Approximate date of proposed sale to the public:
AS SOON AS POSSIBLE AFTER THE EFFECTIVE DATE
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-2
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, Catherine S. Hill, PLLC
including area code, of agent One Global View
for service) Troy, NY 12180
Tel: (518) 285-7587
Fax: (518) 285-7564
<PAGE>
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]
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
Title of Each Maximum Maximum
Class of Offering Aggregate Amount of
Securities to be Amount to Price per Offering Registration
Registered be registered Share(1) Price Fee
________________________________________________________________________________
Stock $ $12,000,000 $3,336
________________________________________________________________________________
Total $ $12,000,000 $3,336
________________________________________________________________________________
(1) 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 MAY 18, 1999
PROSPECTUS
MECHANICAL TECHNOLOGY INCORPORATED
RIGHTS TO PURCHASE _________ SHARES OF STOCK
Mechanical Technology Incorporated is distributing rights to
purchase shares of stock to its shareholders. Mechanical
Technology manufactures advanced test and measurement products
and, through its joint venture, Plug Power, LLC, invests in the
research, development and manufacture of Proton Exchange Membrane
fuel cells. Proceeds of this offering will be invested in Plug
Power and may be used for acquisitions for the test and
measurement business and general working capital requirements.
Total if offering
Per Share Total is oversubscribed
_________ _____ _________________
Subscription Price $10,000,000 $12,000,000
Less Fees 170,000 170,000
___________ ___________
Total Proceeds $ 9,830,000 $11,830,000
THE SUBSCRIPTION RIGHTS
* Each Mechanical Technology shareholder will receive the right
to purchase _________ additional shares of stock for each ____
(__) shares they own of record on June 4, 1999.
* If more than ________ shares in total are subscribed for,
Mechanical Technology may make an additional _________ shares
available for sale.
* The price per share is _________.
* The purchase price is a ______ percent (__%) discount to the
average closing price for Mechanical Technology's stock for the
period ______ through _______ 1999. See "How we determined the
sale price for the stock."
* The subscription rights will expire at 5:00 p.m., New York City
time on July 19, 1999.
* The expiration date may be extended.
* Fractional interests will be rounded up. No fractional rights
will be issued and no fractional shares will be sold.
THE STOCK
* One share is issuable upon the exercise of one right.
* If a shareholder exercises its right to purchase one share for
every right held, he or she may subscribe for additional
shares.
* Any shares remaining after all rights have been exercised will
be allocated to those rights holders that subscribed for
additional shares.
* If the offering is over-subscribed, Mechanical Technology may
make _______ additional shares available for sale. Such
additional shares will be allocated to rights holders that
subscribed for additional shares.
* Voting rights for new shares will be equal to the voting rights
for shares currently outstanding.
PURCHASING SHAREHOLDERS
* First Albany Companies, Inc. will purchase at least _________
shares in this offering.
* First Albany, through First Albany Private Investment Fund
1999, LP, an affiliate, will purchase at least _________
additional shares.
* Mechanical Technology's board of directors will purchase at
least _________ shares in this offering.
* Together, First Albany, and those members of Mechanical
Technology's board that have said they will exercise their
rights own 3,164,532 shares, or approximately forty four
percent (44%) of the outstanding stock. This percentage will
increase if other shareholders do not exercise their rights.
<PAGE>
THE OFFERING
* You cannot revoke a decision to exercise.
* American Stock Transfer & Trust will act as subscription agent.
* Payment for any shares of stock should be sent to American
Stock Transfer & Trust.
* No interest will be paid on funds held for the purchase of
stock.
Since April 16, 1999, Mechanical Technology's stock has been
traded on The NASDAQ National Market System under the symbol MKTY.
From August 1994 to April 15, 1999, Mechanical Technology's stock
had been traded on the over-the-counter market. Mechanical
Technology has filed a registration statement with the Securities
and Exchange Commission covering the stock to be issued upon
exercise of the rights. On May 17, 1999, the closing bid price of
the stock as reported on The NASDAQ National Market was $27.25 per
share.
YOU SHOULD CAREFULLY CONSIDER THE RISKS SET FORTH ON PAGE ____
BEFORE BUYING STOCK.
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 IN THIS PROSPECTUS IS SUBJECT TO COMPLETION
OR AMENDMENT. A REGISTRATION STATEMENT FOR THE STOCK SOLD IN THIS
OFFERING 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.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT
OR THE INFORMATION INCORPORATED BY REFERENCE TO WHICH YOU HAVE
BEEN REFERRED. MECHANICAL TECHNOLOGY HAS NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT DIFFERS FROM SUCH INFORMATION.
MECHANICAL TECHNOLOGY IS NOT MAKING AN OFFER OF SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THOSE DOCUMENTS.
THE DATE OF THIS PROSPECTUS IS MAY 18, 1999.
<PAGE>
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 in this prospectus or incorporated by
reference into this prospectus.
DESCRIPTION OF MECHANICAL TECHNOLOGY INCORPORATED
During the last three years, Mechanical Technology has undergone
significant change. In 1996, First Albany Companies, Inc.
purchased a substantial interest in Mechanical Technology. Since
then First Albany has led a series of transactions to improve
Mechanical Technology's balance sheet and focus Mechanical
Technology on its most profitable businesses. With strengthened
financial resources and streamlined operations, we are now
prepared to focus on those opportunities we believe will be most
profitable in the long term. We believe that the most significant
opportunity for increased value is Plug Power, LLC, a joint
venture between Mechanical Technology and Edison Development
Corp., a subsidiary of DTE Energy, Corp., to develop an
economically viable Proton Exchange Membrane ("PEM") fuel cell.
Investment in Plug Power also involves enormous risk. See "Risk
Factors - Risks related to Mechanical Technology's Investment in
Plug Power." We have issued these rights to purchase Mechanical
Technology's stock to enable us to continue to invest in Plug
Power. We may also use the proceeds of this offering to acquire
businesses for our test and measurement business or for general
working capital purposes. See "Risk Factors - Mechanical
Technology has complete discretion in how the proceeds of this
offering will be spent."
Mechanical Technology and its joint venture partners Edison
Development, GE On-Site Power, Inc., a subsidiary of The General
Electric Company, Southern California Gas Company, a subsidiary of
SEMPRA Energy Corp., and other private investors, have invested or
have rights to invest during the next two years more than $100
million in Plug Power's efforts to manufacture and distribute
affordable and reliable PEM Fuel Cells. Plug Power has grown from
23 former Mechanical Technology employees to over 200 employees in
just two years. Recently, Plug Power has successfully
demonstrated a prototype automotive fuel cell to the Department of
Energy, installed a prototype fuel cell in the world's first fuel
cell powered house, and received research funding or other awards
or commitments for awards for itself and partners of approximately
$30 million from state and federal government agencies. Plug
Power has also received private capital investment in cash and
non-cash assets of approximately $47 million. Nonetheless many
challenges remain, including the ongoing need for additional
funding as well as various research, development and manufacturing
challenges. See "Risk Factors - Risks related to Mechanical
Technology's Investment in Plug Power."
Mechanical Technology's core businesses serve important niche
markets in the commercial and military sectors as a manufacturer
of advanced test and measurement products that combine precision
sensing capabilities with proprietary software and systems to
serve a variety of applications for commercial and military
customers. Mechanical Technology has two principal business units:
the Advanced Products Division, which produces sensing instruments
and computer-based balancing systems, and Ling Electronics, Inc.,
a developer and manufacturer of vibration test systems and power
conversion products.
Advanced Products has two general product families: non-contact
sensing instrumentation and computer-based balancing systems. The
non-contact sensing instrumentation products 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 Product's computer-based
aircraft engine-balancing systems include an on-wing jet engine
balancing system used for both commercial and military
applications.
<PAGE>
Ling, of Anaheim, California, designs, manufactures, and markets
equipment that performs 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.
We believe that the test and measurement industry will undergo
consolidation in the near future. The challenges facing
Mechanical Technology today are similar to those facing other
smaller companies in industries where consolidation is a fact of
life. We believe that consolidation may become a competitive
necessity and that Advanced Products and Ling are well positioned
to combine with other businesses to enhance and expand product
offerings and increase profitability and market position.
Accordingly, Mechanical Technology is actively exploring strategic
acquisitions for these business units.
Mechanical Technology Incorporated was incorporated in New York in
1961. Unless the context otherwise requires, "Mechanical
Technology", "registrant", "MTI" and "MECHANICAL TECHNOLOGY" refer
to Mechanical Technology Incorporated and its subsidiaries.
Mechanical Technology'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
Our total contributions to Plug Power between June 27, 1997 and
March 26, 1999 (including contributions of cash, assets, research
credits, and a below market lease) had a value of $14 million. We
believe that it is likely we will be asked to contribute up to
$22.5 million in cash to Plug Power prior to December 31, 2000.
See "Risk Factors - Mechanical Technology is dependent on Plug
Power being successful," "Risk Factors - Mechanical Technology is
committed to continue funding Plug Power" and "Risk Factors -
Mechanical Technology will be limited in efforts to increase
shareholder value if it doesn't raise enough money in this
offering." In addition, Mechanical Technology, Edison Development
and Plug Power are finalizing discussions concerning the
contribution of the Mechanical Technology campus, including all
land and buildings, to Plug Power in exchange for Plug Power Class
A membership interests. If we contribute $22.5 million in cash,
and contribute the Mechanical Technology land and buildings, our
aggregate investment in Plug Power as of December 31, 2000
(including contributions of cash, assets and research credits)
will be at least $40 million. See "Risk Factors - Mechanical
Technology is dependent on Plug Power being successful," "Risk
Factors - Risks related to Mechanical Technology's Investment in
Plug Power."
Both Mechanical Technology and Edison Development have each agreed
to make capital contributions to Plug Power of up to $7.5 million
in 1999 and $15 million in 2000, in exchange for 3 million shares
each of Plug Power securities. In exchange for this commitment,
Plug Power has agreed that if there is an initial public offering
of Plug Power's securities at a price of greater than $7.50 per
share, Mechanical Technology and Detroit Edison may contribute any
portion of their $22.5 million commitment that has not previously
been contributed to Plug Power, in exchange for securities at the
fixed price of $7.50 per share. If Plug Power requests capital
contributions, and we do not contribute, we will be penalized. We
will forfeit the right to receive Plug Power securities at the
fixed price of $7.50 per share equal to three times the number of
shares we would have received had we made the contribution
requested by Plug Power. Further, Edison Development may fund not
only their requested contribution, but also our contribution in
exchange for Plug Power securities at $7.50 per share. As a
result, we will be diluted in our ownership of Plug Power.
We will use a significant portion of the proceeds of this offering
to fund our commitment to contribute up to $22.5 million to Plug
Power. The proceeds of this offering will not fund our full
commitment to Plug Power. See "Risk Factors - Risks related to
Mechanical Technology's investment in Plug Power," "Risk Factors -
Mechanical Technology is committed to continue funding Plug
Power," and "Risk Factors - Mechanical Technology will be limited
in efforts to increase shareholder value if it doesn't raise
enough money in this offering."
<PAGE>
We have entered into a non-binding letter of intent to sell our
campus, including all land and buildings, to Plug Power, in
exchange for approximately 615,000 Plug Power Class A membership
interests and the assumption of approximately $6 million in debt
by Plug Power. Mechanical Technology currently owns approximately
36-acres of land located at 968 and 950 Albany-Shaker Road in
Latham, New York. The sale of the campus is subject to the
approval of the Board of Directors of Mechanical Technology and
Plug Power. Located on the site are three separate buildings with
approximately 116,000 square feet of office, laboratory and
manufacturing space and an approximately 2,000 square foot
residence. Mechanical Technology's corporate headquarters and its
Advanced Products Division currently occupy one of the three
buildings, which was completed in October 1998, at a cost of
approximately $3 million. After the land and buildings are sold,
we will have the right to remain as tenants in our current
location for a limited period of time. The Mechanical Technology
campus is currently encumbered by approximately $6 million in
debt, which will be assumed by Plug Power, if approved by the
lender. Detroit Edison will also contribute approximately $4.7
million to Plug Power, to assist Plug Power in its building
project and prevent dilution of its ownership percentage. Other
Plug Power members have the right to match Mechanical Technology
and Detroit Edison's contributions to prevent dilution of their
current ownership percentages.
In February 1999, Plug Power and GE On-Site Power, Inc., a wholly-
owned subsidiary of The General Electric Company, entered into a
series of agreements to create a joint venture company, GE Fuel
Cell Systems, to distribute Plug Power fuel cell systems. The
agreements provide that GE Fuel Cell Systems will market, sell,
install and service Plug Power designed and manufactured fuel
cells for residential and small commercial power applications on
an exclusive basis. Edison Development will retain exclusive
distribution rights in Michigan, Illinois, Wisconsin and Indiana.
The initial term of the GE On-Site Power distribution agreement is
five years. The agreement may be extended by agreement of the
parties. All units will bear both the General Electric and Plug
Power brand names. Plug Power must meet certain future quality,
price, engineering, and design and production standards prior to
distribution. See "Risk Factors - Risks related to Mechanical
Technology's investment in Plug Power "- "Plug Power's fuel cell
system must meet future price, quality and performance standards."
GE Fuel Cell Systems must meet certain defined sales targets.
In connection with the General Electric distribution agreements,
Plug Power granted GE Fuel Cell Systems approximately 10% of its
Class A membership interests, and warrants to purchase Class A
membership interests at a fixed price and Plug Power received a
25% ownership interest in GE Fuel Cell Systems. GE Fuel Cell
Systems' interest in Plug Power may be reduced in certain
circumstances. Also in February through April of this year,
several private investors and Southern California Gas Company
invested approximately $19 million in cash and services in Plug
Power, in exchange for Class A membership interests and warrants
to purchase additional Class A membership interests at a fixed
price.
In addition, options for approximately 3 million shares, at
exercise prices ranging from $1.00 to $6.67 per share, have been
issued or are reserved for issuance to Plug Power employees.
Since June 1997, Plug Power has received commitments for over $30
million from federal and state research programs. Pursuant to
Plug Power's Operating Agreement, Mechanical Technology received
credit, based on the dollar amount of government funding committed
to Plug Power. The total credit was approximately $2.8 million.
As of April 1, 1999, we exchanged a portion of the research
credits and options to acquire 2.25 million Class A membership
interests for 2.25 million Plug Power Class A membership
interests. Mechanical Technology and Plug Power have reached a
preliminary agreement to convert the remaining research credits to
approximately 90,000 Plug Power Class A membership interests.
Edison Development and Mechanical Technology each own 10 million
shares of Plug Power, or approximately 40% of the Company.
Assuming a) Edison Development and Mechanical Technology each
contribute an additional $22.5 million to Plug Power, b) all
shares reserved for employee options are issued and exercised, and
<PAGE>
c) all outstanding warrants are exercised, Mechanical Technology
will own approximately 34% of Plug Power's shares on a fully
diluted basis.
For the six months ended March 26, 1999, Mechanical Technology
recognized $3.315 million as its proportionate share of Plug
Power's losses. Mechanical Technology recognizes its proportionate
share of Plug Power losses to the extent of its recorded
investment. To the extent other members make equity contributions
to Plug Power, Mechanical Technology will be required to recognize
its proportionate share of such contributions as recorded
investment and additional paid-in-capital. Plug Power is a
development stage company and has never earned any profits. Plug
Power expects to incur losses in excess of $20 million dollars for
its calendar year ended December 31, 1999. Without any further
investment in Plug Power, based on the above forecast, Mechanical
Technology will recognize a significant additional loss of
approximately $2.3 million in our fiscal year ending September
1999 related solely to our investment in Plug Power. Therefore,
Mechanical Technology expects to report a substantial net loss for
our fiscal year ending September 1999. If Mechanical Technology
contributes all or part of the $22.5 million committed to Plug
Power, we will recognize a substantial additional loss in the year
the contribution is made. This may have a substantial adverse
impact on the market price of Mechanical Technology's stock. To
the extent that Mechanical Technology contributes the Mechanical
Technology campus, research credits or other non-cash assets to
Plug Power, Mechanical Technology will increase its Plug Power
investment and as a result recognize Mechanical Technology's
proportionate share of Plug Power's losses. See "Risk Factors -
Mechanical Technology is committed to continue funding Plug
Power," "Risk Factors - Risks related to Mechanical Technology's
investment in Plug Power "- "Mechanical Technology is required to
recognize a portion of Plug Power's losses," "Risk Factors -
Mechanical Technology is dependent on Plug Power being
successful," and "Risk Factors - Mechanical Technology will be
limited in efforts to increase shareholder value if it doesn't
raise enough money in the offering."
Plug Power anticipates that it will continue to need substantial
additional capital investment after December 31, 1999. Plug Power
has individually, and in association with other companies,
submitted proposals to state and federal government agencies for
research funding. Plug Power hopes that decisions as to the
award, timing and amount of such additional research funding will
be positive, however, there is no assurance that Plug Power will
receive any additional funding. If other sources of funding cannot
be found, Mechanical Technology will be faced with contributing
and/or lending additional capital to Plug Power or dilution of its
interest in Plug Power. If Mechanical Technology lends or
contributes additional cash to Plug Power, it will recognize
losses up to the full extent of such investment or advances. If
Edison Development, Mechanical Technology and other Plug Power
members 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 - Mechanical Technology is
dependent on Plug Power being successful," "Risk Factors -
Mechanical Technology will be limited in efforts to increase
shareholder value if it doesn't raise enough money in the
offering," "Risk Factors - Mechanical Technology is committed to
continue funding Plug Power" and "Risk Factors - Risks related to
Mechanical Technology's investment in Plug Power "- "Mechanical
Technology is required to recognize a portion of Plug Power's
losses."
On April 23, 1999, Mechanical Technology declared a 3 for 2 stock
split in the form of a stock dividend. Holders of Mechanical
Technology's $1.00 par value stock were entitled to receive one
additional share of $1.00 par value stock for every two
shares of stock owned as of April 30, 1999. The rights issued
pursuant to the offering are based on the number of shares owned
after the stock split.
<PAGE>
SUMMARY OF THE OFFERING
Description of the
Offering
If you hold Mechanical Technology stock on June 4, 1999, you will
receive one non-transferable right to purchase Mechanical Technology stock
for every _____ (__) shares of Mechanical Technology 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 Mechanical Technology's
stock at a purchase price of $_____ ("Exercise Price").
Mechanical Technology is offering __________ shares of stock for
purchase through the exercise of rights ("Underlying Shares").
See "Offering - The Rights." Mechanical Technology may offer up
to an additional _______ shares of stock if the offering is over-
subscribed ("Over-Allotment Shares"). See "Offering -Subscription
for Over-Allotment Shares."
Basic Subscription
Privilege
Holders are entitled to purchase, at the Exercise Price, one
share of stock for each right held. See "Offering - The Rights,"
"Offering -Subscription Privileges -- Basic Subscription Privilege"
and "Offering - No Revocation."
Oversubscription
Privilege
Each holder who elects to exercise his or her Basic Subscription
Privilege may also subscribe at the Exercise Price for Underlying Shares, if
<PAGE>
any, remaining unissued after satisfaction of all subscriptions
pursuant to the Basic Subscription Privilege and Over-Allotment
Shares, if any. If an insufficient number of Underlying Shares and
Over-Allotment Shares are available to satisfy fully all elections to
exercise the Oversubscription Privilege, the available Underlying Shares and
Over-Allotment 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. See "Offering -Subscription Privileges --Oversubscription
Privilege" and "Offering - No Revocation."
Subscription for Over-
Allotment Shares
If the offering is oversubscribed, Mechanical Technology may, in its sole
discretion, issue an over-allotment of up to __________ shares. Such
over-allotment may be purchased by the holders of rights pursuant to
their over-subscription privilege. Any Over-Allotment Shares issued
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 Privilege. See "Offering - Subscription
Privileges "- "Subscriptions for Over-Allotment Shares" and
"Offering - No Revocation."
Transferability of
Rights
The rights will not be registered and may not be transferred unless
the transferee of such
<PAGE>
rights provides Mechanical Technology with an opinion of counsel stating that
such transfer is exempt from registration under the Federal Securities
Act of 1933. See "Offering - Transferability of Rights."
Commitments to Exercise
First Albany Companies Inc. has agreed to exercise their full Basic
Subscription Privilege. First Albany Companies Inc. also intends to
exercise its over-subscription privilege through its affiliate, First Albany
Private Investment Fund 1999, LP. All members of Mechanical Technology's
board of directors that have not sold shares within the last six
months intend to exercise their full Basic Subscription Privilege. Such
board members may also exercise their Oversubscription Privilege.
(First Albany and the board members exercising their subscription privileges
are, collectively, the "Purchasing Shareholders"). The Purchasing Shareholders
currently own 3,164,532 shares, or approximately forty four percent (44%)
of the outstanding stock of Mechanical Technology. After exercise of the full
Basic Subscription Privilege, the Purchasing Shareholders will own __________
shares or approximately __________ percent (__%) of the outstanding stock
of Mechanical Technology, assuming no other stockholders exercise their Basic
Subscription Privilege. If the Purchasing Shareholders exercise their full
Oversubscription Privilege, including rights to Over-Allotment Shares
(assuming there are Over-Allotment Shares), the Purchasing Shareholders
will own _______ shares or approximately ______
<PAGE>
percent (____%) of the outstanding stock of Mechanical Technology,
assuming all other stockholders exercise their Basic Subscription
Privilege but do not exercise their Oversubscription Privilege.
Exercise Price
If you wish to exercise your rights to purchase stock, the Exercise
Price will be $_____ per share. See "Risk Factors - The sale price for
shares issued in this offering may be substantially lower than
its market price," "Risk Factors - How we determine the sale price
for the stock."
When You Can Exercise
Your Rights
The rights will only be exercisable from the period beginning on
________, 1999, and ending on July 19, 1999 at 5:00 p.m., New York
City time, unless extended by Mechanical Technology from time to
time. See "Offering - Expiration Date."
Number of shares of
Stock Offered in
the Offering
__________ shares if the offering is not oversubscribed and up to
_____ shares if the offering is oversubscribed and Mechanical Technology
permits Over-Allotment Shares to be issued.
Record Date
June 4, 1999.
Expiration Date
July 19, 1999, unless extended by Mechanical Technology from time to
time, provided that the Expiration Date shall not be later than
<PAGE>
September 24, 1999, 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 Mechanical Technology
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 Mechanical Technology 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 Exercising
Rights
Rights may be exercised by properly completing 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 and Over-Allotment 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
<PAGE>
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 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 insure 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,
or Wishing to Exercise
Rights Through Others
Persons holding shares of stock and receiving the rights distributable
with respect to such shares through a broker, dealer, commercial bank,
trust company or other nominee, as well as persons holding certificates of
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
Stock
The closing will occur and certificates representing Underlying Shares and
Over-Allotment Shares, if any, will be delivered to subscribers as soon
as practical after the Expiration Date and
<PAGE>
after all prorations have been effected. See "Offering - Subscription
Privileges" and "Offering - Delivery of Subscription Certificates." No
Underlying Shares or Over-Allotment Shares, if any, 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 Over-Subscription Privileges, any excess funds will be
returned to the holders as soon as practical following the closing.
Stock to be Outstanding
After the Offering
After this offering, a) assuming all rights are subscribed for but no
Over-Allotment Shares are issued, _________ shares of stock will be
outstanding, and b) assuming all rights are subscribed and all Over-
Allotment Shares are issued, _______ shares of stock will be
outstanding (in each case not including 753,773 shares issuable
upon the exercise of outstanding stock options at a weighted
average exercise price of $4.70 per share, of which options to
purchase 383,391 shares of stock were exercisable as of April
16, 1999, as adjusted for the stock split).
How We Intend to Use the
Proceeds
It is anticipated that the net proceeds to Mechanical Technology
will be approximately $9.8 million if all of the Underlying Shares
are purchased in the offering and $11.8 million if all Over-
Allotment Shares are also purchased. If less
<PAGE>
than all of the Underlying Shares are purchased, the proceeds
will be correspondingly reduced. See "Risk Factors - Mechanical Technology
will be limited in efforts to increase shareholder value if it
doesn't raise enough money in this offering." The net proceeds from
this offering will be used for further investment into Plug Power. See
"Recent Developments," "Risk Factors - Risks related to Mechanical
Technology's investment in Plug Power -- Mechanical Technology is
required to recognize a portion of Plug Power's losses," "Risk Factors -
Mechanical Technology will be limited in efforts to increase
shareholder value if it doesn't raise enough money in this offering"
and "Risk Factors - Mechanical Technology is committed to continue
funding Plug Power." Mechanical Technology may also use the proceeds of
the offering for test and measurement acquisitions, efforts to
increase market share, working capital, general corporate purposes and
other capital expenditures. See "Risk Factors - Mechanical Technology has
complete discretion in how the proceeds of this offering will be spent"
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 and in all documents incorporated by
reference into this prospectus that are not statements of
historical fact are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements regarding
future revenues, expenses and profits. Forward-looking statements
are subject to known and unknown risks, uncertainties or other
factors that may cause Mechanical Technology's actual results to
be materially different from the historical results or from any
results expressed or implied by the forward-looking statements.
Such risks 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 Mechanical
Technology's Form 10-Q for the quarter ended March 26, 1999,
attached hereto as Exhibit 13.2. All cautionary statements made
in this prospectus apply to all forward-looking statements
wherever they appear.
RISK FACTORS
An investment in the stock being offered by this prospectus
involves a high degree of risk. In addition to the other
information contained in this prospectus or incorporated in this
prospectus by reference, prospective investors should carefully
consider the following risk factors before purchasing the stock
offered by this prospectus.
Mechanical Technology is dependent on Plug Power being successful.
Mechanical Technology's stock price and continued success is
almost exclusively dependent on the success of Plug Power. During
the last two years, every available Mechanical Technology resource
has been devoted to Plug Power. Mechanical Technology intends to
devote most, if not all, of the proceeds of this offering to Plug
Power. If Mechanical Technology obtains additional resources in
the future, it will likely devote these resources to Plug Power.
There is no assurance Plug Power will be successful.
Risks related to Mechanical Technology's investment in Plug Power.
Plug Power will spend millions of dollars before we know
whether it can profitably sell PEM fuel cells.
Mechanical Technology and Detroit Edison have each contributed $14
million in cash and other assets to Plug Power since June 27,
1997. Other investors have contributed cash and other assets
valued at approximately $20 million to Plug Power. The government
has committed over $30 million in research funding to Plug Power
and its research partners to be distributed over the next several
years. Even if Mechanical Technology and Detroit Edison together
contribute an additional $45 million to Plug Power, it may not be
enough money to fully fund Plug Power's operations through
commercialization. We do not know how much money Plug Power will
need to get to commercialization. We do not know whether Plug
Power will ever produce a commercial product. See "Risk Factors -
Mechanical Technology is committed to continue funding Plug
Power." Even if the $45 million is sufficient to fund Plug Power
through commercialization, Mechanical Technology believes that
Plug Power will continue to need substantial additional investment
until it can profitably sell PEM fuel cell systems to the public.
We don't know when, if ever, such sales will be made. If
Mechanical Technology and Plug Power's other members stop funding
Plug Power, and no other sources of funding are found, Plug Power
will be unable to continue as a going concern. If Edison
Development, other Plug Power members, or other investors fund
Plug Power, and Mechanical Technology does not, Mechanical
Technology's interest in Plug Power will suffer substantial
dilution.
Plug Power has not completed, and may never complete,
research and development of an economically viable PEM fuel cell.
Plug Power is engaged in the research and development of an
economically viable PEM fuel cell. Plug Power's research efforts
are ongoing with respect to each and every component of the fuel
cell in an effort to decrease costs and improve the efficiency,
reliability, size and safety of the fuel cell system. Since June
1997, Plug Power has produced a limited quantity of test and
demonstration fuel cell units. Substantial research and
<PAGE>
development on the PEM fuel cell system must still be completed.
We do not know when or whether Plug Power will successfully
complete research and development. Even if Plug Power completes
its research and development, we do not know whether its
competitors will do so more effectively or more quickly. Plug
Power faces intense competition from a number of companies,
including at least one competitor that is significantly larger
with significantly greater resources. Finally, even if Plug Power
successfully produces an economically viable PEM fuel cell, there
is no guarantee that any product that Plug Power may ultimately
produce will find a market.
Plug Power's fuel cell system must meet future price, quality
and performance standards.
Plug Power's agreements with GE Fuel Cell Systems require Plug
Power to meet future quality, price, engineering, design and
production standards. Research and development is ongoing but we
do not know when or whether Plug Power will meet these standards.
If Plug Power does not meet the standards, there may be serious
adverse consequences for Plug Power.
Plug Power has no experience manufacturing PEM fuel cells.
No company, including Plug Power, has experience mass-
manufacturing PEM fuel cell systems. A fuel cell system contains
complex mechanical, electrical and chemical components. Plug
Power is currently developing its manufacturing process. There is
no assurance Plug Power will develop an efficient manufacturing
process that will meet the quality, price, engineering, design and
production standards or production volumes required by Plug
Power's agreements with GE Fuel Cell Systems, or otherwise
established by the marketplace. Even if Plug Power is successful
in developing its manufacturing process, we do not know whether it
will be completed in time to satisfy the requirements of GE Fuel
Cell Systems or other potential distributors or customers.
Plug Power has not yet established long-term relationships
with third party suppliers.
Plug Power is currently testing components and parts from various
suppliers and will soon begin negotiating long-term purchase
agreements for component parts and subsystems for the fuel cell
system. Plug Power's ultimate success is dependent on
establishing long-term relationships with suppliers. We do not
know when or whether Plug Power will be able to enter into
relationships with suppliers, or whether such relationships will
be on terms that are favorable to Plug Power.
Plug Power may not be able to protect important intellectual
property.
Plug Power's ability to compete effectively against other fuel
cell companies will depend, in part, on its ability to maintain
the proprietary nature of its technology and manufacturing
processes. Plug Power believes that its technology provides
certain competitive advantages over its competitors. Plug Power
currently believes that its portfolio of patents, patents pending,
trade secrets and contractual rights is sufficient to secure this
competitive advantage. We do not know whether any of Plug Power's
pending patent applications will issue or, in the case of patents
issued or to be issued, that the claims allowed are or will be
sufficiently broad to protect Plug Power's technology. Even if all
necessary patents are issued and every patent is sufficiently
broad, they may be challenged or invalidated. Plug Power could
incur substantial costs in prosecuting or defending patent
infringement suits. While Plug Power has attempted to safeguard
and maintain its proprietary rights, we do not know whether it has
been or will be completely successful in doing so. Further, Plug
Power's competitors may independently develop or patent
technologies that are substantially equivalent or superior to Plug
Power's technology. If Plug Power is found to be infringing third
party patents, we do not know whether it will be able to obtain
licenses on acceptable terms, if at all. Failure to obtain needed
licenses could delay or prevent the development, manufacture or
sale of PEM fuel cell systems. Plug Power relies, in part, on
contractual provisions to protect its trade secrets and
proprietary knowledge. These agreements may be breached, and Plug
Power may not have adequate remedies for any breach. Plug Power's
trade secrets may also be known without breach of such agreements
or may be independently developed by competitors.
Plug Power is dependent on certain key personnel.
<PAGE>
Plug Power has attracted a highly skilled management team and
specialized workforce, including scientists, engineers,
researchers, and manufacturing and marketing professionals. Plug
Power is dependent on its management team and specialized
workforce. Loss of the services of several members of its
management team or specialized workforce could adversely affect
Plug Power. In addition, Plug Power's ability to manage growth
effectively will require it to continue to implement and improve
its management systems and to recruit and train new employees.
Although Plug Power has done so in the past and expects to be able
to do so in the future, there can be no assurance that Plug Power
will be able to successfully attract and retain skilled and
experienced personnel.
Plug Power needs a strong stock market for it to continue
raising capital.
Plug Power will continue to need substantial capital investment
after December 31, 1999. A downturn in the public financial
markets will severely limit Plug Power's ability to engage in an
initial public offering of its securities on terms that are
favorable to Plug Power, this in turn, may severely limit Plug
Power's ability to raise capital from private investors. If
Mechanical Technology, Edison Development or other Plug Power
members do not continue to fund Plug Power, and other sources of
funding cannot be found, Plug Power will be unable to continue as
a going concern.
Mechanical Technology is required to recognize a portion of
Plug Power's losses.
For the six months ended March 26, 1999, we recognized $3.315
million as our proportionate share of Plug Power's losses. We
recognize our proportionate share of Plug Power losses to the
extent of our recorded investment. To the extent other members
make equity contributions to Plug Power, we are required to
recognize our proportionate share of such contributions as
recorded investment and additional paid-in-capital. Plug Power is
a development stage company and has never earned any profits.
Plug Power expects to incur losses in excess of $20 million
dollars for its calendar year ended December 31, 1999. Without any
further investment in Plug Power, based on the above forecast, we
will recognize a substantial additional loss of approximately $2.3
million in our fiscal year ending September 1999 related solely to
our investment in Plug Power. Therefore, we expect to report a
substantial loss for our fiscal year ending September 1999. If we
contribute all or part of the $22.5 million committed to Plug
Power prior to December 31, 2000, based on Plug Power's forecasted
loss, we will recognize an additional loss of approximately $9.4
million in our fiscal year ending September 2000 or 2001,
depending on the timing of the contribution. This may have a
substantial adverse impact on the market price of our stock. To
the extent that we contribute the Mechanical Technology campus,
research credits or other non-cash assets to Plug Power, we will
increase our Plug Power investment and as a result recognize our
proportionate share of Plug Power's losses.
Plug Power has always lost money and will continue to lose money until
it can profitably sell PEM fuel cells to the public. Since its inception
on June 27, 1997, Plug Power has incurred substantial losses. Plug
Power's losses are detailed in the following summary of financial data
as of and for the years ended December 31:
Cumulative
Statement of Earnings Data 1998 1997 From Inception
Contract Revenue $ 6,541 $ 1,194 $ 7,735
Loss on Contracts (2,323) (31) (2,354)
Research and Development
Expenses 4,633 5,344(1) 9,977
Net Loss (9,616) (5,903) (15,519)
Other Information
Capital Expenditures 2,369 362 2,731
Depreciation and Amortization 382 30 412
Balance Sheet Data
Working Capital 2,693 2,667
Shareholder's Equity 5,493(2) 3,597(3)
________________________________
(1)Includes a one-time writeoff of $4,200,000 of in-process research and
development costs.
(2)Includes $2,500,000 for deferred rent and in-kind services.
(3)Includes $4,750,000 interest in certain net assets and in-process research
and development.
<PAGE>
Plug Power anticipates that it will lose at least $20 million in
the year ended December 31, 1999. Plug Power will continue to
sustain significant losses until it can produce sufficient
revenues to cover its costs. We expect that such revenues will
not be generated until Plug Power can cost-effectively produce and
sell PEM fuel cell systems to the public. We do not know when, if
ever, Plug Power will sell PEM fuel cell systems to the public on
a profitable basis.
Mechanical Technology is committed to continue funding Plug Power.
Mechanical Technology and Edison Development have each agreed to
contribute up to $22.5 million to Plug Power to fund continuing
operations for the period April 1, 1999 through December 31, 2000.
Unless Plug Power offers its shares in an initial public offering,
it cannot request more than $7.5 million in funding prior to
December 31, 1999, and $15 million in funding prior to December
31, 2000. Even if we raise $12 million in this offering, we won't
have enough cash to invest $22.5 million in Plug Power. If Plug
Power requests a capital contribution or offers its shares in an
initial public offering, we will be forced to seek additional
financing or investment if we want to invest in Plug Power. There
is no assurance we will receive additional financing or
investment, or that such financing or investment will be on
favorable terms. If we don't fund Plug Power when asked, our
right to purchase Plug Power shares at the fixed price of $7.50
per share will be reduced by three times the amount of the
contribution requested. We don't know when, if ever, we will make
additional contributions to Plug Power, however, it is likely that
a substantial portion of the proceeds of this offering will be
contributed to Plug Power. If we don't make additional
contributions to Plug Power and Edison Development or other
investors do, our interest in Plug Power will be diluted. If
Mechanical Technology and Edison Development fail to make
additional contributions to Plug Power when asked, and no other
sources of funding are found, Plug Power will be unable to
continue as a going concern.
Mechanical Technology has complete discretion in how the proceeds
of this offering will be spent.
We may use all proceeds of the offering for further investments
into or loans to Plug Power. We 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 Mechanical Technology and may be allocated
from time to time based on a variety of circumstances. There is
no assurance we will spend the money wisely or in a way that will
improve the financial condition of Mechanical Technology.
Mechanical Technology will be limited in its efforts to increase
shareholder value if it doesn't raise enough money in this
offering.
There is no assurance that we will raise all the money sought in
this offering. If we don't raise enough money in this offering,
our ability to make further investments in or loans to Plug Power
and to make acquisitions or otherwise increase the market share of
our core businesses will be substantially limited.
The members of Mechanical Technology's board and management have
conflicts of interest with Plug Power and First Albany.
George McNamee is Chairman of the Board of Directors of each of
the following entities; First Albany Companies, Inc., Mechanical
Technology and Plug Power, and is also Chief Executive Officer of
Mechanical Technology and Co-Chief Executive Officer of First
Albany. Drs. Beno Sternlicht and Walter Robb are members of the
Board of Directors of Mechanical Technology and Plug Power.
George McNamee does not receive a salary for acting as Chief
Executive Officer and Chairman of the Board of Mechanical
Technology or Chairman of the Board of Plug Power. Mr. McNamee
has received options to purchase 20,000 shares of Mechanical
Technology stock, at exercise prices of $7.9375 and $18.75 per
share. Mr. McNamee was also issued 110,000 options to purchase
Plug Power Class B membership interests at exercise prices of
$1.00 and $5.00 per share. Drs. Beno Sternlicht and Walter Robb,
each members of the Board of Directors of Mechanical Technology
and Plug Power, were issued 30,000 options for Mechanical
Technology stock at exercise prices of $2.50, $6.00 and $18.75 per
<PAGE>
share, and 60,000 options to purchase Plug Power Class B
membership interests at exercise prices of $1.00 and $5.00 per
share. Alan Goldberg is a member of the Board of Directors of
First Albany and Mechanical Technology and Co-Chief Executive
Officer of First Albany. Mr. Goldberg was issued 20,000 options
to purchase Mechanical Technology stock at exercise prices of
$7.9375 and $18.75 per share. First Albany owns 34% of the
outstanding stock of Mechanical Technology. These
interrelationships create the potential for conflicts of interest
to arise in connection with the exercise by Mechanical
Technology's directors of their respective fiduciary duties.
This offering will result in dilution for current shareholders and
may result in a decrease in Mechanical Technology's stock price.
Assuming all ____________ shares in this offering, are subscribed
for, a purchaser in this offering will experience immediate and
substantial dilution of approximately $______ in value per share.
If we decide to increase the number of shares offered to ________
shares, a purchaser of stock in this offering will experience
immediate and substantial dilution of approximately $____ in value
per share. This is because the $______ share price exceeds the
$______ pro-forma net tangible book value per share on March 26,
1999 of Mechanical Technology's stock after giving effect to the
offering. If you don't exercise your rights to purchase
additional shares, and others do, you will realize a dilution in
your percentage voting interest and ownership interest in future
net earnings, if any. The $______ sales price for shares
represents approximately a _______ percent (___%) discount to
Mechanical Technology's average closing bid price for the ___ days
preceding June 4, 1999 and may result in a reduction in the market
price for our stock.
The sale price for shares issued in this offering may be
substantially lower than its market value.
The sale price for stock issued in this offering was determined by
our board of directors based on the advice of the independent
Consulting and Investment Banking firm of Schwartz Heslin Group,
Inc. The stock price does not necessarily bear any relationship
to the prices at which shares of stock have traded in the market
or in private transactions, or to Mechanical Technology's
earnings, assets, book value, financial condition or any other
recognized criterion of value. There can be no assurance that the
value of stock will not decline below $_______.
Mechanical Technology's stock price is subject to significant
price fluctuations.
The trading price of our stock has been, and in the future could
be, subject to significant fluctuations in response to variations
in quarterly operating results (including losses related to our
investment in or advances to Plug Power), announcements by Plug
Power, the gain or loss of significant contracts, changes in
management, new products or services by Mechanical Technology or
its competitors, general trends in the industry 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 reduce the market
price of our stock.
Mechanical Technology will issue up to an additional _________
shares of stock in this offering.
Mechanical Technology has 15 million authorized shares of stock,
$1.00 par value. Up to ______ shares will be issued in connection
with this offering (assuming every share available pursuant to
this offering, including over-allotment shares, are issued),
resulting in a maximum of ______ shares outstanding after
completion of this offering. Our board of directors has
authority, without action or vote of the shareholders, 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 our stock.
Mechanical Technology is dependant on attracting and retaining
technical employees.
We believe that our future success depends in large part on our
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. We don't
<PAGE>
know that we will be able to attract and retain sufficient numbers
of highly skilled technical employees. The loss of a significant
number of our technical employees could have a material adverse
effect on Mechanical Technology.
Mechanical Technology faces intense competition.
We face intense competition from several companies, many of which
are larger than we are and have greater financial resources.
While Advanced Products and Ling each have a major share of their
respective markets, we do not consider either of them to be
dominant in their industry. The primary competitive
considerations for our 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 our businesses, which
may reduce our stock price.
Mechanical Technology continues to have reduced profits and sales
because of unfavorable economic conditions in Asia.
Our operations have been harmed by unfavorable financial and
economic conditions in Asia. Such conditions are outside of our
control and may continue for the foreseeable future. Recent
economic events in Asia have caused large currency fluctuations
and reduced spending in such areas. Our operating results may
continue to be adversely affected by such crises due to the
potential for significant decreases in demand for our 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 reduce our stock
price.
Mechanical Technology is controlled by its existing stockholders.
The members of our present board of directors directly or
indirectly own more than forty-seven percent (47%) of our
outstanding stock. It is unlikely that a shareholder who purchases
stock in this offering will be able to obtain representation on
Mechanical Technology'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 Mechanical
Technology's management. Furthermore, the substantial
shareholdings by members of our board of directors make it
unlikely that an independent third party could effect a change in
control of Mechanical Technology without the consent of the board.
This means that our board of directors and management are
insulated from objections and challenges by shareholders to
actions taken by the board and management in the conduct of
Mechanical Technology's business and the formulation of its
business objectives, strategies and policies. This may reduce the
market value of our stock.
Mechanical Technology's core businesses are characterized by rapid
technological change.
The market for many of our products and services is characterized
by rapidly changing technology and evolving industry standards.
We don't know whether our current technology base will continue to
address current and evolving customer needs. We believe that our
future success will depend on our 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 our competitive position. The announcements or
introductions of new products by Mechanical Technology or its
competitors may adversely affect our operating results, because
these announcements or introductions may cause customers to defer
or forego ordering products from Mechanical Technology's existing
product lines. Moreover, there is no assurance we will have
sufficient funds to finance product introductions, enhancements or
developments.
Mechanical Technology faces risks related to year 2000 compliance.
We have reviewed the impact of the year 2000 on software installed
in our products. Current versions of Mechanical Technology's
products are designed to be "Year 2000" compliant. We are
finalizing our evaluation of the impact of any non-compliance of
previously installed products or purchased software and related
products on Mechanical Technology and its customers and suppliers.
We do not currently believe that the effects of any potential Year
2000 non-compliance in Mechanical Technology's products will
result in any material adverse impact on our business or financial
condition. We do not know whether we will be exposed to potential
<PAGE>
claims resulting from system problems associated with the arrival
of the Year 2000.
Mechanical Technology has never paid cash dividends.
Since its inception, we have not paid any cash dividends on our
stock. We anticipate that future earnings, if any, will be
retained for use in the business or for other corporate purposes,
and we do not anticipate that any cash dividends on 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 Mechanical Technology's
stock.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
Set forth below is summary consolidated financial information
and certain adjusted financial information of Mechanical
Technology. The consolidated financial information as of and for
the five years ended September 30, 1998 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 six months ended
March 26, 1999 and March 27, 1998 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 Mechanical
Technology's consolidated financial statements and the accompanying
notes set forth in Mechanical Technology's Form 10-K for the year
ended September 30, 1998 and Form 10-Q for the quarter ended March
26, 1999, attached hereto as Exhibit 13.2
<PAGE>
<TABLE>
Six Months Years Ended September 30
(unaudited) (audited)
1999 1998 1998 1997 1996 1995 1994
Statement of Earnings Data: (in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $6,003 $10,249 $21,028 $24,102 $22,755 $18,140 $29,721
Gross Profit 2,063 4,249 8,642 9,628 8,830 6,145 11,800
Operating (Loss) Income (849) 996 1,999 1,593 1,069 (2,167) 2,157
Gain on sale of
subsidiary/division or building
. . . . . . . . . . . . . - - - 2,012 750 6,779 1,856
(Loss) Income from Continuing
Operations before Extraordinary
Item and Income Taxes (4,157) 865 (2,006) 2,701 673 3,352 816
(Loss) Income from Continuing
Operations before Extraordinary
Item (4,157) 865 (2,031) 2,558 598 3,256 201
Extraordinary Item - Gain on
Extinguishment of Debt, net
of taxes ($106) - - - 2,507 - - -
(Loss) Income from
Continuing Operations (4,157) 865 (2,031) 5,065 598 3,256 201
(Loss) Income from
Discontinued Operations, Net
of Taxes - (2,285)(2) (2,285)(2) (545) 3,150 (334) (24,579)(1)
Net (Loss) Income (4,157) (1,420) (4,316) 4,520 3,748 2,922 (24,378)
Diluted Earnings Per Share:(3)
(Loss) Income from Continuing
Operations before Extraordinary
Item (0.39) 0.09 (0.23) 0.30 0.10 0.61 0.04
Extraordinary Item - - - 0.29 - - -
(Loss) Income from
Discontinued Operations - (0.25) (0.26) (0.06) 0.54 (0.06) (4.64)
Net (Loss) Income (0.39) (0.16) (0.48) 0.53 0.64 0.55 (4.60)
Weighted Average Shares
Outstanding and
Equivalents 10,782,191 9,124,610 8,905,737 8,508,068 5,867,928 5,339,684 5,294,822
Other Information:
Capital Expenditures..... 2,560 115 3,166 377 264 409 426
Depreciation and
Amortization 316 143 323 243 233 358 460
Balance Sheet Data:
Working Capital (Deficit) 8,548 5,450 5,779 7,696 7,086 2,712 (6,219)
Total Assets 23,449 12,594 21,128 14,003 13,481 3,444 23,971
Total Long Term Debt 6,000 - - - 5,508 6,960 11,182
Total Shareholders' Equity
(Deficit) 13,014 6,799 11,124 8,213 2,164 (3,490) (6,418)
(1) Includes a net charge of $15,415,000 related to the discontinuance of Mechanical Technology's United Telecontrol
Electronics, Inc. subsidiary.
(2) Includes a net charge of $1,769,000 related to the discontinuance of Mechanical Technology's Technology Division.
(3) Earnings per share have been restated to comply with SFAS No. 128, "Earnings Per Share."
</TABLE>
<PAGE>
USE OF PROCEEDS
The net proceeds of the offering are estimated to be approximately $9.8
million after expenses of the offering. If the offering is over-subscribed,
and we decide to increase the number of shares available to ___________, and
all such shares are subscribed for, the net proceeds are estimated to be
approximately $11.8 million after the payment of expenses of the offering.
See "Risk Factors - Mechanical Technology is committed to continue funding
Plug Power," "Risk Factors - Mechanical Technology has complete discretion
in how the proceeds of this offering will be spent," "Risk Factors -
Mechanical Technology will be limited in efforts to increase shareholder
value if it doesn't raise enough money in this offering," and "Offering -
Subscriptions for Over-Allotment Shares." We intend to use substantially
all of the net proceeds of this offering for further investments into Plug
Power. We may also use the proceeds of the offering for acquisitions for
our test and measurement business, efforts to increase market share, working
capital, general corporate purposes and other capital expenditures. See
"Risk Factors - Mechanical Technology is committed to continue funding Plug
Power," "Risk Factors - Mechanical Technology has complete discretion in how
the proceeds of this offering will be spent," "Risk Factors - Mechanical
Technology will be limited in efforts to increase shareholder value if it
doesn't raise enough money in this offering." Although we intend to pursue
acquisitions, we have no current contract or commitment with respect to any
particular acquisition.
HOW WE DETERMINED THE SALE PRICE FOR THE STOCK
The sale price of $_____ per share 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 sales price. See "Risk Factors - The sale price for
shares issued in this offering may be substantially lower than its market
price."
The sale price for the stock is approximately a ______ percent (__%)
discount to the average closing price of our stock for the period _________,
1999 through _______ 1999. The historical trading price of our stock for
the first two quarters of fiscal year 1999 were as follows:
Six Months Ended
March 26, 1999
High Low
1st Quarter $ 8.500 $6.750
2nd Quarter $21.000 $7.938
OFFERING
The Rights
Mechanical Technology is distributing, at no cost to the record holders of
its outstanding stock as of June 4, 1999 ("Record Date") non-transferable
rights to purchase additional shares of stock at a price of $____ per share
("Exercise Price"). Mechanical Technology will distribute one non-
transferable right for each _____ (__) shares of stock held on the Record
Date. Each right will entitle its holder to purchase one share of stock.
The rights will be evidenced by non-transferable subscription certificates.
An aggregate of __________ shares of stock will be sold if all rights are
exercised and Mechanical Technology does not issue up to _______ over-
allotment shares ("Over-Allotment Shares") and ________ shares of stock if
rights for all Over-Allotment Shares are purchased. The rights are non-
transferable unless the transferee of such rights provides Mechanical
Technology with an opinion of counsel stating that such transfer is exempt
from registration under the Federal Securities Act of 1933.
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 stock.
Certificates representing shares of stock purchased pursuant to the
Subscription Privilege will be delivered to subscribers as soon as practical
<PAGE>
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.
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 or the up to _______ additional
Over-Allotment Shares which Mechanical Technology may offer if the offering
is oversubscribed (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 privilege 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.
Exercise of Over-Allotment Shares. If the Offering is oversubscribed,
Mechanical Technology may, in its sole discretion, decide to issue up to an
additional ______ shares. Mechanical Technology will determine whether to
issue Over-Allotment Shares after all subscriptions for shares have been
received. No Over-Allotment Shares will be issued unless the Offering is
oversubscribed.
Expiration Date
The Rights will expire at 5:00 p.m., New York City time, on July 19, 1999
(the "Expiration Date"), unless extended by Mechanical Technology from time
to time. Notwithstanding the foregoing, the Expiration Date shall not be
later than September 24, 1999, except that Mechanical Technology 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. Mechanical Technology 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.
Transferability of Rights
The Rights will not be registered and may not be transferred unless the
transferee provides Mechanical Technology with an opinion of counsel, that
is acceptable to Mechanical Technology, stating that such transfer is exempt
from registration under the Federal Securities Act of 1933.
Commitments to Exercise Rights
First Albany Companies Inc. has informed the board of directors that they
intend to exercise their full Basic Subscription Privilege. First Albany has
also agreed to exercise its Oversubscription Privilege through First Albany
Private Investment Fund 1999, LP, an affiliate. All members of Mechanical
Technology's board of directors that have not sold shares within the last
six months have informed Mechanical Technology that they will exercise their
full Basic Subscription Privilege and may exercise their Oversubscription
Privilege (First Albany and the board members exercising their rights are the
"Purchasing Shareholders"). The Purchasing Shareholders currently own
3,164,532 shares or approximately forty four (44%) of the outstanding stock
of Mechanical Technology. After exercise of the full Basic Subscription
Privilege, the Purchasing Shareholders will own __________ shares or
approximately __________ percent (__%) of the outstanding stock, assuming no
other stockholders exercise their Basic Subscription Privilege. If the
Purchasing Shareholders exercise their full Oversubscription Privilege, the
Purchasing Shareholders will own _______ shares or approximately _____
percent (____%) of the outstanding stock of Mechanical Technology, assuming
<PAGE>
all other stockholders exercise their Basic Subscription Privilege but do
not exercise their Oversubscription Privilege, and assuming there are no
Over-Allotment Shares.
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 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 Mechanical Technology 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 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
<PAGE>
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 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 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 MECHANICAL TECHNOLOGY INCORPORATED.
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 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 Mechanical Technology 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
Mechanical Technology 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:
<PAGE>
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Telephone No. (718) 921-8200
Telecopier No. (718) 234-5001
Mechanical Technology 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.
WHERE YOU CAN FIND MORE INFORMATION
Mechanical Technology Incorporated is subject to the information
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and
files reports and other information with the Securities and Exchange
Commission ("SEC"). You may read and copy information concerning Mechanical
Technology at the Public Reference Room of the SEC in Washington, D.C., at
450 Fifth Street, N.W., Washington, D.C., and at 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. Please call the SEC at 1-800-
SEC-0330 to get information on the operation of the public reference rooms.
You may also receive copies of documents from the SEC upon payment of a
duplicating fee, by writing to the SEC's Public Reference Section, located
at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also download
information concerning Mechanical Technology from the SEC's website at
http://www.sec.gov.
Mechanical Technology filed a registration statement with the SEC for the
shares of stock we are offering. Pursuant to SEC rules and regulations,
this prospectus does not contain all of the information that you can find in
the registration statement. You can read and copy the information in the
registration statement in the same way that you read and copy any other
information filed by Mechanical Technology with the SEC.
Copies of Mechanical Technology's Form 10-K for the year ended September 30,
1998 and Form 10-Q Report for the quarter ended March 26, 1999 accompany this
Prospectus. Statements in this prospectus concerning those documents and any
document filed as an exhibit to the registration statement are not necessarily
complete. Each of those statements is qualified in its entirety by reference
to the complete document. The exhibits to the prospectus, filed with the SEC,
may be inspected, copied, and obtained by mail from the SEC as set forth above.
These documents will also be available for inspection and copying at the
principal executive offices of Mechanical Technology Incorporated, located at
968 Albany-Shaker Road, Latham, New York 12210, during regular business hours
by any interested shareholder, or his or her duly authorized representative,
so designated in writing.
The SEC allows us to "incorporate by reference" information into this document,
which means we can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated
by reference is deemed to be a part of this document, except for any
information superceded by information in this document. The information
incorporated by reference is an important part of this prospectus.
Incorporated documents contain important information about Mechanical
Technology and its finances. This prospectus incorporates the following
documents by reference into this prospectus:
* Mechanical Technology's Annual Report on Form 10-K for its fiscal year
ended September 30, 1998;
* Mechanical Technology's Quarterly Report on Form 10-Q for its quarter
ended March 26, 1999;
* Mechanical Technology's four Reports on Form 8-K dated February 10, 1999,
February 12, 1999, March 29, 1999 and April 13, 1999.
You may obtain any documents incorporated by reference in this document,
other than exhibits, either from the SEC, as set forth above, or from
Mechanical Technology by writing to Cynthia Scheuer at Mechanical Technology
Incorporated at 968 Albany-Shaker Road, Latham, New York 12210, or by
telephone at (518)785-2211.
You should rely only on the information contained in this document or the
information incorporated by reference to which you have previously been
referred. We have not authorized anyone to provide you with information that
differs from such information. We are not making an offer of securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as
of any date other than the date on the front of those documents.
<PAGE>
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 Mechanical
Technology 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 stock offered by Mechanical Technology is being offered through the
issuance of rights directly to its shareholders of record on June 4, 1999.
Certain employees, officers or directors of Mechanical Technology may
solicit responses from you, but such individuals will not receive any
commissions or compensation for such services other than their normal
employment compensation.
We intend to distribute rights and copies of this prospectus to shareholders
of record on June 4, 1999, as soon as the Registration Statement, of which
this prospectus is a part, becomes effective with the Securities and
Exchange Commission.
Shareholders who want to subscribe for the purchase of shares of 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 date
this offer expires, together with payment in full for any shares purchased.
See "Offering - Exercise of Rights" and "Offering - Exercise of Rights
Through Third Parties."
DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized capital stock of Mechanical Technology includes 15 million
shares of stock, par value $1.00 per share. Mechanical Technology is
registering _________ shares of stock in connection with the offering. The
outstanding shares of stock are fully paid and non-assessable. Holders of
stock are entitled to dividends when, as and if declared by the board of
directors of Mechanical Technology out of any funds legally available to
Mechanical Technology for that purpose.
We have never paid cash dividends on our stock and do not anticipate we will
be doing so in the foreseeable future.
Holders of stock are entitled to one vote per share held of record with
respect to all matters submitted to a vote of the shareholders. There is no
cumulative voting for the election of directors, who are elected for
staggered three-year terms.
At March 26, 1999, the approximate number of holders of record of Mechanical
Technology stock was 1,874.
LEGAL MATTERS
Certain legal matters with respect to the validity of the rights and the
shares to be issued upon exercise of the rights have been passed upon for
Mechanical Technology by Catherine S. Hill, PLLC, Troy, New York.
EXPERTS
The financial statements incorporated in this registration statement by
reference to the Annual Report on Form 10-K for the year-ended September 30,
1998, have been incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The sale price for the shares was determined by the board of directors based
on the advice of the 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 $_____ as the sale price for
the shares. Mechanical Technology 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 Price How We Determined the Sale Price for
the Stock
6. Dilution Risk Factors - This offering will
result in dilution for current
shareholders and may result in a
decrease in Mechanical Technology's
stock price
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 --
Mechanical Technology will issue an
additional _____ shares of stock in
this offering; Offering
10.Interests of Named Experts Legal Matters; Experts
and Counsel
11.Information with Respect to Form 10-K for the fiscal year
Registrant ended September 30, 1998,
Form 10-Q for the quarter ended March
26, 1999, appended hereto
12.Incorporation of Certain Where You Can Find More Information
Information by Reference
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee $ 3,336
Printing 8,000*
Legal fees and Expenses 45,000*
Accounting Fees and Expenses 25,000*
Pricing and Fairness Opinion and Expenses 30,000*
Stock Transfer Fees 35,000*
Estimated Mailing Costs 12,513*
Miscellaneous other costs 11,151*
Total $170,000*
*Estimated
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS --
DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION
Under provisions of Mechanical Technology's Amended and Restated Certificate
of Incorporation, Mechanical Technology 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
Mechanical Technology 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 Mechanical Technology, 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 Mechanical Technology,
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 Mechanical Technology, and, in
criminal actions or proceedings, in which he 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
Mechanical Technology pursuant to the foregoing provisions, Mechanical
Technology 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
The Exhibit Index has been included immediately preceding the exhibits to
this registration statement.
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
<PAGE>
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Mechanical
echnology Incorporated certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-2 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 May 18, 1999.
MECHANICAL TECHNOLOGY, INCORPORATED
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 05/18/99
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
Exhibit Table
5.1 Form of Opinion re legality.
10.14 Mechanical Technology Incorporated Stock
Incentive Plan - included as Appendix A to the
registrant's Proxy Statement, filed pursuant
to Regulation 14A, for its December 20, 1996
Special Meeting of Shareholders. (1)
10.17 Agreement, dated March 14, 1997, between the
Registrant and Mr. James Clemens, Vice
President and General Manager of Ling
Electronic, Inc., regarding his employment.
(2)
10.18 Limited Liability Company Agreement of Plug
Power, L.L.C., dated June 27, 1997, between
Edison Development Corporation and Mechanical
Technology, Incorporated. (3) (4)
10.19 Contribution Agreement, dated June 27, 1997,
between Mechanical Technology, Incorporated
and Plug Power, L.L.C. (3) (4)
10.20 Asset Purchase Agreement, dated as of
September 22, 1997, between Mechanical
Technology, Incorporated and Noonan Machine
Company. (3)
10.21 Asset Purchase Agreement between Mechanical
Technology and NYFM, Incorporated, dated as of
March 31, 1998. (5)
10.22 Option Agreement-Contribution Match between
Plug Power, L.L.C. and Mechanical Technology,
dated as of April 24, 1998. (5)
<PAGE>
10.23 Option Agreement-Contribution Match between
Plug Power, L.L.C. and Mechanical Technology,
dated as of June 45, 1998. (5)
10.24 Contribution Agreement between Edison
Development Corporation and Mechanical
Technology, dated as of June 40, 1998. (5)
10.29 Mechanical Technology, Incorporated/Plug
Power, L.L.C. Lease for Building III. (6)
10.30 Mechanical Technology Incorporated 1999
Employee Stock Incentive Plan. (7)
13.1 Form 10-Q Quarterly Report for the Quarter Ended
March 26, 1999. (8)
23.1 Form of Consent of PricewaterhouseCoopers LLP
23.2 Form of Consent of Catherine S. Hill, PLLC
(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 herein by reference. All other exhibits for which no
other filing information is given are filed herewith:
(1) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for its fiscal year ended September 30,
1996.
(2) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 8-K Report dated May 12, 1997.
(3) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for the fiscal year ended September
30, 1997.
(4) Refiled as an Exhibit (bearing the same exhibit number) to the
Registrant's Form S-2 dated August 18, 1998, after confidential
treatment request with respect to certain schedules and exhibits was
denied by the Commission. Confidential treatment with respect to
certain schedules and exhibits was granted.
(5) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form S-2 dated August 18, 1998.
(6) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Report on Form 10-Q for the period ended June 26, 1998.
(7) Filed as an Exhibit to the registrant's Proxy Statement,
Schedule 14A, dated February 12, 1999.
(8) Filed with the Securities and Exchange Commission as of May 10,
1999.
Exhibit No. 5.1
Form of Opinion As to Legality of Shares
May 17, 1999
Mechanical Technology, Incorporated
968 Albany-Shaker Road
Latham, New York 12110
RE: Rights Offering Pursuant to Form S-2
Ladies and Gentlemen:
We have acted as counsel to Mechanical Technology Incorporated (the
"Company"), a New York corporation, pursuant to a Registration Statement on
Form S-2, as filed with the Securities and Exchange Commission on May 17, 1999
(the "Registration Statement"), covering ________ shares of the Company's $1.00
par value Common Stock (the "Securities").
In acting as counsel for the Company and arriving at the opinions as
expressed below, we have examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such records of the
Company, resolutions of the Board of Directors of the Company, agreements and
other instruments, certificates of officers, and representatives of the
Company, certificates of public officials and other documents as we have deemed
necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination we have assumed the genuineness of
all signatures, the authenticity of all documents tendered to us as originals,
the legal capacity of natural persons and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
Based on the foregoing, and subject to the qualifications and
limitations set forth herein, it is our opinion that:
1. The Company has the authority to issue the Securities in the manner
and under the terms set forth in the Registration Statement.
2. The Securities have been duly authorized by the Company and when
issued, delivered and paid for in accordance with their respective
terms, will be validly issued, fully paid and non-assessable.
We express no opinion with respect to the laws other than those of the
state of New York and Federal Laws of the United States of America, and we
assume no responsibility as to the applicability thereto, the effect thereon,
of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement. It is not to be used, circulated,
quoted or otherwise relied upon for any other purpose.
Very truly yours,
Catherine S. Hill, PLLC
Exhibit No. 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-2 of our report dated November 6, 1998 relating to the
financial statements, which appears in Mechanical Technology Incorporated and
Subsidiaries Annual Report on Form 10-K for the year ended September 30, 1998.
We also consent to the incorporation by reference of our report dated
November 6, 1998 relating to the financial statement schedules, which appears
in such Annual Report on Form 10-K. We also consent to the references to us
under the headings "Experts" and "Summary Consolidated Financial Information"
in such Registration Statement.
Albany, New York
May 17, 1999 PRICEWATERHOUSECOOPERS L.L.P.
