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
For the fiscal year ended March 31, 2016
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
OR
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)
4120 Specialty Place, Longmont, Colorado
(Address of principal executive offices)
84-0579156
(I.R.S. Employer
Identification No.)
80504
(Zip Code)
Registrant’s telephone number, including area code: (303) 682-4900
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class
Common Stock
Name of each exchange on which registered
NYSE MKT
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-
K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer
[ ] Accelerated filer
[] Non-accelerated filer
[X ] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (Do not check if a smaller reporting company)
Yes [ ] No [X]
The aggregate market value of the registrant’s common stock (“Common Stock”) held by non-affiliates as of September 30, 2015, based on the closing price of
the Common Stock as reported by the NYSE MKT on such date was approximately $25,8 38,504 . As of June 5, 2016, there were 48,436,196 shares of the
registrant’s Common Stock outstanding.
Document
Portions of the Proxy Statement for the 2016 Annual
Meeting of Shareholders.
Parts Into Which Incorporated
Part III
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Table of Contents
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosure
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity
Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm- Hein & Associates LLP
Report of Independent Registered Public Accounting Firm- Grant Thornton LLP
Consolidated Balance Sheets as of March 31, 2016 and March 31, 2015
Consolidated Statements of Operations for the Fiscal Years ended March 31, 2016, 2015 and 2014
Consolidated Statements of Stockholders’ Equity for the Fiscal Years ended March 31, 2016, 2015 and
2014
Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2016, 2015 and 2014
Notes to Consolidated Financial Statements
1
1
7
13
13
14
14
14
14
16
17
24
25
25
26
27
29
30
31
32
Item 9.
Change In and Disagreements with Independent Accountants on Accounting and Financial Disclosure
47
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
47
48
49
49
49
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
49
Item 13.
Certain Relationships and Related Transactions and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
49
49
50
50
i
Table of Contents
BUSINESS
PART I
This Report contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act. These could be statements regarding our plans, beliefs or current
expectations; including those plans, beliefs and expectations of our officers and directors with respect to, among other things,
new product developments, future orders to be received from our customers, sales of products from inventory, future financial
results, liquidity and the continued growth of the electric-powered vehicle industry. Important Risk Factors that could cause
actual results to differ from those contained in the forward-looking statements are listed below in Part I, Item 1A. Risk Factors .
ITEM 1.
Overview
UQM Technologies, Inc., (“UQM”, “Company”, “we”, “our”, or “us”) develops, manufactures and sells power dense, high
efficiency electric motors, generators, power electronic controllers and fuel cell compressors for the commercial truck, bus,
automotive, marine, military and industrial markets. Our primary focus is incorporating our advanced technology as propulsion
systems for electric, hybrid electric, plug-in hybrid electric and fuel cell electric vehicles, delivering the heart of the electric
vehicle.
We believe our proprietary permanent magnet propulsion motor and motor control technology delivers exceptional performance
at a competitive cost. Our principal products include propulsion motors and generators with power ratings from 50 kilowatts to
250 kilowatts, auxiliary motors and electronic controls and DC-to-DC converters. The principal attributes that we believe
differentiate our proprietary products are compact size, high torque delivery, high power density (the ratio of power output to
weight), design and manufacture of integrated motor/controller systems, and superior energy efficiency with full system ratings as
high as 95%.
We have assembled a management team with significant experience in the automotive and electric propulsion market with
critical experience in state of the art design and high quality production. We are ISO/TS 16949 certified, the highest level of
quality certification in the automotive supplier industry, and ISO 14001 certified, the highest environmental standards. We have
an approximately 130,000 square foot combined headquarters and manufacturing facility located in Longmont, Colorado. We
were incorporated in 1967 as a Colorado corporation.
The Market
The global electrified vehicle market is an emerging market with high growth potential being driven by several factors. In China,
the market for electric vehicles is driven by strong government pressure to deal with the staggering pollution that is choking
citizens in its major cities. The government has a number of initiatives to encourage electric vehicle market growth including
mandates for purchases of New Energy Vehicles by municipalities, incentives and other tools. We are seeing strong demand for
electric buses across several cities and regions. We are also seeing demand for electric buses, delivery vans, trucks and taxi fleets
across several cities and regions in China. As China is the world’s largest market for electric vehicles, we believe that our
presence in China is critical to our long-term success. Therefore, we continue to devote significant time and resources to business
development efforts in China.
In other global markets, including the United States, the drivers for growth in the electric commercial truck and bus market
include the demand for zero tailpipe emissions from full electric vehicles or during the electric only range for hybrids, improved
operating costs due to a more efficient powertrain on a gas equivalent basis and reduced maintenance costs for the powertrain
system and other systems, such as improved brake life. Moreover, there is community support for cleaner buses and trucks
operating in congested areas, along with government incentives and requirements to purchase electric and hybrid vehicles. In the
automotive market, these same growth drivers exist, as well as growing consumer acceptance of electric vehicles due to their
excellent performance, quiet operation, zero or reduced tailpipe emissions and improved operating cost. In addition, significant
Corporate Average Fuel Economy (“CAFE”) standards in the United States are expected to accelerate further electrification of
vehicle fleets. The major impediment to electrification of vehicle has been total vehicle cost, of which a substantial part is due to
the cost of batteries. Battery cost has decreased considerably over the last few years and is projected to continue to
improve. Government incentives
1
Table of Contents
have helped to offset these early additional costs and generate the volume and momentum that should further reduce these
incremental costs through economies of scale.
Many studies have been conducted indicating the potential for electric vehicles to capture significant market share over the next
several years. For example, in 2016, The International Energy Agency forecasted that 6 million electric vehicles will be on the
road by 2020, as shown in the chart below:
Governments around the world have implemented financial incentives to promote the sales of electric vehicles. For example, the
U.S. federal government currently offers a $7,500 federal tax credit for the purchase of an electric passenger vehicle, and there are
additional tax credits and other benefits such as HOV lane access in various states for purchasers of qualifying vehicles. In
China, the country’s National Development and Reform Commission and three other ministries jointly announced in September
2015, a new round of New Energy Vehicle supportive policies for the years 2015 - 2016. Various levels of government subsidies
for electric vehicles were announced, including subsidies for pure electric buses of RMB 500,000 each (approximately $78,000),
electric trucks of RMB 150,000 each (approximately $23,000) and plug-in electric and fuel cell passenger vehicles of RMB
60,000 each (approximately $9,300). Additionally, the Chinese government offers higher subsidies for more efficient vehicle
performance. This should incentivize our potential customers to purchase our drivetrain systems because they are highly
efficient. In Europe, a majority of European Union member states provide tax incentives for electrically chargeable passenger
vehicles, with Norway providing the most generous package of subsidies totaling almost EUR 17,000 (approximately $19,000).
We believe that the trend toward increasing electrification of vehicles coupled with the government subsidies offered world-wide
provide a substantial opportunity for the broad commercial application of our products.
Business Strategy
We are focused primarily on the transportation markets, with a strong emphasis on the commercial truck and bus space, followed
by automotive and then marine, military and other. We have developed two basic frame size propulsion systems: the PowerPhase
®
®
Pro for passenger car, light commercial applications, light duty marine and other lighter duty applications and the PowerPhase
HD lineup of products for heavier commercial bus and truck applications and heavier duty marine and other applications. We
also utilize these products, customized versions of these products and all new custom solutions in these markets to meet various
customer requirements. We provide motor and controller systems for full-electric, hybrid electric, plug-in hybrid and fuel cell
applications. We also provide units for non-automotive markets including the energy management market, auxiliary systems
and motor and controller systems for aircraft. Further, we manufacture fuel cell compressor motors for the fuel cell business.
2
Table of Contents
Our products are used in the following applications:
· Commercial Trucks, Vans and Shuttles - We supply electric propulsion systems to Zenith Motors, LLC for their electric
shuttle vans and have supplied Electric Vehicles International (“EVI”) for their all-electric medium-duty delivery trucks.
·
Passenger Buses – Electric and hybrid passenger buses can have large positive impacts on the environment and many
municipalities around the world are demanding more of these vehicles on the road. We supply electric propulsion
systems to Proterra, Inc., a developer and manufacturer of all-electric composite transit buses, under a multi-year supply
agreement. We have provided electric propulsion systems for Hino Bus, a subsidiary of Toyota Motor Corporation, for
their electric city-buses. PT Sarimas Ahmadi Pratama of Jakarta, Indonesia is using our motors and controllers for their
all-electric 17-passenger bus. In October 2015, we signed a ten-year supply agreement with ITL Efficiency Corporation
to provide electric propulsion systems for New Energy Vehicles in China, in particular 6-8 meter shuttles and 10-12
meter transit buses. In addition, we are in discussions with other potential Chinese customers to supply our products
for both all-electric and hybrid-electric vehicles, and we have shipped a small number of electric motor and controller
systems into China for prototype testing in buses.
· Mining vehicles – In January 2015, we announced a long-term supply agreement with the KESHI Group, a Chinese
market leader that manufactures vehicles for the mining industry in China. KESHI will manufacture under license
explosion proof electric mining vehicles using UQM’s designs and parts supplied by UQM to Keshi. This first phase is
for the vehicles that move the coal from the mines. We are also under discussions for additional usage for the vehicles
that move the people in and out of the mines and other potential applications.
· Airplane tugs – In January 2016, we announced that Kalmar Motor AB in Sweden had successfully passed vehicle trials
with major airlines and plans on beginning production orders by mid-2016 using our heavy-duty commercial traction
electric motor/controller system, for their TBL50 airplane tugs. Ground handling tugs play a vital role at airports by
enabling large aircraft to be moved from their hangars to the passenger gate, as well as for pushback and other taxiing
functions on the runway.
· Marine – The marine market is an emerging market for the Company. In January 2015, Research and Markets
announced that marine electric vehicles are now a rapidly growing market due to new capability, affordability and
legislation banning or restricting internal combustion engines. Their research found that the market for electric water
craft, including those on and under water, is expected to increase from $2.6 billion to $6.3 billion in 2023. In addition,
there is a market for electric outboard motors that will more than triple in value as high power pure electric versions
become increasingly viable. We are seeing demand for electric solutions for both the clean and quiet operation afforded
by full electric and hybrid electric solutions. We supply UQM motors and controllers used in a variety of marine
applications and for a variety of customers. We believe the marine market could be a growing sector of electrified
vehicles.
·
Fuel Cell Compressors – We manufacture fuel cell compressors which are an integral component of hydrogen powered
fuel cell vehicles designed for light duty automotive and commercial bus applications for 75kW to 150kW fuel cell
stacks.
· Military - The U.S. military purchases a wide-range of ground vehicles each year, including combat vehicles such as
tanks, self-propelled artillery and armored personnel carriers, as well as a variety of light, medium and heavy-duty trucks
for convoy and supply operations and for the transport of fuel used on the battlefield. We have in the past worked with a
number of military contractors and vehicle makers on prototype hybrid electric vehicles, high export power generators,
and electric auxiliaries. There are a number of initiatives to reduce the carbon footprint of military bases that may drive
additional efforts in this area. Although this market has not yet emerged, we believe that it may, driven by the
availability of electric components in the commercial truck market that operate at similar power levels as those required
by many military vehicles.
· Automobiles – Government mandates for fuel economy and clean air emissions are accelerating the demand for electric
passenger cars. In the United States, for example, CAFE standards will increase the average fuel economy of each
manufacturer’s passenger car and light truck model offerings to 35.5 miles per gallon in 2016
3
Table of Contents
and 54.5 miles per gallon by 2025. We have in the past provided electric propulsion systems to many original
equipment manufacturers (“OEMs”) for testing and product development.
· Other – We supply an automotive qualified DC-to-DC converter which can be used in medium and heavy-duty hybrid
trucks. We also provide small motors and controllers for aircraft HVAC usage to AirComm. Further, we have supplied
systems to a customer in the energy management market for a stationary application for electric motors.
Our business strategy is also comprised of the following:
· Highly qualified and experienced management – We have a management team with significant experience in the
automotive industry and the requirements for high quality production programs and very deep technical knowledge of
the electric motor and controller business.
·
State-of-the-art manufacturing facility – Our headquarters and manufacturing plant are located in an approximately
130,000 square foot facility. We have designed, installed and qualified volume production lines for our motors and their
related electronic controllers.
· Manufacturing capacity – We currently have the capacity to build motor/controller systems, in quantities sufficient to
meet demands of our current and future customers for the foreseeable future.
· Highest production quality standards – Our Company is certified under the ISO/TS 16949 standards, the highest level of
automotive quality standards in the industry and ISO 14001, the highest environmental standards.
·
Leading edge technology – Our technology base includes a number of proprietary technologies and patents related to
brushless permanent magnet motors, generators and power electronic controllers, together with software code to
intelligently manage the operation of our systems. We continue to develop next generation products to achieve
improved performance and efficiency, smaller package sizes and lower production costs.
Products
We offer a full range motors and controllers for electric, hybrid electric, plug-in hybrid electric and fuel cell electric commercial
trucks, vans, buses and automobiles. Our current core electric propulsion products are:
·
·
·
·
·
PowerPhase HD 220 : Designed for medium and heavy duty trucks and buses.
®
®
PowerPhase HD 950T : A high torque version designed for heavy duty trucks and buses that require additional torque
due to higher GVW or more challenging hilly terrain, this product delivers especially high torque performance compared
to the PowerPhase HD 220.
®
PowerPhase HD 250 : A high voltage version designed for buses and medium and heavy duty trucks.
®
PowerPhase Pro 100 : Designed for passenger vehicles and light duty truck or van applications.
®
PowerPhase Pro 135 : The PP 135 offers higher performance for those applications that require it versus our
PowerPhase Pro 100 .
®
®
· Auxiliary Motor Systems : Multiple products are offered for compressor, pump and fan applications, including a family
of motor/controller systems for fuel cell air compressors, an integrated motor/controller for aircraft air conditioning
compressors, and an integrated motor/controller for aircraft air conditioning condenser fans.
· Custom Solutions : We offer variations of the above motors in custom configurations as well as custom hybrid solutions
to meet individual customer specifications.
· R340 and R410 Fuel Cell Compressor Systems : These fuel cell compressors are used in hydrogen powered fuel cell
vehicles.
4
Table of Contents
We also sell four types of DC to DC converters at 1.6 kW and 2.2 kW levels, each available at two different voltage output
ranges.
Product Development Activities
®
We continue to develop new variations of our product lineup to meet expanding customer requirements and work on custom
solutions for new prospective customers meeting their precise specifications. We are also developing the next generation of
PowerPhase Pro products designed to be smaller, lighter weight, more energy efficient and producible at lower cost with equal
or better performance than our current PowerPhase Pro systems. This development effort is expected to take more than two
years. Development targets include a substantial size reduction of the motor controller. Adopting new generation components
and control strategies are also elements of this development. Target applications include automotive and light commercial truck
and bus markets.
®
We are also pursuing an advanced motor design technology that eliminates the need for rare-earth elements in the magnets. The
technology incorporates permanent magnets of an alternate chemistry, arranged in a unique way that maintains performance
benefits. A patent has been awarded to protect this innovation. We have a $4.0 million program with the Department of Energy
(“DOE”) to develop non-rare-earth magnet electric motors for use in electric and hybrid vehicles. The DOE is providing $3.0
million of funding for this program and the Company is providing $1.0 million of cost-share contribution. This award was
announced in August 2011 and is a multi-year technology development program.
Competition
All of the markets in which we operate are highly competitive and are characterized by changes due to technological advances
that could render existing technologies and products obsolete, although we are not currently aware of any such advances that
could render our current product portfolio obsolete. We believe our competitors are large automotive OEMs, Tier 1 suppliers to
OEMs, Chinese electric motor manufacturers offering lower cost options, and numerous other competitors in nearly every region
of the world
As a result, additional vehicle makers in both on-road and off-road markets are expected to develop and introduce a variety of
hybrid electric and all-electric vehicles as market acceptance of these vehicles continues to grow. We cannot assure that we will
be able to compete successfully in this market or any other market that now exists or may develop in the future. There are
numerous companies developing products that do or soon will compete with our systems. Some of these companies possess
significantly greater financial, personnel and other resources than we do, including established supply arrangements, volume
manufacturing operations and access to governmental incentive programs.
Customers and Suppliers
We derive our revenue from the following sources: 1) the sale of products designed, engineered and manufactured by us primarily
to OEMs, Tier 1 suppliers of OEMs, and vehicle integrators; 2) funded contract research and development services performed for
strategic partners, customers and the U.S. government directed toward either the advancement of our proprietary technology
portfolio or the application of our proprietary technology to customers’ products; and 3) after market services and remanufacture.
Our business is subject to revenue fluctuation based on the buying cycles of our customers. Specific customers that reach 10% or
more of revenues in any given fiscal quarter or year will also vary depending on these buying cycles. In fiscal year ending March
31, 2016, four customers individually comprised 10% or more of our total revenues. Any loss of business with these customers
could have a material adverse effect on our business, financial condition and results of operation.
Principal raw materials and components purchased by us include iron, steel, electronic components, rare-earth magnets and
copper wire. Most of these items are available from several suppliers. Certain components used by us are custom designs and if
our current supplier no longer made them available to us, we could experience production delays.
We can experience significant price fluctuation in the cost of magnets used in our motors, which contain the rare-earth elements
neodymium and dysprosium and are primarily sourced from China. We have not experienced any disruption in
5
Table of Contents
supply of magnets and magnet prices may continue to be volatile until mining operations outside of China increase or restart.
Financial Information about Geographic Areas
The following summarizes total revenue by geographic area:
United States
Foreign Countries
$
$
2016
3,537,397
1,769,402
5,306,799
Fiscal Year Ended March 31,
2015
3,442,050
573,694
4,015,744
$
$
2014
5,694,144
1,352,056
7,046,200
$
$
Classification of geographic area is determined based upon the country where the purchase transaction originated.
U.S. Government Contracts
We have a $4.0 million program with the DOE to develop non-rare-earth magnet electric motors for use in electric and hybrid
vehicles. The DOE is providing $3.0 million of funding for this three-year program and the Company is providing $1.0 million of
cost-share contribution. The objective of the program is to identify and evaluate magnet materials and technology that can deliver
performance comparable to our rare-earth magnet motors, broaden our product portfolio, potentially lower magnet costs and limit
our exposure to price and supply concerns associated with rare-earth magnets. At March 31, 2016, we had received
reimbursements from the DOE under this program of $2.3 million. We have been granted a U.S. patent for our electric and
hybrid electric vehicle motor design using non-rare earth magnets.
We had a Grant from the DOE under the American Recovery and Reinvestment Act that ended on January 12, 2015. The Grant
provided funds to facilitate the manufacture and deployment of electric drive vehicles, batteries and electric drive vehicle
components in the United States. Under the terms of our Grant Agreement, the DOE reimbursed us 50 percent of qualifying costs
incurred for the purchase of facilities, tooling and manufacturing equipment, and for engineering expenditures related to product
qualification and testing of our electric propulsion systems and other products. The Grant ended on January 12, 2015.
As of March 31, 2015, we had received cumulative reimbursements from the DOE of $27.1 million and had no funds receivable.
Backlog
Our order backlog for products at April 30, 2016 was approximately $2.3 million versus $1.8 million at April 30, 2015. Certain
orders are blanket purchase orders which are subject to the issuance of subsequent release orders directing the number and timing
of actual deliveries. We had backlog of service contracts from customers, which will provide future revenue upon completion,
totaling approximately $457,000 at April 30, 2016 versus $1.2 million at April 30, 2015. Substantially all of the backlog amounts
at April 30, 2016 and 2015 are subject to amendment, modification or cancellation. We expect to ship motor and controller
backlog products over the next twelve months and complete all service contracts in backlog over the next six months.
Intellectual Property
We have numerous patents in the United States and in other countries to protect our intellectual property.
We determine if our intellectual property should be treated as a trade secret or submitted to the patent application process by
deciding whether a technology successfully passes through three evaluation gates. The first gate is an assessment of whether the
expected breadth of the patent would offer a high level of protection or whether it will serve as an educational tool for
competitors. Based upon a patent and literature search, if the expected coverage is broad, the evaluation moves to the second
gate, which is an assessment of infringement detection. This is a review of whether or not it will be possible to detect patent
infringement if a competitor were to adopt the technology. Difficulty in detection reduces the value of a patent and will lead us to
handle the technology as a trade secret rather than a patent. The last gate is an assessment of whether the technology will have
value for many years or whether the technology is a stepping stone
6
Table of Contents
to a different technology. The patent process is a multi-year endeavor from the initial disclosure to the granted patent, which
leads to the importance of this gate. A technology that is expected to have value for five or more years will pass the final gate and
the patent application process will then commence.
We also implement measures to protect our intellectual property, including the guarding and encryption of source code,
nondisclosure of control techniques, and protection of product design details, drawings and documentation.
Trademarks
We have registered the letters "UQM" in the U.S. Patent and Trademark Office. Counterpart applications have been filed in
numerous countries throughout the world, most of which have granted registrations or indicated them to be allowable. We own
three U.S. Trademark Registrations for "UQM" (International Class 7 for power transducers, Class 12 for utility land vehicles,
and Class 16 for publications). The foreign trademark registrations and applications include major markets where we are doing
business or establishing business contacts.
We have also registered the trademark "POWERPHASE" which we use in conjunction with certain of our propulsion systems.
The trademark is registered in the European Community and several other foreign countries .
Employee and Labor Relations
As of April 30, 2016, we had 49 employees, all of whom are full-time employees. We have entered into employment agreements
with our executive officers. The employment agreements expire on June 30, 2017. We believe our relationship with employees
has been generally satisfactory.
In addition to our full-time staff, we from time to time engage the services of outside consultants and contract employees to meet
peak workload or specialized program requirements. We do not anticipate any difficulty in locating additional qualified engineers,
technicians and production workers, if so required, to meet expanded research and development or manufacturing operations .
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange
Commission (“SEC”). Anyone seeking information about our business can receive copies of our Fiscal Year 2016 Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports and other
documents, filed with the SEC at the public reference section of the SEC at 100 F Street, NE, Room 1580, Washington, D.C.
20549. These documents also may be obtained, free of charge, by: contacting our Investor Relations office by e-mail at
investor@uqm.com; by phone at (303) 682-4900; writing to UQM Technologies, Inc., Investor Relations, 4120 Specialty Place,
Longmont, CO 80504-5400; or accessing our website at www.uqm.com. We make our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, available on our website as soon as reasonably practicable after we file or
furnish the materials electronically with the SEC. To obtain any of this information, go to www.uqm.com, select “Investor
Relations” and select the form you would like to access. Our website also includes our Audit Committee Charter and Code of
Business Conduct and Ethics as well as the procedures for reporting a violation of business ethics . Information on our website
does not constitute part of this Annual Report.
ITEM 1A. RISK FACTORS
We operate in a challenging and changing environment that involves numerous known and unknown risks and uncertainties that
could materially affect our operations. The risks, uncertainties and other factors set forth below may cause our actual results,
performances or achievements to be materially different from those expressed or implied by our forward-looking statements. If
any of these risks or events occur, our business, financial condition or results of operations may be adversely affected.
7
Table of Contents
We have incurred significant losses and may continue to do so.
We have incurred significant net losses as shown in the following tables:
2016
Fiscal Year Ended March 31,
2015
2014
Net loss
$
6,938,351
$
5,988,530
$
2,773,244
As of March 31, 2016, we had an accumulated deficit of $106,875,426.
In the future, we plan to make additional investments in product development, facilities and equipment and other costs related to
the commercialization of our products. As a result, we expect to continue to incur net losses for the foreseeable future .
Our operating losses, anticipated capital expenditures and working capital requirements in the longer term may exceed
our current cash balances.
Our net loss for the fiscal year ended March 31, 2016 was $6,938,351 versus a net loss for the fiscal years ended March 31, 2015
and 2014 of $5,988,530 and $2,773,244, respectively. At March 31, 2016, our cash and cash equivalents totaled $7,030,230. We
expect our losses to continue for the foreseeable future. Our existing cash resources, together with cash generated from reductions
in our inventories of PowerPhase Pro propulsion systems, are expected to be sufficient to complete our business plan for at least
the next twelve months. Should those resources be insufficient, we may need to secure additional debt or equity funding, which
may not be available on terms acceptable to us, if at all .
Our business depends, in part, on the expansion of the market for all-electric and hybrid electric vehicles .
Although our electric propulsion systems may be used in a wide variety of products, the market for electric and hybrid vehicles is
fairly new. At the present time, batteries used to power electric motors have limited life and require several hours to charge, and
charging stations for electric motors are not widely available. Electric and hybrid vehicles also tend to be priced higher than
comparable gasoline-powered vehicles. As a result, consumers may experience concerns about driving range limitations, battery
charging time and higher purchase costs of electric or hybrid vehicles. If consumer preferences shift to vehicles powered by other
alternative methods, or if concerns about the availability of charging stations cannot be overcome, the market for all-electric
vehicles, and therefore our electric propulsion systems, may be limited. In addition, our electric propulsion systems are
incorporated in buses used for mass transit in several U.S. cities. If passenger traffic in these mass transit systems declines or
government funding to transportation districts declines from current levels, demand for our products may also decrease.
The popularity of alternative fuel based vehicles and “green energy” initiatives are highly dependent on macro-economic
conditions, including oil prices and the overall health of the economy. When oil prices fall, interest in and resources allocated to
the development of advanced technology vehicles and propulsion systems may diminish. We cannot predict how and the extent to
which the recent substantial decrease of oil prices will affect the domestic interest in electric and hybrid vehicles. Downturns in
the world economy may also have a severe impact on the automotive industry, slowing the demand for vehicles generally and
reducing consumers' willingness to pay more for environmentally friendly technology.
If our products do not achieve market acceptance, our business may not grow .
Although we believe our proprietary systems are suited for a wide-range of vehicle electrification applications, our business and
financial plan relies heavily on our introduction of new products that have limited testing in the marketplace. We have made
substantial investments in manufacturing facilities and equipment, production and application engineering, among other things, to
increase our production capacity in order to capitalize on the anticipated expansion in demand for electric propulsion systems and
generators in the commercial truck, bus and automobile markets. We cannot be certain that our existing products will achieve
broad market acceptance, or that we will be able to develop new products or product enhancements that will achieve broad market
acceptance .
8
Table of Contents
Our sales cycle is inherently long .
We must go through lengthy processes to achieve supply contracts with our customers. Our products must conform to the
technical specifications of the customer and meet design requirements of the electric vehicle. Typically prototype testing is
required to ensure consistent system performance on an ongoing basis. These steps can often take many months to multiple years
until decisions are made on whether or not to take a vehicle to production. We may spend considerable financial and human
resources over an extended period of time and not end up with a completed supply contract. Failure to secure volume production
levels within a reasonable period of time could have an adverse effect on our results of operations and our liquidity.
CODA Automotive filed for bankruptcy protection on May 1, 2013 and it is unlikely we will be able to recover more than
insignificant amounts due to us under our CODA Supply Agreement, including substantial amounts due for accounts
receivable, inventory purchases and guaranteed minimum payments.
We executed a ten-year supply agreement with CODA in July, 2009 which provided a framework for CODA, or its
manufacturing partner, to purchase from us electric propulsion systems for use in automobiles to be manufactured by CODA. On
May 1, 2013, CODA filed for bankruptcy protection. Amounts due from CODA at March 31, 2015 totaled $3,838,092, all of
which had been written off as uncollectible. In addition, CODA was obligated under the supply agreement for inventory
purchases totaling approximately $8.2 million and for a guaranteed minimum payment of $2 million due to their failure to
purchase at least 15,000 units. It is likely that we will recover only an insignificant amount of the balance owed to us under the
CODA supply agreement, if any.
We carry a large inventory balance originally acquired for CODA and may not be able to sell this inventory and may
recognize a loss on the value of this inventory carried on our books.
At March 31, 2016, we had aged inventory of $7.7 million of PowerPhase Pro systems on our books originally acquired for
now-bankrupt CODA. We believe the PowerPhase Pro system is right sized for many medium-duty truck, marine, passenger
vehicle and stationary power applications, and this inventory is now for sale to other customers. While we believe that there
continues to be a strong market for these products, a change in market conditions or technology advancements could make this
inventory obsolete, causing a material adverse effect on our results of operations.
®
®
We regularly consider outstanding customer orders, potential customers, market conditions and other factors that may affect our
ability to sell this inventory at prices above our costs. At least each quarter, we consider the appropriate value of this inventory to
maintain on our books. A change in customer orders or prospects for future sales may impact the carrying value we believe is
appropriate for our CODA inventory and may result in one or more future write-downs in value of this inventory. This would be
reflected as a loss on our Consolidated Statement of Operations.
We entered into purchase contracts with our supply base to support the CODA program, some of which are non-
cancellable by their terms. Our actual liability under these contracts may vary from our current estimates.
We have recorded a liability as of March 31, 2016 of $189,175 representing the amount we expect to pay to settle non-cancellable
contracts with certain suppliers to the CODA program that will not be fulfilled due to the bankruptcy filing by CODA. This
liability is lower than the original amount we recorded of $1,050,000 as of March 31, 2013 as a result of negotiations and
settlements we reached with some vendors since then. The amount of this liability represents management’s current estimate and
may be subject to further adjustment based on future negotiations or litigation. Settlements in excess of our estimates or any
upward revision in our settlement estimate could result in a material change in our results of operations and financial condition.
All funding from our DOE Grant under the American Recovery and Reinvestment Act ended as of January 12, 2015 when
the Grant expired.
Funds from the DOE Grant were very useful in supporting our growth initiatives and reducing our losses over the past several
years. We believe that we have adequate cash resources for at least the next twelve months. However, if anticipated revenues are
not realized and other cash resources are unavailable, the end of the DOE Grant funding could significantly impact our ability to
sustain operations.
9
Table of Contents
The reduction or elimination of government subsidies and economic incentives for alternative energy technologies,
including our electric vehicle motor technology, could reduce demand for our products and services, lead to a reduction in
our revenues and adversely impact our operating results.
We believe that the near-term growth of alternative energy technologies, including our electric vehicle motor technology, relies
on the availability and size of government and economic incentives both in the United States and in other countries. Many of
these government incentives expire, phase out over time, exhaust the allocated funding, require renewal by the applicable
authority, and/or could be reduced or discontinued for other reasons. The reduction, elimination, or expiration of government
subsidies and economic incentives may result in the diminished demand from our customers and could materially and adversely
affect our future operating results.
We are subject to risks inherent in international operations.
Since we market our products both inside and outside the United States, our success depends in part, on our ability to secure
international customers and our ability to manufacture products that meet foreign regulatory and commercial requirements in
target markets. In addition, we are subject to tariff regulations and requirements for export licenses. We can face numerous
challenges in our international growth plans, including unexpected changes in regulatory requirements, potential conflicts or
disputes that countries may have to deal with, fluctuations in currency exchange rates, longer accounts receivable requirements
and collections, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation
of earnings and the burdens of complying with a wide variety of international laws. Any of these factors could adversely affect
our results of operations and financial condition.
Our revenue is highly concentrated among a small number of customers.
A large percentage of our revenue is typically derived from a small number of customers, and we expect this trend to continue.
Our customer arrangements generally are non-exclusive, have no long-term volume commitments and are typically done on a
purchase order basis. We cannot be certain that customers that have accounted for significant revenue in past periods will
continue to purchase our products. Accordingly, our revenue and results of operations may vary substantially from period to
period. We are also subject to credit risk associated with the concentration of our accounts receivable from our customers. If one
or more of our significant customers were to cease doing business with us, significantly reduce or delay its purchases from us or
fail to pay us on a timely basis, our business, financial condition and results of operations could be materially adversely affected .
Our business relies on third parties, whose success we cannot predict.
As a manufacturer of motors, generators, and other component parts, our business model depends on the ability of third parties in
our industry to develop, produce and market products that include or are compatible with our technology and then to sell these
products into the marketplace. Our ability to generate revenue depends significantly on the commercial success of our customers
and partners. Failure of these third parties to achieve significant sales of products incorporating our products and fluctuations in
the timing and volume of such sales could have a material adverse effect on our business, financial condition and results of
operations .
Our electric propulsion systems use rare-earth minerals and unavailability or limited supply of these minerals could
prevent us from manufacturing our products in production quantities or increase our costs.
Neodymium and dysprosium, rare-earth minerals, are key elements used in the production of magnets that are components of our
electric propulsion systems. We currently source our magnets from China, and China has indicated its intent to retain more of this
mineral for China use, rather than exporting it. During calendar year 2011, for example, we experienced significant price
escalation in the cost of magnets used in our motors. This price escalation was primarily due to rare-earth government policy in
China. Rare-earth prices have decreased substantially since peaking in the summer of 2011, and are now approaching the baseline
prices (defined as the beginning of calendar year 2011). We have implemented a magnet surcharge process to recover these
additional costs in the event of another price escalation. Although rare-earth magnets are available from other sources, these
alternative sources are currently more costly. Reduced availability of neodymium and dysprosium from China could adversely
affect our ability to obtain magnets in
10
Table of Contents
sufficient quantities, in a timely manner, or at a commercially reasonable cost. In the event that China's actions cause us to seek
alternate sources of supply for magnets, it could cause an increase in our product costs, thereby reducing or eliminating our profit
margin on electric propulsion systems if we are unable to pass the increase on to our customers . Increasing prices to our
customers due to escalating magnet costs may reduce demand for our motors and make it difficult or impossible to compete with
other motor manufacturers whose motors do not use rare-earth minerals.
Some of our contracts can be cancelled with little or no notice and could restrict our ability to commercialize our
technology.
Our contracts with government agencies are 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. March-in rights can be exercised if we fail to commercialize the developed technology. The
exercise of march-in rights by the government or an agency of the government could restrict our ability to commercialize our
technology.
Some of our orders for the future delivery of products are placed under blanket purchase orders which may be cancelled by our
customers at any time. The amount payable to us, if any, upon cancellation by the customer varies by customer. Accordingly, we
may not recognize as revenue all or any portion of the amount of outstanding order backlog we have reported .
We face intense competition and may be unable to compete successfully .
In developing electric motors for use in vehicles and other applications, we face competition from very large domestic and
international companies, including the world's largest automobile manufacturers. Many of our competitors 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. These competitors also have much greater experience in and resources for marketing
their products. For these reasons, potential customers may choose to purchase electric motors from our competitors rather than
from us.
Changes in environmental policies could hurt the market for our products .
The market for electric and other alternative fuel vehicles and equipment and the demand for our products are influenced, to a
degree, by federal, state and local regulations relating to air quality, greenhouse gases and pollutants. These laws and regulations
may change, which could result in transportation or equipment manufacturers abandoning or delaying their interest in electric or
hybrid electric vehicles or equipment. In addition, a failure by authorities to enforce current laws and regulations or to adopt
additional environmental laws or regulations could limit the demand for our products.
Although many governments have identified as a significant priority the development of alternative energy sources, governments
may change their priorities, and any change they make could materially affect our revenue or the development of our products .
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 the United States and 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 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
11
Table of Contents
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 may not 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 . Finally, patents may not deter third parties from
attempting to reverse engineer our products and discovering our intellectual property.
We rely, in part, on contractual provisions to protect our trade secrets and proprietary knowledge, the adequacy of which
may not be sufficient.
Confidentiality agreements to which we are party may be breached, and we may not have adequate remedies for any breach. Our
trade secrets may also be known without breach of such agreements or may be independently developed by competitors. Our
inability to maintain the proprietary nature of our technology and processes could allow our competitors to limit or eliminate any
competitive advantages we may have.
Use of our motors in vehicles could subject us to product liability claims or product recalls, 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 .
The automotive industry experiences significant product liability claims. As a supplier of electric propulsion systems or other
products to vehicle OEMs, we face an inherent business risk of exposure to product liability claims in the event that our products,
or the equipment into which our products are incorporated, malfunction and result in personal injury or death. We may be named
in product liability claims even if there is no evidence that our systems or components caused an accident. Product liability claims
could result in significant losses as a result of expenses incurred in defending claims or the award of damages. The sale of
systems and components for the transportation industry entails a high risk of these claims, which may increase as our production
and sales increase. In addition, we may be required to participate in recalls involving these systems if any of our systems prove to
be defective, or we may voluntarily initiate a recall or make payments related to such claims as a result of various industry or
business practices or the need to maintain good customer relationships.
We carry product liability insurance of $10 million covering most 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. Any product liability claim
brought against us also could have a material adverse effect on our reputation .
We may be subject to warranty claims, and our provision for warranty costs may not be sufficient .
We may be subject to warranty claims for defects or alleged defects in our products, and the risk of such claims arising will
increase as our production and sales increase. In addition, in response to consumer demand, vehicle manufacturers have been
providing, and may continue to provide, increasingly longer warranty periods for their products. As a consequence, these
manufacturers may require their suppliers, such as us, to provide correspondingly longer product warranties. As a result, we could
incur substantially greater warranty claims in the future .
Our future success will depend on our ability to attract and retain qualified management and technical personnel.
Our future success is substantially dependent on the continued services and on the performance of our executive officers and
other key management, engineering, manufacturing and operating personnel. The loss of the services of any executive officer, or
other key management, engineering, manufacturing and operating personnel, could materially adversely affect our business. Our
ability to achieve our growth plans will also depend on our ability to attract and retain additional qualified management and
technical personnel, and we do not know whether we will be able to be successful in these regards. Our inability to attract and
retain additional qualified management and technical personnel, or the
12
Table of Contents
departure of key employees, could materially and adversely affect our growth plans and, therefore, our business prospects, results
of operations and financial condition.
The maintenance and security of our information systems are critical to our operations.
We rely on our information systems to be functioning at all times, and that the data in those systems is protected and secure from
viruses, illegal access and any other form of unauthorized use. Should our information systems be compromised in any way, our
business operations could be severely impacted.
Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow.
Cybersecurity attacks could include, but are not limited to, malicious software, viruses, attempts to gain unauthorized access,
whether through malfeasance or error, either from within or outside of our organization, to our data or that of our customers or
our customers’ customers which may be in our possession, and the unauthorized release, corruption or loss of the data, loss of the
intellectual property, theft of the proprietary or licensed technology, whether ours, that of our customers or their customers, loss
or damage to our data delivery systems, other electronic security breaches that could lead to disruptions in our critical systems,
and increased costs to prevent, respond to or mitigate cybersecurity events. It is possible that our business, financial and other
systems could be compromised, which might not be noticed for some period of time. Although we utilize various procedures and
controls to mitigate our exposure to such risk, cybersecurity attacks are evolving and unpredictable and we cannot guarantee that
any risk prevention measures implemented will be successful. The occurrence of such an attack could lead to financial losses and
have a material adverse effect on our reputation, business, financial condition and results of operations.
Our stock price has been and could remain volatile.
The market price for our common stock has been and may continue to be volatile and subject to extreme price and volume
fluctuations in response to market and other factors, including the following, some of which are beyond our control:
·
·
·
·
·
·
·
·
·
·
failure to meet growth expectations;
variations in our quarterly operating results from the expectations of investors;
downward changes in general market conditions;
announcements of new products or services by our competitors;
announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital
commitments;
additions or departures of key personnel;
investor perception of our industry or our prospects;
insider selling or buying;
demand for our common stock; and
general technological or economic trends.
In the past, following periods of volatility in the market price of their stock, many companies have been the subjects of securities
class action litigation. If we became involved in securities class action litigation in the future, it could result in substantial costs
and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations
and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
13
Table of Contents
ITEM 2. PROPERTIES
We own our offices and manufacturing facility and believe the facility to be well maintained, adequately insured and suitable for
its present and intended uses. Information concerning our facility as of March 31, 2016 is set forth in the table below:
Location
Square Feet Expiration Date of Lease
Ownership or
Longmont, Colorado
129,304
Own
Use
Manufacturing, laboratories and
offices
ITEM 3. LEGAL PROCEEDINGS
Litigation
We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, and
based on current available information, the ultimate disposition of these matters is not expected to have a material adverse effect
on our financial position, results of operations or cash flow.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Part II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades on the NYSE MKT and Chicago Stock Exchange under the symbol UQM. The high and low trade
prices, by fiscal quarter, as reported by the NYSE MKT Stock Exchange for the last two fiscal years are as follows:
2016
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2015
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
High
Low
$
$
$
$
$
$
$
$
0.67
1.65
0.96
1.25
High
1.32
1.44
2.30
2.96
$
$
$
$
$
$
$
$
0.43
0.47
0.50
0.70
Low
0.71
0.76
1.18
1.72
On June 3, 2016 the closing price of our common stock, as reported on the NYSE MKT, was $0.79 per share and there were 538
holders of record of our common stock.
We have not paid any cash dividends on our common stock since inception and we intend for the foreseeable future to retain any
earnings to finance the growth of our business. Future dividend policy will be determined by our Board of Directors based upon
consideration of our earnings, capital needs and other factors then relevant.
14
Table of Contents
PERFORMANCE GRAPH
1
The following graph represents the yearly percentage change in the cumulative total return on the common stock of UQM
Technologies, Inc., the group of companies comprising the S&P Electrical Equipment Index, and those companies comprising the
S&P 500 Index for the five year period from March 31, 2011 through March 31, 2016:
UQM Technologies, Inc.
S&P 500
S&P Electrical Components & Equipment
3/11
100
100
100
3/12
49.66
108.54
94.75
3/13
24.83
123.69
112.02
3/14
88.59
150.73
140.20
3/15
36.91
169.92
129.75
3/16
19.20
172.95
127.03
* $100 invested on 3/31/11 in stock or index, including reinvestment of dividends Fiscal year ending March 31.
Copyright 2016 S&P Global. All rights reserved.
1
The stock price performance graph depicted is not “soliciting material,” is not deemed "filed" with the SEC, and is not
to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange
Act, whether made before or after the date hereof and irrespective of any general incorporation contained in such filing.
15
Table of Contents
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below should be read in conjunction with our consolidated financial statements
and related notes included elsewhere in this document.
UQM Technologies, Inc.
Selected Consolidated Financial Data
Product sales
Contract services revenue
Loss before other income (expense)
2016
$ 4,592,852
713,947
$
$ (6,976,527)
2015
$ 3,218,616
797,128
$
$ (6,859,891)
Fiscal Year Ended March 31,
2014
$ 6,136,305
909,895
$
$ (2,782,503)
2013
$
5,910,153
1,268,556
$
$ (10,707,432)
2012
$ 9,358,388
785,068
$
$ (4,953,336)
Net loss
$ (6,938,351)
$ (5,988,530)
$ (2,773,244)
$ (10,688,312)
$ (4,928,520)
Net loss per common share - basic and
diluted
$
(0.16)
$
(0.15)
$
(0.07)
$
(0.29)
$
(0.14)
Total assets
$ 23,350,903
$ 24,801,993
$ 29,835,133
$ 28,608,715
$ 39,655,601
Long-term obligations
(1)
$
288,889
$
445,024
$
182,100
$
627,412
$
715,107
Cash dividend declared per common
share
(1)
Includes current portion of long-term obligations.
-
-
-
-
-
16
Table of Contents
ITEM 7 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Introduction
UQM is a developer and manufacturer of power dense, high efficiency electric motors, generators, power electronic controllers,
and fuel cell compressors for the commercial truck, bus, automotive, marine, military, and industrial markets. We generate
revenue from two principal activities: 1) the sale of motors, generators, electronic controls, and fuel cell compressors; and 2)
research, development and application engineering contract services. Our product sales consist of annually recurring volume
production, prototype low volume sales, and revenues derived from the sale of refurbished and serviced products. The sources of
engineering service revenue typically vary from year to year and individual projects may vary substantially in their periods of
performance and aggregate dollar value.
We have invested considerable financial and human resources into the development of our technology and manufacturing
operations. We have developed and production-validated a full range of products for use in full-electric, hybrid electric, plug-in-
hybrid and fuel cell applications for the commercial bus and truck, automotive, marine, military, and industrial markets. These
products are all highly efficient permanent magnet designs and feature outstanding performance, package size and weight valued
by our customers. Our production capabilities and capacity are sufficient to meet the demands of our current and future customers
for the foreseeable future. We are certified as an ISO/TS 16949 quality supplier, which is the highest level of quality standards in
the automotive industry, and we are ISO 14001 certified, meeting the highest environmental standards. We have a management
team with significant experience in the automotive industry and the requirements for high quality production programs and very
deep technical knowledge of the motor and controller business. This team has the ability and background to grow the business to
significantly higher levels, and we believe we have adequate cash balances to fund our operations for at least the next twelve
months.
Our most important strategic initiative going forward is to develop customer relationships that lead to longer-term supply
contracts. Volume production is the key to our ongoing operations. We are driving business development in the following ways:
· We have created a well-defined, structured process to target potential customers of vehicle electric motor technology in
the commercial truck/van and shuttles, passenger buses, automotive, marine, military and other targeted markets both
domestically and internationally, particularly in China.
· We have developed a customer pipeline where identified potential customers are synergistic and strategic in nature for
longer-term growth potential.
· We are building long term quantifiable and sustainable relationships within the identified target markets.
· We provide service and support to our customers from pilot and test activities through commissioning processes and
then ultimately leading to volume production operations.
· We improve our purchasing and manufacturing processes to develop competitive costs to ensure that our pricing to
customers is market competitive.
· We provide customized solutions to meet specification requirements that some customers require.
· We participate in trade show events globally to demonstrate our products and engage with users of electric motor
technology.
· We actively involve all functional groups within the Company to support the needs of our customers.
We believe that the successful execution of these activities will lead us to secure volume production commitments from
customers, so that our operations will become cash flow positive and ultimately profitable.
In October 2015, we announced the introduction of the PowerPhase® HD(+) electric propulsion systems. The HD(+) is a major
improvement in UQM’s motor system technology, offering an enhanced thermal path and an increase in continuous power of up
to 25% for handling extreme duty drive cycles and steep grades for heavy duty vehicles.
17
Table of Contents
In October 2015, we announced the signing of a ten year supply agreement (“Agreement”) with ITL Efficiency Corporation
(“ITL”) in China. Over the term of the Agreement, revenues could exceed $400 million based on projected volume shipments.
Production is expected to begin in early 2017 following development, test and certification programs during 2016, and timing will
be dependent on the successful completion of the test and certification processes, followed by orders under the Agreement. We
received the first purchase order under the Agreement for the initial 3,000 units which are expected to ship in calendar year 2017.
We will manufacture our electric propulsion systems in Colorado through 2017 with plans to produce product in China beginning
in calendar year 2018. Initially, the PowerPhase Pro® 135 electric propulsion system will be sold to address the 6-8 meter shuttle
bus market in China, with larger delivery truck and transit bus applications slated to begin in early 2017 with the PowerPhase
HD® 250 system. Due to the fact of this new Agreement and that management believes the majority of sales of current PP135
inventory will be to ITL, at March 31, 2016, inventory of $6,840,170 was reclassified as a noncurrent asset on the Consolidated
Balance Sheet representing that portion of inventory in excess of amounts expected to be sold in the next twelve months, given
the parameters and expectations of the Agreement.
In November 2015, we announced that we closed an offering of common stock and warrants to certain institutional investors,
raising net proceeds of $5.8 million.
In January 2016, we announced that Kalmar Motor AB in Sweden had successfully passed vehicle trials with major airlines using
our propulsion system and plans on beginning production orders by mid-2016 using the PowerPhase® HD220, our heavy-duty
commercial traction electric motor/controller system, for their TBL50 airplane tugs. Ground handling tugs play a vital role at
airports by enabling large aircraft to be moved from their hangars to the passenger gate, as well as for pushback and other taxiing
functions on the runway.
In April 2016, we announced entry into the South American market with a key business relationship in Colombia with Creatti
Labs SAS, an electric vehicle integrator that is designing the next generation EV transportation systems for Colombia and other
South American markets. We have begun collaboration with Creatti Labs on an electric transit bus platform for the major bus
operators in Cali, Medellin and Bogota, which are the three main transportation systems in Colombia.
The Department of Energy grant that was awarded to us in 2010 expired on January 12, 2015. Since the beginning of the grant
program, we were reimbursed a total of $27.1 million through March 31, 2015. These cumulative reimbursements have allowed
us to achieve many milestones to support our business development efforts that we believe will lead to volume production
opportunities. First, we were able to relocate our headquarters and production operations to an approximate 130,000 square foot
facility. Within this modern facility, we were able to develop and install manufacturing capacity and infrastructure to build and
test our state-of-the-art traction motors and controllers. We have installed a flexible manufacturing footprint that allows us to
build both the large and smaller frame size motors and controllers at production capacity levels consistent with the growth targets
of our current and potential customers. Throughout the program, the DOE grant supported product validation and release
activities for both passenger vehicle and heavy duty truck and bus platforms. In addition, the grant assisted us in implementing
all of the required processes and systems to certify our facility to the ISO/TS 16949 quality standard that is a requirement to be a
supplier to the automotive industry.
With the expiration of the Grant, we launched and re-deployed resources from production engineering activities to several new
internally funded projects aimed at developing and significantly improving our product portfolio. This led to a significant increase
in research and development expenditures in fiscal year 2016, and we expect those resources to continue to be deployed on
similar research and development activities in the future.
The funding from the DOE grant strengthened our position with regards to product validation and manufacturing capabilities.
This, in addition to the business development activities in place and the cash reserves we have to fund the operations for at least
the next twelve months, makes us optimistic about the future of the Company.
Financial Condition
Cash and cash equivalents at March 31, 2016 were $7,030,230 and working capital was $8,765,522 compared with $6,585,703
and $15,605,555, respectively, at March 31, 2015. The increase in cash and cash equivalents was the result of our capital raise
offset by operating losses. Working capital decreased in fiscal year 2016 because we reclassified
18
Table of Contents
some inventory as non-current to reflect the timing of sales projections anticipated in our new long-term supply agreement with
ITL.
Accounts receivable decreased $41,013 to $481,404 at March 31, 2016 from $522,417 at March 31, 2015. The decrease is
primarily due to the timing of collections. Our sales are conducted through acceptance of customer purchase orders or in some
cases through supply agreements. For credit qualified customers, our standard terms are net 30 days. For international customers
and customers without an adequate credit rating or history, our typical terms are irrevocable letter of credit or cash payment in
advance of delivery. At both March 31, 2016 and 2015, we had an allowance for uncollectible accounts of zero.
Other receivable decreased to zero at March 31, 2016 from $855,000 at March 31, 2015 resulting from insurance proceeds
received under a key-man life insurance policy.
Costs and estimated earnings on uncompleted contracts increased to $60,296 at March 31, 2016 versus $49,917 at March 31,
2015. The increase is due to timing of billings on certain contracts in process at March 31, 2016 versus March 31, 2015.
Total inventories decreased $242,612 to $9,111,441 at March 31, 2016 compared to $9,354,053 at March 31, 2015, reflecting
shipments of PowerPhase Pro and PowerPhase HD propulsion systems.
®
®
Prepaid expenses and other current assets increased to $272,597 at March 31, 2016 from $266,448 at March 31, 2015, primarily
due to higher levels of prepayments on software licenses outstanding at the end of the current fiscal year versus the prior fiscal
year end.
We invested $144,522 for the acquisition of property and equipment during the fiscal year ended March 31, 2016 versus $558,755
during the fiscal year ended March 31, 2015. The decrease in capital expenditures is primarily attributable to decreased levels of
investments in production equipment during the current fiscal year. Cash reimbursements for capital assets under the Grant
during the fiscal years ended March 31, 2016 and March 31, 2015 were zero and $371,140, respectively, due to the expiration of
the Grant in fiscal year 2015.
Patent costs increased to $249,414 at March 31, 2016 compared to $239,043 at March 31, 2015 primarily due to capitalized costs
associated with a new patent application partially offset by the amortization of capitalized patent costs.
Trademark costs decreased to $98,327 at March 31, 2016 compared to $102,823 at March 31, 2015 due to the amortization of
capitalized trademark costs.
Accounts payable decreased $33,727 to $364,841 at March 31, 2016 from $398,568 at March 31, 2015, primarily due to the
timing of vendor payments.
Other current liabilities decreased $559,536 to $985,435 at March 31, 2016 from $1,544,971 at March 31, 2015. The decrease is
primarily attributable to the settlement of accrued vendor obligations at March 31, 2016.
Billings in excess of costs and estimated earnings on uncompleted contracts decreased to $0 at March 31, 2016 versus $84,444 at
March 31, 2015. The decrease is due to timing of billings on certain contracts in process at March 31, 2016 versus March 31,
2015.
Other long-term liabilities decreased $156,135 to $288,889 at March 31, 2016 from $445,024 at March 31, 2015 due to the
amortization of a license fee received from a customer under a ten-year cooperation agreement and revision of the executive
employment agreements.
Common stock and additional paid-in capital increased to $483,303 and $128,103,861, respectively, at March 31, 2016 compared
to $400,000 and $121,866,061 at March 31, 2015. The increases in common stock and additional paid-in capital were primarily
attributable to the registered direct offering that took place in October, 2015 and the periodic expensing of non-cash share-based
payments associated with grants under our Equity Incentive Plan and Stock Bonus Plan.
19
Table of Contents
Results of Operations
Revenue
Product sales this fiscal year increased 43 percent to $4,592,852 compared to $3,218,616 for the fiscal year ended March 31,
2015, reflecting an increase in orders from our customers, both domestically and internationally. Product sales for the fiscal year
ended March 31, 2015 decreased 48 percent to $3,218,616 compared to $6,136,305 for the fiscal year ended March 31, 2014. The
decrease was primarily due a slow domestic market resulting in reduced orders from our customers.
Revenue from contract services decreased $83,181, or 10 percent, to $713,947 for the fiscal year ended March 31, 2016 versus
$797,128 for the fiscal year ended March 31, 2015. This was driven by a change in mix of contracts in process during the current
fiscal year and by decreased levels of customer funded research activities, which vary from period to period. Revenue from
contract services decreased $112,767, or 12 percent, to $797,128 for the fiscal year ended March 31, 2015 versus $909,895 for the
fiscal year ended March 31, 2014. This was driven by a change in mix of contracts in process and by decreased levels of customer
funded research activities.
Gross Profit Margin
Gross profit margins on product sales this fiscal year decreased to 27 percent compared to 35 percent for fiscal 2015. The
decrease is primarily due to a change in overhead absorption resulting from the termination of our DOE grant. Gross profit
margins on product sales for the fiscal year ended March 31, 2015 decreased to 35 percent compared to 41 percent for fiscal 2014.
The decrease is primarily due to the decrease in overhead absorption as a result of lower volumes shipped during the fiscal year.
Gross profit margins on contract services increased to 8 percent this fiscal year compared to nil percent for the fiscal year ended
March 31, 2015, reflecting a change in the mix of contracts in process in the current fiscal year. Gross profit margins on contract
services for the fiscal year ended March 31, 2015 decreased to nil compared to 18 percent for the fiscal year ended March 31,
2014, reflecting a change in the mix of contracts in process.
Costs and Expenses
Research and development expenditures for the fiscal year ended March 31, 2016 were $3,459,746 compared to $1,131,159 and
$219,887 for the fiscal years ended March 31, 2015 and 2014, respectively. Coincident with the contractual end of the DOE Grant
on January 12, 2015, we launched and re-deployed resources to several new internally funded projects aimed at developing and
significantly improving our product portfolio. The reallocation of expenses from production engineering to research and
development led to the significant increase in research and development expenditures for fiscal years ending March 31, 2016 and
2015.
Production engineering costs were $0 for the fiscal year ended March 31, 2016 versus $3,406,923 and $4,644,646 for the prior
two fiscal years, respectively. With the expiration of the Grant, we re-deployed resources from production engineering activities
to several new internally funded research and development activities, which led to the reduction in production engineering costs
in the current fiscal year. The decrease for the fiscal year ended March 31, 2015 was attributable to decreased levels of product
qualification and testing activities.
Reimbursement of costs under the DOE Grant were $0 in fiscal year 2016 versus $1,901,109 and $3,625,853 for each of the two
prior fiscal years, respectively. The decrease for the current fiscal is attributable to the expiration of the Grant which occurred
during the fourth quarter of fiscal year 2015. During the fiscal year ended March 31, 2014, we changed our cumulative estimate
of reimbursable rates under the Grant which resulted in an increase in our reimbursement recorded for the year of
$958,000. Excluding this adjustment, reimbursements recorded during fiscal 2015 were 57 percent of production engineering
expenditures versus 85 percent for the fiscal year ended March 31, 2014, reflecting a decrease in our estimated reimbursable
overhead costs.
Selling, general and administrative expenses this fiscal year were $5,406,628 compared to $5,337,795 and $5,143,864 for the
fiscal years ended March 31, 2015 and 2014, respectively. The increase this fiscal year is attributable to an increase in legal and
business development expenses. The increase for the fiscal year ended March 31, 2015 is attributable to higher marketing and
business development expenses.
20
Table of Contents
Other
Recovery of impaired assets was $585,800 for fiscal year ended March 31, 2016 and $0 for fiscal year ended March 31, 2015
compared to recovery of impaired assets of $868,475 for the fiscal year ended March 31, 2014. During the fiscal year ended
March 31, 2016, we reduced the carrying value of the accrued vendor settlement liability by $585,800, due to the settlement with
a vendor. During the fiscal year ended March 31, 2014, we recorded a reduction to our accrued import duties liability of
$726,640 as a result of the ruling from the Department of Commerce that significantly reduced the amount of duties owed, and
we reduced the carrying value of the accrued vendor settlement liability by $141,835, due to settlements with certain vendors
during the year which were below the originally estimated amounts.
Interest income decreased to $8,122 for the current fiscal year compared to $12,306 and $1,787 for the fiscal years ended March
31, 2015 and 2014, respectively. The decrease this fiscal year versus fiscal year 2015 is attributable to lower yields and lower
levels of invested cash balances prior to the registered direct offering in October, 2015. The increase for fiscal 2015 compared to
fiscal 2014 is attributable to higher yields on invested cash balances.
Other income for the fiscal year ended March 31, 2016 was $30,054 versus $859,055 and $7,472 for the fiscal years ended March
31, 2015 and 2014, respectively. The decrease for fiscal year 2016 compared to fiscal year 2015 is attributable to insurance
proceeds received under a key-man life insurance policy.
Net Loss
As a result, net loss for the fiscal year ended March 31, 2016 was $6,938,351, or $0.16 per common share, compared to a net loss
of $5,988,530, or $0.15 per common share, and $2,773,244, or $0.07 per common share, for the fiscal years ended March 31,
2015 and 2014, respectively.
Liquidity and Capital Resources
Our cash balances and liquidity throughout the fiscal year ended March 31, 2016 were adequate to meet operating needs. At
March 31, 2016, we had cash and cash equivalents of $7,030,230 and working capital of $8,765,522 compared to $6,585,703 and
$15,605,555 at March 31, 2015, respectively. Working capital declined as of March 31, 2016 because we reclassified some
inventory as non-current to reflect the timing of sales projections anticipated in our new long-term supply agreement with ITL.
For the year ended March 31, 2016, net cash used in operating activities was $5,104,097 compared to net cash used in operating
activities of $3,363,094 and $622,732 for the years ended March 31, 2015 and 2014, respectively. The increase in cash used in
operating activities for the current fiscal year versus fiscal 2015 is primarily attributable to increased net losses due to the DOE
Grant ending in the fourth quarter of fiscal 2015 and the settlement of a lawsuit. The increase in cash used in operating activities
for fiscal 2015 compared to fiscal 2014 is primarily attributable to increased net losses due to lower product sales revenue during
fiscal 2015 and an adjustment recorded in fiscal year 2014 to our cumulative estimate of reimbursable rates under the Grant which
resulted in a one-time pick-up of $958,000. These changes were partially offset by decreased levels of inventory and decreased
levels of costs and estimated earnings in excess of billings on uncompleted contracts.
Net cash used in investing activities for the fiscal year ended March 31, 2016 was $176,625 compared to cash used by investing
activities of $153,127 and cash provided by investing activities of $1,348,248 for the fiscal years ended March 31, 2015 and 2014,
respectively. The change for the current fiscal year is primarily due to decreased levels of net investments in property and
equipment during the current year. The decrease in cash provided for the fiscal year ended March 31, 2015 versus fiscal 2014 was
primarily due to higher levels of net investments in property and equipment during the current year, and proceeds from the sale of
our former facility during fiscal 2014.
Net cash provided by financing activities was $5,725,249for the fiscal year ended March 31, 2016 versus cash used by financing
activities of $145,188 for fiscal year 2015 and cash provided by financing activities of $4,993,697 for the fiscal year ended March
31, 2014. The change in cash provided in the current fiscal year was primarily attributable to the cash received by the registered
direct offering in October, 2015. The change in cash used in financing activities in fiscal year 2015 was primarily attributable to
completion of a follow-on offering during fiscal 2014.
21
Table of Contents
We expect to fund our operations over the next year from existing cash and cash equivalent balances and the reduction of
inventories. Although we expect to manage our operations and working capital requirements to minimize the future level of
operating losses and working capital usage, our working capital requirements may increase in the future. If customer demand
accelerates substantially, our working capital requirements may also increase substantially.
If our existing financial resources are not sufficient to execute our business plan, we may issue equity or debt securities in the
future, although we cannot assure that we will be able to secure additional capital should it be required to implement our current
business plan. In the event financing or equity capital to fund future growth is not available on terms acceptable to us, or at all, we
will modify our strategy to align our operations with then available financial resources. Based on our current level of operations,
we believe we have sufficient cash and cash equivalents to fund our operations for at least the next twelve months.
Contractual Obligations
The following table presents information about our contractual obligations and commitments as of March 31, 2016:
Purchase obligations
Executive employment agreements
Total
(1)
Payments due by Period
Total
$ 292,650
132,222
$ 424,872
Less Than
1 Year
$ 292,650
-
$ 292,650
2 - 3 Years
4 - 5 Years
More than
5 Years
$
$
-
132,222
132,222
$
$
-
-
—
$
$
-
-
—
(1)
Includes retention bonus payable under executive employment agreements if our officers remain employees of UQM
continuously through June 30, 2017, but not annual cash compensation under the agreements. This is reflected in other long-
term liabilities in the accompanying Consolidated Balance Sheets.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make judgments, assumptions and estimates that affect the dollar values
reported in the consolidated financial statements and accompanying notes. Note 1 to our consolidated financial statements
describes the significant accounting policies and methods used in preparation of the consolidated financial statements. Estimates
are used for, but not limited to, allowance for uncollectible accounts receivables, costs to complete contracts, the recoverability of
inventories and the fair value of financial and long-lived assets. Actual results could differ materially from these estimates. The
following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in preparation of
the consolidated financial statements.
Inventories
We maintain raw material inventories of electronic components, motor parts and other materials to meet our expected
manufacturing needs for proprietary products and for products manufactured to the design specifications of our customers. Some
of these components may become obsolete or impaired due to bulk purchases in excess of customer requirements. Accordingly,
we periodically assesses our raw material inventory for potential impairment of value based on then available information,
expectations and estimates and establish impairment reserves as appropriate.
As of March 31, 2016, we had approximately $7.7 million of PowerPhase Pro
inventory originally purchased or manufactured
for a former customer who subsequently filed for bankruptcy protection. We evaluate PowerPhase Pro inventory separately from
our other inventory to determine whether the inventory is impaired. We considered the following factors in our evaluation of the
need for a reserve of the PowerPhase Pro
inventory as of March 31, 2016, 2015 and 2014:
®
®
®
·
Demand from customers who had purchased the system in the past and the prospects for future purchases.
22
Table of Contents
·
·
·
·
·
Potential demand for the system from identified customers who were considering purchasing the system, but had not yet
done so.
The potential to identify additional customers for the system who were not currently engaged with the Company in the
sales cycle.
Our ability to sell this inventory as is or with only minor modifications.
Our ability to sell the systems at prices above our inventory cost.
The risk of technical obsolescence for the system over the expected selling period.
®
We believe the PowerPhase Pro system is right sized for many medium-duty truck, marine, passenger vehicle and stationary
power applications, and this inventory is now being sold to other customers. We have analyzed sales forecasts of current and
potential customers for this product, including the forecasts anticipated in the new long-term supply agreement with ITL,
®
although at lower margins, and believe that there is sufficient market demand to consume the balance of the PowerPhase Pro
inventory currently on hand. We continue to sell this product at selling prices in excess of inventory cost and believe that we will
be able to do so in the future. As of March 31, 2016 and 2015, no impairment of this inventory was recorded.
During the fiscal years ended March 31, 2016, 2015 and 2014, we recorded inventory impairments for obsolescence other than
PowerPhase Pro inventory of $9,906, $44,451 and $5,047, respectively.
®
It is reasonably possible that future events or changes in circumstances could cause the realizable value of our inventories to
decline materially, resulting in material impairment losses.
Accounts Receivable
Our trade accounts receivable are subject to credit risks associated with the financial condition of our customers and their
liquidity. We evaluate all customers periodically to assess their financial condition and liquidity and set appropriate credit limits
based on this analysis. As a result, the collectability of accounts receivable may change due to changing general economic
conditions and factors associated with each customer’s particular business. In light of current economic conditions, we may need
to maintain an allowance for bad debts in the future. It is also reasonably possible that future events or changes in circumstances
could cause the realizable value of our trade accounts receivable to decline materially, resulting in material losses.
Percentage of Completion Revenue Recognition on Long-term Contracts: Costs and Estimated Earnings in Excess of Billings
on Uncompleted Contracts
We recognize revenue on development projects funded by our 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 our technology to customers’
products and other applications with demanding specifications. Estimated costs for each project are developed by our engineering
staff based upon a progression of technical tasks required to attain the project's objectives. These estimates typically include the
number of hours of work required by each category of personnel, the cost of subcontracts, materials and components, as well as
costs for consultants and project related travel. These estimated costs are reviewed throughout the project and revised quarterly, if
necessary, to accurately reflect our best estimate of the remaining costs necessary to complete the project. Management’s best
estimates have sometimes been adversely impacted by unexpected technical challenges requiring additional analysis and redesign,
failure of electronic components to operate in accordance with manufacturers published performance specifications, unexpected
prototype failures requiring the purchase of additional parts, changes in actual overhead costs versus estimated overhead costs and
a variety of other factors that may cause unforeseen delays and additional costs. It is reasonably likely that estimated project costs
to complete the projects in process at March 31, 2016 could change materially in the future, and any modification of
management’s current estimate of total project costs to be incurred could result in material changes in the profitability of affected
projects or result in material losses on any affected projects.
Fair Value Measurements and Asset Impairment
Some of our assets and liabilities may be subject to analysis as to whether the asset or liability should be marked to fair value and
some assets may be evaluated for potential impairment in value. The determination of fair value for those assets that do not have
quoted prices in active markets is highly judgmental. These estimates and judgments may include
23
Table of Contents
fair value determinations based upon the extrapolation of quoted prices for similar assets and liabilities in active or inactive
markets, for observable items other than the asset or liability itself, for observable items by correlation or other statistical analysis,
or from our assumptions about the assumptions market participants would use in valuing an asset or liability when no observable
market data is available. Similarly, management evaluates both tangible and intangible assets for potential impairments in value.
In conducting this evaluation, management may rely on a number of factors to value anticipated future cash flows including
operating results, business plans and present value techniques. Rates used to value and discount cash flows may include
assumptions about interest rates and the cost of capital at a point in time. There are inherent uncertainties related to these factors
and management’s judgment in applying them to the analysis of asset impairment. Changes in any of the foregoing estimates and
assumptions or a change in market conditions could result in a material change in the value of an asset or liability resulting in a
material adverse change in our operating results.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RIS K
Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and
interest rates. One component of interest rate risk involves the short term investment of excess cash in short term, investment
grade interest-bearing securities. If there are changes in interest rates, those changes would affect the investment income we earn
on these investments and, therefore, impact our cash flows and results of operations, although we expect that the impact would be
immaterial. We do not use financial instruments to any degree to manage these risks and do not hold or issue financial
instruments for trading purposes. All of our product sales and related receivables are payable in U.S. dollars.
24
Table of Contents
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
UQM Technologies, Inc.
We have audited the accompanying consolidated balance sheet of UQM Technologies, Inc. and subsidiaries as of March 31,
2016, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of UQM Technologies, Inc. and subsidiaries as of March 31, 2016 and the results of their operations and their cash flows for the
year then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Hein & Associates LLP
Denver, Colorado
June 7 2016
25
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
UQM Technologies, Inc.
We have audited the accompanying consolidated balance sheet of UQM Technologies, Inc. (a Colorado corporation) and
subsidiaries (the “Company”) as of March 31, 2015, and the related consolidated statements of operations, stockholders’ equity,
and cash flows for each of the two years in the period ended March 31, 2015. These 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 the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of UQM Technologies, Inc. and subsidiaries as of March 31, 2015, and the results of their operations and their cash flows for each
of the two years in the period ended March 31, 2015, in conformity with accounting principles generally accepted in the United
States of America.
/s/ GRANT THORNTON LLP
Denver, Colorado
May 28, 2015
26
Table of Contents
Assets
Current assets:
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Cash and cash equivalents
Accounts receivable
Other receivable
Costs and estimated earnings in excess of billings on uncompleted contracts
Inventories
Prepaid expenses and other current assets
$
Total current assets
Property and equipment, at cost:
Land
Building
Machinery and equipment
Less accumulated depreciation
Net property and equipment
Fiscal Year Ended March 31,
2015
2016
$
7,030,230
481,404
-
60,296
2,271,271
272,597
10,115,798
1,683,330
4,516,301
7,089,332
13,288,963
(7,241,769)
6,047,194
6,585,703
522,417
855,000
49,917
9,354,053
266,448
17,633,538
1,683,330
4,516,301
7,037,200
13,236,831
(6,410,242)
6,826,589
Patent costs, net of accumulated amortization of $916,960 and $895,227,
respectively
249,414
239,043
Trademark costs, net of accumulated amortization of $77,514 and $73,018,
respectively
Noncurrent inventories
Total assets
See accompanying notes to consolidated financial statements.
27
98,327
102,823
6,840,170
-
$
23,350,903
$
24,801,993
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Other current liabilities
Billings in excess of costs and estimated earnings on uncompleted
contracts
Total current liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 7)
Stockholders’ equity:
Fiscal Year Ended March 31,
2015
2016
$
364,841
985,435
$
398,568
1,544,971
-
1,350,276
84,444
2,027,983
288,889
445,024
1,639,165
2,473,007
Common stock, $0.01 par value, 75,000,000 and 50,000,000 shares
authorized; 48,330,286 and 39,999,984 shares issued and outstanding,
respectively
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
483,303
128,103,861
(106,875,426)
21,711,738
400,000
121,866,061
(99,937,075)
22,328,986
Total liabilities and stockholders’ equity
$
23,350,903
$
24,801,993
See accompanying notes to consolidated financial statements.
28
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Revenue:
Product sales
Contract services
Operating costs and expenses:
Costs of product sales
Costs of contract services
Research and development
Production engineering
Reimbursement of costs under DOE grant
Selling, general and administrative
Recovery of impaired assets
Loss (gain) on disposal of long- lived assets
Fiscal Year Ended March 31,
2016
2015
2014
$
4,592,852
713,947
5,306,799
$
$
3,218,616
797,128
4,015,744
3,343,508
659,244
3,459,746
-
-
5,406,628
(585,800)
-
12,283,326
2,101,610
798,038
1,131,159
3,406,923
(1,901,109)
5,337,795
-
1,219
10,875,635
6,136,305
909,895
7,046,200
3,609,028
743,068
219,887
4,644,646
(3,625,853)
5,143,864
(868,475)
(37,462)
9,828,703
Loss before other income
(6,976,527)
(6,859,891)
(2,782,503)
Other income:
Interest income
Other
8,122
30,054
38,176
12,306
859,055
871,361
1,787
7,472
9,259
Net loss
$ (6,938,351)
Net loss per common share - basic and diluted
$
(0.16)
$
$
(5,988,530)
(0.15)
$
$
(2,773,244)
(0.07)
Weighted average number of shares of common stock
outstanding - basic and diluted
43,574,137
39,940,795
37,253,066
See accompanying notes to consolidated financial statements.
29
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
Number of
common
shares
issued
Additional
Common
stock
paid-in
Accumulated
capital
deficit
Total
stockholders’
equity
Balances at April 1, 2013
36,664,097 $ 366,641 $ 115,573,331 $ (91,175,301) $ 24,764,671
Issuance of common stock under employee
stock purchase plan
Issuance of common stock in follow-on
offering, net of offering costs
Issuance of common stock under stock bonus
plan
Issuance of common stock upon exercise of
employee options
Compensation expense from employee and
director stock option and common stock
grants
Net loss
Balances at March 31, 2014
Issuance of common stock under employee
stock purchase plan
Issuance of common stock under stock bonus
plan
Issuance of common stock upon exercise of
employee options
Retirement of vested shares
Compensation expense from employee and
director stock option and common stock
grants
Net loss
Balances at March 31, 2015
Issuance of common stock under employee
stock purchase plan
Issuance of common stock under registered
direct offering
Issuance of common stock under stock bonus
plan
Common stock used for tax withholdings
Compensation expense from employee and
director stock option and common stock
grants
Net loss
Balances at March 31, 2016
62,421
624
60,065
-
60,689
2,864,872
28,649
4,883,284
-
4,911,933
166,231
1,663
34,836
20,146
201
20,874
-
-
36,499
21,075
753,372
(2,773,244)
39,777,767 $ 397,778 $ 121,325,762 $ (93,948,545) $ 27,774,995
-
(2,773,244)
753,372
-
-
-
-
-
12,052
120
21,935
288,051
2,881
29,563
5,053
(82,939)
50
(829)
4,447
(170,911)
-
-
-
-
22,055
32,444
4,497
(171,740)
655,265
(5,988,530)
39,999,984 $ 400,000 $ 121,866,061 $ (99,937,075) $ 22,328,986
-
(5,988,530)
655,265
-
-
-
-
-
62,932 $
629 $
38,748 $
- $
39,377
8,000,000
80,000
5,698,463
-
5,778,463
377,047
(109,677)
3,771
(1,097)
11,805
(91,494)
-
-
15,576
(92,591)
-
580,278
(6,938,351)
48,330,286 $ 483,303 $ 128,103,861 $ (106,875,426) $ 21,711,738
-
(6,938,351)
580,278
-
See accompanying notes to consolidated financial statements.
30
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization
Non-cash equity based compensation
Recovery of assets
Loss (gain) on disposal of long-lived assets
Impairment of inventories
Change in operating assets and liabilities:
Accounts receivable
Other receivable
Costs and estimated earnings on uncompleted contracts
Inventories
Prepaid expenses and other current assets
Accounts payable and other current liabilities
Billings in excess of costs and estimated earnings on
uncompleted contracts
Other long-term liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchases of short-term investments
Maturities of short-term investments
Acquisition of property and equipment
Property and equipment reimbursements received from DOE under
grant
Cash paid for patent and trademark fees
Cash proceeds from the sale of building and equipment
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Cash received for shares exercised under employee stock purchase
plan
Cash received for exercise of employee options
Issuance of common stock in registered direct offering, net of offering
costs
Payment of employee tax withholdings in exchange for return of
common stock
Net cash provided by (used in) financing activities
Fiscal Year Ended March 31,
2016
2015
2014
$
(6,938,351)
$
(5,988,530)
$
(2,773,244)
950,145
595,854
(585,800)
-
9,906
41,013
855,000
(10,379)
232,706
(6,149)
(7,463)
1,061,312
687,709
-
1,219
44,451
328,080
(855,000)
291,338
655,918
(2,460)
65,501
(84,444)
(156,135)
(5,104,097)
84,444
262,924
(3,363,094)
-
-
(144,522)
-
(32,103)
-
(176,625)
-
63,029
(558,755)
371,140
(28,541)
-
(153,127)
1,136,021
789,871
(868,475)
(37,462)
5,047
1,218,971
-
(162,991)
938,992
45,969
(470,119)
-
(445,312)
(622,732)
(593)
-
(377,224)
215,754
(54,721)
1,565,032
1,348,248
39,377
-
4,497
22,055
21,075
60,689
5,778,463
-
4,911,933
(92,591)
5,725,249
(171,740)
(145,188)
-
4,993,697
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
444,527
6,585,703
7,030,230
(3,661,409)
10,247,112
6,585,703
5,719,213
4,527,899
$ 10,247,112
$
$
See accompanying notes to consolidated financial statements.
31
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policie s
(a) Description of Business
UQM Technologies, Inc. and our wholly-owned subsidiaries are engaged in the research, development and manufacture
of permanent magnet electric motors and the electronic controls for such motors. Our facility is located in Longmont,
Colorado. Our revenue is derived primarily from product sales to customers in the commercial truck, bus, automotive,
marine, military, and industrial markets, and from contract research and development services. We are impacted by other
factors such as the continued receipt of contracts from industrial and governmental parties, our ability to protect and
maintain the proprietary nature of our technology, continued product and technological advances and our ability,
together with our partners, to commercialize our products and technology.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of UQM Technologies, Inc. and its majority-owned
subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
(c) Cash and Cash Equivalents
We consider cash on hand and investments with original maturities of three months or less to be cash and cash
equivalents.
We limit our cash and cash equivalents to high quality financial institutions in order to minimize our credit risk. We
maintain cash and cash equivalent balances with financial institutions that exceed federally insured limits. We have not
experienced any losses related to these balances and management believes our credit risk to be minimal.
32
Table of Contents
(d) Accounts Receivables
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
We extend unsecured credit to many of our customers following a review of the customers’ financial condition and
credit history. Our sales are conducted through acceptance of customer purchase orders or in some cases through supply
agreements. For credit qualified customers, our standard terms are net 30 days. For international customers without an
adequate credit rating, our typical terms are irrevocable letter of credit or cash payment in advance of delivery. We
establish an allowance for uncollectable accounts based upon a number of factors including the length of time trade
receivables are past due, the customer’s ability to pay its obligation to us, the condition of the general economy,
estimates of credit risk, historical trends and other information. We write off accounts receivable when they become
uncollectible against our allowance for doubtful accounts receivable. At both March 31, 2016 and 2015, we had no
allowance for doubtful accounts receivable. The following represents activity under our allowance for doubtful accounts
receivable for the fiscal years ended March 31, 2016, 2015 and 2014 :
Balance at
Beginning
of Year
Additions
Charged to Charged to
Costs and Other
Expenses
Accounts
Balance at
Deductions End of Year
Year ended March 31, 2016
Allowance for doubtful accounts- deducted
from accounts receivable
Year ended March 31, 2015
Allowance for doubtful accounts- deducted
from accounts receivable
Year ended March 31, 2014
Allowance for doubtful accounts- deducted
from accounts receivable
(e) Inventories
$
—
—
—
— $
—
$
—
—
—
— $
—
$ 3,838,092
—
— 3,838,092 $
—
Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. We analyze
slow-moving and excess inventory on a periodic basis and we charge directly to expense obsolete inventory items during
the period we assess the value of such inventory to be impaired. For the fiscal years ended March 31, 2016, 2015 and
2014 , we recognized impaired inventory of $9,906, $44,451 and $5,047, respectively. See Footnote 3.
(f) Property and Equipment
Property and equipment are stated at cost, unless the asset was acquired, in part, with U.S. Department of Energy
(“DOE”) grant funds, in which case it is stated at cost net of DOE reimbursements. 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 27.5 years. Maintenance and repairs are charged to expense as incurred.
Depreciation expense for the fiscal years ended March 31, 2016, 2015 and 2014 was $923,917, $1,040,499 and
$1,098,622, respectively, and was reported in operating costs and expenses on the Consolidated Statements of
Operations.
(g) Patent and Trademark Costs
Patent and trademark costs consist primarily of legal expenses, and represent those costs incurred by us for the filing of
patent and trademark applications. Amortization of patent and trademark costs is computed using the straight-line
method over the estimated useful life of the asset, typically 8 years for patents, and 40 years for
33
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
trademarks. Amortization expense for the fiscal years ended March 31, 2016, 2015 and 2014 was $26,228, $20,813, and
$37,399, respectively.
(h) Impairment of Long-Lived Assets
We periodically evaluate whether circumstances or events have affected the recoverability of long-lived assets including
intangible assets with finite useful lives. The assessment of possible impairment is based on our 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 discounted future cash flows.
(i) Product Warranties
Our warranty policy generally provides three months to four years of coverage depending on the product. We record a
liability for estimated warranty obligations at the date products are sold. The estimated cost of warranty coverage is
based on our actual historical experience with our current products or similar products. For new products, the required
reserve is based on historical experience of similar products until sufficient historical data has been collected on the new
product. Adjustments are made as new information becomes available. The following is a summary of warranty activity
for the fiscal years ended March 31, 2016, 2015 and 2014 :
Additions
Balance at Charged to Charged to
Beginning Costs and
Other
of Year
Expenses
Accounts
Balance at
Deductions ( A
)
End of Year
$ 184,920
102,247
$ 175,661
73,678
$ 77,393
164,567
-
-
-
(42,857) $ 244,310
(64,419) $ 184,920
(66,299) $ 175,661
Year ended March 31, 2016
Accrued warranty cost
Year ended March 31, 2015
Accrued warranty cost
Year ended March 31, 2014
Accrued warranty cost
Note (A) Represents actual warranty payments for units covered under warranty
(j) Revenue and Cost Recognition
Revenue from sales of products is generally recognized at the time title to the goods and the benefits and risks of
ownership passes to the customer, which is typically when products are shipped based on the terms of the customer
purchase agreement.
Revenue relating to long-term fixed price contracts is recognized using the percentage of completion method. Under the
percentage of completion method, contract revenues and related costs are recognized based on the percentage that costs
incurred to date bear to total estimated costs. Changes in job performance, estimated profitability and final contract
settlements may result in revisions to cost and revenue, and are recognized in the period in which the revisions are
determined. Contract costs include all direct materials, subcontract and labor costs and other indirect costs. Selling,
general and administrative costs are charged to expense as incurred. At the time a loss on a contract becomes known, the
entire amount of the estimated loss is accrued.
The aggregate of costs incurred and estimated earnings recognized on uncompleted contracts in excess of related billings
is shown as a current asset, and billings on uncompleted contracts in excess of costs incurred and estimated earnings is
shown as a current liability.
(k) Government Grants
34
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The Company recognizes revenue and cost reimbursements from government grants when it is probable that the
Company will comply with the conditions attached to the grant arrangement and the grant proceeds will be received.
Government grants are recognized in the Consolidated Statements of Operations on a systematic basis over the periods
in which the Company recognizes the related costs for which the government grant is intended to compensate.
Specifically, when government grants are related to reimbursements for cost of revenues or operating expenses, the
government grants are recognized as a reduction of the related expense in the Consolidated Statements of Operations.
For government grants related to reimbursements of capital expenditures, the government grants are recognized as a
reduction of the basis of the asset and recognized in the Consolidated Statements of Operations over the estimated useful
life of the depreciable asset as reduced depreciation expense.
The Company records government grants receivable in the Consolidated Balance Sheets in accounts receivable.
(l) Income Taxes
The Company accounts for income taxes under the asset and liability method. 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 basis and operating loss and tax credit carry-forwards. 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 valuation of deferred tax assets may be reduced
if future realization is not assured. The effect of a change in tax rates on deferred tax assets and liabilities is recognized
in income tax expense or benefit in the period that includes the enactment date. The Company has unexpired net
operating losses and research and development credits carrying forward into current years that date from the tax year
1999 and 2001, respectively. As such, all federal tax returns from 1999 to the present are subject to audit.
(m) Research and Development
Costs of researching and developing new technology, or significantly altering existing technology, are expensed as
incurred.
(n) Loss Per Common Share
The following table sets forth the computation of basic and diluted net loss per share for the fiscal years ended March
31, 2016, 2015 and 2014:
Numerator:
Net loss
Denominator for basic and diluted net loss per
common share:
Weighted average number of shares of common
stock outstanding - basic and diluted
Fiscal Year Ended March 31,
2015
2016
2014
$
(6,938,351) $
(5,988,530) $
(2,773,244)
43,574,137
39,940,795
37,253,066
Net loss per common share - basic and diluted
$
(0.16) $
(0.15) $
(0.07)
35
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net
loss per share because to do so would be anti-dilutive as of the end of each period presented:
Non-vested stock bonus plan shares
Stock options outstanding
Warrants to purchase common stock
(o) Use of Estimates
2016
March 31,
2015
2014
88,214
2,561,769
5,489,733
432,039
3,006,009
1,489,733
640,979
3,342,627
1,489,733
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets, obsolescence reserves, and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those
estimates.
(p) New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard to achieve a consistent
application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting
companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs
when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting
companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. The new standard is effective for us for the first fiscal year beginning after December 15, 2017. Earlier
application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim
reporting periods within that reporting period. The new standard is required to be applied retrospectively to each prior
reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of
initial application. We are in the process of determining the impact of this guidance on our financial statements.
In August 2014, the FASB issued guidance on determining when and how to disclose going-concern uncertainties in the
financial statements. The new standard provides guidance around management's responsibility to evaluate whether there
is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures.
The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim
periods thereafter, with early adoption permitted. We expect the new standard to increase the disclosures we provide
regarding our liquidity and cash obligations.
In July 2015, the FASB issued guidance on simplifying the measurement of inventory from the lower of cost or market
to the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for
years beginning after December 15, 2016, including interim periods within those fiscal years. Prospective application is
allowed as of the beginning of an interim or annual reporting period. An entity is only required to disclose the nature of
and reason for the change in accounting principle in the first interim and annual period of adoption. We are in the
process of determining the impact of this guidance on our financial statements.
In March 2016, the FASB issued guidance on improvements to employee share-based payment accounting for stock
compensation. The new standard addresses the topics of accounting for income taxes, classification of excess tax
benefits on the Statement of Cash Flows, forfeitures, minimum statutory tax withholding requirements, classification of
employee taxes paid on the Statement of Cash Flows when an employer
36
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
withholds shares for tax withholding purposes. This is effective for annual periods beginning after December 15, 2016
and interim periods within those annual periods. Early adoption is permitted within any interim or annual period. Any
adjustments should be reflective as of the beginning of the fiscal year that includes that interim period. An entity that
elects early adoption must adopt all the amendments in the same period. We are in the process of determining the
impact of this guidance on our financial statements.
(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, 2016 and March 31, 2015, the estimated period to complete contracts in process ranged from one to six months
and one to thirteen months, respectively. We expect to collect all accounts receivable arising from these contracts within
sixty days of billing.
The following summarizes contracts in process:
Costs incurred on uncompleted contracts
Estimated earnings
Less billings to date
Contracts in process
Included in the accompanying Consolidated Balance Sheets as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts
Billings in excess of costs and estimated earnings on uncompleted contracts
Contracts in process
(3) Inventories
Inventories consist of:
Raw materials
Work-in-process
Finished products
Inventories- current
Inventories- noncurrent
$
Fiscal Year Ended March 31,
2016
2,607,764 $
717,771
3,325,535
(3,265,239)
2015
2,327,816
626,075
2,953,891
(2,988,418)
$
60,296 $
(34,527)
$
$
60,296 $
-
60,296 $
49,917
(84,444)
(34,527)
Fiscal Year Ended March 31,
2016
7,279,633 $
45,506
1,786,302
9,111,441 $
2015
7,261,568
25,842
2,066,643
9,354,053
$
$
Fiscal Year Ended March 31,
2016
2,271,271 $
6,840,170
9,111,441 $
2015
9,354,053
-
9,354,053
$
$
During the fiscal year ended March 31, 2016, the Company entered into a ten year supply agreement (“Agreement”) with
ITL Efficiency Corporation (“ITL”) in China. The Agreement anticipates that development, test and
37
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
certification programs will take place during calendar 2016, and that production will commence in early calendar 2017. The
Company also received a purchase order for the first 3,000 units which are planned to ship in calendar year 2017. It is
expected that the majority of the first 3,000 units shipped will be PP135 electric propulsion systems to address the 6-8 meter
shuttle bus market in China.
Due to the fact of this new Agreement and that management believes the majority of sales of current PP135 inventory will be
to ITL, at March 31, 2016, inventory of $6,840,170 was reclassified as a noncurrent asset on the Consolidated Balance Sheet
representing that portion of inventory in excess of amounts expected to be sold in the next twelve months, given the
parameters and expectations of the Agreement.
(4) Patents and Trademarks
Patents owned by the Company had a gross carrying amount of $1,166,374 and $1,134,270, accumulated amortization of
$916,960 and $895,227, and a net carrying amount of $249,414 and $239,043, at March 31, 2016 and 2015, respectively.
Trademarks owned by the Company had a gross carrying amount of $175,841 and $175,841, accumulated amortization of
$77,514 and $73,018, and a net carrying value of $98,327 and $102,823 at March 31, 2016 and 2015, respectively. Patents
and trademarks are amortized on a straight-line basis over the estimated useful life of the asset. The weighted-average period
of amortization is 8 years for patents, and 40 years for trademarks.
Estimated future amortization of these intangible assets by fiscal year is as follows:
2017
2018
2019
2020
2021
Thereafter
(5) Government Grant
Patents
Trademarks
$
$
21,566
21,089
17,347
11,354
8,627
169,431
249,414
$
$
4,496
4,496
4,496
4,496
4,496
75,847
98,327
We had a grant (the “Grant”) with the DOE under the American Recovery and Reinvestment Act. The Grant provided funds
to facilitate the manufacture and deployment of electric drive vehicles, batteries and electric drive vehicle components in the
United States. Under the terms of the Agreement, the DOE reimbursed us for 50 percent of qualifying costs for the purchase
of facilities, tooling and manufacturing equipment, and for engineering related to product qualification and testing of our
electric propulsion systems and other products. The Grant ended on January 12, 2015.
The Grant was also subject to our compliance with certain reporting requirements. The American Recovery and
Reinvestment Act imposed minimum construction wages and labor standards for projects funded by the Grant. If we dispose
of assets acquired using Grant funding, we may be required to reimburse the DOE upon such sale date if the fair value of the
asset on the date of disposition exceeds $5,000. The amount of any such reimbursement shall be equal to 50 percent of the
fair value of the asset on the date of disposition.
At March 31, 2015, we had received reimbursements from the DOE under the Grant totaling approximately $27.1 million.
38
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The application of grant funds to the recorded value of eligible capital asset purchases under the Grant as of March 31, 2015
is as follows:
Purchase Cost
March 31, 2015
Grant Funding
Recorded Value
$
$
896,388 $
9,906,736
8,462,961
19,266,085 $
448,194 $
4,953,368
4,231,480
9,633,042 $
448,194
4,953,368
4,231,481
9,633,043
Fiscal Year Ended March 31,
2016
2015
141,544 $
174,260
244,310
79,956
48,336
87,100
189,175
20,754
985,435
$
183,245
208,162
184,920
37,000
48,336
87,100
774,974
21,234
1,544,971
$
$
Land
Building
Machinery and Equipment
(6) Other Current Liabilities
Other current liabilities consist of:
Accrued payroll and employee benefits
Accrued personal property and real estate taxes
Accrued warranty costs
Unearned revenue
Accrued royalties
Accrued import duties
Accrued vendor settlements
Other
(7) Commitments and Contingencies
Employment Agreements
On July 21, 2015, the Company entered into new employment agreements with its executive officers that expire on June 30,
2017. The aggregate future base salary payable to the executive officers over their remaining terms is $1,347,975. The July,
2015 employment agreements provide for future retention payments under the conditions and for the amounts specified in the
agreements. These retention payments are being recorded over the required service period and as a result, we have recorded
a liability of $132,222 at March 31, 2016. As of March 31, 2015 we had a liability of $268,357 representing the potential
future compensation payable under the retirement and voluntary termination provisions of the previous employment
agreements of the Company’s officers. These retirement and voluntary termination provisions were eliminated from the
employment agreements when they were renewed in July, 2015.
Lease Commitments
At March 31, 2016, there were no operating leases and there was no rental expense during the years ended March 31, 2016,
2015 and 2014.
Litigation
In November, 2015, we were notified that a supplier of electronic components under the former CODA automotive program
had filed a lawsuit against us alleging breach of contract. This lawsuit has been settled as of March 31, 2016 and we have
adjusted our Consolidated Financial Statements accordingly.
39
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management,
and based on current available information, the ultimate disposition of these matters is not expected to have a material
adverse effect on our financial position, results of operations or cash flow.
(8) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because
of the short maturity of these instruments.
(9) Stockholders’ Equity
In February, 2014, we completed a follow-on offering consisting of 2,864,872 shares of our common stock, and common
stock purchase warrants to purchase 1,432,436 shares of our common stock. The warrants have an exercise price of $2.1275
per whole share of common stock and are exercisable on or after August 6, 2014 and on or before August 5, 2018. In
addition, the placement agent was issued warrants to purchase 57,297 shares of common stock, on substantially the same
terms as the warrants issued to the purchasers. Cash proceeds, net of offering costs, were $4,911,933. Warrants to acquire
1,489,733 shares of our common stock were outstanding at both March 31, 2016 and 2015.
In October, 2015, we completed a follow-on offering consisting of 8,000,000 shares of common stock, and common stock
warrants to purchase 4,000,000 shares of our common stock. The warrants have an exercise price of $1.31 per whole share
of common stock and are exercisable for a period beginning April 30, 2016 through October 20, 2020. Warrants from this
offering to acquire 4,000,000 were outstanding at March 31, 2016. Cash proceeds, net of offering costs, were $5,778,463.
(10) Stock-Based Compensation
Stock Option Plans
As of March 31, 2016, we had 2,100,000 shares of common stock authorized and 525,095 shares of common stock available
for future grant to employees and consultants under our 2012 Equity Incentive Plan (“Plan”). The term of the 2012 Plan is
ten years. Under the 2012 Plan, the exercise price of each option is set at the fair value of the common stock on the date of
grant and the maximum term of the option is ten years from the date of grant. Options granted to employees generally have a
ten year term and vest ratably over a three-year period. The maximum number of options that may be granted to an employee
under the Plan in any calendar year is 500,000 options. Forfeitures under the Plan are available for re-issuance at any time
prior to expiration of the Plan in 2022. Options granted under the Plan to employees require the option holder to abide by
certain Company policies, which restrict their ability to sell the underlying common stock. Prior to the adoption of the 2012
Plan, we issued stock options under our 2002 Equity Incentive Plan. Forfeitures under the 2002 Equity Incentive Plan may
not be re-issued.
We also have a Stock Option Plan for Non-Employee Directors (“Directors Plan”) pursuant to which Directors may elect to
receive stock options in lieu of cash compensation for their services as directors. As of March 31, 2016, we had 1,000,000
shares of common stock authorized and 435,935 shares of common stock available for future grant under the Directors Plan.
Option terms range from three to ten years from the date of grant. Option exercise prices are equal to the fair value of the
common shares on the date of grant. Options granted under the plan vest immediately. Forfeitures under the Directors Plan
are available for re-issuance at a future date.
Stock Bonus Plan
We have a Stock Bonus Plan (“Stock Plan”) administered by the Board of Directors. As of March 31, 2016, we had
2,254,994 shares of common stock authorized and there were 233,641 shares of common stock available for future grant
under the Stock Plan. Under the Stock Plan, shares of common stock may be granted to employees, key
40
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
consultants, and directors who are not employees as additional compensation for services rendered. Vesting requirements for
grants under the Stock Plan, if any, are determined by the Board of Directors at the time of grant.
Stock Purchase Plan
We have established a Stock Purchase Plan under which eligible employees may contribute up to 10 percent of their
compensation to purchase shares of our common stock at 85 percent of the fair market value at specified dates. At March 31,
2016, we had 700,000 shares of common stock authorized and 232,666 shares of common stock available for issuance under
the Stock Purchase Plan.
Share-Based Compensation Expense
We use the straight-line attribution method to recognize share-based compensation costs over the requisite service period of
the award. The exercise price of options is equal to the market price of our common stock (defined as the closing price
reported by the NYSE MKT) on the date of grant. We adjust share-based compensation on a quarterly basis for changes to
the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture
rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture
adjustments during the years ended March 31, 2016, 2015 and 2014 was insignificant.
We use the Black-Scholes-Merton option pricing model for estimating the fair value of stock option awards. The expected
volatility and the expected life of options granted are based on historical experience, and the risk free interest rate is obtained
from the U.S. Department of the Treasury daily yield curve rates. The weighted average estimated values of employee and
director stock option grants, as well as the weighted average assumptions that were used in calculating such values during the
years ended March 31, 2016, 2015 and 2014, were based on estimates at the date of grant as follows:
Fiscal Year Ended March 31,
2016
2015
2014
Weighted average estimated fair value of
grant
Expected life (in years)
Risk free interest rate
Expected volatility
Expected dividend yield
$
0.45 per option $
6.5 years
2.05 %
79.03 %
0.00 %
1.12 per option
6.5 years
2.18 %
74.66 %
0.00 %
$
0.68 per option
4.8 years
2.30 %
73.91 %
0.00 %
Total share-based compensation expense and the classification of these expenses for the last three fiscal years were as
follows:
Costs of contract services
Costs of product sales
Research and development
Production engineering
Selling, general and administrative
Fiscal Year Ended March 31,
2016
2015
2014
6,345 $
15,301
36,561
-
537,645
595,852 $
17,626 $
27,696
14,255
72,712
555,420
687,709 $
18,738
40,559
8,981
140,811
580,782
789,871
$
$
41
Table of Contents
Stock Option Plans Activity
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Additional information with respect to stock option activity during the year ended March 31, 2016 under our Stock Option
Plans is as follows:
Additional information with respect to stock option activity during the year ended March 31, 2015 under our Stock Option
Plans is as follows:
Outstanding at April 1, 2015
Granted
Exercised
Forfeited
Outstanding at March 31, 2016
Exercisable at March 31, 2016
Shares
Under
Option
2,969,075
424,713
-
(832,019)
2,561,769
2,107,828
Vested and expected to vest at March 31, 2016
2,534,662
Outstanding at April 1, 2014
Granted
Exercised
Forfeited
Outstanding at March 31, 2015
Exercisable at March 31, 2015
Shares
Under
Option
3,330,575
369,287
(5,053)
(725,734)
2,969,075
2,391,625
Vested and expected to vest at March 31, 2015
2,948,647
42
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
5.5 years
1.79
0.66
-
2.43
1.40
6.2 years
1.50
5.5 years
1.40
6.2 years
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
4.8 years
1.98
1.71
0.89
2.60
1.79
5.5 years
1.91
4.6 years
1.79
5.5 years
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Aggregate
Intrinsic
Value
311,101
-
-
-
-
$
$
$
$
$
Aggregate
Intrinsic
Value
$ 2,931,885
$
$
$
$
6,720
311,101
251,329
309,935
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Additional information with respect to stock option activity during the year ended March 31, 2014 under our Stock Option
Plans is as follows:
Outstanding at April 1, 2013
Granted
Exercised
Forfeited
Outstanding at March 31, 2014
Exercisable at March 31, 2014
Shares
Under
Option
4,251,695 $
$
89,340
$
(20,146)
$
(990,314)
3,330,575
2,634,589
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
2.14 4.7 years
1.11
1.05
2.62
Aggregate
Intrinsic
Value
$
-
$
27,462
$
$
$
1.98
4.8 years
$ 2,931,885
2.21
3.9 years
$ 1,848,784
1.98
4.8 years
$ 2,891,654
Vested and expected to vest at March 31, 2014
3,306,339
The weighted-average grant date fair value of options granted during the years ended March 31, 2016, 2015 and 2014 was
$0.45, $1.12 and $0.68, respectively.
As of March 31, 2016, there was $210,378 of total unrecognized compensation costs related to stock options granted under
our Stock Option Plans. The unrecognized compensation cost is expected to be recognized over a weighted-average period of
twenty-six months. The total fair value of stock options that vested during the years ended March 31, 2016, 2015 and 2014
was $414,981, $377,375 and $493,271, respectively.
Cash received by us upon the exercise of stock options for the years ended March 31, 2016, 2015 and 2014 was zero, $4,497
and $21,075, respectively. The source of shares of common stock issuable upon the exercise of stock options is from
authorized and previously unissued common shares.
Stock Bonus Plan Activity
Activity with respect to non-vested shares under the Stock Bonus Plan as of March 31, 2016, 2015 and 2014 and changes
during the years ended March 31, 2016, 2015 and 2014 are presented below:
Fiscal Year Ended March 31,
2016
2015
2014
Unvested at April 1
Granted
Vested
Forfeited
Unvested at March 31
Shares Under
Contract
Weighted-
Average
Grant Date
Shares Under
Weighted-
Average
Grant Date Shares Under Grant Date
Weighted-
Average
Fair Value Contract
Fair Value
432,039 $
23,600 $
(362,411) $
(5,014) $
88,214 $
Fair Value Contract
1.26
0.66
1.22
3.95
1.36
640,979 $
136,144 $
(303,862) $
(41,222) $
432,039 $
1.17
1.71
1.21
1.28
1.26
358,855 $
452,195 $
(166,231) $
(3,840) $
640,979 $
1.22
1.18
1.34
1.25
1.17
As of March 31, 2016, there was $56,104 of total unrecognized compensation costs related to common stock granted under
our Stock Bonus Plan. The unrecognized compensation cost at March 31, 2016 is expected to be recognized over a
weighted-average period of eight months.
43
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Stock Purchase Plan Activity
During the years ended March 31, 2016, 2015 and 2014, we issued 62,932, 12,052 and 62,421 shares of common stock,
respectively, under the Stock Purchase Plan. Cash received by us upon the purchase of shares under the Stock Purchase Plan
for the years ended March 31, 2016, 2015 and 2014 was $39,377, $22,055 and $60,689, respectively.
(11) Significant Customers
We have historically derived significant revenue from a few key customers. The following table summarizes revenue and
percent of total revenue from significant customers for the fiscal years ended March 31, 2016, 2015 and 2014:
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
Fiscal Year Ended March 31,
2016
174,565
$
480,454
$
564,636
$
625,947
$
$
859,964
$ 1,075,861
3 %
9 %
11 %
12 %
16 %
20 %
2015
2014
$
$
$
$
$
$
394,922 10 %
4 %
160,000
20 %
822,929
12 %
479,678
4 %
142,128
1 %
32,771
$
$
$
$
$
$
727,683 10 %
5 %
323,000
9 %
615,081
12 %
880,145
9 %
608,222
- %
-
The following table summarizes accounts receivable from significant customers as of March 31, 2016 and 2015:
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
(12) Income Taxes
Fiscal Year Ended March 31,
2016
2015
- %
20 %
12 %
32 %
22 %
- %
2 %
- %
24 %
- %
11 %
- %
Income tax benefit attributable to loss from operations differed from the amounts computed by applying the U.S. federal
income tax rate of 34 percent as a result of the following:
Computed "expected" tax benefit
Increase (decrease) in taxes resulting from:
Increase (decrease) in valuation allowance for net
deferred tax assets
Other, net
Income tax expense
Fiscal Year Ended March 31,
2016
(2,359,039)
2,495,540
(136,501)
—
$
$
2015
(2,036,100) $
2014
(942,903)
2,489,012
(452,912)
— $
875,016
67,887
—
$
$
44
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The tax effects of temporary difference that give rise to significant portions of the net deferred tax asset are presented below:
Deferred tax assets:
Research and development credit carry-forwards
Net operating loss carry-forwards
Deferred compensation
Property and equipment
Stock Compensation
Other
Total deferred tax assets
Deferred tax liabilities:
Intangible assets
Total deferred tax liabilities
Net deferred tax assets
Less valuation allowance
Fiscal Year Ended March 31,
2015
2016
$
$
4,073
29,451,289
50,021
133,085
981,829
505,883
31,126,180
4,073
26,742,134
104,559
131,440
993,216
653,578
28,629,000
54,666
54,666
53,023
53,023
31,071,514
28,575,977
(31,071,514)
(28,575,977)
Deferred tax assets, net of valuation allowance
$
—
$
—
As of March 31, 2016 and March 31, 2015, respectively, we had net operating loss (“NOL”) carry-forwards of approximately
$84.8 million and $77.4 million for U.S. income tax purposes that expire in varying amounts through 2036. Approximately
$5.3 million of the net operating loss carry-forwards 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 may be limited. Future ownership changes under Section 382 could occur that would
result in additional Section 382 limitations, which could further restrict the use of NOLs. In addition, any Section 382
limitation could reduce our ability for utilization to zero if we fail to satisfy the continuity of business enterprise requirement
for the two-year period following an ownership change.
The valuation allowance for deferred tax assets of $31.1 million and $28.6 million at March 31, 2016 and 2015, respectively,
relates principally to the uncertainty of the utilization of deferred tax assets in various tax jurisdictions. The Company
continually assesses both positive and negative evidence to determine whether it is more-likely-than-not that the deferred tax
assets can be realized prior to their expiration. Based on the Company’s assessment it has determined the deferred tax assets
are not currently realizable.
We have not recorded any potential liability for uncertain tax positions taken on our tax returns.
We may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments
historically have been minimal and immaterial to our financial results. Penalties are recorded in selling, general and
administrative expenses and interest paid or received is recorded in interest expense or interest income, respectively, in the
consolidated statements of operations.
(13) 401(k) Employee Benefit Plan
We have established a 401(k) Savings Plan (“401K Plan”) under which eligible employees may contribute up to 15 percent
of their compensation. Employees over the age of 18 are eligible immediately upon hire to participate in the 401K Plan. At
the direction of the participants, contributions are invested in several investment options offered by the 401K Plan. We
currently match 33 percent of participants’ contributions, subject to certain limitations. These
45
Table of Contents
UQM TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
matching contributions vest ratably over a three-year period. Matching contributions to the 401K Plan were $115,789,
$117,222, and $132,471, for the years ended March 31, 2016, 2015, and 2014, respectively.
(14) Interim Financial Data (Unaudited)
Fiscal year 2016
Sales
Gross profit
Net loss
June 30,
September 30,
December 31,
March 31,
Quarters Ended
740,529
$
$
98,285
$ (2,224,251)
$ 1,734,810
$
349,466
$ (2,409,047)
$ 1,327,172
$
465,283
$ (1,374,134)
$ 1,504,288
391,013
$
(930,919)
$
Net loss per common share basic and diluted:
$
(0.06)
$
(0.06)
$
(0.03)
$
(0.01)
Fiscal year 2015
Sales
Gross profit
Net loss
June 30,
September 30,
December 31,
March 31,
Quarters Ended
$ 1,019,548
$
407,286
$ (1,310,037)
$ 1,116,779
$
399,631
$ (1,990,714)
835,635
$
$
174,165
$ (1,371,465)
$ 1,043,782
$
135,014
$ (1,316,314)
Net loss per common share basic and diluted:
$
(0.03)
$
(0.05)
$
(0.03)
$
(0.04)
46
Table of Contents
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH INDEPENDENT ACCOUNTANTS O N ACCOUNTING
AND FINANCIAL DISCLOSURE
As previously reported in our Current Report on Form 8-K filed August 14, 2015 and incorporated herein by reference, effective
August 14, 2015, our board of directors dismissed Grant Thornton LLP, who was previously engaged as our principal accountant
to audit our financial statements for the fiscal years ended March 31, 2014 and March 31, 2015, and effective August 14, 2015 we
retained Hein & Associates LLP as our new independent accountants engaged as the principal accountant to audit our financial
statements for the fiscal year ending March 31, 2016.
ITEM 9A. CONTROLS AND PROCEDURES
Controls Evaluation
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of
March 31, 2016 under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”)
and Chief Financial Officer (“CFO”).
Based on their evaluation as of March 31, 2016, our CEO and CFO have concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure
that the information required to be disclosed by our management in the reports that it files or submits under the Securities
Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules
and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions
regarding required disclosure.
Management Report on Internal Control Over Financial Reporting
Our management is responsible for all aspects of the business, including the preparation of the consolidated financial statements
in this annual report. Management prepared the consolidated financial statements using accounting principles generally accepted
in the United States. Management has also prepared the other information in this annual report and is responsible for its accuracy
and consistency with the consolidated financial statements.
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting,
including safeguarding of assets against unauthorized acquisition, use or disposition. This system is designed to provide
reasonable assurance to management and the board of directors regarding preparation of reliable published financial statements
and safeguarding of our assets. This system is supported with written policies and procedures and contains self-monitoring
mechanisms. Appropriate actions are taken by management to correct deficiencies as they are identified. All internal control
systems have inherent limitations, including the possibility of circumvention and overriding of controls, and, therefore, can
provide only reasonable assurance as to the reliability of financial statement preparation and such asset safeguarding.
Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2016. In making this
assessment, it used the criteria described in the 1992 “Internal Control-Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has concluded that,
as of March 31, 2016, our internal control over financial reporting is effective. Management reviewed the results of its assessment
with the Audit Committee of our Board of Directors who oversees the financial reporting process.
Attestation Report of the Registered Public Accounting Firm
This Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the
rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the fiscal year ended March 31, 2016 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
47
Table of Contents
June 7, 2016
Joseph Mitchell
President and Chief Executive Officer
David I. Rosenthal
Treasurer, Secretary and
Chief Financial Officer
ITEM 9B . OTHER INFORMATION
None.
48
Table of Contents
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Additional information required by Item 10 is incorporated by reference from and contained under the headings “Election of
Directors”, “Management” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics” in our Definitive
Proxy Statement for the 2016 Annual Meeting of Shareholders.
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 2015,” “Aggregate Option Exercises During Fiscal Year 2015,” “Option
Values at the End of Fiscal Year 2015,” “Director Compensation,” “Compensation discussion and Analysis,” “Compensation and
Benefits Committee Report,” and “Compensation Committee Interlocks” in our definitive Proxy Statement for the 2016 Annual
Meeting of Shareholders.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMEN T AND
RELATED STOCKHOLDER MATTERS
The information required by Item 12 is incorporated by reference from and contained under the heading “Security Ownership of
Certain Owners and Management” and “Equity Compensation Plan Information” in our definitive Proxy Statement for the 2016
Annual Meeting of Shareholders.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION S AND DIRECTOR INDEPENDENCE
The information required by Item 13 is incorporated by reference from and contained under the headings “Certain Relationships
and Related Transactions” in our definitive Proxy Statement for the 2016 Annual Meeting of Shareholders.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by Item 14 is incorporated by reference from and contained under the heading “Ratification of Selection
of Independent Auditors” in our definitive Proxy Statement for the 2016 Annual Meeting of Shareholders.
49
Table of Contents
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
1.
Financial Statements
PART IV
UQM Technologies, Inc. (included in Part II):
Reports of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets, March 31, 2016 and March 31, 2015.
Consolidated Statements of Operations for the Years Ended March 31, 2016, 2015, and 2014.
Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2016, 2015, and 2014.
Consolidated Statements of Cash Flows for the Years Ended March 31, 2016, 2015, and 2014.
Notes to Consolidated Financial Statements.
2.
Financial Statement Schedules:
Valuation and Qualifying Accounts. See note 1(e) to the Consolidated Financial Statements above.
3.
Exhibits:
Amended and Restated Articles of Incorporation as further amended.
Bylaws, as amended. Reference is made to Exhibit 3.2 of our Annual Report on Form 10-K filed May 30, 2014,
which is incorporated herein by reference.
Specimen Stock Certificate. Reference is made to Exhibit 3.1 of our Registration Statement on Form 10 dated
February 27, 1980, which is incorporated herein by reference.
Form of Common Stock Purchase Warrant (expiration August 5, 2018). Reference is made to Exhibit 4.1 of our
current report on Form 8-K, filed February 5, 2014, which is incorporated herein by reference.
Form of Common Stock Purchase Warrant (expiration October 30, 2020). Reference is made to Exhibit 4.1 of our
current report on Form 8-K, filed October 30, 2015, which is incorporated herein by reference.
3.1
3.2
4.1
4.2
4.3
10.1
Supply Agreement dated October 20, 2015 by and between ITL and UQM Technologies, Inc. Reference is made to
Exhibit 10.1 of our Form 8-K filed on October 26, 2015, which is incorporated herein by reference.
10.2
Employment Agreement dated as of January 5, 2016, between UQM and Joseph Mitchell. ** Reference is made to
Exhibit 10.1 of our Form 8-K filed on January 5, 2016, which is incorporated herein by reference.
10.3
10.4
Employment Agreement dated July 20, 2015, between the Company and David I. Rosenthal. ** Reference is made
to Exhibit 10.2 of our Quarterly Report on Form 10-Q filed on July 30, 2015, which is incorporated herein by
reference.
Employment Agreement dated July 20, 2015, between the Company and Adrian P. Schaffer. ** Reference is made
to Exhibit 10.3 of our Quarterly Report on Form 10-Q filed on July 30, 2015, which is incorporated herein by
reference.
50
Table of Contents
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
21.1
23.1
23.2
31.1
31.2
32.1
Employment Agreement dated July 20, 2015, between the Company and Josh M. Ley. ** Reference is made to
Exhibit 10.4 of our Quarterly Report on Form 10-Q filed on July 30, 2015, which is incorporated herein by
reference.
Form of Amendment to the Employment Agreements between UQM and each of David I. Rosenthal, Adrian P.
Schaffer and Josh M. Ley.** Reference is made to Exhibit 10.2 of our Form 8-K filed on January 5, 2016, which
is incorporated herein by reference.
Stock Bonus Plan. ** Reference is made to Exhibit 10.2 of our Current Report on Form 8-K filed on August 12,
2005, which is incorporated herein by reference.
Amendment to UQM Technologies, Inc. Stock Bonus Plan dated May 9, 2012. ** Reference is made to Exhibit
10.22 of our Form 10-K filed May 24, 2012, which is incorporated herein by reference.
Amendment to UQM Technologies, Inc. Stock Bonus Plan adopted August 13, 2014.** Reference is made to
Appendix B of our Proxy Statement filed July 2, 2014, which is incorporated herein by reference.
UQM Technologies, Inc. 2012 Equity Incentive Plan adopted April 11, 2012.** Reference is made to Exhibit
10.19 of our Form 10-K filed May 24, 2012, which is incorporated herein by reference.
Amendment to UQM Technologies, Inc. 2012 Equity Incentive Plan adopted August 13, 2014.** Reference is
made to Appendix A of our Proxy Statement filed July 2, 2015, which is incorporated herein by reference.
Amended and Restated UQM Technologies, Inc. Employee Stock Purchase Plan. ** Reference is made to Exhibit
4.1 to the Company’s Registration Statement on Form S-8 (No. 333-164705) filed on February 5, 2010, which is
incorporated herein by reference.
UQM Technologies, Inc. Outside Director Stock Option Plan amended November 2, 2011. ** Reference is made
to Exhibit 10.21 of our Form 10-K filed May 24, 2012, which is incorporated herein by reference.
Form of Incentive Stock Option Agreement. ** Reference is made to Exhibit 10.6 of our Annual Report on Form
10-K, filed on May 22, 2008, which is incorporated herein by reference.
Form of Non-Qualified Stock Option Agreement. ** Reference is made to Exhibit 10.7 of our Annual Report on
Form 10-K, filed on May 22, 2008, which is incorporated herein by reference.
Form of Restricted Stock Agreement, amended May 9, 2012. ** Reference is made to Exhibit 10.20 of our Form
10-K filed May 24, 2012, which is incorporated herein by reference.
Subsidiaries of the Company.
Consent of Hein & Associates, LLP.
Consent of Grant Thornton LLP.
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act
2002.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
51
Table of Contents
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
** management contract or compensation plan.
52
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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 Longmont,
th
Colorado on the 7 day of June, 2016.
SIGNATURES
UQM TECHNOLOGIES, INC.,
a Colorado Corporation
By: /s/ JOSEPH MITCHELL
Joseph Mitchell
President and
Chief Executive Officer
Pursuant to the requirements of the Securities 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 indicated and on the date indicated.
Signature
Title
/s/ DONALD W. VANLANDINGHAM
Donald W. Vanlandingham
Chairman of the Board of Directors
/s/JOSEPH R. MITCHELL
Joseph R. Mitchell
President and Chief Executive Officer
Date
June 7, 2016
June 7, 2016
/s/DAVID I. ROSENTHAL
Treasurer and Secretary (Principal Financial and
June 7, 2016
David I. Rosenthal
Accounting Officer)
/s/STEPHEN J. ROY
Stephen J. Roy
s/JOSEPH P. SELLINGER
Joseph P. Sellinger
/s/JOHN E. SZTYKIEL
John E. Sztykiel
Director
Director
Director
53
June 7, 2016
June 7, 2016
June 7, 2016
Exhibit 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
UQM TECHNOLOGIES, INC.
(as further amended September 24, 2015)
The undersigned corporation, incorporated December 7, 1967 under the laws of Colorado, hereby
adopts the following restated articles of incorporation and certifies that such restated articles of
incorporation only restate and integrate and do not further amend the provisions of the corporation’s
articles of incorporation as heretofore amended or supplemented, that there is no discrepancy between
such articles of incorporation with such amendments or supplements and the provisions of the restated
articles, and that the restated articles of incorporation supersede the original articles of incorporation and
all amendments and supplements thereto:
ARTICLE I
Name
The name of the corporation is UQM Technologies, Inc.
ARTICLE II
The corporation shall have perpetual existence.
ARTICLE III
The nature of the business of the corporation and the objects and purposes to be transacted,
promoted and carried on by it are:
1.
To own, design, manufacture and distribute fiberglass and fiberglass products and all
related and non-related businesses; to buy, sell, lease, or otherwise dispose of, and to operate, conduct,
furnish, equip and manage factories, wholesale and retail outlets, and generally to do and perform
everything necessary for carrying out the aforesaid purposes.
2.
To locate, purchase, lease or otherwise acquire patents and lands believed to be valuable
for carrying out the foregoing purposes, and to acquire leasehold, or other interest therein, and to develop
and operate same; also to purchase, lease, build, construct, remodel and operate manufacturing plants,
distribution plants, retail and wholesale outlets, storage and warehouse facilities, and any and all other
buildings, structures and works necessary or useful in carrying on all or any part of the business of the
corporation; and to acquire, own, hold, use and operate any other kind of real property deemed necessary
in and about its business.
3.
To purchase or otherwise acquire, own, hold, maintain and use any and all machinery,
equipment, appliances, tools, automotive equipment, automobiles, trucks and transportation facilities, as
may be deemed necessary or useful in carrying on the business of the corporation, or any part thereof.
4.
To make and enter into contracts with other persons, firms, associations or corporations,
or with any state, government or agency thereof, for any and all lawful purposes, in carrying on all or any
part of the business of the corporation.
5.
To borrow money and to make, issue, negotiate and deliver its promissory notes,
debentures, bonds and other securities or evidence of indebtedness, and to secure payment thereof by
mortgage, pledge, or other encumbrance upon all or any part of its property and assets.
6.
To purchase or otherwise acquire the properties and assets of any other person, firm or
corporation and the business and goodwill thereof, when such acquisition is deemed advisable, and to pay
therefor in cash, or its stock, notes, debentures or bonds; and in any such transaction to assume and
undertake or guarantee payment of any part or all of the indebtedness or other obligation of the person,
firm or corporation whose properties and business are so acquired.
7.
To purchase or otherwise acquire, and to invest in, hold, own and dispose of, the stock,
bonds, notes, debentures and other obligations or securities issued by any person, firm, association or
corporation, and the bonds or other evidences of the obligations of any government, state, territory or
province, or of any city, county or other governmental subdivision thereof; and to guarantee payment of
dividends on, or of the principal of or interest on, any stocks, bonds, notes, debentures or other securities
or obligations of any person, firm, association or corporation in which this corporation has an interest as
stockholder, creditor or otherwise.
8.
To purchase or otherwise acquire shares of its own capital stock, and to hold, sell,
exchange, pledge or otherwise dispose of or retire the same; provided that this corporation shall not use
any of its funds or property for the purpose of its own shares when such use would cause any impairment
of the capital of this corporation, and provided, that the shares of its own stock belonging to this
corporation shall not be voted directly or indirectly while so owned.
9.
To apply for, register and obtain patents, trademarks, trade names and copyrights and to
purchase or otherwise acquire rights and licenses under patents owned or held by others; and to grant
licenses under, or to sell or otherwise dispose of, patents and patent rights, trademarks or trade names
obtained by this corporation.
10.
To carry on any other lawful business which may be deemed related or tributary to the
business of this corporation.
11.
To conduct business and to have offices and places of business, and to acquire, own and
dispose of property of all kinds in the State of Colorado and in other states and territories, districts,
dependencies or colonies of the United States, and in any foreign country, subject to compliance with the
laws thereof; and generally to have and exercise all the powers
2
now or hereafter conferred by the general corporation laws of the State of Colorado whether or not herein
specifically mentioned.
The foregoing clauses shall be construed as both objects and powers, and the foregoing
enumeration of powers shall not be deemed to limit or restrict in any manner the general powers of this
corporation; and the purposes, objects and powers specified in each of the paragraphs of this Article III
shall not be limited or restricted by reference to or inference from the terms of any other paragraph, but
each shall be regarded as independent objects and purposes.
ARTICLE IV
The authorized capital stock of the corporation is 75,000,000 shares of common stock with a par
value of $.01 per share. The capital stock, after the amount of the subscription price has been paid in,
shall not be subject to assessment to pay the debts of the corporation.
Any stock of the corporation may be issued for money, property, services rendered, labor done,
cash advances for the company, or for any other assets of value in accordance with the action of the
Board of Directors, whose judgment as to value received in return therefor shall be conclusive and said
stock when issued shall be fully paid and non-assessable.
ARTICLE V
Cumulative voting in the election of directors shall not be permitted.
ARTICLE VI
The governing Board of this corporation shall be known as Directors, and the number of Directors
may from time to time be increased or decreased in such manner as shall be provided by the By-Laws of
this Corporation, provided that the number of Directors shall not be reduced to less than three (3).
In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors is
expressly authorized:
To manage and govern the corporation by majority vote of members present at any regular or
special meeting at which such a quorum shall be present.
To make, alter or amend the By-Laws of the corporation at any regular or special meeting.
To fix the amount to be reserved as working capital over and above its capital stock paid in, to
authorize and cause to be executed mortgages and liens upon the real and personal property of this
corporation.
To designate one or more committees, each committee to consist of two or more of the Directors
of the corporation, which, to the extent provided in the Resolution or in the By-Laws of the Corporation,
shall have and may exercise the powers of the Board of Directors in the management of the business and
affairs of the corporation. Such committee or committees shall
3
have such name or names as may be stated in the By-Laws of the corporation or as may be determined
from time to time by resolution adopted by the Board of Directors.
To provide for and carry into execution without action by the stockholders a plan for any and all
of the following purposes:
1.
The issue and sale, or purchase and sale, of its capital stock whether authorized or
hereafter authorized, to any of its employees, including officers and directors and those actively engaged
in the conduct of the business of such corporation or of any subsidiary thereof, or of any corporation or
association in which, or in the welfare of which, such corporation shall have an interest or to a trustee for
their benefit, upon such terms and conditions as may be determined by the Board of Directors and
incorporated in such plan, including, but without limiting the generality of the foregoing, the payment for
such stock in installments or at one time, with or without the right to vote thereon pending payment
therefore in full, and for aiding or assisting any such employees and said other persons in paying for such
stock by contributions, compensations for services, or otherwise.
2.
The participation by all or any of its employees, including officers and directors and those
actively engaged in the conduct of its business, in the profits of the corporate enterprise or of any branch
or division thereof, or in any plan for pension or retirement privileges, wholly or in part at the expense of
such corporation, on such terms and conditions as may be determined by the Board of Directors and
incorporated in such plan.
3.
The furnishing to all or any of its employees, including officers and directors and those
actively engaged in the conduct of its business, wholly or in part at the expense of such corporation, of
medical service, life, disability, or unemployment insurance, education, housing, social and recreation
service or other similar aids and services on such terms and conditions as may be determined by the
Board of Directors.
If any such plan is financed in part at the expense of any employee or other said persons, then,
such employee or other persons shall have the right to elect whether or not to become a member of such
plan and all sums expended by the corporation in the formulation, adoption and carrying out of any such
plan or plans pursuant to subparagraphs 1, 2 or 3 above, shall be regarded as part of the corporation’s
legitimate expenses.
The Board of Directors shall have the power and authority to sell, lease or exchange in part, and
less than all, the property and assets of the corporation upon such terms and conditions as the Board of
Directors deem expedient and for the best interests of the corporation without vote or consent of the
stockholders.
The Board of Directors shall have power and authority at any meeting to sell, lease or exchange
all of the property and assets of the corporation, including its goodwill and its corporate franchises, upon
such terms and conditions as its Board of Directors deem expedient and for the best interests of the
corporation, provided such sale shall be authorized or ratified by the affirmative vote of stockholders
holding stock entitling them to exercise at least two-thirds of the voting power at a stockholders’ meeting
called for that purpose, or when authorized or
4
ratified by the written consent of the holders of at least two-thirds of the voting stock issued and
outstanding.
The Board of Directors may adopt such By-Laws as they deem advisable to indemnify officers
and directors of the corporation to the extent permitted by the Colorado Statutes.
ARTICLE VII
Meetings of stockholders may be held at such time and place as the By-Laws shall provide. At all
meetings of shareholders, one-third (1/3) of all shares entitled to vote shall constitute a quorum.
ARTICLE VIII
No stockholder in the corporation shall have the preemptive right to subscribe to any or all
additional issues of stock and/or other securities of any or all classes of this corporation or securities
convertible into stock or carrying stock purchase warrants, options or privileges.
ARTICLE IX
To the fullest extent permitted by the Colorado Corporation Code, as the same exists or may
hereafter be amended, a director of the corporation shall not be liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification
of this Article by the shareholders of the corporation shall be prospective only and shall not adversely
affect any right or protection of a director of the corporation existing at the time of such repeal or
modification.
5
THE SUBSIDIARIES OF THE REGISTRANT
Exhibit 21.1
Name
State of Incorporation
UQM Properties, Inc.
Colorado
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-193305)
and the Registration Statements on Form S-8 (File No. 333-129251, 333-168999, 333-169000, 333-183786,
333-183788, 333-183796, 333-198227, and 333-198228) of UQM Technologies, Inc. of our report dated June 7,
2016, relating to our audit of the consolidated financial statements, which appears in this Annual Report on
Form 10-K of UQM Technologies, Inc. for the fiscal year ending March 31, 2016.
/s/ Hein & Associates LLP
Denver, Colorado
June 7, 2016
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated May 28, 2015, with respect to the consolidated financial statements
as of and for each of the two years in the period ended March 31, 2015, included in the Annual
Report of UQM Technologies, Inc. on Form 10-K for the year ended March 31, 2016. We hereby
consent to the incorporation by reference of said report in the Registration Statements of UQM
Technologies, Inc. on Form S-3 (File No. 333-193305) and on Forms S-8 (File No. 333-129251,
File No. 333-168999, File No. 333-169000, File No. 333-183786, File No. 333-183788, File No.
333-183796, File No. 333-198227, and File No. 333-198228).
/s/ GRANT THORNTON LLP
Denver, Colorado
June 7, 2016
Exhibit 31.1
I, Joseph R. Mitchell , certify that:
1.
I have reviewed this Annual Report on Form 10- K of UQM Technologies, Inc. ;
Certification
2. Based on my knowledge, this Report does not contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this Report;
4. The regist rant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report
is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this Report based on such evaluation; and
d. Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The regist rant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal controls over financial reporting.
Date: June 7 , 201 6
/s/ J OSEPH R. M ITCHELL
Joseph R. Mitchell
President and Chief Executive Officer
Exhibit 31.2
I, David I. Rosenthal, certify that:
1.
I have reviewed this Annual Report on Form 10-K of UQM Technologies, Inc.;
Certification
2. Based on my knowledge, this Report does not contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this Report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report
is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this Report based on such evaluation; and
d. Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal controls over financial reporting.
Date: June 7, 2016
/s/ DAVID I. ROSENTHAL
David I. Rosenthal
Treasurer, Secretary and
Chief Financial Officer
Exhibit 32.1
CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of UQM Technologies, Inc. (the “Company”) on Form 10- K for the annual period ended
March 31 , 2 01 6 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned
Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: 1) the Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and 2) the information contained in the R eport
fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the
periods covered in the R eport .
/s/ JOSEPH R M ITCHELL
Joseph R. Mitchell
President and Chief Executive Officer
/s/ D AVID I . R OSENTHAL
David I. Rosenthal
Treasurer, Secretary and Chief Financial Officer
Date: June 7, 2016