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, ~~2017~~2018

[ ] 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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every interactive data file required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes X No

Indicate by check mark 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 ~~(Do not check if a smaller reporting company)~~		[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 ~~transition~~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 ~~November 1,~~October 29, ~~2017~~2018 was ~~54,054,477.~~54,253,731.

TABLE OF CONTENTS


		Page No.
PART I Financial Information		1

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017		1

Consolidated Condensed Statements of Operations for the quarters and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017		3

Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017		4

Notes to Consolidated Condensed Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1617

Item 3. Quantitative and Qualitative Disclosures About Market Risk		22

Item 4. Controls and Procedures		22

PART II Other Information		2223

Item 1. Legal Proceedings		2223

Item 1A. Risk Factors		2223

Item 2. Unregistered Sales of Equity Securities		2324

Item 3. Defaults Upon Senior Securities		2324

Item 4. Mine Safety Disclosures		2324

Item 5. Other Information		2324

Item 6. Exhibits.		2425

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,		September 30,		December 31,
	2017		2016		2018		2017
Assets
Current assets:
Cash and cash equivalents	$	8,035,754	$	2,100,089	$	2,487,132	$	6,309,269
Restricted cash		165,575		-		358,627		176,193
Accounts receivable		634,108		1,163,316		1,287,194		823,793
Costs and estimated earnings in excess of billings on uncompleted contracts		-		29,917		45,850		-
Inventories, net		2,688,933		1,749,735		4,575,472		2,341,360
Prepaid expenses and other current assets		292,795		259,682		452,307		233,566
Total current assets		11,817,165		5,302,739		9,206,582		9,884,181

Property and equipment, at cost:
Land		896,388		1,683,330		896,388		896,388
Building		4,516,301		4,516,301		4,516,301		4,516,301
Machinery and equipment		7,098,898		7,052,740		7,413,005		7,136,578
		12,511,587		13,252,371		12,825,694		12,549,267
Less accumulated depreciation		(7,853,574)		(7,590,641)		(8,182,410)		(7,936,056)
Net property and equipment		4,658,013		5,661,730		4,643,284		4,613,211

Patent costs, net of accumulated amortization of $948,438 and $932,564, respectively		210,865		213,326
Trademark costs, net of accumulated amortization of $84,257 and $80,885, respectively		91,583		94,955
Patent costs, net of accumulated amortization of $968,891 and $953,491, respectively						252,134		222,461
Trademark costs, net of accumulated amortization of $88,753 and $85,381, respectively						87,088		90,460
Restricted cash		376,407		-		-		323,863
Total assets	$	17,154,033	$	11,272,750	$	14,189,088	$	15,134,176

See accompanying notes to consolidated condensed financial statements.

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited), Continued


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,388,825	$	809,950	$	2,644,797	$	948,875
Unearned revenue						2,201,597		153,944
Other current liabilities		1,585,997		1,318,941		1,018,172		819,839
Billings in excess of costs and estimated earnings on engineering services contracts		25,378		-		277,967		199,160
Current portion of long-term debt, net of deferred financing costs of $17,099 and $0, respectively						3,147,430		-
Total current liabilities		3,000,200		2,128,891		9,289,963		2,121,818

Long-term debt, net of deferred financing costs of $54,406 and $0, respectively		3,110,123		-
Long-term debt, net of deferred financing costs of $0 and $45,079, respectively						-		3,119,450
Other long-term liabilities		126,667		141,667		106,667		121,667
Total long-term liabilities		3,236,790		141,667		106,667		3,241,117

Total liabilities		6,236,990		2,270,558		9,396,630		5,362,935

Commitments and contingencies (Note 16)
Commitments and contingencies (Note 17)

Stockholders’ equity:
Common stock, $0.01 par value, 175,000,000 shares authorized; 54,035,328 and 48,519,313 shares issued and outstanding, respectively		540,353		485,193
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
Additional paid-in capital		133,767,272		128,409,933		134,465,515		133,901,406
Accumulated deficit		(123,390,582)		(119,892,934)		(130,215,347)		(124,671,250)
Total stockholders’ equity		10,917,043		9,002,192		4,792,458		9,771,241

Total liabilities and stockholders’ equity	$	17,154,033	$	11,272,750	$	14,189,088	$	15,134,176

See accompanying notes to consolidated condensed financial statements.

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (unaudited)


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017

Revenue:
Product sales	$	2,752,554	$	728,921	$	5,169,479	$	3,120,979	$	3,747,846	$	2,752,554	$	7,497,209	$	5,169,479
Contract services		-		292,204		387,075		839,517		637,576		-		1,201,442		387,075
		2,752,554		1,021,125		5,556,554		3,960,496		4,385,422		2,752,554		8,698,651		5,556,554
Operating costs and expenses:
Costs of product sales		1,471,334		525,313		3,085,822		2,094,236		2,999,394		1,471,334		6,061,505		3,085,822
Costs of contract services		-		251,291		161,616		791,681		346,775		-		570,738		161,616
Research and development		403,273		882,090		1,591,520		2,285,354		396,690		403,273		1,902,324		1,591,520
Selling, general and administrative		1,983,450		1,738,439		4,757,571		4,655,978		1,839,872		1,983,450		5,678,428		4,757,571
Recovery of impaired assets		-		-		-		(585,800)
		3,858,057		3,397,133		9,596,529		9,241,449		5,582,731		3,858,057		14,212,995		9,596,529

Loss from operations		(1,105,503)		(2,376,008)		(4,039,975)		(5,280,953)		(1,197,309)		(1,105,503)		(5,514,344)		(4,039,975)

Other income / (expense):
Interest income		112		2,445		2,211		9,735
Interest expense		(42,895)		-		(65,626)		-
Amortization of deferred financing costs		(9,327)		-		(20,208)		-
Other income (expense), net										55,731		(43,904)		(29,753)		(63,679)
Gain on sale of long-lived assets		606,006		-		606,006		-		-		606,006		-		606,006
Other		8,206		5,318		19,944		18,025
		562,102		7,763		542,327		27,760

Net loss	$	(543,401)	$	(2,368,245)	$	(3,497,648)	$	(5,253,193)	$	(1,141,578)	$	(543,401)	$	(5,544,097)	$	(3,497,648)

Net loss per common share - basic and diluted	$	(0.01)	$	(0.05)	$	(0.07)	$	(0.11)	$	(0.02)	$	(0.01)	$	(0.10)	$	(0.07)

Weighted average number of shares of common stock outstanding - basic and diluted		48,941,702		48,479,908		48,677,423		48,351,907		54,208,477		48,941,702		54,158,607		48,677,423

See accompanying notes to consolidated condensed financial statements.

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2018		2017

Cash flows from operating activities:
Net loss	$	(3,497,648)	$	(5,253,193)	$	(5,544,097)	$	(3,497,648)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		302,385		533,983		323,241		302,385
Non-cash equity based compensation		269,891		299,349		525,624		269,891
Recovery of impaired assets		-		(585,800)
Gain on sale of long-lived assets		(606,006)		-		-		(606,006)
Impairment of inventories		-		9,906
Change in operating assets and liabilities:
Accounts receivable		529,208		178,941		(463,401)		529,208
Costs and estimated earnings on uncompleted contracts		29,917		(16,329)		(45,850)		29,917
Inventories		(939,197)		(157,430)		(2,234,112)		(939,197)
Prepaid expenses and other current assets		(43,198)		12,834		(218,741)		(43,198)
Accounts payable and other current liabilities		845,931		244,231		1,894,255		375,298
Billings in excess of costs and estimated earnings on engineering services contracts		25,378		(60,266)
Unearned revenue						2,047,653		470,633
Billings in excess of costs and estimated earnings on
engineering services contracts						78,807		25,378
Other long-term liabilities		(15,000)		125,000		(15,000)		(15,000)
Net cash used in operating activities		(3,098,339)		(4,668,774)		(3,651,621)		(3,098,339)

Cash flows from investing activities:
Acquisition of property and equipment		(46,158)		(102,545)
Acquisition of property and equipment, net						(306,561)		(46,158)
Cash paid for patent and trademark fees		(13,411)		(15,198)		(45,074)		(13,411)
Cash proceeds from the sale of long-lived assets		1,392,948		-		-		1,392,948
Net cash provided by / (used in) investing activities		1,333,379		(117,743)
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		36,327		35,474		32,881		36,327
Registered direct offering costs		-		(65,000)
Draw on line of credit		3,100,000		-
Proceeds from line of credit						-		3,100,000
Payment of employee tax withholdings in exchange for return of common stock		(12,381)		(10,678)		(10,462)		(12,381)
Issuance of common stock upon definitive stock purchase agreement		5,099,898		-		-		5,099,898
Issuance of common stock upon exercise of employee and directors options		18,763		-		17,271		18,763
Net cash provided by / (used in) financing activities		8,242,607		(40,204)
Net cash provided by financing activities						39,690		8,242,607

Increase / (decrease) in cash, cash equivalents, and restricted cash		6,477,647		(4,826,721)
(Decrease) / increase in cash, cash equivalents, and restricted cash						(3,963,566)		6,477,647
Cash, cash equivalents, and restricted cash at beginning of period		2,100,089		8,688,668		6,809,325		2,100,089
Cash, cash equivalents, and restricted cash at end of period	$	8,577,736	$	3,861,947	$	2,845,759	$	8,577,736

See accompanying notes to consolidated condensed financial statements.

~~Table of Contents~~

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements ~~Continued~~

(unaudited)

(1) Basis of Presentation

The accompanying ~~consolidated condensed financial statements~~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-KT~~10-K for the ~~nine-month transition period~~year ended December 31, ~~2016.~~2017.

(2) Segment Reporting

~~The Company~~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 ~~(CODM)~~ 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 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard, ASU 2014-09, to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for us for the first fiscal year beginning after December 15, 2017. ~~Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.~~ The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application and providing additional disclosures. The Company ~~currently anticipates adopting the~~has adopted this standard effective January 1, 2018 using the retrospective method with the cumulative effect and additional disclosures. See Note 5.

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. Based on the Company’s assessment on the impact of this guidance on our consolidated condensed financial statements, we expect revenue related to product and contract services to remain substantially unchanged.

In July 2015, the FASB issued guidance on simplifying the measurement of inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidanceThe new standard is effective for fiscal years beginning after December 15, ~~2016,~~2018, including interim periods within those fiscal years. Prospective application is allowed as of the beginning of an interim or annual reporting period. An entity is only required to disclose the nature of and reason for the change in accounting principle in the first interim and annual period of adoption. The Company ~~adopted this~~entered into a new ~~standard~~operating lease in the quarter ended ~~March 31, 2017. There was no material impact~~September 30, 2018 and is currently evaluating the effect on ~~the consolidated~~its financial ~~statements upon adoption.~~statements. See Note 17 for current disclosures.

In March 2016, the FASB issued guidance on improvements to employee share-based payment accounting for stock compensation. The new standard addresses the topics of accounting for income taxes, classification of excess tax benefits on the Statement of Cash Flows, forfeitures, minimum statutory tax withholding requirements, and classification of employee taxes paid on the Statement of Cash Flows when an employer withholds shares for tax withholding purposes. This is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

within any interim or annual period. Any adjustments should be reflective as of the beginning of the fiscal year that includes that interim period. The Company adopted this new standard in the quarter ended March 31, 2017. No adjustments were necessary upon adoption of the standard.

In November, 2016, the FASB issued guidance on the Statement of Cash Flows and the presentation of restricted cash in the statement. The new standard will require the Statement of Cash Flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. As a result, the amounts generally described as restricted cash should be included in the cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the Statement of Cash Flows. This is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied using the retrospective transition method in each period presented. The Company elected to early adopt this standard in the quarter ended June 30, 2017. The ending cash balance in the Consolidated Condensed Statements of Cash Flows was updated to reflect the adoption of the standard. Additional disclosure has been included in Note 5 of the Consolidated Condensed Financial Statements as required by adopting the standard.

(4) Going Concern

These ~~consolidated condensed financial statements~~Consolidated Condensed Financial Statements are presented assuming 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, ~~2017,~~2018, the Company had sustained recurring losses from continuing operations, had a working capital ~~surplus~~deficit of ~~$8,816,965,~~$83,381, and accumulated deficit of ~~$123,390,582.~~$130,215,347.

On ~~March 15, 2017,~~May 9, 2018, the Company ~~entered into a non-revolving line of credit for $5.6 million. The interest rate is variable based upon~~announced that the ~~one month LIBOR rate plus 4.0% per annum~~Committee on Foreign Investment in the ~~outstanding balance. The non-revolving line of credit will expire on March 15, 2019 and~~United States would likely not approve 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. As of September 30, 2017, $3,164,529 was drawn on the line of credit. For additional information, see Note 9 of the Consolidated Condensed Financial Statements.

On July 6, 2017, the Company sold 15 acres of vacant land adjacent to its manufacturing facility. The gross selling price of the land was $1.5 million (net proceeds were $1.4 million) which was representative of the fair market value.

~~On September 25, 2017, the Company closed the first~~second stage investment ~~pursuant to a definitive stock purchase agreement entered into~~as anticipated in the Stock Purchase Agreement with China National Heavy Duty Truck ~~Group~~ Co., ~~Ltd.~~Ltd, which would have brought approximately $23 million of cash to the Company. Since that announcement, the Company has been investigating other potentially favorable funding alternatives.

As of the date of the filing of this Form 10-Q, management has assessed the liquidity position of the Company per the requirements of ASU No. 2014-15 “Presentation of the Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Management’s cash flow forecast for the next twelve months, based on expectations of the receipt of new customer orders and revenues, indicates that the Company should be able to meet its obligations, but there can be no assurance that this will happen. Therefore, with the losses that the Company has sustained, and its ~~wholly-owned subsidiary, Sinotruk (BVI) Limited (the Buyer),~~ ~~which resulted~~working capital deficit at September 30, 2018, substantial doubt exists about the Company’s ability to continue as a going concern without taking additional actions and/or finalizing orders that are currently in the ~~sale~~negotiation stage. Management believes that additional funding may be necessary, and is evaluating numerous options, including but not limited to:

Renegotiation of the maturity date of Company’s line of credit with its bank;

Sale and leaseback transaction related to the Company’s facility;

Investments from strategic partners; and

Capital market investment.

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 ~~5,347,300 shares~~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 ~~common stock~~contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when control has been transferred to the ~~Buyer~~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 ~~the Company’s receipt~~is generally based upon a negotiated fixed price. The Company sells its products directly to customers under agreements with payment terms of ~~cash proceeds of $5.1 million on that date.~~prepayment or generally net 30 days for credit qualified customers.

~~Based~~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 ~~management’s projections~~the relationship between actual costs incurred compared to the total estimated costs of ~~operations,~~ the ~~non-revolving line of credit, and a cash balance of approximately $8.0 million on September 30, 2017,~~contract, as the Company believes that it currently has sufficient cash and bank financing resources to support day to day activities through operations as they become due and sustain operations for at least the next twelve months.

performance obligations

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

are satisfied. Costs incurred towards contract completion may include costs associated with direct materials, labor, subcontractors, and other indirect costs.

~~(5)~~

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,
	2018		2017
United States & Canada	$	5,050,379	$	3,093,034
Asia Pacific		3,504,679		2,227,800
Europe		143,593		235,720
Total Revenues	$	8,698,651	$	5,556,554

Table of Contents

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 ~~on the Consolidated Condensed Balance Sheets to the cash on~~in the Consolidated Condensed Statements of Cash ~~Flows for the period ending September 30, 2017. There was no restricted cash as of September 30, 2016 or December 31, 2016.~~Flows.


	September 30,		September 30,		September 30,
	2017		2018		2017
Cash and cash equivalents	$	8,035,754	$	2,487,132	$	8,035,754
Restricted cash		165,575
Restricted cash included in other long-term assets		376,407
Restricted cash, current				358,627		165,575
Restricted cash, long-term				-		376,407
Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statements of Cash Flows	$	8,577,736	$	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 ~~long-term~~ debt is paid ~~off.~~back in full.

~~(6)~~(7) Contracts in Process

At September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the estimated period to complete contracts in process ranged from ~~zero~~one to five and one to ~~six~~three months, respectively. We expect to collect all accounts receivable arising from these contracts within ~~sixty~~ninety days of billing.

The following summarizes contracts in process:


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
Costs incurred on engineering services contracts	$	502,701	$	502,701	$	158,047	$	56,175
Estimated earnings		331,969		331,969		445,236		144,665
		834,670		834,670		603,283		200,840
Less billings to date		(860,048)		(804,753)		(835,400)		(400,000)

Contracts in process	$	(25,378)	$	29,917	$	(232,117)	$	(199,160)

Included in the accompanying Consolidated Condensed Balance Sheets is as follows:

Costs and estimated earnings in excess of billings on uncompleted contracts	$	-	$	29,917	$	45,850	$	-
Billings in excess of costs and estimated earnings on engineering services contracts		(25,378)		-		(277,967)		(199,160)
Contracts in process	$	(25,378)	$	29,917	$	(232,117)	$	(199,160)

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

~~(7)~~(8) Inventories

Inventories at September 30, ~~2017~~2018 and December 31, ~~2016~~2017 consisted of:


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
Raw materials	$	7,564,248	$	7,277,612	$	9,178,495	$	7,679,922
Work-in-process		756,528		105,252		1,073,612		289,848
Finished products		1,389,386		1,531,544		1,298,089		1,390,200
Reserve for excess and obsolete inventory		(7,021,229)		(7,164,673)		(6,974,724)		(7,018,610)
	$	2,688,933	$	1,749,735	$	4,575,472	$	2,341,360

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.

~~As of December 31, 2016, we re-evaluated~~ During the carrying value of our PowerPhase Pro® product. A key factor in our analysis during the nine-month transition period ended December 31, 2016 was that in October 2016, our customer, ITL Efficient Energy Co., Ltd, informed us of their intention to purchase in cash a significant portion of the PowerPhase Pro® inventory by the filing date of our Form 10-KT for the nine-month transition period ended December 31, 2016. That payment had not at that point in time been received, nor have we received any payment as of the date of this quarterly filing. Because of the long delays in this customer’s product launchquarter and the lack of a significant cash payment towards this inventory, we determined that approximately $6.8 million of this inventory be reserved as excess inventory and we took a charge for this amount against this inventory as of December 31, 2016. We have purchase orders from existing customers to acquire the remaining balance of the PowerPhase Pro® inventory. We also reserved approximately $350,000 for other obsolete inventory as of December 31, 2016.

~~During the~~ nine months ended September 30, ~~2017, we sold $143,443 of inventory that~~2018, no additional reserve was previously reserved as discussed in the preceding paragraph. There was no net cost basis in the inventory that was sold, and as a result of the transactions, there was no adjustment to the inventory cost basis.required.

~~(8)~~(9) Other Current Liabilities

Other current liabilities at September 30, ~~2017~~2018 and December 31, ~~2016~~2017 consisted of:


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
Accrued payroll and employee benefits	$	126,503	$	62,220	$	216,103	$	94,680
Accrued personal property and real estate taxes		179,879		232,326		176,350		235,133
Accrued warranty costs		346,539		289,710		470,283		333,431
Unearned revenue		587,519		116,886
Accrued royalties		48,336		48,336		48,336		48,336
Accrued import duties		87,100		87,100		87,100		87,100
Accrued vendor settlements		189,175		189,175
Accrued executive compensation		-		272,222
Other		20,946		20,966		20,000		21,159
	$	1,585,997	$	1,318,941	$	1,018,172	$	819,839

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

~~(9)~~(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 ~~headquarters~~headquarter facility. The interest rate is variable based upon the one month LIBOR rate plus 4.0% per annum on the outstanding balance, which was ~~5.23%~~6.26% as of September 30, ~~2017.~~2018. 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 ~~Sheet~~Sheets as of September 30, 2018 and December 31, 2017. For additional information, see Note 56 to the Consolidated Condensed Financial Statements. The covenants under the debt agreement require the Company to have liquid assets of a minimum of $1.5 million 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 30, ~~2017,~~2018, the Company was in compliance with its covenants. 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. As of September 30, ~~2017,~~2018, $3,164,529 was drawn on the line of credit. The Company incurred deferred financing costs of $73,060 upon securing the line of ~~credit.~~credit which are amortized over the term using the effective interest rate method.

~~(10)~~(11) Stock-Based Compensation

~~Share-Based~~Stock-Based Compensation Expense

The table below shows total ~~share-based~~stock-based compensation expense for the quarters and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, and the classification of these expenses:


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017

Costs of product sales	$	9,300	$	3,265	$	16,627	$	8,519	$	9,637	$	9,300	$	25,695	$	16,627
Costs of contract services		-		3,491		2,097		7,826		6,900		-		12,107		2,097
Research and development		18,521		12,332		37,422		23,744		16,275		18,521		53,772		37,422
Selling, general and administrative		113,522		176,932		213,745		259,260		116,685		113,522		434,050		213,745
	$	141,343	$	196,020	$	269,891	$	299,349	$	149,497	$	141,343	$	525,624	$	269,891

910

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

Stock Option Plans Activity

Additional information with respect to stock option activity during the nine months ended September 30, ~~2017~~2018 under our ~~Stock Option Plans~~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, 2016

3,004,798

$
1.20

6.4 years

$
-

Granted

500,047

$
0.87

-

Exercised

(22,105)

$
0.85

$
-

Forfeited

(99,255)

$
1.28

$
480

Outstanding at September 30, 2017

3,383,485

$
1.15

6.5 years

$
765,296

Exercisable at September 30, 2017

2,451,144

$
1.30

5.4 years

$
412,812

Vested and expected to vest at September 30, 2017

2,938,864

$
1.23

6.2 years

$
557,173


				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, ~~2017,~~2018, there was ~~$451,381~~$969,934 of total unrecognized compensation cost related to stock options granted under our ~~Stock Option Plans.~~stock option plans. The unrecognized compensation cost is expected to be recognized over a weighted-average period of ~~twenty-six~~twenty-four months. The total fair value of stock options that vested during ~~each of~~ the nine months ended September 30, 2018 and 2017 was $325,898 and ~~2016 was~~ $236,328, ~~and $264,004,~~ respectively.

Stock Bonus Plan Activity

Activity with respect to non-vested shares under the Stock Bonus Plan as of September 30, ~~2017~~2018 and ~~2016~~2017 and changes during the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 are presented below:



							Nine months ended September 30,
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			2018			2017
		Weighted-Average			Weighted-Average			Weighted-Average			Weighted-Average
	Shares Under	Grant Date		Shares Under	Grant Date		Shares Under	Grant Date		Shares Under	Grant Date
	Contract	Fair Value		Contract	Fair Value		Contract	Fair Value		Contract	Fair Value
Unvested at beginning of period	102,048	$	0.84	90,561	$	1.36	57,760	$	0.68	102,048	$	0.84
Granted	23,735	$	0.87	160,389	$	0.68	188,191	$	1.25	23,735	$	0.87
Vested	(68,023)	$	0.98	(144,982)	$	0.98	(76,079)	$	1.03	(68,023)	$	0.98
Forfeited	-	$	-	(3,920)	$	1.25	-	$	-	-	$	-
Unvested at end of period	57,760	$	0.68	102,048	$	0.84	169,872	$	1.15	57,760	$	0.68

As of September 30, ~~2017,~~2018, there was ~~$33,512~~$156,335 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan. The unrecognized compensation cost at September 30, ~~2017~~2018 is expected to be recognized over a weighted-average period of ~~twenty-one~~twenty-six months.

1011

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

Employee Stock Purchase Plan Activity

During the ~~three~~nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, we issued ~~45,849~~31,187 and ~~26,175~~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 ~~three~~nine months ended September 30, 2018 and 2017 was $32,881 and ~~2016 was~~ $17,881, ~~and $13,088,~~ respectively. As of September 30, ~~2017, 25,777~~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.

~~(11)~~(12) Stockholders’ Equity

Changes in the components of stockholders’ equity during the nine months ended September 30, ~~2017~~2018 were as follows:

Number of

common

Additional

Total

shares

Common

paid-in

Accumulated

stockholders’


issued

stock

capital

deficit

equity

Balances at December 31, 2016

48,519,313

$
485,193

$
128,409,933

$
(119,892,934)

$
9,002,192

Issuance of common stock under employee stock purchase plan

3,823

38

1,912

-

1,950

Compensation expense from employee and director stock option and common stock grants

-

-

61,564

-

61,564

Net loss

-

-

-

(1,606,026)

(1,606,026)

Balances at March 31, 2017

48,523,136

$
485,231

$
128,473,409

$
(121,498,960)

$
7,459,680

Issuance of common stock under employee stock purchase plan

43,412

434

16,062

-

16,496

Compensation expense from employee and director stock option and common stock grants

-

66,984

-

66,984

Net loss

-

-

-

(1,348,221)

(1,348,221)

Balances at June 30, 2017

48,566,548

$
485,665

$
128,556,455

$
(122,847,181)

$
6,194,939

Issuance of common stock upon exercise of employee and director options

22,105

221

18,542

-

18,763

Issuance of common stock under employee stock purchase plan

45,849

458

17,423

-

17,881

Issuance of common stock under stock bonus plan

68,022

680

(680)

-

-

Issuance of common stock under definitive stock purchase agreement

5,347,300

53,473

5,046,425

-

5,099,898

Common stock used for tax withholdings

(14,496)

(144)

(12,236)

-

(12,380)

Compensation expense from employee and director stock option and common stock grants

-

-

141,343

-

141,343

Net loss

-

-

-

(543,401)

(543,401)

Balances at September 30, 2017

54,035,328

$
540,353

$
133,767,272

$
(123,390,582)

$
10,917,043

~~Table of Contents~~

~~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
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

10,864,872
5,489,733


	Number of
	common				Additional				Total
	shares		Common		paid-in		Accumulated		stockholders’
	issued		stock		capital		deficit		equity
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

Weighted-

Weighted-

Average

Warrants

Average

Remaining

Under

Exercise

Contractual


Option

Price

Life
Outstanding at December 31, 2016

5,489,733

$
1.53

3.3 years
Granted

-

$
-

Exercised

-

$
-

Forfeited

-

$
-

Outstanding at September 30, 2017

5,489,733

$
1.53

2.5 years

Exercisable at September 30, 2017

5,489,733

$
1.53

2.5 years

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

The Company has warrants outstanding as follows:

~~(12)~~


	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

Table of Contents

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 30, ~~2017~~2018 and ~~2016:~~2017:


	Quarter Ended September 30,								Nine Months Ended September 30,								Quarters Ended September 30,								Nine Months Ended September 30,
	2017				2016				2017				2016				2018				2017				2018				2017

Customer A	$	1,800,000	65	%	$	-	-	%	$	1,974,000	36	%	$	-	-	%	$	269,576	6	%	$	52,364	2	%	$	879,215	10	%	$	227,502	4	%
Customer B	$	308,341	11	%	$	448,597	31	%	$	1,714,876	31	%	$	1,212,252	41	%	$	418,313	10	%	$	-	-	%	$	1,110,042	13	%	$	300,000	5	%
Customer C	$	102,499	4	%	$	14,838	1	%	$	136,781	2	%	$	311,069	11	%	$	426,026	10	%	$	-	-	%	$	782,028	9	%	$	-	-	%
Customer D	$	61,785	2	%	$	-	-	%	$	286,515	5	%	$	45,897	2	%	$	793,506	18	%	$	308,341	11	%	$	1,730,414	20	%	$	1,714,876	31	%
Customer E	$	52,364	2	%	$	141,379	10	%	$	227,502	4	%	$	499,389	17	%	$	1,275,000	29	%	$	1,800,000	65	%	$	1,275,000	15	%	$	1,974,000	36	%
Customer F	$	-	-	%	$	-	-	%	$	300,000	5	%	$	-	-	%
Customer G	$	-	-	%	$	239,005	17	%	$	-	-	%	$	775,018	26	%

The following table summarizes accounts receivable from significant customers as of September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:


	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017

Customer A	-	%	-	%	22	%	4	%
Customer B	41	%	45	%	-	%	-	%
Customer C	-	%	11	%	1	%	-	%
Customer D	10	%	29	%	43	%	80	%
Customer E	8	%	10	%	-	%	-	%
Customer F	-	%	-	%
Customer G	-	%	-	%

~~Table of Contents~~

~~UQM TECHNOLOGIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements, Continued~~

~~(unaudited)~~

~~(13)~~(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 30, ~~2017~~2018 and ~~2016,~~2017, 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. As

Table of ~~September 30, 2017, the Company’s tax years for 2012~~Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to ~~2016 are subject to examination by the tax authorities.~~Consolidated Condensed Financial Statements, Continued

(unaudited)

~~(14)~~(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 30, ~~2017~~2018 and ~~2016:~~2017:


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017

Numerator:
Net loss	$	(543,401)	$	(2,368,245)	$	(3,497,648)	$	(5,253,193)	$	(1,141,578)	$	(543,401)	$	(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		48,941,702		48,479,908		48,677,423		48,351,907		54,208,477		48,941,702		54,158,607		48,677,423

Net loss per common share - basic and diluted	$	(0.01)	$	(0.05)	$	(0.07)	$	(0.11)	$	(0.02)	$	(0.01)	$	(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,			September 30,
	2017		2016	2018		2017

Non-vested stock bonus plan shares		57,760	102,048		169,872	57,760
Stock options outstanding		3,409,262	3,106,096		4,219,691	3,409,262
Warrants to purchase common stock		5,489,733	5,489,733		4,000,000	5,489,733

~~(15)~~(16) Fair Value of Financial Instruments

The carrying amounts of cash, cash equivalents, restricted cash, accounts receivable, ~~and~~ 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 ~~long-term~~ debt of ~~$3,110,123~~$3,147,430 is reported at amortized cost. The Company’s ~~long-term~~ debt is subject to variable rates of interest and accordingly its carrying value is considered to be representative of its fair market value.

1415

Table of Contents

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

~~(16)~~(17) Commitments and Contingencies

Employment Agreements

~~On July 21, 2015, the Company entered into employment agreements with its four officers~~ ~~that expired on June 30, 2017.~~

Effective July 1, 2017, the Company entered into new employment agreements with each of its four officers, which ~~expire~~have terms through December 31, 2019. The aggregate future base salary payable to the executive officers over ~~their~~the remaining terms of their employment agreements is ~~$2,399,634.~~$1,372,505.

Lease Commitments

Operating lease: In July 2018, the Company entered into a new lease agreement for its customer service center in Shanghai, China with a lease term of four years, effective July 30, 2018 through August 31, 2022. There were no operating leases or rental expense during the nine months ended September 30, 2017.

The table below summarizes the Company's scheduled future minimum lease payments under facility operating leases having initial or remaining non-cancellable lease terms of more than one year as of September 30, 2018:


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

Litigation

We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, and based on current available information, the ultimate disposition of these matters is not expected to have a material adverse effect on our financial position, results of operations or cash flow.

1516

Table of Contents

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 statements appear in a number of places in this Report and include statements regarding our plans, beliefs or current expectations. Important Risk Factors that could cause actual results to differ from those contained in the forward-looking statements are listed below in Part II, Item 1A. Risk Factors and in our ~~Transition~~Annual Report on Form ~~10-KT~~10-K for the ~~nine-month transition period~~year ended December 31, ~~2016.~~2017. Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the U.S. Securities and Exchange Commission (“SEC”). We assume no obligation to update, and, except as may be required by law, do not intend to update, any forward-looking statements.

Introduction

UQM Technologies, Inc.~~, (“UQM”,~~ (the “Company”, ~~“we”~~“UQM”, ~~“our”~~“we”, or “us”) ~~is a developer~~develops, manufactures, and ~~manufacturer of~~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 ~~three~~two principal activities: 1) the sale of ~~electric propulsion systems, which includes~~ motors, generators, electronic controls, and ~~controllers;~~fuel cell compressors; and 2) ~~the sale of auxiliary products including generators, fuel cell compressors, air conditioning compressor systems, and DC-to-DC converters; and 3) services, including~~ research, development, and application engineering contract ~~services and remanufacturing~~ 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 ~~contract~~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 ~~markets we serve.~~commercial bus and truck, automotive, marine, 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. ~~Our~~We 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/TS~~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 ~~with~~ the requirements for high quality production programs ~~that our customers demand, they have~~and very deep technical knowledge of the ~~electric~~ motor and controller business. ~~This~~We believe this team has the ability and background to grow the business to significantly higher ~~levels, and we believe we have adequate cash balances and bank financing resources to fund our operations for at least the next twelve months.~~levels.

Our most important strategic initiative going forward is to develop customer relationships that lead to longer-term supply contracts. Volume production is the key to our ongoing operations. We are ~~driving~~taking steps to drive business development in ~~the following ways:~~various ways including:

We have created a well-defined, structured process to target potential customers of vehicle electric motor technology in the commercial truck/van and shuttles, passenger buses, automotive, marine, military and other targeted markets both domestically and internationally. ~~In particular, we are focused on developing customer relationships in China which is the world’s largest market for vehicle electrification products.~~

We ~~hired~~have expanded our ~~first employees~~staff in China, and during the current quarter, we opened a customer service center in ~~2016. As~~Shanghai. 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.

~~During the quarter ended September 30,~~On August 28, 2017, we ~~executed~~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 ~~strategic partner~~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 that meets three important criteria; the partner has capital, infrastructure and access to the Chinese domestic market (see below).~~China. Today CNHTC owns approximately 9.9% of our outstanding shares of common stock.

Table of Contents

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.

~~Table of Contents~~

We are building potentially 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 ~~continually look for ways~~strive 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 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 ~~requests~~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 ~~Announcements~~Events

On July 31, 2018, we announced that we had signed a lease agreement in Shanghai, China to open a customer service center for both our fuel cell compressor systems and propulsions systems. The facility should allow us to provide quick turnaround for service and spare parts to our customers in China, and eventually assemble the fuel cell compressor systems in that region.

On August ~~28, 2017,~~9, 2018, we announced that we ~~entered~~had received new fuel cell compressor system purchase orders from several new and existing Chinese customers, including our major Chinese OEM customer. The new purchase orders are valued at approximately $3.0 million. All these orders represent incremental new business with shipments expected to be delivered through 2018 and 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 (“Sinotruk”), a leading Chinese commercial vehicle manufacturer, and2019.

On August 30, 2018, we announced that ~~UQM and CNHTC plan to create a joint venture (“JV”) to manufacture and sell~~we had received an order from Lightning Systems for our eDT 220 electric propulsion systems for ~~commercial~~use in several new projects, including Class 6 vehicles for Zeem Solutions, located in New York, and ~~other vehicles~~a city bus program for Via Mobility, located in ~~China. CNHTC has headquarters~~Boulder, Colorado. Shipments are currently expected to commence in ~~Jinan, China. CNHTC’s investment~~2018 and ~~creation of~~continue into 2019. We supply various powertrain components to Lightning Systems, including the ~~JV is planned to occur in two stages. First, CNHTC acquired newly issued common shares of~~ UQM ~~resulting in a 9.9% ownership interest of common shares issued and outstanding. This first stage of~~E-Drive paired with different gearbox solutions, making us the investment was closed on September 25, 2017, and we received cash proceeds of $5.1 million on that date. Second, CNHTC will acquire additional newly issued common shares resulting in CNHTC owning a total of 34% of UQM’s issued and outstanding common stock on a fully diluted basis. The purchase price is $0.95 per share, which represents a 15% premium over the 30-day closing price averageTier 1 provider for the period ending on the last trading date before signing. The total transaction will bring approximately $28.3 million in cash to UQM. The terms of the Agreement were unanimously approved by the boards of directors of both companies. Our shareholders will continue to hold their shares in UQM, and UQM stock will continue to be traded on the NYSE American.full assembly.

~~The Agreement is subject~~On September 11, 2018, we announced that we had unveiled our newest product launch at the Electric & Hybrid Vehicle Technology Expo held in Novi, Michigan. We introduced a full lineup of PowerPhase® HD2 electric motor inverters, which complements our signature motors and software controls, to ~~usual and customary closing conditions, and closing of the second stage will require approval by~~further serve our shareholders representing a majority of UQM’s voting shares. Closing is expected to occur as soon as possible following shareholders’ approval and receipt of approval from the Committee on Foreign Investmentcustomers in the ~~United States (“CFIUS”) and the required Chinese regulatory authorities. We expect the closing will occur in December 2017.~~

As part of the Agreement, we have agreed that following the closing, CNHTC will have the right to nominate up to three of eight total directors to our board of directors with one CNHTC representative expected to be elected as the Chairman of the Board.

~~CNHTC is the parent company of Sinotruk (Hong Kong) Limited (“Sinotruk”), a leading heavy-duty commercial~~electric vehicle manufacturer in China and one of the largest commercial vehicle groups in the world. In addition to heavy and light-duty commercial trucks and buses, they also manufacture key parts and components such as engines, cabins, axles, steel frames, and gearboxes. In Sinotruk’s annual report for the year ended December 31, 2016, Sinotruk reported audited revenues from these vehicles, parts, and components of US$4.9 billion. They also reported shipping over 172,000 commercial vehicles and over 106,000 engines. Sinotruk has over 25,000 employees.

~~Table of Contents~~

After the closing of the Agreement, we intend to form a joint venture with CNHTC for the manufacture and sales of electric propulsion systems in China. We expect Sinotruk to be a significant purchaser of electric drive trains from the JV for Sinotruk’s commercial vehicles and other customers will be identified for sales as well.market.

Financial Condition

Cash and cash equivalents at September 30, ~~2017~~2018 were ~~$8,035,754~~$2,487,132 and we had a working capital ~~was $8,816,965,~~deficit of ($83,381), compared with ~~$2,100,089~~$6,309,269 and ~~$3,173,848,~~$7,762,363, respectively, at December 31, ~~2016.~~2017. The change in cash and working capital is primarily attributable to operating losses, debt obligations being reclassified from long-term to current, and investments in inventory, offset in part by ~~proceeds~~prepayments received from ~~the sale of vacant land during the quarter ended September 30, 2017 and the sale of common shares pursuant to the Agreement as discussed above.~~customers.

Restricted cash (current and long-term) at September 30, ~~2017~~2018 was ~~$541,982~~$358,627 versus $0$500,056 at December 31, ~~2016.~~2017. The restricted cash is reserved for payment of the interest on ~~the draws from~~ the line of credit. ~~The current portion is for estimated interest payment due within the next twelve months. The long-term portion is the remaining amount expected to be paid by the end~~

Table of ~~the term of the line of credit on March 15, 2019.~~Contents

Accounts receivable ~~decreased $529,208~~increased $463,401 to ~~$634,108~~$1,287,194 at September 30, ~~2017~~2018 from ~~$1,163,316~~$823,793 at December 31, ~~2016.~~2017. The ~~decrease~~increase is primarily due to the mix in customer credit ~~terms.~~terms and increased customer shipments at the end of the third 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 September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we had no allowance for bad debts.

Costs ~~and estimated earnings~~in excess of billings on uncompleted engineering service contracts were ~~zero~~$45,850 and ~~$29,917~~$0 at September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The ~~decrease~~increase was due to timing of costs incurred and billings on customer contracts in progress at the ~~completion~~end of ~~a customer contract.~~the quarter.

Total inventories increased ~~$939,198~~$2,234,112 to ~~$2,688,933~~$4,575,472 at September 30, ~~2017~~2018 from ~~$1,749,735~~$2,341,360 at December 31, ~~2016~~2017 reflecting ~~purchases~~an increase in raw materials and work-in-process for ~~anticipated~~confirmed sales ~~of fuel cell compressor and PP220 PowerPhase~~ ~~HD®~~ ~~systems.~~orders to be sold to customers in 2018.

Prepaid expenses and other current assets increased to ~~$292,795~~$452,307 at September 30, ~~2017~~2018 from ~~$259,682~~$233,566 at December 31, ~~2016,~~2017, primarily due to ~~timing of amortization of maintenance contracts.~~an increase in vendor prepayments.

We invested ~~$8,751 and $46,158~~$306,561 for the acquisition of property and equipment during the ~~quarter and~~ nine months ended September 30, ~~2017, respectively,~~2018, compared to ~~$2,030 and $102,545~~$46,158 during the comparable ~~periods~~period last year. We ~~believe that we have sufficient~~purchase property and equipment ~~in place~~ to ~~meet our production requirements for the foreseeable future.~~augment and replace existing fixed assets based on operational needs.

Patent costs ~~decreased $2,461~~increased $29,673 for the nine months ended September 30, ~~2017~~2018 due to new patent costs offset by amortization. Trademark costs decreased $3,372 for the nine months ended September 30, ~~2017~~2018 due to amortization.

Accounts payable increased ~~$578,875~~$1,695,922 to ~~$1,388,825~~$2,644,797 at September 30, ~~2017~~2018 from ~~$809,950~~$948,875 at December 31, ~~2016,~~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 ~~$1,585,997~~$1,018,172 at September 30, ~~2017~~2018 from ~~$1,318,941~~$819,839 at December 31, ~~2016.~~2017. The ~~increase~~change is ~~primarily~~ attributable to an increase in ~~unearned revenue offset by a decrease~~accrued warranty costs which reflect the increase in ~~accrued executive compensation.~~sales in the current year and payroll and employee benefits.

Billings in excess of costs and estimated earnings on engineering services contracts were ~~$25,378~~$277,967 and ~~zero~~$199,160 at September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The increase was due to timing of billings ~~on the conclusion~~and completion of a customer ~~contract.~~contracts in 2018.

~~Long-term debt~~Debt net of deferred financing costs (current and long-term) increased ~~$3,110,123~~$27,980 during the nine months ended September 30, ~~2017~~2018 due to ~~borrowings on a bank line of credit secured on March 15, 2017. For additional information, see Note 9~~amortization of the ~~Consolidated Condensed Financial Statements.~~deferred financing costs.

Other long-term liabilities decreased $15,000 to ~~$126,667~~$106,667 at September 30, ~~2017~~2018 from ~~$141,667~~$121,667 at December 31, ~~2016~~2017 due to amortization of a license fee received from a customer under a ten-year cooperation agreement.

~~Table of Contents~~

Common stock and additional paid-in capital were ~~$540,353~~$542,290 and ~~$133,767,272,~~$134,465,515, respectively, at September 30, ~~2017~~2018 compared to ~~$485,193~~$541,085 and ~~$128,409,933~~$133,901,406 at December 31, ~~2016.~~2017. The ~~increases~~increase in common stock and additional paid-in capital were primarily attributable to the issuance of common stock under the ~~Agreement with CNHTC,~~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.

Table of Contents

Results of Operations

Quarter Ended September 30, ~~2017~~2018

Revenue

Product sales revenue for the ~~current~~ quarter ended September 30, 2018 increased to ~~$2,752,554~~$3,747,846 versus ~~$728,921~~$2,752,554 for the comparable ~~quarter~~period last year, reflecting increased shipments ~~of PowerPhase Pro~~® ~~135 systems, PowerPhase HD~~® ~~propulsion systems and fuel cell compressor systems offset partially by decreased shipments of auxiliary motors.~~in all product lines.

Revenue from contract services was ~~zero~~$637,576 for the quarter ended September 30, ~~2017~~2018 versus ~~$292,204~~$0 for the comparable ~~quarter~~period last year. The ~~decrease~~increase is due to ~~a Department of Energy grant program which expired as of September 30, 2016 and no revenue from new contracts.~~externally funded development contracts in progress.

Gross Profit Margin

Total gross profit margin for the quarter ended September 30, ~~2017 increased~~2018 decreased to 23.7 percent compared to 46.6 percent ~~compared to 24.0 percent~~ for the ~~quarter ended September 30, 2016.~~comparable period in the prior year. Gross profit margin on product sales for the quarter this year ~~increased~~decreased to ~~46.6~~20.0 percent compared to ~~27.9~~46.6 percent for the same ~~quarter~~period last year primarily due to ~~increased~~higher sales of ~~fuel cell compressor systems which generated higher gross profit margins than electric propulsion systems.~~lower margin products and increased production headcount. Gross profit margin on contract services was ~~zero~~45.6 percent for the quarter this year compared to ~~14.0~~0.0 percent for the ~~quarter ended September 30, 2016, as there was no contract services revenue~~same period last year, resulting from securing new contracts in the ~~quarter.~~current period.

Costs and Expenses

Research and development expenditures for the quarter ended September 30, ~~2017~~2018 decreased to ~~$403,273~~$396,690 compared to ~~$882,090~~$403,273 for the ~~quarter ended September 30, 2016.~~same period last year. The decrease is related to ~~fewer headcount and engineering resources allocated to supporting business~~a greater focus on externally funded development ~~efforts.~~projects.

Selling, general and administrative expenses for the quarter ended September 30, ~~2017~~2018 was ~~$1,983,450~~$1,839,872 compared to ~~$1,738,439~~$1,983,450 for the same ~~quarter~~period last year. The ~~increase~~decrease is primarily attributable to ~~legal fees,~~variable compensation and business development ~~costs, and~~ expenses ~~pertaining to our UQM Asia operations,~~ in the current ~~quarter~~period compared to the same period last year.

Other income ~~and (expenses)~~(expense)

Other income and ~~expense~~(expense) for the quarter ended September 30, ~~2017~~2018 was ~~$562,102~~$55,731 compared to ~~$7,763~~$562,102 for the same ~~quarter~~period last year. The ~~increase~~decrease is primarily attributable to the gain on the sale of vacant land in ~~the current quarter.~~2017.

Net Loss

As a result, net loss for the quarter ended September 30, ~~2017~~2018 was ~~$543,401,~~$1,141,578, or ~~$0.01~~$0.02 per common share, compared to a net loss of ~~2,368,245,~~$543,401, or ~~$0.05~~$0.01 per common share, for the comparable ~~quarter~~period last year.

~~Table of Contents~~

Nine Months Ended September 30, ~~2017~~2018

Revenue

Product sales revenue for the nine months ended September 30, 2018 increased to ~~$5,169,479~~$7,497,209 versus ~~$3,120,979~~$5,169,479 for the comparable period last year, reflecting increased shipments ~~of PowerPhase HD~~® ~~propulsion systems and fuel cell compressor systems offset by decreased shipments of auxiliary motor and PowerPhase Pro~~® ~~135 systems.~~in all product lines.

Revenue from contract services ~~decreased to $387,075~~was $1,201,442 for the nine months ended September 30, ~~2017~~2018 versus ~~$839,517~~$387,075 for the comparable period last year. The ~~decrease~~increase is ~~primarily~~ due to ~~a Department of Energy grant program which expired as of September 30, 2016 and lower revenue from new contracts.~~customer contracts in progress.

Gross Profit Margin

Total gross profit margin for the nine months ended September 30, ~~2017 increased~~2018 decreased to 23.8 percent compared to 41.6 percent ~~compared to 27.1 percent~~ for the ~~nine month~~comparable period ~~last~~in the prior year. Gross profit margin on product sales for the nine months ~~ended September 30, 2017 increased~~this year

Table of Contents

decreased to 19.2 percent compared to 40.3 percent ~~compared to 32.9 percent~~ for the ~~nine month~~same period last year primarily due to ~~a change in product mix.~~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 ~~increased~~was 52.5 percent for the nine months this year compared to 58.3 percent for the ~~nine months ended September 30, 2017 compared to 5.7 percent for the nine months~~same period last year, resulting from a change in the mix of contracts in process during the ~~nine months ended September 30, 2017 versus the comparable nine months last year.~~respective periods.

Costs and Expenses

Research and development expenditures for the nine months ended September 30, ~~2017 decreased~~2018 increased to $1,902,324 compared to $1,591,520 ~~compared~~for the same period last year. The increase is related to ~~$2,285,354~~a greater focus on internally funded development projects.

Selling, general and administrative expenses for the nine months ended September 30, ~~2016.~~2018 was $5,678,428 compared to $4,757,571 for the same period last year. The ~~decrease~~increase is primarily attributable to legal fees, variable compensation, and related stock compensation in the current period compared to ~~fewer headcount and engineering resources allocated to supporting business development efforts.~~the same period last year.

~~Selling, general~~Other income (expense)

Other income and ~~administrative expense net of recovery of impaired assets~~(expense) for the nine months ended September 30, ~~2017~~2018 was ~~$4,757,571~~expense of ($29,753) compared to $4,070,178 for the nine month period last year. The change is primarily attributable to expenses pertaining to our UQM Asia operations, and higher business development costs, partially offset by a decrease in consulting, legal, and deferred executive compensation expenses in the current year. In the nine months ended September 30, 2016, we recovered $585,800 in connection with a vendor settlement.

~~Other~~ income ~~and (expenses)~~

~~Other income and expense for the nine months ended September 30, 2017 was~~of $542,327 ~~compared to $27,760~~ for the same period last year. The ~~increase~~change is primarily attributable to the gain on the sale of vacant land in ~~the current nine month period.~~2017.

Net Loss

As a result, net loss for the nine ~~month period~~months ended September 30, ~~2017~~2018 was ~~$3,497,648,~~$5,544,097, or ~~$0.07~~$0.10 per common share, compared to a net loss of ~~$5,253,193,~~$3,497,648, or ~~$0.11~~$0.07 per common share, for the comparable ~~nine month~~ period last year.

Liquidity and Capital Resources

Our cash balances and liquidity throughout the ~~quarter~~nine months ended September 30, ~~2017~~2018 were adequate to meet operating needs. At September 30, ~~2017,~~2018, we had a working capital deficit of ($83,381) compared to working capital of ~~$8,816,965 compared to $3,173,848~~$7,762,363 at December 31, ~~2016.~~2017. The ~~increase~~decrease in working capital is primarily attributable to afunding operations, higher ~~cash balance~~unearned revenue and debt obligations being reclassified from ~~the sale~~long-term to current because of ~~land and common stock, and increased inventory purchases offset by higher accounts payable due to the timing of the vendor payments.~~its maturity date.

For the nine months ended September 30, ~~2017,~~2018, net cash used in operating activities was ~~$3,098,339~~$3,651,621 compared to net cash used in operating activities of ~~$4,668,774~~$3,098,339 for the comparable period last year. The ~~change~~increase in cash used in operating activities iswas due to higher ~~inventory purchases, which was offset by a decrease in~~ accounts receivable and ~~settlement of vendor~~inventory purchases, partially offset by higher unearned revenue, accounts payable and other liabilities.

~~Table of Contents~~

Net cash ~~provided by~~used in investing activities for the nine months ended September 30, ~~2017~~2018 was ~~$1,333,379~~$351,635 compared to net cash ~~used in~~provided by investing activities of ~~$117,743~~$1,333,379 for the comparable nine months last year. The ~~increase~~decrease for the nine months ended September 30, ~~2017~~2018 was primarily due to the sale of vacant land ~~as previously discussed.~~in the prior year.

Net cash provided by financing activities for the nine months ended September 30, ~~2017~~2018 was ~~$8,242,607~~$39,690 compared to net cash ~~used in~~provided by financing activities of ~~$40,204~~$8,242,607 for the comparable period last year. The change is primarily due to borrowings on ~~a bank~~the line of credit and the sale of common stock ~~associated~~ 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 910 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,

Table of Contents

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. ~~Based on our current level~~See Footnote 4 to the Consolidated Condensed Financial Statements related to management’s assessment of ~~operations, current cash balance and bank credit availability, we believe we have sufficient liquidity~~the Company’s ability to ~~fund our operations for at least the next twelve months.~~continue as a going concern.

Contractual Obligations

The following table presents information about our contractual obligations and commitments as of September 30, ~~2017:~~2018:

Payments due by Period

Less Than

More than


Total

1 Year

1 - 3 Years

3 - 5 Years

5 Years

Purchase obligations (1)

$
796,286

$
796,286

$
—

$
—

$
—


			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	$	—	$	—	$	—
Purchase obligations		4,501,558		4,501,558		—		—		—
Lease obligations		95,553		18,534		58,897		18,122		—
Total	$	7,761,640	$	7,684,621	$	58,897	$	18,122	$	—

~~(1)~~

~~Includes procurement of inventory to fulfill the backlog for products.~~

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~~Consolidated Condensed Financial Statements and accompanying notes. Note 1 to the Consolidated ~~Condensed~~ Financial Statements contained in our ~~Transition~~Annual Report on Form ~~10-KT~~10-K for the ~~nine-month transition period~~year ended December 31, ~~2016~~2017 describes the significant accounting policies and methods used in the preparation of the ~~consolidated financial statements.~~Consolidated Financial Statements. There have been no material changes in our Condensed Consolidated Financial Statements based on any of our critical accounting policies including the adoption of ASC 606, during the nine months ended September 30, ~~2017.~~2018.

~~Table of Contents~~

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)~~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 30, ~~2017,~~2018, 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

Table of Contents

controls and ~~procedures (as defined in Rule 13a-15(e) under the U.S. Securities and Exchange Act of 1934 (the “Exchange Act”)).~~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, ~~2017.~~2018.

There were no changes to our internal control over financial reporting (as defined in ~~Rules~~Rule 13a-15(f) ~~and 15d-15(f)~~ under the Exchange Act) that occurred during the ~~quarter~~nine months ended September 30, ~~2017~~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

ITEM 1A. RISK FACTORS

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 ~~Transition~~Annual Report on Form ~~10-KT~~10-K for the ~~transitional nine-month~~ period ended December 31, ~~2016:~~2017:

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

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

Nine months ended September 30,

Nine months ended December 31,

Year ended March 31,


2017

2016

2016

Net loss

$
3,497,648

$
12,978,261

$
6,938,351


	Quarters ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net loss	$	1,141,578	$	543,401	$	5,544,097	$	3,497,648

~~Table of Contents~~

As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we had accumulated deficits of ~~$123,390,582~~$130,215,347 and ~~$119,892,934,~~$124,671,250, respectively.

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 ~~quarter~~nine months ended September 30, ~~2017~~2018 was ~~$543,401~~$5,544,097 versus a net loss for the comparable ~~quarter~~period last year of ~~$2,368,245.~~$3,497,648. Our net loss for the ~~nine-month transition period~~year ended December 31, ~~2016~~2017 was ~~$13,017,508.~~$4,778,316. At September 30, ~~2017,~~2018, our cash, ~~and~~ cash equivalents and restricted cash totaled ~~$8,035,754.~~$2,845,759. We expect our losses to continue for the foreseeable future. ~~Our existing cash resources and availability under our bank line~~See Footnote 4 to the Consolidated Condensed Financial Statements related to management’s assessment of ~~credit are expected~~the Company’s ability to be sufficient to complete our business plan for at least the next twelve months. Should those resources be insufficient, we may need to secure additional debt or equity funding, which may not be available on terms acceptable to us, if at all.continue as a going concern.

Table of Contents

Our revenue is highly concentrated among a small number of customers.

~~We have historically derived a~~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 on a purchase order basis. ~~Further, although we entered into a 10-year exclusive supply agreement with ITL in October 2015, the amount of revenue we will generate pursuant to the ITL Agreement is uncertain.~~ We cannot be certain that customers that have accounted for significant revenue in past periods will continue to purchase our products. Accordingly, our revenue and results of operations may vary substantially from period to period. We are also subject to credit risk associated with the concentration of our accounts receivable from our customers. If one or more of our significant customers were to cease doing business with us, significantly reduce or delay its purchases from us or fail to pay us on a timely basis, our business, financial condition and results of operations could be materially adversely affected.

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.

2324

Table of Contents

ITEM 6. EXHIBITS

(a)

Exhibits


~~10.1~~		Stock Purchase Agreement, dated as of August 25, 2017, among UQM Technologies, Inc., China National Heavy Duty Truck Group Co., Ltd. and Sinotruk (BVI) Limited. Reference is made to Exhibit 10.1 to our Current Report on Form 8-K, filed on August 30, 2017 (No. 1-10869), which is incorporated herein by reference.

~~10.2~~		Registration Rights Agreement, dated September 25, 2017, between UQM Technologies, Inc. and Sinotruk (BVI) Limited. Reference is made to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 28, 2017 (No. 1-10869), which is incorporated herein by reference.

~~10.3~~		First Amendment to Employment Agreement, dated as of September 25, 2017, between UQM Technologies, Inc. and Joseph R. Mitchell. Reference is made to Exhibit 10.1 to our Current Report on Form 8-K, filed on September 29, 2017 (No. 1-10869), which is incorporated herein by reference.

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

2425

Table of Contents

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: ~~November 2, 2017~~October 31, 2018
	/s/	DAVID I. ROSENTHAL
		David I. Rosenthal
		Treasurer and Chief Financial Officer
		(Duly Authorized Officer, Principal Financial and Accounting Officer)

2526


	Nine months ended September 30,		Nine months ended December 31,		Year ended March 31,
	2017		2016		2016

Net loss	$	3,497,648	$	12,978,261	$	6,938,351