<PAGE>

================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                            ______________________

                                   FORM 10-Q/A
                         AMENDMENT NO. 2 TO FORM 10-Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999

                        COMMISSION FILE NUMBER 1-11512


                            ______________________

                         SATCON TECHNOLOGY CORPORATION
            (Exact name of registrant as specified in its charter)
                            ______________________

 State of Incorporation:  DELAWARE          I.R.S. Employer ID. No. 04-2857552

                                161 FIRST STREET
                            CAMBRIDGE, MA 02142-1221
                    (Address of principal executive offices)

                                 (617) 661-0540
              (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 the number of shares outstanding of each of the issuer's classes of
                common stock, as of the latest practicable date.

               Common Stock, $0.01 Par Value, 12,296,601 shares
                      outstanding as of January 31, 2000.

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS


                         PART I: FINANCIAL INFORMATION


<TABLE>
<CAPTION>

                                                                 Page
                                                                 ----
<S>                                                               <C>
Item 1: Restated Financial Statements

Consolidated Balance Sheets (As restated) (Unaudited)............   1
Consolidated Statements of Operations (As restated) (Unaudited)..   2
Consolidated Statement of Changes in Stockholders' Equity
  (As restated) (Unaudited)......................................   3
Consolidated Statements of Cash Flows (As restated) (Unaudited)..   4
Notes to Interim Consolidated Financial Statements (Unaudited)...   5

Item 2: Management's Discussion and Analysis of Financial
        Condition and Results of Operations......................  12

Item 3: Quantitative and Qualitative Disclosures About Market
        Risk.....................................................  18


                          PART II:  OTHER INFORMATION

Item 1. Legal Proceedings.......................................   19
Item 2. Changes in Securities and Use of Proceeds...............   19
Item 3. Defaults Upon Senior Securities.........................   19
Item 4. Submission of Matters to a Vote of Security
        Holders.................................................   19
Item 5. Other Information.......................................   19
Item 6. Exhibits and Reports on Form 8-K........................   19

Signature.......................................................   20
Exhibit Index...................................................   21
</TABLE>


<PAGE>

                         PART I: FINANCIAL INFORMATION


Item 1: Restated Financial Statements



                         SATCON TECHNOLOGY CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                                (As Restated)




<TABLE>
<CAPTION>
                                                                         December 31,       September 30,
                                                                      ------------------  ------------------
                                                                             1999                1999
                                                                      ------------------  ------------------
                                                                         (Unaudited)

<S>                                                                   <C>                 <C>
                               ASSETS
Current assets:
  Cash and cash equivalents  .......................................       $  3,173,619        $  2,533,072
  Accounts receivable, net of allowance of $469,119 at
    December 31, 1999 and $386,686 at September 30, 1999............          3,885,049           2,799,143
  Unbilled contract costs, net of allowance of $746,121 at
    December 31, 1999 and September 30, 1999........................          1,058,150           1,462,201
  Inventory ........................................................          8,187,440           3,697,972
  Prepaid expenses and other current assets.........................            502,250             349,070
                                                                           ------------        ------------
    Total current assets............................................         16,806,508          10,841,458
Investment in Beacon Power Corporation..............................                 --             414,729
Warrant to purchase Mechanical Technology Incorporated
    common stock....................................................            516,624                  --
Property and equipment, net.........................................          4,542,414           3,260,632
Intangibles, net ...................................................          9,793,710           3,194,609
Other long-term assets .............................................            184,557             103,675
                                                                           ------------        ------------
    Total assets.....................................................      $ 31,843,813        $ 17,815,103
                                                                           ============        ============

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable....................................................     $  1,358,848        $  1,563,605
  Accrued payroll and payroll related expenses........................          833,999             479,888
  Deferred revenue....................................................          107,725             113,179
  Other accrued expenses..............................................        1,080,130             620,874
  Funding commitment to Beacon Power Corporation......................               --             333,333
  Current portion of long-term debt...................................           16,535              16,226
                                                                           ------------        ------------
    Total current liabilities.........................................        3,397,237           3,127,105
Long-term debt........................................................           29,619              33,871
Other long-term liabilities...........................................           29,735              29,735
Contingent obligation to Class D preferred stockholders of Beacon
 Power Corporation....................................................        5,457,552           5,309,115
Redeemable convertible preferred stock ...............................        5,050,056           4,894,112
Stockholders' equity:
  Preferred stock; $.01 par value, 1,000,000 shares authorized;
    8,000 shares Series A redeemable convertible preferred stock
    issued and outstanding at December 31, 1999 and
    September 30, 1999...............................................                --                  --
  Common stock, $.01 par value, 20,000,000 shares authorized;
    11,396,570 and 9,617,009 shares issued at December 31, 1999
    and September 30, 1999,  respectively............................           113,966              96,170
  Additional paid-in capital.........................................        53,484,074          37,074,161
  Shares held in escrow, at market; 42,860 shares at
    December 31, 1999 and September 30, 1999.........................          (357,615)           (428,600)
  Amounts receivable from exercise of stock options..................        (1,816,667)         (1,816,667)
  Accumulated deficit................................................       (33,230,039)        (30,254,195)
  Accumulated other comprehensive loss...............................           (64,401)                 --
  Treasury stock, at cost; 44,500 shares at December 31, 1999 and
    September 30, 1999...............................................          (249,704)           (249,704)
                                                                           ------------        ------------
    Total stockholders' equity.......................................        17,879,614           4,421,165
                                                                           ------------        ------------
    Total liabilities, redeemable convertible preferred
      stock and stockholders' equity.................................       $31,843,813        $ 17,815,103
                                                                           ============        ============
</TABLE>


   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       1
<PAGE>



                         SATCON TECHNOLOGY CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (As Restated)
                                  (Unaudited)




<TABLE>
<CAPTION>
                                                                            For the three months ended
                                                                                    December 31,
                                                                             1999                1998
                                                                      ------------------  ------------------

<S>                                                                   <C>                 <C>
Product revenue.....................................................        $ 3,161,505         $ 1,994,527
Funded research and development revenue.............................          1,394,902           1,730,572
                                                                            -----------         -----------
Total revenue.......................................................          4,556,407           3,725,099
Cost of product revenue.............................................          3,001,178           1,523,677
                                                                            -----------         -----------
Gross margin........................................................          1,555,229           2,201,422
                                                                            -----------         -----------
Research and development expenses...................................          1,723,195           1,428,941
Selling, general and administrative expenses........................          2,032,536             989,580
Amortization of intangibles.........................................            242,608              77,758
                                                                            -----------         -----------
Total operating expenses............................................          3,998,339           2,496,279
                                                                            -----------         -----------
Operating loss......................................................         (2,443,110)           (294,857)
Loss from Beacon Power Corporation..................................           (563,166)         (1,440,021)
Interest income.....................................................             34,123              20,267
Interest expense....................................................             (3,691)                 --
                                                                            -----------         -----------
Net loss............................................................         (2,975,844)         (1,714,611)
Accretion of redeemable convertible preferred stock discount........           (155,944)                 --
                                                                            -----------         -----------
Net loss attributable to common stockholders........................        $(3,131,788)        $(1,714,611)
                                                                            ===========         ===========
Net loss per share, basic and diluted...............................             $(0.29)             $(0.19)
                                                                            ===========         ===========
Weighted average number of common shares, basic and diluted.........         10,793,030           8,980,249
                                                                            ===========         ===========
</TABLE>




   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       2

<PAGE>

                         SATCON TECHNOLOGY CORPORATION
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                   For the three months ended December 31, 1999
                                 (As Restated)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                  AMOUNTS
                                                                                                RECEIVABLE
                                                                        COMMON      COMMON         FROM
                                                         ADDITIONAL     SHARES       STOCK      EXERCISE OF
                                   COMMON      COMMON      PAID-IN     HELD IN      HELD IN        STOCK      ACCUMULATED
                                   SHARES      STOCK       CAPITAL      ESCROW      ESCROW        OPTIONS       DEFICIT
                                 ----------   --------   -----------   --------   -----------   -----------   ------------
<S>                              <C>          <C>        <C>           <C>        <C>           <C>           <C>
Balance, September 30, 1999 (as
  restated)....................   9,617,009   $96,170    $37,074,161    42,860    $  (428,600)  $(1,816,667)  $(30,254,195)
Net loss.......................          --        --             --        --             --            --     (2,975,844)
Common stock issued in
  connection with Ling
  acquisition..................     770,000     7,700      7,732,026        --             --            --            --
Common stock issued in
  connection with MTI
  investment...................     370,800     3,708      2,486,292        --             --            --            --
MTI warrant received in
  connection with MTI
  investment...................          --        --        568,553        --             --            --            --
Valuation adjustment for MTI
  warrant......................          --        --             --        --             --            --            --
Common stock issued in
  connection with NGC
  acquisition..................     578,761     5,788      5,465,770        --             --            --            --
Exercise of common stock
  options......................      60,000       600        354,400        --             --            --            --
Valuation adjustment for common
  stock held in escrow.........          --        --        (70,985)       --         70,985            --            --
Amortization of deferred
  consulting expense related to
  shares held in escrow........          --        --         29,801        --             --            --            --
Accretion of redeemable
  convertible preferred stock
  discount.....................          --        --       (155,944)       --             --            --            --
Foreign currency translation
  adjustment...................          --        --             --        --             --            --            --
                                 ----------  --------    -----------    ------    -----------   -----------  ------------
Balance, December 31, 1999.....  11,396,570  $113,966    $53,484,074    42,860    $  (357,615)  $(1,816,667) $(33,230,039)
                                 ==========  ========    ===========    ======    ===========   ===========  ============

<CAPTION>

                                  ACCUMULATED
                                     OTHER                                   TOTAL
                                 COMPREHENSIVE    TREASURY   TREASURY    STOCKHOLDERS'
                                 INCOME/(LOSS)     SHARES      STOCK        EQUITY
                                 --------------   --------   ---------   -------------
<S>                              <C>              <C>        <C>         <C>
Balance, September 30, 1999 (as
  restated)....................            --      44,500    $(249,704)   $ 4,421,165
Net loss.......................            --          --           --     (2,975,844)
Common stock issued in
  connection with Ling
  acquisition..................            --          --           --      7,739,726
Common stock issued in
  connection with MTI
  investment...................            --          --           --      2,490,000
MTI warrant received in
  connection with MTI
  investment...................            --          --           --        568,553
Valuation adjustment for MTI
  warrant......................       (51,929)         --           --        (51,929)
Common stock issued in
  connection with NGC
  acquisition..................            --          --           --      5,471,558
Exercise of common stock
  options......................            --          --           --        355,000
Valuation adjustment for common
  stock held in escrow.........            --          --           --             --
Amortization of deferred
  consulting expense related to
  shares held in escrow........            --          --           --         29,801
Accretion of redeemable
  convertible preferred stock
  discount.....................            --          --           --       (155,944)
Foreign currency translation
  adjustment...................       (12,472)         --           --        (12,472)
                                  ------------     -------   -----------   ------------
Balance, December 31, 1999.....   $   (64,401)      44,500    $(249,704)   $17,879,614
                                  ============     -======   ===========   ============
</TABLE>


   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       3

<PAGE>



                         SATCON TECHNOLOGY CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (As Restated)
                                  (Unaudited)





<TABLE>
<CAPTION>
                                                                            For the three months ended
                                                                                    December 31,
                                                                              1999                  1998
                                                                      --------------------  --------------------
<S>                                                                   <C>                   <C>
Cash flows from operating activities:
 Net loss ..........................................................          $(2,975,844)          $(1,714,611)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
   Depreciation and amortization....................................              435,746               218,347
   Allowance for doubtful accounts..................................               82,433                86,207
   Loss from Beacon Power Corporation...............................              563,166             1,440,021
   Non-cash compensation expense related to issuance
     of common stock options to non-employees.......................                   --                56,362
   Non-cash compensation expense related to common
     stock held in escrow...........................................               29,801                    --
   Changes in operating assets and liabilities,
      net of effects of acquisitions:
     Accounts receivable............................................            1,022,084              (292,291)
     Unbilled contract costs........................................              404,051              (451,922)
     Prepaid expenses and other assets..............................              107,957               145,102
     Inventory......................................................             (381,366)             (617,656)
     Other assets...................................................              (81,780)              545,488
     Accounts payable...............................................             (846,444)              151,753
     Accrued expenses and payroll...................................              (18,361)               19,435
     Other liabilities..............................................              (18,954)              174,186
                                                                              -----------           -----------
  Total adjustments.................................................            1,298,333             1,475,032
                                                                              -----------           -----------
Net cash used in operating activities...............................           (1,677,511)             (239,579)
                                                                              -----------           -----------

Cash flows from investing activities:
 Sales and maturities of marketable securities......................                   --                12,428
 Patent and intangible expenditures.................................              (22,625)              (30,360)
 Capital expenditures...............................................             (130,515)             (258,101)
 Cash paid for acquisition, net of cash acquired....................              (24,054)                   --
 Investment in Beacon Power Corporation.............................             (333,333)              (30,000)
                                                                              -----------           -----------
Net cash used in investing activities...............................             (510,527)             (306,033)
                                                                              -----------           -----------

Cash flows from financing activities:
 Borrowing under line of credit.....................................                   --                 5,000
 Repayment of borrowings............................................               (3,943)                   --
 Proceeds from issuance of common stock.............................            2,490,000                    --
 Proceeds from exercise of stock options............................              355,000                    --
 Purchase of treasury stock.........................................                   --               (55,235)
                                                                              -----------           -----------
Net cash provided/(used) by financing activities....................            2,841,057               (50,235)
                                                                              -----------           -----------

Effect of exchange rates on cash and cash equivalents...............              (12,472)                   --
                                                                              -----------           -----------

Net increase/(decrease) in cash and cash equivalents................              640,547              (595,847)
Cash and cash equivalents at beginning of period....................            2,533,072             1,201,610
                                                                              -----------           -----------
Cash and cash equivalents at end of period..........................          $ 3,173,619           $   605,763
                                                                              ===========           ===========
</TABLE>



   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       4
<PAGE>

                         SATCON TECHNOLOGY CORPORATION
         NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note A. Basis of Presentation
-----------------------------


  The accompanying unaudited consolidated financial statements include the
accounts of SatCon Technology Corporation and its majority-owned subsidiaries
(collectively, the "Company") as of December 31, 1999 and have been prepared
by the Company in accordance with generally accepted accounting principles
for interim financial reporting and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  All intercompany accounts and
transactions have been eliminated.  These  consolidated financial statements,
which in the opinion of management reflect all adjustments (including normal
recurring adjustments) necessary for a fair presentation, should be read in
conjunction with the financial statements and notes thereto included in the
Company's Amendment No. 2 to its Annual Report on Form 10-K for the year
ended September 30, 1999. Operating results for the three-month period ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for any future interim period or for the entire fiscal year.







  The financial statements as of September 30, 1999 and for the three
month periods ended December 31, 1999 and 1998 have been restated. The
Company has determined that the recapitalization of Beacon Power Corporation
on December 24, 1997 did not qualify as a divestiture of a subsidiary for
accounting purposes in accordance with SEC Staff Accounting Bulletin No.
30/Topic 5E (SAB 30) "Accounting for Divestiture of a Subsidiary or Other
Business Operation" as the Company had not transferred risks and other
incidents of ownership of Beacon Power with sufficient certainty. In
accordance with SAB 30, the Company has included 100% of Beacon Power's net
loss in its statements of operations from December 24, 1997 to May 1999 in a
manner similar to the equity method of accounting and has included the assets
and liabilities transferred to Beacon Power as separate components in its
September 30, 1998 balance sheet. In June 1999, in connection with a bridge
note financing at Beacon Power, the Company determined that risks and other
incidents of ownership of Beacon Power had passed with sufficient certainty
to other investors and the Company began accounting for its investment in
Beacon Power under the equity method of accounting. The Company has recorded
the face value of and cumulative dividends on Beacon Power's Class D
preferred stock issued on October 23, 1998 as an additional investment in
Beacon Power as of October 23, 1998. The Class D preferred stockholders of
Beacon Power have the right to require the Company to purchase their shares
of Class D preferred stock in certain events. While the Company currently
believes that the Class D preferred stockholders will not exercise this
right, the Company has recorded the face value and the cumulative dividends
as a liability.




  In addition as of December 31, 1999, the Company has restated its balance
sheet to record the fair value of a warrant received from Mechanical
Technology Incorporated in connection with the Company's October 1999
issuance of common stock to Mechanical Technology Incorporated. See Note C
for additional discussion.



The financial statements reflect the following changes:






-        As of September 30, 1999, the Company recorded its net investment
         balance in Beacon Power of $414,729 and its contingent obligation
         to the Class D preferred stockholders of Beacon Power of $5,309,115.



-        The Company's share of Beacon Power's net loss for the three months
         ended December 31, 1999 and 1998 increased by $563,166 and $1,410,021,
         respectively.



-        As of December 31, 1999, the Company has recorded the contingent
         obligation to the Class D preferred stockholders of Beacon Power
         of $5,457,552.



         As of December 31, 1999, the Company has recorded the fair value of
         the warrant to purchase Mechanical Technology Incorporated common
         stock of $516,624 and has recorded an unrealized loss of $51,929.

  The as restated and as reported consolidated statements of operations data
  and consolidated balance sheet date follows:






<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
                                                                            For the three months ended
                                                                                 December 31, 1999
                                                                         --------------------------------
                                                                          As Restated        As Reported
                                                                      ------------------  ------------------
<S>                                                                   <C>                 <C>
Loss from Beacon Power Corporation..................................        $  (563,166)        $        --
Net loss............................................................         (2,975,844)         (2,412,678)
Net loss attributable to common stockholders........................         (3,131,788)         (2,568,622)
Net loss per share, basic and diluted...............................              (0.29)              (0.24)
</TABLE>


                                      5

<PAGE>


                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)


<TABLE>
<CAPTION>

                                                                            For the three months ended
                                                                                 December 31, 1998
                                                                         ---------------------------------
                                                                          As Restated         As Reported
                                                                      ------------------  ------------------
<S>                                                                   <C>                 <C>
Loss from Beacon Power Corporation..................................        $(1,440,021)        $   (30,000)
Net loss attributable to common stockholders........................         (1,714,611)           (304,590)
Net loss per share, basic and diluted...............................              (0.19)              (0.03)
</TABLE>




<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA:
                                                    December 31, 1999             September 30, 1999
                                               --------------------------    ---------------------------
                                               As Restated    As Reported    As Restated    As Reported
                                               ------------   ------------   ------------   ------------
<S>                                            <C>            <C>            <C>            <C>
Investment in Beacon Power Corporation......   $         --   $         --   $    414,729             --
Warrant to purchase Mechanical Technology
 Incorporated common stock..................        516,624             --             --             --
Total assets................................     31,843,813     31,327,189     17,815,103     17,400,374

Funding commitment to
 Beacon Power Corporation...................             --             --        333,333        333,333
Contingent obligation to Class D preferred
 stockholders of Beacon Power Corporation...      5,457,552             --      5,309,115             --
Additional paid-in-capital..................     53,484,074     52,915,521     37,074,161     37,074,161
Accumulated deficit.........................    (33,230,039)   (27,772,487)   (30,254,195)   (25,359,809)
Accumulated other comprehensive loss........        (64,401)       (12,472)            --             --
Total liabilities, redeemable convertible
 preferred stock and stockholders' equity...     31,843,813     31,327,189     17,815,103     17,400,374

</TABLE>






  The financial statements for fiscal 1997, 1998 and 1999 had previously been
restated in connection with the initial audit of Beacon Power. For a
discussion of that restatement, see Management's Discussion and Analysis of
Financial Condition and Results of Operations and the financial statements
and notes thereto included in the Company's Amendment No. 1 to the Annual
Report on Form 10-K as filed on August 15, 2000. The financial statements for
the three months ended December 31, 1998 and 1999 have also been previously
restated. For a discussion of that restatement, see Management's Discussion
and Analysis of Financial Condition and Results of Operations and the
financial statements and notes thereto included in the Company's Amendment
No. 1 to Form 10-Q for the quarterly period ended December 31, 1999 as filed
on August 18, 2000. The as reported financial information presented here
includes the effects of the August 15 and 18, 2000 restatements.



                                      6

<PAGE>

                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)


Note B. Significant Accounting Policies

REVENUE RECOGNITION

  Revenue from manufactured products is recognized upon shipment, or if the
product requires installation, then revenue is recognized upon installation
of the product. The Company provides for a warranty reserve at the time the
product revenue is recognized.

  The Company performs funded research and development in collaboration with
third parties under both cost reimbursement and fixed-price contracts. Cost
reimbursement contracts provide for the reimbursement of allowable costs and,
in some situations, the payment of a fee. These contracts may contain
incentive clauses providing for increases or decreases in the fee depending
on how costs compare with budget. On fixed-price contracts, revenue is
generally recognized on the percentage of completion method based upon the
proportion of costs incurred to the total estimated costs for the contract.
Revenue from reimbursement contracts is recognized as services are performed.
In each form of contract, the Company receives periodic progress payments or
payment upon reaching interim milestones. All payments to the Company for
work performed on contracts with agencies of the U.S. government are subject
to audit and adjustment by the Defense Contract Audit Agency. Adjustments are
recognized in the period made. When the current estimates of total contract
revenue and contract costs indicate a loss, a provision for the entire loss
on the contract is recorded. At December 31, 1999 and September 31, 1999,
there was no anticipated contract losses.

  Deferred revenue consists of payments received from customers in advance of
services performed, product shipped or installation completed.

  Unbilled contract costs and fees represent revenue recognized in excess of
amounts billed due to contractual provisions or deferred costs that have not
yet been recognized as revenue or billed to the customer.

RECLASSIFICATIONS

  Certain prior year balances have been reclassified to conform to current
year presentations. For all periods presented, expenses associated with
funded research and development activities have been reclassified as research
and development expenses from cost of revenue.



Note C. Significant Events
---------------------------


INVESTMENT IN BEACON POWER CORPORATION


  The Company accounts for its investment in Beacon Power under the equity
method of accounting. During the three months ended December 31, 1999, the
Company recorded its share of Beacon Power's losses of $563,166 and its
investment in Beacon Power was reduced to zero. The Company will continue to
record additional losses from Beacon Power to the extent of additional
dividends accrued on the contingent obligation to the Class D preferred
stockholders of Beacon Power. At December 31, 1999, the contingent obligation
to the Class D preferred stockholders is $5,457,552 consisting of $4,750,000
face value and $707,552 of cumulative dividends. During the three months
ended December 31, 1998, the Company accounted for its investment in
accordance with SAB 30 and included 100% of Beacon Power's losses in its
results of operations in a manner similar to the equity method of accounting.
In June 1999 in connection with a bridge note financing at Beacon Power, the
Company began to account for its investment in Beacon Power under the equity
method of accounting.




  On January 7, 2000, the Company purchased from Beacon Power a convertible
promissory note with a principal amount of $200,000 due and payable on the
earlier of (i) the maturity date, February 12, 2000 (the "Maturity Date"), or
(ii) upon the occurrence of an event of default by Beacon Power. The note
bears interest at 12 1/2% per annum; provided, that if the note is not repaid
in full on or prior to the Maturity Date, the interest rate increases to 15%
per annum (the "January 7, 2000 Note"). Interest on the January 7, 2000 Note
is due and payable on the Maturity Date. At December 31, 1999, the Company
did not accrue losses of $200,000 relating to its share of Beacon Power's
losses incurred through December 31, 1999, which the Company was required to
fund pursuant to the terms of the January 7, 2000 Note, as those amounts,
including interest, have been repaid as of February 14, 2000.



INVESTMENT FROM MECHANICAL TECHNOLOGY INCORPORATED


  On October 21, 1999, the Company received a $7,070,000 investment from
Mechanical Technology Incorporated ("MTI"). In consideration for MTI's
investment, MTI received 1,030,000 shares of the Company's common stock, $.01
par value per share (the "Common Stock"), at a discounted price of
approximately $6.80 per share, and warrants to purchase an additional 100,000
shares of the Company's Common Stock at an exercise price of $8.80 per share
and an expiration date four years from the date of issuance. MTI funded
$2,570,000 of its investment in the Company on October 21, 1999 and received
370,800 shares of the Company's Common Stock and a warrant to purchase 36,000
shares of the Company's Common Stock. MTI made the remaining investment on
January 31, 2000 of $4,500,000 and received 659,200 shares of the Company's
Common Stock and a warrant to purchase 64,000 shares of the Company's Common
Stock. The Company has recorded approximately $80,000 of legal, accounting,
consultation and filing fees as transaction costs. The Company has determined
the value of the warrants issued to MTI on October 21, 1999 and January 31,
2000 to be $231,912 and $1,273,509, respectively using the Black-Scholes
option pricing model.



  In addition, the Company received a warrant to purchase 108,000 shares of
MTI's common stock on October 21, 1999 and a warrant to purchase 192,000
shares of MTI's common stock on January 31, 2000 at exercise prices of $12.56
per share, as adjusted to reflect a 3:1 stock split in April 2000, and
expiration dates four years from the date of issuance. The Company has valued
the warrant received on October 21, 1999 and January 31, 2000 at $568,553 and
$2,926,885, respectively, using the Black-Scholes option pricing model and
has recorded the warrants as an asset and additional paid in capital.
In accordance with EITF 96-11 "Accounting for Forward Contracts and Purchased
Options to Acquire Securities Covered by FASB Statement No. 115", the Company
has marked to market the fair value of the warrant at each reporting period
date and has recorded any unrealized gains and losses as a component of other
comprehensive income/(loss) included in stockholders equity. At December 31,
1999, the warrant issued on October 21, 1999 has an unrealized loss of
$51,929, which is included in other comprehensive income/(loss). Upon the
adoption of SFAS No 133, the warrants will be considered derivatives and the
Company will be required to record unrealized gains or losses in its
statement of operations.



                                       7

<PAGE>


                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)

ACQUISITIONS

  On October 21, 1999, the Company acquired Ling Electronics, Inc. and Ling
Electronics, Ltd. (collectively, "Ling Electronics") from MTI. In consideration
for the acquisition of Ling Electronics, MTI received $70,000 and 770,000 shares
of the Company's Common Stock valued at $9.8438 per share or $7,579,726. In
addition, the Company has incurred approximately $160,000 of legal, accounting,
consultation and filing fees as a cost of this transaction. The purchase price
of the acquisition has been allocated as follows:

<TABLE>
<S>                                                                   <C>
  Cash and cash equivalents  .......................................  $   45,946
  Accounts receivable ..............................................   2,190,423
  Inventory ........................................................   2,902,102
  Prepaid expenses and other assets.................................     260,239
  Property and equipment............................................     250,000
  Intangibles ......................................................   3,540,423
  Accounts payable..................................................     641,687
  Accrued payroll and payroll related expenses......................     334,129
  Deferred revenue..................................................      13,500
  Other accrued expenses............................................     390.091
</TABLE>

  The following unaudited pro forma financial information combines the Company
and Ling Electronics' results of operations as if the acquisition had taken
place on October 1, 1998. The pro forma results are not necessarily indicative
of what the results of operations actually would have been if the transaction
had occurred on the applicable dates indicated and are not intended to be
indicative of future results of operations.



<TABLE>
<CAPTION>
                                                          FOR THE THREE MONTHS ENDED
                                                       ---------------------------------
                                                                 DECEMBER 31,
                                                       ---------------------------------
                                                             1999             1998
                                                       ----------------  ---------------
<S>                                                    <C>               <C>
  Revenue............................................      $ 4,695,996      $ 5,662,099
  Operating loss (as restated).......................      $(2,763,315)     $  (549,961)
  Net loss (as restated).............................      $(3,294,728)     $(1,962,714)
  Net loss attributable to common stockholders.
   (as restated).....................................      $(3,450,672)     $(1,962,714)
  Net loss per share, basic and diluted.
   (as restated).....................................      $     (0.32)     $     (0.20)
</TABLE>


  On November 16, 1999, the Company purchased certain intellectual property,
equipment and other assets from Northrop Grumman Corporation ("NGC"). These
assets were used by NGC in connection with its power electronics products
business. The Company also entered into (i) a sublease with NGC pursuant to
which the Company agreed to a five-year sublease for approximately 14,863 square
feet of rentable space in the Baltimore, Maryland area and (ii) a three-year
Transition Services Agreement providing the Company access to certain test
facilities and personnel of NGC on a fee basis. In consideration for these
foregoing assets and agreements, NGC received 578,761 shares of the Company's
Common Stock valued at $8.3438 per share or $4,829,066. In addition, the Company
issued to NGC a warrant to purchase an additional 100,000 shares of the
Company's Common Stock at an exercise price of $9.725 per share. The Company has
recorded the fair market value of this warrant, as determined by the Black-
Scholes option pricing model, of approximately $631,000 and approximately
$119,000 of legal, accounting, consultation and filing fees as a cost of this
transaction. On February 4, 2000, the Company issued to NGC an additional
warrant to purchase 100,000 shares of the Company's Common Stock at an exercise
price of $9.725 per share. This warrant is exercisable upon the occurrence of
certain defined events. The purchase price of the asset purchase has been
allocated as follows:

<TABLE>
<S>                                                                   <C>
      Inventory.....................................................          1,206,000
      Property and equipment........................................          1,091,643
      Intangibles...................................................          3,281,423
</TABLE>

  The pro forma financial information has not been presented, as the Company
views this transaction as the purchase of assets rather than as a business
combination.


                                       8

<PAGE>

                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)



Note D. Loss per Share
----------------------


  The following is the reconciliation of the numerators and denominators of the
basic and diluted per share computations of loss:



<TABLE>
<CAPTION>
                                                                                            FOR THE THREE MONTHS ENDED
                                                                                                   DECEMBER 31,
                                                                                             1999                1998
                                                                                      ------------------  ------------------
                                                                                                   (as restated)

<S>                                                                                   <C>                 <C>
     Net loss attributable to common shareholders...................................        $(3,131,788)        $(1,714,611)
                                                                                            ===========         ===========
     BASIC AND DILUTED:
     Common shares outstanding, beginning of period.................................          9,529,649           8,990,249
     Weighted average common shares issued during the period........................          1,263,381                  --
     Weighted average shares repurchased during the period..........................                 --             (10,000)
                                                                                            -----------         -----------
     Weighted average shares outstanding--basic and diluted.........................         10,793,030           8,980,249
                                                                                            ===========         ===========
     Net loss per share, basic and diluted..........................................        $     (0.29)        $     (0.19)
                                                                                            ===========         ===========
</TABLE>






  As of December 31, 1999 and 1998, 2,859,394 and 922,616 options and warrants,
respectively, were excluded from the diluted weighted average common shares
outstanding as their effect would be antidilutive.



Note E. Inventory
-----------------


  Inventory consists of the following:
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,               SEPTEMBER 30,
                                                                        1999                       1999
                                                                   -------------             --------------
<S>                                                                 <C>                       <C>
Raw material...................................................      $3,294,832                $1,139,064
Work-in-process................................................       3,092,421                 2,199,199
Finished goods.................................................       1,800,187                   359,709
                                                                  -------------             -------------
                                                                     $8,187,440                $3,697,972
                                                                  =============              =============
</TABLE>


                                       9

<PAGE>

                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)


Note F. Comprehensive income/(loss)
-----------------------------



  The Company's total comprehensive income/(loss) is as follows:



<TABLE>
<CAPTION>
                                                                          FOR THE THREE MONTHS ENDED
                                                                                 DECEMBER 31,
                                                                           1999                 1998
                                                                    -------------------  ------------------
                                                                                  (as restated)

<S>                                                                 <C>                  <C>
Net loss..........................................................         $(2,975,844)        $(1,714,611)
                                                                           ===========         ===========

Other comprehensive loss, net of tax:
     Unrealized losses on securities..............................                  --         $    (5,666)
     Valuation adjustment for MTI warrants........................         $   (51,929)                 --
     Foreign currency translation adjustment......................             (12,472)                 --
                                                                           -----------         -----------
Other comprehensive loss..........................................         $   (64,401)        $    (5,666)
                                                                           -----------         -----------
Comprehensive loss................................................         $(3,040,245)        $(1,720,277)
                                                                           ===========         ===========
</TABLE>




Note G. Segment Disclosures
----------------------------


  As of October 1, 1998, the Company adopted SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information." SFAS No. 131 establishes
annual and interim reporting standards for an enterprise's operating segments
and related disclosures about its products and services, geographical areas and
major customers. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker, or decision making group, in
deciding how to allocate resources and assess their performance.


  The Company's organizational structure is based on strategic business units
that offer various products to the principal markets in which the Company's
products are sold. These business units equate to three reportable segments:
research and development, power electronic products and motion-control
products.



  The Company provides research and development services in collaboration
with third-parties. Film Microelectronics, Inc designs and manufactures power
electronics products. The MagMotor Division and Ling Electronics specialize
in the engineering and manufacturing of motion-control products.



  The Company evaluates performance based on revenue and profit and loss from
operations before income taxes, interest income, interest expense, other
income and losses and loss from Beacon Power Corporation, excluding the
effects of amortization of intangible assets associated with acquisitions.
Common costs not directly attributable to a particular segment are allocated
among segments based on management's estimates.



                                       10

<PAGE>

                         SATCON TECHNOLOGY CORPORATION
  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)


  The following is a summary of the Company's operations by operating segment:


<TABLE>
<CAPTION>
                                                                                            FOR THE THREE MONTHS ENDED
                                                                                            --------------------------
                                                                                                   DECEMBER 31,
                                                                                                   ------------
                                                                                             1999                1998
                                                                                      ------------------  ------------------
<S>                                                                                   <C>                 <C>
Research and development:
  Funded research and development revenue...........................................        $ 1,394,902         $ 1,730,572
                                                                                            -----------         -----------
  Loss from operations, net of amortization of intangibles..........................        $(1,132,470)        $  (232,507)
                                                                                            ===========         ===========

Power electronic products:
  Product revenue...................................................................        $ 1,808,008         $ 1,218,382
                                                                                            -----------         -----------
  Loss from operations, net of amortization of intangibles..........................        $  (377,783)        $  (112,395)
                                                                                            ===========         ===========

Motion-control products:
  Product revenue...................................................................        $ 1,353,497         $   776,145
                                                                                            -----------         -----------
  (Loss)/income from operations, net of amortization of intangibles.................        $  (690,249)        $   127,803
                                                                                            ===========         ===========
</TABLE>



  The following is a summary of the Company's long-lived assets excluding
investment in Beacon Power Corporation and a warrant to purchase Mechanical
Technology Incorporated common stock, by operating segment:



<TABLE>
<CAPTION>
                                  DECEMBER 31,       SEPTEMBER 30,
                                -----------------  -----------------
                                      1999               1999
                                -----------------  -----------------
<S>                             <C>                <C>
Research and development:
  Long-lived assets...........         $6,101,163         $1,717,228
                                       ----------         ----------
Power electronic products:
  Long-lived assets...........         $3,875,105         $3,978,027
                                       ----------         ----------
Motion-control products:
  Long-lived assets...........         $4,544,413         $  863,661
                                       ----------         ----------
</TABLE>


  The Company operates and markets its services and products on a worldwide
basis with its principal markets as follows:

<TABLE>
<CAPTION>
                                                                                           FOR THE THREE MONTHS ENDED
                                                                                           --------------------------
                                                                                                  DECEMBER 31,
                                                                                                  ------------
                                                                                            1999               1998
                                                                                      -----------------  -----------------
<S>                                                                                   <C>                <C>
Geographic:
  United States.....................................................................         $4,259,643         $3,725,099
  Europe............................................................................            161,665                 --
  Rest of world.....................................................................            135,099                 --
                                                                                             ----------         ----------
       Total revenue................................................................         $4,556,407         $3,725,099
                                                                                             ==========         ==========
</TABLE>

                                       11

<PAGE>


Item 2:  Management's Discussion and Analysis of Financial
         Condition and Results of Operations



  This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes", "anticipates", "plans",
"expects", and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, those
set forth under the caption "Factors Affecting Future Results" below and
those set forth in Exhibit 99 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 2000, which are expressly incorporated by
reference herein.






  The financial statements as of September 30, 1999 and for the three month
periods ended December 31, 1999 and 1998 have been restated. The Company
determined that the recapitalization of Beacon Power Corporation on December
24, 1997 did not qualify as a divestiture of a subsidiary for accounting
purposes in accordance with SEC Staff Accounting Bulletin No. 30/Topic 5E
(SAB 30) "Accounting for Divestiture of a Subsidiary or Other Business
Operation" as the Company had not transferred risks and other incidents of
ownership of Beacon Power with sufficient certainty. In accordance with SAB
30, the Company has included 100% of Beacon Power's net loss in its
statements of operations from December 24, 1997 to May 1999 in a manner
similar to the equity method of accounting and has included the assets and
liabilities transferred to Beacon Power as separate components in its
September 30, 1998 balance sheet. In June 1999, in connection with a bridge
note financing at Beacon Power, the Company determined that risks and other
incidents of ownership of Beacon Power had passed with sufficient certainty
to other investors and the Company began accounting for its investment in
Beacon Power under the equity method of accounting. The Company has recorded
the face value of and cumulative dividends on Beacon Power's Class D
preferred stock issued on October 23, 1998 as an additional investment in
Beacon Power. The Class D preferred stockholders have the right to require
the Company to purchase their shares of Class D preferred stock in certain
events. While the Company currently believes that the Class D preferred
stockholders will not exercise this right, the Company has recorded the face
value and the cumulative dividends as a liability.



    In addition as of December 31, 1999, the Company has restated its balance
sheet to record the fair value of warrants received from Mechanical
Technology Incorporated in connection with the Company's October 1999
issuance of common stock to Mechanical Technology Incorporated. See Note C to
the financial statements for additional discussion.



The financial statements reflect the following changes:









-        As of September 30, 1999, the Company recorded its net investment
         balance in Beacon Power of $415,000 and its contingent obligation to
         the Class D preferred stockholders of Beacon Power of $5.3 million.



-        The Company's share of Beacon Power's net loss for the three months
         ended December 31, 1999 and 1998 increased by $563,000 and $1,410,000,
         respectively.



-        As of December 31, 1999, the Company has recorded the contingent
         obligation to the Class D preferred stockholders of Beacon Power of
         $5.5 million.



         As of December 31, 1999, the Company has recorded the fair value of
         the warrant to purchase Mechanical Technology Incorporated common
         stock of $517,000 and has recorded an unrealized loss of $52,000.







    The financial statements for fiscal 1997, 1998 and 1999 had previously
been restated in connection with the initial audit of Beacon Power. For a
discussion of that restatement see Management's Discussion and Analysis of
Financial Condition and Results of Operations and the financial statements
and notes thereto included in the Company's Amendment No. 1 to its Annual
Report on Form 10-K as filed on August 15, 2000. The financial statements for
the three months ended December 31, 1998 and 1999 have also been previously
restated. For a discussion of that restatement, see Management's Discussion
and Analysis of Financial Condition and Results of Operations and the
financial statements and notes thereto included in the Company's Amendment No
1 to Form 10-Q for the quarterly period ended December 31, 1999 as filed on
August 18, 2000. The financial information presented here includes the
effects of the August 15 and 18, 2000 restatements.






OVERVIEW

    SatCon develops enabling technologies for the emerging distributed power
generation and power quality markets. SatCon also manufactures power and
energy management products that convert, condition, store and manage
electricity for businesses and consumers that require high-quality,
uninterruptible power. SatCon is utilizing its engineering and manufacturing
expertise to develop products to serve the distributed power generation and
power quality markets, including products for fuel cell and microturbine
power generation systems, hybrid-electric vehicles and flywheel energy
storage systems. SatCon believes the family of products it is developing will
be integral components of distributed power generation and power quality
systems.



    In the past three years, SatCon has expanded its business and capabilities
through the following acquisitions:

    - K&D MagMotor Corp.--a manufacturer of custom electric motors, acquired in
      January 1997.

    - Film Microelectronics, Inc.--a manufacturer of hybrid microelectronics,
      acquired in April 1997.

    - Inductive Components, Inc.--a value-added supplier of customized electric
      motors, acquired in January 1999.

    - Lighthouse Software, Inc.--a supplier of control software for machine
      tools, acquired in January 1999.

    - HyComp, Inc.--a manufacturer of electronic multi-chip modules, acquired in
      April 1999.

    - Ling Electronics, Inc.--a manufacturer of test equipment, power
      converters, amplifiers and converters, acquired in October 1999.



                                       12

<PAGE>


    All of these acquisitions were accounted for using the purchase method of
accounting. In addition, in November 1999, the Company acquired intellectual
property, tooling and other assets from Northrop Grumman Corporation enabling
the Company to manufacture and sell electric drivetrains.



    On May 20, 1997, the Company formed Beacon Power. On October 23, 1998,
Beacon Power completed a $4.8 million private placement of its Class D
preferred stock and warrants to third-party investors, and the Company
relinquished significant control of Beacon Power. From June 1999 through
March 31, 2000, Beacon Power was financed through the issuance of
approximately $4.7 million of bridge notes and warrants to its investors,
including $1.0 million from the Company. On April 7, 2000, Beacon Power
issued 1,226,141 shares of its Class E preferred stock and 306,535 Class E
warrants in exchange for the conversion of all of its outstanding bridge
notes of which the Company received 347,407 shares of Beacon Power's Class E
preferred stock and 86,852 Class E warrants. On April 21, 2000, Beacon Power
raised an additional $4.1 million through the sale of additional bridge notes
that are convertible into Beacon Power's Class F preferred stock. The Company
did not participate in this financing.



    The results of the Company's operations include $3.1 million loss of
Beacon Power from May 8, 1997 to December 24, 1997 under the consolidation
method of accounting. On December 24, 1997, the Company began accounting for
its investment in Beacon Power in accordance with SAB 30 and has included
100% of Beacon Power's $7.1 million loss for the period from December 25,
1997 through May 1999, in a manner similar to the equity method of accounting
at which time the Company's initial investment of $1.9 million and the
additional investment of $4.8 million and accrued dividends of $410,000 had
been written down to zero. In June 1999, the Company committed up to $1.0
million of additional financing to Beacon Power, representing a minority
share of a funding commitment received by Beacon Power and the Company began
accounting for its investment in Beacon Power under the equity method of
accounting and has included in its results through December 31, 1999 its
share of Beacon Power's losses of $1.3 million. As of December 31, 1999, the
Company's investment in Beacon Power had been reduced to zero and the
Company's contingent obligation to Beacon Power's Class D preferred
stockholders was $5.5 million. The Company will continue to record additional
losses from Beacon Power to the extent of additional dividends accrued on the
contingent obligation to the Class D preferred stockholders of Beacon Power.



    The Company performs funded research and development in collaboration with
third parties under both cost reimbursement and fixed-price contracts. Cost
reimbursement contracts provide for the reimbursement of allowable costs, an in
some situations, the payment of a fee. These contracts may contain incentive
clauses providing for increases or decreases in fees depending on how costs
compare with a budget. On fixed-price contracts, revenue is recognized on the
percentage of completion method based upon the proportion of costs incurred to
the total estimated costs for the contract. Revenue from reimbursement contracts
is recognized as services are performed. Revenue from manufactured products is
recognized upon shipment, or, if the product requires installation, the revenue
is recognized upon installation of the product.



    The Company has incurred significant costs to develop its technology
and products. These cost have exceeded total revenue. As a result, the
Company has incurred net losses in each of the past five fiscal years and for
the three months ended December 31, 1999. As of December 31, 1999, the
Company had an accumulated deficit of $33.2 million. The Company intends to
significantly increase its capital expenditures and operating expenses to
rapidly expand its manufacturing capabilities and for general corporate
purposes, including product development activities, sales and marketing and
administrative activities. Because the Company expects to continue to invest
in its business ahead of anticipated future revenues, the Company expects to
incur operating losses for at least the next two years.





                                       13

<PAGE>


COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1999 (AS RESTATED) AND DECEMBER
31, 1998 (AS RESTATED)

     PRODUCT REVENUE. Product revenue increased by $1.2 million or 59% from
$2.0 million to $3.2 million. This increase was attributable to $800,000 in
revenue from Ling Electronics and $590,000 increase in revenue from the
Company's microelectronics products. These increases were partially offset by
a $223,000 decrease in revenue from the Company's high performance motors and
magnetic levitation products.



     FUNDED RESEARCH AND DEVELOPMENT REVENUE. Funded research and
development revenue decreased by $336,000 or 19% from $1.7 million to $1.4
million. During the three months ended December 31, 1999, the Company devoted
more resources to internally funded research and development programs
including the development of power conversion products for the distributed
power generation market.



     GROSS MARGIN. Gross margin decreased by $646,000 or 29% from $2.2
million to $1.6 million. Gross margin from products decreased by $311,000 and
funded research and development decreased by $336,000. Gross margin from
product revenue as a percentage of product revenue decreased to 5% from 24%.
The decrease in gross margin from product revenue as a percentage of product
revenue is due to higher costs for facilities and staffing.



     RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased by $294,000 or 21% from $1.4 million to $1.7 million. The increase
was attributable to the Company's increased focus on internally funded
research and development programs including the development of power
conversion products for the distributed power generation market offset by the
decrease in funded research and development revenue.



     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1.0 million or 105% from $990,000 to $2.0
million. The increase was primarily due to the inclusion of $484,000 of costs
from Ling Electronics, $300,000 of costs for facilities and staffing in an
effort to meet expected growth and demand for our products, and in 1999, the
deferral of $300,000 of costs associated with a research and development
contract.



     AMORTIZATION OF INTANGIBLES. Amortization of intangibles increased by
$165,000 or 212% from $78,000 to $243,000. The increase was the result of
amortization of intangibles recorded in connection with the acquisition of
Ling Electronics in 1999 and certain intellectual property and other
intangible assets from Northrop Grumman in November 1999.



    LOSS FROM BEACON POWER CORPORATION. Loss from Beacon Power decreased by
$877,000 or 61% from $1.4 million to $563,000. For the three months ended
December 31, 1999, the Company recorded $563,000 of its share of Beacon
Power's losses under the equity method of accounting as its investment has
been reduced to zero as of December 31, 1999. For the three months ended
December 31, 1998, the Company recorded 100% of Beacon Power's losses of $1.4
million and in accordance with SAB 30, in a manner similar to equity method
accounting.



     OTHER INCOME (EXPENSE), NET. Other income, net increased to $30,000 from
$20,000. The increase was the result of an increase of cash and cash
equivalents being maintained in interest bearing accounts offset by interest
expense associated with capital leases entered into during fiscal year 1999.



                                     14

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES


  As of December 31, 1999, the Company's cash and cash equivalents were $3.2
million, an increase of approximately $641,000 from September 30, 1999. Cash
used in operating activities for the three months ended December 31, 1999 was
$1.7 million as compared to $240,000 in 1998. Cash used in operating
activities during the three months ended December 31, 1999 was primarily
attributable to the Company's net loss of approximately offset by a decrease
in accounts receivable, depreciation and amortization.



  Cash used in investing activities for the three months ended December 31,
1999 was $511,000 as compared to $306,000 in 1998. Net cash used in investing
activities during the three months ended December 31, 1999, included capital
and intellectual property expenditures of $153,000, an investment in Beacon
Power of $333,000 and $24,000 for cash paid for Ling Electronics, net of cash
acquired. The Company estimates that it will spend an additional $2.0
million on capital expenditures during the next 12 months primarily to expand
its capacity to manufacture power conversion products. The Company expects
these additions to be financed from cash on hand and from lease financing.



  Cash provided by financing activities for the three months ended December
31, 1999 was $2.8 million. Net cash provided by financing activities during
the three months ended December 31, 1999 includes net proceeds of $2.5
million from the sale of the Company's Common Stock and $355,000 from the
exercise of common stock options and warrants.



  On October 23, 1998, the Company granted the purchasers of Beacon Power's
Class D redeemable preferred stock the right to cause us under certain
circumstances to purchase all of Beacon Power's shares of Class D redeemable
preferred stock issued to those purchasers and upon exercise of this put
right, the Company must pay $4.8 million plus cumulative dividends at 12.5%
per year since October 23, 1998 through May 22, 2000 and 6% per year
thereafter in its common stock. The Company has recorded as of
December 31, 1999, the face value of the put right of $4.8 million plus
cumulative dividends of $708,000 as a liability. If the put right is
exercised, the Company would reclassify the value of the contingent
obligation to the Class D preferred stockholders of Beacon Power to common
stock and additional paid in capital.



                                       15

<PAGE>





    The Company anticipates that the existing $3.2 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 the Company will not require
additional financings within this time frame or that any additional financing,
if needed, will be available to the Company on terms acceptable to the Company,
if any.


EFFECTS OF INFLATION

  The Company believes that inflation and changing prices over the past three
years have not had a significant impact on the Company's net sales and revenues
or on income from continuing operations.

FACTORS AFFECTING FUTURE RESULTS

  The Company's future results remain difficult to predict and may be affected
by a number of factors which could cause actual results to differ materially
from forward-looking statements contained in this Quarterly Report on Form 10-Q
and presented elsewhere by management from time to time. These factors include
business conditions within the aerospace, transportation, industrial, utility,
telecommunications, silicon wafer manufacturing, factory automation, aircraft
and automotive industries and the world economies as a whole, and competitive
pressures that may impact research and development spending. The Company's
revenue growth is dependent on technology developments and contract research and
development for both the government and commercial sectors and no assurance can
be given that such investments will continue or that the Company can
successfully obtain such funds. In addition, the Company's future growth
opportunities are dependent on the introduction of new products that must
penetrate aerospace, transportation, industrial, utility, telecommunications,
silicon wafer manufacturing, factory


                                       16
<PAGE>


automation, aircraft and automotive market segments. No assurance can be given
that new products can be developed, or if developed, will be successful; that
competitors will not force prices to an unacceptably low level or take market
share from the Company; or that the Company can achieve or maintain profits in
these markets. Because of these and other factors, past financial performances
should not be considered an indicator of future performance. Investors should
not use historical trends to anticipate future results and should be aware that
the Company's stock price frequently experiences significant volatility. These
factors also include, without limitation, those set forth in Exhibit 99 to
the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2000,
which are expressly incorporated by reference herein.



  On October 23, 1998, the Company granted the purchasers of Beacon Power
Class D preferred stock the right to cause the Company, under the
circumstances described below, to purchase all of Beacon Power's shares
issued to those purchasers and, upon exercise of this "put right," the
Company must pay $4,750,000 plus cumulative dividends at 12 1/2% per year
from October 23, 1998 through May 22, 2000 and 6% per year thereafter in its
common stock, valued at the average fair value for the fifteen trading days
before and after notice of exercise of the put right. The put right is
exercisable within sixty days of the second, third, fourth and fifth
anniversary of the closing date of the transaction, upon certain events of
bankruptcy of Beacon Power and upon the occurrence of certain going private
transactions involving the Company. If the put right is exercised, the
Company will reclassify the contingent obligation to the Class D stockholders
to common stock and additional paid in capital.


EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS


  In June 1999, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 137 (SFAS No. 137), "Accounting for
Derivative Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133," which defers the effective date of Statement of
Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
Derivative Instruments and Hedging Activities" to all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a new
model for accounting for derivatives and hedging activities. It requires an
entity to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure these instruments at fair value.
The Company will adopt SFAS No. 133 beginning in the first quarter of the
fiscal year ending September 30, 2001. Upon adoption of SFAS No. 133, the
Company will be required to record any unrealized gains or losses on the fair
value of its investment in derivatives in its results of operations and the
Company will record a cumulative adjustment to reflect the impact of adopting
this accounting standard.



  The Company currently does not expect that the adaption of SFAS No. 133 will
have a material impact on its financial condition or results of operations.


EFFECTS OF YEAR 2000

  The Company has assessed its software systems and internal operations. The
Company believes that it has resolved all potential Year 2000 issues and
problems and, to the best of its knowledge, its systems are Year 2000 compliant.
However, if the Company's systems do not operate properly with respect to date
calculations involving the Year 2000 and subsequent dates, the Company could
incur unanticipated expenses to remedy any problems, which could seriously harm
its business. The Company may also experience reduced sales of its products as
current or potential customers reduce their budgets due to increased
expenditures on their own Year 2000 compliance efforts.

  Additionally, the Company relies on information technology supplied by third
parties and its other business partners, including third-party distributors and
consultants, who are also heavily dependent on information technology systems
and on their own and third-party vendor systems. Year 2000 problems experienced
by the Company or any of these third parties could materially adversely affect
the Company's business. Prior versions of the Company's products may contain
technology from third parties that is not Year 2000 compliant.

  Given the pervasive nature of the Year 2000 problem, the Company cannot
guarantee that disruptions in other industries and market segments will not
adversely affect its business. Moreover, the Company's costs related to Year
2000 compliance, which thus far have not been material, could ultimately be
significant. In the event that the Company experiences unforeseen disruptions as
a result of the Year 2000 problem, the Company's business could be seriously
affected.


                                       17
<PAGE>


Item 3:  Quantitative and Qualitative Disclosures About Market Risk

    The Company develops products in the United States and sells them worldwide.
As a result, the Company's financial results could be affected by factors such
as changes in foreign exchange rates or weak economic conditions in foreign
markets. Since the Company's sales are currently priced in U.S. dollars and are
translated to local currency amounts, a strengthening of the dollar could make
the Company's products less competitive in foreign markets. Interest income and
expense are sensitive to changes in the general level of U.S. interest rates,
particularly since the Company's investments are in short-term instruments and
the Company's available line of credit requires interest payments calculated at
variable rates. Based on the nature and current levels of the Company's
investments and debt, however, the Company has concluded that there is no
material market risk exposure.



                                       18
<PAGE>

PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings:

  On November 6, 1999, APACE, Inc. ("APACE") commenced an action against the
Company in the Supreme Court of the State of New York claiming that the Company
had been awarded a "Prime Contract" by the Department of Energy and that the
Company had failed or refused to negotiate a subcontract with APACE. APACE is
seeking $1,000,000 in damages. The Company denies the allegations, has moved to
stay the action and has filed for arbitration with the American Arbitration
Association in Boston, Massachusetts. The American Arbitration Association has
decided that the arbitration will go forward in Boston and not New York. In the
meantime, APACE has requested that the court permit the action to go forward and
for the arbitration to be stayed. At this time, the arbitration is still going
forward in Boston, and an arbitrator has been selected. It is anticipated that a
preliminary hearing will be scheduled shortly.

Item 2.  Changes in Securities and Use of Proceeds:

RECENT SALES OF UNREGISTERED SECURITIES

  On October 21, 1999, in connection with its acquisition of Ling Electronics,
Inc. and Ling Electronics, Ltd., the Company issued 770,000 shares of its Common
Stock to MTI, the parent entity of the two acquired entities. The common stock
was issued in reliance upon the exemptions from registration under Section 4(2)
of the Securities Act or Regulation D promulgated thereunder, relative to sales
by an issuer not involving a public offering.

  On October 21, 1999, in connection with an investment, the Company issued
370,800 shares of its Common Stock to Mechanical Technology Incorporated. In
addition, the Company issued to MTI a warrant to purchase 36,000 shares of its
Common Stock at an exercise price of $8.80 per share. This warrant expires on
October 21, 2003. On January 31, 2000, in connection with a second closing of
this investment, the Company issued 659,200 shares of its Common Stock and a
warrant to purchase 64,000 shares of its Common Stock at an exercise price of
$8.80 per share. This warrant expires on January 31, 2004. Both the common stock
and the warrants were issued in reliance upon the exemptions from registration
under Section 4(2) of the Securities Act or Regulation D promulgated thereunder,
relative to sales by an issuer not involving any public offering.

  On November 16, 1999, the Company issued 578,761 shares of its Common Stock to
NGC in exchange for certain intellectual property, equipment and other assets
which were used by NGC in connection with its power electronics products
business. In addition, the Company issued to NGC a warrant to purchase 100,000
shares of its Common Stock at an exercise price of $9.725 per share. In
connection with this transaction, on February 4, 2000, the Company issued to NGC
an additional warrant to purchase 100,000 shares of its Common Stock at an
exercise price of $9.725 per share. These warrants expire on December 31, 2006.
Both the Common Stock and the warrants were issued in reliance upon the
exemptions from registration under Section 4(2) of the Securities Act or
Regulation D promulgated thereunder, relative to sales by an issuer not
involving any public offering.

Item 3.  Defaults upon Senior Securities:
Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders:
Not applicable.

Item 5.  Other Information:
Not applicable.

Item 6  Exhibits and Reports on Form 8-K:
(a) Exhibits


10.41  Promissory Note, dated October 6, 1999, made in favor of the Registrant
       by Michael C. Turmelle in the amount of $10,000, together with Promissory
       Note, dated December 6, 1999, made in favor of the Registrant by Michael
       C. Turmelle in the amount of $75,000 is incorporated herein by
       reference to Exhibits to the Registrant's Quarterly Report on Form
       10-Q for the period ended December 31, 1999.

10.42  Senior Secured Convertible Promissory Note, dated January 7, 2000, made
       in favor of the Registrant by Beacon Power Corporation in the amount of
       $200,000 is incorporated herein by reference to Exhibits to the
       Registrant's Quarterly Report on Form 10-Q for the period ended December
       31, 1999.

10.43  Stock Purchase Warrant issued on February 4, 2000 by the Registrant to
       Northrop Grumman Corporation is incorporated herein by reference to
       Exhibits to the Registrant's Quarterly Report on Form 10-Q for the
       period ended December 31, 1999.

27     Financial Data Schedule

99     Risk Factors are incorporated herein by reference to Exhibit 99 to the
       Registrant's Quarterly Report on Form 10-Q for the period ended June
       30, 2000.


(b) Reports on Form 8-K

  On November 5, 1999, the Registrant filed a Current Report on Form 8-K, dated
October 21, 1999, in connection with its acquisition of Ling Electronics, Inc.
and Ling Electronics, Ltd. from Mechanical Technology Incorporated and an
investment by Mechanical Technology Incorporated of approximately $7,000,000.

  On November 24, 1999, the Registrant filed a Current Report on Form 8-K, dated
November 16, 1999, in connection with its purchase of certain intellectual
property, equipment and other assets from Northrop Grumman Corporation.

  On January 4, 2000, the Registrant filed a Current Report on Form 8-K/A, dated
October 21, 1999, in connection with its acquisition of Ling Electronics, Inc.
and Ling Electronics, Ltd. from Mechanical Technology Incorporated.


                                       19
<PAGE>

                                   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.


                                             SATCON TECHNOLOGY CORPORATION


Date:  September 18, 2000                    By:  /s/ Sean F. Moran
                                                  ---------------------
                                                  Sean F. Moran, Chief Financial
                                                  Officer
                                                  (Principal Financial and
                                                  Accounting Officer)



                                       20

<PAGE>

                                   EXHIBIT INDEX

10.41  Promissory Note, dated October 6, 1999, made in favor of the Registrant
       by Michael C. Turmelle in the amount of $10,000, together with Promissory
       Note, dated December 6, 1999, made in favor of the Registrant by Michael
       C. Turmelle in the amount of $75,000 is incorporated herein by
       reference to Exhibits to the Registrant's Quarterly Report on Form
       10-Q for the period ended December 31, 1999.

10.42  Senior Secured Convertible Promissory Note, dated January 7, 2000, made
       in favor of the Registrant by Beacon Power Corporation in the amount of
       $200,000 is incorporated herein by reference to Exhibits to the
       Registrant's Quarterly Report on Form 10-Q for the period ended December
       31, 1999.

10.43  Stock Purchase Warrant issued on February 4, 2000 by the Registrant to
       Northrop Grumman Corporation is incorporated herein by reference to
       Exhibits to the Registrant's Quarterly Report on Form 10-Q for the
       period ended December 31, 1999.

27     Financial Data Schedule

99     Risk Factors are incorporated herein by reference to Exhibit 99 to the
       Registrant's Quarterly Report on Form 10-Q for the period ended June
       30, 2000.


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