Soluna Holdings, Inc - Quarter Report: 2001 June (Form 10-Q)

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3. Inventories

Inventories consist of the following at:

(Dollars in thousands)	June 30, 2001	Sept.30, 2000
Finished goods	$ 247	$ 150
Work in process	839	249
Raw materials, components and assemblies	667	794
	$1,753	$1,193

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Holdings, at equity

Summarized below is financial information for Plug Power and SatCon, as derived from published financial reports. Plug Power's fiscal year ends December 31 and SatCon's fiscal year ends September 30. Our holdings in SatCon are accounted for on a one-quarter lag.

For the nine months ended June 30, 2001, unrealized gains were $12.129 million. The deferred tax expense on this income at June 30, 2001 was $4.851 million, resulting in a net unrealized gain of $7.278 million, which is included in Other Comprehensive Income.

9. Earnings per Share (Continued)

10. Equity in Holdings Losses, net of tax

The Company's proportionate share of losses, net of tax, from holdings accounted for under the equity method is as follows:

	Three months ended		Nine months ended
	June 30, 2001	June 30, 2000	June 30, 2001	June 30, 2000
Plug Power	$(2,926)	$(3,347)	$(10,633)	$(8,653)
SatCon	(900)	(521)	(2,227)	(1,013)
	$(3,826)	$(3,868)	$(12,860)	$(9,666)

11. Cash Flows - Supplemental Information

(Dollars in thousands)	Nine months ended
	June 30, 2001	June 30, 2000
Non-cash Investing and Financing Activities:
Additional holdings and paid-in-capital resulting from other investors' investments in Plug Power	$ 1,592	$27,694
Acquired stock of SatCon Technology Corporation in exchange for net assets of Ling Electronics, Inc. and subsidiaries	-	6,738
Additional holdings and paid-in-capital resulting from warrant issuance to SatCon Technology Corporation	-	3,678
Additional holdings and paid-in-capital resulting from other investors' investments in SatCon Technology Corporation	2,248	475
Additional paid-in-capital resulting from stock option exercises treated differently for financial reporting and tax purposes	184	-
Additional investment from unrealized gain for fair value adjustment in Beacon Power Corporation	12,129	-
Investment in Beacon Power Corporation - conversion of derivative asset to common stock at warrant exercise	8,500	-
Capitalization of interest on FAC loans	107	-

12. Segment Information

13. Related Party Transactions

During fiscal 2001, First Albany Companies Inc. provided a credit enhancement in December 2000 and extended that enhancement in April 2001 for which the Company paid fees of $945 thousand and $200 thousand, respectively.

On April 30, 2001, the Company made principal and interest payments to FAC totaling $1,445 thousand and $117 thousand, respectively, which reduced the Company's obligations on the FAC Bridge Loans to

zero.

 

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

14. Subsequent Events

Dupont Strategic Partnership

On August 7, 2001, the Company and Dupont announced that they signed definitive agreements forming a strategic partnership to accelerate the development and commercialization of direct methanol micro fuel cells for portable electronics.

Terms of the partnership include an agreement to develop selected fuel cell components based on DuPontä Nafionâ membrane technology. The components would be customized for the Company's micro fuel cells, which are being developed for portable electronic applications including cellular telephones, personal digital assistants and portable computers.

The partnership also includes a supply agreement for DuPont to provide the Company with membranes and related fuel cell components. DuPont also has obtained a minority equity interest in MTI MicroFuel Cells Inc., a subsidiary of the Company established to commercialize micro fuel cells.

Plug Power Equity Financings

During July 2001, Plug Power completed a public equity financing of 4,575,000 shares of its common stock at $12 per share raising $51.3 million in net proceeds after fees and expenses. Simultaneous with the closing of the public financing, another 416,666 shares were sold to both GE Power Systems Equities and DTE Energy in a private equity financing raising an additional $9.6 million in net proceeds.

Advanced Technology Program Award

During August 2001, the Company announced that it, and its partners, had received an award of more than $4.6 million by the Advanced Technology Program (ATP) of the National Institute of Standards and Technology (NIST). The award is to carry out a two-and-a-half-year, $9.3 million cost-shared program to research and develop a micro fuel cell for use in portable electronics.

15. New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement No. 141, ACCOUNTING FOR BUSINESS COMBINATIONS, and Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These Statements modify accounting for business combinations after June 30, 2001 and will affect the Company's treatment of goodwill and other intangible assets at the start of fiscal year 2002. The Statements require that goodwill existing at the date of adoption be reviewed for possible impairment and that impairment tests be periodically repeated, with impaired assets written-down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified consistent with the Statements' criteria. Intangible assets with estimated useful lives will continue to be amortized over those periods. Amortization of goodwill and intangible assets with indeterminate lives will cease. The Company is currently analyzing the impact of these Statements.

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following is management's discussion and analysis of certain significant factors, which have affected the Company's earnings during the periods included in the accompanying, consolidated statements of income.

Continuing Operations

Sales for the quarter ended June 30, 2001 totaled $2.260 million compared to $1.146 million for the same period in the prior year, an increase of $1.114 million, a 97.2% increase. This increase in sales is primarily the result of MTI Instruments' change in sales mix reflecting a reduction in PBS balancing system and capacitance sales offset by increases in semiconductor and OEM instrument sales. Sales for the first nine months of fiscal 2001 versus the same period in fiscal 2000 have increased by $1.313 million to $5.555 million in 2001 from $4.242 million in 2000, a 31.0% increase. The nine-month change is also the result of MTI Instruments' increased sales of its new wafer thickness and instruments product lines.

Gross profit decreased to 54.7% of sales in the third quarter of fiscal 2001 from 55.8% of sales for the same period in the prior year. Gross profits decreased in the fiscal 2001 third quarter due to the shift in product mix to OEM instrument sales from PBS balancing systems. Gross profit as a percentage of sales for the first nine months of fiscal 2001 versus the same period in fiscal 2000 has increased by 3.7% to 55.2% from 51.5%. The first nine months' change is also the result of the sale of Ling in October 1999 (Ling had lower margin sales) and sales of higher margin products in fiscal 2001.

Selling, general and administrative expenses increased $.231 million to $1.412 million for the three months ended June 30, 2001 as compared to $1.181 million for the three months ended June 30, 2000, a 19.6% increase. Selling, general and administrative expenses during the first nine months of fiscal 2001 of $4.558 million represents a $1.16 million or 34.1% increase from $3.399 million incurred during the same period in fiscal 2000. These increases are primarily the result of increased personnel costs related to the operations of the new energy technology segment.

Product development and research costs for the three months ended June 30, 2001 were 39.7% of sales, compared to 54.6% for the same period in the prior year. Development costs increased $.271 million from the three months ended June 30, 2000 to the same period in 2001. Product development and research costs during the first nine months of fiscal 2001 of $2.56 million represents a $1.351 million or 111.7% increase from $1.209 million incurred during the same period in fiscal 2000. These increases reflect the Company's commitment to developing its micro fuel cell business and new products at MTI Instruments.

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Continuing Operations (Continued)

Operating loss decreased $.096 million to an operating loss of $1.072 million for the three months ended June 30, 2001 as compared

to $1.168 million for the three months ended June 30, 2000, an 8.2%

decrease. This decrease results from increased expenses for administration and product development at the Company's micro fuel cell operation offsetting increased gross profits at the precision instrumentation operation. The first nine months of fiscal 2001 resulted in an operating loss of $4.050 million, an increase of $1.627 million or 67.1% from the $2.423 million operating loss recorded during the same period in fiscal 2000. This increase is the result of increased expenditures for research and product development by the Company's micro fuel cell operation.

As of October 1, 2000, the Company recorded a $6.110 million unrealized gain, net of tax, from the adoption of SFAS No.133 "Accounting for Derivative Instruments and Hedging Activities," as of October 1, 2000. The Company also recorded a net $.807 million loss on derivative accounting for the nine months ended June 30, 2001. Changes in derivative fair values are recorded on a quarterly basis.

Results during the three and nine months ended June 30, 2001 were affected by interest expense of $.463 million and $1.778 million, respectively, compared to $.521 and $1.336 million, respectively, for the same periods last year. The decrease in expense for the three month period results from decreases in the prime interest since last year. The nine month increase reflects higher average debt outstanding during 2001 as compared to 2000.

Fiscal 2001 first nine months' results include a $31.009 million gain on the sale of holdings and the prior year results included a $1.262 million gain from the sale of Ling.

In the three and nine months ended June 30, 2001, the Company recorded a $3.826 million and $12.860 million loss, net of tax, respectively, from the recognition of the Company's proportionate share of losses in equity holdings compared to $3.868 million and $9.666 million loss, net of tax, respectively, for the comparable periods in fiscal 2000.

Equity in holdings losses result from the Company's minority ownership in certain companies, which are accounted for under the equity method of accounting. Under the equity method of accounting, the Company's proportionate share of each company's operating losses and amortization of the Company's net excess investment over its equity in each company's net assets is included in equity in holdings losses. Equity in holdings losses for the nine months ended June 30, 2001 includes the results from the Company's minority ownership in Plug Power and SatCon. The Company expects these companies to continue to invest in development of their products and services, and to recognize operating losses, which will result in future charges recorded by the Company to reflect its proportionate share of such losses.

 

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Continuing Operations (Continued)

Equity in holdings losses includes a loss, before taxes, from Plug Power of $4.930 million and $17.624 million, respectively, for the three and nine months ended June 30, 2001 compared to $5.679 million and $14.154 million, respectively, for the three and nine months ended June 30, 2000. The three month decrease is primarily the result of the Company's decrease in ownership of Plug Power since 2000. The nine month increase in losses is primarily the result of Plug Power expanding its operations including costs to develop and prototype residential fuel cell units. Equity in holdings losses, before taxes, for the three and nine months ended June 30, 2001 also includes our proportionate share of losses from SatCon of $.825 million and $1.638 million, respectively, compared to $.250 and $.445, respectively, for the three and nine months ended June 30, 2000; and embedded difference (the difference between the carrying value of the Company's holdings and its interest in the underlying equity) amortization of $.688 million and $2.066 million, respectively, for the three and nine months ended June 30, 2001 compared to $.649 and $1.299, respectively, for the three and nine months ended June 30, 2000. SatCon is accounted for on a one-quarter lag and includes results of SatCon through March 31, 2001. The Company acquired its stock holdings in SatCon during fiscal 2000.

The tax rates for the three and nine months ended June 30, 2001 are 40.61% and 40.97%, respectively, compared to the rates for the three and nine months ended June 30, 2000 of (42.04%) and (42.04%), respectively. These tax rates are primarily due to losses generated by operations, gains generated through the sale of holdings, use of net operating losses, calculation of alternative minimum tax and changes in deferred tax liabilities associated with the accounting for holdings in and recognition of the Company's proportionate share of losses from Plug Power and SatCon and its investment in derivatives and marketable securities. Further, as a result of ownership changes in 1996, the availability of net operating loss carryforwards to offset future taxable income will be limited pursuant to the Internal Revenue Code.

 

Financial Condition

Inventory and accounts receivable turnover ratios and their changes for the nine months ended June 30 are as follows:

	2001	2000	Change
Inventory	1.54	1.65	(0.11)
Accounts receivable	5.48	5.45	0.03

The change in the inventory turnover ratio is the result of increasing inventory levels to support new product sales. The change in the accounts receivable turnover ratio is the result of increased sales levels and the timing of these sales in 2001.

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Financial Condition (Continued)

Inventories at June 30, 2001 of $1.753 million reflect inventory levels for MTI Instruments required to support expected increased sales levels in fiscal 2001.

Working capital of $30.531 million at June 30, 2001 reflects a $54.824 million increase from September 30, 2000. This increase reflects $35.7 million of proceeds from the sale of Plug Power common stock, net of debt repayments of $11.8 million, the $12.129 million increase in fair value for the Beacon Power investment, coupled with $8.5 million for additional shares purchased through the cash-less exercise of warrants and the reclassification of $6 million of investments at cost to securities available for sale.

At June 30, 2001, cash and cash equivalents were $17.654 million versus $1.552 million at September 30, 2000. Net cash used by operating activities for the first nine months of fiscal 2001 amounted to $6.021 million, as compared to $1.672 million in the prior year. Accounts receivable increased due to an increase in sales and the timing of those sales. Accounts receivable totaled $1.932 million as of June 30, 2001 as compared to $.693 million as of September 30, 2000, or a 178.8% increase.

As of August 10, 2001, the Company amended and restated its Credit Agreement with KeyBank, N.A. The $30 million Credit Agreement, as amended, was reduced to $10 million ("the $10 million Credit Agreement, as amended"). Concurrent with this amendment, the Company made a principal reduction of $5.2 million, bringing the loan balance to $10 million as of the amendment date. The Company made an additional principal reduction of $2.5 million bringing the loan balance to $7.5 million as of August 14, 2001.

The Company has pledged two million shares of Plug Power common stock as collateral for the KeyBank loan. The Agreement expires July 31, 2003. In the event the market value of Plug Power common stock falls below $10 per share, the facility will be reduced to $7.5 million and additional collateral will be required. In the event the market value of Plug Power common stock falls below $8 per share, the facility will be reduced to $5.0 million. In the event the market value of Plug Power common stock falls below $7 per share, the facility will be reduced to zero.

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition (Continued)

The Company is obligated to make interest-only payments through July 31, 2003 and any outstanding principal balance on July 31, 2003. Interest is payable monthly at either the Prime Rate or after November 3, 2001, if certain performance standards are achieved, based on both the trading volume and market price of Plug Power common stock, at LIBOR based rates.

The $10 million Credit Agreement, as amended, requires the Company to meet certain covenants, including maintenance of a debt service reserve account (equal to 3 months of interest payments on outstanding debt), a minimum Plug Power share price and pledge additional collateral and maintain an additional collateral value, if required, based on the Plug Power share price falling below $10 per share. The Company was in compliance with these covenants as of August 10, 2001.

If the market price of Plug Power common stock falls below $10 per share, the line of credit will be reduced and the Company may need to sell assets, or otherwise raise cash to fund its obligations pursuant to the line of credit.

On December 27, 2000, the Company entered into two bridge loan agreements with FAC. The first loan was for $945 thousand and was used to pay the purchase price for the FAC Credit Enhancement. The Company had pledged 200,000 shares of Plug Power common stock as collateral. The second loan was for $5 million, $3 million of which was used to make a December 27, 2000 principal loan repayment to KeyBank, N.A. and the remaining $2 million was available for working capital. The Company pledged 1 million shares of Plug Power common stock as collateral. Both loans bear interest at the Prime Rate (6.75% at June 30, 2001) and both interest and principal are due on January 3, 2002. Upon mutual agreement of FAC and the Company, loan balances may be converted to equity prior to maturity. On April 30, 2001, the Company made principal and interest payments to FAC totaling $1,445 thousand and $117 thousand, respectively, which reduced the Company's obligations on the FAC Bridge Loans to zero.

On April 27, 2001, the Company amended the FAC Credit Enhancement to extend its expiration date from April 27, 2001 to August 27, 2001. The Company paid FAC a fee of $200,000 for this amendment.

Capital spending during the first nine months of fiscal 2001 was $.864 million, an increase from the comparable period in fiscal 2000 where capital spending totaled $.221 million. Capital spending during fiscal 2001 included furniture, computer network equipment, telephone system, facilities fit-up, computers, software, manufacturing and laboratory equipment. Total additional capital spending during fiscal 2001 is expected to be approximately $.884 million for computers, furniture, computer network equipment, telephone system, facilities fit-up, laboratory and manufacturing equipment.

 

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition (Continued)

 

As of June 30, 2001, the Company recognized a $31.0 million gain on the sale of its holdings. This gain related to the Company's previously announced strategy to raise additional capital through equity offerings and the sale of up to 10% of its assets in order to pay down debt, strengthen its balance sheet and fund its micro fuel cell operations.

As of June 30, 2001, the Company has sold 1.710 million shares of Plug Power common stock with proceeds totaling $35.7 million and gains totaling $31.0 million. Taxes on gains will be offset by the Company's net operating loss carryforwards, however, alternative minimum taxes will be paid. As of June 30, 2001, the Company estimates its remaining net operating loss carryforwards to be approximately $2.3 million.

The Company anticipates that it will be able to meet the liquidity needs of its continuing operations for the next year from current cash resources, borrowings under its $10 million line of credit, borrowings under its $5 million bridge loan from FAC, equity financings, and sale of assets. However, there can be no assurance that the Company will not require additional financing within this time frame or that any additional financing will be available to the Company on terms acceptable to the Company, if at all.

As of June 30, 2001, the Company owns shares of common stock in the following companies:

Plug Power Inc.	11,994,315	shares
SatCon Technology Corporation	1,800,000	"
Beacon Power Corporation	3,866,649	"

Each of these securities is currently traded on the Nasdaq National Market and are therefore subject to market conditions. In addition, our shares of Plug Power are subject to an underwriter's lockup prohibiting sale until October 25, 2001. When acquired, each of these securities was unregistered. In February 2000, SatCon registered the securities acquired by the Company on a Form S-3. The stock in Plug Power and Beacon Power are considered "restricted securities" as defined in Rule 144 and may be sold in the future without registration under the Securities Act subject to compliance with the provisions of Rule 144. Generally, restricted securities that have been owned for at least one year may be sold immediately after the completion of an IPO subject to the volume limitations of Rule 144. However, because of our ownership position and our appointment of directors to both Plug Power's and Beacon Power's Board of Directors, we are considered an

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Financial Condition (Continued)

"affiliate" of those companies and therefore are subject to the volume limitation of Rule 144, even if we have held the securities for two

years or more.

The Rule 144 limitations, as currently in effect, limit our sales of either Plug Power or Beacon Power stock within any three-month period

to a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock of the Company, or the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of such sale is filed, subject to certain restrictions.

As disclosed in Plug Power's most recent Form 10-Q filed for the quarter ended June 30, 2001:

Plug Power's cash requirements depend on numerous factors, including completion of its product development activities, ability to commercialize its residential fuel cell systems, market acceptance of its systems and other factors. Plug Power expects to devote substantial capital resources to continue development programs directed at commercializing its fuel cell systems for worldwide residential use, to hire and train production staff, develop and expand manufacturing capacity, begin production activities and expand research and development activities. Plug Power will pursue the expansion of its operations through internal growth and strategic acquisitions and expect such activities will be funded from existing cash and cash equivalents, issuance of additional equity or debt securities or additional borrowings subject to market and other conditions. In July, 2001 Plug Power completed a public equity financing raising an additional $51.3 million in net proceeds after fees and expenses. Simultaneous with the closing of the public financing Plug Power closed a private equity financing raising an additional $9.6 million in net proceeds. Plug Power believes that its current cash balances combined with the recently completed financing are sufficient to fund operations into 2003.

As disclosed in SatCon's Form 10-Q filed for the period ended March 31, 2001:

Since inception, SatCon has financed its operations and met its capital expenditure requirements primarily through the sale of private equity securities, public security offerings, borrowings on a line of credit and capital equipment leases.

SatCon anticipates that the existing $7.2 million in cash and cash equivalents will be sufficient to fund operations for at least the next twelve months. However, there can be no assurance that SatCon will not require additional financings within this time frame or that any additional financing, if needed, will be available to SatCon on terms acceptable to it, if at all.

 

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Market Risk

Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and equity prices.

At June 30, 2001, the Company had variable rate debt totaling $15.2 million. Interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows. The earnings and cash flow impact for the next year resulting from a one-percentage point increase in interest rates would be approximately $.152 million, holding other variables (debt level) constant.

The Company has performed a sensitivity analysis on its holdings of Plug Power, SatCon and Beacon Power common stock and its derivative financial instruments (warrants to purchase SatCon common stock). The sensitivity analysis presents the hypothetical change in fair value of our new energy holdings held by the Company at June 30, 2001, which are sensitive to changes in interest rates. Market risk is estimated as the potential change in fair value resulting from an immediate hypothetical one-percentage point parallel shift in the yield curve. The fair values of the Company's holdings in marketable securities have been based on quoted market prices and its derivative financial instruments based on estimates using valuation techniques.

The Company's interests in Plug Power and SatCon are accounted for on the equity method, Beacon Power is accounted for at fair value, and the derivative financial instruments are accounted for at estimated values. The fair market and estimated values, at June 30, 2001, of the Company's interests in these companies and the derivative financial instruments and the effects on fair value are as follows, if the market price on these interests decreased by ten percent:

(in millions)	Fair Value	10% Change
Plug Power	$258.238	$25.824
SatCon	18.810	1.881
Beacon Power	26.679	2.668
Derivative Financial Instruments	.679	.068

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement No. 141, ACCOUNTING FOR BUSINESS COMBINATIONS, and Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These Statements modify accounting for business combinations after June 30, 2001 and will affect the Company's treatment of goodwill and other intangible assets at the start of fiscal year 2002. The Statements require that goodwill existing at the date of adoption be reviewed for possible impairment and that impairment tests be periodically repeated, with impaired assets written-down to fair value.

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

New Accounting Pronouncements (Continued)

Additionally, existing goodwill and intangible assets must be assessed and classified consistent with the Statements' criteria. Intangible assets with estimated useful lives will continue to be amortized over those periods. Amortization of goodwill and intangible assets with indeterminate lives will cease. The Company is currently analyzing the impact of these Statements.

Statement Concerning Forward Looking Statements

This Form 10-Q contains and incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. You can identify forward-looking statements through our use of the words "expect," "anticipate," "believe," "should," "could," "may," "will," and other similar words, whether in the negative or the affirmative. Statements containing these, or similar words, are our predictions, expectations, plans and intentions of what may occur in the future.

All statements that are not historical fact should be deemed to be

forward-looking statements. We believe it is important to communicate our future expectations to our investors, however, our actual results may be very different from the predictions, expectations, plans and intentions we have shared with our investors. Such forward-looking statements involve known and unknown risks that may cause our actual results to differ materially from those stated and implied by our forward-looking statements. Such risks include, among others, our need to raise additional financing, difficulties in

developing and acquiring new energy companies and technologies, risks related to developing Direct Methanol Fuel Cells, market acceptance of new energy technologies, our dependence on the success of our portfolio companies, our history of losses, the historical volatility of our stock price, the risk we may become an inadvertent investment company, conflicts of interest between us, First Albany Companies Inc. and our portfolio companies and general market conditions. These and other risks are set forth in greater detail in the "Risk Factors" section of our Annual Report on Form 10-K, which is incorporated herein by reference. We do not intend to update any information in any forward-looking statements we make.

PART II OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

 

(a) Exhibits

None

(b) No reports on Form 8-K were filed during the quarter ended

June 30, 2001.


SIGNATURE

 

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.

 

Mechanical Technology Incorporated

 

08/14/01 (Date)	s/William P. Acker Dr. William P. Acker President and Chief Technology Officer
08/14/01 (Date)	s/Cynthia A. Scheuer Cynthia A. Scheuer Vice President and Chief Financial Officer