to $902,407  for fiscal 1998,  $513,544  for the five month  transition
period ended March 31, 1997 and  $1,698,352 for year ended October 31, 1996. The
decrease is generally  attributable  to decreasing  levels of  internally-funded
development  activities and declining levels of development  expenditures on the
product launch for Invacare Corporation.

General and  administrative  expense for fiscal 1999 was $3,461,161  compared to
$2,121,340 for fiscal 1998, $695,263 for the five-month  transition period ended
March 31, 1997 and  $1,354,713  for fiscal 1996,  respectively.  The increase in
fiscal 1999  expenditures  over all the prior  periods  presented  is  generally
attributable to the acquisition of Franklin. General and administrative expenses
for the technology  segment which includes general corporate  expenses decreased
nominally to $1,965,885 in fiscal 1999 compared to $2,005,417 last year.

Interest  income for fiscal 1999  declined  to $111,365  compared to $191,186 in
fiscal  1998,  $54,802 for the five months  ended March 31, 1997 and $113,582 in
fiscal 1996.  The decrease is  attributable  to lower levels of cash  throughout
fiscal 1999.

Interest  expense rose to $338,396  during  fiscal 1999  compared to $96,073 for
fiscal 1998,  $84,704 for the five month transition  period ended March 31, 1997
and $202,798 in fiscal 1996. The increase in fiscal 1999 is  attributable to the
acquisition  of  Franklin,and  higher  levels of term  debt at Unique  Power and
Franklin arising from significant capital expenditures at each unit for facility
and equipment.

Equity in loss of Taiwan joint venture rose to $417,801 for the year ended March
31, 1999 compared to $246,648 for the year ended March 31, 1998, $24,121 for the
five-month  transition  period  ended  March 31, 1997 and $45,164 for the fiscal
year ended  October 31,  1996.  The  increase is due to  expanded  staffing  and
operations at Taiwan UQM and revenue growth from starter and alternator  product
sales that has not met expectations.

Liquidity and Capital Resources

The Company's cash balances and liquidity  throughout  fiscal 1999 were adequate
to meet  operating  needs as a result of the Company's  ability to raise capital
and  borrow  additional  funds.  Net  cash  used  by  operating  activities  was
$2,334,761  for the year ended March 31, 1999 a decrease of $1,344,311  from the
prior year level.  Cash used in  operations,  before  considering  the effect of
changes in  operating  assets and  liabilities  was  $1,336,241,  a decrease  of
$968,840 from the comparable amount last year. Cash requirements  throughout the
period were funded primarily through the sale of common stock to investors, cash
received upon the exercise of outstanding  common stock warrants and options and
borrowings on available bank facilities.

During fiscal 1999 Unique Power  constructed a 25,000 square foot  manufacturing
plant in Frederick,  Colorado.  The plant is situated on 2 acres of land and the
Company  holds an option to acquire an  adjacent  2 acre  parcel to  accommodate
future  expansion  of the  facility.  Subsequent  to the end of the fiscal  year

<PAGE>

Unique  Power   exercised   its  option  to  acquire  the  adjacent  two  acres.
Construction cost of the plant,  including land acquisition  costs,  amounted to
$1,233,404 of which  approximately  $922,500 was financed through mortgage debt.
Coincident   with  this   expansion,   Unique  Power  invested   $1,190,781  for
manufacturing equipment to increase the Company's gear manufacturing capability.
The  equipment  acquired  was financed in its  entirety  through term  equipment
loans. Unique Power has a line-of-credit  facility with a commercial bank in the
amount of $750,000  which is scheduled  for renewal in July,  1999. At March 31,
1999 no amount was drawn against this facility.  All financing of the subsidiary
has been unconditionally guaranteed by Unique as the parent entity.

In April 1998, the Company  acquired  Franklin,  a  privately-held  St. Charles,
Missouri  manufacturer and distributor of electronic  assemblies and components.
The  Company  completed  the  acquisition  of the  outstanding  common  stock of
Franklin for $4 million in cash, the assumption of approximately $3.1 million in
liabilities and debt and the issuance of 286,282 shares of the Company's  common
stock. Subsequent to the acquisition, Franklin secured an increase in Franklin's
revolving  line-of-credit  with a commercial bank to accommodate  future growth,
raising its available borrowing limit to $2.5 million.  In addition,  during the
fourth quarter of fiscal 1999 Franklin  invested $1.5 million for  manufacturing
equipment  which improved its component  placement  capacity over  three-fold to
110,000 components per hour. The equipment acquired was financed in its entirety
through term equipment loans. All financing of Franklin has been unconditionally
guaranteed by the Company

The Company met a capital call from Taiwan UQM of $1.4  million  during the five
month transition  period ended March 31, 1997. Taiwan UQM reported a net loss of
approximately  $1.1  million  for  calendar  1998.  Further  losses  or  capital
investment by Taiwan UQM could result in additional capital calls by Taiwan UQM.
Capital calls by Taiwan UQM can be made only by unanimous vote of their Board of
Directors,  of which the Company holds two seats. An additional  capital call by
Taiwan UQM require the Company to either fund its proportionate  share or suffer
a dilution of its ownership interest.

The  Company  believes  that  its  existing  cash  balances  and  existing  bank
lines-of-credit are sufficient to meet its operating capital requirements for at
least the next twelve months,  exclusive of acquisition financing  requirements.
For the longer-term, the Company expects to continue its strategy of growing its
business  through  expanding  its product  line of permanent  magnet  motors and
controllers,  seeking strategic alliances to accelerate the commercialization of
its technology and pursuing synergistic and accretive acquisitions.  The Company
expects to finance its future  growth from existing  cash  resources,  cash flow
from  operations,  if any, and through the issuance of equity or debt securities
or a  combination  thereof.  There  can,  however,  be no  assurance  that  such
financing or capital will be available on terms  acceptable  to the Company.  In
the event  financing  or  capital  for  future  growth as  envisioned  under the
Company's  strategy is not available,  the Company believes it can configure its
operations  such that existing cash balances and cash flow from  operations will
be sufficient to meet its operating requirements over the next year.

Year 2000 Issues

The Year 2000  presents  issues  because  many  computer  hardware  and software
systems use only the last two digits to refer to a calendar year.  Consequently,
these systems may fail to process dates correctly after December 31, 1999, which
may cause systems failures.

<PAGE>

State of Readiness

The Company has conducted  numerous internal  discussions over the last eighteen
months  amongst its  management  and technical  staff to  informally  assess the
extent of the Year 2000 Issue on the Company's operations.  In September,  1998,
the Company  adopted a formal  project to evaluate all of the Company's  systems
for Year 2000  compliance.  The project is being monitored and supervised by the
Company's Chief Operating  Officer.  The evaluation of all hardware and software
systems was completed in December 1998.  The Company  believes that its critical
hardware and software  systems are Year 2000 compliant with the exception of the
Company's voice mail system which will be replaced prior to December 31, 1999.

As part of the  Company's  Year 2000  compliance  evaluation,  the Company began
contacting  key suppliers and customers  during the fourth  calendar  quarter of
1998 to determine the extent to which the Company is vulnerable to third parties
failures to remediate their Year 2000 compliance  issues. The Company expects to
have  contacted all key suppliers and customers by March 31, 1999.  However,  we
cannot  guarantee or assure you that the systems of other companies that we rely
on, such as suppliers of raw materials,  electricity providers and other similar
suppliers,  or the customers who buy products from us, will effectively  address
their Year 2000 issues. In the event these suppliers and customers  experience a
disruption in their operations or cease  operations  indefinitely as a result of
not addressing  their Year 2000 issues,  our operations  could be  significantly
impacted including the temporary or permanent cessation of operations.

Costs to Address the Year 2000 Issue

The total cost to address  the Year 2000  issue,  including  the cost of Company
personnel  and  outside  vendors  and  consultants  is  expected to be less than
$50,000. To date the Company has spent less than $15,000 to evaluate and address
the Year 2000 Issue.

Risks Associated with the Company's Year 2000 Issues

The Company  utilizes a number of suppliers  both large and small to provide raw
materials and components for its products.  The failure of third party suppliers
to become Year 2000  compliant  on a timely  basis  could  create a need for the
Company to change  suppliers or otherwise  impair the sourcing of raw materials,
components or services to the Company, any of which could have a material effect
on the  Company's  business,  financial  condition  and  results of  operations.
Likewise,  the failure of the Company's customers to become Year 2000 compliant,
could cause a disruption or termination of their  operations  which could result
in a reduction or the  elimination  of order to purchase goods and services from
the Company. Either of the foregoing occurrences could have a material effect on
the Company's business, financial condition and results of operations.

Contingency Plan

The Company does not currently  have a contingency  plan if Year 2000 issues are
not resolved or go undetected.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the potential  loss arising from adverse  changes in market rates
and prices,  such as foreign  currency  exchange and interest rates. The Company
does not use financial  instruments to any degree to manage these risks and does
not hold or issue financial instruments for trading purposes.  Subsequently, all
of the Company's  product  sales,  and related  receivables  are payable in U.S.

<PAGE>

dollars.  The Company is subject to interest  rate risk on its debt  obligations
and notes receivable,  all of which have fixed interest rates. Interest rates on
these instruments approximate current market rates as of March 31, 1999.

Effect of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative  Instruments and Hedging  Activities ("FAS 133") which
was originally  effective for fiscal quarters beginning after June 15, 1999. The
Financial  Accounting Standards Board has delayed the effective date for FAS 133
to fiscal quarters beginning after June 15, 2000. FAS No. 133 requires companies
to record derivatives on the balance sheet as assets or liabilities, measured at
fair  value.  Gains or losses  resulting  from  changes  in the  values of those
derivatives  would be accounted for depending on the use of the  derivative  and
whether it qualifies under the standard for hedge  accounting.  The Company does
not  anticipate  a  material  impact on its  financial  condition  or results of
operations as a result of implementing this standard.

<PAGE>

ITEM 8.  Financial Statements


                          Independent Auditors' Report

The Board of Directors
Unique Mobility, Inc.:

We have audited the accompanying consolidated balance sheets of Unique Mobility,
Inc.  and  subsidiaries  as  of  March  31,  1999  and  1998,  and  the  related
consolidated  statements of operations,  stockholders'  equity and comprehensive
income  (loss),  and cash flows for the years ended March 31, 1999 and 1998, the
five  months  ended March 31, 1997 and the year ended  October 31,  1996.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We did not audit the  financial  statements of
Taiwan UQM Electric Co.,  Ltd., (a 38.25 percent owned  investee  company).  The
Company's investment at March 31, 1999 and 1998 in Taiwan UQM Electric Co., Ltd.
was $1,595,432 and $2,044,393,  respectively,  and for the years ended March 31,
1999 and 1998 the Company recognized equity in the losses of Taiwan UQM Electric
Co., Ltd. of $(417,801) and $(246,648),  respectively.  The financial statements
of Taiwan UQM Electric Co., Ltd. were audited by other auditors whose report has
been  furnished  to us, and our  opinion,  insofar as it relates to the  amounts
included  for Taiwan UQM Electric  Co.,  Ltd. for the years ended March 31, 1999
and 1998 is based solely on the report of the other auditors.

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

In our opinion,  based on our audits and the report of the other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material  respects,  the  financial  position  of  Unique  Mobility,   Inc.  and
subsidiaries as of March 31, 1999 and 1998, and the results of their  operations
and their  cash  flows for the years  ended  March 31,  1999 and 1998,  the five
months ended March 31, 1997 and the year ended  October 31, 1996,  in conformity
with generally accepted accounting principles.


                                  /s/KPMG LLP
                                     KPMG LLP


Denver, Colorado
June 4, 1999
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Balance Sheets


                                                March 31,             March 31,
Assets                                            1999                  1998

Current assets:
   Cash and cash equivalents                 $  1,537,453             7,005,533
   Accounts receivable (note 14)                2,601,994             1,105,466
   Costs and estimated earnings in excess
     of billings on uncompleted contracts
     (note 3)                                     173,457               454,738
   Inventories (note 4)                         2,787,994               253,917
   Prepaid expenses                               248,441               158,764
   Other                                          340,658                18,361

           Total current assets                 7,689,997             8,996,779

Property and equipment, at cost:
   Land (notes 5 and 9)                           444,480               444,480
   Building (notes 5 and 9)                     2,675,763             1,511,635
   Molds                                          102,113               102,113
   Transportation equipment                       195,890               209,920
   Machinery and equipment (note 9)            10,098,430             5,605,326
                                               13,516,676             7,873,474
   Less accumulated depreciation               (3,643,341)           (2,186,805)

           Net property and equipment           9,873,335             5,686,669

Investment in Taiwan joint venture (note 6)     1,595,432             2,044,393

Investment in EV Global (note 7)                1,000,000             1,000,000

Patent and trademark costs, net of
  accumulated amortization of $90,869
  and $63,542                                     686,195               575,985

Goodwill, net of accumulated amortization
  of $324,318 and $16,215 (note 2)              6,327,841             1,280,872

Other assets                                       33,778                   853

                                             $ 27,206,578            19,585,551

                                                              (Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Balance Sheets, Continued

                                                 March 31,           March 31,
Liabilities and Stockholders' Equity              1999                 1998

Current liabilities:
   Accounts payable                          $  2,244,144               389,791
   Other current liabilities (note 8)             952,498               876,357
   Current portion of long-term
     debt (note 9)                                928,701               163,554
   Revolving line-of-credit (note 9)            1,100,000                 -
   Billings in excess of costs and
     estimated earnings on uncompleted
     contracts (note 3)                            69,393                   450

          Total current liabilities             5,294,736             1,430,152

Long-term debt, less current portion
  (note 9)                                      4,396,127             1,029,924

          Total liabilities                     9,690,863             2,460,076

Minority interest in consolidated
  subsidiary (note 5)                             399,591               394,343

Stockholders' equity (notes 11 and 12):
   Common stock, $.01 par value, 50,000,000
     shares authorized; 16,222,932 and
     15,394,621 shares issued                     162,230               153,946
   Additional paid-in capital                  43,412,390            38,852,446
   Accumulated deficit                        (25,552,794)          (21,798,724)
   Accumulated other comprehensive income        (451,639)             (420,480)
   Notes receivable from officers                (454,063)              (56,056)
          Total stockholders' equity           17,116,124            16,731,132

Commitments (notes 6, 9, 16, 19 and 20)



                                             $ 27,206,578            19,585,551


See accompanying notes to consolidated financial statements.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Operations



                                   Year       Year       Five Months      Year
                                   Ended      Ended         Ended       Ended
                                 March 31,   March 31,    March 31,  October 31,
                                   1999        1998         1997        1996
Revenue (note 14):
   Contract services          $  1,517,960   2,790,496      700,132   1,436,484
   Product sales                14,280,458   1,274,236      152,016     611,213
                                15,798,418   4,064,732      852,148   2,047,697

Operating costs and expenses:
   Costs of contract services    1,471,827   2,635,599      631,823   1,168,757
   Costs of product sales       13,033,930     980,034      132,418     570,481
   Research and development        667,989     902,407      513,544   1,698,352
   General and administrative    3,461,161   2,121,340      695,263   1,354,713
   Amortization of goodwill        308,103      16,215         -           -
   Write-down of inventory            -        416,736         -           -
                                18,943,010   7,072,331    1,973,048   4,792,303

           Operating loss       (3,144,592) (3,007,599)  (1,120,900) (2,744,606)

Other income (expense):
   Interest income                 111,365     191,186       54,802     113,582
   Interest expense               (338,396)    (96,073)     (84,704)   (202,798)
   Equity in loss of Taiwan
     joint venture (note 6)       (417,801)   (246,648)     (24,121)    (45,164)
   Minority interest share of
     earnings of consolidated
     subsidiary                    (72,596)    (70,905)     (27,725)    (69,400)
   Other                           107,950     (36,321)       1,563      43,643


                                  (609,478)   (258,761)     (80,185)   (160,137)

           Net loss           $ (3,754,070) (3,266,360)  (1,201,085) (2,904,743)

           Net loss per common
             share - basic and
             diluted (note 1p)    $(.24)       (.23)         (.12)      (.26)

Weighted average number of shares
  of common stock outstanding   15,960,966  13,924,434   12,043,481  11,021,742


See accompanying notes to consolidated financial statements.

<PAGE>


UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)

<TABLE>
                                       Number of                                  Accumulated    Notes
                                        common              Additional  Accumu-      other     receivable             Total
                                        shares      Common   paid-in    lated    comprehensive  due from  Treasury stockholders'
                                        issued       stock   capital    deficit      income     officers   stock      equity
<CAPTION>
<S>                                <C>         <C>       <C>        <C>          <C>         <C>      <C>        <C>
Balances at October 31, 1995         10,571,953  105,720  18,887,886 (14,426,536)      -      (52,421) (117,602)   4,397,047

Issuance of common stock in private
 offerings, net of offering costs
 of $247,309 (note 11)                1,057,708   10,577   3,898,802        -           -         -         -      3,909,379
Issuance of common stock upon
 exercise of employee options           100,542    1,005     153,205        -           -     (13,395)  (10,250)    130,565
Issuance of common stock under
 employee stock purchase plan             6,668       67      20,200        -           -         -         -         20,267
Issuance of common stock for services    14,494      145      61,246        -           -         -         -         61,391
Comprehensive income (loss):
  Net loss                                 -         -           -    (2,904,743)       -         -         -     (2,904,743)
  Translation adjustment                   -         -           -           -       (21,030)     -         -        (21,030)
Total comprehensive income (loss)          -         -           -           -           -         -         -    (2,925,773)

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

Issuance of common stock in private
 offerings, net of offering costs
 of $365,688 (note 11)                1,289,288   12,893   4,133,927        -           -         -                4,146,820
Issuance of common stock upon
 exercise of employee options            40,105      401      62,429        -           -     (17,830)      -         45,000
Issuance of common stock for services     1,547       15       3,934        -           -         -         -          3,949
Comprehensive income (loss):
  Net loss                                 -         -           -    (1,201,085)      -         -         -      (1,201,085)
  Translation adjustment                   -         -           -           -       (12,761)      -         -       (12,761)
Total comprehensive income (loss)                                                                                 (1,213,846)

Retirement of treasury stock            (39,341)    (393)  (127,459)       -           -         -      127,852        -

Balances at March 31, 1997           13,042,964  130,430 27,094,170  (18,532,364)   (33,791)  (83,646)     -       8,574,799

Issuance of common stock in private
 offerings, net of offering costs
 of $341,202 (note 11)                  626,875    6,269  4,667,528         -          -         -         -       4,673,797
Issuance of common stock upon
 exercise of employee and directors
 options                                226,332    2,263  1,081,888         -          -         -         -       1,084,151
Issuance of common stock upon
 exercise of warrants                   918,026    9,180  1,923,195         -          -         -         -       1,932,375
Issuance of common stock under
 employee stock purchase plan             7,523       75     23,963         -          -         -         -          24,038
Issuance of common stock for services     4,000       40     28,480         -          -         -         -          28,520
Compensation expense accrued for
 issuance of common stock options
 granted for services                       -        -       19,000         -          -         -         -          19,000
Issuance of common stock for
 acquisition of Aerocom                 371,555    3,716  3,035,602         -          -         -         -       3,039,318
Issuance of common stock for
 investment in EV Global                200,000    2,000    998,000         -          -         -         -       1,000,000
Comprehensive income (loss):
  Net loss                                 -         -        -       (3,266,360)     -         -         -       (3,266,360)
  Translation adjustment                   -         -        -            -      (386,689)     -         -         (386,689)
Total comprehensive income (loss)                                                                                 (3,653,049)

Repayment of officers' notes             (2,654)    (27)   (19,380)        -          -       27,590      -            8,183

Balances at March 31, 1998           15,394,621$153,946 38,852,446   (21,798,724) (420,480)  (56,056)     -       16,731,132
</TABLE>
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated  Statements  of  Stockholders'  Equity  and  Comprehensive  Income,
Continued
<TABLE>
<CAPTION>
                                      Number of                                Accumulated    Notes
                                        common            Additional  Accumu-      other     receivable             Total
                                        shares    Common   paid-in    lated    comprehensive  due from  Treasury stockholders'
                                        issued     stock   capital    deficit      income     officers   stock      equity
<S>                                <C>         <C>     <C>         <C>          <C>       <C>          <C>        <C>
Issuance of common stock in private
 offerings, net of offering costs
 of $33,671 (note 11)                  123,125    1,231     950,098         -          -         -         -         951,329
Issuance of common stock upon
 exercise of employee and directors
 options                               329,339    3,294     942,316         -          -     (794,341)     -         151,269
Issuance of common stock upon
 exercise of warrants                   68,600      686     297,689         -          -         -         -         298,375
Issuance of common stock under
 employee stock purchase plan            3,120       31      15,089        -          -          -         -          15,120
Issuance of common stock for services   17,845      179      91,303        -          -          -         -          91,482
Compensation expense accrued for
 issuance of common stock options
 granted for services                    -          -        19,000        -          -          -         -          19,000
Issuance of common stock for
 acquisition of Franklin               286,282    2,863   2,244,449        -          -          -         -       2,247,312
Comprehensive income (loss):
  Net loss                               -          -           -      (3,754,070)     -          -               (3,754,070)
  Translation adjustment                 -          -           -         -         (31,159)      -         -        (31,159)
Total comprehensive income (loss)                                                                                 (3,785,229)

Repayment of officers' notes              -          -           -         -            -     396,334      -         396,334

Balances at March 31, 1999          16,222,932 $162,230 43,412,390    (25,552,794) (451,639) (454,063)     -      17,116,124
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                         Year          Year      Five Months        Year
                                                        Ended         Ended         Ended          Ended
                                                      March 31,     March 31,     March 31,      October 31,
                                                        1999          1998          1997            1996
<S>                                              <C>           <C>          <C>            <C>
Cash flows used by operating activities:
  Net loss                                        $ (3,754,070)  (3,266,360)    (1,201,085)     (2,904,743)
  Adjustments to reconcile net loss to
    net cash used by operating activities:
       Depreciation and amortization                 1,825,323      545,295        159,473         375,590
       Minority interest share of earnings of
         consolidated subsidiary                        72,596       70,905         27,725          69,400
       Noncash compensation expense for
         common stock, stock options and
         warrants issued for services                  110,482       47,520          3,949          61,391
       Equity in loss of Taiwan joint venture          417,801      246,648         24,121          45,164
       Loss (gain) on sale of property and
         equipment                                        -          32,180           -            (45,676)
       Write-off of patent costs                          -          18,731         55,529            -
       Other                                            (8,373)         -            1,210         (20,092)
       Change in operating assets and liabilities:
          Accounts receivable and costs and
           estimated earnings in excess of
            billings on uncompleted contracts          231,768     (609,588)       167,846        (148,782)
          Inventories                               (1,444,538)     331,294        (17,246)         (3,444)
          Prepaid expenses and other current
            assets                                    (361,498)     (41,084)       (66,910)        (12,846)
          Accounts payable and other current
            liabilities                                506,805     (395,256)       106,497         (25,681)
          Billings in excess of costs and
            estimated earnings on uncompleted
            contracts                                   68,943     (659,357)       634,122          25,685
              Net cash used by operating
                  activities                        (2,334,761)  (3,679,072)      (104,769)     (2,584,034)

Cash provided by(used by)investing activities:
  Cash paid for acquisition of subsidiary, net      (3,848,640)    (337,702)          -               -
  Acquisition of property and equipment             (4,399,114)    (703,562)      (118,608)       (182,011)
  Increase in patent and trademark costs              (137,537)    (110,411)       (47,865)        (92,390)
  Investment in Taiwan joint venture                                   -        (1,375,121)           -
  Proceeds from sale of certificates of deposit           -
    and other investments                                 -            -              -            319,107
  Proceeds from sale of property and equipment            -          25,250           -             63,361

              Net cash provided by (used by)
                 investing activities               (8,385,291)  (1,126,425)    (1,541,594)        108,067
</TABLE>
                                                                    (Continued)
<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
                                                    Year        Year     Five Months     Year
                                                    Ended       Ended      Ended         Ended
                                                  March 31,   March 31,   March 31,   October 31,
                                                    1999        1998        1997         1996
<S>                                           <C>          <C>        <C>          <C>
Cash flows provided by financing activities:
  Proceeds from borrowings                     $ 10,827,358       -           -           -
  Repayment of debt                              (7,320,466)  (212,440)    (34,085)    (83,045)
  Repayment of note payable for investment
    in Taiwan joint venture                            -    (1,345,285)       -           -
  Proceeds from sale of common stock, net           951,329  4,673,797   4,146,820   3,909,379
  Issuance of common stock upon exercise
    of employee options, net of note repayments     547,603  1,092,334      45,000     130,565
  Issuance of common stock under employee
    stock purchase plan                              15,120     24,038        -         20,267
  Issuance of common stock upon exercise of
    warrants                                        298,375  1,932,375        -           -
  Distributions paid to holders of minority
    interest                                        (67,347)   (67,346)    (28,061)    (67,345)
              Net cash provided by financing
                activities                        5,251,972  6,097,473   4,129,674   3,909,821

              Increase (decrease) in cash
                and cash equivalents             (5,468,080)  1,291,976  2,483,311   1,433,854
Cash and cash equivalents at beginning of period  7,005,533   5,713,557  3,230,246   1,796,392

Cash and cash equivalents at end of period      $ 1,537,453   7,005,533  5,713,557   3,230,246

Interest paid in cash during the period         $   314,983     129,599    276,591      82,494
</TABLE>
Non-cash investing and financing transactions:

Translation adjustments of $31,159,  $386,689, $12,761 and $21,030 were recorded
for the years  ended March 31,  1999 and 1998,  the five months  ended March 31,
1997, and the year ended October 31, 1996, respectively.

In April 1998, the Company  purchased all of the  outstanding  stock of Franklin
Manufacturing  Company for $4 million cash and 286,282  shares of the  Company's
common stock (see note 2). In January  1998,  the Company  purchased  all of the
outstanding  stock of Aerocom  Industries,  Inc. for  $337,702  cash and 371,555
shares of the Company's common stock (see note 2).

In June 1997, the Company entered into a stock purchase agreement with EV Global
Motors Company (EVG) whereby the Company  exchanged 200,000 shares of its common
stock for 400,000 shares of EVG (see note 7).

In December  1996, the Company  financed an additional  investment in the Taiwan
joint venture through the issuance of a note payable in the amount of $1,345,285
(see note 6).

In  accordance  with the  provisions of the  Company's  stock option plans,  the
Company accepts as payment of the exercise price, mature shares of the Company's
common stock held by the option holder for a period of six months

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued

prior to the date of the option exercise. For the years ended March 31, 1999 and
October 31, 1996,  the Company  issued  15,870 and 13,666 shares of common stock
for an aggregate exercise price of $15,870 and $10,250,  respectively, for which
the Company  received  2,308 and 2,000 shares of common stock as payment for the
exercise price.  The shares received were recorded at cost as treasury stock and
subsequently  retired.  For the year ended  March 31,  1998 and the five  months
ended March 31, 1997, there were no such transactions.

In  accordance  with the  provisions of the  Company's  stock option plans,  the
Company may, and has, accepted  promissory notes from officers of the Company in
satisfaction of the exercise price of options exercised.  These notes receivable
are  recorded  as a  reduction  of  shareholders'  equity  in  the  consolidated
financial  statements.  For the year ended March 31, 1999, the five months ended
March 31, 1997 and the year ended October 31, 1996, the Company issued  267,362,
20,105 and 13,395  shares of common  stock for an  aggregate  exercise  price of
$794,341,  $17,830 and  $13,395,  respectively,  for which the company  received
promissory notes for the same amount.  There were no notes receivable  exchanged
for the exercise of options during the year ended March 31, 1998.


See accompanying notes to consolidated financial statements.
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

     (a) Description of Business

          Unique Mobility,  Inc. and subsidiaries  (the "Company") is engaged in
          the research,  development and  commercialization  of permanent magnet
          electric  motors  and the  electric  controls  for  such  motors,  the
          grinding and manufacturing of high precision gears and the manufacture
          and  sale  of  electronic  circuit  board  assemblies,   wire  harness
          assemblies and other  electronic  products.  The Company's  revenue is
          derived  primarily from product sales to customers in the  automotive,
          agriculture,  telecommunications,  industrial,  medical and  aerospace
          markets,  and from contract  research and  development  services.  The
          Company is impacted by other factors such as the continued  receipt of
          contracts from  industrial and  governmental  parties,  its ability to
          protect and maintain the  proprietary  nature of its  technology,  its
          continued  product and  technological  advances and the ability of the
          Company and its partners to commercialize its products and technology.

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

      (b)     Principles of Consolidation

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

          The minority interests as of March 31, 1999 and 1998, consisted of the
          other  stockholders'  ownership  interests  in  a  subsidiary  of  the
          Company. See Note 5.

      (c)     Cash and Cash Equivalents

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

      (d)     Inventories

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

      (e)     Property and Equipment

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

<PAGE>


UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



      (f)     Investment in Taiwan Joint Venture

          The  Company's  investment  in a joint  venture  located  in Taiwan is
          accounted  for  under the  equity  method of  accounting.  Under  this
          method,  the investment,  originally  recorded at cost, is adjusted to
          recognize  the  Company's  share of the net  earnings or losses of the
          joint venture.

          Income or loss  recognition  is limited to the extent of the Company's
          investment  in,  advances  to and  guarantees  of the  joint  venture.
          Commencing  with the five months ended March 31,  1997,  due to timing
          considerations,  the financial  position and results of operations for
          the Taiwan joint  venture are included in the  Company's  consolidated
          financial  statements  on a  three-month  time lag.  Accordingly,  the
          consolidated  statements of operations,  stockholders' equity and cash
          flows include activity of the Taiwan joint venture for the years ended
          December 31, 1998 and 1997,  the two months ended  December 31,  1996,
          and the year ended  October  31,  1996.  Similarly,  the  accompanying
          consolidated  balance  sheets and related  footnote  disclosures as of
          March 31, 1999 and 1998,  include the financial position of the Taiwan
          joint  venture as of  December  31, 1998 and 1997,  respectively.  The
          cumulative  foreign currency  translation  adjustments with respect to
          the Taiwan joint  venture were  calculated  using the average rates in
          effect  during the years ended  December  31,  1998 and 1997,  and the
          two-month  period and year ended  December 31,  1996 and  October  31,
          1996,  respectively,  and the spot  rates in effect at the  respective
          December 31, 1998 and 1997 balance sheet dates.

     (g)     Patent and Trademark Costs

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

     (h) Goodwill

          The excess of the  consideration  exchanged over the fair value of the
          net  assets   obtained  in   acquisitions  is  recorded  as  goodwill.
          Amortization of goodwill is calculated using the straight-line  method
          over a period of 20 years.


<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



     (i)      Long-Lived Assets

          The Company  accounts for  long-lived  assets in  accordance  with the
          provisions of Financial  Accounting  Standards No. 121, Accounting for
          the Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be
          Disposed Of ("SFAS 121"). SFAS 121 requires that long-lived assets and
          certain  identifiable  intangibles be reviewed for impairment whenever
          events or changes in  circumstances  indicate that the carrying amount
          of an asset may not be recoverable.

      (j)    Contract Services Revenue and Cost Recognition

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

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

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

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

      (k)    Income Taxes

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

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



      (l)    Research and Development

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

      (m)    Equity Instruments Issued for Non-Employee Services

          The  Company   periodically   issues   common   stock  or  options  to
          non-employees  for services  rendered.  The cost of these  services is
          recorded  based upon the fair  market  value of the  Company's  common
          stock on the date of issuance  or the fair market  value of the option
          determined using an appropriate option pricing model.

      (n)    Foreign Currency Translation

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

     (o) Comprehensive Income

          On April  1,  1998,  the  Company  adopted  SFAS  No.  130,  Reporting
          Comprehensive Income, SFAS No. 130 establishes standards for reporting
          and presentation of comprehensive  income and its components in a full
          set of  financial  statements.  Comprehensive  income  consists of net
          income and foreign currency  translation  adjustments and is presented
          in  the   consolidated   statements   of   stockholder's   equity  and
          comprehensive  income (loss).  The Statement  requires only additional
          disclosures  in the  consolidated  financial  statements;  it does not
          affect the  Company's  financial  position  or results of  operations.
          Prior year financial  statements have been  reclassified to conform to
          the requirements of SFAS No. 130.

      (p)    Loss Per Common Share

     In March 1997, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standards No. 128,  Earnings per Share ("SFAS 128"),
     which specifies the computation,  presentation and disclosure  requirements
     for earnings  per share.  SFAS 128 is  effective  for periods  ending after
     December  15, 1997 and  requires  retroactive  restatement  of earnings per
     share in prior periods.  The statement replaces the calculation of "primary
     earnings  per share"  with "basic  earnings  per share" and  redefines  the
     "diluted earnings per share" computation. Common stock equivalents were not
     included  in the  computations  because  their  effect  was  anti-dilutive.
     Adoption of SFAS 128 did not effect the  reported net loss per common share
     for the years
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



          ended March 31, 1999 and 1998, the five months ended March 31, 1997 or
          the year ended  October 31,  1996.  The fair value of the  pre-emptive
          rights  arising from the issuance of employee stock options during the
          five months ended March 31, 1997, has been treated in a manner similar
          to a  preferred  stock  dividend  in the  calculation  of net loss per
          common  share.  The  estimated  aggregate  fair value of these rights,
          determined using the Black-Scholes option pricing model, was $201,000.

      (q)    Use of Estimates

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

      (r)    Reclassifications

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

(2)      Acquisitions

     On April 30, 1998, the Company acquired all of the outstanding common stock
     of  Franklin  Manufacturing  Company  (Franklin)  for $4  million  cash and
     286,282  shares of the  Company's  common  stock.  The  total  value of the
     consideration  exchanged  was  $6,247,316.  The  allocation of the purchase
     price was as follows:

                  Cash                                        $   151,360
                  Accounts receivable                           1,396,276
                  Inventories                                   1,089,539
                  Property, plant and equipment                 1,299,449
                  Goodwill                                      5,383,811
                  Other                                            75,028

                                                                9,395,463

                  Debts and other liabilities
                    assumed                                    (3,148,147)

                  Purchase price                              $ 6,247,316

     The  acquisition  has been  accounted  for  using  the  purchase  method of
     accounting and the results of Franklin's operations have been included with
     those of the Company since April 30, 1998.


<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



     On January 16, 1998,  the Company  acquired all of the  outstanding  common
     stock of Aerocom  Industries,  Inc.  ("Aerocom") for cash and shares of the
     Company's common stock totaling $3,377,020.  The allocation of the purchase
     price was as follows:

                  Accounts receivable                         $   369,417
                  Inventories                                     159,820
                  Property, plant and equipment                 2,812,054
                  Goodwill                                      1,297,087
                  Other                                             3,106

                                                                4,641,484
                  Debt and other liabilities
                    assumed                                    (1,264,464)

                  Purchase price                              $ 3,377,020

     The  acquisition  has been  accounted  for  using  the  purchase  method of
     accounting and the results of Aerocom's  operations have been included with
     those of the Company since January 16, 1998.

     The unaudited pro forma  revenue,  net loss,  and loss per common share for
     the years ended  March 31,  1999 and 1998,  assuming  the  acquisitions  of
     Aerocom and Franklin occurred on April 1, 1997, is as follows:


                                                Year Ended         Year Ended
                                              March 31, 1999     March 31, 1998

                  Revenue                      $ 16,758,131        16,817,275
                  Net loss                     $ (3,717,658)       (3,119,632)
                  Basic and diluted loss
                    per common share              $ (.23)              (.22)

     The pro forma  information does not necessarily  represent the results that
     would have occurred if the  acquisitions  had been  consummated on April 1,
     1997,  nor  are  they  necessarily  indicative  of the  results  of  future
     operations.

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

     At March 31, 1999,  the estimated  period to complete  contracts in process
     ranged from 1 to 7 months, and the Company expects to collect substantially
     all related accounts  receivable and costs and estimated earnings in excess
     of billings on uncompleted contracts as of March 31, 1999, within one year.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



      The following summarizes contracts in process at March 31, 1999, and 1998:

                                               March 31,         March 31,
                                                 1999              1998

         Costs incurred on uncompleted
         contracts                            $ 1,457,955         1,724,552
         Estimated earnings                       285,804           515,782
                                                1,743,759         2,240,334
       Less billings to date                   (1,639,695)       (1,786,046)

                                              $   104,064           454,288
         Included in the accompanying balance
         sheets as follows:
           Costs and estimated earnings
             in excess of billings on
             uncompleted contracts            $   173,457           454,738
           Billings in excess of costs and
             estimated earnings on
             uncompleted contracts                (69,393)             (450)

                                              $   104,064           454,288

(4)    Inventories

       Inventories at March 31, 1999, and 1998 consist of:

                                               March 31,          March 31,
                                                 1999               1998

          Raw materials                       $ 2,205,042           76,377
          Work in process                         452,653          159,825
          Finished products                       130,299           17,715

                                              $ 2,787,994          253,917

 (5)   Limited Liability Company

     In September  1992,  the Company and a private  investor  formed a Colorado
     limited liability company to acquire, own and maintain a 40,000 square-foot
     facility in Golden,  Colorado,  and the  surrounding  land.  This  facility
     serves as the Company's corporate  headquarters.  Ownership in this limited
     liability  company is divided  equally  between the Company and the private
     investor.  However, the Company is deemed to have a controlling interest in
     the limited  liability  company by virtue of the operating  agreement which
     authorizes  the Company to make all decisions  with respect to the business
     of the limited liability company, subject

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



     only to certain protective rights of the private investor, and by virtue of
     the lease agreement with the limited  liability company covering the entire
     facility.  The limited liability company is, therefore,  accounted for as a
     consolidated  subsidiary.  Minority  interest  in  consolidated  subsidiary
     represents the private  investor's  allocable  portion of the equity of the
     consolidated subsidiary.

 (6)   Investment in Taiwan Joint Venture

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

     During the year ended March 31, 1998, an investment  was made in Taiwan UQM
     by employees of Taiwan UQM diluting the Company's investment to 38 1/4%.

     The  Company's  investment  in Taiwan UQM is accounted for under the equity
     method  of  accounting.  Under  this  method,  the  investment,  originally
     recorded at cost, is adjusted to recognize  the Company's  share of the net
     earnings or losses of the joint venture.

     Income or loss  recognition  is  limited  to the  extent  of the  Company's
     investment in, advances to and guarantees of the joint venture.  Commencing
     with the five months  ended March 31, 1997,  due to timing  considerations,
     the  financial  position  and results of  operations  for the Taiwan  joint
     venture are included in the Company's  consolidated financial statements on
     a  three-month  time  lag.  Accordingly,  the  consolidated  statements  of
     operations,  stockholders'  equity and cash flows  include  activity of the
     Taiwan joint  venture for the years ended  December 31, 1998 and 1997,  the
     two months ended  December 31,  1996,  and the year ended October 31, 1996.
     Similarly,  the  accompanying   consolidated  balance  sheets  and  related
     footnote  disclosures as of March 31, 1999 and 1998,  include the financial
     position  of the Taiwan  joint  venture as of  December  31, 1998 and 1997,
     respectively.  The cumulative foreign currency translation adjustments with
     respect to the Taiwan joint venture were calculated using the average rates
     in effect during the years ended  December 31, 1998 and 1997, the two-month
     period  ended  December 31,  1996  and the year  ended  October  31,  1996,
     respectively,   and  the  exchange   rates  in  effect  at  the  respective
     December 31, 1998 and 1997 balance sheet dates.

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

       Summarized unaudited financial information for Taiwan UQM is as follows:

                                                 December 31,    December 31,
        Financial Position                           1998            1997

        Current assets                           $   607,889         341,178
        Noncurrent assets-land, property
          and equipment                            6,647,023       6,474,301
               Total assets                        7,254,912       6,815,479

        Current liabilities                          682,073       1,470,684
        Noncurrent liabilities                     2,401,775            -
        Stockholders' equity                       4,171,064       5,344,795

               Total liabilities and equity      $ 7,254,912       6,815,479

                                 Year         Year      Two Months      Year
                                 Ended        Ended        Ended        Ended
                             December 31, December 31, December 31,  October 31,
      Results of Operations      1998         1997         1996          1996

      Revenue                $   127,638        663       10,123          -
      Expenses                (1,219,928)  (597,278)     (56,403)     (128,214)

      Net loss               $(1,092,290)  (596,615)     (46,280)     (128,214)

(7)    Investment in EV Global

     In June of 1997, the Company entered into a strategic  relationship with EV
     Global  Motors   Company  (EVG)  to  develop  and  market  light   electric
     transportation  products.  EVG purchased a total of 1,501,925 shares of the
     Company's  common  stock  from  third  parties  in open  market  purchases.
     Separately,  the Company and EVG entered  into a stock  purchase  agreement
     whereby the Company  agreed to purchase  400,000 shares of EVG common stock
     in exchange  for 200,000  shares of the  Company's  common  stock which was
     valued at  $1,000,000.  The  Company's  investment  in EVG is accounted for
     under the cost method.

 (8)   Other Current Liabilities

       Other current liabilities at March 31, 1999 and 1998, consist of:

                                                        March 31,  March 31,
                                                          1999       1998

       Accrued interest                                $  28,623       5,692
       Accrued legal and accounting fees                  66,205      55,376
       Accrued payroll, consulting, personal property
         taxes and real estate taxes                     268,729     158,604
       Accrued material purchases                        285,722      82,357
       Accrued machinery and equipment purchases            -        402,834
       Other                                             303,219     171,494

                                                       $ 952,498     876,357
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



(9) Long-term debt

    Long-term debt at March 31, 1999 and 1998 consists of:

                                                      March 31,        March 31,
                                                        1999             1998
Note payable to bank, payable in monthly
  installments with interest at 8.65%; matures
  July 2003; secured by land and building          $   903,338             -
Note payable to bank, payable in monthly
  installments with interest at 9.1%; matures
  October 2007; secured by land and building           676,652           726,202
Note payable to bank, payable in monthly
  installments with interest at 10.05%; matures
  November 2001; secured by equipment                     -              467,276
Notes payable to bank, payable in monthly
  installments with interest at 8.5%; matures
  October 2001, April, May, October and
  December 2005; secured by equipment                 1,451,242            -
Note payable to bank, payable in monthly
  installments with interest at 8.125%; matures
  July 2001; secured by accounts receivable,
  inventory and equipment                               729,167            -
Note payable to bank, payable in monthly
  installments with interest at 7.70%; matures
  March 2004; secured by equipment                    1,500,000            -
Note payable to commercial lender, payable in
  monthly installments with interest at 6.38%;
  matures October 1999                                   50,648            -
Capital lease obligation                                 13,781            -
            Total long-term debt                      5,324,828        1,193,478
Less current portion                                    928,701          163,554

            Long-term debt, less current portion    $ 4,396,127        1,029,924

     Certain  of the above  loan  agreements  require  the  Company  to  achieve
     specific  financial and operating  requirements.  As of March 31, 1999, the
     Company was in compliance with all covenants.

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

             2000                              $   928,701
             2001                                  965,656
             2002                                  762,854
             2003                                  609,482
             2004                                  661,616
             Thereafter                          1,396,519

                                               $ 5,324,828

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



       Lines of credit

     At March 31, 1999, the Company has lines of credit of $.75 million and $2.5
     million with available borrowing capacity of $.75 million and $1.4 million,
     respectively.  The $.75  million line of credit  expires in June 1999.  The
     $2.5 million line of credit is due on demand,  but if no demand is made, it
     is due August 15, 1999.  Interest on the lines of credit is payable monthly
     at prime plus .75% (8.50% at March 31,  1999) and prime less .50% (7.25% at
     March 31,  1999),  respectively.  Both lines have various  covenants  which
     limit the  Company's  ability  to dispose  of  assets,  merge with  another
     entity,  and pledge trade  receivables and  inventories as collateral.  The
     Company is also required to maintain certain financial ratios as defined in
     the  agreements.  Outstanding  borrowings  under  both  lines of credit are
     secured by accounts receivable,  inventory and general intangibles, and are
     limited  to  certain   percentages  of  eligible  accounts  receivable  and
     inventory.

(10)     Income Taxes

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

                                                            Five Months
                              Year Ended   Year Ended     Ended      Year Ended
                               March 31,    March 31,   March 31,   October 31,
                                 1999          1998       1997         1996
     Computed "expected"
      tax benefit            $(1,276,384)   (1,110,562)  (408,369)    (987,613)
     Increase (decrease) in
      taxes resulting from:
         Amortization of
           goodwill not
           deductible for
           tax                    97,915          -           -            -
         Expiration of
           net operating
           loss carry-
           forwards               89,369          -           -            -
         Increase in
           valuation
           allowance for
           net deferred
           tax assets            906,668     1,015,804    407,443      985,132
         Other, net              182,432        94,758        926        2,481

      Income tax benefit     $      -             -           -            -


<PAGE>


UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



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

                                                 March 31,
                                          1999           1998
  Deferred tax assets:
            Research and development
            credit carryforwards      $    97,565         83,671
          Net operating loss
            carryforwards               8,617,380      7,522,664
               Total deferred
                  tax assets            8,714,945      7,606,335

       Less valuation allowance         8,513,003      7,606,335

               Net deferred tax
                  assets, net of
                  valuation allowance     201,942          -
               Deferred tax
                  liabilities -
                  property and
                  equipment               201,942          -

               Net deferred tax
                  liability            $      -             -

     As of March 31,  1999,  the Company had net  operating  loss  carryforwards
     (NOL) of  approximately  $25.5 million for U.S.  income tax purposes  which
     expire in varying amounts through 2019.  Approximately  $2.6 million of the
     net operating loss  carryforwards  are  attributable to stock options,  the
     benefit  of  which  will be  credited  to  additional  paid-in  capital  if
     realized.  However,  due to the  provisions  of Section 382 of the Internal
     Revenue Code, the utilization of a portion of these NOLs is limited. Future
     ownership  changes  under  Section 382 could occur that would  result in an
     additional  Section 382 limitation  which would further restrict the use of
     NOLs. In addition,  the Section 382 limitation  could be reduced to zero if
     the  Company  fails  to  satisfy  the  continuity  of  business  enterprise
     requirement for the two-year period following an ownership change.

(11)    Stockholders' Equity

     During the year ended March 31,  1998,  the Company  completed  one private
     placement  with  institutional  and  private  investors  of  750,000  units
     consisting of one share of the Company's  common stock and one warrant at a
     price of $8.00 per unit. Each warrant is exercisable  into one share of the
     Company's  common  stock at $8.00 per share and  expires two years from the
     date of issuance. Of the 750,000 units that were privately placed,  626,875
     were issued in March 1998 and the  remaining  123,125  were issued in April
     1998.
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

     During the five months  ended March 31,  1997,  the Company  completed  one
     private placement of common stock with  institutional and private investors
     outside of the United  States.  In total  1,289,288  shares of common stock
     were privately placed at $3.50 per share. During the year ended October 31,
     1996, the Company completed several private placements of common stock with
     institutional  and private investors outside of the United States. In total
     928,676  shares  were  placed at  between  $3.30 and  $4.75 per  share.  In
     addition,  129,032 shares of common stock were sold to Invacare Corporation
     in a private placement, at $3.88 per share.

(12)     Common Stock Options and Warrants

         Incentive and Non-Qualified Option Plans

     The  Company  has  reserved  5,104,000  shares  of  common  stock  for  key
     employees,   consultants   and  key  suppliers   under  its  Incentive  and
     Non-Qualified  Option Plans of 1992 and 1982.  Under these option plans the
     exercise price of each option is set at the fair market value of the common
     stock on the date of grant and the maximum  term of the options is 10 years
     from the date of grant.  Options  granted to employees  vest ratably over a
     three-year period. The maximum number of options that may be granted to any
     eligible  employee  during the term of the 1982 and 1992 plans is 1,000,000
     options. Options granted under the Company's plans to employees require the
     option holder to abide by certain  Company  policies  which  restrict their
     ability to sell the underlying common stock.

         The following table summarizes activity under the plans:
                                             Shares Under      Weighted-Average
                                               Option           Exercise Price
         Outstanding at October 31, 1995      1,852,232             5.12
         Granted                                590,000             4.15
         Exercised                             (100,542)            1.53
         Forfeited                             (315,978)            5.63

         Outstanding at October 31, 1996      2,025,712             4.94
         Granted                                500,000             3.31
         Exercised                              (40,105)            1.57
         Expired                                (30,000)            5.00
         Forfeited                               (4,151)            3.31

         Outstanding at March 31,1997         2,451,456             4.66
         Granted                                601,000             7.88
         Exercised                             (210,332)            4.75
         Forfeited                              (13,772)            4.80

         Outstanding at March 31, 1998        2,828,352             5.34
         Granted                                650,000             5.20
         Exercised                             (331,647)            2.90
         Forfeited                             (109,151)            7.68

         Outstanding at March 31, 1999        3,037,554            $5.49
         Exercisable at March 31, 1999        1,933,571            $5.37
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



     The following  table presents  summarized  information  about stock options
     outstanding at March 31, 1999:

                           Options Outstanding            Options Exercisable
                                Weighted      Weighted                 Weighted
                  Number        Average       Average     Number       Average
    Range of    Outstanding     Remaining     Exercise  Exercisable    Exercise
Exercise Prices  at 3/31/99 Contractual Life   Price     at 3/31/99    Price

  $0.50 - 1.00       23,959     1.9 years      $0.75        23,959      $0.75
  $2.25 - 3.31      547,292     6.7 years      $3.07       406,195      $2.99
  $3.50 - 5.00    1,129,663     7.6 years      $4.23       627,554      $4.10
  $5.38 - 8.13    1,336,640     6.8 years      $7.64       875,863      $7.51
  $0.50 - 8.13    3,037,554     7.0 years      $5.49     1,933,571      $5.37

         Non-Employee Director Stock Option Plan

     In February 1994, the Company's Board of Directors  ratified a Stock Option
     Plan for  Non-Employee  Directors  pursuant to which Directors may elect to
     receive stock options in lieu of cash  compensation  for their  services as
     directors.  The Company has  reserved  500,000  shares of common  stock for
     issuance  pursuant to the exercise of options  under the Plan.  The options
     vest ratably over a three-year  period  beginning one year from the date of
     grant  and are  exercisable  for 10 years  from the date of  grant.  Option
     prices are equal to the fair market  value of common  shares at the date of
     grant.

         The following table presents summarized activity under the plan:

                                                                Weighted
                                             Shares Under        Average
                                                Option        Exercise Price

         Outstanding at October 31, 1995        109,333           5.48
         Granted                                 32,000           4.38

         Outstanding at October 31, 1996
            and March 31, 1997                  141,333           5.23
         Granted                                 64,000           7.13
         Exercised                              (16,000)          5.38

         Outstanding at March 31, 1998          189,333           5.86
         Granted                                 64,000           5.06

         Outstanding at March 31, 1999          253,333          $5.66

         Exercisable at March 31, 1999          146,666          $5.49

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



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

                              Options Outstanding            Options Exercisable
                                    Weighted    Weighted                Weighted
                     Number         Average     Average     Number      Average
      Range of     Outstanding      Remaining   Exercise  Exercisable   Exercise
 Exercise Prices   at 3/31/99  Contractual Life   Price     at 3/31/99    Price

     $4.38 - 6.00   157,333        7.6 years      $4.94       93,333      $4.85
     $6.25 - 7.13    96,000        7.4 years      $6.84       53,333      $6.60
                    253,333        7.5 years      $5.66      146,666      $5.49

          Statement of Financial  Accounting  Standards No. 123,  Accounting for
          Stock-Based  Compensation  ("SFAS 123") defines a fair value method of
          accounting for employee stock options and similar equity  instruments.
          SFAS 123 permits an entity to choose to recognize compensation expense
          by adopting  the new fair value  method of  accounting  or continue to
          measure   compensation   costs  using  the  intrinsic   value  methods
          prescribed by APB25. The Company accounts for stock options granted to
          employees  and  directors  of the Company  under the  intrinsic  value
          method.  Stock options  granted to  non-employees  under the Company's
          1992 Stock Option Plan are  accounted for under the fair value method.
          Had the Company reported  compensation costs as determined by the fair
          value  method  of  accounting  for  option  grants  to  employees  and
          directors,  net loss and net loss per common share would have been the
          pro forma amounts indicated in the following table:
<TABLE>
<CAPTION                                                Five Months
                          Year Ended      Year Ended      Ended          Year Ended
                         March 31, 1999 March 31, 1998 March 31, 1997 October 31, 1996
<S>                    <C>             <C>           <C>           <C>
Net loss - as reported   $(3,754,070)   (3,266,360)    (1,201,085)   (2,904,743)
Compensation expense -
 current period option
 grants                     (129,406)     (821,800)      (116,847)     (339,221)
Compensation expense -
 prior period option
 grants                   (1,274,213)     (619,654)      (145,042)           -


Net loss - pro forma     $(5,157,689)   (4,707,814)    (1,462,974)   (3,243,964)
Net loss per common share -
  as reported               $ (.24)         (.23)           (.12)         (.26)
Net loss per common share -
  pro forma                 $ (.32)         (.34)           (.14)         (.29)
</TABLE>
          The fair value of stock options granted was calculated using the Black
          Scholes option pricing model based on the following  weighted  average
          assumptions:
<TABLE>
<CAPTION>
                                                         Five Months
                            Year Ended     Year Ended      Ended         Year Ended
                         March 31, 1999  March 31, 1998 March 31, 1997 October 31, 1996
<S>                        <C>            <C>          <C>              <C>
Expected volatility          48.3%           48.1%          47.6%          49.1%
Expected dividend yield       0.0%            0.0%           0.0%           0.0%
Risk free interest rate       5.4%            5.7%           6.4%           5.6%
Expected life of option
  granted                  6 years         6 years        6 years        6 years
Fair value of options
  granted as computed
  under the Black Scholes
  option pricing models  $2.74 per share $4.15 per share $1.79 per share $2.22 per share
</TABLE>
<PAGE>


UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


          Pro forma net loss reflects only the fair value  compensation  expense
          of options granted since November 1, 1995. Therefore,  the full impact
          of calculating  compensation  cost for stock options under SFAS 123 is
          not  reflected  in the pro  forma  net loss  amounts  presented  above
          because compensation cost is reflected over the option vesting periods
          (ranging from 1 to 3 years) and compensation  cost for options granted
          prior to  November  1,  1995,  is not  considered.  Future  pro  forma
          compensation cost by fiscal year, assuming no additional grants by the
          Company to employees and directors, is as follows:

                      Fiscal Year          Pro Forma
                        Ended            Compensation
                       March 31,           Expense
                         2000             $1,565,187
                         2001             $  579,800
                         2002             $  447,567
          Warrants

          As discussed in Note 11, the Company  completed a private placement in
          fiscal 1998 of 750,000  units  consisting  of one common share and one
          warrant. Of the 750,000 units privately placed, 626,875 were issued in
          March 1998 and the remaining  123,125 were issued in April 1998.  Also
          in connection with the 1998 private  placement,  the placement  agents
          were issued  warrants in March 1998,  to acquire 176,588 shares of the
          Company's  common stock at an exercise  price of $8.00 per share.  The
          warrants  expire  two  years  from  the date of  issuance.  All of the
          warrants issued remain outstanding as of March 31, 1999.

          In connection with the 1997 private  placement,  the placement  agents
          were issued  warrants in February  1997, to acquire  225,625 shares of
          the  Company's  stock at an  exercise  price of $3.50  per  share  and
          warrants to acquire  50,000  shares at an exercise  price of $4.20 per
          share.  The  warrants  expire  three years from the date of  issuance.
          During  the fiscal  year ended  March 31,  1998,  warrants  to acquire
          151,750  shares of the Company's  common stock at $3.50 per share were
          exercised,  resulting  in cash  proceeds to the  Company of  $531,125.
          During  December  1997,  warrants  to  acquire  50,000  shares  of the
          Company's common stock at $4.20 per share were exercised, resulting in
          cash proceeds to the Company of $210,000.  Warrants to acquire  73,875
          shares  of the  Company's  common  stock at  $3.50  per  share  remain
          outstanding as of March 31, 1999.

          In connection with the 1996 private  placements,  the placement agents
          were issued warrants to acquire 50,000 shares of the Company's  common
          stock at $4.75  per  share in  February,  1996,  38,100  shares of the
          Company's  common  stock at $5.00 per share in May,  1996,  and 50,000
          shares at $4.25 per share in September,  1996,  being the market price
          of the  common  stock of the  Company  at the date of each  respective
          grant.  The  warrants  expire  three years from the date of  issuance.
          During June 1998,  warrants to acquire  38,100 shares of the Company's
          common  stock of $5.00  per share  were  exercised  resulting  in cash
          proceeds to the Company of $190,500.
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



          During October 1997, warrants to acquire 5,000 shares of the Company's
          common  stock at $4.25  per share  were  exercised  resulting  in cash
          proceeds to the Company of $21,250.  Warrants to acquire 45,000 shares
          at $4.25 per share remain outstanding as of March 31, 1999.

          In connection with a 1995 private  placement,  the placement agent was
          issued  warrants  expiring July 1998, to acquire 150,000 shares of the
          Company's common stock at $5.75 per share.  During July 1998, warrants
          to acquire 500 shares of the  Company's  common stock were  exercised,
          resulting in cash proceeds to the Company of $2,875.  During September
          and  December 1997,  and February  1998,  warrants to acquire  120,000
          shares of the Company's common stock were exercised, resulting in cash
          proceeds to the Company of $690,000.  The  remaining  29,500  warrants
          expired in July 1998.

          The Company has reserved  300,000  shares of common stock for issuance
          pursuant to a warrant  agreement with an investment  banking  company.
          The  warrants  were  exercisable  at a price of $6.00  per  share  and
          expired in January 1999. On March 19, 1998, warrants to acquire 80,000
          shares of the Company's common stock were exercised  resulting in cash
          proceeds to the Company of $480,000.  The remaining  220,000  warrants
          expired in January 1999.

(13)      Alcan Royalty Agreement

          During 1994, the Company and Alcan Aluminum Limited ("Alcan") executed
          an agreement in which Alcan assigned to the Company all of its rights,
          title and  interests in certain  motor  technology  developed  under a
          program  funded by Alcan.  This  agreement  further  provides that the
          Company  shall pay to Alcan  royalties  of  one-half of one percent on
          revenue derived from the manufacture and sale of products or processes
          embodying the related  technology.  For the years ended March 31, 1999
          and 1998,  the five months  ended March 31,  1997,  and the year ended
          October 31, 1996,  the Company  recorded  royalty  expense of $14,240,
          $14,999, $4,077, and $9,497, respectively, under this agreement.

(14)     Significant Customers

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

<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



                         Year Ended  Year Ended     Five Months    Year Ended
                          March 31,   March 31,   Ended March 31,  October 31,
                            1999        1998            1997           1996

       Customer A       $ 3,108,929        -              -              -
                B               -          -           162,500           -
                C               -       707,771        113,229           -
                D               -          -           176,749           -
                E               -       571,924           -              -
                F               -          -              -           378,640

                        $ 3,108,929   1,279,695        452,478        378,640
       Percentage of
         revenue             20%         31%             53%             18%

          The  significant  customer  for the year ended March 31,  1999,  was a
          customer in the Company's  Electronic  Products Segment.  In the prior
          years, the significant  customers were all customers of the Technology
          Segment.  These  customers,  in total,  also represented 19% and 0% of
          total accounts receivable at March 31, 1999 and 1998, respectively.

          Contract  services revenue derived from contracts with agencies of the
          U.S.  Government and from  sub-contracts  with U.S.  Government  prime
          contractors,  certain  portions of which are  included in revenue from
          other key customers above, totaled $758,853 and $846,740 for the years
          ended  March  31,  1999 and  1998,respectively,  $78,532  for the five
          months ended March 31, 1997,  and $800,208 for the year ended  October
          31, 1996.

(15)     Fair Value of Financial Instruments

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

          Cash  and  cash   equivalents,   certificates  of  deposit,   accounts
          receivable,  notes payable to joint venture participant,  and accounts
          payable:

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

         Long-term debt:

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

<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

 (16)    Employee Benefit Plans

         401(k) Plan

          The Company has  established  a 401(k)  Savings  Plan (the Plan) under
          which   eligible   employees  may   contribute  up  to  15%  of  their
          compensation. At the direction of the participants,  contributions are
          invested  in  several  investment  options  offered  by the Plan.  The
          Company currently matches 33% of participants  contributions,  subject
          to  certain  limitations.  These  contributions  vest  ratably  over a
          three-year period.  Matching  contributions to the Plan by the Company
          were $107,455, $100,212, $39,535 and $90,935 for the years ended March
          31, 1999 and 1998,  the five months ended March 31, 1997, and the year
          ended October 31, 1996, respectively.

         Stock Purchase Plan

          The  Company  has  established  a Stock  Purchase  Plan  which  allows
          eligible employees to purchase, through payroll deductions,  shares of
          the  Company's  common  stock  at 85%  of the  fair  market  value  at
          specified  dates.  The Company has reserved  200,000  shares of common
          stock for issuance  under the Stock  Purchase  Plan.  During the years
          ended  March 31,  1999 and 1998,  the Company  issued  3,120 and 7,523
          shares of common stock,  respectively,  under the Stock Purchase Plan.
          During the five months ended March 31, 1997, the Company did not issue
          any  shares  under the Stock  Purchase  Plan.  During  the year  ended
          October 31,  1996,  the Company  issued  6,668  shares of common stock
          under the Stock Purchase Plan.

(17)     Segments

          The  Company has three  reportable  segments:  technology,  mechanical
          products and electronic  products.  The technology segment encompasses
          the Company's  technology-based  operations including core research to
          advance   its   technology,   application   engineering   and  product
          development and job shop production of prototype components as well as
          its corporate  headquarters and executive  management.  The mechanical
          products  segment  encompasses  the  manufacture and sale of permanent
          magnet motors, precision gears, gear assemblies and related mechanical
          products.  The electronic products segment encompasses the manufacture
          and  sale  of  wire  harness  assemblies,   electronic  circuit  board
          assemblies and electronic products.

          During the years ended March 31, 1999 and 1998,  intersegment sales or
          transfers  were  immaterial.  Salaries of the  executive  officers and
          corporate general and administrative  expense is allocated entirely to
          the technology segment.

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

          The  following  table  summarizes   significant   financial  statement
          information  for each of the  reportable  segments  for the year ended
          March 31, 1999:
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued




                                     Mechanical    Electronic
                        Technology    Products      Products         Total

Revenue                $ 2,135,818   3,532,871     10,129,729      15,798,418
Interest income             88,307      23,058          -             111,365
Interest expense           (67,306)   (165,473)      (105,617)       (338,396)
Depreciation and
 amortization             (399,823)   (804,246)      (313,151)     (1,517,220)
Goodwill amortization         -        (61,682)      (246,421)       (308,103)
Equity in loss of
 Taiwan joint venture     (417,801)       -             -            (417,801)
 Segment loss           (2,646,442) (1,205,556)        97,928      (3,754,070)
 Segment assets          8,032,683   7,495,481     11,678,414      27,206,578
 Expenditures for
  segment assets       $  (487,550) (2,418,688)    (1,630,413)     (4,536,651)

          The  following  table  summarizes   significant   financial  statement
          information  for each of the  reportable  segments  for the year ended
          March 31, 1998:

                                        Mechanical
                            Technology   Products       Total

Revenue                   $  3,489,586    575,146     4,064,732
Interest income                155,480     35,706       191,186
Interest expense               (75,473)   (20,600)      (96,073)
Depreciation and
 amortization                 (383,137)  (145,943)     (529,080)
Goodwill amortization             -       (16,215)      (16,215)
Equity in loss of
 Taiwan joint venture         (246,648)        -       (246,648)
Segment loss                (3,243,204)   (23,156)   (3,266,360)
Segment assets              12,757,776  6,827,775    19,585,551
Expenditures for
 segment assets           $   (278,568)  (535,405)     (813,973)


          During  the five  months  ended  March  31,  1997  and the year  ended
          October 31, 1996, the Company operated in only the technology segment.

 (18)    Transition Period Comparative Financial Information (Unaudited)

          The  following  table  sets  forth  certain  unaudited   statement  of
          operations data for the five months ended March 31, 1996:


<PAGE>
UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

         Revenue:
            Contract services                        $    331,761
            Product sales                                 216,325
                                                          548,086
         Operating costs and expenses:
            Costs of contract services                    376,614
            Costs of product sales                        228,080
            Research and development                      632,101
            General and administrative                    624,996
                                                        1,861,791
                    Operating loss                     (1,313,705)

         Other income (expense):
            Interest income                                46,214
            Interest expense                              (91,780)
            Equity in loss of Taiwan joint
              venture                                     (16,682)
            Minority interest share of earnings
              of consolidated subsidiary                  (28,588)
            Other                                          37,280
                                                          (53,556)

                    Net loss                         $ (1,367,261)

                    Net loss per common share        $    (.13)

         Weighted average number of shares
           of common stock outstanding                 10,708,645

(19)     Commitments and Contingencies

        Employment Agreements

          The Company has entered into  employment  agreement  with three of its
          officers  which expire  December  31, 1999 and with one officer  which
          expires March 31, 2001. The aggregate annual future compensation under
          these agreements through the expiration date is $711,573.

        Lease Commitments

          The Company has entered into  operating  lease  agreements  for office
          space and equipment  which expire at various times through 2007. As of
          March 31, 1999,  the future  minimum lease  payments  under  operating
          leases with initial  noncancelable  terms in excess of one year are as
          follows:

               Year ending March 31:
                  2000                           $    290,419
                  2001                                279,937
                  2002                                265,364
                  2003                                251,444
                  2004                                253,961
                  Thereafter                          756,420

                                                  $ 2,097,545
<PAGE>

UNIQUE MOBILITY, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued



          Rental expense under these leases totaled  approximately  $327,000 for
          the year ended March 31, 1999.  Rental expense under operating  leases
          for the year ended March 31, 1998,  the five months ended  October 31,
          1997 and the year ended October 31, 1996 was immaterial.

         Litigation

          The Company is involved in various claims and legal actions arising in
          the ordinary  course of business.  In the opinion of  management,  the
          ultimate disposition of these matters will not have a material adverse
          effect on the Company's financial position.

         Uncertainty due to Year 2000 Issue

          The Year 2000 issue arises because many  computerized  systems use two
          digits rather than four to identify a year. Date-sensitive systems may
          recognize  the Year  2000 as 1900 or some  other  date,  resulting  in
          errors  when  information  using  Year  2000  dates is  processed.  In
          addition, similar problems may arise in some systems which use certain
          dates in 1999 to represent something other than a date. The effects of
          the Year 2000 issue may be experienced before, on, or after January 1,
          2000,  and, if not  addressed,  the impact on operations and financial
          reporting may range from minor errors to significant  systems  failure
          which could affect the Company's  ability to conduct  normal  business
          operations.  There can be no  assurance  that all  aspects of the Year
          2000 issue  affecting  the  Company,  including  those  related to the
          efforts of customers,  suppliers or other third parties, will be fully
          resolved.

(20)     Subsequent Events

          On May 10, 1999, the Company and three other entities,  including EVG,
          formed a German private company, Unique Mobility Europa GmbH (UME), to
          develop  and  manufacture  a  battery-electric   cargo  and  passenger
          vehicle.  UME is headquartered  in Mittweida,  in the State of Saxony,
          Germany. UME was initially  capitalized with DM50,000 cash and 625,000
          shares of the  Company's  common  stock,  of which  208,333 were newly
          issued shares contributed by the Company.  The Company currently holds
          a 33.6 percent ownership interest in UME.

          In  June  1999,   Unique   acquired  an   approximately   9.5  percent
          participation  in a $5.225  million  loan from EVG to  Windermere  Eco
          Development  Limited, a Bahamian company ("WED") for $500,000 in cash.
          WED is an environmentally  sensitive  development of Windermere Island
          in the Bahamas. The entire loan is convertible into approximately 50.4
          percent  of the total  outstanding  equity of WED.  Therefore,  if EVG
          converts the loan, Unique will have the right to receive approximately
          4.82 percent of the equity of WED.

<PAGE>


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


         None.
<PAGE>

                                   PART III


Pursuant to  instruction  G(3) to Form 10-K, the  information  required in Items
10-13 is hereby  incorporated by reference from the Company's  definitive  Proxy
Statement for the Annual  Meeting of  Shareholder to be held on August 11, 1999,
to be filed on or about June 25, 1999, pursuant to Regulation 14A.

<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)      1.    Financial Statements:

              Unique Mobility, Inc. (included in Part II):

                    Independent Auditors' Report.

                    Consolidated  Balance  Sheets,  March 31, 1999 and March 31,
                         1998.

                    Consolidated  Statements of  Operations  for the years ended
                         March 31, 1999 and 1998,  the five  months  ended March
                         31, 1997 and the year ended October 31, 1996.

                    Consolidated   Statements   of   Stockholders'   Equity  and
                         Comprehensive  and  Income(Loss)  for the  years  ended
                         March 31, 1999 and 1998,  the five  months  ended March
                         31, 1997, and the year ended
                               October 31, 1996.

                    Consolidated  Statements  of Cash Flows for the years  ended
                         March 31, 1999 and 1998,  the five  months  ended March
                         31, 1997 and year ended October 31, 1996.

                    Notes to Consolidated Financial Statements.

             2.     Financial Statement Schedules:

                    None.


     (b) Repprts on Form 8-K:


                    Report  regarding  signing  of Letter  of Intent to  acquire
                         Franklin Manufacturing Company dated April 2, 1998.

                    Report  regarding  the  completion  of  the  acquisition  of
                         Franklin Manufacturing Company dated May 6, 1998.

                    Report regarding the Financial Information required upon the
                         acquisition  of Franklin  Manufacturing  Company  dated
                         June 29, 1998.

                    Report regarding  the  formation of Unique  Mobility  Europa
                         Gmbh dated May 11, 1999.

     (c) Exhibits


3.1      Articles of  Incorporation  and Bylaws.  Reference  is made to Exhibit
         3.1 of the  Company's  Registration  Statement on Form S-1 (No.
         33-42342), which is incorporated herein by reference.
3.2      Restated  Articles of  Incorporation.  Reference  is made to Exhibit
         3.2 of the  Company's  Quarter  Report on Form 10-K for the year
         ended October 31, 1993 (No. 0-9146) which is incorporated herein by
         reference.
4.1      Specimen  Stock  Certificate.  Reference is made to Exhibit 3.1 of the
         Company  Registration  Statement on Form 10, dated February 27,
         1980 (No. 0-9146) which is incorporated herein by reference.
10.1     Shareholder  Agreement  by and among  Alcan  International  Limited,
         Ray A.  Geddes and  Unique  Mobility,  Inc.  dated June 7, 1988.
         Reference is made to Exhibit 10.2 of the Company's  Quarterly  Report
         on Form 10-Q for the quarter  ended April 30, 1988 (No.  0-9146)
         which is incorporated herein by reference.
10.2     Unique Mobility,  Inc. Incentive and Non-qualified  Stock Option Plan
         (amended and restated  effective January 1, 1988).  Reference is
         made to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q
         for the quarter ended April 30, 1988 (No. 0-9146).
<PAGE>

10.3     Unique Mobility,  Inc. 1992 Stock Option Plan.  Reference is made to
         Exhibit 4.1 to the Company's  Registration  Statement on Form S-8
         (No. 33-47454), which is incorporated herein by reference.
10.4     Unique  Mobility,  Inc.  Employee  Stock Purchase Plan.  Reference is
         made to Exhibit 4.3 to the Company's  Registration  Statement on
         Form S-8 (No. 33-34612), which is incorporated herein by reference.
10.5     401(k) Savings Plan of Unique  Mobility,  Inc.  Reference is made to
         Exhibit 4.3 to the Company's  Registration  Statement on Form S-8
         (No. 33-34613), which is incorporated herein by reference.
10.6     Amendment  to  Shareholder  Agreement  dated March 25, 1992  between
         Unique  Mobility,  Inc.,  Ray A. Geddes and Alcan  International
         Limited.  Reference is made to Exhibit 19.7 to the Company's
         Quarterly  Report on Form 10-Q for the quarter ended April 30, 1992
         (No. 0-9146) which is incorporated herein by reference.
10.6     Unique Building  Partners,  Ltd.  Liability Co.  Operating  Agreement
         dated September 16, 1992.  Reference is made to Exhibit 10.33 of
         the Company's Registration Statement on Form S-2 (No. 33-53376), which
         is incorporated herein by reference.
10.8     Lease between the Company and Unique Building  Partners,  Ltd.
         Liability Co. dated  September 22, 1992.  Reference is made to Exhibit
         10.34 of the Company's Registration Statement on Form S-2 (No.
         33-53376), which is incorporated herein by reference.
10.9     Amended Warrant  Agreements  between Unique  Mobility,  Inc. and
         affiliates of Advent  International  Corporation  and  Techno-Venture
         U.S.A.,  Inc.  Reference is made to exhibits  10.1 through 10.7 to the
         Company's  Quarterly  Report on Form 10-Q for the quarter ended
         April 30, 1993, (No. 0-9146) which is incorporated herein by reference.
10.10    Unique  Mobility,  Inc.  Stock Option Plan for  Non-Employee
         Directors.  Reference is made to Exhibit 10.39 of the Company's
         Quarter Report on Form 10-K (No. 0-9146) for the year ended October 31,
         1993 which is incorporated herein by reference.
10.11    Warrant Agreement with Arnhold and S.  Bleichroeder,  Inc.  Reference
         is made to Exhibit 10.41 of the Company's Quarter Report on Form
         10-K (No. 0-9146) for the year ended October 31, 1993 which is
         incorporated herein by reference.
10.12    Assignment  Agreement with Alcan  International  Limited.  Reference is
         made to Exhibit 10.3 to the Company's Quarterly Report on Form
         10-Q for the quarter ended April 30, 1994 (No. 0-9146) which is
         incorporated herein by reference.
10.13    Amendment  to the 1992 Stock  Option Plan of Unique  Mobility,  Inc.
         Reference  is made to Exhibit  10.4 to the  Company's  Quarterly
         Report on Form 10-Q for the quarter ended April 30, 1994 (No. 0-9146)
         which is incorporated herein by reference.
10.14    Amendment to the 401(k)  Savings  Plan of Unique  Mobility,  Inc.
         dated  January 18,  1995.  Reference is made to Exhibit 10.1 in the
         Company's  Quarterly  Report on Form 10-Q for the  Quarter  ended
         January  31,  1995 (No.  0-9146)  which is  incorporated  herein by
         reference.
10.15    Amendment to the 1992 Stock Option Plan of Unique  Mobility,  Inc.
         dated  December 7, 1994.  Reference is made to Exhibit 10.2 in the
         Company's  Quarterly  Report on Form 10-Q for the  Quarter  ended
         January  31,  1995 (No.  0-9146)  which is  incorporated  herein by
         reference.
10.16    Stock Purchase  Agreement by and among Unique Mobility,  Inc. and
         Invacare  Corporation  dated December 7, 1995.  Reference is made to
         exhibit  10.36 in the  Company's  Annual  Report on Form 10-K for the
         fiscal  year ended  October  31,  1995,  (No.  1-10869)which  is
         incorporated herein for reference.
10.17    Amendment to the Stock Purchase Agreement by and among Unique Mobility
         Inc. and Invacare  Corporation.  Reference is made to exhibit
         10.3 in the Company's  Quarterly  Report on Form 10-Q for the quarter
         ended April 30, 1996,  (No.  0-9146)  which is  incorporated  herein by
         reference.
10.18    Incentive Stock Option  Agreement with Ray A. Geddes,  Reference is
         made to Exhibit 10.1 in the Company's  Quarterly  Report on Form
         10-Q for the quarter ended September 30, 1997, (No. 0-9146) which is
         incorporated herein by reference.
10.19    Non-qualified  Stock Option  Agreement with Ray A. Geddes,  Reference
         is made to Exhibit 10.2 in the Company's  Quarterly  Report on
         Form 10-Q for the quarter ended September 30, 1997, (No. 0-9146) which
         is incorporated herein by reference.
10.20    Agreement and Plan of Merger and Reorganization  between Unique
         Mobility,  Inc., Unique Merger Sub, Inc., Aerocom Industries,  Inc.,
         Thomas J. Lang,  James M. Buschy,  Robert C. Jeffers and Gary R.
         Morton.  Reference is made to Exhibit 2 in the Company's  current
         report on Form 8-K filed January 20, 1998 (No. 0-9146) which is
         incorporated herein by reference.
10.21    Escrow Agreement  between Unique Mobility,  Inc.,  Thomas J. Lang,
         James M. Buschy,  Robert C. Jeffers,  Gary P. Morton and Norwest
         Bank Colorado N.A.  Reference is made to Exhibit 2 in the Company's
         current report on Form 8-K filed  January 20,1998  (No. 0-9146) which
         is incorporated herein by reference.
10.22    Share  Exchange  Agreement  between  Unique  Mobility,  Inc.,  Franklin
         Manufacturing  Company,  Michael G. Franklin and Deborah M. McNatt.
         Reference is made to Exhibit 2.2 in the Company's  current report on
         Form 8-K filed May 6, 1998,  (No. 09146)  which is incorporated
         herein by reference.
10.23    Escrow Agreement between Unique Mobility,  Inc., Michael G. Franklin,
         Deborah M. McNatt and Norwest Bank Colorado N.A. Reference is
         made to Exhibit 2.1 in the Company's current report on Form 8-K filed
         May 6, 1998, (No. 09146) which is incorporated herein by reference.
10.24    Employment  Agreement  between  Unique  Mobility,  Inc. and Michael G.
         Franklin.  Reference is made to Exhibit 2.3 in the Company's
         current report on Form 8-K filed May 6, 1998, (No. 09146) which is
         incorporated herein by reference.
10.25    Non-competition  Agreement between Unique Mobility, Inc. and Michael G.
         Franklin.  Reference is made to Exhibit 2.4 in the Company's
         current report on Form 8-K filed May 6, 1998, (No. 09146) which is
         incorporated herein by reference.

21       Subsidiaries of the Company

23       Consent of KPMG Peat Marwick LLP.

27       Financial Data Schedule

<PAGE>
                                  SIGNATURES

Pursuant to the requirements of Section 13 of the Securities and Exchange Act of
1934,  Unique Mobility,  Inc. has duly caused this Annual Report on Form 10-K to
be signed on its  behalf  by the  undersigned,  thereunto  duly  authorized,  in
Golden, Colorado on the 18th day of June, 1999.

                                             UNIQUE MOBILITY, INC.,
                                             a Colorado Corporation
                                             By: "Ray A. Geddes"
                                             Ray A. Geddes
                                             Chairman of the Board of Directors

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

  Signature                     Title                                 Date


                          Chairman of the Board of Directors
 "Ray A. Geddes"          (Principal Executive Officer)          June 18, 1999
  Ray A. Geddes


                          Treasurer
 "Donald A. French        (Principal Financial and
  Donald A. French        Accounting Officer)                    June 18, 1999


 "William G. Rankin"      President and Director                 June 18, 1999
  William G. Rankin


 "Francis S.M. Hodsoll"   Director                               June 18, 1999
  Francis S.M. Hodsoll


 "H. J. Young"            Director                               June 18, 1999
  H. J. Young


 "J. B. Richey"           Director                               June 18, 1999
  J. B. Richey


 "Lee Iacocca"            Director                               June 18, 1999
  Lee Iacocca


 "Michael G. Franklin"    Vice-President - Electronics           June 18, 1999
  Michael G. Franklin     Manufacturing and Director