Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K

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

OF THE SECURITIES EXCHANGE ACT OF 1934



> [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Year Ended March 31, 2002



Commission file number 1-10869





UQM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)



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



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

Pacific Stock Exchange

Chicago Stock Exchange

Frankfurt Stock Exchange

Berlin Stock Exchange



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

Common stock, $.01 par value



> Indicate by check mark whether the registrant (1) has filed all reports
>   required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
>   the preceding 12 months (or for such shorter period that the registrant was required to
>   file such reports), and (2) has been subject to such filing requirements for the past 90
>   days. YesX  No.
>   Indicate by check mark if disclosure of delinquent filers pursuant to
>   Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
>   of registrant's knowledge, in definitive proxy or information statements incorporated by
>   reference in Part III of this Form 10-K or any amendment to this Form 10-K. X
>   The aggregate market value of the voting stock held by
>   nonaffiliates of the registrant (18,332,525 shares) computed by reference to the closing
>   price of such stock on the American Stock Exchange, as of June 21, 2002:
>   $69,663,595
>   The number of shares outstanding (including shares held by affiliates)
>   of each of the registrant's classes of common stock, as of June 21, 2002:
>   18,842,888 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 21, 2002 Annual Meeting of
>   Shareholders.

TABLE
OF CONTENTS

ITEM 1. BUSINESS

ITEM 2. PROPERTIES

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 5. MARKET PRICE OF COMMON STOCK

ITEM 6. SELECTED FINANCIAL DATA

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

ITEM 8.
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

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

ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS

ITEM
11 EXECUTIVE COMPENSATION

ITEM
12 SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

ITEM
13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

SIGNATURES





ITEM 1.BUSINESS

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



General

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

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

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

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

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

Net loss for the fiscal year was $8,592,655 or $0.49 per common share,
including the write-down of goodwill of $4,348,633 or $0.25 per common share and loss from
discontinued operations of $2,321,100 or $0.13 per common share, versus a net loss last
year of $3,140,122 or $0.18 per common share. Excluding the write-down of goodwill,
continuing operations for the fiscal year ended March 31, 2002, resulted in a loss of
$1,922,922 or $0.11 per common share on total revenue of $21,395,240 versus a loss from
continuing operations of $2,042,538 or $0.12 per common share on total revenue of
$25,294,650 last fiscal year. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the fiscal year, including the write-down of
goodwill of $4,348,633 or $0.25 per common share and loss from discontinued operations of
$2,321,100 or $0.13 per common share, was $6,068,821 or $0.35 per common share. EBITDA
from continuing operations for the year, excluding the write-down of goodwill, was $55,078
or nil per common share versus EBITDA from continuing operations of $(304,509) or $(0.02)
per common share last year.

EBITDA is a broadly used financial term which many investment
professionals use as an approximation of the operating cash flow generated by a business.
Management believes that this information may be useful to investors in the Company due to
the amount of noncash depreciation and amortization charges reported by the Company.
Investors are cautioned, however, that EBITDA is not a replacement or substitute for net
earnings or loss determined by the application of generally accepted accounting principles
and our calculation of EBITDA may not be comparable to similarly titled disclosures made
by other companies.

In April 2002, subsequent to the end of the fiscal year, the Company
completed a secondary offering of 1,160,095 shares of its common stock and two year
warrants to purchase an additional 232,019 shares of common stock at an exercise price of
$5.73 per common share to institutional and other investors in Europe and the United
States. The transaction was priced based on the average closing price of the common stock
on the American Stock Exchange for the five trading days immediately preceding the
transaction date. Net cash proceeds to the Company were $4,433,114, a  portion of
which was  applied to the  reduction of  debt. I-Bankers Securities, Inc.
served as underwriter for the offering.



Technology Segment

The technology segment of the Company encompasses the operations of the
Engineering and Product Development Center and the administrative and management functions
performed by the Corporate Headquarters staff and senior executives. The Company's
Engineering and Product Development Center occupies a 25,000 square foot facility located
in Golden, Colorado equipped with research and development laboratories, prototype build
and test facilities for electric motors, generators, power electronic inverters, software,
and vehicle integration activities. The technology segment conducts sponsored and
internally-funded engineering activities directed toward the development of new products
and the engineering of motors, generators, and power electronic inverters to meet the
requirements of customers' specific product applications and is the source of
engineering services for both the mechanical and electronic product segments. During
fiscal year 2002, the technology segment revenue rose 10.9 percent to $3,747,725
consisting of $2,999,342 of contract services revenue and $748,383 of revenue from the
sale of low volume motor and inverter products compared to technology segment revenue of
$3,378,396 consisting of contract services revenue of $2,283,292 and revenue from the sale
of low volume motor and inverter products of $1,095,104 last fiscal year. Net earnings for
the technology segment in fiscal year 2002 were $32,078, compared to a net loss of
$921,583 last fiscal year. Technology segment EBITDA for the fiscal year ended March 31,
2002 was $353,544 versus $(477,444) last fiscal year.



Mechanical Products Segment

The mechanical products segment of the Company encompasses the
operations of the Company's wholly-owned subsidiary, UQM Power Products, Inc. UQM
Power occupies a 25,000 square foot manufacturing plant located in Frederick, Colorado.
Prior to September, 2001, UQM Power Products, Inc. operations consisted of the volume
manufacture of motors and the contract manufacture of gears and gear assemblies. Due to
continuing weak demand in the markets served by the Company, the gear market generally,
and industry trends toward greater sourcing of customer gear requirements overseas, the
Company announced its intention to divest its non-core contract gear manufacturing
business. As a result, in the second quarter of fiscal year 2002 the Company recorded a
charge for discontinued operations of $1,676,450 reflecting management's estimate of
the difference between the expected liquidation value of the business and its carrying
value and the expected future operating losses to be incurred during the winding down of
operations. In addition, losses for the six months ended September 30, 2002 of $644,650
attributable to gearing operations were reclassified and separately presented on the
Company's financial statements.

Motor manufacturing operations consist of the high volume manufacture
of the Company's proprietary permanent magnet motors. During fiscal year 2002, the
motor manufacturing operations revenue rose 42.6 percent to $4,001,270 from the prior
year's revenue of $2,805,300. Net earnings from motor manufacturing operations for
the year were $23,160 compared to net earnings last fiscal year of $219,325. The decrease
in earnings is attributable to increased allocations of general corporate overhead and
facility costs following the announced divestiture of gearing operations. EBITDA for the
fiscal year ended March 31, 2002 was $221,943 compared to $337,590 last year.



Electronic Products Segment

The electronic products segment of the Company encompasses the
operations of the Company's wholly-owned subsidiary UQM Electronics, Inc. and
includes the manufacture of thru-hole and surface mount electronic printed circuit board
assemblies, wire harness assemblies, value-added component assemblies incorporating either
printed circuit board assemblies, wire harness assemblies or both, and complete turn-key
electronic product builds. In addition, UQM Electronics is a wholesale distributor of over
20 lines of passive electronic components. UQM Electronics conducts its operations from a
31,000 square foot manufacturing plant located in St. Charles, Missouri. During fiscal
year 2002, segment operations were adversely impacted by a broad and significant business
downturn in the contract electronics manufacturing sector, generally, including a
substantial decline in consumer demand for electronic products resulting in a decline in
segment revenue of 28.6 percent to $13,646,245 and a substantial increase in segment
losses, including a charge for the write-off of goodwill of $4,348,633, to $6,326,793
versus a net loss last fiscal year of $1,340,280. Segment EBITDA for the fiscal year ended
March 31, 2002, excluding the write-off of goodwill, was $(520,409) compared to EBITDA of
$(164,655) last fiscal year. Segment EBITDA for the fiscal year ended March 31, 2002,
including the write-off of goodwill, was $(4,869,042) compared to EBITDA of $(164,655)
last fiscal year.



Technology

The Company's technology base includes a number of proprietary technologies and patents
relating to brushless permanent magnet motors, generators and power electronic inverters,
together with software code to intelligently manage the operation of the system. See also
"Patents" below.
The typical architecture (Figure 1) of a UQM(R) motor consists of a stator winding
employing
a high pole count configuration, which allows for high copper utilization
(minimizing
energy loss and cost) and a hollow rotor upon which powerful rare earth
magnets are mounted on the outer





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

Attributes of the Company's permanent magnet motor technology
include brushless electronic commutation; a relatively large air-gap dimension; the use of
powerful rare earth NdFeB magnet material; good heat rejection; low iron content; and low
mechanical losses. As a result, UQM

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

In addition, the Company has developed and patented a method of control
embodied in electronic component architecture and software code (Phase Advance Control)
which allows UQM

In April 2002, the Company announced the successful completion of
testing and the commercial availability of an integrated electric traction system
("INTETS"),the next generation of its motor technology for vehicle propulsion
applications including battery, hybrid and fuel cell electric vehicles. INTETS maximizes
the advantages of the UQM

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

Substantially all of the Company's research and development
activities are the results of projects contracted for and funded by customers, with the
Company typically retaining intellectual property rights in the resulting technology
developed. Customer funded development activities are recorded as contract services
revenue and the associated development costs are shown as cost of contract services in the
Company's financial statements. For the year ended March 31, 2002, revenues from
customer funded research and development activities were $2,999,342 and internally-funded
research and development expenditures were $98,940.

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



Competition

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

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

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

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

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



Patents

The Company holds U.S. Patent No. 5,004,944, issued on April 2,
1991,entitled "Lightweight high power electromagnetic transducer". Corresponding
applications were filed in foreign countries, and most of these foreign applications have
issued as patents. U.S. Patent 5,311,092, issued on May 10, 1994, and is a related patent
directed to additional subject matter regarding lightweight, high power electromagnetic
transducers. U.S. Patent No. 5,319,8444, issued June 14, 1994, and is a
continuation-in-part of U.S. Patent No. 5,004,944. U.S. Patent No. 5,319,844 claims
various methods of producing armatures for electromagnetic transducers.

In April 1992, the Company was issued U.S. Patent No. 5,107,151
entitled "Switching circuit employing electronic devices in series with an inductor
to avoid commutation breakdown and extending the current range of switching circuits by
using IGBT devices in place of MOSFETs". This patent is directed to certain
proprietary aspects of electronic control circuitry. Corresponding applications were filed
in foreign countries, and many of these foreign applications have issued as patents.

The Company was granted U.S. Patent No. 5,382,859, issued January 17,
1995, entitled "Stator and method of constructing same for high power density
electric motors and generators". The Company also holds U.S. Patent No. 5,592,731,
issued on January 15, 1997 and entitled "Method of constructing a stator". These
patents relate to the Company's enhancement to its motor technology. Corresponding
applications were filed in foreign countries, and many of these foreign applications have
issued as patents.

The Company was granted U.S. Patent No. 5,677,605, issued October 14,
1997 entitled "Brushless DC motor using phase timing advancement". This patent
describes a low cost method of controlling the drive current to a motor, which can achieve
operating characteristics ideal for vehicle traction drives. Corresponding applications
were filed in foreign countries, and most of these foreign applications have issued as
patents.

The Company was granted U.S. Patent No. 5,982,063, issued November 9,
1999, entitled "Electric motor with internal brake". This patent relates to
current developments in electric wheelchair drives. Corresponding applications were filed
in foreign countries, some of which have issued.

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" which is pending. Corresponding applications are pending in foreign
countries.

In January of 2002, the Company filed a new application for a rotor
cooling apparatus. The application is pending. The deadline for filing foreign
applications has not passed. Accordingly, no decision on foreign applications has been
made.

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 un-patented 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.



Trademarks

The Company owns three U.S. Trademark Registrations for
"UNIQ" (International Class 7 for power transducers, and Class 12 for utility
land vehicles and Class 16 for Publications). The Class 7 and Class 12 trademarks are
subject to renewal in August 2006; and the Class 16 trademark is subject to renewal in
February 2007.

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

The Company has registered "POWERPHASE" as a trademark
(International Class 12 for motors for electric and hybrid-electric land vehicles namely,
modular brushless permanent magnet electric motor traction drives). Corresponding
applications for trademark registration were filed in 11 countries. The trademark was
registered in the European community on March 21, 1997. Trademark registrations have been
granted in Mexico, Canada, China, Israel, Japan, Singapore, South Korea, Taiwan and
Thailand.



Backlog

The Company's technology segment had unperformed service contracts
from customers which will provide payments to the Company upon completion aggregating
approximately $1.1 million and an order backlog for prototype motors and controls of
approximately $.03 million at May 31, 2002. All such service contracts are subject to
amendment, modification or cancellation. The Company expects to complete all unperformed
service contracts over the next 11 months and ship motor and controller backlog products
over the next 2 months.

The Company's mechanical products segment had an order backlog of
approximately $3.4 million at May 31, 2002. The Company expects to ship all backlog
products within the next eight months.

The Company's electronic products segment had an order backlog of
approximately $4.4 million at May 31, 2002. The Company expects to ship all backlog
products within the next twelve months.



Customers and Suppliers

The Company has three significant customers, two of which are customers
of its electronic products segment, Tyco International, Ltd., and Handera, Inc. which
accounted for revenue of $5,397,571 and $1,066,190, respectively representing 25.2 percent
and 5.0 percent of consolidated revenue, respectively, and one of which is a customer of
its mechanical products segment, Invacare Corporation, which accounted for revenue of
$4,001,270 representing 18.7 percent of consolidated revenue. These customers, in total,
represented 48 percent of total accounts receivable and 42 percent of inventories at March
31, 2002.

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



U.S. Government Contracts

For the year ended March 31, 2002, $1,040,251, or approximately 4.9
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, 2001, $853,341, or approximately 3.4
percent of 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, 2000, $910,770, or approximately 4.8
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 contracts with the U.S. Government provide
for the reimbursement of costs on a 50 percent cost-sharing basis based on not-to-exceed
billing rates negotiated between the Company and the U.S. Government. Other U.S.
Government business is performed under firm fixed price contracts. On
"cost-share" and "firm fixed price" contracts, the Company can incur
an actual loss in the performance thereof if incurred costs exceed the contract amount.
All U.S. Government contracts with the Company are subject to modification or cancellation
at the convenience of the Government.



Employee and Labor Relations

As of May 31, 2002, the Company had 137 full-time employees. The
Company has entered into employment contracts with two of its executive officers which
expire December 31, 2002. None of the Company's employees are covered by a collective
bargaining agreement. The Company's management believes that its relationship with
its employees has been generally satisfactory.

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



Risk Factors

You should carefully consider the following factors and other
information in this document and the information incorporated by reference before
investing in our securities.



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

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

|         | Fiscal Year Ended March 31,
|-------- | ---------------------------
|         | 2002                       
|Net loss | $ 8,592,655                



We have had accumulated deficits as follows:

|March 31, 2002 | $43,757,378
|-------------- | -----------
|March 31, 2001 | $35,164,723



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

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

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

Most of our net sales come from three customers, one of which we are
losing. Reductions in purchases by either of the remaining two significant customers could
further negatively impact our financial condition, results of operations and liquidity.

A significant portion of our total revenue has historically been
concentrated among three large customers, Tyco International, HandEra, Inc. and Invacare
Corporation. HandEra has informed us that following the sale of the remaining units it has
ordered from us, HandEra will no longer offer for sale the product we have been
manufacturing for HandEra. We are in the process of completing shipments to HandEra under
an existing binding purchase order and expect to have additional revenue of approximately
$650,000 subsequent to March 31, 2002 upon shipment of the product covered by the purchase
order. Revenue from HandEra for the fiscal year ended March 31, 2002 declined
substantially to $1,066,190 from the comparable prior year amount of $6,427,983. The loss
of either of the two remaining significant customers or a significant reduction in revenue
from these customers could cause us to experience a material adverse change in our
financial condition, results of operations and liquidity.



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

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



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

We had a net loss of $8,592,655 during fiscal year 2002. Cash balances
stood at $1,411,509 at March 31, 2002.  If our losses continue at this level, they
could consume some or all of our current cash balances. During several fiscal years prior
to fiscal year 2002, we experienced substantial growth in our revenue, which increased our
working capital requirements. Should future growth resume at a similar rate or an
accelerated rate, the working capital requirements to fund our operations and pursue
acquisition opportunities may consume our existing cash balances.



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

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



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

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

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

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

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



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

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



ITEM 2. PROPERTIES

The Company owns or leases its offices and manufacturing facilities and
believes these facilities to be well maintained, adequately insured and suitable for their
present and intended uses. Information concerning facilities of the Company as of May 31,
2002, is set forth in the table below:



|Location              | Square
    Feet | Ownership or
    Expiration Date
    of Lease | Use                                            
|--------------------- | --------------- | --------------------------------------------- | -----------------------------------------------
|Golden, Colorado(1)   | 40,000 (2)      | September 2002                                | manufacturing,
    laboratories
    and offices
|Frederick, Colorado   | 25,000          | Own                                           | manufacturing
    and offices                  
|St. Charles, Missouri | 31,000          | March 2007                                    | manufacturing,
    warehouse and
    offices   

(1) The Company sold its fifty percent member interest in a limited
liability company which owns this facility in January 2001.

(2) The Company occupies 25,000 square feet and sub-leases the
remaining 15,000 square feet.



ITEM 3

The Company has filed a lawsuit against a former customer of its
Electronics Segment seeking payment for inventory purchased on behalf of the customer. The
Company is seeking damages of approximately $360,000 plus attorneys fees and other costs.



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

There were no matters submitted to a vote of security holders of the
Company during the quarter ended March 31, 2002.



ITEM 5. MARKET PRICE OF COMMON STOCK





2002
    High
    LowFourth
    Quarter
    $5.60
    $3.86Third
    Quarter
    $5.67
    $3.95Second
    Quarter
    $6.30
    $3.50First
    Quarter
    $7.49
    $6.252001
    High
    LowFourth
    Quarter
    $ 7.75
    $6.13Third
    Quarter
    $ 8.38
    $6.50Second
    Quarter
    $ 8.38
    $7.19First
    Quarter
    $ 9.00
    $6.25






On June 21, 2002 the closing price of the Company's common stock,
as reported on the American Stock Exchange, was $3.80 per share and there were 892 holders
of record of the Company's common stock.





ITEM 6. SELECTED FINANCIAL DATA



UQM Technologies, Inc.

Consolidated Selected Financial Data



|                               | Year            | Year          | Year          | Year          | Year         
|------------------------------ | --------------- | ------------- | ------------- | ------------- | -------------
|                               | Ended           | Ended         | Ended         | Ended         | Ended        
|                               | March
    31,   | March
    31, | March
    31, | March
    31, | March
    31,
|                               | 2002            | 2001          | 2000          | 1999          | 1998         
|                               |                 |               |               |               |              
|Contract
    services revenue  | $
    2,999,342 | 2,283,292     | 1,702,937     | 1,517,960     | 2,790,496    
|                               |                 |               |               |               |              
|Product
    sales              | $18,395,898     | 23,011,358    | 17,096,963    | 11,402,122    | 742,449      
|                               |                 |               |               |               |              
|Loss
    from continuing       |                 |               |               |               |              
|operations
    before other    |                 |               |               |               |              
|income
    (expense)           | $(6,337,051)    | (1,805,409)   | (4,892,252)   | (2,527,785)   | (3,013,342)  
|                               |                 |               |               |               |              
|Loss
    from continuing       |                 |               |               |               |              
|operations                     | $(6,271,555)    | (2,042,538)   | (5,504,510)   | (2,992,297)   | (3,252,197)  
|                               |                 |               |               |               |              
|Discontinued
    operations    | $(2,321,100)    | (1,097,584)   | (967,297)     | (761,773)     | (14,163)     
|                               |                 |               |               |               |              
|Net loss                       | $(8,592,655)    | (3,140,122)   | (6,471,807)   | (3,754,070)   | (3,266,360)  
|                               |                 |               |               |               |              
|Net loss
    per common share- |                 |               |               |               |              
|basic
    and diluted:         |                 |               |               |               |              
|Continuing
    operations      | $ (.36)         | (.12)         | (.33)         | (.19)         | (.23)        
|Discontinued
    operations    | $ (.13)         | (.06)         | (.06)         | (.05)         | (-)          
|                               | $ (.49)         | (.18)         | (.39)         | (.24)         | (.23)        
|                               |                 |               |               |               |              
|Total
    assets               | $16,129,535     | 27,481,593    | 24,257,843    | 27,206,578    | 19,585,551   
|                               |                 |               |               |               |              
|Long-term
    obligations      | $ 1,108,023     | 2,606,075     | 3,422,459     | 4,396,127     | 1,029,924    
|                               |                 |               |               |               |              
|Cash
    dividend              |                 |               |               |               |              
|declared
    per common share  | $    -0-        | -0-           | -0-           | -0-           | -0-          

> 

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

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



Financial Condition

Cash and cash equivalents at March 31, 2002 was $1,411,509 and working
capital (the excess of current assets over current liabilities) was $3,184,735 compared
with $2,399,006 and $4,737,780,respectively, at March 31, 2001. In April 2002, subsequent
to the end of the fiscal year, the Company completed a secondary offering of 1,160,095
shares of its common stock and two year warrants to purchase an additional 232,019 shares
of common stock at an exercise price of $5.73 per common share to institutional and other
investors in Europe and the United States. The transaction was priced based on the average
closing price of the common stock on the American Stock Exchange for the five trading days
immediately preceding the transaction date. Net cash proceeds to the Company were
 $4,433,114, a  portion of which  was applied to the  reduction of
debt. I-Bankers Securities, Inc. served as underwriter for the offering.

Accounts receivable declined $1,236,487 to $2,662,554 at March 31, 2002
from $3,899,041 at March 31, 2001. The decrease is primarily attributable to accelerated
collections from a significant customer and lower revenue levels during the fiscal year
ended March 31, 2002.

Costs and estimated earnings in excess of billings on uncompleted
contracts decreased $129,796 to $442,213 at March 31, 2002 from $572,009 at March 31,
2001. The decrease is attributable to the performance of work on engineering contracts at
a rate faster than the associated billing arrangements. Estimated earnings on contracts in
process rose to $1,025,313 at March 31, 2002 on costs incurred on contracts in process of
$2,486,598 compared to estimated earnings on contracts in process of $720,333 on costs
incurred on contracts in process of $1,974,471 at March 31, 2001. The increase in
estimated earnings on contracts in process is attributable to an expanded amount of work
and improved pricing.

Inventories declined $2,019,924 to $4,636,312 at March 31, 2002 from
$6,656,236 at March 31, 2001, principally due to a decline in raw materials and
finished products inventories of $1,665,437 and $880,554, respectively, partially offset
by an increase in work-in-process inventories of $526,067. The decline in raw materials
inventory is attributable to increased levels of obsolescence reserves which accounted for
$184,846 of the increase and reduced purchases due to lower levels of revenue. The
increase in work in process inventories is attributable to the inclusion of
"kitted" electronic components in the work in process numbers this year. The
decline in finished products inventory is due to reduced finished goods inventories of
hand-held computers at the electronic products segment.

Prepaid expense increased to $220,528 at March 31, 2002 from $184,405
at March 31, 2001 reflecting higher levels of prepaid patent maintenance costs versus
the prior fiscal year.

Equipment of discontinued operations held for sale, net, reflects the
estimated realizable value of property and equipment of the discontinued gear division
held for sale.

Other current assets rose $78,869 to $130,934 at March 31, 2002
reflecting deferred costs associated with the Company's secondary offering of common
stock and warrants completed subsequent to fiscal year end.

The Company invested $513,973 for the acquisition of property and
equipment during fiscal year 2002 compared to $2,151,041 for the prior fiscal year. The
decrease is attributable to higher levels of capital expenditures in the prior fiscal year
arising from investments in manufacturing equipment at the Company's electronic products
segment to improve manufacturing throughput and component placement density.

Goodwill, net of accumulated amortization, was nil at March 31, 2002
compared to $5,662,797 at March 31, 2001 reflecting the write-down of goodwill associated
with the discontinuation of the Company's gear division operations which represented
$1,012,658 of the decrease and the write-down of goodwill in the Company's electronic
products segment which represented $4,348,633 of the decrease.

Accounts payable decreased $84,425 to $2,693,312 at March 31, 2002 from
$2,777,737 at March 31, 2001. The decrease is primarily attributable to lower levels of
inventory purchased from suppliers.

Other current liabilities declined $462,474 to $568,554 at March 31,
2002 from $1,031,028 at March 31, 2001. The decrease is attributable to lower accrued
payroll costs arising from changes in the Company's paid time off policy and lower levels
of other accrued liabilities.

In fiscal year 2001, a limited partnership in which the Company was a
50 percent owner sold its principal asset, the Company's headquarters building in Golden,
Colorado, and was subsequently liquidated. As a result of this transaction, the Company
recorded a deferred gain that is being recognized ratably over the remaining term on the
Company's facility lease which expires September, 2002. At March 31, 2002 the remaining
balance of the deferred gain was $322,139.

Current portion of long-term debt decreased $303,642 to $562,043 at
March 31, 2002 from $865,685 at March 31, 2001 primarily due to the retirement of a
portion of the Company's term debt during the fiscal year and the reclassification of the
term debt of the discontinued gear division operations to term debt and accrued future
losses of discontinued operations.

Revolving line-of-credit declined $1,783,000 to $2,254,000 at March 31,
2002 from $4,037,000 at March 31, 2001 due to cash generated from the reduction of trade
accounts receivable and inventories during the fiscal year which was applied to reduce the
Company's line-of-credit balance.

Billings in excess of costs and estimated earnings on uncompleted
contracts rose $184,920 to $382,739 at March 31, 2002 from $197,819 at March 31, 2001
reflecting billings to customers for certain sponsored development contracts in advance of
the performance of the associated work.

Long-term debt declined $1,498,052 to $1,108,023 at March 31, 2002
reflecting principal repayments on the Company's term bank debt during the fiscal
year and the reclassification of the term debt of the discontinued gear division to
current liabilities in anticipation of its retirement in less than one year as gearing
assets are sold.

Common stock and additional paid-in capital increased to $176,798 and
$51,444,359 at March 31, 2002, respectively, compared to $174,233 and $50,626,120 at March
31, 2001. The increases in these accounts totaling $820,804 is attributable to cash
received upon the exercise of stock options by employees, directors and consultants of
$663,361; cash proceeds from the sale of common stock under the Company's Employee Stock
Purchase Plan of $42,878, common stock issued for services of $9,558 and cash received for
the extension of warrants of $105,007.



Results of Continuing Operations

Continuing operations for the fiscal year ended March 31, 2002,
resulted in a loss of $6,271,555, or $0.36 per common share compared to a loss from
continuing operations of $2,042,538, or $0.12 per common share and $5,504,510 or $0.33 per
common share for the fiscal years ended March 31, 2001 and 2000, respectively. EBITDA from
continuing operations for fiscal year 2002 declined by $3,989,046 to $(4,293,555) versus
EBITDA from continuing operations of $(304,509) last fiscal year and by $321,090 versus
EBITDA from continuing operations of $(3,972,465) for the fiscal year ended March 31,
2000. Continuing operations for the fiscal year ended March 31, 2002, excluding a charge
for the write-down of goodwill of $4,348,633, resulted in a loss of $1,922,922, or $0.11
per common share compared to a loss from continuing operations, excluding the write-down
of investments and other assets of $291,818, of $1,750,720, or $0.10 per common share last
fiscal year and a loss from continuing operations, excluding the write-down of investments
and other assets of $4,104,628, of $1,399,882 or $0.08 per common share for the fiscal
years ended March 31, 2000. EBITDA for fiscal year 2002, before the foregoing charges,
rose $67,769 to $55,078 versus EBITDA of $(12,691) last fiscal year and declined by
$77,085 versus EBITDA of $132,163 for the fiscal year ended March 31, 2000.

EBITDA is a broadly used financial term which many investment
professionals use as an approximation of the operating cash flow generated by a business.
Management believes that this information may be useful to investors in the Company due to
the amount of non-cash depreciation and amortization charges reported by the Company.
Investors are cautioned, however, that EBITDA is not a replacement or substitute for net
earnings or loss determined by the application of generally accepted accounting principles
and our calculation of EBITDA may not be comparable to similarly titled disclosures made
by other companies.

Revenue from contract services increased 31 percent to $2,999,342
during fiscal year 2002 from $2,283,292 for the year ended March 31, 2001. Revenue from
contract services increased $580,355 or 34 percent for the year ended March 31, 2001
compared to revenue for the year ended March 31, 2000. The increase in contract services
revenue for both years is attributable to growing demand for development programs.

Product sales for the year declined 20 percent to $18,395,898 compared
to $23,011,358 for the year ended March 31, 2001, and rose 35 percent for the year ended
March 31, 2001 versus revenue for the year ended March 31, 2000 of $17,096,963. Mechanical
products segment revenue for the fiscal year ended March 31, 2002 increased $1,195,970 or
43 percent to $4,001,270 compared to $2,805,300 for fiscal year 2001, and fiscal year 2001
revenue rose $487,703 or 21 percent compared to fiscal year 2000 revenue of $2,317,597.
The growth in mechanical products segment revenue in each fiscal year is primarily
attributable to increased shipments of wheelchair motors. Electronic products segment
revenue for fiscal year 2002 decreased 29 percent to $13,646,245 compared to $19,110,954
for fiscal year 2001. The decline in revenue is attributable to lower revenue from
consumer products and weaker demand generally following the events of September 11,
2001. Electronic products segment revenue for the fiscal year ended March 31, 2001
increased 36 percent to $19,110,954 compared to $14,056,151 for the year ended March 31,
2000. The increase was attributable to the launch of a value added product for an existing
customer, higher production volumes for certain customers and new business launches during
fiscal year 2001. Technology segment product sales for fiscal year 2002 declined 32
percent to $748,383 compared to $1,095,104 for the year ended March 31, 2001. The decrease
is attributable to reduced demand for propulsion systems. Technology segment product sales
for the fiscal year ended March 31, 2001 increased 51 percent compared to $723,215 for the
fiscal year ended March 31, 2000. The increase is primarily attributable to increased
shipment of Powerphase 100(R)systems.

Consolidated gross profit margin for fiscal year 2002 was 9.9 percent
compared to 10.5 and 18.5 percent for the comparable fiscal years ended March 31, 2001 and
March 31, 2000, respectively. Gross profit on contract services was 31.5 percent this
fiscal year compared to 15.4 and 23.7 percent for fiscal year 2001 and fiscal year 2000,
respectively. The improvement in contract services margins for the current year versus
fiscal years 2001 and 2000 is attributable to reduced levels of cost overruns on
development programs and improved pricing. The decline in contract services margins in
fiscal year 2001 versus fiscal year 2000 is attributable to cost overruns on certain
programs in fiscal year 2001. Gross profit margins on product sales this fiscal year were
6.3 percent compared to 10.0 and 18.0 percent in fiscal year 2001 and fiscal year 2000,
respectively. The decrease in margins on product sales for this year versus fiscal year
2001 and fiscal year 2000, is attributable to proportionally increased inventory
impairment charges, decreased overhead absorption due to declining revenue levels and
unfavorable product mix. The decrease in margins for fiscal year 2001 versus fiscal year
2000, is attributable to increased inventory impairment charges and unfavorable product
mix in fiscal year 2001.

Research and development expenditures for the fiscal year ended March
31, 2002 declined to $98,940 compared to $103,231 and $378,954 for the fiscal years ended
March 31, 2001 and 2000, respectively. The decrease in this year versus fiscal year 2001
and 2000 is generally attributable to lower levels of internally-funded development
activities and cost-share type contracts.

General and administrative expense for the year was $3,729,064 compared
to $3,786,669 and $3,613,335 for fiscal years ended March 31, 2001 and 2000, respectively.
The decrease in general and administrative expenses for fiscal year 2002 versus fiscal
year 2001 is attributable to professional fees associated with acquisition activities in
fiscal year 2001. The increase for fiscal year 2001 versus fiscal year 2000 is due to
higher levels of marketing expenditures and professional fees associated with acquisition
activities in fiscal year 2001.

Write-down of investments and other assets in fiscal year 2001 of
$291,818 is attributable to the retirement of obsolete electronic equipment and the
impairment write-down of the Company's investment in Aeromax Corporation. Write-down
of investments and other assets for the year ended March 31, 2000 represents write-downs
of the Company's investments in EV Global, Unique Mobility Europa, Taiwan UQM
Electric Company and a note receivable from Windemere Eco Development("WED"),
all of which did not meet the Company's expectation of near term profitable
operations.

Write-down of goodwill for fiscal year 2002 of $4,348,633 is
attributable to the Company's assessment that the fair value of its electronic
products segment exceeded its recorded value at March 31, 2002. The Company's
electronics products segment is a contract manufacturer of electronic assemblies and wire
harness assemblies for customers. Demand for electronic contract manufacturing services
has declined substantially over the last year due to declines in consumer and business
spending for electronic products and generally deteriorating economic conditions, and the
prospects and timing for recovery are uncertain. The Company's electronic products
segment has experienced order cancellations and delays leading to significant declines in
revenue and substantial losses during the period. As a result of the foregoing factors and
the application of the impairment test described in Note 1, the Company determined that
goodwill associated with the purchase of its electronic products segment was impaired.
Based on management assessment of the fair value of the net assets, in the fourth quarter
the Company recorded a charge of $4,348,633 to impair all of the unamortized goodwill
arising from the purchase of its electronic products segment.

Interest income rose to $64,067 for the year compared to $59,588 and
$55,064 in fiscal years ended March 31, 2001 and 2000, respectively. The increase is
generally attributable to higher levels of invested cash.

Interest expense increased to $372,084 for the year ended March 31,
2002 compared to $298,690 and $308,218 for the years ended March 31, 2001 and 2000,
respectively. The increase in fiscal year 2002 versus fiscal year 2001 is attributable to
higher interest rates on borrowings throughout fiscal year 2002 on the Company's
lines-of-credit. The decrease in fiscal year 2001 versus fiscal year 2000 is attributable
to the effect of lower interest rates, lower levels of term debt, partially offset by
higher borrowing levels on the Company's linesof-credit.

Equity in loss of joint ventures for fiscal year 2000 of $280,170
reflects the Company's recognition of its pro-rata share of the losses of Taiwan UQM,
EV Global, Europa, and WED through the second quarter of fiscal year 2000 at which time
the Company wrote off its investment in these entities and ceased recording its pro-rata
shares of their operating losses.

Gain on sale of real estate was $379,997 in fiscal year 2002 compared
to $19,286 and nil in fiscal year 2001 and 2000, respectively. The gain was generated from
the sale of the Company's Golden facility in fiscal year 2001 by a partnership of
which the Company held a 50 percent ownership stake and was deferred at the time of sale.
The deferred gain is being recognized on a pro-rata basis over the remaining term of the
Company's lease on the facility which expires in September, 2002.



Results of Discontinued Operations

In October, 2001 the Company announced its intention to exit its
non-core contract gear manufacturing business. As a result, during the quarter ended
September 30, 2001, the Company recorded a charge of $1,676,450 for the estimated loss on
disposal of the gear division, which includes a provision of $663,792 for expected
operating losses during the phase-out period. Additionally, the Company reclassified
operating results of the gear division to loss from operations of discontinued gear
division, and reclassified all capital equipment and associated term debt as current under
the following balance sheet captions: equipment of discontinued operations held for sale,
net and term debt and accrued future losses of discontinued operations, respectively. Loss
from operations of the discontinued gear division for the fiscal year ended March 31, 2002
was $644,650, or $0.04 per common share compared to a loss of $1,097,584, or $0.06 per
common share and $967,297 or $0.06 per common share for the fiscal years ended March 31,
2001 and 2000, respectively. Loss on disposal of gear division for the fiscal year ended
March 31, 2002 was $1,676,450 or $0.09 per common share representing estimated losses on
the disposition of assets of the discontinued gear division.



Liquidity and Capital Resources

The Company's cash balances and liquidity throughout the fiscal
year ended March 31, 2002 were adequate to meet operating needs. For the year ended
March 31, 2002 net cash provided by operations was $1,946,936 compared to net cash
used by operations of $3,457,194 for the year ended March 31, 2001. The increase in cash
provided by operating activities is primarily attributable to lower levels of accounts
receivable and inventory. Substantially all of the cash generated from operations together
with cash proceeds from issuance of common stock upon the exercise of stock options and
cash proceeds from the extension of certain warrants which amounted to $817,749, together
with $987,497 of cash on hand was applied to the reduction of debt. Consequently, net
repayment on the Company's revolving line-of-credit totaled $1,783,000 and term debt
obligations were reduced by $849,064 during the fiscal year. For the year ended March 31,
2001 net cash used by operations was $3,457,194 representing a net loss of $2,042,538, the
application of cash to fund higher levels of inventories and accounts receivable which
increased $1,189,274 and $3,585,540, respectively, and was partially offset by higher
levels of accounts payable and other accrued liabilities. Capital expenditures last fiscal
year were $2,151,041. Cash used by operations and cash used for capital expenditures last
fiscal year were funded from cash proceeds received from the sale of real estate, net of
distributions to a minority interest, of $1,752,365, cash proceeds from the issuance of
common stock of $1,121,274 and cash proceeds from borrowings, net of repayments, which
amounted to $3,986,158. Cash used by operations for the fiscal year ended March 31, 2000
was $1,488,485 representing a net loss of $5,504,510, higher levels of accounts receivable
and inventory and a reduction in the level of accounts payable and other current
liabilities. Substantially all of the cash used by operations together with capital
expenditures and the reduction in debt was funded using proceeds from the sale of common
stock and the exercise of warrants and stock options which amounted to $5,405,395.

UQM Power Products has a line-of-credit facility with a commercial bank
in the amount of $400,000 which is scheduled for renewal in July, 2002. At March 31, 2002
no amount was drawn against this facility. All financing of UQM Power has been
unconditionally guaranteed by UQM Technologies as the parent entity.

UQM Electronics has a line-of-credit with a commercial bank in the
amount of $4.0 million expiring in May, 2002. In April 2002, subsequent to the end of the
fiscal year, the Company completed a secondary offering of 1,160,095 shares of its common
stock and two year warrants to purchase an additional 232,019 shares of common stock at an
exercise price of $5.73 per common share to institutional and other investors in Europe
and the United States. The transaction was priced based on the average closing price of
the common stock on the American Stock Exchange for the five trading days immediately
preceding the transaction date. Net cash proceeds to the Company were $4,433,114, a
portion of which was applied to the reduction of term debt and the repayment of the
borrowings under the Company's $4.0 million line-of-credit. The Company's did
not renew its $4.0 million line-of-credit at its expiration date and does not currently
plan to replace this facility with a similar facility.

The Company believes that its existing cash balances and bank
line-of-credit will be sufficient to meet its operating capital requirements for the
foreseeable future, exclusive of acquisition financing requirements. Some of the Company's
significant customers have experienced downturns in their businesses as a result of
deteriorating general economic conditions and other factors. To the extent these customers
experience financial difficulties sufficient to impair their ability to honor their
financial commitments the Company could experience a material adverse change in its
financial condition, results of operations and liquidity.

The Company is actively considering possible future acquisitions at any
given time and from time to time enters into non-binding letters of intent with respect to
possible acquisitions. The Company expects to continue its strategy of growing its
business through expanding its product line of permanent magnet motors and controllers,
securing production orders from new and existing customers, designing and introducing new
products for manufacture, seeking strategic alliances to accelerate the commercialization
of its technology and pursuing synergistic and accretive acquisitions. The Company expects
to finance its future growth from existing cash resources, cash flow from operations, 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 will modify its
strategy to align its operations with its then available financial resources.



Critical Accounting Policies

Accounts Receivable

The Company's trade accounts receivable are subject to credit
risks associated with the financial condition of its customers and their liquidity. The
Company evaluates all customers periodically to assess their financial condition and
liquidity and sets appropriate credit limits based on this analysis. As a result, the collectibility of accounts receivable may change due to changing general economic
conditions and factors associated with each customers particular business. The Company has
established a reserve for potentially uncollectible trade accounts receivable which is
management's best estimate of the amount of trade accounts receivable that it
believes may become uncollectible at a future date due to the foregoing factors. At March
31, 2002 the Company has recorded reserves for uncollectible trade accounts receivable of
$33,054. It is reasonably possible, that future events or changes in circumstances could
cause the realizable value of the Company's trade accounts receivable to decline
materially, resulting in additional material losses.



Inventories

The Company maintains raw material inventories of electronic
components, motor parts and other materials to meet its expected manufacturing needs for
proprietary products and for products manufactured to the design specifications of its
customers. Some of these components may become obsolete, unuseable due to design changes,
or become unuseable in the manufacturing activities of the Company due to customers
inability to honor their obligation to purchase from the Company. Accordingly, the Company
periodically assesses its raw material inventory for potential impairment of value based
on then available information, expectations and estimates and establishes impairment
reserves for estimates declines in the realizable value of its inventories. The actual
realizable value of the Company's inventories may differ materially from these
estimates based on future occurrences and any resulting change in the Company's
estimates. At March 31, 2002 the Company has recorded inventory reserves of $554,998. It
is reasonably possible, that future events or changes in circumstances could cause the
realizable value of the Company's inventories to decline materially, resulting in
additional material impairment losses.



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

The Company recognizes revenue on the development projects funded by
its customers using the percentage-of-completion method. Under this method, contract
services revenue is based on the percentage that costs incurred to date bear to
management's best estimate of the total costs to be incurred to complete the project.
Many of these contracts involve the application of the Company's technology to
customers products and other applications to demanding specifications. Accordingly,
management's best estimates could be adversely impacted by unexpected technical
challenges requiring additional analysis and redesign, failure of electronic components to
operate in accordance with manufacturers published performance specifications, unexpected
prototype failures requiring the purchase of additional parts and a variety of other
factors that could cause unforseen delays and additional costs. Accordingly, it is
reasonably possible that total costs to be incurred on any of the projects in process at
March 31, 2002 could be materially different from management's estimates, and any
modification of management's estimate of total project costs to be incurred could
result in material changes in the profitability of affected projects or result in material
losses and affected projects.



Discontinued Operations; Assets Held for Sale

Discontinued Operations include management's best estimate of the
amount to be realized on the sale of its contract gear manufacturing divisions assets,
consisting primarily of manufacturing equipment, which have been estimated based on an
independent appraisal. Management has also estimated the future losses of the gear
division based on performance expectations during the winding down of manufacturing
operations. Management's best estimate of the realizable sales value of the
Company's gear manufacturing equipment could be adversely impacted by changes in
economic conditions, changing valuations in the resale market for gear manufacturing
equipment and a variety of other factors and future occurrences. Management's best
estimate of the future losses during the winding down of gear manufacturing operations
could be adversely impacted by labor disruptions, employee resignations, lower than
expected labor productivity, customer order cancellations and a variety of other factors
and future occurrences. Accordingly, the amount the Company will ultimately receive from
the sale of these assets, and the level of losses incurred during the winding down of gear
operations, could differ materially from the amounts estimated.



New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated or completed after June 30, 2001. SFAS No. 141 also specifies
criteria that intangible assets acquired in a purchase method business combination must
meet to be recognized and reported apart from goodwill. The adoption of SFAS 141 will not
have an effect on the Company's consolidated financial statements. SFAS No. 142 requires
that, beginning on the first day of the Company's next fiscal year, goodwill no
longer be amortized for any intangible assets determined to have an indefinite useful life
and acquired in a business combination accounted for under the purchase method and
completed prior to June 30, 2001. In addition, the Company will be required to assign
goodwill to specific reporting units and then test it for impairment at least annually
under a two step approach designed to compare the carrying value of each reporting unit to
the fair value of the reporting unit. Upon implementation, the Company will be required to
reassess its intangible assets, including goodwill recorded in connection with earlier
acquisitions accounted for under the purchase method, including their useful lives. The
Company plans to adopt SFAS No. 142 on April 1, 2002 and expects that the adoption of SFAS
No. 142 will not have a material impact on its financial condition and results of
operations.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which is effective for fiscal years beginning after June 15, 2002.
SFAS 143 requires that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of fair value
can be made. The Company intends to adopt SFAS No. 143 on April 1, 2002 and expects that
the adoption of SFAS No. 143 will not have a material impact on its financial condition or
results of operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 establishes one accounting model to be used for
long-lived assets to be disposed of by sale and broadens the presentation of discontinued
operations to include more disposal transactions. The Company plans to adopt SFAS No. 144
on April 1, 2002 and expects that the adoption of SFAS 144 will not have a material impact
on its financial condition and reports of operations.



Quantitative and Qualitative Disclosures about Market Risk

Market risk is the potential loss arising from adverse changes in
market rates and prices, such as foreign currency exchange and interest rates. The Company
does not use financial instruments to any degree to manage these risks and does not hold
or issue financial instruments for trading purposes. Subsequently, all of the Company's
product sales, and related receivables are payable in U.S. dollars. The Company is subject
to interest rate risk on its debt obligations. Long-term debt obligations have fixed
interest rates and the Company's lines-of-credit have variable rates of interest indexed
to the prime rate. Interest rates on these instruments approximate current market rates as
of March 31, 2002. A one percent change in the prime interest rate would
increase or decrease interest expense by $22,540 on an annual basis on outstanding
borrowings at March 31, 2002 on debt with adjustable interest rate provisions.



ITEM 8



> Independent Auditors'
>   Report

The Board of Directors
UQM Technologies, Inc.:



We have audited the accompanying consolidated balance sheets of UQM
Technologies, Inc. (formerly Unique Mobility, Inc.) and subsidiaries (Company) as of March
31, 2002 and 2001, and the related consolidated statements of operations,
stockholders' equity and comprehensive income (loss), and cash flows for each of the
years in the three-year period ended March 31, 2002. These consolidated financial
statements are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

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

In our opinion, based on our audits, the consolidated financial
statements referred to above present fairly, in all material respects, the financial
position of UQM Technologies, Inc. and subsidiaries as of March 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the years in the three-year
period ended March 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.



KPMG LLP



Denver, Colorado

May 17, 2002





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets





|                                              | March
    31, | March
    31,
|--------------------------------------------- | ------------- | -------------
|Assets                                        | 2002          | 2001         
|                                              |               |              
|Current assets:                               |               |              
|Cash and
    cash equivalents                 | $ 1,411,509   | 2,399,006    
|Accounts
    receivable (notes 15 and 22)     | 2,662,554     | 3,899,041    
|Costs and
    estimated earnings in excess    |               |              
|of
    billings on uncompleted contracts      |               |              
|(note
    2)                                  | 442,213       | 572,009      
|Inventories
    (notes 3 and 22)              | 4,636,312     | 6,656,236    
|Prepaid
    expenses                          | 220,528       | 184,405      
|Equipment
    of discontinued operations      |               |              
|held
    for sale, net (note 16)              | 1,253,432     | -            
|Other                                         | 130,934       | 52,065       
|                                              |               |              
|Total
    current assets                      | 10,757,482    | 13,762,762   
|                                              |               |              
|Property and equipment, at
    cost:          |               |              
|Land
    (notes 4 and 10)                     | 181,580       | 181,580      
|Building
    (notes 4 and 10)                 | 1,247,265     | 1,240,435    
|Machinery
    and equipment (notes 8 and 10)  | 8,622,471     | 12,433,475   
|                                              | 10,051,316    | 13,855,490   
|Less
    accumulated depreciation             | (5,482,194)   | (6,577,035)  
|                                              |               |              
|Net
    property and equipment                | 4,569,122     | 7,278,455    
|                                              |               |              
|Patent and trademark costs,
    net of        |               |              
|accumulated
    amortization of $219,084      |               |              
|and $170,204                                  | 757,059       | 731,707      
|                                              |               |              
|Goodwill, net of
    accumulated amortization |               |              
|of $989,362 at
    March 31, 2001 (note 8)    | -             | 5,662,797    
|                                              |               |              
|Other assets                                  | 45,872        | 45,872       
|                                              |               |              
|                                              |               |              
|                                              |               |              
|                                              |               |              
|                                              |               |              
|                                              |               |              
|                                              |               |              
|                                              | $ 16,129,535  | 27,481,593   





See accompanying notes to consolidated financial statements.

(Continued)





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets, Continued





|                                                | March
    31, | March
    31,
|----------------------------------------------- | ------------- | -------------
|Liabilities and
    Stockholders' Equity        | 2002          | 2001         
|                                                |               |              
|Current liabilities:                            |               |              
|Accounts
    payable                            | $ 2,693,312   | 2,777,737    
|Other
    current liabilities (notes 9          |               |              
|and
    22)                                     | 568,554       | 1,031,028    
|Current
    portion of deferred gain on         |               |              
|sale
    of real estate (note 4)                | 322,139       | 115,713      
|Current
    portion of long-term                |               |              
|debt
    (note 10)                              | 562,043       | 865,685      
|Term debt
    and accrued future losses of      |               |              
|discontinued
    operations (notes 10and 16)    | 789,960       | -            
|Revolving
    line-of-credit (note 10)          | 2,254,000     | 4,037,000    
|Billings
    in excess of costs and             |               |              
|estimated
    earnings on uncompleted           |               |              
|contracts
    (note 2)                          | 382,739       | 197,819      
|                                                |               |              
|Total
    current liabilities                   | 7,572,747     | 9,024,982    
|                                                |               |              
|Deferred gain on sale of
    real               |               |              
|estate (note 4)                                 | -             | 636,423      
|                                                |               |              
|Long-term debt, less
    current portion        |               |              
|(note 10)                                       | 1,108,023     | 2,606,075    
|                                                |               |              
|Total
    liabilities                           | 8,680,770     | 12,267,480   
|                                                |               |              
|Stockholders' equity
    (notes 12, 13 and 23): |               |              
|Common
    stock, $.01 par value, 50,000,000    |               |              
|shares
    authorized; 17,679,848 and           |               |              
|17,423,358
    shares issued                    | 176,798       | 174,233      
|Additional
    paid-in capital                  | 51,444,359    | 50,626,120   
|Accumulated
    deficit                         | (43,757,378)  | (35,164,723) 
|Accumulated
    other comprehensive income      | (384,300)     | (384,300)    
|Note
    receivable from officer                | (30,714)      | (37,217)     
|                                                |               |              
|Total
    stockholders' equity                  | 7,448,765     | 15,214,113   
|                                                |               |              
|Commitments (notes 10, 18,
    and 20)          |               |              
|                                                |               |              
|                                                | $ 16,129,535  | 27,481,593   





See accompanying notes to consolidated financial statements.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations







|                                                                     | Year
    Ended | Year
    Ended | Year
    Ended
|-------------------------------------------------------------------- | -------------- | -------------- | --------------
|                                                                     | March
    31,  | March
    31,  | March
    31, 
|                                                                     | 2002           | 2001           | 2000          
|Revenue:                                                             |                |                |               
|Contract
    services                                                | $ 2,999,342    | 2,283,292      | 1,702,937     
|Product
    sales                                                    | 18,395,898     | 23,011,358     | 17,096,963    
|                                                                     | 21,395,240     | 25,294,650     | 18,799,900    
|                                                                     |                |                |               
|Operating costs and
    expenses:                                    |                |                |               
|Costs of
    contract services                                       | 2,053,745      | 1,930,601      | 1,300,052     
|Costs of
    product sales                                           | 17,231,561     | 20,717,392     | 14,025,122    
|Research
    and development                                         | 98,940         | 103,231        | 378,954       
|General
    and administrative                                       | 3,729,064      | 3,786,669      | 3,613,335     
|Amortization
    of goodwill                                         | 270,348        | 270,348        | 270,061       
|Write-down
    of investments and other assets(notes 5, 6, 7, and 8) | -              | 291,818        | 4,104,628     
|Write-down
    of goodwill (note 8)                                  | 4,348,633      | -              | -             
|                                                                     | 27,732,291     | 27,100,059     | 23,692,152    
|                                                                     |                |                |               
|Loss
    from continuing operationsbefore other income (expense)     | (6,337,051)    | (1,805,409)    | (4,892,252)   
|                                                                     |                |                |               
|Other income (expense):                                              |                |                |               
|Interest
    income                                                  | 64,067         | 59,588         | 55,064        
|Interest
    expense                                                 | (372,084)      | (298,690)      | (308,218)     
|Equity in
    loss of joint ventures                                 | -              | -              | (280,170)     
|Minority
    interest share of earnings                              |                |                |               
|of
    consolidated subsidiary                                       | -              | (65,426)       | (80,823)      
|Gain on
    sale of real estate                                      | 379,997        | 19,286         | -             
|Other                                                                | (6,484)        | 48,113         | 1,889         
|                                                                     | 65,496         | (237,129)      | (612,258)     
|                                                                     |                |                |               
|Loss
    from continuing operations                                  | (6,271,555)    | (2,042,538)    | (5,504,510)   
|                                                                     |                |                |               
|Discontinued operations
    (note 16):                               |                |                |               
|Loss from
    operations of discontinued geardivision                | (644,650)      | (1,097,584)    | (967,297)     
|Loss on
    disposal of gear division including                      |                |                |               
|provision
    of $663,792 for phase-out period                       | (1,676,450)    | -              | -             
|                                                                     | (2,321,100)    | (1,097,584)    | (967,297)     
|                                                                     |                |                |               
|Net
    loss                                                         | $ (8,592,655)  | (3,140,122)    | (6,471,807)   
|                                                                     |                |                |               
|Net
    loss per common share -                                      |                |                |               
|basic
    and diluted (note 1o)                                      |                |                |               
|Continuing
    operations                                            | $ (.36)        | (.12)          | (.33)         
|Discontinued
    operations                                          | (.13)          | (.06)          | (.06)         
|                                                                     | $ (.49)        | (.18)          | (.39)         
|                                                                     |                |                |               
|Weighted average number of
    shares                                |                |                |               
|of common stock
    outstanding                                      | 17,548,130     | 17,314,891     | 16,573,391    





See accompanying notes to consolidated financial statements.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

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





|                                                                                           | Number of  |           |            |              | Accumulated   | Notes      |           |              
|------------------------------------------------------------------------------------------ | ---------- | --------- | ---------- | ------------ | ------------- | ---------- | --------- | -------------
|                                                                                           | common     |           | Additional | Accumu-      | other         | receivable |           | Total        
|                                                                                           | shares     | Common    | paid-in    | lated        | comprehensive | due from   | Treasury  | stockholders'
|                                                                                           | issued     | stock     | capital    | deficit      | loss          | officers   | stock     | equity       
|                                                                                           |            |           |            |              |               |            |           |              
|                                                                                           |            |           |            |              |               |            |           |              
|Balances at March 31,
    1999                                                             | 16,222,932 | $162,230  | 43,412,390 | (25,552,794) | (451,639)     | (454,063)  | -         | 17,116,124   
|                                                                                           |            |           |            |              |               |            |           |              
|Issuance of common stock in
    private offerings, net of offering costs of $11,235        | 88,900     | 889       | 487,939    | -            | -             | -          | -         | 488,828      
|Issuance of common stock
    upon exercise of employee, directors and consultant options   | 204,970    | 2,050     | 774,671    | -            | -             | -          | (3,062)   | 773,659      
|Proceeds from extension of
    warrants                                                    | -          | -         | 78,151     | -            | -             | -          | -         | 78,151       
|                                                                                           |            |           |            |              |               |            |           |              
|Issuance of common stock
    upon exercise of warrants                                     | 493,087    | 4,931     | 3,693,577  | -            | -             | -          | -         | 3,698,508    
|Issuance of common stock
    under employee stock purchase plan                            | 9,072      | 91        | 33,730     | -            | -             | -          | -         | 33,821       
|Compensation expense
    accrued for issuance of common stock options granted for services | -          | -         | 46,368     | -            | -             | -          | -         | 46,368       
|Issuance of common stock
    for investment in Germany joint venture                       | 208,333    | 2,083     | 1,147,811  | -            | -             | -          | -         | 1,149,894    
|Adjustment in purchase
    price of UQM Electronics and UQM Power Products                 | -          | -         | -          | -            | -             | -          | (167,395) | (167,395)    
|Comprehensive income
    (loss):                                                           |            |           |            |              |               |            |           |              
|Net loss                                                                                   | -          | -         | -          | (6,471,807)  | -             | -          | -         | (6,471,807)  
|Translation
         adjustment                                                            | -          | -         | -          | -            | 67,339        | -          | -         | 67,339       
|Total comprehensive income
    (loss)                                                      | -          | -         | -          | (6,471,807)  | 67,339        | -          | -         | (6,404,468)  
|                                                                                           |            |           |            |              |               |            |           |              
|Retirement of treasury
    shares                                                          | (33,102)   | (332)     | (291,760)  | -            | -             | -          | 292,092   | -            
|                                                                                           |            |           |            |              |               |            |           |              
|Repayment of officers'
    notes                                                           | -          | -         | -          | -            | -             | 454,063    | (121,635) | 332,428      
|                                                                                           |            |           |            |              |               |            |           |              
|Balances at March 31,
    2000                                                             | 17,194,192 | 171,942   | 49,382,877 | (32,024,601) | (384,300)     | -          | -         | 17,145,918   
|                                                                                           |            |           |            |              |               |            |           |              
|Issuance of common stock
    upon exercise of employee, directors and consultant options   | 212,408    | $   2,124 | 1,094,961  | -            | -             | (38,500)   | (63,864)  | 994,721      
|Issuance of common stock
    upon exercise of warrants                                     | 12,000     | 120       | 95,880     | -            | -             | -          | -         | 96,000       
|Issuance of common stock
    under employee stock purchase plan                            | 6,774      | 68        | 29,202     | -            | -             | -          | -         | 29,270       
|Issuance of common stock
    for services                                                  | 5,967      | 59        | 44,944     | -            | -             | -          | -         | 45,003       
|Compensation expense
    accrued for issuance of common stock options granted for services | -          | -         | 42,040     | -            | -             | -          | -         | 42,040       
|Comprehensive income
    (loss):                                                           |            |           |            |              |               |            |           |              
|Net loss                                                                                   | -          | -         | -          | (3,140,122)  | -             | -          | -         | (3,140,122)  
|Translation
         adjustment                                                            | -          | -         | -          | -            | -             | -          | -         | -            
|Total comprehensive income
    (loss)                                                      | -          | -         | -          | (3,140,122)  | -             | -          | -         | (3,140,122)  
|                                                                                           |            |           |            |              |               |            |           |              
|Retirement of treasury
    shares                                                          | (7,983)    | (80)      | (63,784)   | -            | -             | -          | 63,864    | -            
|                                                                                           |            |           |            |              |               |            |           |              
|Repayment of officers'
    notes                                                           | -          | -         | -          | -            | -             | 1,283      | -         | 1,283        
|                                                                                           |            |           |            |              |               |            |           |              
|Balances at March 31,
    2001                                                             | 17,423,358 | $ 174,233 | 50,626,120 | (35,164,723) | (384,300)     | (37,217)   | -         | 15,214,113   





See accompanying notes to consolidated financial statements

(Continued)











UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

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





|                                                                                           | Number of  |          |            |              | Accumulated   | Notes      |           |              
|------------------------------------------------------------------------------------------ | ---------- | -------- | ---------- | ------------ | ------------- | ---------- | --------- | -------------
|                                                                                           | common     |          | Additional | Accumu-      | other         | receivable |           | Total        
|                                                                                           | shares     | Common   | paid-in    | lated        | comprehensive | due from   | Treasury  | stockholders'
|                                                                                           | issued     | stock    | capital    | deficit      | loss          | officers   | stock     | equity       
|                                                                                           |            |          |            |              |               |            |           |              
|Issuance of common stock
    upon exercise of employee, directors and consultants options  | 301,541    | $  3,015 | 998,042    | -            | -             | -          | (337,696) | 663,361      
|Proceeds from extension of
    warrants                                                    | -          | -        | 105,007    | -            | -             | -          | -         | 105,007      
|Issuance of common stock
    under employee stock purchase plan                            | 10,799     | 108      | 42,770     | -            | -             | -          | -         | 42,878       
|Compensation expense accrued
    for issuance of common stock options granted for services | -          | -        | 9,558      | -            | -             | -          | -         | 9,558        
|Comprehensive income (loss):                                                               |            |          |            |              |               |            |           |              
|Net loss                                                                                   | -          | -        | -          | (8,592,655)  | -             | -          | -         | (8,592,655)  
|Translation
         adjustment                                                            | -          | -        | -          | -            | -             | -          | -         | -            
|Total comprehensive income
    (loss)                                                      | -          | -        | -          | (8,592,655)  | -             | -          | -         | (8,592,655)  
|                                                                                           |            |          |            |              |               |            |           |              
|Retirement of treasury
    shares                                                          | (55,850)   | (558)    | (337,138)  | -            | -             | -          | 337,696   | -            
|                                                                                           |            |          |            |              |               |            |           |              
|Repayment of officers' notes                                                               | -          | -        | -          | -            | -             | 6,503      | -         | 6,503        
|                                                                                           |            |          |            |              |               |            |           |              
|Balances at March 31,
    2002                                                             | 17,679,848 | $176,798 | 51,444,359 | (43,757,378) | (384,300)     | (30,714)   | -         | 7,448,765    





See accompanying notes to consolidated financial statements.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

|                                                                        | Year Ended    | Year Ended  | Year Ended 
|----------------------------------------------------------------------- | ------------- | ----------- | -----------
|                                                                        | March 31,     | March 31,   | March 31,  
|                                                                        | 2002          | 2001        | 2000       
|                                                                        |               |             |            
|Cash flows provided (used)
    by operating activities:                 |               |             |            
|Loss from
    continuing operations                                     | $ (6,271,555) | (2,042,538) | (5,504,510)
|Adjustments
    to reconcile net loss to net cash                       |               |             |            
|provided
    (used) by operating activities:                            |               |             |            
|Depreciation
    and amortization                                       | 1,605,916     | 1,439,339   | 1,223,827  
|Gain
    on sale of real estate by consolidated                         |               |             |            
|subsidiary,
    net of minority interest                                | (50,000)      | (771,421)   | -          
|Deferred
    gain on sale of real estate                                | (379,997)     | 752,136     | -          
|Write-down
    of investments and other assets                          | -             | 291,818     | 4,104,628  
|Write-down
    of goodwill                                              | 4,348,633     | -           | -          
|Minority
    interest share of earnings of                              |               |             |            
|consolidated
    subsidiary                                             | -             | 65,426      | 80,823     
|Non-cash
    compensation expense for common                            |               |             |            
|stock,
    stock options and warrants issued
              for services | 9,558         | 87,043      | 46,368     
|Equity
    in loss of joint ventures                                    | -             | -           | 280,170    
|Loss
    (gain) on sale of property and
              equipment         | 6,493         | 2,917       | (1,875)    
|Other                                                                   | 2,443         | (5,426)     | (16,241)   
|Change
    in operating assets and liabilities:                         |               |             |            
|Accounts
    receivable and costs and                                   |               |             |            
|estimated
    earnings in excess of                                     |               |             |            
|billings
    on uncompleted contracts                                   | 1,182,259     | (1,189,274) | (358,868)  
|Inventories                                                             | 1,979,503     | (3,585,540) | (461,699)  
|Prepaid
    expenses and other current
                 assets          | (129,632)     | (54,926)    | (56,167)   
|Accounts
    payable and other current
                 liabilities     | (541,604)     | 1,434,932   | (835,047)  
|Billings
    in excess of costs and                                     |               |             |            
|estimated
    earnings on uncompleted
                 contracts        | 184,919       | 118,320     | 10,106     
|Net
    cash provided (used) by                                         |               |             |            
|operating
    Activities                                                | 1,946,936     | (3,457,194) | (1,488,485)
|                                                                        |               |             |            
|Cash flows used by
    investing activities:                            |               |             |            
|Acquisition
    of property and equipment                               | (513,973)     | (2,151,041) | (433,155)  
|Increase
    in patent and trademark costs                              | (74,232)      | (45,551)    | (79,296)   
|Proceeds
    from sale of property and equipment                        | -             | 7,000       | 63,327     
|Proceeds
    from sale of real estate by subsidiary,
         net       | -             | 2,961,158   | -          
|Distribution
    to minority interest on liquidation                    |               |             |            
|of consolidated subsidiary                                              | -             | (1,208,793) | -          
|Investment
    in other long-term assets                                | -             | (75,000)    | (515,708)  
|Proceeds
    from sale of Germany joint venture                         | -             | 400,000     | -          
|Net
    cash used by investing
                    
    activities      | (588,205)     | (112,227)   | (964,832)  
|                                                                        |               |             |            
|Cash flows provided (used)
    by financing activities:                 |               |             |            
|Borrowings
    (repayment) on revolving
         line-of-credit, net    | (1,783,000)   | 4,037,000   | (1,100,000)
|Proceeds
    from borrowings                                            | -             | 700,000     | 46,328     
|Repayment
    of debt                                                   | (849,064)     | (750,842)   | (768,542)  
|Repayment
    of mortgage on sale of real estate by                     |               |             |            
|Subsidiary                                                              | -             | (581,400)   | -          
|Proceeds
    from sale of common stock, net                             | -             | -           | 488,828    
|Issuance
    of common stock upon exercise of                           |               |             |            
|employee
    options, net of note repayments                            | 669,864       | 996,004     | 1,106,087  
|Issuance
    of common stock under employee stock                       |               |             |            
|purchase
    Plan                                                       | 42,878        | 29,270      | 33,821     
|Issuance
    of common stock upon exercise of
         warrants         | -             | 96,000      | 3,776,659  
|Proceeds
    from extension of warrants                                 | 105,007       | -           | -          
|Distributions
    paid to holders of minority
         interest         | -             | (56,121)    | (67,348)   
|Net
    cash provided (used) by                                         |               |             |            
|financing
    Activities                                                | (1,814,315)   | 4,469,911   | 3,515,833  
|                                                                        |               |             |            



See accompanying notes to consolidated financial statements.

(Continued)





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued



|                                                     | Year Ended  | Year Ended | Year Ended
|---------------------------------------------------- | ----------- | ---------- | ----------
|                                                     | March 31,   | March 31,  | March 31, 
|                                                     | 2002        | 2001       | 2000      
|                                                     |             |            |           
|Cash provided (used) by
    continuing operations    | (455,584)   | 900,490    | 1,062,516 
|                                                     |             |            |           
|Net cash used in
    discontinued operations         | (531,913)   | (586,599)  | (514,854) 
|                                                     |             |            |           
|Increase (decrease) in cash
    and cash equivalents | (987,497)   | 313,891    | 547,662   
|                                                     |             |            |           
|Cash and cash equivalents
    at beginning of period | 2,399,006   | 2,085,115  | 1,537,453 
|                                                     |             |            |           
|Cash and cash equivalents
    at end of period       | $ 1,411,509 | 2,399,006  | 2,085,115 
|                                                     |             |            |           
|Interest paid in cash
    during the period          | $ 389,099   | 429,764    | 488,601   



Non-cash investing and financing transactions:

Translation adjustment of $(67,339) was recorded for the year ended
  March 31, 2000.

In February 2000, the Company accepted 10,675 shares of its $0.01 par
  value common stock with a fair market value of $90,742 in satisfaction of purchase price
  adjustments arising subsequent to the acquisition of UQM Electronics in accordance with
  the provisions of the Purchase Agreement.

In March 2000, the Company accepted 7,762 shares of its $0.01 per share
  common stock with a fair market value of $76,653 in satisfaction of purchase price
  adjustments arising subsequent to the acquisition of UQM Power Products in accordance with
  the provisions of the Purchase Agreement.

In accordance with the provisions of the Company's stock option
  plans, the Company accepts as payment of the exercise price or as repayment of promissory
  notes from officers issued under the option plans, mature shares of the Company's
  common stock held by the option holder for a period of six months prior to the date of the
  option exercise or promissory note repayment. For the years ended
  March 31, 2002, 2001 and 2000, the Company issued 110,059, 20,045 and 5,000
  shares of common stock for an aggregate exercise price of $337,696, $63,864 and $3,750,
  respectively, for which the Company received 55,850, 7,983 and 355 shares of common stock
  as payment for the exercise price.

In accordance with the provisions of the Company's stock option
  plans, the Company accepts 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, 2001, the Company issued 11,000 shares of common stock for an
  aggregate exercise price of $38,500 for which the Company received promissory notes for
  the same amount. For the year ended March 31, 2000, the Company received 14,310 shares of
  common stock with a fair market value of $121,635 in repayment of promissory notes issued
  under the option plans. The shares received were recorded at cost as treasury stock and
  subsequently retired.

See accompanying notes to consolidated financial statements.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements



(1) Summary of Significant Accounting Policies

(a) Description of Business

UQM Technologies, Inc., formerly Unique Mobility, Inc. and
      subsidiaries (the "Company") is engaged in the research, development and
      commercialization of permanent magnet electric motors and the electronic controls for such
      motors, the grinding and manufacturing of high precision gears (which were discontinued
      during the fiscal year ended March 31, 2002. See also note 16 below) and the manufacture
      and sale of electronic printed 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.



(b) Principles of Consolidation

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

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

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



(c) Cash and Cash Equivalents

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



(d) Inventories

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

> 

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





(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.



(f) 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.



(g) 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.



(h) Impairment of Long-Lived Assets

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



(i) 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.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





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

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

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



(j) Income Taxes

The Company accounts for income taxes in accordance with Statement of
      Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the
      asset and liability method of Statement 109, deferred tax assets and liabilities are
      recognized for the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities and their
      respective tax bases 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.



(k) Research and Development

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



(l) Equity Instruments Issued for Non-Employee Services

The Company periodically issues common stock or stock 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 stock option determined using an appropriate option pricing model.



(m) Foreign Currency Translation

The net assets of foreign investments of the Company
      are 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'





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







equity until realized or investments are disposed of. Gains and losses
      from foreign currency transactions are included in other income (expense).



(n) Comprehensive Income (Loss)

Comprehensive income (loss) consists of net loss and other
      comprehensive income (loss) items which under generally accepted accounting principles are
      excluded from net loss but included as a component of stockholders' equity. At March
      31, 2002 and 2001, accumulated other comprehensive loss consisted entirely of unrealized
      foreign currency losses.



(o) Loss Per Common Share

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



(p) 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.



(q) Reclassifications

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



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

At March 31, 2002, the estimated period to complete contracts in
  process ranged from 1 to 12 months, and the Company expects to collect substantially all
  related accounts receivable arising therefrom within thirteen months.





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





The following summarizes contracts in process at March 31, 2002, and
  2001:



March
    31,
    March
    31,2002
    2001Costs
    incurred on uncompletedcontracts
    $ 2,486,598
    1,974,471Estimated
    earnings
    1,025,313
    720,3333,511,911
    2,694,804Less
    billings to date
    (3,452,437
    (2,320,614)$ 59,474
    374,190Included
    in the accompanying balancesheets
    as follows:Costs
    and estimated earningsin
    excess of billings onuncompleted
    contracts
    $   442,213
    572,009Billings
    in excess of costs andestimated
    earnings onuncompleted
    contracts
    (382,739)
    (197,819)$ 59,474
    374,190






(3) Inventories



Inventories at March 31, 2002,
and 2001 consist of:





March
    31,
    March
    31,2002
    2001Raw
    materials
    $ 3,494,195
    5,159,632Work in
    process
    878,699
    352,632Finished
    products
    263,418
    1,143,972$ 4,636,312
    6,656,236








(4) Limited Liability Company

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

> 

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







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.

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



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

Since its inception, Taiwan UQM has incurred substantial operating
    losses and the Company has reported its proportionate share of such losses and foreign
    exchange rate fluctuations as a reduction in the recorded value of its investment in
    Taiwan UQM under the equity method of accounting. Because of continued operating losses at
    September 30, 1999 the Company evaluated this investment relative to its potential to
    achieve profitable operations over the near-term and the Company's potential to recover
    the recorded value of its investment. Based on its assessment of these factors and the
    uncertainty of recovering its investment, on September 30, 1999 the Company wrote down the
    carrying value of this investment from $1,476,233 to zero. Consequently, the Company
    discontinued recording its share of the net losses of the joint venture subsequent to the
    date of the write-down. Prior to the write down the Company reported its proportionate
    share of the losses of Taiwan UQM under the equity method of accounting.

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



(6) Investment in EV Global

The Company owns 400,000 shares of EV Global Motors Company (EVG)
    common stock. EVG sells electric bicycles.

In June 1999, the Company acquired an approximately 9.5 percent
    participation in a $5.225 million convertible note receivable from Windermere Eco
    Development Limited ("WED"), a Bahamian company held by EVG, 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.

> 

UNIQUE MOBILITY, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







Because of continuing operating losses reported by these investees at
    September 30, 1999 the Company evaluated its investment in EVG and WED relative to
    their potential to achieve profitable operations over the near-term and the Company's
    potential to recover the carrying value of its investment in each Company. Based on its
    assessment of these factors, on September 30, 1999 the Company wrote down the carrying
    value of EVG from $1,000,000 to zero and the carrying value of its interest in the WED
    note receivable from $515,708 to zero.



In May, 1999, the Company and three other entities formed a German
    private company, Unique Mobility Europa GmbH (Europa), to develop and manufacture a
    battery-electric cargo and passenger vehicle. Europa was initially capitalized with
    DM50,000 cash (US $9,573) and a contribution to surplus of 625,000 shares of Unique
    Mobility, Inc. common stock, of which 208,333 were newly issued shares contributed by the
    Company in exchange for 33.6 percent ownership interest in Europa.

On October 8, 1999 the Company entered into an agreement with the
    shareholder's of Europa providing for the reduction of its ownership percentage to 5.9
    percent. As a result of this agreement and the Company's assessment of the potential for
    Europa to achieve profitable operations over the near-term and the Company's potential to
    recover the carrying value of its investment, the Company wrote down the carrying value of
    its investment from $1,112,687 to zero at September 30, 1999.

During the year ended March 31, 2001 the Company transferred its
    remaining ownership interest in Europa. No gain or loss was recognized on this
    transaction.



(8) Impairment of Long-Lived Assets

During the fiscal year ended March 31, 2001 the Company recorded an
    impairment charge associated with the retirement of certain electronic manufacturing
    equipment at its Electronic Products Segment in the amount of $216,818. Also during the
    year the Company evaluated its investment in Aeromax Corporation relative to their
    potential to complete product development activities and launch commercial products,
    achieve profitable operations over the near-term and the potential for the Company to
    recover the carrying value of its investment. Based on its assessment of these factors,
    the Company wrote down the carrying value of its investment in Aeromax and associated
    trade amounts receivable from Aeromax totaling $103,583 to zero.

> 



UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







The Company's electronics products segment is a contract
    manufacturer of electronic assemblies and wire harness assemblies for customers. Demand
    for electronic contract manufacturing services has declined substantially over the last
    year due to declines in consumer and business spending for electronic products and
    generally deteriorating economic conditions, and the prospects and timing for recovery are
    uncertain. The Company's electronic products segment has experienced order
    cancellations and delays leading to significant declines in revenue and substantial losses
    during the period.

As a result of the foregoing factors and the application of the
    impairment test described in Note 1, the Company determined that goodwill associated with
    the purchase of its electronic products segment was impaired. Based on management
    assessment of the fair value of the net assets, in the fourth quarter the Company recorded
    a charge of $4,348,633 to impair all of the unamortized goodwill arising from the purchase
    of its electronic products segment.



(9) Other Current Liabilities

Other current liabilities at March 31, 2002 and 2001, consists of:





|                                                   | March
    31, | March
    31,
|-------------------------------------------------- | ------------- | -------------
|                                                   | 2002          | 2001         
|                                                   |               |              
|Accrued
    interest                               | $  24,902     | 41,917       
|Accrued
    legal and accounting fees              | 134,200       | 85,110       
|Accrued
    payroll, consulting, personal property |               |              
|taxes
    and real estate taxes                    | 316,613       | 684,296      
|Customer deposits                                  | 14,500        | 44,575       
|Accrued warranty costs                             | 35,169        | 34,275       
|Other                                              | 43,170        | 140,855      
|                                                   |               |              
|                                                   | $ 568,554     | 1,031,028    









UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





(10) Long-term debt



Long-term debt at March 31, 2002 and 2001 consists of:





|                                                 | March
    31, | March
    31,
|------------------------------------------------ | ------------- | -------------
|                                                 | 2002          | 2001         
|Note
    payable to bank, payable in monthly     |               |              
|installments
    with interest at 8.65%; matures |               |              
|July
    2003; secured by land and building      | $   550,914   | 838,357      
|Notes
    payable to bank, payable in monthly    |               |              
|installments
    with interest at 8.5%; matures  |               |              
|April,
    September, and November 2005; secured |               |              
|by
    equipment                                 | 412,592       | 906,423      
|Note
    payable to bank, payable in monthly     |               |              
|installments
    with interest at 9.50%; matures |               |              
|June
    2006; secured by equipment              | 39,080        | 46,207       
|Note
    payable to bank, payable in monthly     |               |              
|installments
    with interest at 8.125%;        |               |              
|matures
    July 2001; secured by accounts       |               |              
|receivable,
    inventory and equipment          | -             | 104,167      
|Note
    payable to bank, payable in monthly     |               |              
|installments
    with interest at 7.70%; matures |               |              
|March
    2004; secured by equipment             | 667,317       | 964,879      
|Note
    payable to bank, payable in monthly     |               |              
|installments
    with interest at 8.75%;         |               |              
|matures
    August 2004                          | 451,835       | 611,727      
|Total
    long-term debt                         | 2,121,738     | 3,471,760    
|Less:
    current portion                        | 1,013,715     | 865,685      
|Long-term
    debt, less                         |               |              
|current
    portion                              | $ 1,108,023   | 2,606,075    





Certain of the above loan agreements require the Company to
    maintain certain financial ratios as defined in the agreements. At March 31, 2002, the
    Company was in compliance with the covenants. In April, 2002 the Company paid-off two
    notes payable to one of its commercial banks with outstanding principal balances at March
    31, 2002 of $667,317 and $451,835. The Company has not reclassified these notes payable to
    current at March 31, 2002 based on its intent to reborrow similar amounts from another
    lender on comparable terms during the first quarter of fiscal 2003.

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



|2003       | $ 675,278  
|---------- | -----------
|2004       | 729,435    
|2005       | 293,895    
|2006       | 162,545    
|2007       | 89,874     
|Thereafter | 170,711    
|           |            
|           | $ 2,121,738



UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued





Lines of credit

At March 31, 2002, the Company had lines-of-credit of $.4
    million and $4.0 million. The $.4 million line-of-credit expires in July, 2002 and had no
    amount outstanding at March 31, 2002. The $4.0 million line-of-credit is due on demand,
    but if no demand is made, it is due May 15, 2002. Interest on the lines-of-credit is
    payable monthly at prime plus .75% (5.50% at March 31, 2002) and prime plus 3% (7.75% at
    March 31, 2002), respectively. 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 which changes from
    month-to-month. 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. In April, 2002 the Company extended the expiration date of the
    line-of-credit from April 15, 2002 to May 15, 2002 and subsequently paid the then
    outstanding balance of $2.2 million on the line-of-credit. The Company subsequently
    allowed the line-of-credit to expire without renewal or extension on May 15, 2002.



(11) Income Taxes

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



|                                                       | Year
    Ended | Year
    Ended | Year
    Ended
|------------------------------------------------------ | -------------- | -------------- | --------------
|                                                       | March
    31,  | March
    31,  | March
    31, 
|                                                       | 2002           | 2001           | 2000          
|                                                       |                |                |               
|Computed
    "expected" tax benefit                    | $(2,921,503)   | (1,067,641)    | (2,200,414)   
|Increase
    (decrease) in taxes                       |                |                |               
|resulting
    from:                                    |                |                |               
|Amortization
    of goodwill                           |                |                |               
|not
    deductible for tax                             | 1,570,454      | 91,820         | 107,286       
|Expiration
    of net
            operating loss (NOL) |                |                |               
|carry-forwards                                         | -              | 126,992        | 76,822        
|Increase
    in valuation                              |                |                |               
|allowance
    for net                                  |                |                |               
|deferred
    tax assets                                | 1,478,996      | 884,072        | 2,160,758     
|Other,
    net                                         | (127,947)      | (35,243)       | (144,452)     
|                                                       |                |                |               
|Income
    tax benefit                                 | $-             | -              | -             









UQM TECHNOLOGIES, 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,    | March
    31,
|-------------------------------------------------- | ---------------- | -------------
|                                                   | 2002             | 2001         
|                                                   |                  |              
|Deferred
    tax assets:                           |                  |              
|Research
    and development credit                |                  |              
|carryforwards                                      | $

       74,215 | 78,568       
|Net
    operating loss carryforwards 
    Federal | 10,217,388       | 10,089,638   
|Accruals
    and reserves                          | 260,479          | 349,655      
|Property
    and equipment                         | 655,686          | 23,693       
|Intangible
    Assets                              | 671,368          | -            
|Write-down
    of investments                      | 1,170,724        | 1,029,311    
|Total
    deferred tax assets                      | 13,049,860       | 11,570,865   
|                                                   |                  |              
|Less
    valuation allowance                       | (13,049,860)     | (11,570,865) 
|                                                   |                  |              
|Net
    deferred tax assets, net of                |                  |              
|valuation
    allowance                            | -                | -            



As of March 31, 2002, the Company had net operating loss
    carryforwards (NOL) of approximately $30 million for U.S. income tax purposes which expire
    in varying amounts through 2021. Approximately $3 million of the net operating loss
    carryforwards are attributable to stock options, the benefit of which will be credited to
    additional paid-in capital if realized. However, due to the provisions of Section 382 of
    the Internal Revenue Code, the utilization of a portion of these NOLs is limited. Future
    ownership changes under Section 382 could occur that would result in a Section 382
    limitation which would restrict the use of NOLs. In addition, any Section 382 limitation
    could be further reduced to zero if the Company fails to satisfy the continuity of
    business enterprise requirement for the two-year period following an ownership change.



(12) Stockholders' Equity

During the year ended March 31, 2000, the Company completed a
    private placement of 88,900 shares of common stock with an institutional investor. Cash
    proceeds to the Company, net of offering costs were $488,828.

In April, 2002 the Company completed a secondary offering of common
    stock and warrants. See note 22 Subsequent Event.

> 

UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued









(13) Common Stock Options and Warrants

Incentive and Non-Qualified Option Plans

The Company has reserved 6,104,000 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 March 31,
    1999 | 3,037,554    | 5.49              
|Granted                           | 495,000      | 8.31              
|Exercised                         | (204,970)    | 3.79              
|Forfeited                         | (96,190)     | 6.12              
|                                  |              |                   
|Outstanding at March 31,
    2000 | 3,231,394    | 6.01              
|Granted                           | 472,633      | 7.18              
|Exercised                         | (212,408)    | 5.16              
|Forfeited                         | (676,799)    | 7.31              
|                                  |              |                   
|Outstanding at March 31,
    2001 | 2,814,820    | 5.96              
|Granted                           | 472,500      | 4.16              
|Exercised                         | (301,541)    | 3.32              
|Forfeited                         | (219,583)    | 6.96              
|                                  |              |                   
|Outstanding at March 31,
    2002 | 2,766,196    | $ 5.87            
|                                  |              |                   
|Exercisable at March 31,
    2002 | 1,959,651    | $ 5.92            









UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







The following table
    presents summarized information about stock options outstanding at March 31, 2002:





|                | Options
    Outstanding | Options
    Exercisable
|--------------- | ----------------------- | -----------------------
|                |                         | Weighted               
|                | Number                  | Average                
|Range
    of    | Outstanding             | Remaining              
|Exercise Prices | at 3/31/02              | Contractual
    Life   
|                |                         |                        
|$3.31 - 3.31    | 303,198                 | 4.8 years              
|$3.50 - 5.00    | 1,084,514               | 6.5 years              
|$6.25 - 8.75    | 1,378,484               | 6.0 years              
|$3.31 - 8.75    | 2,766,196               | 6.1 years              



Non-Employee Director Stock Option Plan

In February 1994, the Company's Board of Directors ratified a
    Stock Option Plan for Non-Employee Directors pursuant to which Directors may elect to
    receive stock options in lieu of cash compensation for their services as directors. The
    Company has reserved 500,000 shares of common stock for issuance pursuant to the exercise
    of options under the Plan. The options are exercisable from 3 to 10 years from the date of
    grant. Option prices are equal to the fair market value of common shares at the date of
    grant.

The following table presents summarized activity under the plan:



|                                  | Weighted     |               
|--------------------------------- | ------------ | --------------
|                                  | Shares Under | Average       
|                                  | Option       | Exercise Price
|                                  |              |               
|Outstanding at March 31,
    1999 | 253,333      | 5.66          
|Granted                           | 9,275        | 4.25          
|Forfeited                         | (221,333)    | 5.59          
|                                  |              |               
|Outstanding at March 31,
    2000 | 41,275       | 5.68          
|Granted                           | 5,785        | 7.94          
|                                  |              |               
|Outstanding at March 31,
    2001 | 47,060       | 5.96          
|Granted                           | 7,076        | 5.85          
|                                  |              |               
|Outstanding at March 31,
    2002 | 54,136       | $ 5.94        
|                                  |              |               
|Exercisable at March 31,
    2002 | 38,509       | $ 5.81        





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







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



|                | Options
    Outstanding | Options
    Exercisable
|--------------- | ----------------------- | -----------------------
|                |                         | Weighted               
|                | Number                  | Average                
|Range
    of    | Outstanding             | Remaining              
|Exercise Prices | at 3/31/02              | Contractual
    Life   
|                |                         |                        
|$4.25  5.06    | 25,275                  | 4.6 years              
|$5.85  8.00    | 28,861                  | 4.0 years              
|$4.25  8.00    | 54,136                  | 4.3 years              





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:



|                                   | Year
    Ended | Year
    Ended | Year
    Ended
|---------------------------------- | -------------- | -------------- | --------------
|                                   | March
    31,  | March
    31,  | March
    31, 
|                                   | 2002           | 2001           | 2000          
|                                   |                |                |               
|Net loss
    - as reported         | $(8,592,655)   | (3,140,122)    | (6,471,807)   
|Compensation
    expense - current |                |                |               
|period
    option grants           | (82,981)       | (219,753)      | (163,069)     
|Compensation
    expense - prior   |                |                |               
|period
    option grants           | (1,283,110)    | (778,689)      | (1,390,466)   
|                                   |                |                |               
|Net loss
    - pro forma           | $(9,958,746)   | (4,138,564)    | (8,025,342)   
|Net loss
    per common share -    |                |                |               
|as reported                        | $  (.49)       | (.18)          | (.39)         
|Net loss
    per common share -    |                |                |               
|pro
    forma                      | $  (.57)       | (.24)          | (.48)         









UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







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



|                                    | Year
    Ended | Year
    Ended | Year
    Ended
|----------------------------------- | -------------- | -------------- | --------------
|                                    | March
    31,  | March
    31,  | March
    31, 
|                                    | 2002           | 2001           | 2000          
|                                    |                |                |               
|Expected
    volatility             | 48.4%          | 48.4%          | 48.7%         
|Expected
    dividend yield         | 0.0%           | 0.0%           | 0.0%          
|Risk
    free interest rate         | 4.7%           | 5.3%           | 6.8%          
|Expected
    life of option granted | 6
    years    | 6 years        | 6 years       
|Fair
    value of options granted   |                |                |               
|as
    computed under the Black     |                |                |               
|Scholes option pricing models       | $2.16
    per  | $4.75 per      | $4.78 per     
|                                    | share          | share          | share         





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



|Fiscal Year | Pro Forma   
|----------- | ------------
|Ended       | Compensation
|March 31,   | Expense     
|            |             
|2003        | $1,316,031  
|2004        | $  768,907  
|2005        | $  233,093  



Warrants



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. During the years ended March 31, 2001 and 2000 warrants to acquire 12,000 and
    436,212 shares of the Company's common stock at $8.00 per share were exercised
    resulting in cash proceeds to the Company of $96,000 and $3,489,696, respectively. In
    March 2000, warrants to acquire 179,000 shares expired unexercised and warrants to acquire
    299,375 shares of common stock were extended for eighteen months. In fiscal year 2002
    warrants to acquire 111,125 shares expired unexercised. Warrants to purchase 188,250
    shares of common stock were extended for a period of twenty-four months. The warrant
    holders paid to the Company the fair value of such extensions resulting in cash proceeds
    to the Company of $105,007 and $78,151 in fiscal year 2002 and 2000, respectively.

> 





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued









(14) 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, 2002, 2001 and 2000 the
    Company recorded royalty expense of $40,307, $30,162 and $23,612, respectively, under this
    agreement.



(15) Significant Customers

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



|                          | Year
    Ended | Year
    Ended | Year
    Ended
|------------------------- | -------------- | -------------- | --------------
|                          | March
    31,  | March
    31,  | March
    31, 
|                          | 2002           | 2001           | 2000          
|                          |                |                |               
|Tyco
    International    | $  5,397,571   | 4,706,810      | 4,434,454     
|HandEra,
    Inc.         | 1,066,190      | 6,427,983      | 647,584       
|Invacare
    Corporation  | 4,001,270      | 2,805,300      | 2,309,128     
|                          | $ 10,465,031   | 13,940,093     | 7,391,166     
|                          |                |                |               
|Percentage
    of revenue | 49%            | 55%            | 39%           



The significant customers for the years ended March 31, 2002, 2001 and
    2000, were customers in the Company's electronic products and mechanical products
    segments. These customers, in total, also represented 48%, 73% and 31% of total accounts
    receivable at March 31, 2002, 2001 and 2000, respectively. In addition, the Company's
    electronic products segment manufactures products to customers design specification as a
    contract manufacturer. As such, the Company purchases inventory on behalf of customers for
    which the customer is financially obligated in the event his production order with the
    Company is cancelled or otherwise not fulfilled. Substantially all inventories carried by
    the electronic products segment are covered by customer commitments and approximately $1.2
    million is attributable to customers Tyco International and HandEra, Inc.

Contract services revenue derived from contracts with agencies of the
    U.S. Government and from sub-contracts with U.S. Government prime contractors totaled
    $1,040,251, $853,341, and $910,770 and for the years ended March 31, 2002, 2001 and 2000,
    respectively.

> 



UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued









(16) Discontinued Operations

In October, 2001, the Company formalized a plan to close its contract
    gear manufacturing business which is part of its mechanical products segment. The Company
    expects to complete performance under its existing contracts and sell its contract gear
    manufacturing assets for an amount approximating its net book value by the second quarter
    of fiscal 2003. Accordingly, the operating results of this division for the years ended
    March 31, 2002, 2001 and 2000 have been reported separately as discontinued operations
    together with estimated losses from the disposal of division assets and an accrual for
    estimated operating losses to be incurred during the phase-out period. Loss from
    operations of discontinued gear division also includes interest expense on debt used to
    acquire gear manufacturing machinery and equipment but does not include allocations of
    general corporate overheads which have been reallocated to other business segments. All
    prior periods presented have been restated to reflect the contract gear manufacturing
    division as a discontinued operation.

Net revenue and losses from the discontinued gear division are shown in
    the following table. Losses for the six months ended March 31, 2002 were applied as a
    reduction of the liability for accrued future losses of discontinued operations.



|          | For The Year Ended March
    31,
|--------- | --------------------------------
|          | 2002    2001                    
|          |                                 
|Net sales | 1,453,851    1,602,421          
|Net loss  | (2,321,100)  (1,097,584)        



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



|                                             | March 31, 2002 | March 31, 2001
|-------------------------------------------- | -------------- | --------------
|                                             |                |               
|Accounts
    receivable, inventories and     |                |               
|other
    assets                             | 227,268        | 466,353       
|Property and equipment, net                  | 1,253,432      | 1,904,185     
|Goodwill, net                                | -              | 1,043,816     
|                                             |                |               
|Total assets                                 | 1,480,700      | 3,414,354     
|                                             |                |               
|Accounts payable and other
    liabilities   | 228,525        | 233,819       
|Accrued future loses of
    discontinued     |                |               
|operations                                   | 338,288        | -             
|Term debt                                    | 451,672        | 952,630       
|                                             |                |               
|Total liabilities                            | 1,018,485      | 1,186,449     
|                                             |                |               
|Net assets of discontinued
    gear division | 462,215        | 2,227,905     





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







As of March 31, 2002 all assets and liabilities of the discontinued
    gear division have been classified as current.



(17) Fair Value of Financial Instruments



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

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

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

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

The carrying amount of the Company's long-term debt and
    revolving line-of-credit 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.



(18) 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 $97,370, $99,179 and $97,715 for
    the years ended March 31, 2002, 2001 and 2000, 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, 2002, 2001 and 2000, the Company issued 10,799, 6,774 and 9,072 shares of
    common stock, respectively, under the Stock Purchase Plan.



(19) Segments

The Company has three reportable segments: technology, mechanical
    products and electronic products. The technology segment encompasses the Company's
    technology-based operations including core research to advance its technology, application
    engineering and product development and job shop production of prototype components. The
    mechanical products segment





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







encompasses the manufacture and sale of permanent magnet motors. As
    discussed in note 16 the Company discontinued its gear operations in fiscal year 2002 and
    accordingly the financial results of this operation are no longer reported in continuing
    operations of the mechanical products segment in all periods presented. The electronic
    products segment encompasses the manufacture and sale of wire harness assemblies,
    electronic printed circuit board assemblies and electronic products. Salaries of the
    executive officers and corporate general and administrative expense is allocated equally
    to each segment.

Intersegment sales or transfers were $146,903, $75,635 and $96,894 for
    the years ended March 31, 2002, 2001 and 2000, respectively.

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 continuing operations of each of the reportable segments for the year
    ended March 31, 2002:

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





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







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

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





Segment information has been reclassified to reflect corporate overhead
    allocation consistent with the current year presentation. The following table summarizes
    significant financial statement information for continuing operations of each of the
    reportable segments for the year ended March 31, 2000:

> 





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued







|                              |             | Mechanical | Electronic |            
|----------------------------- | ----------- | ---------- | ---------- | -----------
|                              | Technology  | Products   | Products   | Total      
|                              |             |            |            |            
|Revenue                       | $2,426,152  | 2,317,597  | 14,056,151 | 18,799,900 
|Interest
    income           | 54,586      | 478        | -          | 55,064     
|Interest
    expense          | (61,894)    | (19,347)   | (226,977)  | (308,218)  
|Depreciation
    and          |             |            |            |            
|amortization                  | (352,485)   | (98,744)   | (502,538)  | (953,767)  
|Goodwill amortization         | -           | -          | (270,060)  | (270,060)  
|Write-down
    of investments | (4,104,628) | -          | -          | (4,104,628)
|Equity
    in loss of joint   |             |            |            |            
|ventures                      | (280,170)   | -          | -          | (280,170)  
|Segment
    earnings (loss)   |             |            |            |            
|from
    continuing           |             |            |            |            
|operations                    | (5,602,767) | 93,834     | 4,423      | (5,504,510)
|Net
    earnings (loss)       | (5,602,767) | (873,463)  | 4,423      | (6,471,807)
|Assets
    of continuing      |             |            |            |            
|operations                    | 7,955,110   | 3,002,610  | 9,906,436  | 20,864,156 
|Assets
    of discontinued    |             |            |            |            
|operations                    | -           | 3,393,687  | -          | 3,393,687  
|Total
    segment assets      | 7,955,110   | 6,396,297  | 9,906,436  | 24,257,843 
|Expenditures
    for          |             |            |            |            
|segment
    assets            | $ (777,314) | (91,351)   | (159,494)  | (1,028,159)





(20) Commitments and Contingencies

Employment Agreements

The Company has entered into employment agreement with two of its
    officers which expire December 31, 2002. The aggregate future compensation under the
    employment agreements is $324,000.

Lease Commitments

The Company has entered into operating lease agreements for office
    space and equipment which expire at various times through 2007. As of March 31, 2002,
    the future minimum lease payments under operating leases with initial noncancelable terms
    in excess of one year are as follows:



|Year
    ending March 31: |                
|------------------------- | ---------------
|2003                      | $
      415,648
|2004                      | 357,762        
|2005                      | 270,208        
|2006                      | 261,781        
|2007                      | 252,140        
|                          |                
|                          | $ 1,557,539    







UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES





Notes to Consolidated Financial Statements, Continued





Rental expense under these leases totaled approximately $552,883,
    $565,109, and $550,335 for the years ended March 31, 2002, 2001 and 2000, respectively.

Litigation

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

(21) Interim Financial Data (unaudited)



|                             | For The Quarter Ended
|---------------------------- | ---------------------
|                             | June
    30          
|                             |                      
|Fiscal
    year 2002         |                      
|Sales                        | $ 6,509,793          
|Gross
    profit             | 918,101              
|Net loss
    from continuing |                      
|operations                   | (172,679)            
|Net loss
    from continuing |                      
|operations
    per share     |                      
|basic
    and diluted        | $    (0.01)          
|Net loss                     | (487,805)            
|Net loss
    per share       |                      
|basic
    and diluted        | $    (0.03)          
|                             |                      
|Fiscal
    year 2001         |                      
|Sales                        | $ 6,183,747          
|Gross
    profit             | 997,696              
|Net loss
    from continuing |                      
|operations                   | (15,477)             
|Net loss
    from continuing |                      
|operations
    per share     |                      
|basic
    and diluted        | $      -             
|Net loss                     | (332,878)            
|Net loss
    per share       |                      
|basic
    and diluted        | $(0.02)              





UQM TECHNOLOGIES, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements, Continued

> 

(22) Schedule of Valuation and Qualifying Accounts

> AdditionsBalance
>         at
>         Charged
>         to
>         ChargedBeginning
>         Costs
>         and
>         to Other
>         
>         Balance Endof Year
>         Expenses
>         Accounts
>         Deductions
>         of YearYear
>         ended March 31, 2002Deducted
>         from asset accounts:Allowance
>         for doubtfulAllowance
>         for
>         doubtful accounts
>         $  41,540
>         31,438
>         -
>         39,924(A)
>         33,054Inventory
>         obsolescencereserve
>         $ 370,152
>         341,632
>         -
>         156,786(B)
>         554,998Accrued
>         warranty cost
>         $  34,275
>         109,209
>         -
>         108,315(B)
>         35,169Year
>         ended March 31, 2001Deducted
>         from asset accounts:Allowance
>         for doubtfulaccounts
>         $   2,674
>         57,257
>         -
>         18,391(A)
>         $  41,540Inventory
>         obsolescencereserve
>         $  81,829
>         400,822(C)
>         -
>         112,499(B)
>         $ 370,152Accrued
>         warranty cost
>         $   6,473
>         44,657
>         -
>         16,855(B)
>         $  34,275Year
>         ended March 31, 2000Deducted
>         from asset
>         accounts:Allowance
>         for doubtfulaccounts
>         $   9,358
>         -
>         -
>         6,684(A)
>         $   2,674Inventory
>         obsolescencereserve
>         -
>         95,125
>         -
>         13,296(B)
>         $  81,829Accrued warranty
>         cost
>         -
>         28,706
>         -
>         22,233(B)
>         $  6,473
>     Note (A) Uncollectible accounts written off, net of recoveries.
>         Note (B) Amounts written off or payments incurred.
>         Note (C) Includes write down of inventory in 2001 of approximately
>         $392,000.

(23) Subsequent Event



In April 2002, the Company completed a secondary offering of 1,160,095
        shares of common stock together with two year warrants to acquire an additional 232,019
        shares of common stock at an exercise price of $5.73 per share. Cash proceeds to the
        Company after deducting the expenses of the offering was $4,433,114.



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

None.

> PART III

ITEM
    10.
        DIRECTORS AND EXECUTIVE OFFICERS

Additional information required by Item 10 is
    incorporated by reference from and contained under the headings "Election of
    Directors" and "Management" in the Company's definitive Proxy Statement for
    the Annual Meeting of Shareholders to be held August 21, 2002.

> 

ITEM 11.
    EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by
    reference from and contained under the headings "Executive Compensation",
    "Option Grants during Fiscal year 2001" and "Aggregate Option Exercises
    During Fiscal Year 2001 and Option Values at the End of Fiscal Year 2001" in
    the Company's definitive Proxy Statement for the Annual Meeting of
    Shareholders' to be held August 21, 2002.



ITEM 12.
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated by
    reference from and contained under the heading "Security Ownership of
    Certain Owners and Management" in the Company's definitive Proxy Statement
    for the Annual Meeting of Shareholders' to be held August 21, 2002.



ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated by
    reference from and contained under the headings "Compensation Committee
    Interlocks and Insider Participation" and "Certain Relationships and Related
    Transactions" in the Company's definitive Proxy Statement for the Annual
    Meeting of Shareholders' to be held August 21, 2002.

> PART IV

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

> (a) 1. Financial Statements:
>           
>           UQM Technologies, Inc. (included in Part II):
>               Independent Auditors' Report.
>               Consolidated Balance Sheets, March 31, 2002 and March 31, 2001.
>               Consolidated Statements of Operations for the years ended
>               March 31, 2002, 2001 and 2000.
>               Consolidated Statements of Stockholders' Equity and Comprehensive
>               Income (Loss) for the years ended March 31, 2002, 2001 and 2000.
>               Consolidated Statements of Cash Flows for the years ended
>               March 31, 2002, 2001 and 2000.
>               Notes to Consolidated Financial Statements.

> 2. Financial Statement Schedules.

> None

> (b) Reports on Form 8-K:

> Report regarding operating results for the quarter and nine months
>               ended December 31, 2001 filed January 29, 2002.
>               Report regarding operating results for the quarter and fiscal year
>               ended March 31, 2002 filed May 20, 2002.
>     (c) Exhibits:
>     
>               
>               
>   3.1 Bylaws. Reference is made to Exhibit 3.1 of the Company's
>               Registration Statement on Form S-1 (No. 33-42342) filed August 20, 1991 which is
>               incorporated herein by reference.
>               3.2 Restated Articles of Incorporation. Reference is made to Exhibit of
>               the Company's Quarter Report on Form 10-K for the year ended October 31, 1993 (No. 0-9146)
>               which is incorporated herein by reference.
>               4.1 Specimen Stock Certificate. Reference is made to Exhibit 3.1 of the
>               Company Registration Statement on Form 10, dated February 27, 1980 (No. 0-9146) which is
>               incorporated herein by reference.
>               4.2 Form of Warrant Agreement. Reference is made to Exhibit 4.1 of the
>               Company's  Registration Statement, Amendment  No. 6, on Form S-3/A (File
>               No. 333-75520), filed on April 11, 2002 which is incorporated herein by reference.
>               10.1 UQM Technologies, Inc. 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.
>               10.2 UQM Technologies, Inc. Employee Stock Purchase Plan. Reference is
>               made to Exhibit 4.3 to the Company's Registration Statement on Form S-8(No. 33-34612),
>               which is incorporated herein by reference.
>     
>             10.3 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.
>     
>               10.4 UQM Technologies, 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.
>               10.5 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.
>               10.6 Amendment to the 1992 Stock Option Plan of UQM Technologies, 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.
>               10.7 Amendment to the 1992 Stock Option Plan of UQM Technologies, 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.
>               10.8 Employment Agreement between the Company and William G. Rankin.
>               Reference is made to Exhibit 10.17 in the Company's Annual Report on Form 10-K/A  for
>               the  Fiscal Year  ended  March 31, 2001 (No. 1-10869) filed on February 15,
>               2002 which is incorporated herein by reference.
>               10.9 Employment Agreement between the Company and Donald A. French.
>               Reference is made to Exhibit 10.18 in the Company's Annual Report on  Form 10-K/A for
>                the Fiscal Year  ended March 31,  2001 (No. 1-10869) filed on February 15,
>               2002 which is incorporated herein by reference.
>               10.10 Supply Agreement between the Company and Invacare Corporation
>               dated April 1, 1999. Portions have been omitted pursuant to a request for confidential
>               treatment. Reference is made to Exhibit 10.19 in the Company's Annual Report on Form
>               10-K/A for the Fiscal Year ended March 31, 2001 (No. 1-10869) filed on February 15, 2002
>               which is incorporated herein by reference.
>               10.11 License Agreement between the Company and Invacare Corporation
>               July 23, 1997. Portions have been omitted pursuant to a request for confidential
>               treatment. Reference is made to Exhibit 10.20 in the Company's Annual Report on Form
>               10-K/A for the Fiscal Year ended March 31, 2001 (No. 1-10869) filed on February 15, 2002
>               which is incorporated herein by reference.
>               10.12 UQM Technologies, Inc. 2002 Equity Incentive Plan.
>               21 Subsidiaries of the Company.
>               23.1 Consent of KPMG LLP.
>     
>               SIGNATURES

Pursuant to the requirements of Section 13 of the Securities and
    Exchange Act of 1934, UQM Technologies, Inc. has duly caused this Annual Report on Form
    10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in Golden,
    Colorado on the 21st day of June, 2002.

> UQM TECHNOLOGIES, INC.,
> a Colorado Corporation

> By: "William G. Rankin"William G. Rankin
>     Chairman of the 
>     Board of Directors



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



|Signature                            | Title                                                                                          | Date         
|------------------------------------ | ---------------------------------------------------------------------------------------------- | -------------
|"William G. Rankin"William G. Rankin | Chairman of the Board of
        Directors and President
        (Principal Executive Officer) | June 21, 2002
|"Donald A. French"Donald A. French   | Treasurer and Secretary
        (Principal Financial andAccounting Officer)                    | June 21, 2002
|"Ernest H. Drew"Ernest H. Drew       | Director                                                                                       | June 21, 2002
|"Stephen J. Roy"Stephen J. Roy       | Director                                                                                       | June 21, 2002
|"J. B. Richey"J. B. Richey           | Director                                                                                       | June 21, 2002
|"Jerome Granrud"Jerome Granrud       | Director                                                                                       | June 21, 2002