Approximate date of proposed sale to the public: As soon as possible after
effective date.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
MECHANICAL TECHNOLOGY 14-1462255
INCORPORATED (I.R.S. Employer
(Exact name of registrant as Identification Number)
specified in its charter)
968 Albany-Shaker Road
New York Latham, NY 12110
(State or other jurisdiction (518) 785-2211
of incorporation or (Address, including zip code,
organization) and telephone number,
including area code, of
Cynthia A. Scheuer registrant's principal
Mechanical Technology executive offices)
Incorporated
968 Albany-Shaker Road Copies of all communications
Latham, NY 12110 to:
(518) 785-2211
(Name, address, including zip Catherine S. Hill, Esq.
code, and telephone number, Whiteman Osterman & Hanna
including area code, of agent One Commerce Plaza
for service) Albany, NY 12260
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, as amended ("Securities Act"),
other than securities offered only in connection with dividend or
reinvestment plans, check the following box. [ ]
If the registrant elects to deliver its latest annual report
to security holders, or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1) of this Form, check the following box.
[X]
<PAGE>
If this Form is filed to register additional securities or an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
===============================================================================
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Offering Aggregate Amount of
Securities to be Amount to Price per Offering Registration
Registered be registered Share(1) Price Fee
- -------------------------------------------------------------------------------
Common Stock $ $6,000,000 $1,770
===============================================================================
Total $ $6,000,000 $1,770
===============================================================================
(1) Common Stock price per share calculated in accordance with
Rule 457(c) of the Securities Act using the proposed maximum
aggregate Offering Price.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration
Statement shall become effective on such date as the Commission
acting pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 6, 1998
PROSPECTUS
MECHANICAL TECHNOLOGY INCORPORATED
RIGHTS TO PURCHASE ________ SHARES OF COMMON STOCK
Mechanical Technology Incorporated ("MTI" or the "Company"), at no
charge to its stockholders, is distributing to holders of record of
shares of its common stock, $1.00 par value per share (the "Common
Stock"), as of the close of business on August 12, 1998 (the "Record
Date"), non-transferable subscription rights (the "Rights") to purchase
additional shares of Common Stock (the "Basic Subscription Privilege") at
an exercise price of $____ per share (the "Exercise Price").
Stockholders will receive one Right for each _____ (_) shares of Common
Stock held on the Record Date. Each Right will entitle its holder (a
"Holder") to purchase one share of Common Stock (collectively the
"Underlying Shares"). No fractional shares of Common Stock will be sold,
and fractional interests will be rounded up. Upon exercise of the Basic
Subscription Privilege, a Holder will also be entitled to purchase at the
Exercise Price a pro-rata portion of any Underlying Shares that are not
otherwise subscribed for pursuant to the exercise of the Basic
Subscription Privilege (the "Oversubscription Privilege"; collectively,
with the Basic Subscription Privilege, and the sale of shares of Common
Stock in connection therewith, the "Offering").
First Albany Companies, Inc. ("FAC"), George C. McNamee and Alan P.
Goldberg (the "Purchasing Shareholders") have informed the Company that
they intend to exercise their full Basic Subscription Privilege, and may
exercise their Oversubscripton Privilege. The Purchasing Shareholders
currently own 2,556,274 shares, or approximately forty-three percent
(43%) of the outstanding Common Stock of the Company. After exercise of
the full Basic Subscription Privilege, the Purchasing Shareholders will
own _______ shares or approximately _____ percent (__%) of the
outstanding Common Stock of the Company, assuming no other stockholders
exercise their Basic Subscription Privilege.
THE RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER 24, 1998, unless extended by the Company (such date, as it may
be extended on one or more occasions, is referred to herein as the
"Expiration Date"). In no event will the Expiration Date be extended
beyond November 30, 1998. If the Company elects to extend the term of
the Rights, it will issue a press release to such effect not later than
the first day The Nasdaq National Market is open for trading following
the most recently announced Expiration Date. Funds provided in payment
of the Exercise Price will be held by the American Stock Transfer & Trust
Company, as the Subscription Agent, until the closing, which will occur
promptly following the Expiration Date. The exercise of Rights is
irrevocable once made, and no interest will be paid on funds held for
Holders exercising their Rights.
Since August 1994, the Company's Common Stock has been traded on the
over-the-counter market and is listed under the symbol MKTY on the OTC
<PAGE>
Bulletin Board. MTI has filed a registration statement with the
Securities and Exchange Commission ("SEC") covering the shares of Common
Stock to be issued upon exercise of the Rights. On August 3, 1998, the
closing bid price of the Common Stock as reported on the OTC Bulletin
Board was $8.75 per share.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE.
YOU SHOULD CAREFULLY CONSIDER THE INFORMATION REGARDING THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THE COMMON STOCK OF MECHANICAL TECHNOLOGY INCORPORATED
THAT ARE DISCUSSED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
----------------------------------------------------------------------
| | EXERCISE AND OFFER | PROCEEDS TO THE |
| | PRICE | COMPANY(1) |
----------------------------------------------------------------------
| Per Share | $ | Max. $ |
----------------------------------------------------------------------
| Total | $6,000,000 | Max. $ |
----------------------------------------------------------------------
(1) Includes deduction of an estimated $163,770 in expenses,
including legal, accounting, investment advisor and
distribution expenses.
<PAGE>
THE DATE OF THIS PROSPECTUS IS AUGUST 6, 1998.
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is
qualified in its entirety by, the more detailed information and
consolidated financial statements, including the related notes, appearing
elsewhere and incorporated by reference herein.
THE COMPANY
During the last two and a half years, MTI has undergone significant
change. In May 1996, First Albany Companies, Inc. ("FAC") acquired a
substantial interest in MTI and led a series of financial and strategic
transactions that have significantly changed MTI's operations and fiscal
well-being. In July 1996, MTI received an infusion of capital through a
private placement of its Common Stock. In December 1996, MTI and FAC
succeeded in restructuring a significant outstanding debt of the Company
by swapping the debt for Common Stock. This allowed the Company to
receive an unqualified opinion in 1996 from its Independent Auditors,
Coopers & Lybrand, L.L.P., for the first time since 1992. On June 27,
1997, the Company transferred a portion of the Technology Division to
Plug Power, L.L.C. ("Plug Power") to form a joint venture between the
Company and Edison Development Corp. ("EDC"). Plug Power has focused
exclusively on the research and development of an economically viable
Proton Exchange Membrane ("PEM") fuel cell. On September 30, 1997, the
Company sold all of the assets of its L.A.B. Division to Noonan Machine
Company of Franklin Park, Illinois. The proceeds from this sale were
used to pay down outstanding debt and build working capital. On March
31, 1998, the Company sold the remainder of its Technology Division to a
subsidiary of Foster-Miller, Inc., a Waltham, Massachusetts-based
technology company. These divestitures have enabled the Company to
better focus on its profitable test and measurement business.
Today, MTI is a very different Company, substantially streamlined in
focus, but with many challenges remaining. MTI is a manufacturer of
advanced test and measurements products that combine precision sensing
capabilities with proprietary software and systems to serve a variety of
applications for commercial and military customers. The Company has two
principal business units: the Advanced Products Division ("Advanced
Products"), which produces sensing instruments and computer-based
balancing systems, and Ling Electronics, Inc. ("Ling"), a developer and
manufacturer of vibration test systems and power conversion products.
MTI is also a member of Plug Power, which hopes to be the first
commercial manufacturer of PEM fuel cells for residential and other
applications.
<PAGE>
Advanced Products has two general product families: non-contact
sensing instrumentation and computer-based balancing systems. The non-
contact sensing instrumentation products utilize fiber optic, laser and
capacitance technology to perform high precision position measurements
for product design and quality control inspection requirements, primarily
in the semiconductor and computer disk drive industries. Some of these
products bear the trademarks FOTONIC and ACCUMEASURE, which are
recognized in the industry worldwide. Advanced Products's computer-based
aircraft engine balancing systems include an on-wing jet engine balancing
system used by both commercial and military aircraft fleet maintenance
personnel. This product provides trim balancing and vibration analysis
in the field or in test cells.
Ling, of Anaheim, California, designs, manufactures, and markets
electro-dynamic vibration test systems, high-intensity-sound transducers,
power conversion equipment and power amplifiers used to perform
reliability testing and stress screening during product development and
quality control. This mode of testing is used by industry and the
military to reveal design and manufacturing flaws in a broad range of
precision products, from satellite parts to computer components. Recent
Ling products for power and frequency conversion and "clean power"
applications include systems capable of output up to 432 kVA.
The Company believes that the test and measurement industry will
undergo substantial consolidation in the near future. The challenges
facing MTI today are similar to those facing other smaller companies in
industries where consolidation is a part of the landscape. The Company
believes that consolidation may become a competitive necessity and that
Advanced Products and Ling are well-positioned to combine with
complementary, synergistic businesses to enhance and expand product
offerings and increase profitability and market position. Accordingly,
the Company is actively exploring strategic acquisitions and alliances
for these business units.
Mechanical Technology Incorporated was incorporated in New York in
1961. Unless the context otherwise requires, "registrant", "Company" and
"MTI" refer to Mechanical Technology Incorporated and its subsidiaries.
The Company's principal executive offices are located at 968 Albany-
Shaker Road, Latham, New York 12110 and its telephone number is (518)
785-2211.
RECENT DEVELOPMENTS
On July 31, 1998, Plug Power asked the Company and EDC to each
commit to contribute an additional $5 million dollars (in cash and
research credits) between August 5, 1998 and March 31, 1999. Such
contributions, if made, will increase the Company's total contributions
to Plug Power (including contributions of cash, assets, research credits,
and a below market lease) to $11.75 million over the period commencing on
June 27, 1997, and ending on March 31, 1999. In addition, unless the
Company exercises its option to match EDC's previous contributions of
<PAGE>
$250,000 in April 1999, and $2 million in May 1999, such options will
lapse. The Company, EDC and Plug Power are currently negotiating
whether, when and how, such additional contributions will be made. If
EDC and/or MTI do not contribute or lend additional funds to Plug Power,
and no additional sources of funding can be found, Plug Power will be
unable to continue as a going concern. See "Risk Factors--Inability to
Raise Sufficient Proceeds"; "Risk Factors--Plug Power-Investment in Plug
Power"; and "Risk Factors--Plug Power-Recognition of Plug Power Losses."
The Company, EDC and Plug Power intend to determine the form, timing
and pricing of additional contributions or loans to Plug Power, if any,
for the period August 1, 1998 through March 31, 1999, not later than
September 15, 1998. On August 5, 1998 EDC and MTI made short-term loans
to Plug Power of $500,000 each. If MTI, EDC and Plug Power have not
agreed upon the terms and timing of additional contributions to Plug
Power, if any, as of September 15, 1998, such loans will be payable on
demand.
On April 15, 1998, EDC contributed $2.25 million in cash to Plug
Power. MTI contributed a below-market lease for office and
manufacturing facilities in Latham, New York, valued at $2 million and
purchased a one year option to match EDC's remaining $250,000
contribution. In May 1998, EDC contributed an additional $2 million to
Plug Power and MTI purchased a one year option to match the contribution.
MTI's options mature in April 1999 ($250,000) and May 1999 ($2 million).
See "Risk Factors--Plug Power-Investment in Plug Power" and "Risk
Factors--Plug Power-Recognition of Plug Power Losses."
Plug Power anticipates that it will continue to need substantial
capital investment for the foreseeable future. Plug Power is currently
negotiating with several strategic partners and has signed a preliminary
memorandum of understanding with one potential strategic partner. There
is no assurance, however, that Plug Power will successfully conclude any
transactions with strategic partners or find other sources of capital. If
other sources of funding cannot be found, MTI will be faced with
contributing and/or lending additional capital to Plug Power or dilution
of its interest in Plug Power. If EDC and the Company stop funding Plug
Power and no additional sources of capital are found, Plug Power will not
be able to continue as a going concern. See "Risk Factors--Inability to
Raise Sufficient Proceeds"; "Risk Factors--Plug Power-Investment in Plug
Power" and "Risk Factors--Plug Power-Recognition of Plug Power Losses."
On July 15, 1998, the Company received a commitment from KeyBank
National Association ("KeyBank") to lend the Company $4 million in a
working capital line of credit at an interest rate of LIBOR plus 250
basis points, and $1 million in an equipment loan/lease line of credit at
an interest rate of LIBOR plus 275 basis points, both of which expire
January 31, 2000. Additionally, KeyBank has agreed to issue a $6 million
direct pay letter of credit to enhance the $6 million Industrial
Development Revenue Bonds ("IDR Bonds") to be issued on the Company's
behalf on or about August 30, 1998. The loan commitment requires the
Company to meet certain covenants, including a fixed charge coverage and
leverage ratio. Further, if certain performance standards are achieved,
<PAGE>
the interest rates on the debt may be reduced. The commitment letter
also requires the Company to grant a first lien on all consolidated
assets of the Company exclusive of Plug Power, a first mortgage on all
land and buildings owned by the Company and a first lien on any equipment
purchased by the Company. See "Risk Factors--Need for Immediate
Financing."
The Industrial Development Agency for the Town of Colonie("IDA")
has agreed to issue $6 million in IDR Bonds on behalf of the Company to
assist in the construction of a new building for Advanced Products and
MTI's corporate staff and renovation of existing buildings to be leased
to Plug Power (the "Project"). The Project is due to be completed as of
December 1998. The IDA will issue Industrial Development Revenue Notes
to FAC, which will underwrite the sale of the IDR Bonds to the public.
The bond proceeds will be deposited with a trustee for the bondholders.
MTI may draw down on the bond proceeds to cover qualified Project costs.
The bond closing is expected to be completed on or about August 30, 1998.
FAC will receive no fees for underwriting the IDR Bonds, but will be
reimbursed for its out of pocket costs. See "Risk Factors--Immediate
Need for Financing" and "Risk Factors--Conflict of Interest."
<PAGE>
THE OFFERING
Description of the If you hold MTI Common Stock on August 12, 1998,
Offering you will receive one non-transferable right
to purchase MTI Common Stock for every
___ (_) shares of MTI Common Stock you own.
Fractional Rights will be rounded up to the
next whole number in determining the number
of Rights to be issued to stockholders. Each
right entitles you to purchase one share of
MTI's Common Stock at a purchase price of $____
("Exercise Price"). MTI is offering _______
shares of Common Stock for purchase through the
exercise of Rights ("Underlying Shares").
See "Offering--The Rights.
Basic Subscription Holders are entitled to purchase, at the
Privilege Exercise Price, one share of Common Stock
for each Right held. See "Offering--The
Rights", "Offering--Subscription Privileges-
Basic Subscription Privilege" and
"Offering--No Revocation.
Oversubscription Each Holder who elects to exercise his or her
Privilege Basic Subscription Privilege may also
subscribe at the Exercise Price for
Underlying Shares, if any, remaining unissued
after satisfaction of all subscriptions
pursuant to the Basic Subscription Privilege.
If an insufficient number of Underlying
Shares is available to satisfy fully all
elections to exercise the Oversubscription
Privilege, the available Underlying Shares will
be allocated on a pro-rata basis among Holders
who exercise their Oversubscription
Privilege based on the respective numbers of
Underlying shares subscribed for by
such Holders pursuant to the Basic Subscription
"Offering--Subscription Privileges-
Oversubscripton Privilege" and "Offering--No
Revocation
<PAGE>
Commitments to Exercise First Albany Companies, Inc. ("FAC"), George C.
of Subscription McNamee and Alan P.Goldberg (the "Purchasing
Shareholders") have agreed to exercise their
full Subscription Privilege and may exercise their
Oversubscription Privilege. The Purchasing Shareholders
currently own 2,556,274 shares, or approximately
forty-three percent (43%) of the outstanding
Common Stock of the Company. After exercise
of the full Basic Subscription Privilege,
the Purchasing Shareholders will own
_________ shares or approximately
___________ percent (__%) of the outstanding
Common Stock of the Company, assuming no
other stockholders exercise their Basic
Subscription Privilege
Exercise Price If you wish to exercise your Rights to purchase
Common Stock, the Exercise Price will be
$____ per share of Common Stock. See "Risk
Factors--Determination of Exercise Price" and
"Determination of Exercise Price.
When You Can Exercise The Rights will only be exercisable from the
Your Rights period beginning on August 13, 1998, and
ending on September 24, 1998 at 5:00 p.m., New
York City time, unless extended by the Company
from time to time. See "Offering--Expiration
Date.
Number of Shares of _______ shares.
Common Stock Offered in
the Offering
Record Date August 12, 1998
<PAGE>
Expiration Date September 24, 1998, unless extended by the
Company from time to time, provided that the
Expiration Date shall not be later than
November 30, 1998, unless the Board of
Directors determines that a material event
has occurred that necessitates one or more
further extensions of the Rights to permit
adequate disclosure of information concerning
such event to Holders. If the Company elects to
extend the term of the Rights, it will issue a
press release to such effect not later than
the first day on which The Nasdaq National
Market is open for trading following the
most recently announced Expiration Date. In the
event the Company elects to extend the term of
the Offering by more than 14 calendar days,
it will, in addition, cause written notice of
such extension to be sent promptly to all
Holders of record on the Record Date. See
"Offering--Expiration Date.
Procedure for Rights may be exercised by properly completing
Exercising Rights the certificate evidencing such Rights
(the "Subscription Certificate") and
forwarding such Subscription Certificate
(or following the Guaranteed Delivery
Procedures, as defined below) to the
Subscription Agent on or prior to the Expiration
Date, together with payment in full of the
Exercise Price for each Underlying Share
subscribed for pursuant to the Subscription
Privileges. If the mail is used to forward
Subscription Certificates and/or payment, insured,
registered mail should be used. The exercise
of a Right may not be revoked or amended. If
time does not permit a Holder of a Right to
deliver its Subscription Certificate to the
Subscription Agent on or before the Expiration
Date, such Holder should make use of the
Guaranteed Delivery Procedures described
under "Offering--Exercise of Rights."
Please note that funds paid by uncertified
personal check may take at least five business
days to
<PAGE>
clear. Accordingly, Holders who wish to pay
the Exercise Price by means of uncertified
personal check should make payment
sufficiently in advance of the Expiration Date
to ensure that such payment is received and
clears by such date. Holders should consider
payment by means of certified or cashier's
check, money order or wire transfer of funds.
See "Offering--Exercise of Rights" and
"Offering--Over/Underpayment of Exercise Price."
Persons Holding Shares, Persons holding shares of Common Stock and
or Wishing to Exercise receiving the Rights distributable with
Rights Through Others respect to such shares through a broker,
dealer, commercial bank, trust company or other
nominee, as well as persons holding
certificates of Common Stock personally who
would prefer to have such institutions effect
transactions relating to the Rights on their
behalf, should give timely instructions to
their broker, dealer, commercial bank, trust
company or other nominee and request it to effect
the transactions for them. See "Offering--
Exercise of Rights" and "Offering--Exercise of
Rights Through Third Parties."
Closing and Issuance of The closing will occur and certificates
Common Stock representing Underlying Shares will be delivered
to subscribers as soon as practical after the
Expiration Date and after all prorations
have been effected. See "Offering--Subscription
Privileges" and "Offering--Delivery of
Subscription Certificates." No Underlying Shares will
be issued until the closing. Funds delivered to the
Subscription Agent for the exercise of Subscription
Privileges will be held in escrow by the Subscription
Agent until the closing. No interest will be
paid to Holders on funds held by the Subscription
Agent. In the case of Holders exercising
Oversubscription Privileges, any excess
funds will be returned to the Holders as soon
as practical following the closing.
<PAGE>
Common Stock to be After this Offering, assuming all Rights are
Outstanding After the subscribed for, _________ shares of
Offering Common Stock will be outstanding (not
including 249,865 shares issuable upon the
exercise of outstanding stock options at a
weighted average exercise price of $3.42
per share, of which options to purchase
99,365 shares of Common were exercisable as of
August 6, 1998)
How We Intend to Use It is anticipated that the net proceeds to the
the Proceeds Company will be approximately $6 million
if all of the Underlying Shares are purchased in
the Offering. If less than all of the
Underlying Shares are purchased, the proceeds
will be correspondingly reduced. See "Risk
Factors-- Inability to Raise Sufficient
Proceeds." The net proceeds from this
Offering will be used for further investment
into or loans to Plug Power. See "Recent
Developments"; "Risk Factors--Plug Power-
Investment in Plug Power"; "Risk Factors--
Plug Power-Recognition of Plug Power Losses."
The Company may also use the proceeds of the
Offering for acquisitions, efforts to
increase market share, working capital, general
corporate purposes and other capital
expenditures. See "Risk Factors--Discretion in
Application of Proceeds" and "Use of Proceeds.
Subscription Agent American Stock Transfer & Trust Company. See
"Offering--Subscription Agent."
<PAGE>
STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
Statements in this Prospectus or in documents incorporated herein by
reference that are not statements of historical fact constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements regarding future revenues, expenses
and profits. These forward looking statements are subject to known and unknown
risks, uncertainties or other factors that may cause the actual results of the
Company to be materially different from the historical results or from any
results expressed or implied by the forward looking statements. Such risks and
factors include, but are not limited to, those discussed below under "Risk
Factors" and "Management's Discussion and Analysis of Results of Operations and
Financial Condition" in MTI's Form 10-Q for the quarter ended June 26, 1998,
attached hereto as Exhibit 13.2. All cautionary statements made in this
Prospectus should be read as being applicable to all related forward-looking
statements wherever they appear.
RISK FACTORS
An investment in the Common Stock being offered by this Prospectus
involves a high degree of risk. In addition to the other information contained
in this Prospectus or incorporated herein by reference, prospective investors
should carefully consider the following risk factors before purchasing the
Common Stock offered by this Prospectus.
Plug Power
Investment in Plug Power
On July 31, 1998, Plug Power requested contributions or loans of $10
million from EDC and MTI to fund continuing operations for the period August 1,
1998 through March 31, 1999. Thus far, EDC and MTI have already contributed
$16 million in cash and other assets to Plug Power since June 27, 1997. There
is no assurance the $10 million requested will fully fund Plug Power's
operations through March 1999. Further, even if the $10 million is sufficient
to fund Plug Power through March 1999, the Company believes that Plug Power
will continue to need substantial additional capital investment thereafter
until it can profitably sell PEM fuel cells to the public. There is no
assurance when, if ever, such sales will be made. If EDC and MTI stop funding
Plug Power, and no other sources of capital are found, Plug Power will be
unable to continue as a going concern. If EDC and other investors fund Plug
Power, MTI's interest in Plug Power will suffer substantial dilution unless MTI
is able and willing to match such contributions.
Recognition of Plug Power Losses
MTI has recorded its proportionate share of Plug Power's losses only to
the extent of MTI's recorded investment in Plug Power, which has been written
down to zero as of March 28, 1998. Future investments into or loans to Plug
Power may result in the Company's recognition of losses to the full extent of
such investment or loans. Recording of its proportionate share of Plug Power
losses will likely result in the Company reporting significant losses in the
future, which is likely to have a substantial adverse impact on the market
price for the Company's Common Stock.
<PAGE>
Plug Power Research and Development
Plug Power is engaged in the research and development of an economically
viable PEM fuel cell. Plug Power faces intense competition from a number of
companies, including at least one competitor that is significantly larger with
significantly greater resources. Substantial research and development on the
PEM fuel cell remains to be completed. There is no assurance that Plug Power
will ever successfully complete such research and development and if they do,
that their competitors will not do so more quickly or more effectively.
Further, there can be no assurance that any product that Plug Power may
ultimately produce will find a market.
History of Plug Power Losses
Since its inception on June 27, 1997, Plug Power has incurred substantial
losses as follows:
(000's)
For the period June 27, 1997 (inception) to September 30, 1997 $ 630
For the nine months ended June 26, 1998 $6,019
Plug Power will continue to sustain significant losses until it can
produce sufficient revenues to cover its costs. MTI expects that such revenues
will not be generated until it cost-effectively produces and sells PEM fuel
cells to the public. There can be no assurance as to when, or if Plug Power
may ever sell PEM fuel cells to the public on a profitable basis.
Discretion in Application of Proceeds
The Company intends to use some, if not all, of the proceeds of the
Offering for further investments into or loans to Plug Power. The Company may
also use the proceeds of the Offering for acquisitions, efforts to increase
market share, working capital, general corporate purposes and other capital
expenditures. The specific uses of the proceeds will be at the complete
discretion of the Company and may be allocated from time to time based on a
variety of circumstances. There can be no assurance that the Company will
deploy the proceeds in a manner that will enhance the financial condition of
the Company.
Inability to Raise Sufficient Proceeds
There is no assurance that the Company will raise the full amount of funds
sought through this Offering. Failure to raise sufficient funds through this
Offering will severely limit the Company's ability to make further investments
into or loans to Plug Power or to make acquisitions or otherwise increase the
market share of its core businesses.
Immediate Need for Financing
On July 15, 1998, the Company received a letter of commitment from KeyBank
whereby KeyBank agreed to provide a $4 million working capital line of credit
and a $1 million equipment loan/lease line, both of which will expire January
31, 2000. Additionally, KeyBank has agreed to issue a $6 million direct pay
letter of credit to enhance the $6 million IDR Bonds to be issued on the
Company's behalf on or about August 30, 1998. There can be no assurance that
the Company and KeyBank will come to terms on the final agreements contemplated
by the commitment letter, or that the terms of such financing will be favorable
to the Company. There is also no assurance that the Company will be able to
sell the $6 million in IDR Bonds to the public. If the Company cannot obtain
the financing described above, the failure to do so will have a material
adverse effect on the Company's business and operating results.
<PAGE>
Conflict of Interest
George McNamee is Chairman of the Board of Directors of each of FAC, MTI
and Plug Power, and is also Chief Executive Officer of MTI and Co-Chief
Executive Officer of FAC. Beno Sternlicht and Walter Robb are members of the
Board of Directors of MTI and Plug Power. Alan Goldberg is a member of the
Board of Directors of FAC and MTI and Co-Chief Executive Officer of FAC. FAC
owns 34% of the outstanding Common Stock of MTI. These interrelationships
create the potential for conflicts of interest to arise in connection with the
exercise by MTI's directors of their respective fiduciary duties.
Discontinued Operations; Change in Strategy
Since 1996, MTI has shifted its focus from research and development to
product development, marketing and sales. With the sale of the remainder of
the Technology Division to a subsidiary of Foster-Miller, Inc. in March 1998
(see Note 4, "Discontinued Operations" in MTI's Form 10-Q for the quarter ended
March 27, 1998, attached hereto as Exhibit 13.1), MTI has completed its planned
sale of non-core businesses and is now prepared to explore strategic
acquisitions and alliances for its two core businesses, Advanced Products and
Ling. There can be no assurance that any acquisitions or strategic alliances
will be made, or if such acquisitions or alliances are made that they will have
a positive impact on the Company's business and results of operations in the
short or long term.
Dilution; Discount from Market Price
Holders who do not exercise their Subscription Privileges in full will
realize a dilution in their percentage voting interest and ownership interest
in future net earnings, if any, of the Company to the extent that Rights are
exercised by other Holders. The Exercise Price represents a ____% discount
from the closing bid price of the Common Stock on ________, 1998 and could
result in a reduction in the market price for the Common Stock.
Substantial Immediate Dilution
Assuming all Underlying Shares are subscribed for in connection with this
Offering, a purchaser of Common Stock in this Offering will experience
immediate and substantial dilution of approximately $____ in value per share
because the Exercise Price of the Common Stock ($____) exceeds the $____ pro-
forma net tangible book value per share at June 26, 1998 of the Company's
Common Stock after giving effect to the Offering.
Determination of Exercise Price
The Exercise Price of the Common Stock was determined by the Board of
Directors upon the advice of the independent Consulting and Investment Banking
firm of Schwartz Heslin Group, Inc. The Exercise Price does not necessarily
bear any relationship to the prices at which shares of Common Stock have traded
in the market or in private transactions, or to the Company's earnings, assets,
book value, financial condition or any other recognized criterion of value.
There can be no assurance that the value of the Common Stock will not decline
below the Exercise Price.
Attraction and Retention of Technical Employees
The Company believes that its future success will depend in large part
upon its ability to attract, retain and motivate highly skilled employees,
particularly technical employees. These employees are likely to remain in
limited supply for the foreseeable future. There can be no assurance that the
Company will be able to attract and retain sufficient numbers of highly skilled
<PAGE>
technical employees. The loss of a significant number of the Company's
technical employees could have a material adverse effect on the Company.
Competition
The Company faces intense competition from at least several companies,
many of which are larger than MTI and have greater financial resources. While
Advanced Products and Ling each have a major share of their respective markets,
the Company does not consider either of them to be dominant within its
industry. The primary competitive considerations in the Company's businesses
are: product quality and performance; price; and timely delivery. These
competitive pressures have restrained, and can be expected in the future to
restrain the growth and profitability of the Company's businesses, which could
have a material adverse effect on the value of the Common Stock.
Economic Events in Asia
The Company's operations may be affected by unfavorable financial and
economic conditions in Asia, which are outside of the control of the Company.
Recent economic events in Asia have had a material adverse effect on currency
fluctuations and spending in such areas. The Company's operating results may
be adversely affected by such crises due to the potential for significant
decreases in demand for the Company's products and services, the potential for
foreign governments to implement prohibitions and limitations on U.S.
companies, and the potential for foreign currency losses. Such events could
have an adverse effect on the market value of the Common Stock.
Additional Capital Requirements
Management expects that Plug Power will continue to need substantial,
additional funding and the future growth and development of the Company's
business will require additional capital. There can be no assurance that the
Company will be able to obtain additional capital when necessary, or that the
terms on which any capital investment can be obtained will be favorable to the
Company. If the Company cannot obtain capital on satisfactory terms, the
failure to obtain such financing will limit the Company's ability to make
investments in or loans to Plug Power and will have a material adverse effect
on the Company's business and operating results.
Control by Existing Holders of Common Stock
The members of the Company's present Board of Directors directly or
indirectly own more than 48% of the Company's outstanding Common Stock. As a
result, it is unlikely that investors who purchase the shares of Common Stock
offered hereby will be able to obtain representation on the Company's Board of
Directors (unless they first obtain the support of the shareholders on the
existing Board), or otherwise exercise any control or influence over the
Company's management. Furthermore, the substantial shareholdings by members of
the present Board of Directors make it unlikely that an independent third party
could effect a change in control of the Company without the consent of the
Board, thereby effectively insulating the Company's Board of Directors and
management from objections and challenges by shareholders to actions taken by
the Board and management in the conduct of the Company's business and the
formulation of its business objectives, strategies and policies. This could
have an adverse effect on the market value of the Common Stock.
<PAGE>
No Assurance of Public Market for Common Stock
In August 1994, the Company was removed from The Nasdaq National Market
System and commenced trading on the OTC Bulletin Board. The Company intends to
apply for re-listing on The Nasdaq National Market System shortly after the end
of its fiscal year. There can be no assurance that MTI's Common Stock will be
re-listed or that there will be an active trading market for the Company's
Common Stock. In addition, the trading price of the Common Stock has been, and
in the future could be, subject to significant fluctuations in response to
variations in quarterly operating results, the gain or loss of significant
contracts, changes in management, new products or services by the Company or
its competitors, general trends in the industry, announcements by Plug Power
and other events or factors. In addition, the stock market has experienced
extreme price and volume fluctuations that have particularly affected the
market price for many companies in similar industries and that have often been
unrelated to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Common Stock.
Rapid Technological Change; Dependence on New Product Introduction, Product
Enhancements and Product Developments
The market for many of the Company's products and services is
characterized by rapidly changing technology and evolving industry standards.
There is no assurance that the Company's current technology base will continue
to address current and evolving customer needs. The Company believes that its
future success will depend on its ability to develop and manufacture new
products and product enhancements and to introduce them successfully into the
market. Failure to do so in a timely fashion could harm the Company's
competitive position. The announcements or introductions of new products by
the Company or its competitors may adversely affect the Company's operating
results, because these announcements or introductions may cause customers to
defer or forego ordering products from the Company's existing product lines.
Moreover, there is no assurance the Company will have sufficient funds to
finance product introductions, enhancements or developments.
Issuance of Additional Common Stock
The Company has 15 million authorized shares of Common Stock, $1.00 par
value, of which ________ shares will be issued in connection with this
Offering, resulting in a maximum of _________ shares outstanding after
completion of this Offering. The Company's Board of Directors generally has
authority, without action or vote of the stockholders, to issue all or part of
the authorized but unissued shares. Any such issuance could further dilute the
percentage ownership interest of shareholders and may further dilute the book
value of the Common Stock.
Year 2000 Compliance
Currently, there is significant uncertainty regarding the impact of the
year 2000 on software installed in certain products by the Company. Current
versions of the Company's products are designed to be "Year 2000" compliant.
The Company is in the process of determining the impact of any non-compliance
of previously installed products or purchased software and related products on
the Company and its customers and suppliers. The Company does not currently
believe that the effects of any potential Year 2000 non-compliance in the
Company's products will result in any material adverse impact on the Company's
business or financial condition. There can be no assurance, however, that the
Company will not be exposed to potential claims resulting from system problems
associated with the arrival of the Year 2000.
<PAGE>
No Cash Dividends
Since its inception, the Company has not paid any cash dividends on its
Common Stock. The Company anticipates that its future earnings, if any, will
be retained for use in the business or for other corporate purposes, and it is
not anticipated that any cash dividends on the Common Stock will be paid in the
foreseeable future.
In addition to the matters discussed above, prospective investors should
consult their own attorneys, accountants and other professional advisors as to
legal, tax and related matters concerning their prospective investment in the
Company's Common Stock.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
Set forth below is summary consolidated financial information (restated for
the discontinuance of the Technology Division as of December 26, 1997) and
certain adjusted financial information of the Company. The consolidated
financial information as of and for the five years ended September 30, 1997 set
forth below has been derived from consolidated financial statements audited by
PricewaterhouseCoopers LLP, independent public accountants. The consolidated
financial data as of and for the nine months ended June 26, 1998 and June 27,
1997 has been derived from unaudited consolidated financial statements which,
in the opinion of management, reflect all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the financial
data for such periods. The following information should be read in conjunction
with "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and the Company's consolidated financial statements and
the accompanying notes set forth in the Company's Form 10-Q for the quarter
ended June 26, 1998, attached hereto as Exhibit 13.2
<PAGE>
<TABLE>
Nine Months
Ended June 26 and 27 Years Ended September 30, (Restated)
--------------------- --------------------------------------------------------
(unaudited) (audited)
<S> <C> <C> <C> <C> <C> <C> <C>
(Restated)
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
Statement of Earnings Data: (in thousands, except per share data)
Net Sales.................. $16,016 $18,215 $24,102 $22,755 $18,140 $29,721 $28,395
Gross Profit............... 7,013 7,245 9,628 8,830 6,145 11,800 11,321
Operating Income (Loss).... 1,814 1,335 1,593 1,069 (2,167) 2,157 3,021
Gain on sale of
subsidiary/division or
building................... - - 2,012 750 6,779 1,856 -
Income from Continuing
Operations Before
Extraordinary Item and
Income Taxes............... 1,734 1,161 2,701 673 3,352 816 1,840
Income from Continuing
Operations before
Extraordinary Item......... 1,734 1,065 2,558 598 3,256 201 1,492
Extraordinary Item - Gain on
Extinguishment of Debt, net
of taxes ($106)............ - 2,507 2,507 - - - -
Income from Continuing
Operations................. 1,734 3,572 5,065 598 3,256 201 1,492
Income (Loss) from
Discontinued Operations,
Net of Taxes............... (2,285)(2) (198) (545) 3,150 (334) (24,579)(1) (436)
Net (Loss) Income.......... (551) 3,374 4,520 3,748 2,922 (24,378) 1,056
Diluted Earnings Per Share:(3)
Income from Continuing
Operations before
Extraordinary Item......... 0.28 0.19 0.45 0.15 0.91 0.05 0.42
Extraordinary Item......... - 0.45 0.44 - - - -
(Loss) Income from
Discontinued Operations.... (0.37) (0.03) (0.09) 0.81 (0.09) (6.96) (0.12)
Net (Loss) Income.......... (0.09) 0.61 0.80 0.96 0.82 (6.91) 0.30
Weighted Average Shares
Outstanding and
Equivalents................ 6,133,271 5,577,386 5,670,364 3,911,952 3,559,789 3,529,881 3,527,835
Other Information:
Capital Expenditures....... 202 322 377 264 409 426 188
Depreciation and
Amortization............... 224 181 243 233 358 460 706
Balance Sheet Data:
Working Capital (Deficit).. 6,517 6,678 7,696 7,086 2,712 (6,219) 17,326
Total Assets............... 13,108 15,111 14,003 13,481 13,444 23,971 41,680
Total Long Term Debt....... 0 856 0 5,508 6,960 11,182 13,082
Total Shareholders' Equity
(Deficit).................. 7,886 7,070 8,213 2,164 (3,490) (6,418) 17,969
</TABLE>
(1) Includes a net charge of $15,415,000 related to the discontinuance of the
Company's United Telecontrol Electronics, Inc. subsidiary.
(2) Includes a net charge of $1,769,000 related to the discontinuance of the
Company's Technology Division.
(3) Earnings per share have been restated to comply with SFAS No. 128,
"Earnings Per Share."
<PAGE>
USE OF PROCEEDS
The net proceeds from the Offering are estimated to be approximately $6
million after the payment of expenses associated with the Offering, assuming
the Offering is fully subscribed. See "Risk Factors--Inability to Raise
Sufficient Proceeds." The Company intends to use some, if not all, of the
proceeds of the Offering for further investments into or loans to Plug Power.
The Company may also use the proceeds of the Offering for acquisitions, efforts
to increase market share, working capital, general corporate purposes and other
capital expenditures. See "Recent Developments"; "Risk Factors--Discretion in
Application of Proceeds." Although the Company intends to pursue acquisitions
actively, it has no current contract or commitment with respect to any
particular acquisition.
DETERMINATION OF EXERCISE PRICE
The Exercise Price was determined by the Board of Directors upon the advice
of the independent Consulting and Investment Banking firm of Schwartz Heslin
Group, Inc., which has issued a fairness opinion supporting the fairness of the
Exercise Price. See "Risk Factors--Determination of Exercise Price."
OFFERING
The Rights
The Company is distributing, at no cost to the record holders of its
outstanding Common Stock as of August 12, 1998 non-transferable Rights to
purchase additional shares of Common Stock at a price of $____ per share.
The Company will distribute one non-transferable Right for each ___ (_) shares
of Common Stock held on the Record Date. Each Right will entitle its Holder
to purchase one share of Common Stock. The Rights will be evidenced by non-
transferable subscription certificates. An aggregate of _______ shares of
Common Stock will be sold if all Rights are exercised.
No fractional Rights, or cash in lieu thereof, will be issued or paid. The
number of Rights distributed to each Holder will be rounded up to the nearest
whole share in connection with the exercise of Subscription Privileges.
Subscription Privileges
Basic Subscription Privilege. Each Right will entitle the Holder thereof to
receive, upon payment of the Exercise Price, one share of Common Stock.
Certificates representing shares of Common Stock purchased pursuant to the
Subscription Privilege will be delivered to subscribers as soon as practical
after the Expiration Date, irrespective of whether the Subscription Privilege is
exercised immediately prior to the Expiration Date or earlier.Holders exercising
their Subscription Privilege will not be shareholders of record with respect to
the shares issuable pursuant to such Subscription Privilege until the closing,
which it is anticipated will occur four business days after the Expiration Date.
<PAGE>
Oversubscription Privilege. Subject to the allocation described below, each
Right also carries the right to subscribe, at the Exercise Price, for any
Underlying Shares not subscribed for through the exercise of Basic Subscription
Privileges by other Holders (the "Excess Shares"). If the Excess Shares are not
sufficient to satisfy all subscriptions made pursuant to the Oversubscription
Privilege, such Excess Shares will be allocated pro-rata (subject to the
elimination of fractional shares) among those Holders exercising the
Oversubscription Privilege, in proportion, not to the number of shares requested
pursuant to the Oversubscription Privilege, but to the number of shares each
Holder exercising the Oversubscription Privilege subscribed for pursuant to the
Basic Subscription Privilege; provided,however, that if such pro-rata allocation
results in any Holder being allocated a greater number of Excess Shares than
such Holder subscribed for pursuant to the exercise of such Holder's
Oversubscription Privilege, then such Holder will be allocated only the number
of Excess Shares for which such Holder subscribed. The remaining Excess Shares
will be allocated among all other Holders exercising the Oversubscription
Privilege. Only beneficial Holders who exercise the Basic Subscription
rivilege in full will be entitled to exercise the Oversubscription Privilege.
Notification of the number of shares allocated pursuant to the Oversubscription
Privilege will be delivered to subscribers as soon as practical after the
Expiration Date and after all prorations have been effected.
Expiration Date
The Rights will expire at 5:00 p.m.,New York City time, on September 24,1998
(the "Expiration Date"), unless extended by the Company from time to time.
Notwithstanding the foregoing, the Expiration Date in no event shall be later
than November 30, 1998, except that the Company reserves the right to extend
the exercise period on one or more occasions if the Board of Directors
determines that the occurrence of a material event necessitates an amendment
of the Registration Statement or recirculation of the Prospectus that forms a
part thereof in order to permit time for the distribution of such information.
After the Expiration Date, unexercised Rights will be null and void. The
Company will not be obligated to honor any purported exercise of Rights
received by the Subscription Agent after the Expiration Date, regardless of
when the documents relating to such exercise were sent, except pursuant to the
Guaranteed Delivery Procedures described below.
Commitments to Exercise Rights
FAC, George C. McNamee and Alan P. Goldberg (the "Purchasing Shareholders")
have informed the Board of Directors that they intend to exercise their full
Basic Subscription Privilege, and may exercise their Oversubscription Privilege.
The Purchasing Shareholders currently own 2,556,274 shares or approximately
forty-three percent (43%) of the outstanding Common Stock of the Company.
After exercise of the full Basic Subscription Privilege, the Purchasing
Shareholders will own _________ shares or approximately ____________ percent
(__%) of the outstanding Common Stock of the Company, assuming no other
stockholders exercise their Basic Subscription Privilege.
Exercise of Rights
Rights may be exercised by delivering to the Subscription Agent,on or prior
to 5:00 p.m., New York City time, on the Expiration Date, the properly completed
and executed Subscription Certificate evidencing such Rights with any required
signatures, together with payment in full of the Exercise Price for each
Underlying Share subscribed for pursuant to the Subscription Privileges (except
as permitted pursuant to clause (iii) of the next sentence).Such payment in full
<PAGE>
must be by: (i) check or bank draft drawn upon a U.S. bank or postal money
order, payable to American Stock Transfer & Trust Company, as Subscription
Agent; (ii) wire transfer of funds to the account maintained by the
Subscription Agent for such purpose; or (iii) in such other manner as the
Company may approve in writing in the case of persons acquiring Underlying
Shares at an aggregate Exercise Price of $500,000 or more (the payment method
under (iii) being an "Approved Payment Method"), provided in each case that
the full amount of such Exercise Price is received by the Subscription Agent
in currently available funds within three Nasdaq National Market trading days
following the Expiration Date. Payment of the Exercise Price will be deemed
to have been received by the Subscription Agent only upon (a) clearance of any
uncertified check, (b) receipt by the Subscription Agent of any certified
check or bank draft drawn upon a United States bank or of any postal money
order, (c) receipt of good funds in the Subscription Agent's account designated
above, or (d) receipt of good funds by the Subscription Agent through an
Approved Payment Method.
If paying by uncertified personal check, please note that the funds paid
thereby may take at least five business days to clear. Accordingly, Holders
who wish to pay the Exercise Price by means of an uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or bank cashier's check, money order
or wire transfer of funds.
The address to which the Subscription Certificates and payment of the
Exercise Price should be delivered is:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
If a Holder wishes to exercise Rights, but time will not permit such Holder
to cause the Subscription Certificate or Subscription Certificates evidencing
such Rights to reach the Subscription Agent on or prior to the Expiration Date,
such Rights may nevertheless be exercised if all of the following conditions
(the "Guaranteed Delivery Procedures") are met:
(i) such Holder has caused payment in full of the Exercise Price for each
Underlying Share being subscribed for pursuant to the Subscription
Privileges to be received (in the manner set forth above) by the
Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration Date, a
guaranteed notice (a "Notice of Guaranteed Delivery"), substantially in
the form provided with the Instructions for Subscription Certificate(the
"Instructions") distributed with the Subscription Certificates, from an
"Eligible Institution" (as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934), stating the number of Rights represented by the
Subscription Certificate(s) held by such exercising Holder, the number
of Underlying Shares being subscribed for pursuant to the Subscription
Privileges and guaranteeing the delivery to the Subscription Agent of
any Subscription Certificate(s) evidencing such Rights within three
Nasdaq National Market trading days following the date of the Notice of
Guaranteed Delivery; and
(iii)the properly completed Subscription Certificate(s), with any required
signatures, is received by the Subscription Agent within three Nasdaq
<PAGE>
National Market trading days following the date of the Notice of
Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery
may be delivered to the Subscription Agent in the same manner as
Subscription Certificate(s) at the address set forth above, or may be
transmitted to the Subscription Agent by facsimile transmission
(telecopy number (718) 234-5001). Additional copies of the form of
Notice of Guaranteed Delivery are available upon request from the
Subscription Agent, whose address and telephone number are set forth
under "Subscription Agent" below.
Funds received in payment of the Exercise Price for Excess Shares subscribed
for pursuant to the Oversubscription Privilege will be held in a segregated
account pending issuance of such Excess Shares. If a Holder exercising the
Oversubscription Privilege is allocated less than all of the Excess Shares that
such Holder wished to subscribe for pursuant to the Oversubscription Privilege,
the excess funds paid by such Holder in respect of the Exercise Price for shares
not issued shall be returned by mail without interest or deduction as soon as
practical after the Expiration Date.
Exercise of Rights Through Third Parties
A Holder who holds shares of Common Stock for the account of others,such as
a broker, a trustee or a depositary for securities, should notify the respective
beneficial owners of such shares as soon as possible to ascertain such
beneficial owners' intentions and to obtain timely instructions with respect
to the Rights. If the beneficial owner so instructs, the record Holder of such
Rights shall complete the Subscription Certificate and submit it to the
Subscription Agent with the proper payment. In addition, the beneficial owner
of Common Stock or Rights held through such a Holder of record should contact
the Holder and make a timely request that the Holder effect transactions in
accordance with the beneficial owner's instructions.
Over/Underpayment of Exercise Price
If either the number of Underlying Shares being subscribed for pursuant
to the Basic Subscription Privilege is not specified on the Subscription
Certificate, or the amount of funds delivered is not enough to pay the Exercise
Price for all Underlying Shares stated to be subscribed for, the number of
Underlying Shares subscribed for will be assumed to be the maximum amount that
could be subscribed for upon payment of such amount. If the number of
Underlying Shares being subscribed for is not specified, or payment of the
Exercise Price for the indicated number of Rights that are being exercised
exceeds the required Exercise Price, the payment will be applied, until
depleted, to subscribe for Underlying Shares in the following order: (i) to
subscribe for the number of Underlying Shares indicated, if any, pursuant to
the Basic Subscription Privilege; (ii) to subscribe for Underlying Shares until
the Basic Subscription Privilege has been fully exercised with respect to all
of the Rights represented by the Subscription Certificate; and (iii) to
subscribe for additional Underlying Shares pursuant to the Oversubscription
Privilege (subject to any applicable proration).
Delivery of Subscription Certificates
The Instructions accompanying the Subscription Certificates should be read
carefully and followed in detail. PLEASE SEND ALL SUBSCRIPTION CERTIFICATES TO
THE SUBSCRIPTION AGENT. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE COMPANY.
The method of delivery of subscription certificates and payment of the
Exercise Price to the Subscription Agent will be at the election and risk of the
<PAGE>
Rights Holder, but if sent by mail it is recommended that such certificates and
payments be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
the Subscription Agent and clearance of payment prior to 5:00 p.m.,New York City
time, on the Expiration Date. Because uncertified personal checks may take at
least five business days to clear, the Rights Holder is strongly urged to pay,or
arrange for payment, by means of certified or bank cashier's check, money order
or wire transfer of funds.
Any questions or requests for assistance concerning the method of exercising
Rights or requests for additional copies of this Prospectus, or the Notice of
Guaranteed Delivery should be directed to the Subscription Agent at telephone
number (718) 921-8200, or the Company at telephone number (518) 785-2211.
No Revocation
Once a Rights Holder has exercised the Basic Subscription Privilege or the
Oversubscription Privilege, such exercise may not be revoked.
Subscription Agent
The Company has appointed American Stock Transfer & Trust Company as
Subscription Agent for the Offering. The Subscription Agent's address, which is
the address to which the Subscription Certificates and payment of the Exercise
Price should be delivered, as well as the address to which Notice of Guaranteed
Delivery must be delivered, and the Subscription Agent's telephone number and
facsimile number, are:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Telephone No. (718) 921-8200
Telecopier No. (718) 234-5001
The Company will pay the fees and expenses of the Subscription Agent, and
has also agreed to indemnify it from any liability that it may incur in
connection with the Offering.
FEDERAL INCOME TAX CONSEQUENCES
Because of the complexity of the provisions of the Internal Revenue Code of
1986, as amended (the "Code") and because tax consequences may vary depending
upon the particular facts relating to each holder of MTI Common Stock, such
holders should consult their own tax advisors concerning their individual tax
situations and the tax consequences of this Offering under the Code and under
any applicable state, local or foreign tax laws.
PLAN OF DISTRIBUTION
The Common Stock offered hereby is being offered by the Company pursuant to
the issuance of Rights directly to holders of shares of Common Stock on the
Record Date. Certain employees, officers or directors of the Company may
solicit responses from Holders to the Offering, but such individuals will not
receive any commissions or compensation for such services other than their
normal employment compensation.
<PAGE>
The Company intends to distribute Rights and copies of this Prospectus to
stockholders of record on the Record Date promptly following the Effective Date
of the Registration Statement of which this Prospectus forms a part.
Holders who desire to subscribe for the purchase of shares of Common Stock
in the Offering are urged to complete, date and sign the Subscription
Certificate and return it to the Subscription Agent on or before the Expiration
Date, together with payment in full for the share purchase. See "Offering--
Exercise of Rights" and "Offering--Exercise of Rights Through Third Parties."
DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized capital stock of the Company includes 15 million shares of
Common Stock, par value $1.00 per share. The Company is registering _______
shares of Common Stock in connection with the Offering. The outstanding shares
of Common Stock are fully paid and non-assessable. Holders of Common Stock
are entitled to dividends when, as and if declared by the Board of Directors
of the Company out of any funds legally available to the Company for that
purpose.
The Company has not paid dividends on the Common Stock and does not
anticipate doing so in the foreseeable future.
Holders of Common Stock are entitled to one vote per share held of record
with respect to all matters submitted to a vote of the stockholders. There is
no cumulative voting for the election of directors, who are elected for
staggered three-year terms.
At August 3, 1998, the approximate number of Holders of record of the
Common Stock was 1,460.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the SEC are hereby
incorporated by reference and are an integral part hereof: the Company's Annual
Report on Form 10-K for its fiscal year ended September 30, 1997; the Company's
Amended Annual Report on Form 10-K/A for its fiscal year ended September 30,
1997, as filed on January 23, 1998; the Company's Amended Annual Report on
Form 10-K/A for its fiscal year ended September 30, 1997, as filed on March 2,
1998; the Company's Quarterly Report on Form 10-Q for its quarter ended March
27, 1998; the Company's Quarterly Report or Form 10-Q for its quarter ended
June 26, 1998; and the Company's Current Report on Form 8-K dated April 8, 1998.
Copies of the the Company's Form 10-K and 10-K/A reports for the year ended
September 30, 1997 and Form 10-Q reports for quarters ended March 27, 1998 and
June 26, 1998 accompany this Prospectus. All documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent
to the date of this prospectus and prior to the termination of the Offering,
shall be deemed to be incorporated by reference in this prospectus and to be
a part hereof from the respective dates of the filing thereof. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus. All other documents may be obtained
from MTI at no charge by any person, including any
<PAGE>
beneficial owner, to whom a prospectus is delivered, who makes a written or oral
request for such documents. Please address all such requests to Cynthia A.
Scheuer, Chief Financial Officer, Mechanical Technology, Inc., 968 Albany-Shaker
Road, Latham, New York 12110 ((518) 785-2211).
AVAILABLE INFORMATION
MTI is subject to the informational requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") and in accordance therewith files reports and
other information with the SEC. Forms 10-K, 10-K/A, 10-Q, S-8, 8-K, the Proxy
Statement and other information filed by the Company, can be read and copied at
the Public Reference Room of the SEC in Washington, D.C. at the address given
below, and at certain of its Regional Offices at 1 World Trade Center, Suite
1300, New York, New York 10048 and 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Copies of such material
can be obtained from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The SEC also maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Rights and the
Underlying Shares have been passed upon for the Company by Whiteman Osterman &
Hanna, Albany, New York.
EXPERTS
The consolidated balance sheets as of September 30, 1997 and 1996 and the
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended September 30, 1997, incorporated by
reference in this registration statement, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The Exercise Price was determined by the Board of Directors upon the advice
of independent Consulting and Investment Banking firm of Schwartz Heslin Group,
Inc. Schwartz Heslin Group, Inc. has also issued a fairness opinion attesting to
the fairness of the Exercise Price. The Company will pay fees and expenses of
Schwartz Heslin Group, Inc., and has also agreed to indemnify it from certain
liabilities it may incur in connection with the Offering.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
Cross-Reference Sheet to Prospectus on Form S-2
Furnished Pursuant to Item 501(b) of Regulation S-K
Item Form S-2 Caption Location in Prospectus Page
- ---- ---------------- ---------------------- ----
1. Forepart of the Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus Outside Back Cover Pages
3. Summary Information and Prospectus Summary; Risk Factors
Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Exercise Determination of Exercise Price
Price
6. Dilution Risk Factors--Dilution; Risk Factors--
Substantial Immediate Dilution
7. Selling Securityholders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Description of Securities Description of Securities to be
to be registered Registered: Risk Factors--Issuance
of Additional Capital Stock; Offering
10. Interests of Named Experts Legal Matters; Experts
and Counsel
11. Information with Respect to Form 10-K for the fiscal year ended
Registrant September 30, 1997, Form 10-K/A, filed
as of January 23, 1998, Form 10K/A, filed
as of March 2, 1998, Form 10-Q for the
quarter ended March 27, 1998, and Form
10-Q for the quarter ended June 26, 1998,
appended hereto
12. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference; Available
Information
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 1,770
Printing 12,000*
Legal fees and Expenses 65,000*
Accounting Fees and Expenses 20,000*
Pricing and Fairness Opinion and Expenses 30,000*
Stock Transfer Fees 35,000*
--------
Total $163,770*
========
*Estimated
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS --
DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION
Under provisions of the Company's Amended and Restated Certificate of
Incorporation, the Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, proceeding or suit (including one by or in the right of the Company to
procure a judgment in its favor), whether civil or criminal, by reason of the
fact that he, his testator or intestate is or was a director or officer of the
Company, or is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity at
the request of the Company, against judgments, fines, amounts paid in
settlement and expenses, including attorneys' fees, actually incurred as a
result of or in connection with any such action, proceeding or suit, or any
appeal therefrom, if such director or officer acted in good faith for a purpose
which he reasonably believed to be in or not opposed to the best interests of
the Company, and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful; provided, however,
that no indemnification shall be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the director or
officer establishes that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he personally gained a financial profit or other
advantage to which he was not legally entitled.
Insofar as the indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore unenforceable.
Item 16. EXHIBIT INDEX
See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.
<PAGE>
Item 17. UNDERTAKINGS
The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to, and meeting the
requirements of, Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2/A and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Albany, State of New York on August 6, 1998.
MECHANICAL TECHNOLOGY, INC.
By: /s/ George C. McNamee
-----------------------------
George C. McNamee
Chief Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Cynthia A. Scheuer and George C. McNamee his
true and lawful attorneys-in-fact and agents, each acting alone, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
Registration Statement, including post-effective amendments, and to file the
same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all that said attorneys-in-fact and
agents, each acting alone, or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE DATE
/s/ George C. McNamee 08/06/98
- ---------------------------------------
George C. McNamee
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Cynthia A. Scheuer "
- ---------------------------------------
Cynthia A. Scheuer
Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ Dale W. Church "
- ---------------------------------------
Dale W. Church
Director
/s/ Edward A. Dohring "
- ---------------------------------------
Edward A. Dohring
Director
/s/ Alan P. Goldberg "
- ---------------------------------------
Alan P. Goldberg
Director
/s/ E. Dennis O'Connor "
- ---------------------------------------
E. Dennis O'Connor
Director
/s/ Walter L. Robb "
- ---------------------------------------
Dr. Walter L. Robb
Director
/s/ Beno Sternlicht "
- ---------------------------------------
Dr. Beno Sternlicht
Director
<PAGE>
Exhibit Table
5.1 Form of Opinion re legality
10.21 Asset Purchase Agreement between MTI and NYFM, Incorporated,
dated as of March 31,1998
10.22 Option Agreement-Contribution Match between Plug Power, L.L.C.
and MTI, dated as of April 24, 1998
10.23 Option Agreement-Contribution Match between Plug Power, L.L.C.
and MTI, dated as of June 15, 1998
10.24 Contribution Agreement between Edison Development Corporation
and MTI, dated as of June 10, 1998
10.25 Form of Notice of Guaranteed Delivery for Subscription
Certificate
10.26 Form of American Stock Transfer & Trust Co. Agency Agreement
10.27 Form of Instructions for Subscription Certificate
13.1 Form 10-Q Quarterly Report for the Quarter Ended March 27,
1998(1)
13.2 Form 10-Q Quarterly Report for the Quarter Ended June 26,
1998 (2)
23.1 Form of Consent of PricewaterhouseCoopers LLP
23.2 Form of Consent of Whiteman Osterman & Hanna (included in Form
of Opinion in Exhibit 5.1)
24 Power of Attorney (included on signature page)
___________________
Certain Exhibits were previously filed (as indicated below) and are
incorporated by reference herein.
(1) Filed with the Securities and Exchange Commission as of May 8,
1998.
(2) Filed with the Securities and Exchange Commission as of August 6,
1998.
<PAGE>
Exhibit No. 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Mechanical Technology Incorporated and Subsidiaries on Form S-2/A (File No.
__________) of our report dated November 14, 1997, on our audits of the
consolidated financial statements of Mechanical Technology Incorporated and
Subsidiaries as of September 30, 1997 and 1996, and for the years ended
September 30, 1997, 1996 and 1995. We also consent to the references to our
firm under the captions "Experts" and "Selected Financial Data."
Albany, New York /s/ PricewaterhouseCoopers LLP
August 6, 1998 ------------------------------
