UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30~~March 31, ~~2018~~2019

[ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number 1-10869

UQM TECHNOLOGIES, INC.

(Exact name of registrant, as specified in its charter)


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

4120 Specialty Place, Longmont, Colorado 80504

(Address of principal executive offices) (Zip code)

(303) 682-4900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	UQM	NYSE American

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 every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


[ ] Large accelerated filer		[ ] Accelerated filer
[X] Non-accelerated filer		[X] Smaller reporting company
		[ ] Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended Annual period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

The number of shares outstanding (including shares held by affiliates) of the registrant’s common stock, par value $0.01 per share, at ~~October 29~~May 10, ~~2018~~ 2019 was 5456,~~253~~566,~~731~~586.

TABLE OF CONTENTS

		Page No.
PART I Financial Information		1
Item 1. Financial Statements (unaudited)
Consolidated Condensed Balance Sheets as of September 30, 2018 and December 31, 2017		1
Consolidated Condensed Balance Sheets as of March 31, 2019 and December 31, 2018		1
Consolidated Condensed Statements of Operations for the quarters and nine months ended September 30, 2018 and 2017		3
Consolidated Condensed Statements of Operations for the quarters ended March 31, 2019 and 2018		3
Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2018 and 2017		4
Consolidated Condensed Statements of Cash Flows for the quarters ended March 31, 2019 and 2018		4
Notes to Consolidated Condensed Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1716
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2220
Item 4. Controls and Procedures		2220
PART II Other Information		2321
Item 1. Legal Proceedings		2321
Item 1A. Risk Factors		2321
Item 2. Unregistered Sales of Equity Securities		2422
Item 3. Defaults Upon Senior Securities		2422
Item 4. Mine Safety Disclosures		2422
Item 5. Other Information		2422
Item 6. Exhibits		2523

Table of Contents

Part I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited)

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	2,~~487~~910,~~132~~507	$	61,~~309~~918,~~269~~570
Restricted cash		~~358~~222,~~627~~392		~~176~~296,~~193~~314
Accounts receivable		1,~~287~~541,~~194~~178		~~823~~1,~~793~~681,289
Costs and estimated earnings in excess of billings on uncompleted contracts		45,850		-
Inventories, net		4,815,599		4,783,887
Inventories, net		4,575,472		2,341,360
Prepaid expenses and other current assets		282,403		377,762
Prepaid expenses and other current assets		452,307		233,566
Total current assets		9,772,079		9,057,822
Total current assets		9,206,582		9,884,181
Property and equipment, at cost:
Land		896,388		896,388
Building		4,516,301		4,516,301
Machinery and equipment		7,~~413~~719,~~005~~597		7,~~136~~479,~~578~~790
		12,825,694		12,549,267
		13,132,286		12,892,479
Less accumulated depreciation		(8,~~182~~381,~~410~~913)		(78,~~936~~282,~~056~~269)
Net property and equipment		4,~~643~~750,~~284~~373		4,~~613~~610,~~211~~210
Patent costs, net of accumulated amortization of $968,891 and $953,491, respectively		252,134		222,461
Patent costs, net of accumulated amortization of $976,215 and $958,543, respectively		271,328		260,021
Trademark costs, net of accumulated amortization of $88,753 and $85,381, respectively		87,088		90,460
Trademark costs, net of accumulated amortization of $91,001 and $86,505, respectively		84,840		85,964
Restricted cash		-		323,863
Other assets		94,899		-
Total assets	$	14,~~189~~973,~~088~~519	$	1514,~~134~~014,~~176~~017

See accompanying notes to consolidated condensed financial statements.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited), Continued

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,~~644~~679,~~797~~319	$	~~948~~2,~~875~~995,632
Unearned revenue		21,~~201~~308,~~597~~664		~~153~~736,~~944~~819
Other current liabilities		1,~~018~~788,~~172~~979		~~819~~1,~~839~~394,150
Billings in excess of costs and estimated earnings on engineering services contracts		277,967		199,160
Deferred contract liabilities		230,116		110,727
Current portion of long-term debt, net of deferred financing costs of$17,099 and $0, respectively		3,147,430		-
Current debt, net of deferred financing costs of$26,933 and $7,772, respectively		4,637,596		4,656,757
Total current liabilities		910,~~289~~644,~~963~~674		29,~~121~~894,~~818~~085
Long-term debt, net of deferred financing costs of $0 and $45,079, respectively		-		3,119,450
Other long-term liabilities		168,282		106,159
Other long-term liabilities		106,667		121,667
Total long-term liabilities		168,282		106,159
Total long-term liabilities		106,667		3,241,117
Total liabilities		10,812,956		10,000,244
Total liabilities		9,396,630		5,362,935
Commitments and contingencies (Note 17)
Stockholders’ equity:
Common stock, $0.01 par value, 175,000,000 shares authorized; 54,228,955 and 54,108,510 shares issued and outstanding, respectively		542,290		541,085
Common stock, $0.01 par value, 175,000,000 shares authorized; 56,222,189 and 54,267,440 shares issued and outstanding, respectively		562,222		542,674
Additional paid-in capital		~~134~~137,~~465~~323,~~515~~841		~~133~~134,~~901~~645,~~406~~911
Accumulated deficit		(~~130~~133,~~215~~725,~~347~~500)		(~~124~~131,~~671~~174,~~250~~812)
Total stockholders’ equity		4,~~792~~160,~~458~~563		94,~~771~~013,~~241~~773
Total liabilities and stockholders’ equity	$	14,~~189~~973,~~088~~519	$	1514,~~134~~014,~~176~~017

See accompanying notes to consolidated condensed financial statements.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (unaudited)

	Quarters Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2018		2017		2018		2017
	2019		2018
Revenue:
Product sales	$	32,~~747~~991,~~846~~409	$	21,~~752~~405,~~554~~364	$	~~7,497,209~~	$	~~5,169,479~~
Contract services		~~637~~692,~~576~~327		-206,210		~~1,201,442~~		~~387,075~~
		4,385,422		2,752,554		8,698,651		5,556,554
		3,683,736		1,611,574
Operating costs and expenses:
Costs of product sales		2,~~999~~593,~~394~~264		1,~~471~~176,~~334~~138		~~6,061,505~~		~~3,085,822~~
Costs of contract services		~~346~~369,~~775~~906		-128,765		~~570,738~~		~~161,616~~
Research and development		~~396~~502,~~690~~184		~~403~~678,~~273~~505		~~1,902,324~~		~~1,591,520~~
Selling, general and administrative		12,~~839~~692,~~872~~207		1,~~983~~519,~~450~~917		~~5,678,428~~		~~4,757,571~~
		5,582,731		3,858,057		14,212,995		9,596,529
		6,157,561		3,503,325
Loss from operations		(12,~~197~~473,~~309~~825)		(1,~~105~~891,~~503~~751)		~~(5,514,344)~~		~~(4,039,975)~~
Other income (expense), net		55,731		(43,904)		(29,753)		(63,679)
Other income (expense):
Gain on sale of long-lived assets		-		606,006		-		606,006
Interest income		129		3,131
Net loss	$	(1,141,578)	$	(543,401)	$	(5,544,097)	$	(3,497,648)
Interest expense		(75,005)		(43,768)
Net loss per common share - basic and diluted	$	(0.02)	$	(0.01)	$	(0.10)	$	(0.07)
Amortization of deferred financing costs		(13,159)		(9,327)
Weighted average number of shares of common stock outstanding - basic and diluted		54,208,477		48,941,702		54,158,607		48,677,423
Other		11,172		8,917
		(76,863)		(41,047)
Net loss	$	(2,550,688)	$	(1,932,798)
Net loss per common share - basic and diluted	$	(0.05)	$	(0.04)
Weighted average number of shares of common stock outstanding - basic and diluted		55,349,670		54,124,230

See accompanying notes to consolidated condensed financial statements.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2018		2017
	2019		2018
Cash flows from operating activities:
Net loss	$	(52,~~544~~550,~~097~~688)	$	(31,~~497~~932,~~648~~798)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		~~323~~85,~~241~~269		~~302~~99,~~385~~125
Non-cash equity based compensation		~~525~~139,~~624~~519		~~269~~73,~~891~~361
Gain on sale of long-lived assets		-		(606,006)
Change in operating assets and liabilities:
Accounts receivable		~~(463~~140,~~401)~~111		~~529~~(522,~~208~~799)
Costs and estimated earnings on uncompleted contracts		(45,850)		29,917
Inventories		(31,712)		(539,312)
Inventories		(2,234,112)		(939,197)
Prepaid expenses and other current assets		95,359		(106,925)
Prepaid expenses and other current assets		(218,741)		(43,198)
Other assets		(94,899)		-
Accounts payable and other current liabilities		178,~~894,255~~516		~~375~~224,~~298~~776
Unearned revenue		2571,~~047,653~~845		~~470~~1,~~633~~672,926
Billings in excess of costs and estimated earnings on
Deferred contract liability		119,389		165,790
engineering services contracts		78,807		25,378
Other long-term liabilities		62,123		(5,000)
Other long-term liabilities		(15,000)		(15,000)
Net cash used in operating activities		(1,385,168)		(870,856)
Net cash used in operating activities		(3,651,621)		(3,098,339)
Cash flows from investing activities:
Acquisition of property and equipment, net		(~~306~~239,~~561~~807)		(4632,~~158~~220)
Cash paid for patent and trademark fees		(4514,~~074~~969)		(13,~~411~~823)
Cash proceeds from the sale of long-lived assets		-		1,392,948
Net cash used in investing activities		(254,776)		(46,043)
Net cash (used in) / provided by investing activities		(351,635)		1,333,379
Cash flows from financing activities:
Cash received for shares exercised under employee stock purchase plan		~~32,881~~615		3617,~~327~~957
Proceeds from line of credit		-		3,100,000
Cash received for issuance of common stock upon exercise of warrants		2,554,651		-
Payment of employee tax withholdings in exchange for return of common stock		(10,462)		(12,381)
Cash received for issuance of common stock upon exercise of employee and directors options		2,693		-
Issuance of common stock upon definitive stock purchase agreement		-		5,099,898
Net cash provided by financing activities		2,557,959		17,957
Issuance of common stock upon exercise of employee and directors options		17,271		18,763
Increase (decrease) in cash, cash equivalents, and restricted cash		918,015		(898,942)
Net cash provided by financing activities		39,690		8,242,607
Cash, cash equivalents, and restricted cash at beginning of period		2,214,884		6,809,325
(Decrease) / increase in cash, cash equivalents, and restricted cash		(3,963,566)		6,477,647
Cash, cash equivalents, and restricted cash at end of period	$	3,132,899	$	5,910,383
Cash, cash equivalents, and restricted cash at beginning of period		6,809,325		2,100,089
Cash, cash equivalents, and restricted cash at end of period	$	2,845,759	$	8,577,736

See accompanying notes to consolidated condensed financial statements.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying Consolidated Condensed Financial Statements are unaudited; however, in the opinion of management, all adjustments, which were solely of a normal recurring nature, necessary to a fair presentation of the results for the interim periods, have been made. The results for the interim periods are not necessarily indicative of the results to be expected for the year. The Notes contained herein should be read in conjunction with the Notes to our Consolidated Financial Statements filed with our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

(2) Segment Reporting

UQM Technologies, Inc. (the “Company”, “UQM”, “we”, or “us”) has performed its quarterly assessment to determine if additional disclosures are required for segment reporting. Management has determined that the Company has one operating segment because the chief operating decision maker and management make business decisions based on product and contract services revenues taken as a whole. Therefore, no further disclosure is required at this time. Management will perform an assessment quarterly to determine if additional disclosures around this standard are needed in the future.

(3) New Accounting Pronouncements

In ~~May~~February ~~2014~~2016, the ~~Financial~~FASB issued ~~Accounting~~its ~~Standards~~new ~~Board~~lease ~~(“FASB”)~~accounting ~~issued~~guidance ain ~~new standard,~~ ASU ~~2014~~2016-0902, to ~~achieve~~Leases a(Topic ~~consistent~~842) ~~application~~in ofwhich ~~revenue~~the ~~recognition~~lessee ~~within~~should ~~the~~recognize ~~U.S.,~~an ~~resulting~~asset inand aliability ~~single~~that ~~revenue~~arise ~~model~~from toleases beno ~~applied~~matter bythe ~~reporting~~type ~~companies~~of ~~under~~lease ~~U.S.~~the ~~generally~~company ~~accepted~~enters ~~accounting principles~~into. A ~~Under~~lessee ~~the~~should ~~new~~recognize ~~model,~~in ~~recognition~~the statement of ~~revenue~~financial ~~occurs~~position ~~when~~a liability allocated on a ~~customer~~straight-line ~~obtains~~basis ~~control~~over ofthe ~~promised~~lease ~~goods~~term orto ~~services~~make inlease anpayments ~~amount~~and ~~that~~a ~~reflects~~right-of-use asset measured at the ~~consideration~~present tovalue ~~which~~of the ~~entity~~lease ~~expects~~payments representing its right to use the underlying asset for the lease term. All cash payments should be ~~entitled~~classified in ~~exchange~~the ~~for~~operating ~~those~~activities ~~goods~~section orof ~~services~~the statement of cash flows. Another Inrequirement ~~addition,~~under the new standard ~~requires~~is that ~~reporting~~a ~~companies~~company ~~disclose~~must separate the ~~nature,~~lease ~~amount,~~components ~~timing,~~from ~~and~~the ~~uncertainty~~nonlease ofcomponents ~~revenue~~in ~~and~~a ~~cash~~contract. Only ~~flows~~the ~~arising~~lease ~~from~~components ~~contracts~~are ~~with~~subject ~~customers.~~to ~~The~~ASU ~~new~~2016-02 ~~standard~~recognition isand ~~effective~~measurement. Lessees ~~for~~may usmake ~~for~~an ~~the~~accounting ~~first~~policy ~~fiscal~~election ~~year~~to ~~beginning~~not ~~after~~separate ~~December~~lease ~~15,~~components ~~2017~~from nonlease components. ~~The~~Both ~~new~~qualitative ~~standard~~and isquantitative disclosures are required. Recognition toand bemeasurement ~~applied~~is ~~retrospectively~~required toat ~~each~~the ~~prior~~beginning ~~reporting~~of the earliest period presented orusing ~~retrospectively~~a ~~with~~modified ~~the~~retrospective ~~cumulative~~or cumulative-effect ofadjustment ~~initially~~to ~~applying~~the itopening ~~recognized~~balance atof retained earnings in the ~~date~~period of ~~initial~~adoption. The ~~application~~new ~~and~~standard, ~~providing~~ASC ~~additional~~Topic ~~disclosures.~~842, is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company ~~has~~ adopted this standard effective January 1, ~~2018~~2019 using the modified retrospective method with the cumulative effect recorded as of January 1, 2019 and additional disclosures. See Note 517 for current disclosures.

In February 2016, the FASB issued a new standard, ASU 2016-02, in which the lessee should recognize an asset and liability that arise from leases no matter the type of lease the company enters into. A lessee should recognize in the statement of financial position a liability allocated on a straight-line basis over the lease term to make lease payments and a right-of-use asset measured at the present value of the lease payments representing its right to use the underlying asset for the lease term. All cash payments should be classified in the operating activities section of the statement of cash flows. Another requirement under the new standard is that a company must separate the lease components from the nonlease components in a contract. Only the lease components are subject to ASU 2016-02 recognition and measurement. Lessees may make an accounting policy election to not separate lease components from nonlease components. Both qualitative and quantitative disclosures are required. Recognition and measurement is required at the beginning of the earliest period presented using a modified retrospective or cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company entered into a new operating lease in the quarter ended September 30, 2018 and is currently evaluating the effect on its financial statements. See Note 17 for current disclosures.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(4) Going Concern

These Consolidated Condensed Financial Statements are presented ~~assuming~~on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. ~~As of September 30, 2018, the Company had sustained recurring losses from continuing operations, had a working capital deficit of $83,381, and accumulated deficit of $130,215,347.~~

OnAs ~~May~~of 9March 31, ~~2018~~2019, the Company ~~announced~~has ~~that~~sustained ~~the~~recurring ~~Committee~~losses onfrom ~~Foreign~~continuing ~~Investment~~operations, inhad ~~the~~a ~~United~~working ~~States~~capital ~~would~~deficit ~~likely~~of ~~not~~$872,595 ~~approve~~and ~~the~~accumulated ~~second~~deficit ~~stage~~of ~~investment as anticipated in the Stock Purchase Agreement with China National Heavy Duty Truck Co.~~$133, ~~Ltd~~725,500. The ~~which~~Company’s ~~would~~cash ~~have~~and ~~brought approximately $23 million of~~ cash toequivalents ~~the~~balance ~~Company. Since~~at ~~that~~March ~~announcement~~31, ~~the~~2019 ~~Company~~was ~~has been investigating other potentially favorable funding alternatives~~$2,910,507.

AsOn ofMarch ~~the~~15, ~~date of the filing of this Form 10-Q~~2017, ~~management has assessed~~ the ~~liquidity position of the~~ Company ~~per~~entered ~~the~~into ~~requirements~~a ~~of ASU No. 2014~~non-15revolving ~~“Presentation~~line of ~~the~~credit ~~Financial~~for ~~Statements~~$5.6 –million. The ~~Going~~interest ~~Concern~~rate ~~(Subtopic~~is ~~205-40):~~variable ~~Disclosure~~based ofupon ~~Uncertainties~~the ~~about~~one anmonth ~~Entity’s~~LIBOR ~~Ability~~rate toplus ~~Continue as a Going Concern~~4.~~” Management’s~~0% ~~cash~~per ~~flow~~annum ~~forecast~~on ~~for~~ the ~~next~~outstanding ~~twelve~~balance. The ~~months,~~non-revolving ~~based~~line ~~on expectations~~ of ~~the~~credit ~~receipt~~will ofexpire ~~new~~on ~~customer~~September ~~orders and revenues~~15, ~~indicates~~2019 ~~that~~and the ~~Company~~amounts ~~should~~repaid beduring ~~able~~the toterm ~~meet~~of ~~its~~the ~~obligations,~~loan ~~but~~may ~~there~~not ~~can~~ be ~~no assurance that this will happen~~reborrowed. ~~Therefore,~~ ~~with~~At the ~~losses~~expiry ~~that~~date, ~~the~~all ~~Company~~outstanding ~~has~~principal ~~sustained,~~ and ~~its~~interest ~~working~~are ~~capital~~due. ~~deficit~~As atof ~~September~~March 3031, ~~2018~~2019, ~~substantial~~$4,664,529 ~~doubt~~was ~~exists~~drawn ~~about~~on the ~~Company’s~~line ~~ability~~of ~~to continue as a going concern without taking additional actions and/or finalizing orders that are currently in the negotiation stage~~credit. ~~Management~~For ~~believes that~~ additional ~~funding may be necessary~~information, ~~and~~see isNote ~~evaluating numerous options, including but not limited to:~~10.

· On ~~Renegotiation~~January 21, 2019, the Company announced it had entered into an Agreement and Plan of Merger (the ~~maturity~~“Merger ~~date~~Agreement”) with Danfoss Power Solutions (US) Company (“Danfoss”). Under the terms of the Merger Agreement a wholly owned subsidiary of Danfoss will merge with and into the Company, and the Company will continue as the surviving corporation and a wholly-owned subsidiary of Danfoss (the “Merger”). The board of directors of the Company unanimously approved and declared advisable the Merger. If the transactions contemplated by the Merger Agreement are consummated, the Company’s ~~line~~common stock will be delisted from the NYSE American stock exchange and deregistered under the Securities Exchange Act of ~~credit~~1934, ~~with~~as ~~its~~amended ~~bank;~~(the “1934 Act”).

· Our ~~Sale~~existing cash resources and ~~leaseback~~cash ~~transaction~~generated ~~related~~from our revenues are not expected to be sufficient to complete our business plan for the ~~Company~~next twelve months. Given this expectation, we may need to renegotiate existing debt, secure additional debt or equity funding, which may not be available on terms acceptable to us, if at all. Therefore, management believes there is substantial doubt about the entity’s ~~facility;~~ability to continue as a going concern.

· Management ~~Investments~~believes completion of the Merger with Danfoss described above mitigates the substantial doubt raised by our historical operating result and fulfilling our estimated liquidity needs twelve months from ~~strategic~~the ~~partners;~~issuance of the financial statements. The Merger is subject to approval by our shareholders, which was obtained on April 23, 2019 at a Special Meeting of the Shareholders. The closing of the Merger is also subject to approval by the Committee on Foreign Investment in the United States (“CFIUS”) and therefore we are unable to predict with certainty the completion of the Merger.

· (5) ~~Capital~~Revenue ~~market~~and ~~investment.~~Cost Recognition

Management does not believe that there is an immediate need to raise capital given the recent improvements in revenues. Management believes that it is likely that additional funding will be available at the appropriate time given these options, however, there can be no assurance that outside capital will ultimately be available to the Company on reasonable terms, if at all.

The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern.

(5) Revenue Recognition

Accounting Policies

Product Sales- Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company’s contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated fixed price. The Company sells its products directly to customers under agreements with payment terms of prepayment or generally net 30 days for credit qualified customers.

Contract Services- The majority of the Company’s contracts have a single performance obligation to transfer products or an agreed-upon task(s) over time. Accordingly, revenue is recognized using cost input methods, which recognize revenue and gross profit as work is performed based on the relationship between actual costs ~~incurred compared to the total estimated costs of the contract, as the performance obligations~~

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

incurred compared to the total estimated costs of the contract, as the performance obligations are satisfied. Costs incurred towards contract completion may include costs associated with direct materials, labor, subcontractors, and other indirect costs.

Shipping and Handling Costs- We account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, we record customer payment of shipping and handling costs as a component of net sales, and classify such costs as a component of cost of sales.

Product Warranties- Our standard product warranty is for one year and provides assurance to the customer that the purchased product will function as intended and complies with agreed-upon specifications. A customer can negotiate an extended warranty period from four months up to four years. The cost of the warranty can be included in the price of the unit or separately stated as a line item in the contract. A majority of our customers have the warranty included in the sales price of the product which is then accounted for as a guarantee. Warranties that are stated as a separate line item in the contract are considered a single performance obligation which is recognized by the time elapsed input method.

Unearned Revenue- When we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, we record unearned revenue, which represents a contract liability. We recognize unearned revenue as net sales after we have transferred control of the goods or services to the customer and all revenue recognition criteria are met.

License Agreements- We account for our license agreements as multi-element arrangements. Each element in the arrangement is considered a single performance obligation and is treated accordingly. Revenue recognition for the licensing element in the agreement is recognized by the time elapsed input method. Revenue recognition for the product sales element follows the revenue recognition rules as noted above for product sales.

The effect of the adoption of new revenue recognition standard (ASC 606) on our Consolidated Statement of Operations and Balance Sheet as of December 31, 2017 as reported in our Annual Report on Form 10-K was immaterial.

Disaggregation of Revenue

In the following table, revenue is disaggregated by geographic region (using the location of the client as the basis of attributing revenues to the individual regions):

	Nine Months Ended September 30,
	Three months ended March 31,
	2018		2017
	2019
United States & Canada	$	52,~~050~~035,~~379~~656	$	~~3,093,034~~
Asia Pacific		31,~~504~~509,~~679~~080		~~2,227,800~~
Europe		~~143~~139,~~593~~000		~~235,720~~
Total Revenues	$	83,~~698~~683,~~651~~736	$	~~5,556,554~~

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(6) Cash, cash equivalents, and restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the Consolidated Condensed Statements of Cash Flows.

	September 30,		September 30,
	March 31,		March 31,
	2018		2017
	2019		2018
Cash and cash equivalents	$	2,~~487~~910,~~132~~507	$	85,~~035~~454,~~754~~159
Restricted cash, current		~~358~~222,~~627~~392		~~165~~456,~~575~~224
Restricted cash, long-term		-		376,407
Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statements of Cash Flows	$	3,132,899	$	5,910,383
Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statements of Cash Flows	$	2,845,759	$	8,577,736

Restricted cash ~~classified as a current asset on the Consolidated Condensed Balance Sheets~~ represents the amount required to be set aside pursuant to a contractual agreement with the Company’s lender for the payment of interest on borrowings from the line of credit that is expected to be paid within the next twelve months. In addition, restricted cash included in other long-term assets on the Consolidated Condensed Balance Sheets represents interest due on the line of credit more than twelve months from the date of the financial statements as contractually required by the lender. The restrictions will lapse when the related debt is paid back in full.

(7) Contracts in Process

At ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018, the estimated period to complete contracts in process ranged from one to five and one to three months, respectively. We expect to collect all accounts receivable arising from these contracts within ninety days of billing.

The following summarizes contracts in process:

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Costs incurred on engineering services contracts	$	~~158~~369,~~047~~906	$	561,~~175~~008,715
Estimated earnings		~~445~~92,~~236~~305		~~144~~688,~~665~~227
		603,283		200,840
		462,211		1,696,942
Less billings to date		(~~835~~692,~~400~~327)		(~~400~~1,~~000~~807,669)
Contracts in process	$	(~~232~~230,~~117~~116)	$	(~~199~~110,~~160~~727)
Included in the accompanying Consolidated Condensed Balance Sheets is as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	45,850	$	-
Deferred contract liability		(230,116)		(110,727)
Billings in excess of costs and estimated earnings on engineering services contracts		(277,967)		(199,160)
Contracts in process	$	(230,116)	$	(110,727)
Contracts in process	$	(232,117)	$	(199,160)

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(8) Inventories

Inventories at ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018 consisted of:

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Raw materials	$	98,~~178~~594,~~495~~795	$	7,~~679~~836,~~922~~381
Work-in-process		1367,~~073,612~~647		~~289~~351,~~848~~402
Finished products		12,~~298~~964,~~089~~943		13,~~390~~719,~~200~~404
Reserve for excess and obsolete inventory		(67,~~974~~111,~~724~~786)		(7,~~018~~123,~~610~~300)
	$	4,~~575~~815,~~472~~599	$	24,~~341~~783,~~360~~887

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 assess our raw material and finished product inventories for potential impairment of value based on then available information, expectations and estimates and establish impairment reserves as appropriate. During the quarter ~~and nine months~~ ended ~~September~~March 3031, ~~2018~~2019, no additional reserve was required.

(9) Other Current Liabilities

Other current liabilities at ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018 consisted of:

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Accrued payroll and employee benefits	$	216,103	$	94,680
Accrued warranty costs	$	659,236	$	598,415
Accrued personal property and real estate taxes		176,350		235,133
Accrued professional fees		523,325		72,731
Accrued warranty costs		470,283		333,431
Accrued payroll and employee benefits		225,028		159,966
Accrued royalties		48,336		48,336
Accrued fees to Sinotruk		160,000		160,000
Accrued import duties		87,100		87,100
Other		20,000		21,159
Accrued personal property and real estate taxes		57,490		235,133
	$	1,018,172	$	819,839
Accrued royalties		48,336		48,336
Other		28,464		32,469
	$	1,788,979	$	1,394,150

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(10) Debt

On March 15, 2017, the Company entered into a non-revolving line of credit for $5.6 million. The loan is collateralized by the Company’s ~~headquarter~~headquarters facility. The interest rate is variable based upon the one month LIBOR rate plus 4.0% per annum on the outstanding balance, which was 6.2648% as of ~~September~~March 3031, ~~2018~~2019. As a condition of the loan, $600,000 was immediately drawn on the line of credit to be used for monthly interest payments on borrowings over the life of the loan. This is reported as restricted cash on the Consolidated ~~Condensed~~ Balance Sheets as of ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018. ~~For additional information, see Note 6 to the Consolidated Condensed Financial Statements.~~ The covenants under the debt agreement require the Company to have liquid assets ofwith a minimum balance of $1.5 million held with the lender. In addition, financial statements are to be presented no later than 45 days after the end of each quarter and 90 days after the end of each fiscal year. These covenants took effect for the quarter ending June 30, 2017. As of ~~September~~March 3031, ~~2018~~2019, the Company was in compliance with its covenants. The non-revolving line of credit will expire on ~~March~~September 15, 2019, and the amounts repaid during the term of the loan may not be re-borrowed. At the expiry date, all outstanding principal and interest ~~are~~become due and payable in full. As of ~~September~~March 3031, ~~2018~~2019, $34,~~164~~664,529 was drawn on the line of credit. The Company incurred deferred financing costs of $73,060 upon securing the line of credit, ~~which~~and ~~are~~$32,320 ~~amortized~~during ~~over~~ the ~~term~~quarter ~~using~~ended ~~the~~March ~~effective~~31, ~~interest~~2019 ~~rate~~upon ~~method~~extending the maturity date.

(11) Stock-Based Compensation

Stock-Based Compensation Expense

The table below shows total stock-based compensation expense for the quarters ~~and nine months~~ ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, and the classification of these expenses:

Quarters Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2018

2017

2018

2017

2019

2018

Costs of product sales

98,~~637~~694

96,~~300~~435

~~25,695~~

~~16,627~~

Costs of contract services

~~6,900~~-

-2,923

~~12,107~~

~~2,097~~

Research and development

1622,~~275~~750

1813,~~521~~461

~~53,772~~

~~37,422~~

Selling, general and administrative

~~116~~108,~~685~~075

~~113~~50,~~522~~542

~~434,050~~

~~213,745~~

~~149~~139,~~497~~519

~~141~~73,~~343~~361

~~525,624~~

~~269,891~~

Stock Option Plans Activity

Additional information with respect to stock option activity during the three months ended March 31, 2019 under our two separate stock option plans is as follows:


				Weighted-
		Weighted-		Average
	Shares	Average		Remaining		Aggregate
	Under	Exercise		Contractual		Intrinsic
	Option	Price		Life		Value
Outstanding at December 31, 2018	4,190,470	$	1.16		6.5 years	$	170,233
Granted	-	$	-				-
Exercised	(4,080)	$	0.66				-
Forfeited	(6,042)	$	0.73				-
Outstanding at March 31, 2019	4,180,348	$	1.16		6.3 years	$	2,310,509

Exercisable at March 31, 2019	2,706,347	$	1.20		5.0 years	$	1,500,208

Vested and expected to vest at March 31, 2019	3,479,842	$	1.25		6.0 years	$	1,677,160

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

~~Stock~~As ~~Option~~of ~~Plans~~March ~~Activity~~31, 2019, there was $738,843 of total unrecognized compensation cost 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-four months. The total fair value of stock options that vested during the three months ended March 31, 2019 and 2018 was $0.

Additional information with respect to stock option activity during the nine months ended September 30, 2018 under our two separate stock option plans is as follows:

				Weighted-
		Weighted-		Average
	Shares	Average		Remaining		Aggregate
	Under	Exercise		Contractual		Intrinsic
	Option	Price		Life		Value
Outstanding at December 31, 2017	3,295,502	$	1.16		6.3 years	$	1,383,525
Granted	1,068,322	$	1.25				-
Exercised	(23,964)	$	0.72				-
Forfeited	(145,778)	$	1.89				7,178
Outstanding at September 30, 2018	4,194,082	$	1.16		6.7 years	$	1,225,225
Exercisable at September 30, 2018	2,730,432	$	1.19		5.4 years	$	921,790
Vested and expected to vest at September 30, 2018	3,449,842	$	1.25		6.4 years	$	812,630

As of September 30, 2018, there was $969,934 of total unrecognized compensation cost 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-four months. The total fair value of stock options that vested during the nine months ended September 30, 2018 and 2017 was $325,898 and $236,328, respectively.

Stock Bonus Plan Activity

Activity with respect to non-vested shares under the Stock Bonus Plan as of ~~September~~March 3031, ~~2018~~2019 and ~~2017 and changes during the nine months ended September 30,~~ 2018 ~~and 2017~~ are presented below:

	Nine months ended September 30,
	Three Months Ended March 31,
	2018			2017
	2019			2018
		Weighted-Average			Weighted-Average
	Shares Under	Grant Date		Shares Under	Grant Date
	Contract	Fair Value		Contract	Fair Value
Unvested at beginning of period	57169,~~760~~872	$	01.6815	~~102~~57,~~048~~760	$	0.8468
Granted	~~188,191~~-	$	~~1.25~~-	~~23,735~~-	$	~~0.87~~-
Vested	~~(76,079)~~-	$	~~1.03~~-	~~(68,023)~~-	$	~~0.98~~-
Forfeited	-	$	-	-	$	-
Unvested at end of period	169,872	$	1.15	57,760	$	0.68

As of ~~September~~March 3031, ~~2018~~2019, there was $~~156~~118,~~335~~113 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan. The unrecognized compensation cost at ~~September~~March 3031, ~~2018~~2019 is expected to be recognized over a weighted-average period of ~~twenty-six~~fourteen months.

Employee Stock Purchase Plan Activity

During the three months ended March 31, 2019 and 2018, we issued 554 and 18,138 shares of common stock, respectively, under the Employee Stock Purchase Plan. Cash received by us upon the purchase of shares under the Employee Stock Purchase Plan for the three months ended March 31, 2019 and 2018 was $615 and $17,957, respectively. As of March 31, 2019, 31,922 options had been purchased under this plan but the employee(s) had not exercised their right to acquire the common stock under the terms of the Employee Stock Purchase Plan.

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

Employee Stock Purchase Plan Activity

During the nine months ended September 30, 2018 and 2017, we issued 31,187 and 45,849 shares of common stock, respectively, under the Employee Stock Purchase Plan. Cash received by us upon the purchase of shares under the Employee Stock Purchase Plan for the nine months ended September 30, 2018 and 2017 was $32,881 and $17,881, respectively. As of September 30, 2018, 25,609 options had been purchased under this plan but the employee(s) had not exercised their right to acquire the common stock under the terms of the Employee Stock Purchase Plan.

(12) Stockholders’ Equity

Changes in the components of stockholders’ equity during the ~~nine~~three months ended ~~September~~March 3031, 2019 and 2018 were as follows:

	Number of
	common				Additional				Total
	shares		Common		paid-in		Accumulated		stockholders’
	issued		stock		capital		deficit		equity
Balances at December 31, 2018		54,267,440	$	542,674	$	134,645,911	$	(131,174,812)	$	4,013,773
Issuance of common stock under employee stock purchase plan		554		6		609		-		615
Issuance of common stock upon exercise of warrants		1,950,115		19,501		2,535,150		-		2,554,651
Issuance of common stock upon exercise of employee, directors and consultants options		4,080		41		2,652		-		2,693
Compensation expense from employee and director stock option and common stock grants		-		-		139,519		-		139,519
Net loss		-		-		-		(2,550,688)		(2,550,688)
Balances at March 31, 2019		56,222,189	$	562,222	$	137,323,841	$	(133,725,500)	$	4,160,563
Balances at December 31, 2017		54,108,510	$	541,085	$	133,901,406	$	(124,671,250)	$	9,771,241
Issuance of common stock under employee stock purchase plan		18,138		181		17,776		-		17,957
Compensation expense from employee and director stock option and common stock grants		-		-		73,361		-		73,361
Net loss		-		-		-		(1,932,798)		(1,932,798)
Balances at March 31, 2018		54,126,648	$	541,266	$	133,992,543	$	(126,604,048)	$	7,929,761
Issuance of common stock under employee stock purchase plan		11,654		117		13,286		-		13,403
Issuance of common stock upon exercise of employee and director options		2,200		22		1,470		-		1,492
Retirement of vested shares								-		-
Compensation expense from employee and director stock option and common stock grants		-		-		302,766		-		302,766
Net loss		-		-		-		(2,469,721)		(2,469,721)
Balances at June 30, 2018		54,140,502	$	541,405	$	134,310,065	$	(129,073,769)	$	5,777,701
Issuance of common stock upon exercise of employee and director options		21,764		218		15,561		-		15,779
Issuance of common stock under employee stock purchase plan		1,395		14		1,507		-		1,521
Issuance of common stock under stock bonus plan		76,079		761		(761)		-		-
Common stock used for tax withholdings		(10,785)		(108)		(10,354)		-		(10,462)
Compensation expense from employee and director stock option and common stock grants		-		-		149,497		-		149,497
Net loss		-		-		-		(1,141,578)		(1,141,578)
Balances at September 30, 2018		54,228,955	$	542,290	$	134,465,515	$	(130,215,347)	$	4,792,458

The Company had issued warrants as follows:


	Common Stock	Warrants
	Follow-on Offering	Under Option	Earliest
Offering Date	(Shares)	(Shares)	Exercise Date	Expiration Date
February, 2014	2,864,872	1,489,733	August 6, 2014	August 5, 2018
October, 2015	8,000,000	4,000,000	April 30, 2016	October 30, 2020

Warrant activity during the quarter ended March 31, 2019 was as follows:


				Weighted-
		Weighted-		Average
	Warrants	Average		Remaining
	Under	Exercise		Contractual
	Option	Price		Life
Outstanding at December 31, 2018	4,000,000	$	1.31		1.8 years
Granted	-	$	-
Exercised	(1,950,115)	$	1.31		1.8 years
Forfeited	-	$	-
Outstanding at March 31, 2019	2,049,885	$	1.31		1.6 years

Exercisable at March 31, 2019	2,049,885	$	1.31		1.6 years

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

The Company has warrants outstanding as follows:

	Common Stock	Warrants
	Follow-on Offering	Under Option	Earliest
Offering Date	(Shares)	(Shares)	Exercise Date	Expiration Date
October, 2015	8,000,000	4,000,000	April 30, 2016	October 30, 2020

				Weighted-
		Weighted-		Average
	Warrants	Average		Remaining
	Under	Exercise		Contractual
	Option	Price		Life
Outstanding at December 31, 2017	5,489,733	$	1.53		2.3 years
Granted	-	$	-
Exercised	-	$	-
Forfeited	(1,489,733)	$	2.13
Outstanding at September 30, 2018	4,000,000	$	1.31		2.1 years
Exercisable at September 30, 2018	4,000,000	$	1.31		2.1 years

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UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(13) 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 quarters ~~and nine months~~ ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018:

	Quarters Ended September 30,								Nine Months Ended September 30,
	Three Months Ended March 31,
	2018				2017				2018				2017
	2019				2018
Customer A	$	~~269~~958,~~576~~455	626	%	$	~~52,364~~-	2-	%	$	~~879,215~~	10	%	$	~~227,502~~	4	%
Customer B	$	~~418~~471,~~313~~750	1013	%	$	-499,758	-31	%	$	~~1,110,042~~	13	%	$	~~300,000~~	5	%
Customer C	$	~~426~~362,~~026~~499	10	%	$	-297,210	-18	%	$	~~782,028~~	9	%	$	-	-	%
Customer D	$	~~793~~211,~~506~~588	186	%	$	~~308~~216,~~341~~159	1113	%	$	~~1,730,414~~	20	%	$	~~1,714,876~~	31	%
Customer E	$	1,275,000	29	%	$	1,800,000	65	%	$	1,275,000	15	%	$	1,974,000	36	%

The following table summarizes accounts receivable from significant customers as of ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018:

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Customer A	222	%	4-	%
Customer B	-21	%	-30	%
Customer C	110	%	-4	%
Customer D	439	%	8017	%
Customer E	-	%	-	%

(14) Income Taxes

The Company currently has a full valuation allowance against its deferred tax assets, as it is management’s judgment that it is more-likely-than-not that net deferred tax assets will not be realized to reduce future taxable income.

As of ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, we had no provisions for interest or penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and various state jurisdictions.

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Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(15) Loss Per Common Share

The following table sets forth the computation of basic and diluted net loss per share for the quarters ~~and nine months~~ ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018:

	Quarters Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2018		2017		2018		2017
	2019		2018
Numerator:
Net loss	$	(12,~~141~~550,~~578~~688)	$	(~~543~~1,~~401~~932,798)	$	~~(5,544,097)~~	$	~~(3,497,648)~~
Denominator for basic and diluted net loss per common share:
Weighted average number of shares of common stock outstanding - basic and diluted		5455,~~208~~349,~~477~~670		4854,~~941~~124,~~702~~230		~~54,158,607~~		~~48,677,423~~
Net loss per common share - basic and diluted	$	(0.0205)	$	(0.0104)	$	~~(0.10)~~	$	~~(0.07)~~

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:

	September 30,
	March 31,
	2018		2017
	2019		2018
Non-vested stock bonus plan shares		169,872	57,760
Stock options outstanding		4,~~219~~180,~~691~~348	3,~~409~~317,~~262~~560
Warrants to purchase common stock		42,~~000~~049,~~000~~885	5,489,733

(16) Fair Value of Financial Instruments

The carrying amounts of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued and other current liabilities approximate fair value because of the short maturity of these instruments.

The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis and its debt of $34,~~147~~637,~~430~~596 is reported at amortized cost. The Company’s debt is subject to variable rates of interest and accordingly its carrying value is considered to be representative of its fair market value.

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Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(17) Commitments and Contingencies

Employment Agreements

Effective July 1, 2017, the Company entered into ~~new~~ employment agreements with each of its four officers, which have terms through December 31, 2019. The aggregate future base salary payable to the executive officers over the remaining terms of their employment agreements is $1823,~~372,505~~503.

Lease Commitments

~~Operating~~The ~~lease:~~Company Incurrently ~~July~~leases ~~2018,~~a ~~the~~facility ~~Company~~in ~~entered~~Shanghai, ~~into~~China. The afacility ~~new~~is ~~lease~~used ~~agreement~~as ~~for~~a ~~its~~product ~~customer~~ service center inand ~~Shanghai,~~general ~~China~~office. ~~with~~The a lease ~~term~~duration ofruns ~~four~~from ~~years,~~the ~~effective~~initiation date of July 30, 2018 ~~through~~to the expiration on August 31, 2022. ~~There~~ ~~were~~At nothe ~~operating~~time ~~leases~~of orexpiration, ~~rental~~UQM ~~expense~~is ~~during~~eligible to negotiate a renewal to the ~~nine~~lease. ~~months~~In ~~ended~~the ~~September~~normal 30course of business, ~~2017~~it is expected that this lease will be renewed or replaced by a similar lease on another property. This lease is the Company’s only operating lease and it has no financing leases.

~~The~~This ~~table~~lease provides for a 10% increase in annual rental payments after two years, and in increments of two years thereafter. Further, a quarterly service fee of $558 is assessed with the last rental payment of each period and included in the rent amounts shown below. During ~~summarizes~~the quarter ended March 31, 2019, the Company'’s ~~scheduled~~lease ~~future~~cost ~~minimum~~was ~~lease~~$6,777 ~~payments~~compared ~~under~~to ~~facility~~$0 ~~operating~~for ~~leases~~the ~~having~~same ~~initial~~quarter orended ~~remaining~~March ~~non-cancellable~~31, ~~lease~~2018. Lease ~~terms~~costs ofare ~~more~~classified ~~than~~on ~~one~~the ~~year~~Statements of Operations as selling, general and administrative expenses. The depreciable life of ~~September 30~~lease assets is limited by the expected lease term and once terminated, ~~2018:~~there is no transfer of title.

2019	$	24,712
2020		25,536
2021		27,183
2022		18,122
Thereafter		-
	$	95,553

The current lease agreement does not establish requirements for UQM to comply with covenants or to maintain certain financial ratios nor does it contain any variable lease payments.

The Company recognized a right of use asset of $113,416, and current and long term lease liabilities of $27,775 and $74,642, respectively.

The following is a maturity analysis of the payments discounted at our bank borrowing rate of 6.48% of the operating lease liabilities, inclusive of the quarterly service fees, as of March 31, 2019, assuming the ¥/$ exchange rate as of the same date:


2019	$	20,331
2020		27,939
2021		29,600
2022		19,733
	$	97,603

Litigation

WeDuring ~~are~~the ~~involved~~quarter inended ~~various~~March ~~claims~~31, ~~and~~2019, seven legal complaints, including five putative class actions, ~~arising~~were filed by purported stockholders of UQM challenging the Merger and/or the Company’s disclosures in the ~~ordinary~~proxy ~~course~~statements filed with the SEC related to the Merger. These lawsuits are generally described in Item 1 of ~~business~~Part II of this Quarterly Report on Form 10-Q. UQM believes that the claims asserted in each of these lawsuits are without merit. InHowever, to avoid the ~~opinion~~risk of ~~management~~litigation delaying or adversely affecting the Merger, UQM made certain supplemental disclosures regarding the Merger and ~~based~~the circumstances surrounding the negotiation of the Merger Agreement in a Current Report on ~~current~~Form ~~available~~8-K ~~information~~filed with the SEC on April 25, 2019. In connection therewith all of the ~~ultimate~~plaintiffs ~~disposition~~agreed to voluntarily dismiss all claims asserted in their Lawsuits within five days of ~~these~~the ~~matters~~closing isof ~~not~~the ~~expected~~Merger. Certain toplaintiffs already have avoluntarily ~~material~~dismissed ~~adverse~~their ~~effect~~lawsuits onand ~~our~~the ~~financial~~remaining ~~position~~plaintiffs have agreed to voluntarily dismiss their Lawsuits within five days of the closing of the Merger. The dismissals are subject to the plaintiffs requests for fees, ~~results~~which fees are not estimable at this time. Therefore, no provision has been made in the financial statements for the ultimate resolution of ~~operations~~the orLawsuits. Management ~~cash~~believes ~~flow~~that the final resolution of the Lawsuits will not have a material adverse effect on the Company’s financial position.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Report contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These could be statements ~~appear~~regarding inour aplans, ~~number~~beliefs ofor ~~places~~current inexpectations; ~~this~~including ~~Report~~those ~~and~~plans, ~~include~~beliefs ~~statements~~and ~~regarding~~expectations of our ~~plans~~officers and directors with respect to, ~~beliefs~~among orother ~~current~~things, ~~expectations. Important~~uncertainty ~~Risk~~regarding ~~Factors~~the ~~that~~timing ~~could~~and ~~cause~~effect ~~actual~~of ~~results~~the toPlan ~~differ~~of ~~from~~Merger ~~those~~and ~~contained~~Merger inAgreement (as described below) entered into between the ~~forward-looking~~Company ~~statements~~and ~~are~~Danfoss ~~listed~~Power ~~below~~Solutions in(US) ~~Part~~Company II(“Danfoss), ~~Item~~disruption ~~1A.~~in ~~Risk~~our ~~Factors~~business, customers and suppliers in ~~our~~connection ~~Annual~~with ~~Report~~the onMerger, ~~Form~~failure ~~10-K~~or ~~for~~a delay in the ~~year~~contemplated ~~ended~~merger ~~December~~with 31Danfoss, ~~2017. Additionally,~~potential ~~there~~litigation ~~may~~related beto ~~other~~the Merger, risks ~~that~~related ~~are~~to ~~otherwise~~change ~~described~~in ~~from~~control ~~time~~provisions toor ~~time~~delisting inof the ~~reports~~Company’s ~~that~~common westock, ~~file~~general ~~with~~business and economic conditions, international trade issues and geopolitical risks, our ability to enforce intellectual property rights in the U.S. ~~Securities~~and other countries, the impact of existing and ~~Exchange~~future ~~Commission~~laws ~~(“SEC”).~~and Weregulations ~~assume~~governing noour ~~obligation~~products and operations, our ability to ~~update~~recruit and retain key executive and technical employees, the sufficiency of our cash and other resources to support our continued operations and liquidity needs over the coming twelve months, ~~except~~new asproduct ~~may~~developments, future orders to be ~~required~~received byfrom ~~law~~our customers, dosales ~~not~~of ~~intend~~products tofrom ~~update~~inventory, ~~any~~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 in our Annual Report on Form 10-K for the year ended December 31, 2018 and below in Part I, Item 1A. Risk Factors.

Introduction

UQM ~~Technologies, Inc. (the “Company”, “UQM”, “we”, 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, 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 ~~intended to be~~ highly efficient permanent magnet designs and feature outstanding performance, package size, and weight valued by our customers. WeOur ~~believe 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 9001 and~~ IATF 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. We believe this team has the ability and background to grow the business to significantly higher levels, and if we are able to complete the Merger transaction (as described in this quarterly report) we believe we have adequate cash and bank financing resources 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~~on-going operations. We are ~~taking~~attempting ~~steps~~ to drive business development primarily in ~~various~~the ~~ways~~following ~~including~~ways:

· We have created a well-defined, structured process intended 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~~hired ~~expanded~~ our ~~staff~~first employees in China, ~~and during the current quarter, we opened a customer service center~~ in ~~Shanghai~~2016. As China represents the largest market in the world for electric vehicles, ~~and we believe~~ our presence in that market is critical to our long-term success. In 2018, we opened a service center in Shanghai, China to support our installed base of products there.

· On August 28, 2017, we entered into a definitive stock purchase agreement (“Agreement”) with China National Heavy Duty Truck Group Co., Ltd. through its wholly-owned subsidiary, Sinotruk (BVI) Limited (collectively, “CNHTC”), the parent company of Sinotruk (Hong Kong) Limited, a Chinese commercial vehicle manufacturer, and also announced that UQM and CNHTC plan to create a joint venture to manufacture and sell electric propulsion systems for commercial vehicles and other vehicles in China. Today CNHTC owns approximately 9.9% of our outstanding shares of common stock. 16

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· We have developed a customer pipeline where we identified potential customers ~~that we believe~~ are synergistic and strategic in nature for longer-term growth potential.

· We are ~~building~~continuing ~~potentially~~to attempt to build 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 ~~strive~~aim to improve our purchasing and manufacturing processes to develop competitive costs to ensure that our pricing to customers is market competitive.

· We provide customized solutions intended 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 ~~eventually~~ become cash flow positive and ultimately profitable.

Recent Events

On ~~July 31~~January 21, ~~2018~~2019, we ~~announced~~entered ~~that~~into wean ~~had~~Agreement ~~signed~~and aPlan ~~lease~~of ~~agreement~~Merger in(the ~~Shanghai,~~“Merger ~~China~~Agreement”) towith ~~open~~Danfoss Power Solutions (US) Company, a ~~customer~~Delaware ~~service~~corporation ~~center~~(“Danfoss”), ~~for~~and ~~both~~Danfoss-2019 ~~our~~Merger ~~fuel~~Sub, Inc., ~~cell~~a ~~compressor~~Delaware ~~systems~~corporation and ~~propulsions~~a ~~systems~~wholly-owned subsidiary of Danfoss (the “Merger Sub”). ~~The~~Under ~~facility~~the ~~should~~terms ~~allow~~of usthe toMerger ~~provide~~Agreement, ~~quick~~Merger ~~turnaround~~Sub ~~for~~will ~~service~~be ~~and~~merged ~~spare~~(the ~~parts~~“Merger”) towith ~~our~~and ~~customers~~into inthe ~~China~~Company, ~~and~~as ~~eventually~~a ~~assemble~~result of which the ~~fuel~~Company ~~cell~~will ~~compressor~~continue ~~systems~~as inthe ~~that~~surviving ~~region~~corporation and a wholly-owned subsidiary of Danfoss.

OnUnder ~~August~~the 9terms of the Merger Agreement, ~~2018~~at the effective time of the Merger (the “Effective Time”), weeach ~~announced~~issued ~~that~~and weoutstanding ~~had~~share ~~received~~of ~~new~~the ~~fuel~~Company’s ~~cell~~common ~~compressor~~stock ~~system~~(each ~~purchase~~a ~~orders~~“Company ~~from~~Share”), ~~several~~other ~~new~~than ~~and~~shares ~~existing~~owned ~~Chinese~~by ~~customers~~Danfoss, ~~including~~Merger ~~our~~Sub, ~~major~~or ~~Chinese~~any ~~OEM~~wholly-owned ~~customer.~~subsidiary ~~The~~of ~~new~~the ~~purchase~~Company, ~~orders~~or ~~are~~held ~~valued~~in atthe ~~approximately~~Company’s treasury, will be cancelled and converted into the right to receive $31.071 ~~million~~per share in cash (the “Merger Consideration”). ~~All~~Each ~~these~~option ~~orders~~to ~~represent~~purchase ~~incremental~~Company ~~new~~Shares ~~business~~that ~~with~~is ~~shipments~~outstanding ~~expected~~as of the Effective Time (whether vested or unvested) will be cancelled in exchange for the right to receive the excess of the Merger Consideration over the exercise price of such option, less applicable taxes required to be ~~delivered~~withheld. ~~through~~Restricted ~~2018~~stock that is not vested immediately prior to the Effective Time will be automatically fully vested and ~~into~~free ~~2019~~of any restrictions immediately prior to the Effective Time, and will be treated as Company Shares for all purposes of the Merger Agreement, including the right to receive the Merger Consideration, subject to applicable withholdings. Outstanding warrants that are outstanding at the Effective Time will be cancelled and the holders issued a replacement warrant that will be exercisable for an amount in cash equal to the aggregate number of Common Shares underlying the warrant multiplied by the excess, if any of the Merger Consideration over the per share exercise price of the warrant.

OnThe ~~August~~board ~~30,~~of ~~2018,~~directors weof ~~announced~~the ~~that~~Company we(the ~~had~~“Company ~~received~~Board”) anunanimously ~~order~~approved ~~from Lightning Systems for our eDT 220 electric propulsion systems for use in several new projects, including Class 6 vehicles for Zeem Solutions, located in New York,~~ and adeclared ~~city~~advisable ~~bus~~the ~~program for Via Mobility~~Merger, ~~located~~the inMerger ~~Boulder~~Agreement, ~~Colorado. Shipments are currently expected to commence in 2018~~ and ~~continue into 2019. We supply various powertrain components to Lightning Systems, including~~ the ~~UQM~~other ~~E-Drive~~transactions ~~paired~~contemplated ~~with different gearbox solutions, making us the Tier 1 provider for the full assembly~~thereby.

OnCompletion ~~September~~of ~~11,~~the ~~2018~~transaction is subject to the satisfaction or waiver of specified closing conditions, weincluding ~~announced~~(i) the ~~that~~approval weof ~~had~~the ~~unveiled~~Merger ~~our~~Agreement ~~newest~~by ~~product~~the ~~launch~~holders of two-thirds of the issued and outstanding Company Shares (the “Company Stockholder Approval”), which was obtained at the ~~Electric~~Special &Shareholders ~~Hybrid~~Meeting ~~Vehicle~~on ~~Technology~~April ~~Expo~~23, ~~held~~2019, (ii) receipt of required regulatory approvals, including from the Committee on Foreign Investment in ~~Novi~~the United States, ~~Michigan.~~and We(iii) other ~~introduced~~customary aclosing ~~full~~conditions, ~~lineup~~including the accuracy of ~~PowerPhase®~~each ~~HD2~~party’s ~~electric~~representations ~~motor~~and ~~inverters,~~warranties ~~which~~(except ~~complements~~where ~~our~~the ~~signature~~failure ~~motors~~of such representations and ~~software~~warranties ~~controls,~~to be true and correct would not reasonably be expected to ~~further~~have, ~~serve~~individually ~~our~~or ~~customers~~in the aggregate, a Company Material Adverse Effect (as defined in Merger Agreement)), each party’s performance in all material respects of its obligations under the ~~electric~~Merger ~~vehicle~~Agreement, ~~market~~and the absence of a Company Material Adverse Effect since the date of the Merger Agreement. Assuming the satisfaction of conditions, the Company expects the transaction to

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close in the second quarter of 2019. Holders of outstanding Common Shares that did not vote in favor of the Merger may be entitled to exercise dissenter’s rights in accordance with the terms, conditions and procedures of the Colorado Business Corporation Act and to receive the payment of the fair value of such shares.

If the transactions contemplated by the Merger Agreement are consummated, the Company Shares will be delisted from the NYSE American stock exchange and deregistered under the Securities Exchange Act of 1934, as amended.

On April 23, 2019, we held a Special Shareholders Meeting to consider, among other things, the proposed Merger. At that meeting, our shareholders voted to approve the Merger. Assuming we obtain approval from the Committee on Foreign Investment in the United States (“CFIUS”), we expect to close the Merger transaction, which we anticipate will happen in the quarter ended June 30, 2019 or soon thereafter.

Financial Condition

Cash and cash equivalents at ~~September~~March 3031, ~~2018~~2019 were $2,~~487~~910,~~132~~507 and we had a working capital deficit of ($83872,~~381)~~595, compared with $61,~~309~~918,~~269~~570 and $7836,~~762~~263,~~363,~~ respectively, at December 31, ~~2017~~2018. The change in cash and working capital during the quarter is primarily attributable to operating losses, ~~debt~~acquisition ~~obligations~~of ~~being~~property ~~reclassified~~and ~~from long-term to current~~equipment, and investments in inventory, offset ~~in part~~ by ~~prepayments~~cash received from ~~customers~~the exercise of warrants.

Restricted cash ~~(current and long-term)~~ at ~~September~~March 3031, ~~2018~~2019 was $~~358~~222,~~627~~392 versus $~~500~~296,~~056~~314 at December 31, ~~2017~~2018. The restricted cash is reserved for payment of the interest on the line of credit.

Accounts receivable decreased $140,111 to $1,541,178 at March 31, 2019 from $1,681,289 at December 31, 2018. The decrease is primarily due to the mix in customer credit terms and customer prepayments at the end of the first quarter. Our sales are conducted through acceptance of customer purchase orders, or in some cases, through supply agreements. For international customers and customers without an adequate credit rating or history, our typical terms require irrevocable letters of credit or cash payment in advance of delivery. For credit qualified customers, our typical terms are net 30 days. As of March 31, 2019 and December 31, 2018, we had no allowance for bad debts.

Total inventories increased $31,712 to $4,815,599 at March 31, 2019 from $4,783,887 at December 31, 2018 reflecting an increase in raw materials and work-in-process for confirmed sales orders to be sold to customers in 2019 and decreases in finished products from shipped orders.

Prepaid expenses and other current assets decreased to $282,403 at March 31, 2019 from $377,762 at December 31, 2018, primarily due to a decrease in vendor prepayments.

We invested $239,807 for the acquisition of property and equipment during the quarter ended March 31, 2019, compared to $32,220 during the comparable period last year. We purchased equipment for increased production needs.

Patent costs increased $11,307 during the quarter ended March 31, 2019 due to new patent costs offset by amortization, and trademark costs decreased $1,124 during the quarter ended March 31, 2019 due to amortization.

Accounts payable decreased $316,313 to $2,679,319 at March 31, 2019 from $2,995,632 at December 31, 2018, primarily due to the timing of payments of invoices.

Unearned revenue increased to $1,308,664 at March 31, 2019 from $736,819 at December 31, 2018. The increase is attributable to an increase in customer deposits for future shipments.

Other current liabilities increased to $1,788,979 at March 31, 2019 from $1,394,150 at December 31, 2018. The change is attributable to an increase in accrued warranty costs and professional fees incurred during the quarter primarily in relation to the proposed Merger, partially offset by the payment and reduction of accrued property taxes.

Deferred contract liability related to engineering services contracts were $230,116 and $110,727 at March 31, 2019 and December 31, 2018, respectively. The increase was due to increased advance billings of contract services.

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~~Accounts~~Debt, ~~receivable~~net ~~increased~~of ~~$463,401~~deferred tofinancing $1costs,~~287,194 at~~ ~~September~~decreased 30$19,161 ~~2018~~during ~~from~~the ~~$823,793~~quarter atended ~~December~~March 31, ~~2017. The~~2019 ~~increase is primarily~~ due to ~~the~~amortization ~~mix in customer credit terms and increased customer shipments at the end~~ of the ~~third~~deferred ~~quarter. Our~~financing ~~sales are conducted through acceptance of customer purchase orders, or in some cases, through supply agreements~~costs. For international customers and customers without an adequate credit rating or history, our typical terms require irrevocable letters of credit or cash payment in advance of delivery. For credit qualified customers, our typical terms are net 30 days. As of September 30, 2018 and December 31, 2017, we had no allowance for bad debts.

~~Costs~~Other inlong-term ~~excess~~liabilities ofincreased ~~billings on uncompleted engineering service contracts were~~ $4562,~~850~~123 ~~and~~to $0168,282 at ~~September~~March 3031, ~~2018~~2019 ~~and~~from $106,159 at December 31, ~~2017,~~2018 ~~respectively. The increase was~~ due to ~~timing~~recognizing ofthe ~~costs~~long ~~incurred~~term ~~and~~portion ~~billings~~of onour ~~customer~~Shanghai ~~contracts~~service incenter ~~progress at the end of the quarter~~lease.

~~Total~~Common ~~inventories~~stock ~~increased~~and additional paid-in capital were $2562,~~234,112~~222 toand $4137,~~575~~323,~~472~~841, respectively, at ~~September~~March 3031, ~~2018~~2019 ~~from~~compared to $2542,~~341~~674 and $134,~~360~~645,911 at December 31, ~~2017~~2018. ~~reflecting~~The an increase in ~~raw~~common ~~materials~~stock and ~~work~~additional paid-in~~-process~~ ~~for~~capital ~~confirmed~~were ~~sales~~primarily ~~orders~~attributable to bethe ~~sold~~issuance toof ~~customers~~common instock ~~2018~~under the employee stock purchase plan, the exercise of warrants and the periodic expensing of non-cash share-based payments associated with option and stock grants under our equity compensation plans.

Prepaid expenses and other current assets increased to $452,307 at September 30, 2018 from $233,566 at December 31, 2017, primarily due to an increase in vendor prepayments.

We invested $306,561 for the acquisition of property and equipment during the nine months ended September 30, 2018, compared to $46,158 during the comparable period last year. We purchase property and equipment to augment and replace existing fixed assets based on operational needs.

Patent costs increased $29,673 for the nine months ended September 30, 2018 due to new patent costs offset by amortization. Trademark costs decreased $3,372 for the nine months ended September 30, 2018 due to amortization.

Accounts payable increased $1,695,922 to $2,644,797 at September 30, 2018 from $948,875 at December 31, 2017, primarily due to the timing of vendor payments and increased purchases of inventory.

Unearned revenue increased to $2,201,597 at September 30, 2018 from $153,944 at December 31, 2017. The increase is attributable to an increase in customer deposits for future shipments.

Other current liabilities increased to $1,018,172 at September 30, 2018 from $819,839 at December 31, 2017. The change is attributable to an increase in accrued warranty costs which reflect the increase in sales in the current year and payroll and employee benefits.

Billings in excess of costs and estimated earnings on engineering services contracts were $277,967 and $199,160 at September 30, 2018 and December 31, 2017, respectively. The increase was due to timing of billings and completion of customer contracts in 2018.

Debt net of deferred financing costs (current and long-term) increased $27,980 during the nine months ended September 30, 2018 due to amortization of the deferred financing costs.

Other long-term liabilities decreased $15,000 to $106,667 at September 30, 2018 from $121,667 at December 31, 2017 due to amortization of a license fee received from a customer under a ten-year cooperation agreement.

Common stock and additional paid-in capital were $542,290 and $134,465,515, respectively, at September 30, 2018 compared to $541,085 and $133,901,406 at December 31, 2017. The increase in common stock and additional paid-in capital were primarily attributable to the issuance of common stock under the employee stock purchase plan and the periodic expensing of non-cash share-based payments associated with option and stock grants under our equity compensation plans.

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Results of Operations

Quarter Ended ~~September~~March 3031, ~~2018~~2019

Revenue

Product sales revenue for the quarter ended ~~September~~March 3031, ~~2018~~2019 increased to $32,~~747~~991,~~846~~409 versus $21,~~752~~405,~~554~~364 for the comparable period last year, reflecting increased shipments in all product lines.

Revenue from contract services was $~~637~~692,~~576~~327 for the quarter ended ~~September~~March 3031, ~~2018~~2019 versus $0206,210 for the comparable period last year. The increase is due to higher externally funded development contracts ~~in progress~~.

Gross Profit Margin

Total gross profit margin for the quarter ended ~~September~~March 3031, ~~2018~~2019 increased ~~decreased~~ to 2319.76 percent compared to 4619.60 percent for the comparable period in the prior year. Gross profit margin on product sales for the quarter ended ~~this~~March ~~year~~31, 2019 decreased to 2013.03 percent compared to 4616.63 percent for the same period last year, primarily due to higher sales of lower margin products and increased production headcount. Gross profit margin on contract services was 4546.6 percent for the quarter ~~this~~ended ~~year~~March 31, 2019 compared to 037.06 percent for the same period last year, ~~resulting~~due ~~from~~to ~~securing~~more ~~new~~favorable ~~contracts~~pricing ~~in the current period~~terms.

Costs and Expenses

Research and development expenditures for the quarter ended ~~September~~March 3031, ~~2018~~2019 decreased to $~~396~~502,~~690~~ 184 compared to $~~403~~678,~~273~~505 for the same period last year. The decrease is related to a greater focus on externally funded development projects.

Selling, general and administrative expenses for the quarter ended ~~September~~March 3031, ~~2018~~2019 was $12,~~839~~692,~~872~~207 compared to $1,~~983~~519,~~450~~ 917 for the same period last year. The ~~decrease~~increase is primarily attributable to professional costs ~~variable~~related ~~compensation and~~to ~~business~~the ~~development~~Merger, and variable compensation expenses in the current period, compared to the same period last year.

Other income (expense)

Other income and (expense) for the quarter ended ~~September~~March 3031, ~~2018~~2019 was $5511,~~731~~172 compared to $~~562~~8,~~102~~917 for the same period last year. ~~The~~ ~~decrease is primarily attributable to the gain on the sale of vacant land in 2017.~~

Net Loss

As a result, net loss for the quarter ended ~~September~~March 3031, ~~2018~~2019 was $12,~~141~~550,~~578~~688, or $0.0205 per common share, compared to a net loss of $~~543~~1,~~401~~932,798, or $0.0104 per common share, for the comparable period last year.

~~Nine Months Ended September 30, 2018~~19

Revenue

Product sales revenue for the nine months ended September 30, 2018 increased to $7,497,209 versus $5,169,479 for the comparable period last year, reflecting increased shipments in all product lines.

Revenue from contract services was $1,201,442 for the nine months ended September 30, 2018 versus $387,075 for the comparable period last year. The increase is due to customer contracts in progress.

Gross Profit Margin

Total gross profit margin for the nine months ended September 30, 2018 decreased to 23.8 percent compared to 41.6 percent for the comparable period in the prior year. Gross profit margin on product sales for the nine months this year

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decreased to 19.2 percent compared to 40.3 percent for the same period last year primarily due to increased production department expenses related to increased headcount to support higher production demands and higher sales of lower margin products and increased production headcount. Gross profit margin on contract services was 52.5 percent for the nine months this year compared to 58.3 percent for the same period last year, resulting from a change in the mix of contracts in process during the respective periods.

Costs and Expenses

Research and development expenditures for the nine months ended September 30, 2018 increased to $1,902,324 compared to $1,591,520 for the same period last year. The increase is related to a greater focus on internally funded development projects.

Selling, general and administrative expenses for the nine months ended September 30, 2018 was $5,678,428 compared to $4,757,571 for the same period last year. The increase is primarily attributable to legal fees, variable compensation, and related stock compensation in the current period compared to the same period last year.

Other income (expense)

Other income and (expense) for the nine months ended September 30, 2018 was expense of ($29,753) compared to income of $542,327 for the same period last year. The change is primarily attributable to the gain on the sale of vacant land in 2017.

Net Loss

As a result, net loss for the nine months ended September 30, 2018 was $5,544,097, or $0.10 per common share, compared to a net loss of $3,497,648, or $0.07 per common share, for the comparable period last year.

Liquidity and Capital Resources

Our cash balances and liquidity throughout the nine months ended September 30, 2018 were adequate to meet operating needs. At September 30, 2018, we had a working capital deficit of ($83,381) compared to working capital of $7,762,363 at December 31, 2017. The decrease in working capital is primarily attributable to funding operations, higher unearned revenue and debt obligations being reclassified from long-term to current because of its maturity date.

For the nine months ended September 30, 2018, net cash used in operating activities was $3,651,621 compared to net cash used in operating activities of $3,098,339 for the comparable period last year. The increase in cash used in operating activities was due to higher accounts receivable and inventory purchases, partially offset by higher unearned revenue, accounts payable and other liabilities.

Net cash used in investing activities for the nine months ended September 30, 2018 was $351,635 compared to net cash provided by investing activities of $1,333,379 for the comparable nine months last year. The decrease for the nine months ended September 30, 2018 was primarily due to the sale of vacant land in the prior year.

Net cash provided by financing activities for the nine months ended September 30, 2018 was $39,690 compared to net cash provided by financing activities of $8,242,607 for the comparable period last year. The change is primarily due to borrowings on the line of credit and the sale of common stock pursuant to the Agreement executed during the nine months ended September 30, 2017.

We expect to fund our operations over the next year from existing cash and cash equivalent balances, cash generated from operations, and bank financing resources. On March 15, 2017, the Company entered into a non-revolving line of credit with a lender for $5.6 million. The interest rate is variable based upon the one month LIBOR rate plus 4.0% per annum on the outstanding balance. The non-revolving line of credit will expire on March 15, 2019 and the amounts repaid during the term of the loan may not be re-borrowed. At the expiry date, all outstanding principal and interest are due. For additional information, see Note 10 of the Consolidated Condensed Financial Statements. 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,

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our working capital requirements may also increase substantially. The Company intends to renegotiate the maturity date of the line of credit with the bank.

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. See Footnote 4 to the Consolidated Condensed Financial Statements related to management’s assessment of the Company’s ability to continue as a going concern.

Contractual Obligations

The following table presents information about our contractual obligations and commitments as of ~~September~~March 3031, ~~2018~~2019:

			Payments due by Period
			Less Than						More than
	Total		1 Year		1 - 3 Years		3 - 5 Years		5 Years
Long-term debt obligations	$	3,164,529	$	3,164,529	$	—	$	—	$	—
Current debt obligations	$	4,664,529	$	4,664,529	$	—	$	—	$	—
Purchase obligations		4,501,558		4,501,558		—		—		—
Purchase obligations, primarily for inventory for future sales		4,627,322		4,627,322		—		—		—
Lease obligations		9594,~~553~~899		1827,~~534~~775		5855,~~897~~551		1811,~~122~~573		—
Total	$	79,~~761~~386,~~640~~750	$	79,~~684~~319,~~621~~626	$	5855,~~897~~551	$	1811,~~122~~573	$	—

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

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 Condensed Financial Statements and accompanying notes. Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 describes the significant accounting policies and methods used in the preparation of the Consolidated Condensed Financial Statements. There have been no material changes in our ~~Condensed~~ Consolidated Condensed Financial Statements based on any of our critical accounting policies including the adoption of ASC ~~606,~~842 ~~during~~as ~~the~~of ~~nine~~January ~~months ended September 30~~1, ~~2018~~2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. 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.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15 under the ~~U.S. Securities and~~ Exchange Act ~~of 1934 (the “Exchange Act”))~~ that are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

As of ~~September~~March 3031, ~~2018~~2019, we performed an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of March 31, 2019.

22There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2018.

There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the nine months ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~Litigation~~During the quarter ended March 31, 2019, seven legal complaints, including five putative class actions, were filed by purported stockholders of UQM challenging the Merger and/or the Company’s disclosures in the proxy statements filed with the SEC related to the Merger. The following five cases were filed in the United States District Court for the District of Colorado: (i) Carter v. UQM Technologies, Inc., et al., No. 19-cv-502; (ii) Lopez v. UQM Technologies, Inc., et al., No. 19-cv-543; (iii) ETS Logistics Inc. v. UQM Technologies, Inc., et al., No. 19-cv-602; (iv) Poston v. UQM Technologies, Inc., et al., No. 19-cv-648; and (v) Arukala v. UQM Technologies, Inc., et al., No. 19-cv-650. One case was filed in Colorado state court: Franchi v. Vanlandingham, et al., No. 19-cv-30217 (Weld County, CO.). One case was filed in the United States District Court for the Southern District of New York: Gunderson v. UQM Technologies, Inc., et al., No. 19-cv-2219 (S.D.N.Y.) (collectively, such state and federal actions are referred to herein as the “Lawsuits”). The six federal lawsuits asserted claims under Section 14(a) and Section 20(a) of the Exchange Act, and Rule 14a-9 promulgated thereunder, based on an alleged failure to disclose certain information in the preliminary proxy statement filed by the Company on February 11, 2019 and the definitive proxy statement filed by the Company on March 7, 2019. The state lawsuit (Franchi) alleged, among other things, that the Company’s Board of Directors failed to disclose certain information in the preliminary proxy statement filed by the Company on February 11, 2019 constituted a breach of fiduciary duty. Carter and Franchi also included other breach of fiduciary duty claims against the Company’s directors in connection with the Merger.

WeAll ~~are~~of ~~involved~~the inLawsuits ~~various~~sought ~~claims~~or ~~and~~seek: ~~legal~~(i) injunctive ~~actions~~relief ~~arising~~to inprevent the ~~ordinary~~parties ~~course~~from ofproceeding ~~business. In~~with, ~~the opinion of management~~consummating, ~~and~~or ~~based~~closing ~~on current available information,~~ the ~~ultimate~~Merger ~~disposition~~unless ofcertain ~~these~~omitted ~~matters~~information iswas ~~not~~disclosed ~~expected~~in tothe ~~have~~proxy astatement; ~~material~~(ii) an ~~adverse~~accounting ~~effect~~for onalleged ~~our~~damages ~~financial~~sustained ~~position,~~by ~~results~~the ofplaintiffs; ~~operations~~and or(iii) unspecified ~~cash~~costs ~~flow,~~and ~~although~~attorneys’ ~~adverse~~and ~~developments~~experts’ ~~in these matters could have a material impact on a future reporting period~~fees.

~~ITEM~~UQM 1Acontinues to believe that the claims asserted in the Lawsuits are and were without merit, and further believes that no supplemental disclosure was required under applicable law. However, ~~RISK~~UQM ~~FACTORS~~determined that, to avoid the risk of litigation delaying or adversely affecting the Merger, UQM would make certain supplemental disclosures, in a Current Report on Form 8-K that was filed by the Company with the SEC on April 25, 2019. In connection with the filing of that Current Report on Form 8-K, all of the plaintiffs agreed to voluntarily dismiss all claims asserted in their Lawsuits within five days of the closing of the Merger. Plaintiffs in Lopez, Franchi, and ETS Logistics have already voluntarily dismissed their Lawsuits.

The dismissals are subject to the plaintiffs requests for fees, which fees are not estimable at this time. Therefore, no provision has been made in the financial statements for the ultimate resolution of the Lawsuits. Management believes that the final resolution of the Lawsuits will not have a material adverse effect on the Company’s financial position.

Risk Factors

Our business is subject to a number of risks and uncertainties, many of which are outside of our control. Except as indicated below, there have been no material changes in the risk factors contained in our Annual Report on Form 10-K for the period ended December 31, ~~2017~~2018:

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

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

	Quarters ended September 30,				Nine Months Ended September 30,
	Three months ended March 31,
	2018		2017		2018		2017
	2019		2018
Net loss	$	12,~~141~~550,~~578~~688	$	~~543~~1,~~401~~932,798	$	~~5,544,097~~	$	~~3,497,648~~

As of ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018, we had accumulated deficits of $~~130~~133,~~215~~725,~~347~~500 and $~~124~~131,~~671~~174,~~250~~812, respectively.

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In the future, we plan to make additional investments in product development, facilities and equipment and incur 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 ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 was $52,~~544~~550,~~097~~688 versus a net loss for the comparable period last year of $31,~~497~~932,~~648~~798. Our net loss for the year ended December 31, ~~2017~~2018 was $46,~~778~~503,~~316~~562. At ~~September~~March 3031, ~~2018~~2019, our cash, cash equivalents and restricted cash totaled $23,~~845~~132,~~759~~899. We expect our losses to continue for the foreseeable future. See ~~Footnote~~Note 4 to the Consolidated Condensed Financial Statements related to management’s assessment of the Company’s ability to continue as a going concern.

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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 have been non-exclusive, have no long-term volume commitments and are often ~~done~~completed on a purchase order basis. We cannot be certain that our customers ~~that~~which 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a)

Exhibits


31.1		Certification of Chief Executive Officer

31.2		Certification of Chief Financial Officer

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UQM Technologies, Inc.
		Registrant
Date: October 31, 2018
Date: May 14, 2019
	/s/	DAVID I. ROSENTHAL
		David I. Rosenthal
		Treasurer and Chief Financial Officer
		(Duly Authorized Officer, Principal Financial and Accounting Officer)

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