(8) Government Grant

We have a $45.1 million grant (the “Grant”) with the U.S. Department of Energy (“DOE”) under the American Recovery and Reinvestment Act. 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 Agreement, 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. The period of the Grant is through January 12, 2015. 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 currently limited to $32.0 million. We were required to provide the DOE with an updated budget revision application no later than July 12, 2013, which we provided prior to the deadline. It is currently under review by the DOE. If the DOE does not find the revision application acceptable, it reserves the right to: (1) stop payment on the contract; (2) renegotiate the contract; or (3) declare the grant terminated by mutual agreement after we have been given thirty days advance written notice and an opportunity to cure any deficiencies.

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

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

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 June 30, 2013, we had received reimbursements from the DOE under the Grant totaling $20.0 million and had grant funds receivable of $2.1 million.

The application of grant funds to eligible capital asset purchases under the Grant as of June 30, 2013 and March 31, 2013 are as follows:


	June 30, 2013
	Purchase Cost		Grant Funding		Recorded Value
Land	$	896,388		448,194		448,194
Building		9,906,736		4,953,368		4,953,368
Machinery and Equipment		7,812,162		3,906,081		3,906,081
	$	18,615,286		9,307,643		9,307,643


	March 31, 2013
	Purchase Cost		Grant Funding		Recorded Value
Land	$	896,388		448,194		448,194
Building		9,906,736		4,953,368		4,953,368
Machinery and Equipment		7,581,408		3,790,704		3,790,704
	$	18,384,532		9,192,266		9,192,266