<PAGE>

--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                             ______________________

                                    FORM 10-Q

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

                  For the Quarterly Period Ended June 30, 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, 9,617,009 shares outstanding as of July 31, 1999.


 ______________________________________________________________________________
<PAGE>

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>


<S>                                                                                          <C>
                         PART I: FINANCIAL INFORMATION                                         Page
                         -----------------------------                                         ----
ITEM 1: FINANCIAL STATEMENTS

        Consolidated Balance Sheets (Unaudited)..................................................1
        Consolidated Statements of Operations (Unaudited)........................................2
        Consolidated Statements of Cash Flows (Unaudited)........................................3
        Notes to Interim Consolidated Financial Statements (Unaudited)...........................4

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.....................................................10

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............................15


                           PART II: OTHER INFORMATION

Items No. 1 through 6...........................................................................16

Signature.......................................................................................17

</TABLE>
<PAGE>

                         SATCON TECHNOLOGY CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           June 30,       SEPTEMBER 30,
                                                                                       ----------------  ----------------
                                                                                             1999              1998
                                                                                       ----------------  ----------------
                                    ASSETS
<S>                                                                                    <C>               <C>
Current assets:
   Cash and cash equivalents  .......................................................     $    516,610      $  1,201,610
   Marketable securities   ..........................................................               --           657,431
   Accounts receivable, net of allowance of $239,206 at June 30, 1999 and
     $51,836 at September 30, 1998  .................................................        2,984,371         3,347,405
   Unbilled contract costs, net of allowance of $688,510 at June 30, 1999 and
     $57,611 at September 30,1998                                                                851,767         1,196,318
   Inventory ........................................................................        3,851,679         3,678,067
   Prepaid expenses and other assets.................................................          442,057           358,308
   Amounts due from related party                                                                   --           596,453
                                                                                          ------------      ------------
      Total current assets...........................................................        8,646,484        11,035,592
   Property and equipment, net.......................................................        3,320,909         2,677,786
   Intangibles, net .................................................................        3,246,804         2,967,988
   Investment in Beacon Power Corporation............................................               --         1,458,183
   Other assets                                                                                 64,755            27,041
                                                                                          ------------      ------------
      Total assets...................................................................     $ 15,278,952      $ 18,166,590
                                                                                          ============      ============

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Line of credit....................................................................     $  2,617,296                --
   Accounts payable..................................................................        1,847,655      $  1,447,897
   Accrued payroll and payroll related expenses......................................          635,431           352,701
   Deferred liabilities..............................................................          241,651           197,930
   Other accrued expenses............................................................          980,965           385,999
   Current portion of long-term debt.................................................               --           146,594
                                                                                          ------------      ------------
      Total current liabilities......................................................        6,322,998         2,531,121
                                                                                          ------------      ------------
Long-term liabilities:
      Long-term debt.................................................................               --           221,462
                                                                                          ------------      ------------
      Total long-term liabilities....................................................               --           221,462
                                                                                          ------------      ------------
Commitments and contingencies........................................................               --                --

Stockholders' equity:
   Preferred stock; $.01 par value, 1,000,000 shares authorized; none issued
     and outstanding.................................................................               --                --
   Common stock, $.01 par value, 20,000,000 shares authorized; 9,367,009  shares
     issued at June 30, 1999 and 9,018,549 shares at September 30, 1998..............           93,670            90,185
   Additional paid-in capital........................................................       32,886,571        28,377,718
   Shares held in escrow, at market; 42,860 shares at June 30, 1999..................         (332,165)               --
   Amounts receivable from exercise of stock options.................................         (750,000)               --
   Retained earnings/(deficit).......................................................      (22,692,418)      (12,870,440)
   Net unrealized losses on marketable securities, net of tax effect.................               --           (10,380)
   Treasury stock, at cost; 44,500 shares at June 30, 1999 and 28,300 shares
     at September 30, 1998...........................................................         (249,704)         (173,076)
                                                                                          ------------      ------------
      Total stockholders' equity.....................................................        8,955,954        15,414,007
                                                                                          ------------      ------------
         Total liabilities and stockholders' equity..................................     $ 15,278,952      $ 18,166,590
                                                                                          ============      ============
</TABLE>


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

                                       1
<PAGE>

                          SATCON TECHNOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS ENDED        FOR THE NINE MONTHS ENDED
                                                                            JUNE 30,                          JUNE 30,
                                                                     1999             1998             1999             1998
                                                                ---------------  ---------------  ---------------  ---------------
<S>                                                             <C>              <C>              <C>              <C>
Revenue.......................................................     $ 4,091,579      $ 3,643,681      $11,478,898      $11,664,848
                                                                   -----------      -----------      -----------      -----------
Cost of revenue...............................................       5,194,413        2,406,437       11,375,009        8,137,304
Selling, general and administrative expenses..................       5,176,010        1,111,644        7,194,338        3,653,939
Research and development expenses.............................         228,672           25,273          381,272          312,303
Amortization..................................................         101,047           75,468          272,840          213,063
                                                                   -----------      -----------      -----------      -----------
Total operating expenses......................................      10,700,142        3,618,822       19,223,459       12,316,609
                                                                   -----------      -----------      -----------      -----------
Operating income/(loss).......................................      (6,608,563)          24,859       (7,744,561)        (651,761)
Loss from Investment in Beacon Power Corporation..............        (396,620)      (1,269,229)      (1,884,803)      (2,239,213)
Other income/(loss)...........................................        (141,452)              --         (150,464)              --
Interest income/(expense), net................................         (45,672)          36,035          (42,150)         142,398
                                                                   -----------      -----------      -----------      -----------
Net loss......................................................     $(7,192,307)     $(1,208,335)     $(9,821,978)     $(2,748,576)
                                                                   ===========      ===========      ===========      ===========

Net loss per weighted average share, basic and diluted........          $(0.78)          $(0.13)          $(1.08)          $(0.31)
                                                                   ===========      ===========      ===========      ===========
Weighted average number of common shares, basic and diluted...       9,176,849        9,018,549        9,072,060        8,939,562
</TABLE>



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

                                       2
<PAGE>

                          SATCON TECHNOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  For the nine months ended
                                                                                         June 30,
                                                                                 1999                  1998
                                                                         --------------------  --------------------
<S>                                                                   <C>                   <C>
Cash flows from operating activities:
 Net loss ..........................................................         $(9,821,978)          $(2,748,576)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
   Depreciation and amortization....................................             744,486               651,263
   Allowance for unbilled contract costs............................             630,299               (26,241)
   Allowance for doubtful accounts..................................             187,970               (70,807)
   Allowance for inventory..........................................             714,536                    --
   Loss from Investment in Beacon Power Corp........................           1,884,803             2,239,213
   Loss on sale of marketable securities............................              87,535                    --
   Write-off of impaired assets.....................................             260,790                    --
   Non-cash compensation expense related to issuance of
      common stock options to non-employees.........................           2,183,373                    --
   Changes in operating assets and liabilities, net
      of effects of acquisitions:
     Accounts receivable............................................              12,954                62,974
     Prepaid expenses and other assets..............................             (63,949)               48,590
     Unbilled contract costs........................................            (285,748)              194,093
     Inventory......................................................            (754,876)           (2,025,918)
     Other assets...................................................             558,739              (101,406)
     Accounts payable...............................................             284,122               693,963
     Accrued expenses and payroll...................................             322,194              (372,097)
     Deferred liabilities...........................................              43,721               (15,986)
                                                                             -----------           -----------
  Total adjustments.................................................           6,810,949             1,277,641
                                                                             -----------           -----------
Net cash used in operating activities...............................          (3,011,029)           (1,470,935)
                                                                             -----------           -----------

Cash flows from investing activities:
 Sales and maturities of marketable securities......................             580,144               577,867
 Patent and intangible expenditures.................................             (51,333)             (415,867)
 Capital expenditures...............................................            (170,574)             (852,321)
 Cash paid for acquisitions.........................................            (995,876)                   --
 Investment in Beacon Power Corporation.............................            (155,000)           (1,999,781)
                                                                             -----------           -----------
Net cash used in investing activities...............................            (792,639)           (2,690,102)
                                                                             -----------           -----------

Cash flows from financing activities:
 Repayment of  borrowings...........................................            (100,000)              (42,842)
 Proceeds from line of credit.......................................           2,617,296                    --
 Proceeds from exercise of stock options............................             678,000               581,739
 Proceeds from exercise of warrants.................................                  --             1,221,873
 Purchase of treasury stock.........................................             (76,628)                   --
                                                                             -----------           -----------
Net cash provided by financing activities...........................           3,118,668             1,760,770
                                                                             -----------           -----------

Net decrease in cash and cash equivalents...........................            (685,000)           (2,400,267)
Cash and cash equivalents at beginning of period....................           1,201,610             4,256,504
                                                                             -----------           -----------
Cash and cash equivalents at end of period..........................         $   516,610           $ 1,856,237
                                                                             ===========           ===========
</TABLE>


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

                                       3
<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 June 30, 1999 and 1998 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 Annual Report on Form 10-K for the year ended September 30, 1998.
Operating results for the three-month and nine-month period ended June 30, 1999
are not necessarily indicative of the results that may be expected for any
future interim period or for the entire fiscal year.

  In May 1999, the Company appointed Arthur Andersen LLP as the Company's
independent public accountants.  In connection with the finalization of the
Company's financial results for the three and nine months ended June 30, 1999,
the Company with the assistance of Arthur Andersen LLP, conducted a review of
its accounting policies and assessed the realizability of certain assets.  As a
result of this effort, the Company has:

 .    changed the accounting method for its investment in Beacon Power
     Corporation from the cost method to the equity method, effective October
     23, 1998. See Note B.


 .    provided the following additional valuation reserves and adjustments:

<TABLE>
<CAPTION>

                                                                                 THREE MONTHS        NINE MONTHS
                                                                                    ENDED               ENDED
                                                                                JUNE 30, 1999       JUNE 30, 1999
                                                                              -------------------------------------
<S>                                                                            <C>                <C>
Accounts receivable......................................................        $  225,000         $  305,000
Unbilled contract costs..................................................         2,320,000          2,420,000
Inventory................................................................           725,000          1,425,000
Intangibles  Patents.....................................................           150,000            150,000
Warranty reserve.........................................................            12,000             36,000
Sales return reserve.....................................................            22,000             67,000
Other....................................................................            10,000             10,000
                                                                             -------------------------------------
                                                                                 $3,464,000         $4,413,000
                                                                             =====================================
</TABLE>


 .    written off $196,000 of machinery and equipment, $84,000 of which relates
     to the first quarter ended December 31, 1998.

 .    accrued rent expense of $90,000, which was recorded ratably over the first
     three quarters of fiscal 1999.

 .    recorded the fair market value, $56,000, of a warrant granted to a non-
     employee in November 1998.

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period.  Actual results could differ from those estimates.

                                       4
<PAGE>

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

Note B. Significant Events
--------------------------

BEACON POWER CORPORATION

  On October 23, 1998, the Company entered into a Securities Purchase Agreement
(the "Agreement") with Beacon Power Corporation ("Beacon"), Perseus Capital,
L.L.C. ("Perseus"), Duquesne Enterprises, Inc. ("Duquesne") and Micro Generation
Technology Fund, L.L.C ("Micro", and together with Perseus and Duquesne the
"Purchasers"). Pursuant to the terms of the Agreement, (i) the Purchasers
purchased from Beacon and Beacon issued, sold and delivered to the Purchasers
1,900,000 shares (the "Shares") of Beacon's Class D Preferred Stock, $.01 par
value per share; (ii) the Purchasers have the right to receive certain warrants
to purchase shares of Beacon's common stock, $.01 par value per share
("Beacon's Common Stock"); (iii) the Company granted the Purchasers the right
(the "Put Right") to cause the Company, in circumstances described below, to
purchase all of the Shares and all of Beacon's Common Stock issuable upon
conversion of the Shares; and (iv) upon exercise of the Put Right pursuant to
the terms of the Agreement, the Company must pay the consideration contemplated
by the Agreement in shares of the Company's common stock, $.01 par value per
share (the "Common Stock"), valued at the average fair value for the fifteen
trading days before and after notice of exercise of the Put Right. The aggregate
consideration received by Beacon was $4,750,000. 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 and
upon the occurrence of certain going private transactions involving the Company.
If the Put Right were to be exercised, the Company would most likely recognize a
loss equal to the value of the Company's shares issued upon exercise of the Put
Right. The Company retained approximately .1% of Beacon's outstanding voting
stock. The Company owns shares of Series A Preferred stock of Beacon.  Series A
preferred stock is non-voting and is convertible at anytime into Beacon's Common
Stock.  On an as converted basis, the Company would own approximately 70% of
Beacon's outstanding voting stock.

  On June 22, 1999, the Company purchased from Beacon a note (the "June 22, 1999
Note") with a principal amount of $125,000 due and payable on the earlier of
(i) September 22, 1999 ("Maturity Date") or (ii) upon the occurrence of an event
of default, as defined therein.  The note bears interest at 12  1/2% per annum;
provided that if the note is not repaid in full on or prior to Maturity Date the
interest rate would increase to 15% per annum.  The June 22, 1999 Note was
issued pursuant to the terms of a Note Purchase Agreement, dated as of June 22,
1999, by and among Beacon, the Purchasers named therein and the Company (the
"Note Purchase Agreement"). Interest on the June 22, 1999 Note is payable on the
Maturity Date.

  On July 6, 1999, the Company purchased from Beacon an additional note (the
"July 6, 1999 Note") with a principal amount of $125,000 due and payable on the
earlier of (i) Maturity Date or (ii) upon the occurrence of an event of default.
The note bears interest at 12 1/2% per annum; provided that if the note is not
repaid in full on or prior to Maturity Date the interest rate would increase to
15% per annum (the "July 6, 1999 Note" and together with with the June 22, 1999
Note, the "Notes"). The July 6, 1999 Note was also issued pursuant to the terms
of the Note Purchase Agreement. Interest on the July 6, 1999 Note is payable at
the Maturity Date.

  In early August 1999, the Company exchanged in full the Notes and $83,333.33
for a note with a principal amount of $333,333.33 ("Bridge Note") plus accrued
interest due and payable on the earlier of (i) the date of conversion of the
note as described below or (ii) upon the occurrence of an event of default. The
Bridge Note bears interest at 12 1/2% per annum; provided that if the Funding
Date (as defined below) does not occur within six months, such interest rate
shall increase effective February 2, 2000 to 15% per annum. The Bridge Note was
issued pursuant to the terms of a Note and Warrant Purchase Agreement, dated as
of August 2, 1999, by and among Beacon, the Purchasers named therein and the
Company (the "Note and Warrant Purchase Agreement"). Interest on the Bridge Note
is payable on the Maturity Date.

  Pursuant to the terms of the Note and Warrant Purchase, the Company is
required to purchase two (2) additional notes each with a principal amount of
$333,333.33 no earlier than August 4, 1999 and October 1, 1999, respectively,
and no later than the earliest of (a) October 15, 1999 and November 15, 1999,
respectively, (b) two days after the Company closes on a new equity or debt
securities financing or (c) at such other times as mutually agreeable to the
Company and Beacon. The Bridge Note and the committed notes of $333,333.33 are
collectively referred to as the "Bridge Securities."

                                       5
<PAGE>

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


BEACON POWER CORPORATION)-(CONTINUED)

  In the event Beacon obtains a funding commitment for at least $5 million of
external funds within four months of the issuance of the first Bridge Security
and closes a funding pursuant to such commitment within six months of the first
issuance of the first Bridge Security (the date of such funding, the "Funding
Date"), all outstanding principal and interest on the Bridge Securities will
convert into equity of Beacon at a price and on terms that are equivalent to the
securities issued by Beacon pursuant to the funding commitment.  If Beacon does
not obtain a qualified financing commitment within the four month period
referred to above, or close such funding within the six month period referred to
above, the Bridge Securities will convert into securities of Beacon pursuant to
terms to be agreed to with Beacon, or if no terms are agreed to, the Company has
the right to demand payment of all principal and interest on the Bridge
Securities.

  Warrants to purchase shares of Beacon Securities were and will be issued in
connection with each issuance of the Bridge Securities.  The warrants will be
for the purchase of the type of securities to be issued upon conversion of the
Bridge Securities or if such securities are not converted, Beacon common stock.
The number of shares of Beacon securities that will be subject to the warrants
will be determined by dividing (i) 25% of the principal amount of the Bridge
Securities issued by (ii) the price per share of the Bridge Securities, or, if
the Bridge Securities are not converted, $2.50.

  After consultation with its new independent public accountants, Arthur
Andersen LLP, the Company retroactively changed its method of accounting for its
investment in Beacon to the equity method, effective October 23, 1998. This
change resulted in an additional $1,614,000 loss in the investment in Beacon.
The effect of this change on the quarterly results for fiscal 1999 is as
follows:

<TABLE>
<CAPTION>
                                                                   AS REPORTED        AS ADJUSTED
                                                              --------------------------------------
<S>                                                             <C>                   <C>
Equity in the loss of Beacon:
     Quarter ended December 31, 1998........................        $272,437             $1,064,010
     Quarter ended March 31, 1999...........................           --                   424,173
     Quarter ended June 30, 1999............................          N/A                   396,620
                                                              --------------------------------------
     Nine months ended June 30, 1999........................          N/A                $1,884,803
                                                              ======================================
</TABLE>

  At June 30, 1999, the Company has accrued losses of $271,620 which is included
in accrued expenses, relating to its share of Beacon losses which it is required
to fund pursuant to the terms of the Note and Warrant Purchase Agreement. In
future periods, the Company will continue to record its share of Beacon's losses
up to the amount of its actual and committed investment. It is anticipated that
substantially all of the Company's $603,380 remaining and committed investment
in Beacon will be recorded as a loss over the two quarters ending December 31,
1999.

ISSUANCE OF COMMON STOCK AND OPTIONS TO PURCHASE COMMON STOCK

  During the quarter ended quarter June 30, 1999, the Company granted options to
purchase 750,000 shares of the Company's common stock to consultants at prices
ranging from $5.75 to $10.00 per share. The options are fully vested. The
Company has charged the fair market value of the options as determined by using
the Black-Scholes option pricing model, of approximately $2,127,000, to selling,
general and administrative expenses. Subsequent to these grants, a consultant
exercised an option to purchase 200,000 shares at $7.00 per share. The Company
received $650,000 of cash and the remaining amount due from the shareholder is
classified within stockholders' equity as amounts receivable from exercise of
stock options.

  On March 9, 1999, the Company issued 42,860 shares of Common Stock to an
escrow agent in connection with a consulting agreement entered into by the
Company and Mr. Albert R. Snider pursuant to which Mr. Snider will perform such
consulting, advisory and related services as the Company may reasonably request
from time to time between October 1, 1999 and October 1, 2002. These shares 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.

                                       6
<PAGE>

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


ISSUANCE OF COMMON STOCK AND OPTIONS TO PURCHASE COMMON STOCK-(Continued)

  At March 31, 1999, the Company accounted for the $190,191 initial fair market
value of the shares issued to Mr. Snider as a prepaid expense with a
corresponding increase to stockholders' equity. In the quarter ended June 30,
1999, the Company has (i) reclassified the prepaid expense to stockholders'
equity, and (ii) marked the value of the shares placed in escrow to fair market
value at June 30, 1999. As long as the shares remain in escrow, the Company will
continue to mark the shares to their fair market value.

LINE OF CREDIT

  The Company has a $3,000,000 demand discretionary line of credit with a bank.
The line of credit bears interest at the bank's prime rate plus 1 1/2% (9 1/4%
as of June 30, 1999). Available borrowings are based on a formula of eligible
accounts receivable and inventory (the "Borrowing Base"). The Company was also
permitted to borrow up to $500,000 in excess of the Borrowing Base (such excess,
"Over Advances"); provided the Over Advances were fully paid on August 6, 1999.
On August 9, 1999, the Company was otherwise required to pay the Over Advances,
in full, but received an extension to September 30, 1999 ("the Extension") from
the bank in consideration of paying $250,000 of the Over Advances. Under the
terms of the Extension, the Company is required to pay all of the remaining Over
Advances in full by September 30, 1999. At June 30, 1999, the amount outstanding
under this facility exceeded the eligible Borrowing Base, by approximately
$500,000. As of August 16, 1999, the amount of the Over Advances is
approximately $250,000.


Acquisitions

   On April 12, 1999, the Company executed an agreement to purchase
substantially all of the assets and assume certain liabilities of HyComp, Inc.
("HyComp"). This agreement was dated as of March 31, 1999 and was by and between
HyComp and HyComp Acquisition Corp., a wholly-owned subsidiary of the Company.
On April 12, 1999 (the "Closing Date"), the Company completed the acquisition of
HyComp. The aggregate consideration paid by the Company for the acquired assets
of HyComp consisted of (i) $750,000 in cash; (ii) the assumption of certain
liabilities and obligations of HyComp in the amount of approximately $250,000;
(iii) transaction costs of $73,000 and (iv) the Company agreed to pay a 5%
royalty to HyComp on certain sales for 52 weeks subsequent to the Closing Date.
At June 30, 1999, the Company had recorded $50,000 of accrued royalties. The
purchase price has been allocated as follows:

<TABLE>
<CAPTION>

<S>                                                                          <C>
Inventory...............................................................   $  162,825
Deposits................................................................       19,800
Property and equipment..................................................      940,500
                                                                         -------------
                                                                           $1,123,125
                                                                         =============
</TABLE>

The pro forma financial information has not been presented as the results of
HyComp are not material.

                                       7
<PAGE>

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

Note C. 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    FOR THE NINE MONTHS ENDED
                                                                                 JUNE 30,                      JUNE 30,
                                                                           1999           1998           1999           1998
                                                                       -------------  -------------  -------------  -------------

<S>                                                                    <C>            <C>            <C>            <C>
     Net loss........................................................   $(7,192,307)   $(1,208,335)   $(9,821,978)   $(2,748,576)
     BASIC:
     Common shares outstanding, beginning of period..................     9,074,049      9,018,549      8,990,249      8,769,146
     Weighted average common shares issued during the period.........       102,800             --         95,378        170,419
     Weighted average shares repurchased during the period...........            --             --        (13,567)            --
                                                                        -----------    -----------    -----------    -----------
     Weighted average shares outstanding--basic......................     9,176,849      9,018,549      9,072,060      8,939,562
                                                                        ===========    ===========    ===========    ===========
     Net loss per weighted average share, basic......................   $     (0.78)   $     (0.13)   $     (1.08)   $     (0.31)
                                                                        ===========    ===========    ===========    ===========
     DILUTED:
     Weighted average shares outstanding--basic......................     9,176,849      9,018,549      9,072,060      8,939,562
     Weighted average common stock equivalents (a)...................            --             --             --             --
                                                                        -----------    -----------    -----------    -----------
     Weighted average shares outstanding--diluted....................     9,176,849      9,018,549      9,072,060      8,939,562
                                                                        ===========    ===========    ===========    ===========
     Net loss per weighted average share, diluted....................   $     (0.78)   $     (0.13)   $     (1.08)   $     (0.31)
                                                                        ===========    ===========    ===========    ===========
</TABLE>

(a)  not included if antidilutive

As of June 30, 1999 and 1998, 1,327,951 and 943,675 options and warrants,
respectively, were excluded from the weighted average common shares outstanding
as their effect would be anti-dilutive.

Note D. Inventory
-----------------

  Inventory consists of the following:
<TABLE>
<CAPTION>
                                                                            JUNE 30,        SEPTEMBER 30,
                                                                              1999              1998
                                                                         ---------------   --------------
<S>                                                                     <C>                <C>
Raw material.........................................................       $1,519,934         $1,783,803
Work-in-process......................................................        1,933,986          1,788,241
Finished goods.......................................................          397,759            106,023
                                                                         ---------------   --------------
                                                                            $3,851,679         $3,678,067
                                                                         ===============   ==============
</TABLE>

During the quarter ended June 30, 1999, the Company performed a review of the
inventory valuation methodologies.  The Company determined that $725,000 of
additional reserves were required for potentially obsolete and excess inventory
at June 30, 1999. In addition, the Company determined that adjustments totaling
approximately $700,000 were required to reduce inventory and increase cost of
revenues for the quarter ended March 31, 1999.

                                       8
<PAGE>

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


Note E. Comprehensive Income
----------------------------

  As of October 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income."  SFAS 130
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements.
Financial statements for prior periods must be restated.


  The Company's total comprehensive income is as follows:

<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED    FOR THE NINE MONTHS ENDED
                                                                              JUNE 30,                      JUNE 30,
                                                                        1999           1998           1999           1998
                                                                    -------------  -------------  -------------  -------------

<S>                                                                 <C>            <C>            <C>            <C>
Net loss..........................................................   $(7,192,307)   $(1,208,549)   $(9,821,978)   $(2,748,576)
                                                                     ===========    ===========    ===========    ===========

Other comprehensive income/(loss), net of tax:
     Unrealized gains/(losses) on securities......................   $    15,085    $       547    $    10,380    $     6,683
                                                                     -----------    -----------    -----------    -----------
Other comprehensive income/(loss).................................   $    15,085    $       547    $    10,380    $     6,683
                                                                     -----------    -----------    -----------    -----------
Comprehensive loss................................................   $(7,177,222)   $(1,208,002)   $(9,811,598)   $(2,741,893)
                                                                     ===========    ===========    ===========    ===========
</TABLE>


                                       9
<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.  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.  The factors
include, without limitation, those set forth below under the caption "Factors
Affecting Future Results."

RESULTS OF OPERATIONS

  The following table sets forth, for the periods indicated, the percentage of
revenue for certain items in the Company's Statement of Operations for each
period:

<TABLE>
<CAPTION>
                                                                 FOR THE THREE MONTHS      FOR THE NINE MONTHS
                                                                    ENDED  JUNE 30,          ENDED  JUNE 30,
                                                                -------------------------------------------------
                                                                   1999        1998        1999         1998
                                                                -------------------------------------------------
<S>                                                             <C>          <C>         <C>          <C>
Revenue........................................................   100.0%      100.0%       100.0%      100.0%
Cost of revenue................................................   127.0        66.0         99.1        69.8
Selling, general and administrative expenses...................   126.5        30.5         62.7        31.3
Research and development expenses..............................     5.6         0.7          3.3         2.7
Amortization...................................................     2.5         2.1          2.4         1.8
Total operating expenses (excluding cost of
 revenue)......................................................   134.6        33.3         68.4        35.8
Operating income/(loss)........................................  (161.5)        0.7        (67.5)       (5.6)
Loss from Investment in Beacon Power Corporation...............    (9.7)      (34.8)       (16.4)      (19.2)
Other income/(loss)............................................    (3.5)          -         (1.3)          -
Interest income/(expense), net.................................    (1.1)        1.0         (0.4)        1.2
Net loss.......................................................  (175.8%)     (33.2%)      (85.6%)     (23.6%)
</TABLE>

Three Months Ended June 30, 1999 ("Q3 1999") Compared to the Three Months Ended
-------------------------------------------------------------------------------
June 30, 1998 ("Q3 1998")
-------------------------

  Revenue.  The Company's revenue increased approximately $448,000 or 12%, from
Q3 1998 to Q3 1999.  The increase is primarily due to a significant increase in
product revenues of approximately $1,000,000 offset by a reduction in product
development revenues of $500,000.

  Cost of revenue. Cost of revenue increased approximately $2,788,000 or 115%,
from Q3 1998 to Q3 1999. During the quarter ended June 30, 1999, the Company
performed a review of its inventory valuation methodologies. The Company
determined that $725,000 of additional reserves was required for potentially
obsolete and excess inventory at June 30, 1999. In addition, the Company
recorded $350,000 of additional reserve for unbilled contract costs and expensed
$150,000 of abandoned patents. The remainder was the result of a change in
product mix.

  Selling, general and administrative expenses.  Selling, general and
administrative expenses increased approximately $4,064,000 or 366% from Q3 1998
to Q3 1999.  During the quarter ended June 30, 1999, the Company granted options
to purchase 750,000 shares of common stock to consultants at prices ranging from
$5.75 to $10.00 per share, and accordingly, the Company has charged the fair
market value of $2,127,000 to selling, general and administrative expenses.
The Company also recorded a reserve of $1,280,000 for unbilled contract costs
and an additional reserve of $802,000 for accounts receivable.

  Research and development expenses. Research and development expenses increased
approximately $203,000 or 805% from Q3 1998 to Q3 1999. The increase is
attributable to the continued development of magnetic bearings and suspension
systems and electro-optic and sensor inspection systems.

                                       10
<PAGE>

  Amortization.  Amortization increased approximately $26,000 or 34% from Q3
1998 to Q3 1999. This was primarily the result of goodwill recorded in
connection with the acquisition of Inductive and Lighthouse in January 1999.

  Loss from Investment in Beacon Power Corporation.   After consultation with
its new independent public accountants, Arthur Andersen LLP, the Company
retroactively changed its method of accounting for its investment in Beacon to
the equity method, effective October 23, 1998.  This change resulted in an
additional $1,614,000 loss in the investment in Beacon.  The effect of this
change on the quarterly results for fiscal 1999 is as follows:

<TABLE>
<CAPTION>
                                                       AS REPORTED        AS ADJUSTED
                                                  --------------------------------------
<S>                                                  <C>                 <C>
Equity in the loss of Beacon:
     Quarter ended December 31, 1998...........         $272,437           $1,064,010
     Quarter ended March 31, 1999..............            --                 424,173
     Quarter ended June 30, 1999...............           N/A                 396,620
                                                  --------------------------------------
     Nine months ended June 30, 1999...........           N/A              $1,884,803
                                                  ======================================
</TABLE>

  At June 30, 1999, the Company has accrued losses of $271,620 relating to its
share of Beacon losses which it is required to fund pursuant to the terms of the
Note Purchase and Warrant Agreement. In future periods, the Company will
continue to record its share of Beacon's losses up to the amount of its actual
and committed investment. It is anticipated that substantially all of the
Company's $603,380 remaining and committed investment in Beacon will be recorded
as a loss over the two quarters ending December 31, 1999.

  Other income/(loss),net.  Other income/(loss), net increased approximately
$141,000 from Q3 1998 to Q3 1999.  The loss was primarily the result of the sale
of marketable securities.

  Interest income/(expense), net.  Interest income/(expense), net decreased
approximately $82,000 or 227% from Q3 1998 to Q3 1999.  The decrease is the
result of increased borrowings under the Line of Credit to approximately
$2,617,000 at June 30, 1999.



Nine Months Ended June 30, 1999 ("Q3 1999 YTD") Compared to the Nine Months
---------------------------------------------------------------------------
Ended June 30, 1998 ("Q3 1998 YTD")
-----------------------------------

  Revenue.  The Company's revenue decreased approximately $186,000 or 1.6%, from
Q3 1998 YTD to Q3 1999 YTD. The decrease is primarily attributable to a
reduction in revenue related to research and development contracts of
approximately $1,100,000. This decrease in revenue was partially offset by
increases of sale of manufactured products of approximately $1,000,000.

  Cost of revenue.  Cost of revenue increased approximately $3,238,000 or 40%,
from Q3 1998 YTD to Q3 1999 YTD.  During the nine months ended June 30, 1999,
the Company performed a review of its inventory valuation methodologies.  The
Company determined that $725,000 of additional reserves was required for
potentially obsolete and excess inventory.  In addition, the Company determined
that adjustments totaling approximately $700,000 were required to reduce
inventory.  The Company also recorded $350,000 of additional reserve for
unbilled contract costs and expensed $150,000 of abandoned patents. The
remainder was the result of a change in product mix.

  Selling, general and administrative expenses.  Selling, general and
administrative expenses increased approximately $3,540,000 or 97% from Q3 1998
YTD to Q3 1999 YTD.  The increase is primarily due to options granted to
purchase 750,000 shares of common stock to consultants at prices ranging from
$5.75 to $10.00 per share with a fair market value of $2,127,000.  The Company
also recorded a reserve of $1,280,000 for unbilled contract costs and an
additional reserve of $802,000 for accounts receivable.

  Research and development. Research and development expenses increased
approximately $69,000 or 22% from Q3 1998 YTD to Q3 1999 YTD.  The increase is
primarily the result of expenses related to the continued development of
magnetic bearings and suspension systems and electro-optic and sensor inspection
systems.

                                       11
<PAGE>

  Amortization. Amortization increased approximately $60,000
or 28% from Q3 1998 YTD to Q3 1999 YTD.  This was primarily the result of the
acquisition of Inductive and Lighthouse in January 1999.

  Loss from Investment in Beacon Power Corporation.  After consultation with its
new independent public accountants, Arthur Andersen LLP, the Company
retroactively changed its method of accounting for its investment in Beacon to
the equity method, effective October 23, 1998.  This change resulted in an
additional $1,614,000 loss in the investment in Beacon.  The effect of this
change on the quarterly results for fiscal 1999 is as follows:

<TABLE>
<CAPTION>
                                                          AS REPORTED       AS ADJUSTED
                                                     -------------------------------------
<S>                                                     <C>                <C>
Equity in the loss of Beacon:
     Quarter ended December 31, 1998...............        $272,437         $1,064,010
     Quarter ended March 31, 1999..................           --               424,173
     Quarter ended June 30, 1999...................          N/A               396,620
                                                    --------------------------------------
     Nine months ended June 30, 1999...............          N/A            $1,884,803
                                                    ======================================
</TABLE>

  At June 30, 1999, the Company has accrued losses of $271,620 relating to its
share of Beacon losses which it is required to fund pursuant to the terms of the
Note and Warrant Purchase Agreement. In future periods, the Company will
continue to record its share of Beacon's losses up to the amount of its actual
and committed investment. It is anticipated that substantially all of the
Company's $603,380 remaining and committed investment in Beacon will be recorded
as a loss over the two quarters ending December 31, 1999.

  Other income/(loss),net.  Other income, net decreased approximately $150,000
from Q3 1998 YTD to Q3 1999 YTD.  The loss was the result of the sale of
marketable securities.

  Interest income/(expense), net.  Interest income, net decreased approximately
$185,000 or 130% from Q3 1998 YTD to Q3 1999 YTD.  The decrease is the result of
increased borrowings under the line of credit to approximately $2,617,000 at
June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

  The Company's cash and cash equivalents was approximately $517,000 as of
June 30, 1999, a decrease of approximately $685,000 from September 30, 1998.
Cash used in operating activities was approximately $3,011,000 for Q3 1999 YTD,
compared to approximately $1,471,000 for Q3 1998 YTD.

  On June 22, 1999, the Company purchased from Beacon a note with a principal
amount of $125,000 due and payable on the earlier of (i) September 22, 1999
("Maturity Date") or (ii) upon the occurrence of an event of default. The note
bears interest at 12 1/2% per annum; provided that if the note is not repaid in
full on or prior to Maturity Date the interest rate would increase to 15% per
annum (the "June 22, 1999 Note "). The June 22, 1999 Note was issued pursuant to
the terms of a Note Purchase Agreement, dated as of June 22, 1999, by and among
Beacon, the Purchasers named therein and the Company (the "Note Purchase
Agreement"). Interest on the June 22, 1999 Note is payable on the Maturity Date.

  On July 6, 1999, the Company purchased from Beacon an additional note with
a principal amount of $125,000 due and payable on the earlier of (i) Maturity
Date or (ii) upon the occurrence of an event of default. The note
bears interest at 12 1/2% per annum; provided that if the note is not repaid in
full on or prior to Maturity Date the interest rate would increase to 15% per
annum (the "July 6, 1999 Note" and together with with the June 22, 1999 Note,
the "Notes"). The July 6, 1999 Note was also issued pursuant to the terms of the
Note Purchase Agreement. Interest on the July 6, 1999 Note is payable at
Maturity Date.

  In early August 1999, the Company exchanged in full the Notes and $83,333.33
for a note with a principal amount of $333,333.33 ("Bridge Note") plus accrued
interest due and payable on the earlier of (i) the date of conversion as
described below or (ii) upon the occurrence of an event of default. The Bridge
Note bears interest at 12 1/2% per annum; provided that if the Funding Date
(defined below) does not occur within six months such interest rate shall
increase effective February 2, 2000 to 15% per annum pursuant to the terms of a
Note and Warrant Purchase Agreement, dated as of August 2, 1999, by and among
Beacon, the Purchasers named therein and the Company (the "Note and Warrant
Purchase Agreement"). Interest on the Bridge Note is payable on the Maturity
Date.

                                       12
<PAGE>

  Pursuant to the terms of the Note and Warrant Purchase Agreement, the Company
is required to purchase two (2) additional notes each with a principal amount of
$333,333.33 and a warrant to purchase a number of shares of Beacon Class E
Preferred Stock no earlier than August 4, 1999 and October 1, 1999,
respectively, and no later than the earliest of (a) October 15, 1999 and
November 15, 1999, respectively, (b) two days after the Company closes on a new
equity or debt securities financing or (c) at such other times as mutually
agreeable to the Company and Beacon.

  The Company has $3,000,000 demand discretionary line of credit with a bank.
The line of credit bears interest at the bank's prime rate plus 1  1/2% (9 1/4%
as of June 30, 1999).  Available borrowings are based on a formula of eligible
accounts receivable and inventory.  At June 30, 1999, the amount outstanding
under this facility exceeded the eligible borrowing base (such excess "Over
Advances"). On August 9, 1999, the Company was otherwise required to pay the
Over Advances, in full, but received an extension to September 30, 1999 ("the
Extension") from the bank in consideration of paying $250,000 of the Over
Advances. Under the terms of the Extension, the Company is required to pay all
of the remaining Over Advances in full by September 30, 1999.

  The Company anticipates needing approximately $917,000 of external funding
over the next 90 days to pay the remaining $250,000 of Over Advances to its bank
on September 30, 1999 and to fulfill its commitment to Beacon Power Corporation
to advance $333,333 by October 15, 1999 and $333,333 by November 15, 1999. After
obtaining these funds, the Company believes that its existing cash resources,
cash flow from operations and its line of credit will be sufficient to meet its
operations through at least June 30, 2000. Although the Company believes that it
will be able to obtain at least $917,000 of funding from external sources or
through the exercise of currently outstanding options and warrants, there can be
no assurance that the Company will be able to do so on acceptable terms or at
all. The Company's ability to generate cash from operations depends upon, among
other things, revenue growth, its credit and payment terms with vendors, the
collection of accounts receivable and the availability of the Company's demand
discretionary line of credit. If such sources of cash prove insufficient or it
is otherwise unable to obtain necessary third party funding through the issuance
of debt or equity securities or otherwise, the Company will be required to make
changes in its operations, sell assets or otherwise seek protection from its
creditors. Any of these actions will likely have a material adverse effect on
the Company.

     The Company has currently outstanding a stock repurchase program which
authorizes the Company to repurchase up to 5% of its outstanding common stock
(the "Repurchase Program"). Under the Repurchase Program the Company is
authorized to purchase shares of the Company's common stock on the open market
from time to time, depending on market conditions.

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 automotive, telecommunications, industrial
machinery, and semiconductor 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 automotive, telecommunications, industrial, and computer 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.

  On October 23, 1998, the Company entered into the Agreement with Beacon,
Perseus, Duquesne and Micro. Pursuant to the terms of the agreement, (i) the
Purchasers purchased from Beacon and Beacon issued, sold and delivered to the
Purchasers the Shares) of Beacon's Class D Preferred Stock, $.01 par value per
share; (ii) the Purchasers have the right to receive certain warrants to
purchase shares of Beacon's Common Stock; (iii) the Company granted the
Purchasers the Put Right to cause the Company, in circumstances described below,
to purchase all of the Shares and all of Beacon's Common Stock issuable upon
conversion of the

                                       13
<PAGE>

Shares; and (iv) upon exercise of the Put Right pursuant to the terms of the
agreement, the Company must pay the consideration contemplated by the agreement
in shares of the Company's Common Stock, valued at the average fair value for
the fifteen trading days before and after notice of exercise of the Put Right.
The aggregate consideration received by Beacon was $4,750,000. The Put Right is
exercisable within sixty days of the second, third, forth and fifth anniversary
of the closing date of the transaction, upon certain events of bankruptcy of
Beacon and upon the occurrence of certain going private transactions involving
the Company. If the Put Right were to be exercised, the Company would most
likely recognize a loss equal to the value of the Company's shares issued upon
exercise of the Put Right.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

  In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131 ("SFAS 131"), "Disclosure about Segments of an Enterprise and Related
Information." SFAS 131 is effective for fiscal years beginning after December
15, 1997 and 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. The Company will adopt SFAS
131 in the fiscal year ending September 30, 1999. This Statement need not be
applied to interim financial periods in the initial year of application,
however, comparative information for interim financial statements in the year of
application will be reported in financial statements for interim periods in the
second year of application.

  In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 is effective for fiscal years beginning after June 15,
1999 and establishes a new model for accounting for derivatives and hedging
activities. The Company will adopt SFAS 133 beginning in the first quarter of
the fiscal year ending September 30, 2001.

  Adoption of SFAS 131 and SFAS 133 are not expected to have a material impact
to the Company's consolidated financial position, results of operations or cash
flows, and any effect will be limited to the form and content of its
disclosures.

EFFECTS OF YEAR 2000

  The year 2000 ("Y2K") issue is the result of computer programs being written
using two digits rather than four digits to define the applicable year. Certain
computer programs that have date-sensitive software and use two digits only may
recognize a date using "00" as the year 1900 rather than the year 2000.

  The Company recognizes the need to ensure its operations will not be adversely
impacted by the Y2K software failures and has established a project team to
address the Y2K risks. The project team has coordinated the identification of,
and will coordinate the implementation of, changes to computer hardware and
software applications that will attempt to ensure availability and integrity of
the Company's information systems and the reliability of its operational systems
and manufacturing processes. The Company is also assessing the potential overall
impact of Y2K on its business, results of operations and financial position.

  The Company has reviewed its information and operational systems and
manufacturing processes in order to identify those products, services or systems
that are not Y2K compliant. As a result of this review, the Company has
determined that it will be required to modify or replace certain information and
operational systems so that they will be Y2K compliant. These modifications and
replacements are being, and will continue to be, made in conjunction with the
Company's overall system initiatives. The total cost of these Y2K compliance
measures has not been, and is not anticipated to be, material to the Company's
financial position or its results of operations. The Company expects to complete
its Y2K project during fiscal year 1999. Based on available information, the
Company does not believe any material exposure to significant business
interruption exists as a result of Y2K compliance issues. Accordingly, the
Company has not adopted any formal contingency plan in the event its Y2K project
is not completed in a timely manner. These costs and the timing in which the
Company plans to complete its Y2K modifications and testing processes are based
on management's best estimates. However, there can be no assurance that the
Company will timely identify and remediate all significant Y2K problems, that
remedial efforts will not involve significant time and expense or that such
problems will not have a material adverse effect on the Company's business,
results of operations or financial position.

  The Company also faces risks to the extent that suppliers of products,
services and systems purchased by the Company and others with whom the Company
transacts business do not comply with the Y2K requirements. The Company is
identifying significant suppliers and customers to determine the extent to which
the Company is vulnerable to these third parties' failure to remediate their own
Y2K issues. In the event any such third party cannot provide the Company the
products, services or systems that meet the Y2K requirements on a timely basis,
the Company's results of operations could be materially and adversely affected.

                                       14
<PAGE>

To the extent Y2K issues cause significant delays in, or cancellation of,
decisions to purchase the Company's products or services, the Company's
business, results of operations or financial position would be materially
adversely affected.


ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.

                                       15
<PAGE>

PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings:
Not applicable.

Item 2.  Changes in Securities and Use of Proceeds:
Not applicable.

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
10.21 Asset Purchase Agreement dated as of March 31, 1999 by and between HyComp,
      Inc. and HyComp Acquisition Corp., a wholly-owned subsidiary of the
      Registrant
10.22 Note Purchase Agreement dated as of June 22, 1999 by and among Beacon
      Power Corporation, Perseus Capital, L.L.C., Duquesne Enterprises, Inc.,
      Micro Generation Technology Fund, L.L.C. and the Registrant
10.23 Note and Warrant Purchase Agreement dated as of August 2, 1999 by and
      among Beacon Power Corporation, Perseus Capital, L.L.C., Duquesne
      Enterprises, Inc., Micro Generation Technology Fund, L.L.C. and the
      Registrant

27    Financial Data Schedule

(b) Reports on Form 8-K

  On May 19, 1999, the Registrant filed a Current Report on Form 8-K, dated May
12, 1999, in connection with the dismissal of PricewaterhouseCoopers LLP from
its position as the Registrant's independent auditors.

  On May 28, 1999, the Registrant filed a Current Report on Form 8-K, dated May
25, 1999, in connection with the engagement of Arthur Andersen LLP as  the
Registrant's independent auditors.



                                       16
<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:  August 16, 1999      By:  /s/ Michael C. Turmelle
                                ----------------------------------------------
                                Michael C. Turmelle, Vice President,
                                Chief Financial Officer, Treasurer and Secretary
                                (Principal Financial and Accounting Officer)

                                       17