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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

							

FORM 10-Q

 /X/ Quarterly report pursuant to Section 13 or 15 (d) of the Securities

Exchange Act of 1934

For the quarterly period ended June 30, 2005

or

/ / Transition report pursuant to Section 13 or 15 (d) of the Securities

Exchange Act of 1934

For the transition period from  to 				
Commission File Number 0-6890
**MECHANICAL TECHNOLOGY INCORPORATED**
(Exact name of registrant as specified in its charter)
**New York**14-1462255
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)**431 New Karner Road, Albany, New York 12205

(Address of principal executive offices)        (Zip Code)  
**(518) 533-2200

(Registrant's telephone number, including area code)
**Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No  ̈

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  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.

Class
Outstanding at August 5, 2005**Common Stock, $.01 Par Value**30,754,126 Shares**														

			

MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

INDEX

 

 

 

Part I. FINANCIAL INFORMATION
Page No.  
Item 1.  Financial Statements

Financial Statements of Mechanical Technology Incorporated and Subsidiaries   
Condensed Consolidated Balance Sheets - June 30, 2005 (Unaudited) and December 31, 2004  
3-4  
Condensed Consolidated Statements of Operations - Three and Six months ended June 30, 2005 and 2004 (Unaudited)
5  
Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income -   Six months ended June 30, 2005 and 2004 (Unaudited)
6  
Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2005 and 2004 (Unaudited)
7  
Notes to Condensed Consolidated Financial Statements (Unaudited)
8-26  
Item 2.  Management's Discussion and Analysis of Financial Condition 

and Results of Operations
27-37  
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
37  
Item 4.  Controls and Procedures
38  
Part II.  OTHER INFORMATION   
Item 1.  Legal Proceedings
39
Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
39
Item 3.  Defaults Upon Senior Securities
39
Item 4.  Submission of Matters to a Vote of Security Holders
39-40
Item 5.  Other Information
40
Item 6.  Exhibits
40  
Signatures
40
 

 

 

 

 

 

 

 

 

 

2
**PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements****MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2005 (Unaudited) and December 31, 2004

(Dollars in thousands)

 

 **
Jun. 30, 
Dec. 31, 
2005
2004
Assets  
Current Assets:  
  Cash and cash equivalents
$15,858
$22,545
  Securities available for sale
25,985
17,678
  Accounts receivable, less allowances of $58 in 2005 and 2004  
1,252
1,772
  Other receivables - related parties
-
3
  Inventories
1,092
1,136
  Prepaid expenses and other current assets
    689
    504
    Total Current Assets
44,876
43,638   
Long Term Assets:  
  Securities available for sale - restricted
-
16,497
  Property, plant and equipment, net
2,713
2,884
  Deferred income taxes
  8,729
   3,811
    Total Assets
$56,318
$66,830** 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.
**3
**MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2005 (Unaudited) and December 31, 2004  

 (Dollars in thousands, except share data)
 
Jun. 30, 
Dec. 31,  
2005
2004
Liabilities and Shareholders' Equity     
Current Liabilities:  
  Accounts payable
$     585
$      13
  Accrued liabilities
2,607
3,287
  Accrued liabilities - related parties
18
-
  Income taxes payable
29
40
  Deferred income taxes
  8,579
  5,486
    Total Current Liabilities
11,818
  8,826
Long-Term Liabilities:  
  Derivative liability
-
1,125
  Other credits
       24
        24
    Total Liabilities
 11,842
   9,975   
Commitments and Contingencies   
Minority interests
      461
   1,271   
Shareholders' Equity:  
  Common stock, par value $.01 per share, authorized 75,000,000;  issued  

  38,794,862 at June 30, 2005 and 38,650,949 at December 31, 2004
388
387
  Paid-in-capital
121,305
121,033
  Accumulated deficit
(75,471)
 (66,624)
  Accumulated Other Comprehensive Income:  
    Unrealized gain on securities available for sale, net of taxes
11,547
14,542
Common stock in treasury, at cost, 8,040,736 shares at

    June 30, 2005 and December 31, 2004
(13,754)
(13,754)
    Total Shareholders' Equity
 44,015
 55,584
    Total Liabilities and Shareholders' Equity
$ 56,318
$ 66,830
 

 

 

 

 

 

 

 

 

 

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

4
**MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share data)**
Three months ended
Six months ended 
Jun. 30,
Jun. 30,
Jun. 30,
Jun. 30, 
2005
2004
2005
2004*Revenues:    
Product revenue
$  1,285
$  1,231
$   2,688
$  2,810
Funded research and development revenue
    380
     191
     704
     579
Total revenues
1,665
1,422
3,392
3,389*Operating costs and expenses:
Cost of product revenue
517
623
1,119
1,270
Research and product development expenses:
Funded research and product development 
1,057
541
2,112
1,695
Unfunded research and product development 
  1,856
  2,465
   3,461
  3,979
Total research and product development expenses 
2,913
3,006
5,573
5,674
Selling, general and administrative expenses
  2,508
  2,057
   5,542
  3,364
Operating loss
(4,273)
(4,264)
(8,842)
(6,919)
(Loss) gain on derivatives
(7,173)
1,492
(10,407)
211
Gain on sale of securities available for sale
9,635
-
9,635
3,129
Other income, net
     109
      32
      209
       19
Loss before income taxes and minority interests
(1,702)
(2,740)
(9,405)
(3,560)
Income tax (expense) benefit  
(1,472)
1,065
(263)
1,381
Minority interests in losses of consolidated subsidiary
     381
    312
      821
     574
Net loss
$ (2,793)
$ (1,363)
$  (8,847)
$ (1,605)
Loss per Share (Basic and Diluted):
Loss per share
$   (0.09)
$  (0.05)
$    (0.29)
$   (0.06)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
** 

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

5
**MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

 AND COMPREHENSIVE INCOME (Unaudited)**
**(Dollars in thousands)**
Six months ended
Jun. 30,
Jun. 30, 
2005
2004
COMMON STOCK  
 Balance, beginning 
$  38,651
$ 35,776
   Change in par value to $.01 from $1 per share effective June 28, 2005
(38,407)
(36,909)
   Issuance of shares - options 
78     
          86
   Issuance of shares - private placement
         66
    1,419
 Balance, ending
$       388
$       372
PAID-IN-CAPITAL  
 Balance, beginning 
$  82,769
$  68,708
   Change in par value to $.01 from $1 per share effective June 28, 2005
38,407
36,909
   Issuance of shares - options 
109
113
   MTI MicroFuel Cell investment
93**************************