10-Q

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, 2016

[  ] 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   Not Applicable .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.   See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

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 9, 2016 was 48,534,719.

TABLE OF CONTENTS

	Page No.
PART I Financial Information	1
Item 1.   Financial Statements
Consolidated Condensed Balance Sheets as of September 30, 2016 and March 31, 2016	1
Consolidated Condensed Statements of Operations for the quarters and six months ended September 30, 2016 and 2015	3
Consolidated Condensed Statements of Cash Flows for the six months ended September 30, 2016 and 2015	4
Notes to Consolidated Condensed Financial Statements	5
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.   Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.   Controls and Procedures	19
PART II Other Information	20
Item 1.   Legal Proceedings	20
Item 1A. Risk Factors	20
Item 5.   Other Information	21
Item 6.   Exhibits.	21

i

Part I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited)

	September 30,		March 31,
	2016		2016
Assets
Current assets:
Cash and cash equivalents	$	3,861,947	$	7,030,230
Accounts receivable		484,100		481,404
Costs and estimated earnings in excess of billings on uncompleted contracts		46,246		60,296
Inventories		2,421,982		2,271,271
Prepaid expenses and other current assets		286,059		272,597
Total current assets		7,100,334		10,115,798
Property and equipment, at cost:
Land		1,683,330		1,683,330
Building		4,516,301		4,516,301
Machinery and equipment		7,107,224		7,089,332
		13,306,855		13,288,963
Less accumulated depreciation		(7,541,532)		(7,241,769)
Net property and equipment		5,765,323		6,047,194
Patent costs, net of accumulated amortization of $927,249 and $916,960, respectively		251,984		249,414
Trademark costs, net of accumulated amortization of $79,762 and $77,514, respectively		96,079		98,327
Noncurrent inventories		6,727,706		6,840,170
Total assets	$	19,941,426	$	23,350,903

See accompanying notes to consolidated condensed financial statements.

1

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (unaudited), Continued

	September 30,		March 31,
	2016		2016
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	782,495	$	364,841
Other current liabilities		1,135,460		985,435
Total current liabilities		1,917,955		1,350,276
Other long-term liabilities		372,222		288,889
Total liabilities		2,290,177		1,639,165
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.01 par value, 75,000,000 shares authorized; 48,503,260 and 48,330,286 shares issued and outstanding, respectively		485,033		483,303
Additional paid-in capital		128,363,917		128,103,861
Accumulated deficit		(111,197,701)		(106,875,426)
Total stockholders’ equity		17,651,249		21,711,738
Total liabilities and stockholders’ equity	$	19,941,426	$	23,350,903

See accompanying notes to consolidated condensed financial statements.

2

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (unaudited)

	Quarters Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Product sales	$	728,921	$	1,618,666	$	1,902,182	$	2,249,332
Contract services		292,204		116,144		554,024		226,007
		1,021,125		1,734,810		2,456,206		2,475,339
Operating costs and expenses:
Costs of product sales		525,313		1,289,315		1,284,402		1,866,761
Costs of contract services		251,291		96,029		488,240		160,827
Research and development		882,090		912,395		1,601,008		2,000,875
Selling, general and administrative		1,738,439		1,855,214		3,423,084		3,100,588
		3,397,133		4,152,953		6,796,734		7,129,051
Loss from operations		(2,376,008)		(2,418,143)		(4,340,528)		(4,653,712)
Other income:
Interest income		2,445		125		5,853		3,497
Other		5,318		8,971		12,400		16,917
		7,763		9,096		18,253		20,414
Net loss	$	(2,368,245)	$	(2,409,047)	$	(4,322,275)	$	(4,633,298)
Net loss per common share - basic and diluted	$	(0.05)	$	(0.06)	$	(0.09)	$	(0.12)
Weighted average number of shares of common stock outstanding - basic and diluted		48,479,908		40,235,636		48,413,491		40,142,682

See accompanying notes to consolidated condensed financial statements.

3

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (unaudited)

	Six Months Ended September 30,
	2016		2015
Cash flows from operating activities:
Net loss	$	(4,322,275)	$	(4,633,298)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		312,297		497,697
Non-cash equity based compensation		249,785		488,957
Change in operating assets and liabilities:
Accounts receivable		(2,696)		(156,732)
Other receivable		-		855,000
Costs and estimated earnings on uncompleted contracts		14,050		20,000
Inventories		(38,247)		344,153
Prepaid expenses and other current assets		(13,462)		(49,109)
Accounts payable and other current liabilities		567,679		481,635
Billings in excess of costs and estimated earnings on uncompleted contracts		-		(39,652)
Other long-term liabilities		83,333		(239,468)
Net cash used in operating activities		(3,149,536)		(2,430,817)
Cash flows from investing activities:
Acquisition of property and equipment		(17,892)		(57,305)
Cash paid for patent and trademark fees		(12,856)		(9,628)
Net cash used in investing activities		(30,748)		(66,933)
Cash flows from financing activities:
Cash received for shares exercised under employee stock purchase plan		22,679		23,125
Payment of employee tax withholdings in exchange for return of common stock		(10,678)		(92,591)
Net cash provided by (used in) financing activities		12,001		(69,466)
Decrease in cash and cash equivalents		(3,168,283)		(2,567,216)
Cash and cash equivalents at beginning of period		7,030,230		6,585,703
Cash and cash equivalents at end of period	$	3,861,947	$	4,018,487

See accompanying notes to consolidated condensed financial statements.

4

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(1)   Basis of Presentation

The accompanying consolidated condensed financial statements are unaudited; however, in the opinion of management, all adjustments, which were solely of a normal recurring nature, necessary to a fair presentation of the results for the interim periods, have been made.  The results for the interim periods are not necessarily indicative of the results to be expected for the 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 fiscal year ended March 31, 2016.

(2)  Change in Fiscal Year

During the second quarter of fiscal year 2017, the Company decided to change its fiscal year from one ending on March 31st to one ending on December 31st.  This will be effective as of December 31, 2016.

(3)   New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for us for the first fiscal year beginning after December 15, 2017.  Early 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. The impact on our financial statements cannot be determined at this time.

In August 2014, the FASB issued guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We expect the new standard to increase the disclosures we provide regarding our liquidity and cash obligations.

In July 2015, the FASB issued guidance on simplifying the measurement of inventory from the lower of cost or market to the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation.  This guidance is effective for years beginning after December 15, 2016, including interim periods within those fiscal years.  Prospective application is allowed as of the beginning of an interim or annual reporting period.  An entity is only required to disclose the nature of and reason for the change in accounting principle in the first interim and annual period of adoption.  The impact of this guidance on our financial statements cannot be determined at this time.

5

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

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 within any interim or annual period.  Any adjustments should be reflective as of the beginning of the fiscal year that includes that interim period.  An entity that elects early adoption must adopt all the amendments in the same period.  The impact of this guidance on our financial statements cannot be determined at this time.

(4)   Contracts in Process

At September 30, 2016 and March 31, 2016, the estimated period to complete contracts in process ranged from one to three months (to complete final reports for the Department of Energy) and one to six months, respectively.  We expect to collect all accounts receivable arising from these contracts within sixty days of billing.

The following summarizes contracts in process:

	September 30,		March 31,
	2016		2016
Costs incurred on uncompleted contracts	$	3,062,078	$	2,607,764
Estimated earnings		752,981		717,771
		3,815,059		3,325,535
Less billings to date		(3,768,813)		(3,265,239)
Contracts in process	$	46,246	$	60,296
Included in the accompanying Consolidated Condensed Balance Sheets as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	46,246	$	60,296
Contracts in process	$	46,246	$	60,296

6

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(5)   Inventories

Inventories at September 30, 2016 and March 31, 2016 consisted of:

	September 30,		March 31,
	2016		2016
Raw materials	$	7,287,412	$	7,279,633
Work-in-process		65,948		45,506
Finished products		1,796,328		1,786,302
	$	9,149,688	$	9,111,441

	September 30,		March 31,
	2016		2016
Inventories- current	$	2,421,982	$	2,271,271
Inventories- noncurrent		6,727,706		6,840,170
	$	9,149,688	$	9,111,441

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. We concluded that there were no impairments for obsolete inventory during the six month periods ended September 30, 2016 and 2015, and we had no reserve for obsolete inventory as of September 30, 2016 or March 31, 2016.

As of September 30, 2016, inventory of $6,727,706 shown on the Consolidated Condensed Balance Sheet as a noncurrent asset represents that portion of the inventory in excess of amounts expected to be sold in the next twelve months. Management believes that there will be adequate demand for this noncurrent inventory.

(6)   Other Current Liabilities

Other current liabilities at September 30, 2016 and March 31, 2016 consist of:

	September 30,		March 31,
	2016		2016
Accrued payroll and employee benefits	$	117,534	$	141,544
Accrued personal property and real estate taxes		174,244		174,260
Accrued warranty costs		263,695		244,310
Unearned revenue		234,956		79,956
Accrued royalties		48,336		48,336
Accrued import duties		87,100		87,100
Accrued vendor settlements		189,175		189,175
Other		20,420		20,754
	$	1,135,460	$	985,435

7

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(7)   Stock-Based Compensation

Share-Based Compensation Expense

The table below shows total share-based compensation expense for the quarters and six months ended September 30, 2016 and 2015 and the classification of these expenses:

	Quarters Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Costs of product sales	$	3,265	$	4,557	$	6,238	$	10,176
Costs of contract services		3,491		981		5,900		1,726
Research and development		12,332		8,434		19,148		22,715
Selling, general and administrative		176,932		335,697		218,499		454,340
	$	196,020	$	349,669	$	249,785	$	488,957

Stock Option Plans Activity

Additional information with respect to stock option activity during the six months ended September 30, 2016 under our Stock Option Plans is as follows:

				Weighted-
		Weighted-		Average
	Shares	Average		Remaining		Aggregate
	Under	Exercise		Contractual		Intrinsic
	Option	Price		Life		Value
Outstanding at April 1, 2016	2,561,769	$	1.40		6.2 years	$	-
Granted	632,098	$	0.68
Exercised	-	$	-			$	-
Forfeited	(114,197)	$	1.82
Outstanding at September 30, 2016	3,079,670	$	1.23		6.5 years	$	-
Exercisable at September 30, 2016	2,269,476	$	1.41		5.4 years	$	-
Vested and expected to vest at September 30, 2016	2,810,808	$	1.25		6.3 years	$	-

As of September 30, 2016, there was $394,981 of total unrecognized compensation cost related to stock options granted under our Stock Option Plans.  The unrecognized compensation cost is expected to be recognized over a weighted-average period of twenty-nine months.  The total fair value of stock options that vested during the six months ended September 30, 2016 and 2015 was $165,665 and 308,951, respectively.

8

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

Stock Bonus Plan Activity

Activity with respect to non-vested shares under the Stock Bonus Plan as of September 30, 2016 and 2015 and changes during the six months ended September 30, 2016 and 2015 are presented below:

	Six Months Ended September 30, 2016			Six Months Ended September 30, 2015
		Weighted-Average			Weighted-Average
	Shares Under	GrantDate		Shares Under	Grant Date
	Contract	Fair Value		Contract	Fair Value
Unvested at April 1	88,214	$	1.36	432,039	$	1.26
Granted	160,389	$	0.68	23,600	$	0.66
Vested	(144,982)	$	0.98	(361,237)	$	1.22
Forfeited	(1,573)	$	1.25	-	$	-
Unvested at September 30	102,048	$	0.84	94,402	$	1.35

As of September 30, 2016, there was $62,766 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan.  The unrecognized compensation cost at September 30, 2016 is expected to be recognized over a weighted-average period of twenty-nine months. 

Stock Purchase Plan Activity

During the six months ended September 30, 2016 and 2015, we issued 44,272 and 34,508 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 six months ended September 30, 2016 and 2015 was $22,679 and $23,125, respectively.

9

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(8)   Stockholders’ Equity

Changes in the components of stockholders’ equity during the six month period ended September 30, 2016 were as follows: 

	Numberof
	common				Additional				Total
	shares		Common		paid-in		Accumulated		stockholders’
	issued		stock		capital		deficit		equity
Balances at April 1, 2016		48,330,286	$	483,303	$	128,103,861	$	(106,875,426)	$	21,711,738
Issuance of common stock under employee stock purchase plan		18,097		181		9,410		-		9,591
Issuance of common stock under stock bonus plan		3,667		37		(37)		-		-
Common stock used for tax withholdings		(1,368)		(14)		(958)		-		(972)
Compensation expense from employee and director stock option and common stock grants		-		-		53,768		-		53,768
Net loss		-		-		-		(1,954,030)		(1,954,030)
Balances at June 30, 2016		48,350,682	$	483,507	$	128,166,044	$	(108,829,456)	$	19,820,095
Issuance of common stock under employee stock purchase plan		26,175		262		12,826		-		13,088
Issuance of common stock under stock bonus plan		142,488		1,425		(1,425)		-		-
Retirement of vested shares		(16,085)		(161)		(9,545)		-		(9,706)
Compensation expense from employee and director stock option and common stock grants		-		-		196,017		-		196,017
Net loss		-		-		-		(2,368,245)		(2,368,245)
Balances at September 30, 2016		48,503,260	$	485,033	$	128,363,917	$	(111,197,701)	$	17,651,249

In February 2014, we completed a follow-on offering consisting of 2,864,872 shares of our common stock, and common stock purchase warrants to purchase 1,432,436 shares of our common stock. The warrants have an exercise price of $2.1275 per whole share of common stock and are exercisable on or after August 6, 2014 and on or before August 5, 2018.  In addition, the placement agent was issued warrants to purchase 57,297 shares of common stock, on substantially the same terms as the warrants issued to the purchasers. Warrants from this offering to acquire 1,489,733 shares of our common stock were outstanding at both September 30, 2016 and March 31, 2016.

In October 2015, we completed a follow-on offering consisting of 8,000,000 shares of our common stock, and common stock warrants to purchase 4,000,000 shares of our common stock. The warrants have an exercise price of $1.31 per whole share of common stock and are exercisable for a period beginning April 30, 2016 through October 30, 2020. Warrants from this offering to acquire 4,000,000 and zero shares were outstanding at September 30, 2016 and March 31, 2016, respectively.

10

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(9)   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 ended September 30, 2016 and 2015:

	Quarter Ended September 30,								Six Months Ended September 30,
	2016				2015				2016				2015
Customer A	$	448,597	44	%	$	305,870	18	%	$	802,032	33	%	$	427,552	17	%
Customer B	$	239,005	23	%	$	103,144	6	%	$	489,524	20	%	$	138,007	6	%
Customer C	$	141,379	14	%	$	148,803	9	%	$	366,484	15	%	$	299,118	12	%
Customer D	$	14,838	1	%	$	197,654	11	%	$	124,269	5	%	$	197,654	8	%
Customer E	$	-	-	%	$	495,536	29	%	$	12,212	1	%	$	696,693	28	%

The following table summarizes accounts receivable from significant customers as of September 30, 2016 and March 31, 2016:

	September 30,		March 31,
	2016		2016
Customer A	27	%	22	%
Customer B	-	%	32	%
Customer C	27	%	12	%
Customer D	26	%	20	%
Customer E	-	%	-	%

(10) 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. 

We recognize interest and penalties related to uncertain tax positions in “Other Income (expense),” net.  As of September 30, 2016 and 2015, 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 of September 30, 2016, the Company’s tax years for 2012 to 2015 are subject to examination by the tax authorities.  

11

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(11) Loss Per Common Share

The following table sets forth the computation of basic and diluted net loss per share for the quarters and six months ended September 30, 2016 and 2015:

	Quarter Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net loss	$	(2,368,245)	$	(2,409,047)	$	(4,322,275)	$	(4,633,298)
Denominator for basic and diluted net loss per common  share:
Weighted average number of shares of common stock outstanding - basic and diluted		48,479,908		40,235,636		48,413,491		40,142,682
Net loss per common share - basic and diluted	$	(0.05)	$	(0.06)	$	(0.09)	$	(0.12)

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,
	2016		2015
Non-vested stock bonus plan shares		102,048		94,402
Stock options outstanding		3,106,096		3,149,381
Warrants to purchase common stock		5,489,733		1,489,733

(12) Fair Value of Financial Instruments

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

12

UQM TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements, Continued

(unaudited)

(13) Commitments and Contingencies

Employment Agreements

On July 21, 2015, the Company entered into new employment agreements with its four officers that expire on June 30, 2017. The aggregate future base salary payable to the executive officers over their remaining terms is $760,953. The July 2015 employment agreements provide for future retention payments under the conditions and for the amounts specified in the agreements. These retention payments are being recorded over the required service period, and as a result, we have recorded a liability of $225,555 as of September 30, 2016.  

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.

13

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; including those plans, beliefs and expectations of our officers and directors with respect to, among other things,completion of the $48 million investment in us by Hybrid Kinetic Group Limited and our operations following such investment.  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 Annual Report on Form 10-K for the fiscal year ended March 31, 2016.

Introduction

UQM Technologies, Inc., (“UQM”, “Company”, “we”, “our”, or “us”) is a developer and manufacturer of power dense, high efficiency electric motors, generators, power electronic controllers and fuel cell compressors for the commercial truck, bus, automotive, marine, military and industrial markets. We generate revenue from three principal activities: 1) the sale of electric propulsion systems, which includes motors and controllers; 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 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. These products are all highly efficient permanent magnet designs and feature outstanding performance, package size and weight valued by our customers. Our production capabilities and capacity are sufficient to meet the demands of our current and future customers for the foreseeable future.  We are certified as an ISO/TS 16949 quality supplier, which is the highest level of quality standards in the automotive industry, and we are ISO 14001 certified, meeting the highest environmental standards.  We have a management team with significant experience in the automotive industry and the requirements for high quality production programs and very deep technical knowledge of the motor and controller business. This team has the ability and background to grow the business to significantly higher levels, and we believe we have adequate cash balances to fund our operations for at least the next twelve months.

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

· In June 2016, we signed a definitive stock issuance and purchase agreement with a subsidiary of Hybrid Kinetic Group, Ltd. (“HKG”).  The HKG investment agreement calls for HKG, through its wholly-owned subsidiary, to purchase newly issued UQM common shares for approximately $48 million in exchange for a majority ownership of UQM.  This investment will provide us with the growth capital needed to execute on our global expansion strategy, particularly in China which is the largest market in the world for electric vehicles.  The closing of this investment is contingent upon, among other conditions, the approval of our shareholders at the next annual shareholder’s meeting, scheduled to be held on November 22, 2016.  We expect the investment agreement to close before the end of 2016.

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

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· We are building long term quantifiable and sustainable relationships within the identified target markets.

· We provide service and support to our customers from pilot and test activities through commissioning processes and then ultimately to volume production operations. 

· We continually look for ways 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 of our customers.

We believe that the successful execution of these activities will lead us to secure volume production commitments from customers, so that our operations will become cash flow positive and ultimately profitable.

Recent Announcements

During the second quarter, we signed an extension to our long-term supply agreement with our customer Proterra® to support Proterra’s growth demands for electric transit buses. UQM is the primary supplier of electric propulsion systems to Proterra.  The extension reflects the increased demand in the US marketplace for the Proterra buses and the expected increased production volume of the UQM PowerPhase HD® systems.

Also during the quarter, we announced that we had secured global commercial customers as early adopters of our new full drivetrain solution, the PowerPhase®DT. These early adopters include Hybrid Kinetic Group, Wuzhoulong Motors and ITL for a Yangtse full-size bus in China and ADOMANI in the U.S. These customers will work in close collaboration with UQM, and suppliers Pi Innovo and Eaton, to develop heavy-duty commercial and transit all-electric vehicles, enabling them to rapidly deploy vehicles to market.

Finally, during the second fiscal quarter, we introduced our next generation PowerPhase® motor inverter. With a volume less than 7 liters and mass less than 10 kilograms, the new motor inverter will output 600A and operate at voltages up to 550V.  The new inverter is designed for extremely high reliability and provides 135 kW peak and 100 kW continuously to power light and medium-duty commercial vehicles as well as high performance passenger vehicles.

U.S. Government Contract

We had a $4.0 million program with the DOE to develop non-rare-earth magnet electric motors for use in electric and hybrid vehicles. The DOE provided $3.0 million of funding for this three-year program and the Company provided $1.0 million of cost-share contribution. The objective of the program was to identify and evaluate magnet materials and technology that can deliver performance comparable to our rare-earth magnet motors, broaden our product portfolio, potentially lower magnet costs and limit our exposure to price and supply concerns associated with rare-earth magnets.  At September 30, 2016, we had received reimbursements from the DOE under this program of $3.0 million with receivables of zero.  We have been granted a U.S. patent for our electric and hybrid electric vehicle motor design using non-rare earth magnets.  This grant expired on September 30, 2016.

Financial Condition

Cash and cash equivalents at September 30, 2016 were $3,861,947 and working capital was $5,182,379, compared with $7,030,230 and $8,765,522, respectively, at March 31, 2016.  The decrease in cash and working capital is primarily attributable to operating losses, which include higher legal and other expenses incurred relating to the HKG investment agreement.  

15

Accounts receivable increased $2,696 to $484,100 at September 30, 2016 from $481,404 at March 31, 2016.  The increase is primarily due to the mix in customer credit terms during the second quarter this fiscal year versus the fourth quarter last fiscal year.  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 are irrevocable letter of credit or cash payment in advance of delivery. For credit qualified customers, our typical terms are net 30 days. As of September 30, 2016 and March 31, 2016, we had no allowance for bad debts.  

Costs and estimated earnings on uncompleted contracts was $46,246 at September 30, 2016 versus $60,296 at March 31, 2016. The decrease was due to timing of billings and completion of certain contracts in process at September 30, 2016 versus March 31, 2016.

Total inventories increased $38,247 to $9,149,688 at September 30, 2016 reflecting purchases for shipments of fuel cell systems.

Prepaid expenses and other current assets increased to $286,059 at September 30, 2016 from $272,597 at March 31, 2016 primarily due to prepayments on commercial insurance policies offset. 

We invested $2,030 and $17,892 for the acquisition of property and equipment during the quarter and six month period ended September 30, 2016 compared to $10,555 and $57,305 during the comparable quarter and six month period last fiscal year. We believe that we have sufficient property and equipment in place to meet our production requirements for the foreseeable future.

Patent costs increased $2,570 due to new patent costs offset by amortization. Trademark costs decreased $2,248 due to amortization.

Accounts payable increased $417,654 to $782,495 at September 30, 2016 from $364,841 at March 31, 2016, primarily due to the timing of vendor payments and increased legal and other expenses incurred relating to the HKG investment agreement that was signed during the first quarter.

Other current liabilities increased to $1,135,460 at September 30, 2016 from $985,435 at March 31, 2016. The increase is primarily attributable to an increase in unearned revenue and accrued warranty costs offset by lower levels of accrued payroll and associated benefits. 

Common stock and additional paid-in capital were $485,033 and $128,363,917, respectively, at September 30, 2016 compared to $483,303 and $128,103,861 at March 31, 2016. The increases in common stock and additional paid-in capital were primarily attributable to the periodic expensing of non-cash share-based payments associated with option and stock grants under our equity compensation plans and the issuance of shares under the Employee Stock Purchase Plan.

Results of Operations

Quarter Ended September 30, 2016

Revenue

Product sales revenue for the current quarter decreased to $728,921 versus $1,618,666 for the comparable quarter last fiscal year, reflecting decreased shipments primarily of fuel cell motor systems and some reduction of PowerPhase HD® and PowerPhase Pro® propulsion systems.

Revenue from contract services increased to $292,204 at September 30, 2016 versus $116,144 for the comparable quarter last year. The increase is primarily due to higher billings for our Department of Energy grant program which expired as of September 30, 2016.

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Gross Profit Margin

Gross profit margins for the quarter ended September 30, 2016 increased to 24.0 percent compared to 20.1 percent for the quarter ended September 30, 2015. Gross profit margin on product sales for the second quarter this year increased to 27.9 percent compared to 20.3 percent for the second quarter last year primarily due to a change in overhead absorption. Gross profit margin on contract services decreased to 14.0 percent for the second quarter this fiscal year compared to 17.3 percent for the quarter ended September 30, 2015, resulting from a change in the mix of contracts in process during the quarter ended September 30, 2016 versus the comparable quarter last year. 

Costs and Expenses

Research and development expenditures for the quarter ended September 30, 2016 decreased to $882,090 compared to $912,395 for the quarter ended September 30, 2015. The decrease is related to a reduction of payroll and related expenses.

Selling, general and administrative expense for the quarter ended September 30, 2016 was $1,738,439 compared to $1,855,214 for the same quarter last year. The decrease is primarily attributable to reduction in payroll and associated benefits, offset by higher legal and other expenses incurred relating to the HKG investment agreement that was signed during the first quarter.

Net Loss

As a result, net loss for the quarter ended September 30, 2016 was $2,368,245 or $0.05 per common share, compared to a net loss of $2,409,047, or $0.06 per common share, for the comparable quarter last year.

Six Months Ended September 30, 2016

Revenue

Product sales revenue for the six months decreased to $1,902,182 versus $2,249,332 for the comparable period last fiscal year, reflecting decreased shipments of PowerPhase Pro® propulsion systems and fuel cell motor systems.

Revenue from contract services increased to $554,024 at September 30, 2016 versus $226,007 for the comparable period last year. The increase is primarily due to higher billings for our Department of Energy grant program which expired as of September 30, 2016.

Gross Profit Margin

Gross profit margins for the quarter ended September 30, 2016 increased to 27.8 percent compared to 18.1 percent for the comparable six month period last fiscal year. Gross profit margin on product sales for the six month period ended September 30, 2016 increased to 32.5 percent compared to 17.0 percent for the comparable six month period last fiscal year primarily due to a change in product mix and overhead. Gross profit margin on contract services decreased to 11.9 percent for the six month period compared to 28.8 percent for the comparable six month period last fiscal year, resulting from a change in the mix of contracts in process during the period ended September 30, 2016 versus the comparable period last year. 

Costs and Expenses

Research and development expenditures for the six months ended September 30, 2016 decreased to $1,601,008 compared to $2,000,875 for the same period last year.  The decrease is related to a reduction of payroll and related expenses.

Selling, general and administrative expense for the six months ended September 30, 2016 was $3,423,084 compared to $3,100,588 for the same period last year. The increase is primarily attributable to higher legal and other expenses

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incurred relating to the HKG investment agreement that was signed during the first quarter offset by lower payroll and associated benefits.

Net Loss

As a result, net loss for the six months ended September 30, 2016 was $4,322,275, or $0.09 per common share, compared to a net loss of $4,633,298, or $0.12 per common share, for the comparable period last year.

Liquidity and Capital Resources

Our cash balances and liquidity throughout the quarter ended September 30, 2016 were adequate to meet operating needs.  At September 30, 2016, we had working capital of $5,182,379 compared to $8,765,522 at March 31, 2016. The decrease in working capital is primarily attributable to operating losses.

For the six month period ended September 30, 2016, net cash used in operating activities was $3,149,536 compared to net cash used in operating activities of $2,430,817 for the comparable period last fiscal year. The primary reason for this increase in the use of cash this quarter is that in the comparable period last year, we received life insurance proceeds of $855,000.   In addition, accounts receivable decreased in the quarter ended September 30, 2016 versus the prior year quarter.  This was offset by lower operating losses in the current quarter.

Net cash used in investing activities for the six month period of this fiscal year was $30,748 compared to net cash used in investing activities of $66,933 for the comparable six month period last fiscal year. The decrease for the six months ended September 30, 2016 was primarily due to reduction in expenditures for the acquisition of property and equipment.

Net cash provided by financing activities for the six month period of this fiscal year was $12,001 compared to net cash used in financing activities of $69,466 for the comparable period last fiscal year. The decrease in cash provided was primarily attributable to a decrease in cash paid for employee tax withholdings in exchange for return of common stock under the employee stock purchase plan.  

We expect to fund our operations over the next year from existing cash and cash equivalent balances, the reduction of inventories, and the anticipated proceeds upon the successful closing of the HKG investment agreement. Although we expect to manage our operations and working capital requirements to minimize the future level of operating losses and working capital usage, our working capital requirements may increase in the future. If customer demand accelerates substantially, our working capital requirements may also increase substantially.

If our existing financial resources are not sufficient to execute our business plan, we may issue equity or debt securities in the future, although we cannot assure that we will be able to secure additional capital should it be required to implement our current business plan. In the event financing or equity capital to fund future growth is not available on terms acceptable to us, or at all, we will modify our strategy to align our operations with then available financial resources. Based on our current level of operations, we believe we have sufficient cash and cash equivalents with the completion of the offering to fund our operations for at least the next twelve months.

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Contractual Obligations

The following table presents information about our contractual obligations and commitments as of September 30, 2016:

			Payments due by Period
			Less Than						More than
	Total		1 Year		2 - 3 Years		4 - 5 Years		5 Years
Purchase obligations	$	108,083	$	108,083	$	-	$	-	$	-
Executive employment agreements (1)		225,555		225,555		-		-		-
Total	$	333,638	$	333,638	$	—	$	—	$	—

(1) Includes retention bonus payable under executive employment agreements if our officers remain employees of UQM continuously through June 30, 2017, but not annual cash compensation under the agreements.  This is reflected in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.

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 financial statements and accompanying notes.  Note 1 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. There have been no material changes in any of our critical accounting policies during the six months ended September 30, 2016. 

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 that are designed to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission (“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 Interim Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. 

As of September 30, 2016, we performed an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the U.S. Securities and Exchange Act of 1934).  Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2016.

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

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

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 Annual Report on Form 10-K for the fiscal year ended March 31, 2016:

We may not receive shareholder approval and U.S. governmental approval that is required for the completion of Hybrid Kinetic Group’s investment in the Company.

A number of conditions must be satisfied in order for Hybrid Kinetic Group’s $48 million investment in the Company to be completed.  The conditions include approval by the Company’s shareholders holding two-thirds of the Company’s outstanding shares of common stock to amend UQM’s articles of incorporation to increase the number of authorized shares in order to have sufficient shares to permit Hybrid Kinetic Group’s investment.  While UQM’s board of directors believes that the proposed investment by Hybrid Kinetic Group is in the best interest of UQM and its shareholders, there can be no assurance that the Company will be able to achieve the required shareholder approval to permit the transaction to be completed. Because the vote requirement is based on the number of shares outstanding rather than the shares that are voted, if a shareholder does not vote the shareholders’ shares it is treated the same as a vote against the amendment of the articles. In addition, because Hybrid Kinetic Group is a Bermuda corporation listed on the Hong Kong stock exchange, the investment must satisfy the approval requirements of the Committee on Foreign Investment in the United States (“CFIUS”).  While the Company believes CFIUS approval will be timely granted for the transaction to close, we may not receive such approval or such approval may contain a condition that would be unacceptable to the parties  If Hybrid Kinetic Group’s investment in the Company is not completed, the Company may not have sufficient funds to continue operations until a new financing arrangement can be obtained or it may not be able to secure additional financing on as favorable of terms as that under the HKG investment agreement.

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

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

	Quarter Ended		Fiscal Year Ended March 31,
	September 30, 2016		2016		2015		2014
Net loss	$	2,368,245	$	6,938,351	$	5,988,530	$	2,773,244

As of September 30, 2016 and March 31, 2016, we had accumulated deficits of $111,197,701 and $106,875,426, respectively.

In the future, we plan to make additional investments in product development, facilities and equipment and other costs related to the commercialization of our products. As a result, we expect to continue to incur net losses for the foreseeable future.  

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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 ended September 30, 2016 was $2,368,245 versus a net loss for the comparable quarter last fiscal year of $2,409,047.  Our net loss for the fiscal year ended March 31, 2016 was $6,938,351 versus a net loss for the fiscal years ended March 31, 2015 and 2014 of $5,988,530 and $2,773,244 respectively. At September 30, 2016, our cash and cash equivalents totaled $3,861,947.  We expect our losses to continue for the foreseeable future. Our existing cash resources, together with cash generated from reductions in our inventories of PowerPhase Pro®  propulsion systems, are expected to be sufficient to complete our business plan for at least the next twelve months. Should those resources be insufficient, we may need to secure additional debt or equity funding, which may not be available on terms acceptable to us, if at all.

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

A large percentage of our revenue is typically derived from a small number of customers, and we expect this trend to continue.

Our customer arrangements generally are non-exclusive, have no long-term volume commitments and are 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 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits

31.1Certification of Chief Executive Officer

31.2Certification of Chief Financial Officer

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

101.INSXBRL Instance Document

101.SCHXBRL Taxonomy Extension Schema Document

101.CALXBRL Taxonomy Extension Calculation Linkbase Document

101.LABXBRL Taxonomy Extension Label Linkbase Document

101.PREXBRL Taxonomy Extension Presentation Linkbase Document

101.DEFXBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURES

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

		UQM Technologies, Inc.
		Registrant
Date:  November 10, 2016
	/s/	David I. Rosenthal
		David I. Rosenthal
		Treasurer and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification

I, Joseph R. Mitchell, 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:  November 10, 2016	/s/ JOSEPH R MITCHELL
	Joseph R. Mitchell
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, David  I.  Rosenthal, 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:  November 10,   2016	/s/ DAVID I.  ROSENTHAL
	David I. Rosenthal
	Treasurer, Secretary and
	Chief Financial Officer

EX-32.1

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, 2016 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/ JOSEPH R. MITCHELL

     Joseph R. Mitchell     

    President and Chief Executive Officer

/s/ DAVID I.  ROSENTHAL

    David I. Rosenthal

    Treasurer, Secretary and Chief Financial Officer

Date:  November 10, 2016

XML

Document And Entity Information - shares	6 Months Ended
	Sep. 30, 2016	Nov. 09, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017
Entity Current Reporting Status	Yes
Entity Registrant Name	UQM TECHNOLOGIES INC
Entity Central Index Key	0000315449
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		48,534,719

XML

Consolidated Condensed Balance Sheets - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Current assets:
Cash and cash equivalents	$ 3,861,947	$ 7,030,230
Accounts receivable	484,100	481,404
Costs and estimated earnings in excess of billings on uncompleted contracts	46,246	60,296
Inventories	2,421,982	2,271,271
Prepaid expenses and other current assets	286,059	272,597
Total current assets	7,100,334	10,115,798
Property and equipment, at cost:
Land	1,683,330	1,683,330
Building	4,516,301	4,516,301
Machinery and equipment	7,107,224	7,089,332
Property, plant and equipment, gross	13,306,855	13,288,963
Less accumulated depreciation	(7,541,532)	(7,241,769)
Net property and equipment	5,765,323	6,047,194
Patent costs, net of accumulated amortization of $927,249 and $916,960, respectively	251,984	249,414
Trademark costs, net of accumulated amortization of $79,762 and $77,514, respectively	96,079	98,327
Noncurrent inventories	6,727,706	6,840,170
Total assets	19,941,426	23,350,903
Liabilities and Stockholders' Equity
Accounts payable	782,495	364,841
Other current liabilities	1,135,460	985,435
Total current liabilities	1,917,955	1,350,276
Other long-term liabilities	372,222	288,889
Total liabilities	2,290,177	1,639,165
Stockholders' equity:
Common stock, $0.01 par value, 75,000,000 shares authorized; 48,503,260 and 48,330,286 shares issued and outstanding, respectively	485,033	483,303
Additional paid-in capital	128,363,917	128,103,861
Accumulated deficit	(111,197,701)	(106,875,426)
Total stockholders' equity	17,651,249	21,711,738
Total liabilities and stockholders' equity	$ 19,941,426	$ 23,350,903

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Consolidated Condensed Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Consolidated Condensed Balance Sheets [Abstract]
Patent costs, accumulated amortization	$ 927,249	$ 916,960
Trademark costs, accumulated amortization	$ 79,762	$ 77,514
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	48,503,260	48,330,286
Common Stock, Shares, Outstanding	48,503,260	48,330,286

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Consolidated Condensed Statements Of Operations - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Product sales	$ 728,921	$ 1,618,666	$ 1,902,182	$ 2,249,332
Contract services	292,204	116,144	554,024	226,007
Total Revenues	1,021,125	1,734,810	2,456,206	2,475,339
Operating costs and expenses:
Costs of product sales	525,313	1,289,315	1,284,402	1,866,761
Costs of contract services	251,291	96,029	488,240	160,827
Research and development	882,090	912,395	1,601,008	2,000,875
Selling, general and administrative	1,738,439	1,855,214	3,423,084	3,100,588
Total Costs and Expenses	3,397,133	4,152,953	6,796,734	7,129,051
Loss from operations	(2,376,008)	(2,418,143)	(4,340,528)	(4,653,712)
Other income:
Interest income	2,445	125	5,853	3,497
Other	5,318	8,971	12,400	16,917
Total nonoperating income	7,763	9,096	18,253	20,414
Net loss	$ (2,368,245)	$ (2,409,047)	$ (4,322,275)	$ (4,633,298)
Net loss per common share - basic and diluted	$ (0.05)	$ (0.06)	$ (0.09)	$ (0.12)
Weighted average number of shares of common stock outstanding - basic and diluted	48,479,908	40,235,636	48,413,491	40,142,682

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Consolidated Condensed Statements Of Cash Flows - USD ($)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (4,322,275)	$ (4,633,298)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	312,297	497,697
Non-cash equity based compensation	249,785	488,957
Change in operating assets and liabilities:
Accounts receivable	(2,696)	(156,732)
Other receivable		855,000
Costs and estimated earnings on uncompleted contracts	14,050	20,000
Inventories	(38,247)	344,153
Prepaid expenses and other current assets	(13,462)	(49,109)
Accounts payable and other current liabilities	567,679	481,635
Billings in excess of costs and estimated earnings on uncompleted contracts		(39,652)
Other long-term liabilities	83,333	(239,468)
Net cash used in operating activities	(3,149,536)	(2,430,817)
Cash flows from investing activities:
Acquisition of property and equipment	(17,892)	(57,305)
Cash paid for patent and trademark fees	(12,856)	(9,628)
Net cash used in investing activities	(30,748)	(66,933)
Cash flows from financing activities:
Cash received for shares exercised under employee stock purchase plan	22,679	23,125
Payment of employee tax withholdings in exchange for return of common stock	(10,678)	(92,591)
Net cash provided by financing activities	12,001	(69,466)
Decrease in cash and cash equivalents	(3,168,283)	(2,567,216)
Cash and cash equivalents at beginning of period	7,030,230	6,585,703
Cash and cash equivalents at end of period	$ 3,861,947	$ 4,018,487

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Basis Of Presentation

6 Months Ended

Sep. 30, 2016

Basis Of Presentation [Abstract]

Basis Of Presentation

(1)   Basis of Presentation

The accompanying consolidated condensed financial statements are unaudited; however, in the opinion of management, all adjustments, which were solely of a normal recurring nature, necessary to a fair presentation of the results for the interim periods, have been made.  The results for the interim periods are not necessarily indicative of the results to be expected for the 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 fiscal year ended March 31, 2016.

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Change In Fiscal Year

6 Months Ended

Sep. 30, 2016

Change In Fiscal Year [Abstract]

Change in Fiscal Year

(2)  Change in Fiscal Year

During the second quarter of fiscal year 2017, the Company decided to change its fiscal year from one ending on March 31st to one ending on December 31st.  This will be effective as of December 31, 2016.

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New Accounting Pronouncements

6 Months Ended

Sep. 30, 2016

New Accounting Pronouncements

New Accounting Pronouncements

(3)   New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for us for the first fiscal year beginning after December 15, 2017.  Early 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. The impact on our financial statements cannot be determined at this time.

In August 2014, the FASB issued guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We expect the new standard to increase the disclosures we provide regarding our liquidity and cash obligations.

In July 2015, the FASB issued guidance on simplifying the measurement of inventory from the lower of cost or market to the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation.  This guidance is effective for years beginning after December 15, 2016, including interim periods within those fiscal years.  Prospective application is allowed as of the beginning of an interim or annual reporting period.  An entity is only required to disclose the nature of and reason for the change in accounting principle in the first interim and annual period of adoption.  The impact of this guidance on our financial statements cannot be determined at this time.

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 within any interim or annual period.  Any adjustments should be reflective as of the beginning of the fiscal year that includes that interim period.  An entity that elects early adoption must adopt all the amendments in the same period.  The impact of this guidance on our financial statements cannot be determined at this time.

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Contracts In Process

6 Months Ended

Sep. 30, 2016

Contracts In Process [Abstract]

Contracts In Process

(4)   Contracts in Process

At September 30, 2016 and March 31, 2016, the estimated period to complete contracts in process ranged from one to three months (to complete final reports for the Department of Energy) and one to six months, respectively.  We expect to collect all accounts receivable arising from these contracts within sixty days of billing.

The following summarizes contracts in process:

	September 30,		March 31,
	2016		2016
Costs incurred on uncompleted contracts	$	3,062,078	$	2,607,764
Estimated earnings		752,981		717,771
		3,815,059		3,325,535
Less billings to date		(3,768,813)		(3,265,239)
Contracts in process	$	46,246	$	60,296
Included in the accompanying Consolidated Condensed Balance Sheets as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	46,246	$	60,296
Contracts in process	$	46,246	$	60,296

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Inventories

6 Months Ended

Sep. 30, 2016

Inventories [Abstract]

Inventories

(5)   Inventories

Inventories at September 30, 2016 and March 31, 2016 consisted of:

	September 30,		March 31,
	2016		2016
Raw materials	$	7,287,412	$	7,279,633
Work-in-process		65,948		45,506
Finished products		1,796,328		1,786,302
	$	9,149,688	$	9,111,441

	September 30,		March 31,
	2016		2016
Inventories- current	$	2,421,982	$	2,271,271
Inventories- noncurrent		6,727,706		6,840,170
	$	9,149,688	$	9,111,441

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. We concluded that there were no impairments for obsolete inventory during the six month periods ended September 30, 2016 and 2015, and we had no reserve for obsolete inventory as of September 30, 2016 or March 31, 2016.

As of September 30, 2016, inventory of $6,727,706 shown on the Consolidated Condensed Balance Sheet as a noncurrent asset represents that portion of the inventory in excess of amounts expected to be sold in the next twelve months. Management believes that there will be adequate demand for this noncurrent inventory.

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Other Current Liabilities

6 Months Ended

Sep. 30, 2016

Other Current Liabilities [Abstract]

Other Current Liabilities

(6)   Other Current Liabilities

Other current liabilities at September 30, 2016 and March 31, 2016 consist of:

	September 30,		March 31,
	2016		2016
Accrued payroll and employee benefits	$	117,534	$	141,544
Accrued personal property and real estate taxes		174,244		174,260
Accrued warranty costs		263,695		244,310
Unearned revenue		234,956		79,956
Accrued royalties		48,336		48,336
Accrued import duties		87,100		87,100
Accrued vendor settlements		189,175		189,175
Other		20,420		20,754
	$	1,135,460	$	985,435

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Stock-Based Compensation

6 Months Ended

Sep. 30, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

(7)   Stock-Based Compensation

Share-Based Compensation Expense

The table below shows total share-based compensation expense for the quarters and six months ended September 30, 2016 and 2015 and the classification of these expenses:

	Quarters Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Costs of product sales	$	3,265	$	4,557	$	6,238	$	10,176
Costs of contract services		3,491		981		5,900		1,726
Research and development		12,332		8,434		19,148		22,715
Selling, general and administrative		176,932		335,697		218,499		454,340
	$	196,020	$	349,669	$	249,785	$	488,957

Stock Option Plans Activity

Additional information with respect to stock option activity during the six months ended September 30, 2016 under our Stock Option Plans is as follows:

				Weighted-
		Weighted-		Average
	Shares	Average		Remaining		Aggregate
	Under	Exercise		Contractual		Intrinsic
	Option	Price		Life		Value
Outstanding at April 1, 2016	2,561,769	$	1.40		6.2 years	$	-
Granted	632,098	$	0.68
Exercised	-	$	-			$	-
Forfeited	(114,197)	$	1.82
Outstanding at September 30, 2016	3,079,670	$	1.23		6.5 years	$	-
Exercisable at September 30, 2016	2,269,476	$	1.41		5.4 years	$	-
Vested and expected to vest at September 30, 2016	2,810,808	$	1.25		6.3 years	$	-

As of September 30, 2016, there was $394,981 of total unrecognized compensation cost related to stock options granted under our Stock Option Plans.  The unrecognized compensation cost is expected to be recognized over a weighted-average period of twenty-nine months.  The total fair value of stock options that vested during the six months ended September 30, 2016 and 2015 was $165,665 and 308,951, respectively.

Stock Bonus Plan Activity

Activity with respect to non-vested shares under the Stock Bonus Plan as of September 30, 2016 and 2015 and changes during the six months ended September 30, 2016 and 2015 are presented below:

	Six Months Ended September 30, 2016			Six Months Ended September 30, 2015
		Weighted-Average			Weighted-Average
	Shares Under	GrantDate		Shares Under	Grant Date
	Contract	Fair Value		Contract	Fair Value
Unvested at April 1	88,214	$	1.36	432,039	$	1.26
Granted	160,389	$	0.68	23,600	$	0.66
Vested	(144,982)	$	0.98	(361,237)	$	1.22
Forfeited	(1,573)	$	1.25	-	$	-
Unvested at September 30	102,048	$	0.84	94,402	$	1.35

As of September 30, 2016, there was $62,766 of total unrecognized compensation cost related to common stock granted under our Stock Bonus Plan.  The unrecognized compensation cost at September 30, 2016 is expected to be recognized over a weighted-average period of twenty-nine months. 

Stock Purchase Plan Activity

During the six months ended September 30, 2016 and 2015, we issued 44,272 and 34,508 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 six months ended September 30, 2016 and 2015 was $22,679 and $23,125, respectively.

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Stockholders' Equity

6 Months Ended

Sep. 30, 2016

Stockholders' Equity [Abstract]

Stockholders' Equity

(8)   Stockholders’ Equity

Changes in the components of stockholders’ equity during the six month period ended September 30, 2016 were as follows: 

	Numberof
	common				Additional				Total
	shares		Common		paid-in		Accumulated		stockholders’
	issued		stock		capital		deficit		equity
Balances at April 1, 2016		48,330,286	$	483,303	$	128,103,861	$	(106,875,426)	$	21,711,738
Issuance of common stock under employee stock purchase plan		18,097		181		9,410		-		9,591
Issuance of common stock under stock bonus plan		3,667		37		(37)		-		-
Common stock used for tax withholdings		(1,368)		(14)		(958)		-		(972)
Compensation expense from employee and director stock option and common stock grants		-		-		53,768		-		53,768
Net loss		-		-		-		(1,954,030)		(1,954,030)
Balances at June 30, 2016		48,350,682	$	483,507	$	128,166,044	$	(108,829,456)	$	19,820,095
Issuance of common stock under employee stock purchase plan		26,175		262		12,826		-		13,088
Issuance of common stock under stock bonus plan		142,488		1,425		(1,425)		-		-
Retirement of vested shares		(16,085)		(161)		(9,545)		-		(9,706)
Compensation expense from employee and director stock option and common stock grants		-		-		196,017		-		196,017
Net loss		-		-		-		(2,368,245)		(2,368,245)
Balances at September 30, 2016		48,503,260	$	485,033	$	128,363,917	$	(111,197,701)	$	17,651,249

In February 2014, we completed a follow-on offering consisting of 2,864,872 shares of our common stock, and common stock purchase warrants to purchase 1,432,436 shares of our common stock. The warrants have an exercise price of $2.1275 per whole share of common stock and are exercisable on or after August 6, 2014 and on or before August 5, 2018.  In addition, the placement agent was issued warrants to purchase 57,297 shares of common stock, on substantially the same terms as the warrants issued to the purchasers. Warrants from this offering to acquire 1,489,733 shares of our common stock were outstanding at both September 30, 2016 and March 31, 2016.

In October 2015, we completed a follow-on offering consisting of 8,000,000 shares of our common stock, and common stock warrants to purchase 4,000,000 shares of our common stock. The warrants have an exercise price of $1.31 per whole share of common stock and are exercisable for a period beginning April 30, 2016 through October 30, 2020. Warrants from this offering to acquire 4,000,000 and zero shares were outstanding at September 30, 2016 and March 31, 2016, respectively.

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Significant Customers

6 Months Ended

Sep. 30, 2016

Significant Customers [Abstract]

Significant Customers

(9)   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 ended September 30, 2016 and 2015:

	Quarter Ended September 30,								Six Months Ended September 30,
	2016				2015				2016				2015
Customer A	$	448,597	44	%	$	305,870	18	%	$	802,032	33	%	$	427,552	17	%
Customer B	$	239,005	23	%	$	103,144	6	%	$	489,524	20	%	$	138,007	6	%
Customer C	$	141,379	14	%	$	148,803	9	%	$	366,484	15	%	$	299,118	12	%
Customer D	$	14,838	1	%	$	197,654	11	%	$	124,269	5	%	$	197,654	8	%
Customer E	$	-	-	%	$	495,536	29	%	$	12,212	1	%	$	696,693	28	%

The following table summarizes accounts receivable from significant customers as of September 30, 2016 and March 31, 2016:

	September 30,		March 31,
	2016		2016
Customer A	27	%	22	%
Customer B	-	%	32	%
Customer C	27	%	12	%
Customer D	26	%	20	%
Customer E	-	%	-	%

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Income Taxes

6 Months Ended

Sep. 30, 2016

Income Taxes [Abstract]

Income Taxes

(10) 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. 

We recognize interest and penalties related to uncertain tax positions in “Other Income (expense),” net.  As of September 30, 2016 and 2015, 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 of September 30, 2016, the Company’s tax years for 2012 to 2015 are subject to examination by the tax authorities.  

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Loss Per Common Share

6 Months Ended

Sep. 30, 2016

Loss Per Common Share [Abstract]

Loss Per Common Share

(11) Loss Per Common Share

The following table sets forth the computation of basic and diluted net loss per share for the quarters and six months ended September 30, 2016 and 2015:

	Quarter Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net loss	$	(2,368,245)	$	(2,409,047)	$	(4,322,275)	$	(4,633,298)
Denominator for basic and diluted net loss per common  share:
Weighted average number of shares of common stock outstanding - basic and diluted		48,479,908		40,235,636		48,413,491		40,142,682
Net loss per common share - basic and diluted	$	(0.05)	$	(0.06)	$	(0.09)	$	(0.12)

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,
	2016		2015
Non-vested stock bonus plan shares		102,048		94,402
Stock options outstanding		3,106,096		3,149,381
Warrants to purchase common stock		5,489,733		1,489,733

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Fair Value Of Financial Instruments

6 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

(12) Fair Value of Financial Instruments

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

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Commitments And Contingencies

6 Months Ended

Sep. 30, 2016

Commitments And Contingencies [Abstract]

Commitments And Contingencies

(13) Commitments and Contingencies

Employment Agreements

On July 21, 2015, the Company entered into new employment agreements with its four officers that expire on June 30, 2017. The aggregate future base salary payable to the executive officers over their remaining terms is $760,953. The July 2015 employment agreements provide for future retention payments under the conditions and for the amounts specified in the agreements. These retention payments are being recorded over the required service period, and as a result, we have recorded a liability of $225,555 as of September 30, 2016.  

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.

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Change In Fiscal Year (Policy)

6 Months Ended

Sep. 30, 2016

Change In Fiscal Year [Abstract]

Change in Fiscal Year

During the second quarter of fiscal year 2017, the Company decided to change its fiscal year from one ending on March 31st to one ending on December 31st.  This will be effective as of December 31, 2016.

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Contracts In Process (Tables)

6 Months Ended

Sep. 30, 2016

Contracts In Process [Abstract]

Summary Of Contract In Process

	September 30,		March 31,
	2016		2016
Costs incurred on uncompleted contracts	$	3,062,078	$	2,607,764
Estimated earnings		752,981		717,771
		3,815,059		3,325,535
Less billings to date		(3,768,813)		(3,265,239)
Contracts in process	$	46,246	$	60,296
Included in the accompanying Consolidated Condensed Balance Sheets as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	46,246	$	60,296
Contracts in process	$	46,246	$	60,296

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Inventories (Tables)

6 Months Ended

Sep. 30, 2016

Inventories [Abstract]

Schedule Of Inventories

	September 30,		March 31,
	2016		2016
Raw materials	$	7,287,412	$	7,279,633
Work-in-process		65,948		45,506
Finished products		1,796,328		1,786,302
	$	9,149,688	$	9,111,441

	September 30,		March 31,
	2016		2016
Inventories- current	$	2,421,982	$	2,271,271
Inventories- noncurrent		6,727,706		6,840,170
	$	9,149,688	$	9,111,441

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Other Current Liabilities (Tables)

6 Months Ended

Sep. 30, 2016

Other Current Liabilities [Abstract]

Schedule Of Other Current Liabilities

	September 30,		March 31,
	2016		2016
Accrued payroll and employee benefits	$	117,534	$	141,544
Accrued personal property and real estate taxes		174,244		174,260
Accrued warranty costs		263,695		244,310
Unearned revenue		234,956		79,956
Accrued royalties		48,336		48,336
Accrued import duties		87,100		87,100
Accrued vendor settlements		189,175		189,175
Other		20,420		20,754
	$	1,135,460	$	985,435

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Stock-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2016

Stock-Based Compensation [Abstract]

Schedule Of Share-Based Compensation Expense

	Quarters Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Costs of product sales	$	3,265	$	4,557	$	6,238	$	10,176
Costs of contract services		3,491		981		5,900		1,726
Research and development		12,332		8,434		19,148		22,715
Selling, general and administrative		176,932		335,697		218,499		454,340
	$	196,020	$	349,669	$	249,785	$	488,957

Summary Of Stock Option Activity

				Weighted-
		Weighted-		Average
	Shares	Average		Remaining		Aggregate
	Under	Exercise		Contractual		Intrinsic
	Option	Price		Life		Value
Outstanding at April 1, 2016	2,561,769	$	1.40		6.2 years	$	-
Granted	632,098	$	0.68
Exercised	-	$	-			$	-
Forfeited	(114,197)	$	1.82
Outstanding at September 30, 2016	3,079,670	$	1.23		6.5 years	$	-
Exercisable at September 30, 2016	2,269,476	$	1.41		5.4 years	$	-
Vested and expected to vest at September 30, 2016	2,810,808	$	1.25		6.3 years	$	-

Schedule Of Nonvested Share Activity

	Six Months Ended September 30, 2016			Six Months Ended September 30, 2015
		Weighted-Average			Weighted-Average
	Shares Under	GrantDate		Shares Under	Grant Date
	Contract	Fair Value		Contract	Fair Value
Unvested at April 1	88,214	$	1.36	432,039	$	1.26
Granted	160,389	$	0.68	23,600	$	0.66
Vested	(144,982)	$	0.98	(361,237)	$	1.22
Forfeited	(1,573)	$	1.25	-	$	-
Unvested at September 30	102,048	$	0.84	94,402	$	1.35

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Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2016

Stockholders' Equity [Abstract]

Changes In Components Of Stockholders' Equity

	Numberof
	common				Additional				Total
	shares		Common		paid-in		Accumulated		stockholders’
	issued		stock		capital		deficit		equity
Balances at April 1, 2016		48,330,286	$	483,303	$	128,103,861	$	(106,875,426)	$	21,711,738
Issuance of common stock under employee stock purchase plan		18,097		181		9,410		-		9,591
Issuance of common stock under stock bonus plan		3,667		37		(37)		-		-
Common stock used for tax withholdings		(1,368)		(14)		(958)		-		(972)
Compensation expense from employee and director stock option and common stock grants		-		-		53,768		-		53,768
Net loss		-		-		-		(1,954,030)		(1,954,030)
Balances at June 30, 2016		48,350,682	$	483,507	$	128,166,044	$	(108,829,456)	$	19,820,095
Issuance of common stock under employee stock purchase plan		26,175		262		12,826		-		13,088
Issuance of common stock under stock bonus plan		142,488		1,425		(1,425)		-		-
Retirement of vested shares		(16,085)		(161)		(9,545)		-		(9,706)
Compensation expense from employee and director stock option and common stock grants		-		-		196,017		-		196,017
Net loss		-		-		-		(2,368,245)		(2,368,245)
Balances at September 30, 2016		48,503,260	$	485,033	$	128,363,917	$	(111,197,701)	$	17,651,249

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Significant Customers (Tables)

6 Months Ended

Sep. 30, 2016

Sales Revenue, Goods, Net [Member]

Concentration Risk [Line Items]

Schedule of significant customers

	Quarter Ended September 30,								Six Months Ended September 30,
	2016				2015				2016				2015
Customer A	$	448,597	44	%	$	305,870	18	%	$	802,032	33	%	$	427,552	17	%
Customer B	$	239,005	23	%	$	103,144	6	%	$	489,524	20	%	$	138,007	6	%
Customer C	$	141,379	14	%	$	148,803	9	%	$	366,484	15	%	$	299,118	12	%
Customer D	$	14,838	1	%	$	197,654	11	%	$	124,269	5	%	$	197,654	8	%
Customer E	$	-	-	%	$	495,536	29	%	$	12,212	1	%	$	696,693	28	%

Accounts Receivable [Member]

Concentration Risk [Line Items]

Schedule of significant customers

	September 30,		March 31,
	2016		2016
Customer A	27	%	22	%
Customer B	-	%	32	%
Customer C	27	%	12	%
Customer D	26	%	20	%
Customer E	-	%	-	%

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Loss Per Common Share (Tables)

6 Months Ended

Sep. 30, 2016

Loss Per Common Share [Abstract]

Basic and Diluted Net Loss Per Share

	Quarter Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net loss	$	(2,368,245)	$	(2,409,047)	$	(4,322,275)	$	(4,633,298)
Denominator for basic and diluted net loss per common  share:
Weighted average number of shares of common stock outstanding - basic and diluted		48,479,908		40,235,636		48,413,491		40,142,682
Net loss per common share - basic and diluted	$	(0.05)	$	(0.06)	$	(0.09)	$	(0.12)

Shares Not Included In Diluted Net Loss Per Share

	September 30,
	2016		2015
Non-vested stock bonus plan shares		102,048		94,402
Stock options outstanding		3,106,096		3,149,381
Warrants to purchase common stock		5,489,733		1,489,733

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Contracts In Process (Narrative) (Details)	6 Months Ended	12 Months Ended
	Sep. 30, 2016	Mar. 31, 2016
Contracts In Process [Abstract]
Estimated Period To Complete Contracts In Process, Minimum	1 month	1 month
Estimated Period To Complete Contracts In Process, Maximum	3 months	6 months
Expected collection period of accounts receivable	60 days

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Contracts In Process (Summary Of Contract In Process) (Details) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Contracts In Process [Abstract]
Costs incurred on uncompleted contracts	$ 3,062,078	$ 2,607,764
Estimated earnings	752,981	717,771
Contracts in process, Gross	3,815,059	3,325,535
Less billings to date	(3,768,813)	(3,265,239)
Contracts in progress, Total	46,246	60,296
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 46,246	$ 60,296

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Inventories (Details) - USD ($)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Inventories [Abstract]
Inventory impairments	$ 0	$ 0
Inventory reserve	0		$ 0
Noncurrent inventories	$ 6,727,706		$ 6,840,170

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Inventories (Schedule Of Inventories) (Details) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Inventories [Abstract]
Raw materials	$ 7,287,412	$ 7,279,633
Work-in-process	65,948	45,506
Finished products	1,796,328	1,786,302
Inventories, Total	$ 9,149,688	$ 9,111,441

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Inventories (Schedule Of Current and Noncurrent Inventories) (Details) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Inventories [Abstract]
Inventories - current	$ 2,421,982	$ 2,271,271
Inventories - noncurrent	6,727,706	6,840,170
Inventories, Total	$ 9,149,688	$ 9,111,441

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Other Current Liabilities (Schedule Of Other Current Liabilities) (Details) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Other Current Liabilities [Abstract]
Accrued payroll and employee benefits	$ 117,534	$ 141,544
Accrued personal property and real estate taxes	174,244	174,260
Accrued warranty costs	263,695	244,310
Unearned revenue	234,956	79,956
Accrued royalties	48,336	48,336
Accrued import duties	87,100	87,100
Accrued vendor settlements	189,175	189,175
Other	20,420	20,754
Other current liabilities, Total	$ 1,135,460	$ 985,435

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Stock-Based Compensation (Narrative) (Details) - USD ($)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of options vested in period	$ 165,665	$ 308,951
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs	$ 394,981
Unrecognized compensation costs, period for recognition	29 months
Stock Bonus Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs	$ 62,766
Unrecognized compensation costs, period for recognition	29 months
Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued in period for share-based awards	44,272	34,508
Cash received from settlement of share-based awards	$ 22,679	$ 23,125

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Stock-Based Compensation (Schedule Of Share-Based Compensation Expense) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 196,020	$ 349,669	$ 249,785	$ 488,957
Costs Of Product Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	3,265	4,557	6,238	10,176
Costs Of Contract Services [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	3,491	981	5,900	1,726
Research And Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	12,332	8,434	19,148	22,715
Selling, General And Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 176,932	$ 335,697	$ 218,499	$ 454,340

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Stock-Based Compensation (Summary Of Stock Option Activity) (Details) - $ / shares	6 Months Ended	12 Months Ended
	Sep. 30, 2016	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at Period End, Options	3,106,096
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at Period Start, Options	2,561,769
Granted, Options	632,098
Forfeited, Options	(114,197)
Outstanding at Period End, Options	3,079,670	2,561,769
Exercisable, Options	2,269,476
Vested and expected to vest, Options	2,810,808
Outstanding at Period Start, Weighted-Average Exercise Price	$ 1.40
Granted, Weighted-Average Exercise Price	0.68
Forfeited, Weighted-Average Exercise Price	1.82
Outstanding at Period End, Weighted-Average Exercise Price	1.23	$ 1.40
Exercisable, Weighted-Average Exercise Price	1.41
Vested and expected to vest, Weighted-Average Exercise Price	$ 1.25
Outstanding, Weighted Average Remaining Contractual Life	6 years 2 months 12 days	6 years 2 months 12 days
Exercisable, Weighted Average Remaining Contractual Life	5 years 6 months
Vested and expected to vest, Weighted Average Remaining Contractual Life	6 years 1 month 6 days

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Stock-Based Compensation (Schedule Of Nonvested Share Activity) (Details) - $ / shares	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested Ending balance, shares	102,048	94,402
Stock Bonus Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested beginning balance, shares	88,214	432,039
Granted, shares	160,389	23,600
Vested, shares	(144,982)	(361,237)
Forfeited, shares	(1,573)
Non-vested Ending balance, shares	102,048	94,402
Non-vested beginning balance, Weighted-Average Grant Date Fair Value	$ 1.36	$ 1.26
Granted, Weighted-Average Grant Date Fair Value	0.68	0.66
Vested, Weighted-Average Grant Date Fair Value	0.98	1.22
Forfeited, Weighted-Average Grant Date Fair Value	1.25
Non-vested endign balance, Weighted-Average Grant Date Fair Value	$ 0.84	$ 1.35

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Stockholders' Equity (Details) - USD ($)	3 Months Ended			6 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Class of Stock [Line Items]
Beginning balance, value	$ 19,820,095	$ 21,711,738		$ 21,711,738
Beginning balance, shares		48,330,286		48,330,286
Issuance of common stock under employee stock purchase plan, value	13,088	$ 9,591
Common stock used for tax withholdings		(972)
Retirement of vested shares, value	(9,706)
Compensation expense from employee and director stock option and common stock grants	196,017	53,768
Net loss	(2,368,245)	(1,954,030)	$ (2,409,047)	$ (4,322,275)	$ (4,633,298)
Ending balance, value	$ 17,651,249	19,820,095		$ 17,651,249
Ending balance, shares	48,503,260			48,503,260
Common Stock [Member]
Class of Stock [Line Items]
Beginning balance, value	$ 483,507	$ 483,303		$ 483,303
Beginning balance, shares	48,350,682	48,330,286		48,330,286
Issuance of common stock under employee stock purchase plan, value	$ 262	$ 181
Issuance of common stock under employee stock purchase plan, shares	26,175	18,097
Issuance of common stock under stock bonus plan, value	$ 1,425	$ 37
Issuance of common stock under stock bonus plan, shares	142,488	3,667
Common stock used for tax withholdings		$ (14)
Common stock used for tax withholdings (in shares)		(1,368)
Retirement of vested shares, value	$ (161)
Retirement of vested shares, shares	(16,085)
Ending balance, value	$ 485,033	$ 483,507		$ 485,033
Ending balance, shares	48,503,260	48,350,682		48,503,260
Additional Paid-in Capital [Member]
Class of Stock [Line Items]
Beginning balance, value	$ 128,166,044	$ 128,103,861		$ 128,103,861
Issuance of common stock under employee stock purchase plan, value	12,826	9,410
Issuance of common stock under stock bonus plan, value	(1,425)	(37)
Common stock used for tax withholdings		(958)
Retirement of vested shares, value	(9,545)
Compensation expense from employee and director stock option and common stock grants	196,017	53,768
Ending balance, value	128,363,917	128,166,044		128,363,917
Accumulated Deficit [Member]
Class of Stock [Line Items]
Beginning balance, value	(108,829,456)	(106,875,426)		(106,875,426)
Net loss	(2,368,245)	(1,954,030)
Ending balance, value	$ (111,197,701)	$ (108,829,456)		$ (111,197,701)

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Stockholders' Equity (Narrative) (Details) - $ / shares	1 Months Ended
	Oct. 31, 2015	Feb. 28, 2014	Sep. 30, 2016	Mar. 31, 2016
Class of Warrant or Right [Line Items]
Issuance of common stock under direct offering, shares		2,864,872
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		1,432,436
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 2.1275
Class of Warrant or Right, Outstanding			1,489,733	1,489,733
Class of Warrant, Class Two [Member]
Class of Warrant or Right [Line Items]
Issuance of common stock under direct offering, shares	8,000,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	4,000,000		57,297
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.31
Class of Warrant or Right, Outstanding			4,000,000	0

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Significant Customers (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Concentration Risk [Line Items]
Revenue from major customer, amount	$ 728,921	$ 1,618,666	$ 1,902,182	$ 2,249,332
Customer A [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Revenue from major customer, amount	$ 448,597	$ 305,870	$ 802,032	$ 427,552
Customer A [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage			27.00%		22.00%
Customer A [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage	44.00%	18.00%	33.00%	17.00%
Customer B [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Revenue from major customer, amount	$ 239,005	$ 103,144	$ 489,524	$ 138,007
Customer B [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage					32.00%
Customer B [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage	23.00%	6.00%	20.00%	6.00%
Customer C [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Revenue from major customer, amount	$ 141,379	$ 148,803	$ 366,484	$ 299,118
Customer C [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage			27.00%		12.00%
Customer C [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage	14.00%	9.00%	15.00%	12.00%
Customer D [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Revenue from major customer, amount	$ 14,838	$ 197,654	$ 124,269	$ 197,654
Customer D [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage			26.00%		20.00%
Customer D [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage	1.00%	11.00%	5.00%	8.00%
Customer E [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Revenue from major customer, amount		$ 495,536	$ 12,212	$ 696,693
Customer E [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue from major customer, percentage		29.00%	1.00%	28.00%

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Loss Per Common Share (Basic and Diluted Net Loss Per Share) (Details) - USD ($)	3 Months Ended			6 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Loss Per Common Share [Abstract]
Net loss	$ (2,368,245)	$ (1,954,030)	$ (2,409,047)	$ (4,322,275)	$ (4,633,298)
Weighted Average Number of Shares Outstanding, Basic and Diluted	48,479,908		40,235,636	48,413,491	40,142,682
Net loss per common share - basic and diluted	$ (0.05)		$ (0.06)	$ (0.09)	$ (0.12)

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Loss Per Common Share (Number Shares) (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Loss Per Common Share [Abstract]
Non-vested stock bonus plan shares	102,048	94,402
Stock Options Outstanding	3,106,096	3,149,381
Warrants and Rights Outstanding	$ 5,489,733	$ 1,489,733

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Commitments And Contingencies (Details)	Sep. 30, 2016 USD ($)
Commitments And Contingencies [Abstract]
Aggregate future base salary payable	$ 760,953
Potential future compensation payable	$ 225,555