----

----

| x      |       | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  |
|--------|--------------------------------|------------------------------------------------------------------------------|
|   |                           | ACT OF 1934                                                                  |
|   |                           |                                                                         |
|   |                           | FOR THE QUARTERLY PERIOD ENDED March 31, 2011                                |
|   |                           | OR                                                                           |
|   |                           |                                                                         |
|  ̈ |                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE |
|   |                           | ACT OF 1934                                                                  |
|   |                           |                                                                         |
|   |                           | FOR THE TRANSITION PERIOD FROM _____ TO _____                      |

| New York                     | 0-6890                   | 14-1462255          |
|------------------------------|--------------------------|---------------------|
| (State or Other Jurisdiction | (Commission File Number) | (IRS Employer       |
| of Incorporation)            |                     | Identification No.) |

| Large accelerated filer  ̈ | Accelerated filer  ̈ | Non-accelerated filer  ̈ | Smaller reporting company  x |
|--------------------------------|--------------------------|------------------------------|-----------------------------------|

----

| MECHANICAL TECHNOLOGY, INCORPORATED AND SUBSIDIARIES                                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| INDEX                                                                                                                                                                                       |
|                                                                                                                                                                                        |
| PART I. FINANCIAL INFORMATION                                                                                                                                                               | 2 |
|                                                                                                                                                                                        |   |
|        Item 1. Financial Statements                                                                                                                           | 2 |
|                                                                                                                                                                                        |   |
|               Condensed Consolidated Balance Sheets as of December 31, 2010 and March 31, 2011 (Unaudited)                 | 2 |
|                                                                                                                                                                                        |   |
|               Condensed Consolidated Statements of Operations (Unaudited)                                                  |   |
|               For the Three Months Ended March 31, 2010 and 2011                                                           | 3 |
|                                                                                                                                                                                        |   |
|               Condensed Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss (Unaudited) |   |
|               For the Three Months Ended March 31, 2010 and 2011                                                           | 4 |
|                                                                                                                                                                                        |   |
|               Condensed Consolidated Statements of Cash Flows (Unaudited)                                                  |   |
|               For the Three Months Ended March 31, 2010 and 2011                                                           | 5 |
|                                                                                                                                                                                        |   |
|               Notes to Condensed Consolidated Financial Statements (Unaudited)                                             | 6 |
|                                                                                                                                                                                        |   |
|        Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                    | 16 |
|                                                                                                                                                                                        |   |
|        Item 4. Controls and Procedures                                                                                                                        | 22 |
|                                                                                                                                                                                        |   |
| PART II. OTHER INFORMATION                                                                                                                                                                  | 22 |
|                                                                                                                                                                                        |   |
|        Item 1.                                                                                                                                                |       | Legal Proceedings | 22 |
|                                                                                                                                                                                        |   |   |   |
|        Item 1A.                                                                                                                                               |   | Risk Factors | 22 |
|                                                                                                                                                                                        |   |   |   |
|        Item 5.                                                                                                                                                |   | Other Information | 24 |
|                                                                                                                                                                                        |   |   |   |
|        Item 6.                                                                                                                                                |   | Exhibits | 24 |
|                                                                                                                                                                                        |   |   |   |
|        SIGNATURES                                                                                                                                             | 25 |

----

| (Dollars in thousands)                                                                                                          |       | December 31,              |                                       | March 31, |
|---------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------------|----------------------------------------------------------------|-----------|
|                                                                                                                            |                           | 2010                      |                                                           | 2011      |
| Assets                                                                                                                          |                           |
| Current Assets:                                                                                                                 |                           |                      |                                                           |      |   |   |   |   |
|        Cash and cash equivalents                                                                  |                           | $     | 1,118                                                          |      |   | $     | 1,048 |   |
|        Accounts receivable                                                                        |                           |                      | 1,086                                                          |      |   |   | 1,659 |   |
|        Inventories                                                                                |                           |                      | 844                                                            |      |   |   | 854 |   |
|        Prepaid expenses and other current assets                                                  |                           |                      | 128                                                            |      |   |   | 120 |   |
|               Total Current Assets                             |                           |                      | 3,176                                                          |      |   |   | 3,681 |   |
|                                                                                                                            |                           |                      |                                                           |      |   |   |   |   |
| Property, plant and equipment, net:                                                                                             |                           |                      | 425                                                            |      |   |   | 339 |   |
|               Total Assets                                     |                           | $                         | 3,601                                                          |      |   | $ | 4,020 |   |
|                                                                                                                            |
| Liabilities and Stockholders’ Equity                                                                                      |
|                                                                                                                            |
| Current Liabilities:                                                                                                            |                           |                      |                                                           |      |       |   |   |   |
|        Accounts payable                                                                           |                           | $     | 255                                                            |      |   | $ | 432 |   |
|        Accrued liabilities                                                                        |                           |                      | 1,273                                                          |      |   |   | 1,324 |   |
|        Deferred revenue                                                                           |                           |                      | 21                                                             |      |   |   | 13 |   |
|        Derivative liability                                                                       |                           |                      | 73                                                             |      |   |   | 29 |   |
|        Income taxes payable                                                                       |                           |                      | 20                                                             |      |   |   | 20 |   |
|               Total Current Liabilities                        |                           |                      | 1,642                                                          |      |   |   | 1,818 |   |
|                                                                                                                            |                           |                      |                                                           |      |   |   |   |   |
| Stockholders’ Equity (Deficit):                                                                                           |                           |                      |                                                           |      |   |   |   |   |
|        Common stock, par value $0.01 per share, authorized 75,000,000; 5,776,750 issued in        |                           |                      |                                                           |      |   |   |   |   |
|               both 2010 and 2011                               |                           |                      | 58                                                             |      |   |   | 58 |   |
|        Paid-in-capital                                                                            |                           |                      | 134,733                                                        |      |   |   | 134,835 |   |
|        Accumulated deficit                                                                        |                           |                      |          (122,483 | )         |   |   |     (122,289 | ) |
|        Common stock in treasury, at cost, 1,005,092 shares in both 2010 and 2011                  |                           |                      | (13,754                                                        | )         |   |   | (13,754 | ) |
|               Total MTI stockholders’ deficit            |                           |                      | (1,446                                                         | )         |   |   | (1,150 | ) |
|                                                                                                                            |                           |                      |                                                           |      |   |   |   |   |
|        Non-controlling interest                                                                   |                           |                      | 3,405                                                          |      |   |   | 3,352 |   |
|               Total Equity                                     |                           |                      | 1,959                                                          |      |   |   | 2,202 |   |
|               Total Liabilities and Stockholders’ Equity |                           | $                         | 3,601                                                          |      |   | $ | 4,020 |   |
|                                                                                                                            |                           |                      |                                                           |      |   |   |   |   |

----

| (Dollars in thousands, except per share)                                                                                 | Three Months Ended March 31,          |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                                                     | 2010                                  |      | 2011 |
| Product revenue                                                                                                          | $       | 1,267 |   |   | $       | 2,539 |   |
| Funded research and development revenue                                                                                  |                                  | 357 |   |   |   | 13 |   |
|        Total revenue                                                                       |                                  | 1,624 |   |   |   | 2,552 |   |
| Operating costs and expenses:                                                                                            |                                  |   |   |   |   |   |   |
|        Cost of product revenue                                                             |                                  | 544 |   |   |   | 939 |   |
|        Research and product development expenses:                                          |                                  |   |   |   |   |   |   |
|               Funded research and product development   |                                  | 770 |   |   |   | 25 |   |
|               Unfunded research and product development |                                  | 360 |   |   |   | 471 |   |
|                                                                                                                     |                                  |   |   |   |   |   |   |
|        Total research and product development expenses                                     |                                  | 1,130 |   |   |   | 496 |   |
|                                                                                                                     |                                  |   |   |   |   |   |   |
|        Selling, general and administrative expenses                                        |                                  | 1,856 |   |   |   | 1,307 |   |
|                                                                                                                     |                                  |   |   |   |   |   |   |
| Operating loss                                                                                                           |                                  | (1,906 | ) |   |   | (190 | ) |
| Gain on derivatives                                                                                                      |                                  | 2 |   |   |   | 44 |   |
| Other (expense) income, net                                                                                              |                                  | (16 | ) |   |   | 84 |   |
|        Loss before income taxes and non-controlling interest                               |                                  | (1,920 | ) |   |   | (62 | ) |
| Income tax benefit (expense)                                                                                             |                                  | — |   |   |   | — |   |
|        Net loss, net of tax                                                                |                                  | (1,920 | ) |   |   | (62 | ) |
| Plus: Net loss attributed to non-controlling interest                                                                    |                                  | 686 |   |   |   | 256 |   |
|        Net income (loss) attributed to MTI                                                 | $                                     | (1,234 | ) |   | $ | 194 |   |
|                                                                                                                     |                                  |   |   |   |   |   |   |
| Net earnings (loss) per share attributable to MTI (Basic and Diluted):                                                   | $                                     | (0.26 | ) |   | $ | 0.04 |   |
|                                                                                                                     |                                  |   |   |   |   |   |   |
| Weighted average shares outstanding (Basic and Diluted)                                                                  |                                  | 4,771,658 |   |   |   | 4,771,658 |   |

----

| (Dollars in thousands)                                                                                    | Three Months Ended                    |
|-----------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                                      | March 31,                             |
|                                                                                                      | 2010                                  |      | 2011 |
| Common Stock                                                                                              |                                  |   |   |   |   |   |   |
|        Balance, beginning                                                   | $       | 58 |   |   | $       | 58 |   |
|        Balance, ending                                                      | $                                     | 58 |   |   | $ | 58 |   |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Paid-In Capital                                                                                           |                                  |   |   |   |   |   |   |
|        Balance, beginning                                                   | $                                     | 133,286 |   |   | $ | 134,733 |   |
|               Stock-based compensation   |                                  | 904 |   |   |   | 102 |   |
|        Balance, ending                                                      | $                                     | 134,190 |   |   | $ | 134,835 |   |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Accumulated Deficit                                                                                       |                                  |   |   |   |   |   |   |
|        Balance, beginning                                                   | $                                     | (120,724 | ) |   | $ | (122,483 | ) |
|               Net income (loss)          |                                  | (1,234 | ) |   |   | 194 |   |
|        Balance, ending                                                      | $                                     | (121,958 | ) |   | $ | (122,289 | ) |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Treasury Stock                                                                                            |                                  |   |   |   |   |   |   |
|        Balance, beginning                                                   | $                                     | (13,754 | ) |   | $ | (13,754 | ) |
|        Balance, ending                                                      | $                                     | (13,754 | ) |   | $ | (13,754 | ) |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Non-controlling Interest (NCI)                                                                            |                                  |   |   |   |   |   |   |
|        Balance, beginning                                                   | $                                     | 3,156 |   |   | $ | 3,405 |   |
|               Equity contribution        |                                  | 660 |   |   |   | 203 |   |
|               Net loss attributed to NCI |                                  | (686 | ) |   |   | (256 | ) |
|        Balance, ending                                                      | $                                     | 3,130 |   |   | $ | 3,352 |   |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Total Stockholders’ Equity                                                                          |                                  |   |   |   |   |   |   |
|        Balance, ending                                                      | $                                     | 1,666 |   |   | $ | 2,202 |   |
|                                                                                                      |                                  |   |   |   |   |   |   |
| Total Comprehensive (Loss)                                                                                |                                  |   |   |   |   |   |   |
|        Net income (loss)                                                    | $                                     | (1,234 | ) |   | $ | 194 |   |
|               Other comprehensive (loss) |                                  | — |   |   |   | — |   |
|        Total comprehensive (loss)                                           | $                                     | (1,234 | ) |   | $ | 194 |   |
|                                                                                                      |                                  |   |   |   |   |   |   |

----

| (Dollars in thousands)                                                      | Three Months Ended March 31,                        |
|-----------------------------------------------------------------------------|-----------------------------------------------------|
|                                                                        | 2010                                                |           | 2011 |
| Operating Activities                                                        |                                                |   |   |   |   |   |   |
| Net loss                                                                    | $           | (1,920 | ) |   | $           | (62 | ) |
|                                                                        |                                                |   |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash used by operating activities: |                                                |   |   |   |   |   |   |
|     Gain on derivatives                                 |                                                | (2 | ) |   |   | (44 | ) |
|     Depreciation and amortization                       |                                                | 131 |   |   |   | 99 |   |
|     Stock based compensation                            |                                                | 904 |   |   |   | 102 |   |
|                                                                        |                                                |   |   |   |   |   |   |
| Changes in operating assets and liabilities:                                |                                                |   |   |   |   |   |   |
|     Accounts receivable                                 |                                                | 250 |   |   |   | (572 | ) |
|     Inventories                                         |                                                | 41 |   |   |   | (10 | ) |
|     Prepaid expenses and other current assets           |                                                | (174 | ) |   |   | 8 |   |
|     Accounts payable                                    |                                                | 155 |   |   |   | 177 |   |
|     Income taxes payable                                |                                                | — |   |   |   | — |   |
|     Deferred revenue                                    |                                                | — |   |   |   | (8 | ) |
|     Accrued liabilities                                 |                                                | 174 |   |   |   | 50 |   |
| Net cash used by operating activities                                       |                                                | (441 | ) |   |   | (260 | ) |
|                                                                        |                                                |   |   |   |   |   |   |
| Investing Activities                                                        |                                                |   |   |   |   |   |   |
| Purchases of property, plant and equipment                                  |                                                | (13 | ) |   |   | (13 | ) |
| Net cash used by investing activities                                       |                                                | (13 | ) |   |   | (13 | ) |
|                                                                        |                                                |   |   |   |   |   |   |
| Financing Activities                                                        |                                                |   |   |   |   |   |   |
| Proceeds from capital raise and warrants issued                             |                                                | 660 |   |   |   | 203 |   |
| Net cash provided by financing activities                                   |                                                | 660 |   |   |   | 203 |   |
|                                                                        |                                                |   |   |   |   |   |   |
| Increase (Decrease) in cash and cash equivalents                            |                                                | 206 |   |   |   | (70 | ) |
| Cash and cash equivalents - beginning of period                             |                                                | 785 |   |   |   | 1,118 |   |
| Cash and cash equivalents - end of period                                   | $                                                   | 991 |   |   | $ | 1,048 |   |
|                                                                        |                                                |   |   |   |   |   |   |

----

----

-  obtain additional government or private funding of its direct methanol fuel cell research, development, manufacturing readiness and commercialization;  
-  secure additional debt or equity financing; or 
-  further reduce its current expenditure run-rate.  

----

| (Dollars in thousands)        |                                  |    |       | Test and                              |       |   |                                  |
|-------------------------------|---------------------------------------|---------|--------------------------------|---------------------------------------|--------------------------------|--------|---------------------------------------|
|                          |                                  |    |                           | Measurement                           |                           |   |                                  |
|                          | New Energy                            |    | Instrumentation                |                                  | Consolidated Totals            |
| December 31, 2010             |                                  |    |                           |                                  |                           |   |                                  |   |
| U.S. and State Government     | $       | 111     |                           | $       | 232                            |   | $       | 343 |
| Commercial                    |                                  | — |                           |                                  | 743                            |   |                                  | 743 |
|     Total | $                                     | 111     |                           | $                                     | 975                            |   | $                                     | 1,086 |
|                          |                                  |    |                           |                                  |                           |   |                                  |   |
| March 31, 2011                |                                  |    |                           |                                  |                           |   |                                  |   |
| U.S. and State Government     | $                                     | 83      |                           | $                                     | 272                            |   | $                                     | 355 |
| Commercial                    |                                  | — |                           |                                  | 1,304                          |   |                                  | 1,304 |
|     Total | $                                     | 83      |                           | $                                     | 1,576                          |   | $                                     | 1,659 |
|                          |                                  |    |                           |                                  |                           |   |                                  |   |

----

| (Dollars in thousands) |              |                           |           |   |   |
|------------------------|-------------------|--------------------------------|----------------|--------|--------|
|                   | December 31, 2010 |       | March 31, 2011 |
| Finished goods         | $                 | 283                            |           | $      | 271    |
| Work in process        |              | 156                            |           |   | 127    |
| Raw materials          |              | 405                            |           |   | 456    |
|                   | $                 | 844                            |           | $      | 854    |
|                   |              |                           |           |   |   |

| (Dollars in thousands)                           | 2010                                        |       | 2011   |
|--------------------------------------------------|---------------------------------------------|--------------------------------|--------|
| Federal statutory tax rate                       | 34.00                                       | %                              |   | 34.00 | % |
| State taxes, net of federal tax effect           | 6.01                                        |                           |   | 9.97 |   |
| Change in valuation allowance                    |        (40.05 | )                              |   |        (66.13 | ) |
| Permanent tax difference on derivative valuation | 0.04                                        |                           |   | 23.58 |   |
| Other permanent tax differences, net             | —                                     |                           |   | (1.42 | ) |
| Tax Rate                                         | 0.00                                        | %                              |   | 0.00 | % |
|                                             |                                        |                           |   |   |   |

| (Dollars in thousands)                     | 2010                                                                                   |       | 2011   |
|--------------------------------------------|----------------------------------------------------------------------------------------|--------------------------------|--------|
| Operations before non-controlling interest |                                                                                   |                           |   |   |   |
|     Federal            | $                | —                        |   | $                | — |
|     State              |                                                                                   | —                        |   |   | — |
|     Deferred           |                                                                                   | —                        |   |   | — |
|     Total              | $                                                                                      | —                        |   | $ | — |
|                                       |                                                                                   |                           |   |   |   |

----

|               |                           | Year Ended        |                           | Three Months Ended |
|--------------------|--------------------------------|-------------------|--------------------------------|--------------------|
|               |       | December 31, 2010 |       | March 31, 2011     |
| Common Shares      |                           |              |                           |               |
| Balance, beginning |                           | 5,776,750         |                           | 5,776,750          |
| Balance, ending    |                           | 5,776,750         |                           | 5,776,750          |
|               |                           |              |                           |               |
| Treasury Stock     |                           |              |                           |               |
| Balance, beginning |                           | 1,005,092         |                           | 1,005,092          |
| Balance, ending    |                           | 1,005,092         |                           | 1,005,092          |
|          |

|                                     |       | December 31, 2010 |       | March 31, 2011 |
|------------------------------------------|--------------------------------|-------------------|--------------------------------|----------------|
| Expected life of option (number of days) |                           | 365               |                           |           | 274 |   |
| Risk-free interest rate                  |                           | 0.29              | %                              |           | 0.17 | % |
| Expected volatility of stock             |                           | 219.4             | %                              |           | 212.2 | % |
| Expected dividend yield                  |                           | None              |                           |           | None |   |

----

| Stock options outstanding            |      | 878,591   |
|--------------------------------------|--------------------------|-----------|
| Stock options available for issuance |                     | 114,986   |
| Warrants outstanding                 |                     | 378,472   |
| Number of common shares reserved     |                     | 1,372,049 |
|                                 |

----

|                                                                               |                           |    |                           |   | MTI                            |      | Non Controlling Interest       |   |                           |
|------------------------------------------------------------------------------------|--------------------------------|---------|--------------------------------|--------|--------------------------------|-----------|--------------------------------|--------|--------------------------------|
|                                                                               |                           | Average |                           |   |                           | Ownership |                           |   |                           | Ownership |   |   |
|                                                                               |       | Price   |       | Shares |       | %         |       | Shares |       | % |       | Total Shares |
| Balance at 12/31/2008                                                              |                           |    |                           |   | 63,797,770                     |      | 97.3                           |   | 1,750,345                      |   | 2.7 |   | 65,548,115 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
|        Stock issued for MTI Options to MFC Employees |                           | $       | 0.14                           |   | 10,501                         |      |                           |   |                           |   |   |   | 31,469 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
|        Conversion of Bridge Loan                     |                           | $       | 0.07                           |   | 11,241,666                     |      |                           |   | 44,622,759                     |   |   |   | 55,864,425 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
| Balance at 12/31/09                                                                |                           |    |                           |   | 75,049,937                     |      | 61.8                           |   | 46,373,104                     |   | 38.2 |   | 121,423,041 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
|        Stock issued under Purchase Agreement         |                           | $       | 0.07                           |   |                           |      |                           |   | 26,952,386                     |   |   |   | 26,952,386 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
| Balance at 12/31/10                                                                |                           |    |                           |   | 75,049,937                     |      | 50.58                          |   | 73,325,490                     |   | 49.42 |   | 148,375,427 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
| Stock issued under Purchase Agreement & Amendment                              |                           | $       | 0.07                           |   |                           |      |                           |   | 2,904,757                      |   |   |   | 2,904,757 |
|                                                                               |                           |    |                           |   |                           |      |                           |   |                           |   |   |   |   |
| Balance at 03/31/11                                                                |                           |    |                           |   | 75,049,937                     |      | 49.61                          |   | 76,230,247                     |   | 50.39 |   | 151,280,184 |
|                                                                               |

|         | Level 1: |         |  Quoted market prices in active markets for identical assets or liabilities, which includes listed equities.                                                                                                                                                                                                                                                                           |
|--------------------------------------------|----------|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |     |                                       |                                                                                                                                                                                                                                                                                                                                                                                        |
|                                       | Level 2: |                                       | Observable market based inputs or unobservable inputs that are corroborated by market data. These items are typically priced using models or other valuation techniques. These models are primarily financial industry-standard models that consider various assumptions, including the time value of money, yield curves, volatility factors, as well as other relevant economic measures. |

----

|         | Level 3: |         | These use unobservable inputs that are not corroborated by market data. These values are generally estimated based upon methodologies utilizing significant inputs that are generally less observable from objective sources. |
|--------------------------------------------|----------|--------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Dollars in thousands)                                    |                           |    |                           |    |                           |    |                           |           |   |   |       |   |
|-----------------------------------------------------------|--------------------------------|---------|--------------------------------|---------|--------------------------------|---------|--------------------------------|----------------|--------|--------|------------|--------|
|                                                      |                           |    |                           |    |                           |    |                           |           |   |   | Balance at |
| Balance Sheet Classification                              |       | Level 1 |       | Level 2 |       | Level 3 |       | March 31, 2011 |
| Financial Liabilities:                                    |                           |    |                           |    |                           |    |                           |           |   |   |       |   |
|        Derivative liability |                           | $       | —                        |    | $                              | — |                           | $              | 29     |   | $          | 29     |
| Total fair value of liabilities                           |                           | $       | —                        |    | $                              | — |                           | $              | 29     |   | $          | 29     |
|                                                      |

| (Dollars in thousands)                                    |                           |          |                           |            |                           |             |                           |           |    |   |   |   |
|-----------------------------------------------------------|--------------------------------|---------------|--------------------------------|-----------------|--------------------------------|------------------|--------------------------------|----------------|---------|--------|--------|--------|
|                                                      |                           | Beginning     |                           | Total (Gains) / |                           | Purchases,       |                           | Ending Balance |
|                                                      |                           | Balance as of |                           | Losses Realized |                           | Issuances, Sales |                           | as of Dec. 31, |
| Instrument                                                |       | Jan. 1, 2010  |       | and Unrealized  |       | and Settlements  |       | 2010           |
|        Derivative liability |                           | $             | 70                             |            | $                              | 3                |                           | $              | — |   | $      | 73     |
| Total Level 3 instruments                                 |                           | $             | 70                             |            | $                              | 3                |                           | $              | — |   | $      | 73     |
|                                                      |

| (Dollars in thousands)                                    |                           |          |                           |            |                                       |                                                                               |                           |            |   |    |   |   |   |
|-----------------------------------------------------------|--------------------------------|---------------|--------------------------------|-----------------|--------------------------------------------|------------------------------------------------------------------------------------|--------------------------------|-----------------|--------|---------|--------|--------|--------|
|                                                      |                           | Beginning     |                           | Total (Gains) / |                                       | Purchases,                                                                         |                           | Ending Balance  |
|                                                      |                           | Balance as of |                           | Losses Realized |                                       | Issuances, Sales                                                                   |                           | as of March 31, |
| Instrument                                                |       | Jan. 1, 2011  |       | and Unrealized  |         | and Settlements                                                                    |       | 2011            |
|        Derivative liability |                           | $             | 73                             |            | $            |               (44 | )                              |            | $      | — |   | $      | 29     |
| Total Level 3 instruments                                 |                           | $             | 73                             |            | $                                          | (44                                                                                | )                              |            | $      | — |   | $      | 29     |
|                                                 |

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| (Dollars in thousands)                                                         |                           |                                  |                           |            |                           | Test and                                                                       |                           |   |                           |   |        |    | Condensed    |
|--------------------------------------------------------------------------------|--------------------------------|---------------------------------------|--------------------------------|-----------------|--------------------------------|--------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|-------------|---------|--------------|
|                                                                           |                           |                                  |                           |            |                           | Measurement                                                                    |                           |   |                           |   | Reconciling |    | Consolidated |
|                                                                           |       | New Energy                            |       | Instrumentation |       | Other                                                                          |       | Items  |       | Totals |
| Three months ended March 31, 2010                                              |                           |                                  |                           |            |                           |                                                                           |                           |   |                           |   |        |    |         |   |   |
| Product revenue                                                                |                           | $       | —                        |            |                           | 1,267                                                                          |                           |   | —                        |   |        | — |         | 1,267 |   |
| Funded research and development revenue                                        |                           |                                  | 357                            |            |                           | —                                                                        |                           |   | —                        |   |        | — |         | 357 |   |
| Research and product development expenses                                      |                           |                                  | 868                            |            |                           | 262                                                                            |                           |   | —                        |   |        | — |         | 1,130 |   |
| Selling, general and administrative expenses                                   |                           |                                  | 1,108                          |            |                           | 472                                                                            |                           |   | 276                            |   |        | — |         | 1,856 |   |
| Segment profit (loss) from operations before                                   |                           |                                  |                           |            |                           |                                                                           |                           |   |                           |   |        |    |         |   |   |
|        income taxes and non-controlling interest |                           |                                  | (1,621                         | )               |                           | (135                                                                           | )                              |   | (150                           | )      |        | — |         |          (1,906 | ) |
| Segment profit (loss)                                                          |                           |                                  | (1,635                         | )               |                           | (135                                                                           | )                              |   | (150                           | )      |        | 686     |         | (1,234 | ) |
| Total assets                                                                   |                           |                                  | 1,068                          |            |                           |              1,623 |                           |   |      1,021 |   |        | — |         | 3,712 |   |
| Capital expenditures                                                           |                           |                                  | —                        |            |                           | 13                                                                             |                           |   | —                        |   |        | — |         | 13 |   |
| Depreciation and amortization                                                  |                           |                                  | 103                            |            |                           | 23                                                                             |                           |   | 5                              |   |        | — |         | 131 |   |
|                                                                           |                           |                                  |                           |            |                           |                                                                           |                           |   |                           |   |        |    |         |   |   |
| Three months ended March 31, 2011                                              |                           |                                  |                           |            |                           |                                                                           |                           |   |                           |   |        |    |         |   |   |
| Product revenue                                                                |                           | $                                     | —                        |            |                           | 2,539                                                                          |                           |   | —                        |   |        | — |         | 2,539 |   |
| Funded research and development revenue                                        |                           |                                  | 13                             |            |                           | —                                                                        |                           |   | —                        |   |        | — |         | 13 |   |
| Research and product development expenses                                      |                           |                                  | 166                            |            |                           | 330                                                                            |                           |   | —                        |   |        | — |         | 496 |   |
| Selling, general and administrative expenses                                   |                           |                                  | 393                            |            |                           | 533                                                                            |                           |   | 381                            |   |        | — |         | 1,307 |   |
| Segment profit (loss) from operations before                                   |                           |                                  |                           |            |                           |                                                                           |                           |   |                           |   |        |    |         |   |   |
|        income taxes and non-controlling interest |                           |                                  | (527                           | )               |                           | 622                                                                            |                           |   | (157                           | )      |        | — |         | (62 | ) |
| Segment profit (loss)                                                          |                           |                                  | (527                           | )               |                           | 622                                                                            |                           |   | (157                           | )      |        | 256     |         | 194 |   |
| Total assets                                                                   |                           |                                  | 420                            |            |                           | 2,539                                                                          |                           |   | 1,061                          |   |        | — |         | 4,020 |   |
| Capital expenditures                                                           |                           |                                  | —                        |            |                           | 8                                                                              |                           |   | 5                              |   |        | — |         | 13 |   |
| Depreciation and amortization                                                  |                           |                                  | 77                             |            |                           | 19                                                                             |                           |   | 3                              |   |        | — |         | 99 |   |

| (Dollars in thousands)                                             |                           | Three Months Ended                    |
|--------------------------------------------------------------------|--------------------------------|---------------------------------------|
|                                                               |                           | March 31,                             |
|                                                               |       | 2010                                  |       | 2011 |
| Corporate and other (expenses) income:                             |                           |                                  |   |   |   |   |   |   |
|        Depreciation and amortization |                           | $                                     | (5 | ) |   | $ | (3 | ) |
|        Gain on derivatives           |                           |                                  | 2 |   |   |   | 43 |   |
|        Other expense, net            |                           |                                  | (147 | ) |   |   | (197 | ) |
| Total income (expense)                                             |                           | $       |             (150 | ) |   | $       | (157 | ) |
|                                                          |

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| (Dollars in thousands)                |                           | Three Months Ended                    |
|---------------------------------------|--------------------------------|---------------------------------------|
|                                  |                           | March 31,                             |
|                                  |       | 2010                                  |       | 2011 |
| Balance, January 1                    |                           | $       | 21 |   |   | $       | 36 |   |
| Accruals for warranties issued        |                           |                                  | 6 |   |   |   | 12 |   |
| Settlements made (in cash or in kind) |                           |                                  | (3 | ) |   |   |     (3 | ) |
| Balance, end of period                |                           | $                                     | 24 |   |   | $ | 45 |   |
|                                  |                           |                                  |   |   |   |   |   |   |

----

----

|                                      |                           | Three Months Ended                    |
|-------------------------------------------|--------------------------------|---------------------------------------|
| (Dollars in thousands)                    |                           | March 31,                             |
|                                      |       | 2010                                  |       | 2011 |
| Cash and cash equivalents                 |                           | $       | 991 |   |   | $       | 1,048 |   |
| Working capital                           |                           |                                  | 993 |   |   |   | 1,863 |   |
| Net income (loss)                         |                           |                                  | (1,234 | ) |   |   | 194 |   |
| Net cash used in operating activities     |                           |                                  | (441 | ) |   |   | (260 | ) |
| Purchase of property, plant and equipment |                           |                                  | 13 |   |   |   | 13 |   |

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| (Dollars in thousands)                                               |                           |       |                           |   |                           |    |                           |           |                           |           |   |   |   | Total Contract |
|----------------------------------------------------------------------|--------------------------------|------------|--------------------------------|--------|--------------------------------|---------|--------------------------------|----------------|--------------------------------|----------------|--------|--------|--------|----------------|
|                                                                 |                           |       |                           |   | Revenues for the               |    | Revenue Contract               |           | Orders Received                |
|                                                                 |                           |       |                           |   | Three Months Ended March 31,   |    | to Date                        |           | to Date                        |
| Contract (1)                                                         |       | Expiration |       | 2010   |       | 2011    |       | March 31, 2011 |       | March 31, 2011 |
| $2.3 million Air Force New PBS-4100                                  |                           |       |                           |   |                           |    |                           |           |                           |           |   |   |   |           |   |
|        Systems                         |                           | 07/28/2010 |  (2)                      |   | $                              | — |                           | $              | —                        |           | $      | 2,166  |   | $              | 2,166 |
| $6.5 million Air Force Retrofit and                                  |                           |       |                           |   |                           |    |                           |           |                           |           |   |   |   |           |   |
|        Maintenance of PBS-4100 Systems |                           | 9/27/2014  |  (3)                      |   | $                              | 4       |                           | $              | 83                             |           | $      | 1,908  |   | $              | 1,948 |

| (1) |        | Contract values represent maximum potential values and may not be representative of actual results. |
|-----|--------------------------------------|-----------------------------------------------------------------------------------------------------|
| (2) |                                 | Date represents expiration of contract, including all three potential option extensions.            |
| (3) |                                 | Date represents expiration of contract, including all four potential option extensions.             |

----

| (Dollars in thousands) |                           |           |                           |           |                           |      |                           |           |                           |      |                           |           |   |        |   |   |   |
|------------------------|--------------------------------|----------------|--------------------------------|----------------|--------------------------------|-----------|--------------------------------|----------------|--------------------------------|-----------|--------------------------------|----------------|--------|-------------|--------|--------|--------|
|                   |                           |           |                           | Revenue        |                           |      |                           |           | Revenue                        |      |                           |           |   | Revenue     |
|                   |                           |           |                           | Three Months   |                           |      |                           |           | Three Months                   |      |                           |           |   | Contract to |
|                   |                           |           |                           | Ended          |                           | % of 2010 |                           | Ended          |                           | % of 2011 |                           | Date           |
| Contract               |       | Expiration (1) |       | March 31, 2010 |       | Total     |       | March 31, 2011 |       | Total     |       | March 31, 2011 |
| $2.9 million DOE (2)   |                           | 3/31/2011      |                           | $              | 357                            |      | 100                            | %              |                           | $         | 6                              |           | 50     | %           |   | $      | 2,997  |
| $296 thousand NYSERDA  |                           | 12/31/10       |                           | $              | —                        |      | —                        | %              |                           | $         | 6                              |           | 50     | %           |   | $      | 296    |

| (1) |        | Dates represent expiration of contract, not date of final billing.                                                                                                                                                                                                                         |
|-----|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |        | The DOE contract was initially awarded for $2.4 million, effective for January 2009 through March 31, 2010. An extension to this was granted in April 2010, increasing total funding to $2.99 million and an expiration date of March 31, 2011. The DOE contract is a cost share contract. |

----

|                                               | 2010 |       | 2011 |       | Change |
|----------------------------------------------------|------|--------------------------------|------|--------------------------------|--------|
| Inventory turnover                                 | 2.3  |                           | 4.2  |                           | 1.9    |
| Average accounts receivable days sales outstanding | 42   |                           | 42   |                           | 0      |

|                                                     | Less                                  |                     |   |                                  |   |                     |                                  |                     | More   |                                  |    |   |
|----------------------------------------------------------|---------------------------------------|--------------------------|--------|---------------------------------------|--------|--------------------------|---------------------------------------|--------------------------|--------|---------------------------------------|---------|--------|
| Contractual Payment Obligations                          | Than 1                                |                     | 1-3    |                                  | 3-5    |                     | Than 5                                |                     |   |                                  |
| (in thousands)                                           | Year                                  |      | Years  |                   | Years  |      | Years                                 |      | Total  |
| Operating Leases / Total Contractual Payment Obligations | $       | 367                      |   | $       | 1,109  |                     | $       | —                  |   | $       | — |   | $       | 1,476 |
|                                                     |                                  |                     |   |                                  |   |                     |                                  |                     |   |                                  |    |   |   |   |

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- the need to raise additional financing for MTI Micro; 
- our history of recurring net losses and the risk of continued net losses; 
- our independent auditors have included a going concern paragraph in their opinion; 
- sales revenue growth of our test and measurement instrumentation business may not be achieved; 
- the dependence of our test and measurement instrumentation business on a small number of customers and potential loss of government funding; 
- our ownership position in MTI Micro may be further reduced as a result of our plans to seek external financing for MTI Micro’s operations; 
- risks related to developing Mobion ®  direct methanol fuel cells and whether MTI Micro will ever successfully develop reliable and commercially viable Mobion ®  fuel cell solutions; 
- MTI Micro’s or their customer’s portable products that utilize the portable power source products may not be accepted by the market; 
- our inability to build and maintain relationships with our customers; 
- MTI Micro’s lack of experience in manufacturing fuel cell systems on a commercial basis; 
- MTI Micro’s dependence on others for the production requirements of their portable power source products; 
- MTI Micro’s dependence on manufacturing subcontractors to maintain high levels of productivity and satisfactory delivery schedules for the portable power source products; 
- MTI Micro’s dependence on third-party suppliers for most of the manufacturing equipment necessary to produce their portable power source products; 
- MTI Micro’s inability to obtain sufficient quantities of components and other materials, including platinum and ruthenium, necessary for the production of their portable power source products; 
- MTI Micro’s dependence on OEMs integrating Mobion ®  fuel cell systems into their devices; 
- our lack of long-term purchase commitments from our customers and the ability of our customers to cancel, reduce, or delay orders for our products; 
- risks related to protection and infringement of intellectual property; 
- MTI Micro’s inability to commercialize their proposed portable power source solutions and develop new product solutions on a timely basis; 
- our inability to develop and utilize new technologies that address the needs of our customers; 
- intense competition in the direct methanol fuel cell and instrumentation businesses; 
- change in policies by U.S. or foreign governments that hinder, disrupt or economically disadvantage international trade; 
- the impact of future exchange rate fluctuations; 
- the uncertainty of the U.S. economy; 
- the historical volatility of our stock price; 
- the cyclical nature of the electronics industry; 
- failure of our strategic alliances to achieve their objectives or perform as contemplated and the risk of cancellation or early termination of such alliance by either party; 
- product liability or defects; 
- risks related to the flammable nature of methanol as a fuel source; 
- the loss of services of one or more of our key employees or the inability to hire, train, and retain key personnel; 
- significant periodic and seasonal quarterly fluctuations in our results of operations; 
- our dependence on sole suppliers or a limited group of suppliers for both business segments; 
- risks related to the limitation of the use of our net operating losses in the event of certain ownership changes; and 
- other factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. 

----

----

- obtain additional government or private funding for its direct methanol fuel cell research, development, manufacturing readiness and commercialization; 
- secure additional debt or equity financing; or 
- further reduce its current expenditure run-rate. 

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| Exhibit No. |        | Description                                                                                                                                   |   |
|-------------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.19       |                                 | Lease extension and modification agreement dated April 19, 2011 between Kingfisher, LLC and MTI MicroFuel Cells, Inc.                         |
|        |                                 |                                                                                                                                          |
| 31.1        |                                 | Rule 13a-14(a)/15d-14(a) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of Peng K. Lim                              |
|        |                                 |                                                                                                                                          |
| 31.2        |                                 | Rule 13a-14(a)/15d-14(a) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of Frederick W. Jones                       |
|        |                                 |                                                                                                                                          |
| 32.1        |                                 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Peng K. Lim        |
|        |                                 |                                                                                                                                          |
| 32.2        |                                 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Frederick W. Jones |

----

|               | Mechanical Technology, Incorporated |
|--------------------|-------------------------------------|
|               |                                |
|               |                                |
| Date: May 12, 2011 | By:                       | /S/ PENG K. LIM |
|               |                                | Peng K. Lim |
|               |                                | Chief Executive Officer |
|               |                                |   |
|               | By:                                 | /S/ FREDERICK W. JONES |
|               |                                | Frederick W. Jones |
|               |                                | Acting Chief Financial Officer |

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