EX-10

Exhibit 10.1

NOTE: THIS DOCUMENT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. PORTIONS OF THIS DOCUMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED AND ARE MARKED HEREIN BY "[***]". SUCH REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.

AMENDMENT No. 1 TO SUPPLY AGREEMENT

This Amendment No. 1 to the Supply Agreement, effective as of September 7, 2011, amends that certain Supply Agreement dated as of July 18, 2009 ("Supply Agreement"), by and between CODA Automotive, Inc. ("CODA") and UQM Technologies, Inc. ("Supplier"). Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Supply Agreement.

WHEREAS, Supplier has experienced increases in the pricing for rare earth materials, and CODA has agreed to compensate Supplier for such price increases, subject to certain terms and conditions set forth herein;

WHEREAS, Supplier and CODA have agreed to use their best efforts to achieve material cost reductions, employing such tools as [***] relating to the Product;

WHEREAS, Supplier and CODA have agreed to apply the cost reductions as set forth in this Amendment;

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to amend the Supply Agreement by adding the following terms and conditions:

1. The following new paragraph shall be added after the first full paragraph of Section 1.2 of Exhibit B Purchase Terms and Conditions of the Supply Agreement ("Exhibit B"):

"Notwithstanding the foregoing, in order to achieve the cost reduction objectives set forth herein, CODA shall have the right to [***] to be provided by Supplier no later than September 9, 2011. In conjunction therewith, Supplier will provide CODA with a detailed cost analysis (including but not limited to, a paid invoice) to support the [***] increase in the price of each motor that Supplier has experienced due to a market-wide increase in the cost of rare earth magnets. In exchange for the payment by CODA of the "Total Magnet Escalation Costs" (as defined in Section 2 of this Amendment), Supplier hereby agrees that [***] will be reflected as a cost reduction in the Supplier purchase price, [***], until CODA has recouped the Total Magnet Escalation Costs. After CODA has recouped the Total Magnet Escalation Costs, all future cost reductions will be divided [***] by CODA and Supplier. [***]."

2. Subject to Supplier's performance of its obligations set forth in Section 1 of this Amendment, CODA has agreed to:

(a) Notwithstanding the pricing terms set forth in Exhibit A Product Schedule of the Supply Agreement ("Exhibit A"), CODA shall pay Supplier [***] ("Magnet Escalation Costs") for [***] units to be ordered by CODA at a fixed rate of [***] per unit above the purchase price per unit as set forth in Exhibit A (and as amended pursuant to the terms and conditions of the Supply Agreement). This added cost is based on a base of [***]. The Magnet Escalation Costs shall be paid to Supplier in [***].

(b) In connection with orders after [***] units, CODA shall pay Supplier, on an order to order basis, for actual magnet escalation costs over the [***] base cost [***] to calculate any costs in excess of the Magnet Escalation Costs (together with the Magnet Escalation Costs, the "Total Magnet Escalation Costs"). Supplier will provide CODA with a detailed cost analysis (including but not limited to, a paid invoice) to support future escalation costs. CODA shall pay Supplier for such future magnet escalation costs in [***], with the [***] payment due [***] after Supplier has submitted a copy of the paid invoice.

3. In accordance with Section 1.3 of Exhibit B, CODA recognizes that Supplier may have incurred added tariff/tax as the result of Case A570-967-000 relating to the import of aluminum extrusions from China. Accordingly, CODA, upon receiving a paid invoice representing this added cost, will reimburse Supplier for such cost.

4. Except as specifically amended herein, the Supply Agreement shall remain in full force and effect as to all of its terms and conditions without this Amendment.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by persons duly authorized as of the date and year first above written.

UQM TECHNOLOGIES, INC.	CODA AUTOMOTIVE, INC.
/s/ Eric Ridenour	/s/ Waqas Sherwani
Eric Ridenour	Waqas Sherwani
President and CEO	Vice President Supply Chain

EX-31

Exhibit 31.1  

Certification

I, Eric R. Ridenour, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of UQM Technologies, Inc.:
2.	Based on my knowledge, this Report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.	Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
	d.	Disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date:  October 27, 2011			/s/ ERIC RRIDENOUR
				Eric R. Ridenour
				President and Chief Executive Officer

EX-31

Exhibit 31.2  

Certification

I, Donald A. French, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of UQM Technologies, Inc.:
2.	Based on my knowledge, this Report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.	Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
	d.	Disclosed in this Report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date:  October 27, 2011			/s/ DONALD A. FRENCH
				Donald A. French
				Treasurer, Secretary and
				Chief Financial Officer

EX-32

Exhibit 32.1 

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of UQM Technologies, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: 1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ERIC RRIDENOUR
	Eric R. Ridenour
	President and Chief Executive Officer

/s/ DONALD A. FRENCH
	Donald A. French
	Treasurer, Secretary and Chief Financial Officer

 Date:  October 27, 2011

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Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2011	Mar. 31, 2011
Consolidated Balance Sheets
Patent costs, accumulated amortization	$ 799,420	$ 781,608
Trademark costs, accumulated amortization	$ 57,499	$ 55,256
Common stock, par value per share	$ 0.01
Common stock, shares authorized	50,000,000
Common stock, shares issued and outstanding	36,326,516	36,213,293

XML

Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenue:
Contract services	$ 135,547	$ 43,262	$ 211,849	$ 345,490
Product sales	2,198,676	1,984,296	3,437,434	4,237,392
Total Revenues	2,334,223	2,027,558	3,649,283	4,582,882
Operating costs and expenses:
Costs of contract services	86,123	161,434	131,693	350,750
Costs of product sales	1,227,559	1,639,515	1,909,154	3,041,451
Research and development	647	152,628	4,810	271,947
Production engineering	1,622,163	856,682	3,196,986	1,660,316
Reimbursement of costs under DOE grant	(1,111,034)	(2,551,944)	(2,232,670)	(2,551,944)
Selling, general and administrative	2,099,025	2,177,981	3,288,628	3,000,822
Gain on sale of long-lived asset	(3,138)	0	(3,138)	(1,004)
Total Costs and Expenses	3,921,345	2,436,296	6,295,463	5,772,338
Loss before other income (expense)	(1,587,122)	(408,738)	(2,646,180)	(1,189,456)
Other income (expense):
Interest income	641	30,945	15,895	59,653
Other	296	0	557	265,140
Total nonoperating income (expense)	937	30,945	16,452	324,793
Net loss	$ (1,586,185)	$ (377,793)	$ (2,629,728)	$ (864,663)
Net loss per common share - basic and diluted	$ (0.04)	$ (0.01)	$ (0.07)	$ (0.02)
Weighted average number of shares of common stock outstanding - basic and diluted	36,304,613	36,005,413	36,263,640	35,976,580

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Segments

6 Months Ended

Sep. 30, 2011

Segments

Segments

(17)Segments

Effective April 1, 2011 the Company merged its wholly-owned subsidiary UQM Power Products, Inc. into UQM Technologies, Inc. As a result of this merger the operations of each of these entities are no longer managed or reported upon to management separately, and accordingly, the Company is no longer presenting segment information in its financial statements.

Last fiscal year we had two reportable segments: technology and power products. These reportable segments were strategic business units that offered different products and services. They were managed separately because each business required different business strategies. The technology segment encompassed our technology-based operations including core research to advance our technology, application and production engineering and product development and job shop production of prototype components. The power products segment encompassed the manufacture and sale of motors and electronic controllers. Salaries of the executive officers and corporate general and administrative expense were allocated to each segment annually based on factors established at the beginning of the fiscal year. The percentages allocated to the technology segment and power products segment were 69 percent and 31 percent for the quarter and six month periods ended September 30, 2010, respectively.

Intersegment sales or transfers, which were eliminated upon consolidation, were $524,754 and $641,330, for the quarter and six month period ended September 30, 2010.

The Company leased office, production and laboratory space in a building owned by a wholly-owned subsidiary of the Company. During the quarter and six month period ended September 30, 2010 this wholly-owned subsidiary's operations were included as part of the former Power Products segment. Intercompany lease payments were based on a negotiated rate for the square footage occupied and were $212,004, and $257,904, for the quarter and six month period ended September 30, 2010, and were eliminated upon consolidation.

The following table summarizes significant financial statement information, after deducting intersegment eliminations of each of the reportable segments as of and for the quarter ended September 30, 2010:

			Power
	Technology		Products	Total
Revenue	$	1,174,999	852,559	2,027,558
Interest income	$	30,468	477	30,945
Depreciation and amortization	$	(117,564)	(110,273)	(227,837)
Segment earnings (loss)	$	311,384	(689,177)	(377,793)
Total assets	$	32,014,383	10,309,722	42,324,105
Expenditures for long-lived segment assets	$	(531,108)	(1,495,446)	(2,026,554)

The following table summarizes significant financial statement information, after deducting intersegment eliminations of each of the reportable segments as of and for the six month period ended September 30, 2010:

			Power
	Technology		Products	Total
Revenue	$	3,046,029	1,536,853	4,582,882
Interest income	$	58,651	1,002	59,653
Depreciation and amortization	$	(228,858)	(159,747)	(388,605)
Segment loss	$	(45,136)	(819,527)	(864,663)
Total assets	$	32,014,383	10,309,722	42,324,105
Expenditures for long-lived segment assets	$	(671,102)	(3,776,439)	(4,447,541)

XML

Document and Entity Information	6 Months Ended
	Sep. 30, 2011	Oct. 25, 2011
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Entity Registrant Name	UQM TECHNOLOGIES INC
Entity Central Index Key	0000315449
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		36,504,208

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Contracts in Process

6 Months Ended

Sep. 30, 2011

Contracts in Process

Contracts in Process

(6)On both September 30, 2011 and March 31, 2011, the estimated period to complete contracts in process ranged from one to three months. We expect to collect all related accounts receivable arising there from within sixty days of billing. The following summarizes contracts in process:

			September 30, 2011	March 31, 2011
Costs incurred on uncompleted contracts			$   1,421,356	4,105,858
Estimated earnings			490,535	424,184
			1,911,891	4,530,042
Less billings to date			(1,637,744)	(4,418,993)
			$      274,147	111,049
Included in the accompanying balance sheets as follows:
	Costs and estimated earnings in excess of billings on
		uncompleted contracts	$      274,147	126,775
	Billings in excess of costs and estimated earnings on
		uncompleted contracts	-	(15,726)
			$      274,147	111,049

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Stockholders' Equity

6 Months Ended

Sep. 30, 2011

Stockholders' Equity

Stockholders' Equity

(11)Stockholders' Equity

Changes in the components of stockholders' equity during the quarter and six month period ended September 30, 2011 were as follows:

	Number of common shares issued	Common stock	Addditional paid-in capital	Accumulated deficit	Total stockholders' equity
Balances at April 1, 2011	36,213,293	$ 362,133	113,391,049	(75,558,469)	38,194,713
Issuance of common stock underemployee stock purchase plan	10,974	110	21,509	-	21,619
Compensation expense from employee and director stock option and common stock grants	-	-	91,087	-	91,087
Net loss	-	-	-	(1,043,543)	(1,043,543)
Balances at June 30, 2011	36,224,267	362,243	113,503,645	(76,602,012)	37,263,876
Issuance of common stock under stock bonus plan	107,917	1,079	167,545	-	168,624
Issuance of common stock under employee stock purchase plan	523	5	1,370	-	1,375
Purchase of treasury stock	(6,191)	(62)	(12,314)	-	(12,376)
Compensation expense from employee and director stock option and common stock grants	-	-	389,914	-	389,914
Net loss	-	-	-	(1,586,185)	(1,586,185)
Balances at September 30, 2011	36,326,516	$ 363,265	114,050,160	(78,188,197)	36,225,228

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Allowance for Doubtful Accounts

6 Months Ended

Sep. 30, 2011

Accounts Receivable Additional Disclosures [Abstract]

Allowance for Doubtful Accounts

(2)Allowance for Doubtful Accounts

The Company periodically evaluates the credit worthiness of its customers and establishes credit limits for each customer. The Company also establishes estimates and records an allowance for doubtful accounts based upon a number of factors including the payment history of its customers, general business conditions, specific business developments that may impact a customer's creditworthiness, and other relevant factors that may impact the ability of customers to honor their payment obligation to the Company. At September 30, 2011 and March 31, 2011 we had established an allowance for doubtful accounts of $70,943 and zero, respectively.

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Facility Held for Sale

6 Months Ended

Sep. 30, 2011

Assets Held-for-sale, Current [Abstract]

Facility Held for Sale

(8)Facility Held for Sale

In July 2010, the Company relocated a substantial portion of its staff and equipment from its facility in Frederick, Colorado to a new facility in Longmont, Colorado. The Company continued limited operations at its Frederick, Colorado facility through June 2011, at which time the Company ceased operations at the Frederick facility and listed it for sale with a commercial real estate broker.

The facility has been reclassified as a current asset and the Company has discontinued depreciating the asset pending its sale, which is expected to occur within one year. The facility is recorded at the lower of fair value or cost.

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Income Taxes

6 Months Ended

Sep. 30, 2011

Income Taxes

Income Taxes

(13)Income Taxes

The Company currently has a full valuation allowance, 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.

We recognize interest and penalties related to uncertain tax positions in "Other Income (expense)," net. As of September 30, 2011 and 2010, we had no provisions for interest or penalties related to uncertain tax positions.

The tax years 2006 through 2010 remain open to examination by both the Internal Revenue Service of the United States and by the various state taxing authorities where we file.

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Government Grants

6 Months Ended

Sep. 30, 2011

Government Grants

Government Grants

(9)Government Grants

We have a $45,145,534 grant with the U.S. Department of Energy ("DOE") under the Stimulus Act (the "Grant"). The Grant provides funds to facilitate the manufacture and deployment of electric drive vehicles, batteries and electric drive vehicle components in the United States. Pursuant to the terms of the Grant, the DOE will reimburse us for 50 percent of qualifying costs for the purchase of facilities, tooling and manufacturing equipment, and for engineering related to product qualification and testing of our electric propulsion systems and other products. The period of the Grant is through January 12, 2013.

We recognize government grants when it is probable that the Company will comply with the conditions attached to the grant arrangement and the grant will be received.

Funding for qualifying project costs incurred is initially limited to $32.0 million until we provide the DOE with an updated total estimated cost of the project along with evidence of firm commitments for our 50 percent share of the total estimated cost of the project no later than April 12, 2012. If all such funds have not been secured, we must submit, by such date, a funding plan to obtain the remainder of such funds, which is acceptable to the DOE. In the event we do not satisfy the foregoing contingency, the Grant may be terminated. In addition, the Grant may be terminated at any time at the convenience of the government.

The Grant is also subject to our compliance with certain reporting requirements. The Stimulus Act imposes minimum construction wage and labor standards for projects funded by the Grant.

If we dispose of assets acquired using Grant funding, we may be required to reimburse the DOE upon such sale date if the fair value of the asset on the date of disposition exceeds $5,000. The amount of any such reimbursement shall be equal to 50 percent of the fair value of the asset on the date of disposition.

While UQM has exclusive patent ownership rights for any technology developed with Grant funds, we are required to grant the DOE a non-exclusive, non-transferable, paid-up license to use such technology.

At September 30, 2011 we had received reimbursements from the DOE under the Grant totaling $13.2 million and had grant funds receivable of $1.6 million.

The application of grant funds to eligible capital asset purchases under the Grant as of September 30, 2011 and March 31, 2011 are as follows:

	September 30, 2011
	Purchase Cost	Grant Funding	Recorded Value
Land	$      896,388	448,194	448,194
Building	9,789,051	4,894,526	4,894,525
Machinery and Equipment	6,516,659	3,258,329	3,258,330
	$ 17,202,098	8,601,049	8,601,049

	March 31, 2011
	Purchase Cost	Grant Funding	Recorded Value
Land	$      896,388	448,194	448,194
Building	9,611,560	4,805,780	4,805,780
Machinery and Equipment	5,437,965	2,718,982	2,718,983
	$ 15,945,913	7,972,956	7,972,957

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Inventories

6 Months Ended

Sep. 30, 2011

Inventories

Inventories

(7)Inventories at September 30, 2011 and March 31, 2011 consist of:

	September 30, 2011	March 31, 2011
Raw materials	$ 3,874,104	1,769,614
Work-in-process	281,919	388,647
Finished products	101,273	55,180
	$ 4,257,296	2,213,441

Our raw material inventory is subject to obsolescence and potential impairment due to bulk purchases in excess of customers' requirements. We periodically assess our inventories for recovery of carrying value based on available information, expectations and estimates, and adjust inventory-carrying values to the lower of cost or market for estimated declines in the realizable value. During the six month periods ended September 30, 2011 and 2010, there was no impairment of inventory.

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Consolidated Statements of Cash Flows (Parenthetical) (USD $)	Sep. 30, 2011
Assets Held-for-sale, Current [Abstract]
Facility Held for Sale Gross Value	$ 2,645,793
Facility Held for Sale Accumulated Depreciation	$ 1,024,536

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New Accounting Pronouncements

6 Months Ended

Sep. 30, 2011

New Accounting Pronouncements

New Accounting Pronouncements

(3)New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued amendments to fair value measurement standards to achieve common fair value measurement and disclosure requirements in U.S. generally accepted accounting principles and international financial reporting standards. The amended standards clarify the intent regarding the application of existing fair value measurements and disclosures, and change certain principles and requirements for measuring fair value or for disclosing information about fair value measurements. These new standards are required to be adopted in the fourth quarter of FY 2012. We do not expect these new standards to significantly impact our consolidated financial statements.

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Stock-Based Compensation

6 Months Ended

Sep. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

(4)Stock-Based Compensation

Stock Option Plans

As of September 30, 2011, we had 281,306 shares of common stock available for future grant to employees, consultants and key suppliers under our 2002 Equity Incentive Plan ("Plan"). Under the Plan, the exercise price of each option is set at the fair value of the common stock on the date of grant and the maximum term of the option is 10 years from the date of grant. Options granted to employees generally vest ratably over a three-year period. The maximum number of shares that may be granted as options to an employee under the Plan in any calendar year is 500,000. Forfeitures under the Plan are available for re-issuance at any time prior to expiration of the Plan in 2013. Options granted under the Plan to employees require the option holder to abide by certain Company policies, which restrict their ability to sell the underlying common stock. Prior to the adoption of the Plan, we issued stock options under our 1992 Incentive and Non-Qualified Option Plan, which expired by its terms in 2002. Forfeitures under the 1992 Incentive and Non-Qualified Option Plan may not be re-issued.

Non-Employee Director Stock Option Plan

In February 1994 our Board of Directors ratified a Stock Option Plan for Non-Employee Directors ("Directors Plan") pursuant to which Directors may elect to receive stock options in lieu of cash compensation for their services as directors. As of September 30, 2011, we had no shares of common stock available for future grant under the Directors Plan. Option terms range from 3 to 10 years from the date of grant. Option exercise prices are equal to the fair value of the common shares on the date of grant. Options granted under the plan generally vest immediately. Forfeitures under the Directors Plan are available for re-issuance at a future date.

Stock Purchase Plan

We have established a Stock Purchase Plan under which eligible employees may contribute up to 10 percent of their compensation to purchase shares of our common stock at 85 percent of the fair market value at specified

dates.  At September 30, 2011 we had 485,282 shares of common stock available for issuance under the Stock Purchase Plan.  During the quarters and six month periods ended September 30, 2011 and 2010, we issued 523 and 277, and 11,497 and 277 shares of common stock, respectively, under the Stock Purchase Plan.  Cash received by us upon the purchase of shares under the Stock Purchase Plan for the quarters and six month periods ended September 30, 2011 and 2010 was $1,375 and $1,006, and $22,994 and $1,006, respectively, and is included in cash provided by financing activities.  

Stock Bonus Plan

We have a Stock Bonus Plan ("Stock Plan") administered by the Board of Directors.  At September 30, 2011 there were 550,320 shares of common stock available for future grant under the Stock Plan.  Under the Stock Plan, shares of common stock may be granted to employees, key consultants, and directors who are not employees as additional compensation for services rendered.  Vesting requirements for grants under the Stock Plan, if any, are determined by the Board of Directors at the time of grant.  There were 213,398 shares granted under the Stock Plan during both the quarter and six month period ended September 30, 2011 and 235,173 shares granted under the Stock Plan during both the quarter and six month period ended September 30, 2010.    

We use the straight-line attribution method to recognize share-based compensation costs over the requisite service period of the award. Options granted by us generally expire ten years from the grant date. Options granted to existing and newly hired employees generally vest over a three-year period from the date of the grant. The exercise price of options is equal to the market price of our common stock (defined as the closing price reported by the NYSE Amex) on the date of grant.

We use the Black-Scholes-Merton option pricing model for estimating the fair value of stock option awards. The table below shows total share-based compensation expense for the quarters and six month periods ended September 30, 2011 and 2010 and the classification of these expenses:

	Quarter Ended September 30,		Six Months Ended September 30,
	2011	2010	2011	2010
Costs of contract services	$      5,430	11,350	8,877	41,470
Costs of product sales	22,885	37,371	42,861	50,463
Research and development	22	7,780	47	13,596
Production engineering	54,379	27,426	98,027	51,208
Selling, general and administrative	475,822	693,896	499,813	699,432
	$  558,538	777,823	649,625	856,169

Share-based compensation capitalized in inventories were insignificant in the quarters and six month periods ended September 30, 2011 and September 30, 2010.

We adjust share-based compensation on a quarterly basis for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments in the quarters and six month periods ended September 30, 2011 and September 30, 2010 were insignificant.

All shares granted under the Director's Plan are vested.

A summary of the status of non-vested shares under the 2002 Equity Incentive Plan as of September 30, 2011 and 2010 and changes during the quarters and six month periods ended September 30, 2011 and 2010 are presented below:

	Six Months Ended September 30, 2011		Six Months Ended September 30, 2010
		Weighted-Average		Weighted-Average
	Shares	Grant Date	Shares	Grant Date
	Under Option	Fair Value	Under Option	Fair Value
Non-vested at April 1	475,934	$ 1.73	338,747	$ 1.93
Granted	-	$   -	-	$   -
Vested	-	$   -	-	$   -
Forfeited	(3,610)	$ 1.79	(1,832)	$ 1.61
Non-vested at June 30	472,324	$ 1.73	336,915	$ 1.94
Granted	389,588	$ 1.68	510,132	$ 1.37
Vested	(149,126)	$ 1.41	(297,594)	$ 1.21
Forfeited	(931)	$ 1.61	-	$   -
Non-vested at September 30	711,855	$ 1.77	549,453	$ 1.80

As of September 30, 2011, there was $822,629 of total unrecognized compensation costs related to stock options granted under the 2002 Equity Incentive Plan. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 27 months. The total fair value of stock options that vested during both the quarter and six month period ended September 30, 2011 was $209,581. The total fair value of stock options that vested during both the quarter and six month period ended September 30, 2010 was $359,062. There were options to acquire 389,588 shares granted under the Equity Incentive Plan during both the quarter and six month period ended September 30, 2011 and there were options to acquire 510,132 shares granted under the Equity Incentive Plan during both the quarter and six month period ended September 30, 2010.

A summary of the non-vested shares under the Stock Bonus Plan as of September 30, 2011 and 2010 and changes during the quarters and six month periods ended September 30, 2011 and 2010 are presented below:

	Six Months Ended September 30, 2011		Six Months Ended September 30, 2010
		Weighted-Average		Weighted-Average
	Shares	Grant Date	Shares	Grant Date
	Under Contract	Fair Value	Under Contract	Fair Value
Non-vested at April 1	62,199	$ 2.50	98,929	$ 2.97
Granted	-	$   -	-	$   -
Vested	-	$   -	-	$   -
Forfeited	-	$   -	-	$   -
Non-vested at June 30	62,199	$ 2.50	98,929	$ 2.97
Granted	213,398	$ 2.34	235,173	$ 2.51
Vested	(107,917)	$ 2.28	(139,767)	$ 2.57
Forfeited	-	$   -	-	$   -
Non-vested at September 30	167,680	$ 2.44	194,335	$ 2.70

As of September 30, 2011, there was $357,001 of total unrecognized compensation costs related to common stock granted under our Stock Bonus Plan. The unrecognized compensation cost at September 30, 2011 is expected to be recognized over a weighted-average period of 31 months. The total fair value of common stock granted under the Stock Bonus Plan that vested during both the quarter and six month period ended September 30, 2011 was $245,745 and the total fair value of common stock granted under the Stock Bonus Plan that vested during both the quarter and six month period ended September 30, 2010 was $589,998.

Expected volatility is based on historical volatility. The expected life of options granted is based on historical experience.

Additional information with respect to stock option activity during the quarter and six month periods ended September 30, 2011 under our 2002 Equity Incentive Plan is as follows:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Option	Price	Life	Value
Outstanding at April 1, 2011	2,630,491	$ 3.00	3.7 years	$   959,001
Granted	-	$   -
Exercised	-	$   -		$         -
Forfeited	(6,309)	$ 3.08
Outstanding at June 30, 2011	2,624,182	$ 3.00	3.5 years	$     39,661
Granted	389,588	$ 2.40
Exercised	-	$    -		$          -
Forfeited	(35,931)	$ 3.54
Outstanding at September 30, 2011	2,977,839	$ 2.92	4.1 years	$         -
Exercisable at September 30, 2011	2,265,984	$ 2.94	2.9 years	$         -
Vested and expected to vest at September 30, 2011	2,937,409	$ 2.92	4.0 years	$         -

Additional information with respect to stock option activity during the quarter and six month periods ended September 30, 2010 under our 2002 Equity Incentive Plan is as follows:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Option	Price	Life	Value
Outstanding at April 1, 2010	2,377,075	$ 3.45	3.9 years	$ 2,509,155
Granted	-	$    -
Exercised	(1,000)	$ 3.57		$           600
Forfeited	(3,166)	$ 3.57
Outstanding at June 30, 2010	2,372,909	$ 3.45	3.7 years	$ 1,264,435
Granted	510,132	$ 2.52
Exercised	-	$    -		$          -
Forfeited	(6,334)	$ 3.59
Outstanding at September 30, 2010	2,876,707	$ 3.28	4.0 years	$    328,687
Exercisable at September 30, 2010	2,327,254	$ 3.30	3.4 years	$    260,704
Vested and expected to vest at September 30, 2010	2,850,029	$ 3.29	3.9 years	$    325,114

Additional information with respect to stock option activity during the quarter and six month periods ended September 30, 2011 under our Director's Plan is as follows:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Option	Price	Life	Value
Outstanding at April 1, 2011	329,786	$ 2.86	3.1 years	$   129,642
Granted	-	$    -
Exercised	-	$    -		$         -
Forfeited		$    -
Outstanding at June 30, 2011	329,786	$ 2.86	2.9 years	$       9,734
Granted	155,122	$ 2.04
Exercised	-	$    -		$         -
Forfeited	(25,996)	$ 2.33
Outstanding at September 30, 2011	458,912	$ 2.61	3.7 years	$         -
Exercisable at September 30, 2011	458,912	$ 2.61	3.7 years	$         -
Vested and expected to vest at September 30, 2011	458,912	$ 2.61	3.7 years	$         -

Additional information with respect to stock option activity during the quarter and six month periods ended September 30, 2010 under our Director's Plan is as follows:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Option	Price	Life	Value
Outstanding at April 1, 2010	256,653	$ 3.15	2.6 years	$   303,651
Granted	-	$    -
Exercised	-	$    -		$         -
Forfeited	(977)	$ 7.63
Outstanding at June 30, 2010	255,676	$ 3.13	2.4 years	$   143,003
Granted	100,136	$ 2.63
Exercised	-	$    -		$         -
Forfeited	(24,039)	$ 3.57
Outstanding at September 30, 2010	331,773	$ 2.96	3.3 years	$      45,771
Exercisable at September 30, 2010	331,773	$ 2.96	3.3 years	$      45,771
Vested and expected to vest at September 30, 2010	331,773	$ 2.96	3.3 years	$      45,771

Cash received by us upon the exercise of stock options for the quarters and six month periods ended September 30, 2011 and 2010 was zero and zero, and zero and $3,570, respectively. The source of shares of common stock issuable upon the exercise of stock options is from authorized and previously unissued common shares.

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Significant Customers

6 Months Ended

Sep. 30, 2011

Significant Customers

Significant Customers

(12)Significant Customers 

We have historically derived significant revenue from a few key customers.  Revenue from CODA Automotive totaled $818,555 and $358,800, and $818,555 and $427,800 for the quarters and six month periods ended September 30, 2011 and 2010, respectively, which was 35 percent and 18 percent, and 22 percent and 9 percent, of our consolidated total revenue, respectively.    

Trade accounts receivable from CODA Automotive were 6 percent and 16 percent of total accounts receivable as of September 30, 2011 and March 31, 2011, respectively. Inventories consisting of raw materials, work-in-progress and finished goods for this customer totaled $2,354,850 and $832,320 as of September 30, 2011 and March 31, 2011, respectively.

Revenue derived from contracts with agencies of the U.S. Government and from subcontracts with U.S. Government prime contractors totaled $135,547 and $317,053 and $208,849 and $844,334 for the quarters and six month periods ended September 30, 2011 and 2010, respectively, which was 6 percent and 16 percent, and 6 percent and 18 percent of our consolidated total revenue for the quarters and six month periods ended September 30, 2011 and 2010, respectively. Accounts receivable from government-funded contracts represented 69 percent and 49 percent of total accounts receivable as of September 30, 2011 and March 31, 2011, respectively. Of these amounts, revenue derived from subcontracts with AM General LLC totaled $35,438 and $328,689 and $55,724 and $715,611 for the quarters and six months ended September 30, 2011 and 2010, respectively, which represented 2 percent and 16 percent, and 2 percent and 16 percent, of our consolidated total revenue for the quarters and six month periods ended September 30, 2011 and 2010, respectively. There were no accounts receivable balances or inventories for this customer at September 30, 2011 and March 31, 2011, respectively.

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Investments

6 Months Ended

Sep. 30, 2011

Investments

Investment

(5)We have an investment policy approved by the Board of Directors that governs the quality, acceptability and dollar concentration of our investments. Investments are comprised of marketable securities and consist primarily of commercial paper, asset-backed and mortgage-backed notes and bank certificates of deposits with original maturities beyond three months. All marketable securities and corporate bonds are held in our name at three major financial institutions who hold custody of the investments. All of our investments are held-to-maturity investments as we have the positive intent and ability to hold until maturity. These securities are recorded at amortized cost.

The amortized cost and unrealized gain or loss of our investments at September 30, 2011 and March 31, 2011 were:

		September 30, 2011		March 31, 2011
		Amortized Cost	Gain (Loss)	Amortized Cost	Gain (Loss)
Short-term investments:
U.S. government and government agency
	securities	$   1,500,896	(15,187)	795,451	(17,197)
Commercial paper, corporate and foreign bonds		5,127,050	(77,772)	7,227,820	(59,777)
Certificates of deposit		311,195	-	309,252	-
		$   6,939,141	(92,959)	8,332,523	(76,974)

The time to maturity of held-to-maturity securities were:

	September 30, 2011	March 31, 2011
Less than three months	$   4,173,560	3,432,312
Three to six months	2,639,857	3,086,533
Six months to one year	125,724	1,813,678
Over one year	-
	$   6,939,141	8,332,523

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Fair Value of Financial Instruments

6 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments

Fair Value of Financial Instruments

(15)Fair Value of Financial Instruments

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

Cash and cash equivalents, accounts receivable, and accounts payable:

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

Investments:

The carrying value of these instruments is the amortized cost of the investments which approximates fair value. See Note 5.

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Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net loss	$ (2,629,728)	$ (864,663)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	575,529	388,605
Non-cash equity based compensation	649,625	856,169
Gain on sale of long-lived asset	(3,138)	(1,004)
Change in operating assets and liabilities:
Accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts	295,287	(1,129,807)
Inventories	(2,043,855)	(190,613)
Prepaid expenses and other current assets	(811,632)	(171,045)
Accounts payable and other current liabilities	(239,982)	(393,823)
Billings in excess of costs and estimated earnings on uncompleted contracts	(15,726)	(27,261)
Deferred compensation under executive employment agreements	(684,181)	105,669
Net cash used in operating activities	(4,907,801)	(1,427,773)
Cash flows from investing activities:
Purchases of short-term investments	(6,636,954)	(11,264,319)
Maturities of short-term investments	8,030,336	11,621,304
Decrease (increase) in other long-term assets	0	534
Acquisition of property and equipment	(1,329,245)	(4,441,304)
Property and equipment reimbursements received from DOE under grant	1,078,743	2,224,776
Increase in patent and trademark costs	(17,981)	(6,237)
Cash proceeds from the sale of equipment	3,825	1,004
Net cash used in investing activities	1,128,724	(1,864,242)
Cash flows from financing activities:
Issuance of common stock under employee stock purchase plan	22,994	1,006
Issuance of common stock upon exercise of employee stock options		3,570
Purchase of treasury stock	(12,376)	(102,008)
Net cash provided by (used in) financing activities	10,618	(97,432)
Increase (decrease) in cash and cash equivalents	(3,768,459)	(3,389,447)
Cash and cash equivalents at beginning of period	15,878,752	17,739,600
Cash and cash equivalents at end of period	$ 12,110,293	$ 14,350,153

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Fair Value Measurements

6 Months Ended

Sep. 30, 2011

Fair Value Measurement

Fair Value Measurements

(16)Fair Value Measurements

Liabilities measured at fair value on a recurring basis as of September 30, 2011 are summarized below:

				Quoted Prices
				In Active	Significant
				Markets	Other	Significant
				For Identical	Observable	Unobservable
				Liabilities	Inputs	Inputs
			Total	(Level 1)	(Level 2)	(Level 3)
Deferred compensation under
	executive employment agreements (1)		$ 632,191	-	-	632,191
Note (1)		Included in long term liabilities on our consolidated balance sheet as of September 30, 2011.

Liabilities measured at fair value on a recurring basis as of March 31, 2011 are summarized below:

				Quoted Prices
				In Active	Significant
				Markets	Other	Significant
				For Identical	Observable	Unobservable
				Liabilities	Inputs	Inputs
			Total	(Level 1)	(Level 2)	(Level 3)
Deferred compensation under
	executive employment agreements (1)		$ 1,316,372	-	-	1,316,372
Note (1)		$739,200 included in current liabilities and $577,172 included in long term liabilities on our consolidated balance sheet as of March 31, 2011.

Deferred compensation under executive employment agreements represents the future compensation potentially payable under the retirement and voluntary termination provisions of executive employment agreements.  The value of the Level 3 liability in the foregoing table was determined using a discounted cash flow model with a discount rate of 14 percent based on the expected cost of capital for the Company.    

A summary of the liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follows:

			Fair Value Measurements Using Significant
			Unobservable Inputs (Level 3)
			Deferred Compensation On Executive Employment Agreements
			Quarter Ended September 30,		Six Months Ended September 30,
			2011	2010	2011	2010
Balance at beginning of the period			$ 614,381	1,166,480	1,316,372	1,155,416
	Transfers into Level 3		-	-	-	-
	Transfers out of Level 3		-	-	-	-
	Total gains or losses (realized and
	unrealized):
		Included in earnings	17,810	94,605	55,019	105,669
		Included in other comprehensive
		income	-	-	-	-
	Purchases, sales, issuances, and
	settlements, net		-	-	(739,200)	-
Balance at the end of the period			632,191	1,261,085	632,191	1,261,085
Loss for the period included in earnings
attributable to the Level 3 liability still held
at the end of the period			$    17,810	94,605	55,019	105,669

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2011

CommitmentsAndContingencies

Commitments and Contingencies

(18)Commitments and Contingencies

Employment Agreements

We have entered into employment agreements with four of our officers.  Three of these agreements expire on August 22, 2012 and one agreement expires on August 31, 2015. The aggregate future base salary payable to these four executive officers under the employment agreements, over their remaining terms is $2,289,750.  In addition, we have recorded a liability of $632,191 and $1,316,372 at September 30, 2011 and March 31, 2011, respectively, representing the potential future compensation payable under the retirement and voluntary termination provisions of the employment agreements of the Company's current officers.   

Lease Commitments

At September 30, 2011 there were no operating leases with initial non-cancelable terms in excess of one year.

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, although adverse developments in these matters could have a material impact on a future reporting period.

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Basis of Presentation

6 Months Ended

Sep. 30, 2011

Basis of Presentation

Basis of Presentation

(1) The accompanying consolidated 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.  Certain prior year amounts have been reclassified to conform to the current period presentation.  The results for the interim periods are not necessarily indicative of the results to be expected for the fiscal year.  The Notes contained herein should be read in conjunction with the Notes to our Consolidated Financial Statements filed on Form 10-K for the year ended March 31, 2011.

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Other Current Liabilities

6 Months Ended

Sep. 30, 2011

Other Current Liabilities

Other Current Liabilities

(10)Other current liabilities at September 30, 2011 and March 31, 2011 consist of:

	September 30, 2011	March 31, 2011
Accrued payroll and employee benefits	$  268,722	193,670
Accrued personal property and real estate taxes	249,116	223,714
Accrued warranty costs	89,774	89,463
Unearned revenue	134,280	219,751
Accrued royalties	88,189	71,398
Construction  retainage	-	97,756
Other	16,019	7,954
	$  846,100	903,706

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Loss Per Common Share

6 Months Ended

Sep. 30, 2011

Loss Per Common Share

Loss Per Common Share

(14)Loss Per Common Share

Basic earnings per share is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed by dividing income or loss available to common stockholders by all outstanding and potentially dilutive shares during the periods presented, unless the effect is antidilutive. At September 30, 2011 and 2010, respectively, common shares issued under the Stock Bonus Plan but not yet earned totaling 167,680 and 194,335 shares were being held by the Company. For the quarters and six month periods ended September 30, 2011 and 2010 zero and 8,686, and zero and 13,682 shares, respectively, were potentially includable in the calculation of diluted loss per share under the treasury stock method but were not included, because to do so would be antidilutive. At September 30, 2011 and 2010, options to purchase 3,450,310 and 3,216,601 shares of common stock, respectively, were outstanding. For the quarters and six month periods ended September 30, 2011 and 2010, respectively, options for 3,423,669 and 1,268,268 and 2,430,435 and 1,189,700 shares, respectively, were not included in the computation of diluted loss per share because the option exercise price was greater than the average market price of the common stock. In-the-money options determined under the treasury stock method to acquire 919 and 297,312, and 34,474 and 465,862 shares of common stock for the quarters and six month periods ended September 30, 2011 and 2010, respectively, were potentially includable in the calculation of diluted loss per share but were not, because to do so would be antidilutive.

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Consolidated Balance Sheets (USD $)	Sep. 30, 2011	Mar. 31, 2011
Assets
Cash and cash equivalents	$ 12,110,293	$ 15,878,752
Short-term investments	6,939,141	8,332,523
Accounts Receivable, Net	2,633,744	3,527,054
Costs and estimated earnings in excess of billings on uncompleted contracts	274,147	126,775
Inventories	4,257,296	2,213,441
Facility held for sale	1,621,257
Prepaid expenses and other current assets	1,178,786	367,154
Total current assets	29,014,664	30,445,699
Property and equipment, at cost:
Land	1,683,330	1,859,988
Building	4,446,332	6,822,850
Machinery and equipment	7,271,121	6,766,539
Property, plant and equipment, gross	13,400,783	15,449,377
Less accumulated depreciation	(4,221,133)	(4,696,942)
Net property and equipment	9,179,650	10,752,435
Patent costs, net of accumulated amortization of $799,420 and $781,608	264,260	264,091
Trademark costs, net of accumulated amortization of $57,499 and $55,256	116,088	118,331
Other assets	280,496	223,364
Total assets	38,855,158	41,803,920
Liabilities and Stockholders' Equity
Accounts payable	1,151,639	1,373,403
Other current liabilities	846,100	903,706
Short-term deferred compensation under executive employment agreements		739,200
Billings in excess of costs and estimated earnings on uncompleted contracts	0	15,726
Total current liabilities	1,997,739	3,032,035
Long-term deferred compensation under executive employment agreements	632,191	577,172
Total liabilities	2,629,930	3,609,207
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized; 36,326,516 and 36,213,293 shares issued and outstanding	363,265	362,133
Additional paid-in capital	114,050,160	113,391,049
Accumulated deficit	(78,188,197)	(75,558,469)
Total stockholders' equity	36,225,228	38,194,713
Total liabilities and stockholders' equity	$ 38,855,158	$ 41,803,920