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

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

~~For the transition period from ______________________ to _______________________~~

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§(§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesx ☒ Noo ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ¨☐ Nox ☒

~~The number~~As of August 9, 2021, the Registrant had 12,699,670 shares of common stock ~~par value of $0.01 per share, outstanding as of October 26, 2017 was 9,149,518.~~outstanding.

As of ~~September~~June 30, ~~2017~~2021 (Unaudited) and December 31, ~~2016~~2020

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

Mechanical Technology, Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020

(Dollars in thousands, except per share) Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020

Product revenue $ 1,647 $ 2,390 $ 2,984 $ 3,973
Cryptocurrency revenue 1,657 50 2,652 50
     Total revenue 3,304 2,440 5,636 4,023
Operating costs and expenses:
     Cost of product revenue 502 631 954 1,159
     Cost of cryptocurrency revenue 545 0 873 0
     Research and product development expenses 406 362 792 764
     Selling, general and administrative expenses 3,030 847 4,867 1,642
Operating (loss) income (1,179 ) 600 (1,850 ) 458
Other income, net 8 2 13 4
(Loss) income before income taxes (1,171 ) 602 (1,837 ) 462
Income tax (expense) benefit (3 ) 0   (3 ) 3
      Net (loss) income $ (1,174 ) $ 602 $ (1,840 ) $ 465

Net loss per share (Basic) $ (.10 ) $ .06 $ (.17 ) $ .05
Net loss per share (Diluted) $ (.10 ) $ .06 $ (.17 ) $ .05

Weighted average shares outstanding (Basic) 11,709,851 9,570,677 10,758,641 9,570,677

Weighted average shares outstanding (Diluted) 11,709,851 9,651,615 10,758,641 9,655,514

(Dollars in thousands, except per share)
Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Product revenue
$
1,857

$
2,232

$
5,047

$
5,265

Operating costs and expenses:

Cost of product revenue

563

774

1,604

2,018

Research and product development expenses

277

298

887

942

Selling, general and administrative expenses

674

829

2,309

2,445

Operating income (loss)

343

331

247

(140
)
Other income (expense), net

1

(1
)

(4
)

(7
)
Income (loss) before income taxes

344

330

243

(147
)
Income tax expense

—

(1
)

—

(1
)
Net income (loss)
$
344

$
329

$
243

$
(148
)

Income (loss) per share attributable to MTI (Basic)
$
.04

$
.06

$
.03

$
(.03
)
Income (loss) per share attributable to MTI (Diluted)
$
.04

$
.06

$
.03

$
(.03
)

Weighted average shares outstanding (Basic)

9,146,216

5,248,482

9,103,276

5,250,082

Weighted average shares outstanding (Diluted)

9,429,402

5,458,871

9,424,982

5,250,082

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

3

~~MECHANICAL TECHNOLOGY, INCORPORATED AND SUBSIDIARIES~~
Mechanical Technology, Incorporated and Subsidiaries
Condensed Consolidated Statements of Changes in Equity (Unaudited)
For the ~~Year~~Three and Six-Month Period Ended ~~December 31, 2016~~June 30, 2021(Unaudited):
~~and the Nine Months Ended September 30, 2017 (Unaudited)~~(Dollars in thousands, except per share)

Common Stock Treasury Stock

Shares

Amount

Additional Paid-
in Capital

Accumulated
Deficit

Shares

Amount
Total
Stockholders’ Equity
December 31, 2020 10,750,100 $ 11 $ 137,462 $ (117,793 ) 1,015,493 $ (13,764 ) $ 5,916

Net loss — — — (666 ) — — (666 )

Stock based compensation — — 34 — — — 34

Issuance of shares – option exercises 77,250 — 62 — — — 62

Issuance of shares – restricted stock 57,500 — 49 — — — 49

March 31, 2021 10,884,850 11 137,607 (118,459 ) 1,015,493 (13,764 ) 5,395
Net loss — — — (1,174 ) — — (1,174 )

Stock based compensation — — 1,005 — — — 1,005

Issuance of shares – stock offering 2,782.258 3 15,400 — — — 15,403

Issuance of shares – option exercises 27,650 — 21 — — — 21

Issuance of shares – restricted stock 20,405 — 207 — — — 207

June 30, 2021 13,715,163 $ 14 $ 154,240 $ (119,633 ) 1,015,493 $ (13,764 ) $ 20,857
(Dollars in thousands,
except per share)

Common Stock

Treasury Stock

Shares

Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Shares

Amount
Total
Stockholders’
Equity
(Deficit)

January 1, 2016
6,263,975
$
63

$
135,839

$
(120,621
)
1,005,092
$
(13,754
)
$
1,527

Net loss
-

-

-

(359
)
-

-

(359
)

Stock based compensation
-

-

449

-

-

-

449

Issuance of shares – stock purchase
3,750,000

37

2,700

-

-

-

2,737

Costs of stock purchase
-

-

(201
)

-

-

-

(201
)

Issuance of shares – option exercises
12,161

-

7

-

-

-

7

Purchase of common stock for treasury
-

-

-

-

10,401

(10
)

(10
)

December 31, 2016
10,026,136
$
100

$
138,794

$
(120,980
)
1,015,493
$
(13,764
)
$
4,150

Net income
-

-

-

243

-

-

243

Stock based compensation
-

-

37

-

-

-

37

Costs of stock purchase
-

-

(25
)

-

-

-

(25
)

Issuance of shares – option exercises
136,375

2

99

-

-

-

101

September 30, 2017
10,162,511
$
102

$
138,905

$
(120,737
)
1,015,493
$
(13,764
)
$
4,506

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

4

~~MECHANICAL TECHNOLOGY, INCORPORATED AND SUBSIDIARIES~~
~~Condensed Consolidated Statements of Cash Flows (Unaudited)~~
For the ~~Nine Months~~Three and Six-Month Period Ended ~~September~~June 30, ~~2017 and 2016~~2020 (Unaudited):
(Dollars in thousands, except per share)
(Dollars in thousands)
Nine Months Ended September 30,

2017

2016

Operating Activities

Net income (loss)
$
243

$
(148
)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
               operating activities:

Depreciation

60

64

Loss on disposal of equipment

—

6

Bad debt recovery

—

(21
)
Stock based compensation

37

131

Provision for excess and obsolete inventories

(50
)

244

Changes in operating assets and liabilities:

Accounts receivable

(516
)

257

Inventories

68

(130
)
Prepaid expenses and other current assets

14

9

Accounts payable

118

(47
)
Accrued liabilities

(17
)

182

Net cash (used in) provided by operating activities

(43
)

547

Investing Activities

Purchases of equipment

(54
)

(113
)
Net cash used in investing activities

(54
)

(113
)
Financing Activities

Costs of stock purchase

(25
)

—

Purchases of common stock for treasury

—

(10
)
Proceeds from stock option exercises

101

—

Net cash provided by (used in) financing activities

76

(10
)
(Decrease) increase in cash

(21
)

424

Cash – beginning of period

3,381

462

Cash – end of period
$
3,360

$
886

Common Stock Treasury Stock

Shares

Amount

Additional Paid-
in Capital

Accumulated
Deficit

Shares

Amount
Total
Stockholders’ Equity
December 31, 2019 10,586,170 $ 10 $ 137,326 $ (119,739 ) 1,015,493 $ (13,764 ) $ 3,833

Net loss — — — (137 ) — — (137 )

Stock based compensation — — 12 — — — 12

March 31, 2020 10,586,170 10 137,338 (119,876 ) 1,015,493 (13,764 ) 3,708

Net income — — — 602 — — 602

Stock based compensation — — 12 — — — 12

June 30, 2020 10,586,170 $ 10 $ 137,350 $ (119,274 ) 1,015,493 $ (13,764 ) $ 5,840
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Mechanical Technology, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2021 and 2020

(Dollars in thousands) Six Month Ended June 30,
2021 2020
Operating Activities
Net (Loss) income $ (1,840 ) $ 465
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 258 53
Stock based compensation 1,039 24
Consultant stock compensation 49 —
Provision (recovery) for excess and obsolete inventories (20 ) —
Loss on disposal of equipment — 3
Changes in operating assets and liabilities:
Accounts receivable 195 (511 )
Inventories (339 ) (498 )
Prepaid expenses and other current assets (6,487 ) (32 )
Other long-term assets (2 ) (289 )
Accounts payable 1,689 395
Operating lease, net 4 —
Other liabilities 61 203
Accrued liabilities 356 126
Net cash used in operating activities (5,037 ) (61 )
Investing Activities
Purchases of equipment (1,336 ) (348 )
Purchase of stock in equity investment — (750 )
Net cash used in investing activities (1,336 ) (1,098 )
Financing Activities
Proceeds from equity offering 17,250 0
Costs of equity offering (1,495 ) 0
Proceeds from stock option exercises 84 0
Net cash provided by financing activities 15,839 0
Increase (decrease) in cash 9,466 (1,159 )
Cash – beginning of period 2,630 2,510
Cash – end of period $ 12,096 $ 1,351

Supplemental Disclosure of Cash Flow Information
Purchase of miner equipment using restricted stock (207 ) —
Registration statement fees in prepaids and accounts payable 352 —
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Nature of Operations
~~1.             Nature of Operations~~
Description of Business
Mechanical Technology, Incorporated ~~(MTI~~(“MTI” or ~~the Company)~~“the Company”), ~~a New York corporation,~~ was incorporated in ~~1961.~~Nevada on March 24, 2021, and is the successor to Mechanical Technology, Inc., which was incorporated in the State of New York in 1961, as a result of a merger which became effective on March 29, 2021, and is headquartered in Albany, New York. The ~~Company’s~~Company conducts two core ~~business is conducted~~businesses through its wholly-owned subsidiaries MTI Instruments, Inc. ~~(MTI Instruments)~~(“MTI Instruments”), ~~a wholly-owned subsidiary.~~which designs, manufactures and markets its products also at the Albany, New York location, and EcoChain, Inc. (“EcoChain”), which is engaged in cryptocurrency mining powered by renewable energy.
MTI Instruments was incorporated in New York on March 8, 2000 and is a supplier of vibration measurement and balancing systems, precision linear displacement ~~sensors, instruments and system~~ solutions, ~~vibration measurement and system balancing solutions, precision tensile measurement systems~~ and wafer inspection ~~tools, serving markets that require 1) the precise measurements and control~~tools. MTI Instruments products consist of ~~products and processes in automated manufacturing, assembly, and consistent operation of complex machinery, 2)~~ engine ~~balancing and~~ vibration analysis systems for both military and commercial aircraft ~~3) metrology~~and electronic gauging instruments for position, displacement and vibration application within the industrial manufacturing markets, as well as in the research, design and process development markets. These systems, tools and solutions are developed for ~~semiconductor~~markets and ~~solar wafer characterization,~~applications that require consistent operation of complex machinery and ~~4) tensile stage systems~~the precise measurements and control of products, processes, the development and implementation of automated manufacturing and assembly.
EcoChain was incorporated in Delaware on January 8, 2020. EcoChain has established a new business line focused on cryptocurrency mining and the blockchain ecosystem. In connection with the creation of the new business line, EcoChain has established a cryptocurrency mining facility that integrates with the cryptocurrency blockchain network in Washington State. EcoChain focuses on sites that can be powered by renewable energy sources. In connection with the establishment of the EcoChain business, MTI purchased Class A Preferred Shares of Soluna Technologies, Ltd. (“Soluna”), a Canadian company that develops vertically-integrated, utility-scale computing facilities focused on cryptocurrency mining and cutting-edge blockchain applications.
On April 29, 2021, the Company closed a public securities offering (the “April Offering”), pursuant to which the Company issued and sold 2,419,355 shares of the Company’s common stock and warrants to purchase up to 604,839 shares of common stock for ~~materials testing~~gross proceeds of $15,000,001, less underwriting discounts of 7.0% ($1,050,000) and ~~precision linear displacement gauges~~other offering expenses, resulting in aggregate net proceeds to the Company of $13,725,001. In addition, on May 27, 2021, the underwriter, exercised its over-allotment option, in full, in connection with the April Offering, pursuant to which the Company issued and sold an additional 362,903 shares of common stock and warrants to purchase up to an additional 90,726 shares of common stock, on the same terms as the securities sold in the April Offering, resulting in additional aggregate gross proceeds of approximately $2,250,000, less underwriter discounts of 7.0% ($157,500) and other offering expenses, resulting in net proceeds to the Company of $2,029,999. The Company’s aggregate net proceeds in relation to the April Offering, including the over-allotment option, was $15,755,000. The warrants have an initial exercise price of $8.24, subject to certain adjustments, per whole share of common stock and expire five years from their date of issuance. In connection with the April Offering, the Company also issued to the underwriter, as a portion of its compensation, warrants to purchase up to 139,113 shares of Common Stock, at an initial exercise price of $6.82 per share, subject to certain adjustments. The Company also incurred additional expenses of $351,850 in conjunction with the April Offering resulting in total Common Stock of $2,782 and Additional-Paid-in-Capital of $15,400,367.
On May 4, 2021, EcoChain Block, LLC, a Delaware limited liability company (“ECB”), a wholly-owned subsidiary of EcoChain, executed a 25-year ground lease with a power-providing cooperative with respect to an existing building and certain surrounding land (the “Building Lease”), and a 25-year ground lease with the same landlord with respect to certain vacant land adjacent thereto, both located in the Southeastern United States (the “Vacant Land Lease”, and together with the Building Lease, the “Ground Leases”). In addition, ECB and the landlord entered into a Power Supply Agreement (the “Power Supply Agreement”) whereby the landlord has agreed to supply power to the building leased under the Building Lease (the “Building Lease Premises”) and to the premises leased under the Vacant Land Lease (the “Vacant Land Premises”), some of which power, under certain circumstances, may be terminated by the landlord, on at least 6 months prior notice, any time after 12 months after the Building Commencement Date (as hereafter defined), in which case the landlord is required to reimburse ECB for all of its construction costs, subject to certain exceptions, relating to buildings and other improvements developed by ECB on the Vacant Land Premises. As of August 10, 2021, this lease has not commenced.
ECB has agreed to pay rent to the landlord of $500,000 on the effective date of the Building Lease (such date, the “Building Commencement Date”) and the sum of $4,000,000 in periodic payments (the “Vacancy Payments”). We executed a guaranty in favor of the landlord with respect to the Vacancy Payments (the “Guaranty of Rent”). The amount of each Vacancy Payment is determined based on the percentage of the building that has been vacated by existing tenants and available for use by ECB. The final Vacancy Payment is due within 60 days after the building has been completely vacated by the existing tenants, which date is contractually scheduled to be no later than March 31, 2022. ECB has the option of making the Vacancy Payments in ~~academic~~cash or by our issuance of common stock in an amount that equals the Vacancy Payment then due based on the prior day’s closing price (any such shares, “Vacancy Payment Shares”). If ECB elects to make any payment in Vacancy Payment Shares, then the landlord has an option to accept such Vacancy Payment Shares or require such shares to be converted to cash as more fully provided in the Building Lease. The Building Lease also includes provisions relating to the issuance of additional shares of our common stock, which may be applied as an advance against future Vacancy Payments, all as fully provided in the Building Lease.
We are required to issue to the landlord 100,000 shares of our common stock, in connection with the Vacant Land Lease, upon the effective date of the Vacant Land Lease, which may not occur prior the Building Commencement Date. In addition, ECB and ~~industrial research~~the landlord have entered into a memorandum of understanding providing ECB with a six-month exclusivity period to expand the Vacant Land Premises, including the obtaining additional power, in connection therewith. ECB and ~~development settings.~~the landlord have not agreed on any of the terms of such expansion other than the exclusivity period previously described. ECB and the landlord have also entered into a transition services agreement (the “Transition Services Agreement”) by which the landlord will provide certain transition services to ECB at a fee to be mutually agreed by the landlord and ECB. The Transition Services Agreement also requires the landlord to pay   ECB an amount approximately equal to the landlord’s net profits received from the landlord’s other tenants operating out of the Building Lease Premises.
~~Liquidity~~
7

On June 24, 2021, the Company and American Stock Transfer & Trust Company, LLC entered into Amendment No. 2 to Rights Agreement (the “Amendment”) to a Rights Agreement, dated as of October 6, 2016, which was amended by Amendment No. 1 to Rights Agreement, dated as of October 20, 2016 (collectively, the “Rights Agreement”), pursuant to which, with the approval of the Board, the Final Expiration Date (as such term is defined in the Rights Agreement) was amended and accelerated from October 26, 2026 to June 24, 2021, and, as a result, the Rights Agreement was terminated effective as of June 24, 2021.
As a result of the termination of the Rights Agreement, certain stockholders of the Company, who, pursuant to the terms of the Rights Agreement, held certain rights entitling them, under certain circumstances, to be issued additional shares of our common stock in the event we issued shares of our common stock to any other person resulting in such person acquiring beneficial ownership of 4.99% or more of our outstanding shares of common stock, are no longer entitled to such rights. These rights were established in an effort to protect our ability to use our net operating loss carryforwards (“NOLs”). The Board, in connection with its authorization and approval of the Amendment, determined that keeping the Rights Agreement in effect was placing undue restrictions on our ability to raise capital, which it determined outweighed any benefits provided to protect the NOLs.
Liquidity
The Company has historically incurred significant losses primarily due to its past efforts to fund direct methanol fuel cell product development and commercialization programs and had ana consolidated accumulated deficit of approximately ~~$120.7~~$119.6 million as of ~~September~~June 30, ~~2017.~~2021. As of ~~September~~June 30, ~~2017, we~~2021, the Company had working capital of approximately ~~$4.4~~$16.8 million, no debt, ~~$9 thousand in~~outstanding commitments related to EcoChain for $8.3 million for capital expenditures, and approximately ~~$3.4~~$12.0 million of cash available to fund ~~our~~ operations.
Based on recent business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, the Company will require additional capital equipment in the foreseeable future. With respect to MTI and MTI Instruments, the Company expects to spend a total of approximately $300 thousand on computer equipment and software and $1.6 million on research and development during 2021. As the Company has done historically, the Company expects to finance these expenditures and continue funding of MTI’s and MTI Instruments’ operations from the Company’s current cash position and the Company’s projected 2021 cash flows. If necessary, the Company may also seek to supplement its resources by increasing credit facilities to fund operational working capital and capital expenditure requirements. With respect to EcoChain, the Company expects to fund growth (additional cryptocurrency mining facilities and miners) through capital raise activities to the extent that the Company can successfully raise capital through additional securities sales. Any additional financing, if required, may not be available to the Company on acceptable terms or at all.
While it cannot be assured, management believes that, due in part to the Company’s current working capital level and projected cash requirements for operations and capital expenditures, its current available cash of approximately ~~$3.4~~$12.0 million, and ~~our~~the Company’s projected ~~2017 and 2018~~2021 cash ~~flows~~flow pursuant to management’s plans, ~~management believes it~~the Company will have adequate resources to fund operations and capital expenditures for ~~the remainder of 2017~~MTI and MTI Instruments for the year ending December 31, ~~2018. If cash generated from operations is insufficient to satisfy~~2021 and through at least the ~~Company’s operational working capital and capital expenditure requirements,~~end of the third quarter of 2022. As noted above, the Company ~~may be required to obtain credit facilities, if available,~~expects to fund ~~these initiatives.~~capital expenditures for EcoChain through capital raises, while EcoChain’s operations will be funded through its cash flows. The Company ~~has no other formal commitments~~expects to have adequate resources to fund EcoChain’s operations for ~~funding its future needs at this time and any additional financing during~~ the ~~remainder of 2017~~year ending December 31, 2021 and through at least the ~~year ended December 31, 2018, if required, may not be available to us on acceptable terms or at all.~~third quarter of 2022.

~~2.            Basis of Presentation~~
2. Basis of Presentation
In the opinion of management, the Company’s condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the periods presented in accordance with United States of ~~America~~America’s Generally Accepted Accounting Principles ~~(U.S. GAAP) and with the instructions to Form 10-Q in Article 10 of the Securities and Exchange Commission’s (SEC) Regulation S-X.~~(“U.S. GAAP”). The results of operations for the interim periods presented are not necessarily indicative of results for the full year.
Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020 (“the Annual Report”).
The information presented in the accompanying condensed consolidated balance sheet as of December 31, ~~2016~~2020 has been derived from the Company’s audited consolidated financial statements. All other information has been derived from the Company’s unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~September~~June 30, ~~2016.~~2020.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned ~~subsidiary,~~subsidiaries, MTI ~~Instruments.~~Instruments and EcoChain. All intercompany balances and transactions are eliminated in consolidation.
Change in Par Value
Unless otherwise noted, all capital values, share and per share amounts in the condensed consolidated financial statements have been retroactively restated for the effects of the Company’s change in par value from $0.01 to $0.001, which became effective after the redomestication to the State of Nevada on March 29, 2021.
68

~~3.             Accounts Receivable~~
3. Accounts Receivable
Accounts receivables consist of the following at:

(Dollars in thousands)
September 30, 2017

December 31, 2016

June 30, 2021 December 31, 2020

U.S. and State Government
$
46

$
103

$ 53 $ 2
Commercial

1,351

778

638 909
Allowance for doubtful accounts

—

—

Other 89 64
Total
$
1,397

$
881

$ 780 $ 975
For the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, the largest commercial customer represented ~~9.5%~~14.2% and ~~9.7%~~7.1%, respectively, and the largest governmental agency represented ~~20.8%~~35.5% and ~~16.2%~~65.8%, respectively, of the Company’s product revenue. For the six months ended June 30, 2021 and 2020, the largest commercial customer represented 12.7% and 9.6%, respectively, and the largest governmental agency represented 27.3% and 42.3%, respectively, of the Company’s product revenue. As of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the largest commercial customer receivable represented ~~20.5%~~16.4% and ~~23.0%~~15.9%, respectively, and the largest governmental customer receivable represented ~~3.3%~~6.8% and ~~11.6%~~0.3%, respectively, of the Company’s accounts receivable.
~~4.             Inventories~~The Company's allowance for doubtful accounts was $0 at both June 30, 2021 and December 31, 2020.
4. Inventories
Inventories consist of the following at:

(Dollars in thousands)
September 30, 2017

December 31, 2016

June 30, 2021 December 31, 2020

Finished goods
$
208

$
244

$ 570 $ 371
Work in process

157

143

263 139
Raw materials

293

289

354 318
Total
$
658

$
676

$ 1,187 $ 828

5. Property, Plant and Equipment
~~5.             Property, Plant and Equipment~~
Property, plant and equipment consist of the following at:
(Dollars in thousands)

September 30, 2017

December 31, 2016
June 30, 2021 December 31, 2020

Land $ 52 $ —
Leasehold improvements

$
39

$
39
262 262
Computers and related software

986

1,068
2,639 1,603
Machinery and equipment

900

892
902 885
Office furniture and fixtures

34

25
39 38
Construction in progress 437 —

1,959

2,024
4,331 2,788
Less: Accumulated depreciation

1,805

1,864
2,199 1,941

$
154

$
160
$ 2,132 $ 847

Depreciation expense was ~~$60~~$165 thousand and ~~$85~~$31 thousand for ~~the nine months ended September~~ 30~~, 2017 and the year ended December 31, 2016, respectively.~~

6.             ~~Income Taxes~~
We have adopted the provisions of accounting standard update (ASU) 2016-09 as of the beginning of the current fiscal year, which requires recognition through opening retained earnings of any pre-adoption date net operating loss (NOL) carryforwards from nonqualified stock options for excess tax benefits that were not previously recognized because the related tax deduction had not reduced taxes payable and other employee share-based payments, as well as recognition of all income tax effects from share-based payments arising on or after January 1, 2017 (our adoption date) in income tax expense. As a result, we recognized through opening retained earnings $1.3 million of pre-adoption date NOL carryforwards with remaining carryforward periods of more than 10 years (the corresponding deferred tax asset is $457 thousand). We recorded a full valuation allowance for this deferred tax asset. In addition, we realized windfall tax benefits of less than $1 thousand during the three months ended September 30, 2017, shortfall tax expense of $19 thousand during the three months ended June 30, ~~2017~~2021 and ~~windfall tax benefits of $2~~2020, respectively. Depreciation expense was $258 thousand ~~during~~and $53 thousand for the ~~three~~six months ended ~~March 31, 2017, which we recognized as discrete period income benefits~~June 30, 2021 and ~~tax, accordingly, as required by the ASU.~~2020, respectively.
9

6. Income Taxes
During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, the Company’s effective income tax rate was 0%0.0%. The projected annual effective tax rate is less than the Federal statutory rate of ~~34%~~21%, primarily due to the change in the valuation allowance, as well as changes to estimated taxable income for ~~2017~~2021 and permanent differences. ~~For the three and nine months ended September 30, 2016, the Company’s effective income tax rate was 0%.~~ There was noan income tax expense ~~for the three and nine months ended September 30, 2017. Income tax expense was $1~~of $3 thousand for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2021 and ~~related to~~$0 for the ~~payment~~three months ended June 30, 2020 and an income tax benefit of ~~prior and current year state tax expenses.~~$3 thousand for the six months ended June 30, 2020.
The Company provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur in accordance with accounting standards that address income taxes. Significant management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company has considered all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items, in determining its valuation allowance. In addition, the Company’s assessment requires us to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance which further requires the exercise of significant management judgment.
The Company believes that the accounting estimate for the valuation of deferred tax assets is a critical accounting estimate because judgment is required in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns. The Company based the estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes. In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company may need to adjust the recorded valuation allowance, which could materially impact our financial position and results of operations. The ~~Company has recorded a full~~ valuation allowance was $10.2 million and $9.7 million at ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016 for its deferred tax assets. The valuation allowance was $19.0 million at September 30, 2017 and $18.6 million at December 31, 2016.~~ 2020, respectively. We will continue to evaluate the ability to realize our deferred tax assets and related valuation allowance on a quarterly basis.

7. Stockholders’ Equity
~~7.             Stockholders’ Equity~~
Common Stock
The Company has one class of common stock, par value ~~$.01.~~$0.001. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. As of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, there were ~~9,147,018~~12,699,670 and ~~9,010,643~~9,734,607 shares of common stock ~~respectively,~~ issued and ~~outstanding.~~outstanding, respectively.
Dividends
Dividends are recorded when declared by the Company’s Board of Directors. There were no dividends declared or paid during 2020 or 2021.
Reservation of Shares
The Company had reserved shares of common ~~shares~~stock for future issuance as follows as of ~~September~~June 30,~~, 2017:~~ 2021:
Stock options outstanding
~~984,303~~
1,010,050
Restricted stock units outstanding
15,000
Common stock available for future equity awards or issuance of options
~~67,161~~
692.616
Number of common shares reserved
~~1,051,464~~
1,717,666

Income (Loss) per Share
The Company computes basic income (loss) per common share by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted income (loss) per share reflects the potential dilution, if any, computed by dividing income (loss) by the combination of dilutive common ~~share~~stock equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company’s ~~share-based~~stock-based compensation plans, and the weighted average number of shares of common ~~shares~~stock outstanding during the reporting period. Dilutive common ~~share~~stock equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option and the amount of compensation cost, if any, for future service that the Company has not yet recognized and the amount of windfall tax benefits that would be recorded in additional paid-in capital for the periods presented prior to the adoption of ASU 2016-09 on January 1, 2017, if any, when the stock option is exercised are assumed to be used to repurchase shares in the current period.
~~Not included in the computation of earnings per share, assuming dilution, for the nine months ended September 30, 2017, were options to purchase 271,589 shares of the Company’s common stock.~~ Not included in the computation of earnings per share, assuming dilution, for the three months ended ~~September~~June 30, ~~2017,~~2021, were options to purchase ~~273,589~~658,550 shares ~~of the Company’s common stock. These potentially dilutive items were excluded even though the average market price of the common~~and 15,000 restricted stock ~~exceeded the exercise prices for a portion of the options because the calculation of incremental shares resulted in an anti-dilutive effect.~~
~~Not included in the computation of earnings per share, assuming dilution, for the nine months ended September 30, 2016, were options to purchase 1,175,500 shares~~units of the Company’s common stock. These potentially dilutive items were excluded because the Company incurred a loss during the period and their inclusion would be anti-dilutive. Not included in the computation of earnings per share, assuming dilution, for the ~~three~~six months ended ~~September~~June 30, ~~2016,~~2021, were options to purchase ~~669,500~~1,010,050 shares of the Company’s common stock and 15,000 restricted stock units of the Company’s common stock. These potentially dilutive items were excluded because the Company incurred a loss during the period and their inclusion would be anti-dilutive.
10
Not included in the computation of earnings per share, assuming dilution, for the three months ended June 30, 2020, were options to purchase 491,430 shares of the Company’s common stock. These potentially dilutive items were excluded ~~even though~~because the average market price of the shares of common stock exceeded the exercise ~~prices for a portion~~price of the options. Not included in the computation of earnings per share, assuming dilution, for the six months ended June 30, 2021, were options to purchase 491,430 shares of the Company’s common stock. These potentially dilutive items were excluded because the ~~calculation~~average market price of ~~incremental~~the shares ~~resulted in an anti-dilutive effect.~~of common stock exceeded the exercise price of the options.

8. Commitments and Contingencies
~~8.             Commitments and Contingencies~~Commitments:
~~Commitments:~~Leases
~~Leases~~
The Company determines whether an arrangement is a lease at inception. The Company and its ~~subsidiary lease~~subsidiaries have operating leases for certain manufacturing, laboratory, office facilities and ~~office facilities.~~certain equipment. The ~~lease provides for the Company to pay its allocated share of insurance, taxes, maintenance and other costs of the leased property.~~
~~Future minimum rental payments required under non-cancelable operating~~ leases ~~(with initial or~~have remaining lease terms of less than one year to less than five years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of June 30, 2021 and December 31, 2020, the Company has no assets recorded under finance leases.
Lease expense for these leases is recognized on a straight-line basis over the lease term. For the three and six months ended June 30, total lease costs are comprised of the following:

(Dollars in thousands)
Three Months Ended
June 30,

Six Months Ended
June 30,

2021 2020 2021 2020

Operating lease cost $ 93 $ 66 $ 187 $ 121
Short-term lease cost — 2 — 2
       Total net lease cost $ 93 $ 68 $ 187 $ 123
Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.
Other information related to leases was as follows:
Six Months Ended June 30, 2021
Weighted Average Remaining Lease Term (in years):
     Operating leases 3.64
Weighted Average Discount Rate:
     Operating leases 5.51 %

(Dollars in thousands)
Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Supplemental Cash Flows Information:
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases $ 187 $ 121

Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations:
     Operating leases $ —   $ 387
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Maturities of noncancellable operating lease liabilities are as follows for the quarter ending June 30:
(Dollars in thousands)
2021
2021 $ 374
2022 376
2023 290
2024 103
2025 —
Total lease payments 1,143
  Less: imputed interest (91 )
     Total lease obligations 1,052
  Less: current obligations (327 )
     Long-term lease obligations $ 725
As of June 30, 2021, except for the ground lease entered into as described in ~~excess of one year) as of September 30, 2017 are: $57 thousand remaining in 2017; $227 thousand in 2018; $212 thousand in 2019 and $3 thousand in 2020.~~Note 1, there were no additional operating lease commitments that had not yet commenced.
Warranties
Product warranty liabilities are included in “Accrued liabilities” in the Condensed Consolidated Balance Sheets. Below is a reconciliation of changes in product warranty liabilities:

(Dollars in thousands) Six Months Ended
June 30,
2021 2020
Balance, January 1 $ 22 $ 16
Accruals for warranties issued 8 10
Accruals for pre-existing warranties — —
Settlements made (in cash or in kind) (4 ) (3 )
Balance, end of period $ 26 $ 23
(Dollars in thousands)

Nine Months Ended
September 30,

2017

2016

Balance, January 1

$
14

$
16

Accruals for warranties issued

13

13

Settlements made (in cash or in kind)

(11
)

(6
)
Balance, end of period

$
16

$
23

Contingencies:
~~Employment Agreement~~Legal
On May 5, 2017, the Company entered into an employment agreement with one employee. The agreement provides for an initial term ending December 31, 2018, and, unless either party provides written notice that the agreement will not be renewed, is renewed for an additional year on December 31, 2018 and each subsequent December 31; such non-renewal may be for any or for no stated reason. The agreement provides for certain payments upon termination of employment under certain circumstances. As of September 30, 2017, the Company’s potential minimum obligation to this employee was approximately $198 thousand.

~~Separation Agreement~~
Our former President and Chief Executive Officer Kevin G. Lynch, who resigned from these positions on January 18, 2017, was not entitled to any post-termination payments or benefits under the terms of his employment arrangement. However, the Company entered into a separation agreement with Mr. Lynch, as of February 1, 2017, that entitles him to be paid the compensation he was receiving at his termination ($11,488.47 bi-weekly) from his January 18, 2017 termination date through June 30, 2017, as well as reimbursement for COBRA medical insurance coverage through December 31, 2017. Under the terms of this separation agreement, as of September 30, 2017, Mr. Lynch is entitled to remaining payments aggregating $3 thousand, assuming he complies with the terms of the separation agreement. The separation agreement also includes confidentiality provisions and Mr. Lynch’s release of any claims against the Company and agreement not to bring suit against the Company and its affiliates.
~~Contingencies:~~
~~Legal~~
We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred.
~~9.             Stock Based Compensation~~
~~During 2016,~~The Company has been named as a party in the ~~Company granted 261,000 options to purchase~~December 19, 2019 United States Environmental Protection Agency (“EPA”) Demand Letter regarding the ~~Company’s common stock~~Malta Rocket Fuel Area Superfund Site (“Site”) located in Malta and Stillwater, New York in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the ~~Mechanical Technology Incorporated 2014 Equity Incentive Plan (2014 Plan), which generally vest 25% on each~~amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the ~~first four anniversaries~~Explanation of Significant Differences (“ESD”) of the ~~date~~Site, and implementation of the ~~award.~~work contemplated by the ESD. The ~~exercise price~~Company considers the likelihood of ~~these options is $0.78 per share~~a material adverse outcome to be remote and was based on the closing market price of the Company’s common stock on the date of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options is $0.74 per share and was estimated at the date of grant. These options became immediately vested in conjunction with the change in control provision (as defined in the 2014 Plan)does not currently anticipate that any expense or liability it may incur as a result of these matters in the ~~Brookstone Partners Acquisition XXIV, LLC purchase of shares of our common stock on October 21, 2016.~~ future will be material to the Company's financial condition.

9. Related Party Transactions
During 2016, the Company granted 2,000 options to purchase the Company’s common stock from the Mechanical Technology Incorporated 2012 Equity Incentive Plan, which generally vest 25% on each of the first four anniversaries of the date of the award. The exercise price of these options is $0.78 per share and was based on the closing market price of the Company’s common stock on the date of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options is $0.74 per share and was estimated at the date of grant.
~~10.          Related Party Transactions~~
MeOH Power, Inc.
The Company records its investment in MeOH Power, Inc. using the equity method of accounting. The fair value of the Company’s interest in MeOH Power, Inc. has been determined to be $0 as of September 30, 2017 and December 31, 2016, based on MeOH Power, Inc.’s net position and expected cash flows. A~~s of~~ ~~September 30, 2017, the Company retained its ownership of approximately 47.5% of~~ ~~MeOH Power, Inc.’s~~ ~~outstanding common stock, or 75,049,937 shares.~~ ~~The number of shares of MeOH Power, Inc.’s common stock authorized for issuance is 240,000,000 as of September 30, 2017.~~ ~~The Company previously held warrants to purchase 31,904,136 shares of common stock of MeOH Power, Inc., which expired in December 2016.~~
On December 18, 2013, MeOH Power, Inc. and the Company executed a Senior Demand Promissory Note (the ~~Note)~~“Note”) in the amount of ~~$380~~$380 thousand to secure the intercompany amounts due to the Company from MeOH Power, Inc. upon the deconsolidation of MeOH Power, Inc. Interest accrues on the Note at the Prime Rate in effect on the first business day of the month, as published in the Wall Street Journal. At the Company’s option, all or part of the principal and interest due on this Note may be converted to shares of common stock of MeOH Power, Inc. at a rate of $0.07 per share. Interest began accruing on January 1, 2014. The Company recorded a full allowance against the Note. As of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016, $283~~2020, $325 thousand and ~~$275~~$321 thousand, respectively, of principal and interest are available to convert into shares of common stock of MeOH Power, ~~Inc~~.Inc. Any adjustments to the allowance are recorded as miscellaneous expense during the period incurred.

Legal Services
During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, the Company incurred $0$7 thousand and $9$15 thousand, respectively, to Couch White, LLP for legal services associated with contract review. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2020, the Company ~~paid $9~~incurred $19 thousand and $77 thousand, respectively, to Couch White, LLP for legal services associated with contract review.A partner at Couch White, LLP is an immediate family member of one of our Directors.
Soluna Transactions
On January 8, 2020, the Company formed EcoChain as a wholly-owned subsidiary to pursue a new business line focused on cryptocurrency and the blockchain ecosystem. In connection with this new business line, EcoChain established a facility to mine cryptocurrencies and integrate with the blockchain network. Pursuant to an Operating and Management Agreement dated January 13, 2020, by and between EcoChain and Soluna Technologies, Ltd. (“Soluna”), a Canadian company that develops vertically-integrated, utility-scale computing facilities focused on cryptocurrency mining and cutting-edge blockchain applications, Soluna assisted the Company, and later EcoChain, in developing, and is now operating, the cryptocurrency mining facility. The Operating and Management Agreement requires, among other things, that Soluna provide developmental and operational services, as directed by EcoChain, with respect to the cryptocurrency mining facility in exchange for EcoChain’s payment to Soluna of a one-time management fee of $65 thousand and profit-based success payments in the event EcoChain achieves explicit profitability thresholds. Once aggregate earnings before interest, taxes, depreciation and amortization of the mine exceeds the total amount of funding provided by EcoChain to Soluna (whether pursuant to this agreement or otherwise) for the purposes of creating, developing, assembling, and constructing the mine (the “Threshold”), Soluna is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. As of June 30, 2021, $118 thousand of payments have been made or are due, as certain Thresholds have been achieved. Pursuant to the Operating and Management Agreement, during the developmental phase of the cryptocurrency mining facility, which ended on March 14, 2020, Soluna gathered and analyzed information with respect to EcoChain's cryptocurrency mining efforts and produced budgets, financial models, and technical and operational plans, including a detailed business plan, that it delivered to EcoChain in March 2020 (the “Deliverables”), all of which was designed to assist with the efficient implementation of a cryptocurrency mine. The agreement provided that, following EcoChain’s acceptance of the Deliverables, which occurred on March 23, 2020, Soluna, on behalf of EcoChain, would commence operations of the cryptocurrency mine in a manner that would allow EcoChain to mine and sell cryptocurrency. In that regard, on May 21, 2020, EcoChain acquired the intellectual property of GigaWatt, Inc. (“GigaWatt”) and certain other property and rights of GigaWatt associated with GigaWatt’s operation of a crypto-mining operation located in Washington State. The acquired assets formed the cornerstone of EcoChain’s current cryptocurrency mining operation. EcoChain sells for U.S. dollars all cryptocurrency it mines and is not in the business of accumulating cryptocurrency on its balance sheet for speculative gains. On October 22, 2020, EcoChain loaned Soluna $112 thousand to acquire additional assets from the bankruptcy trustee for GigaWatt’s assets. On the same day, Soluna transferred title of the assets to EcoChain, which under the terms thereof paid off the note.
On November 19, 2020, EcoChain and Soluna entered into a second Operating and Management Agreement related to a potential location for a cryptocurrency mine in the Southeast United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management agreement noted above, Soluna is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. EcoChain paid Soluna $150 thousand in 2020 and $100 thousand in the six months ended June 2021 related to the one-time fees.
On December 1, 2020, EcoChain and Soluna entered into a third Operating and Management Agreement with respect to a potential location for a cryptocurrency mine in the Southwestern United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management agreement noted above, Soluna is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. EcoChain paid Soluna $38,000 during 2020 in relation to the one-time fees; this target location did not meet the business requirements to continue pursuing the potential acquisition, and as a result EcoChain will not make any further payments to Soluna under this agreement.
On February 8, 2021, EcoChain and Soluna entered into a fourth Operating and Management Agreement related to a potential location for a cryptocurrency mine in the Southeast United States. In accordance with the terms of the agreement, which are consistent with the first Operating and Management agreement noted above, Soluna is entitled to ongoing success payments of 20.0% of the earnings before interest, taxes, depreciation and amortization of the mine. EcoChain paid Soluna $70 thousand during the six months ended June 30, 2021 in relation to the one-time fees.
Each Operating and Management Agreement requires that Soluna provide project sourcing services to EcoChain, including acquisition negotiations and establishing an operating model, investments/financing timeline, and project development path.
Simultaneously with entering into the initial Operating and Management Agreement with Soluna, the Company, pursuant to a purchase agreement it entered into with Soluna, made a strategic investment in Soluna by purchasing 158,730 Class A Preferred Shares of Soluna for an aggregate purchase price of $500 thousand on January 13, 2020. After acceptance of the Deliverables, as required by the terms of the purchase agreement, on March 23, 2020, the Company purchased an additional 79,365 Class A Preferred Shares of Soluna for an aggregate purchase price of $250 thousand. The Company also has the right, but not the obligation, to purchase additional equity securities of Soluna and its subsidiaries (including additional Class A Preferred Shares of Soluna) if Soluna secures certain levels or types of project financing with respect to its own wind power generation facilities. Each preferred share may be converted at any time and without payment of additional consideration, into Common shares. The Company has additionally entered into a Side Letter Agreement, dated January 13, 2020, with Soluna Technologies Investment I, LLC, a Delaware limited liability company that owns, on a fully diluted basis, 58.8% of Soluna and is controlled by a Brookstone Partners-affiliated director of the Company. The Side Letter Agreement provides for the transfer to the Company, without the payment of any consideration by the Company, of additional Class A Preferred Shares of Soluna in the event Soluna issues additional equity below agreed-upon valuation thresholds.
Several of Soluna’s equityholders are affiliated with Brookstone Partners, the investment firm that holds an equity interest in the Company through Brookstone Partners Acquisition XXIV, LLC. The Company’s two Brookstone-affiliated directors also serve as directors and, in one case, as an officer, of Soluna and also have ownership interest in Soluna. In light of these relationships, the various transactions by and between the Company and EcoChain, on the one hand, and Soluna, on the other hand, were negotiated on behalf of the Company and EcoChain via an independent investment committee of Board and separate legal representation. The transactions were subsequently unanimously approved by both the independent investment committee and the full Board.

Three of the Company’s directors have various affiliations with Soluna.
Michael Toporek, our Chief Executive Officer and a director, owns (i) 90% of the equity of Soluna Technologies Investment I, LLC, which owns 58.8% of Soluna and (ii) 100% of the equity of MJT Park Investors, Inc., which owns 3.1% of Soluna, in each case on a fully-diluted basis. Mr. Toporek does not own directly, or indirectly, any equity interest in Tera Joule, LLC, which owns 8.4% of Soluna; however, as a result of his 100% ownership of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in Soluna.
In addition, one of the Company’s directors, Matthew E. Lipman, serves as a director and as acting Secretary and Treasurer of Soluna. Mr. Lipman does not directly own any equity interest in Tera Joule, LLC, which owns 8.4% of Soluna; however, as a result of his position as a director and officer of Brookstone IAC, Inc., which is the manager of Tera Joule, LLC, he has dispositive power over the equity interests that Tera Joule owns in Soluna.
Finally, the Company’s director William P. Phelan serves as an observer on Soluna’s board of directors on behalf of the Company.As a result, the approximate dollar value of the amount of Mr. Toporek's and Mr. Lipman's interest in the Company's transactions with Soluna through June 30, 2021, were $98 thousand and $0, respectively.
The Company’s investment in Soluna is carried at the cost of investment and was $750 thousand as of June 30, 2021. The Company owned approximately 1.83% of Soluna, calculated on a converted fully-diluted basis, as of June 30, 2021. The Company may enter into additional transactions with Soluna in the future.
10.       Stock Based Compensation
2021 Plan
The Company’s 2021 Stock Incentive Plan (the “2021 Plan”) was adopted by the Board on February 12, 2021 and approved by the stockholders on March 25, 2021. The 2021 Plan authorizes the Company to issue shares of common stock upon the exercise of stock options, the grant of restricted stock awards, and the conversion of restricted stock units (collectively, the "Awards"). The Compensation Committee has full authority, subject to the terms of the 2021 Plan, to interpret the 2021 Plan and establish rules and regulations for the proper administration of the 2021 Plan. Subject to certain adjustments as provided in the 2021 Plan, the maximum aggregate number of shares of the Company’s common stock that may be issued under the 2021 Plan (i) pursuant to the exercise of stock options, (ii) as restricted stock, and (iii) as available pursuant to restricted stock units shall be limited to (A) during the Company's fiscal year ending December 31, 2021, 1,460,191 shares of common stock, and (B) beginning with the Company's fiscal year ending December 31, 2022, 15% of the number of shares of common stock outstanding. Subject to certain adjustments as provided in the 2021 Plan, (i) shares of the Company’s common stock subject to the 2021 Plan shall include shares of common stock forfeited in a prior year and (ii) the number of shares of common stock that may be issued under the 2021 Plan may never be less than the number of shares of the Company’s common stock that are then outstanding under outstanding Awards.
During the three months ended June 30, 2021, the Company granted options to purchase 686,200 shares of the Company’s common stock under the 2021 Plan, of which 186,200 shares immediately vested with an exercise price of $7.52 per share, based on the closing price plus 10% of the Company’s common stock on the date of the grant. The remaining 500,000 shares will vest in equal installments of 33 1/3% on each of the three anniversaries of the date of grant, the exercise price of these awards are $6.84 per share. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options was $4.86 per share and was estimated at the date of grant.
During the six months ended June 30, 2021, the Company granted options to purchase 716,200 shares of the Company’s common stock under the 2021 Plan, of which 186,200 shares immediately vested with an exercise price of $7.52 per share, based on the closing price plus 10% of the Company’s common stock on the date of the grant. The remaining 530,000 shares will vest in equal installments of 33 1/3% on each of the three anniversaries of the date of the grant. The weighted exercise price of these options is $7.08 per share and was based on the closing market price of the Company’s common stock on the dates of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options was $5.04 per share and was estimated at the date of grant.
During the six months ended June 30, 2021, the Company awarded 47,500 shares of restricted common stock under the 2021 Plan, valued at $11.10 per share based on the closing market price of the Company’s common stock on the date of the award. The shares will be restricted for one year, with the entire award vesting on the first anniversary of the award date.
During the six months ended June 30, 2021, the Company awarded 15,000 restricted stock units under the 2021 Plan, valued at $11.10 per share based on the closing market price of the Company’s common stock on the date of the grant. 33 1/3% of such restricted stock units will vest on each of the first three anniversaries of the date of the grant.
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11.       Effect of Recent Accounting Updates

Accounting Updates Not Yet Effective
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (the ~~FASB)~~“FASB”) in the form of ~~ASUs~~accounting standard updates (“ASUs”) to the FASB’s Accounting Standards ~~Codification.~~Codification (“ASC”). The Company considered the applicability and impact of all ASUs. ASUs not mentioned below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.
In ~~May 2014,~~June 2016, the FASB issued ASU ~~2014-09 (Revenue from Contracts with Customers~~2016-13 (Financial Instruments - Credit Losses (Topic ~~606)~~326))and ~~issued~~its subsequent amendments to the initial guidance ~~in August 2015, March 2016, April 2016, May 2016 and December 2016~~ within ASU ~~2015-14,~~2018-19, ASU ~~2016-08,~~2019-04, ASU ~~2016-10,~~2019-05, ASU ~~2016-12~~2019-10, ASU 2019-11 and ASU ~~2016-20,~~2020-02, respectively ~~(ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12~~(collectively, Topic 326). Topic 326 changes how entities will measure credit losses for most financial assets and ~~ASU 2016-20, respectively,~~certain other instruments that are not accounted for at fair value through net income. This standard replaces the existing incurred credit loss model and ~~collectively, Topic 606)~~establishes a single credit loss framework based on a current expected credit loss model for financial assets carried at amortized cost, including loans and held-to- maturity debt securities. The current expected loss model requires an entity to~~clarify~~ estimate credit losses expected over the ~~principles for recognizing revenue and to develop a common revenue~~life of the credit exposure upon initial recognition of that exposure when the financial asset is originated or acquired, which will generally result in earlier recognition of credit losses. This standard for GAAP and International Financial Reporting Standards. Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. Topic 606 is principles-based and provides a five-step model to determine when and how revenue is recognized. It is possible more judgment and estimates mayalso requires expanded credit quality disclosures. For available-for-sale debt securities, entities will be required ~~within~~to record allowances rather than reduce the ~~revenue recognition process than~~carrying amount, as they do today under the other-than-temporary impairment model. This standard also simplifies the accounting model for purchased credit-impaired debt securities and loans. This standard will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are ~~required under existing GAAP. The core principle is~~accounted for using lease guidance and not as financial instruments. ASU 2019-04 clarifies that ~~a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to~~equity instruments without readily determinable fair values for which ~~the company expects to be entitled in exchange for those goods or services. To achieve that core principle,~~ an entity has elected the measurement alternative should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction pricebe remeasured to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Topic 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This standard, as amended, will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. This standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognizedfair value as of the date that an observable transaction occurred. ASU 2019-05 provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of ~~initial application. Early adoption is permitted, but no earlier than calendar 2017.~~amortized cost. This standard ~~could impact~~should be applied on either a prospective transition or modified-retrospective approach depending on the timing and amounts of revenue recognized. The Company is currently evaluating the impact of this standard on its consolidated financial statements. The Company has not yet selected a transition method and in preparation for our adoption of the new standard in our 2018 fiscal year, we are obtaining representative samples of contracts and other forms of agreements with our customers in the U.S. and international locations and are evaluating the provisions contained therein in light of the five-step model specified by this standard. While we do not believe there will be a material impact to our revenues upon adoption, we do expect some level of changes to our current footnote disclosures; we are continuing to evaluate the impact to our revenues and our preliminary assessments are subject to change. We are also continuing to evaluate the provisions of Topic 606 related to costs for obtaining customer contracts.
In January 2016, the FASB issued ASU 2016-01 (Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities) the main objective of which is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.subtopic. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, ~~2017,~~2022, and while early adoption is ~~permitted.~~permitted, the Company does not expect to elect that option. The Company is currently evaluating the impact of ~~this standard but we do not expect~~ the adoption ~~of it to have a material impact on its consolidated financial statements.~~
In February 2016, the FASB issued ASU 2016-02 (Leases (Topic 842)), which requires lessees to recognize a right-of-use asset and a lease liability on their balance sheet for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, this standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While this standard maintains similar accounting for lessors as under ASC 840, this standard reflects updates to, among other things, align with certain changes to the lessee model. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2018, and early adoption is permitted. Although we have not completed our assessment, we believe adoption of this standard may have a significant impact on our consolidated balance sheets. However, we do not expect the adoption to change the recognition, measurement or presentation of lease expense within our consolidated statements of operations or the consolidated statements of cash flows. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of the standard, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. Information about our undiscounted future lease payments and the timing of those payments is in Note 8, Commitments and Contingencies.

In August 2016, the FASB issued ASU 2016-15 (Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments), which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017, and early adoption is permitted. This standard should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09 (Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017, and early adoption is permitted. This standard should be applied prospectively to an award modified on or after the adoption date. The Company will evaluate the impact of this standard on its consolidated financial statements, including assessing and evaluating assumptions and models to estimate losses. Upon adoption of this standard on January 1, 2023, the Company will be required to record a cumulative effect adjustment to retained earnings for the impact as of the date of adoption. The impact will depend on the Company’s portfolio composition and credit quality at the ~~time~~date of adoption, ~~if applicable.~~as well as forecasts at that time.
Accounting Updates Recently Adopted by the Company
On January 1, ~~2017, we~~2021, the Company adopted ASU 2015-11 (Inventory (Topic 330): Simplifying the Measurement of Inventory), which applies to inventory that is measured using first-in, first-out (FIFO) or average cost. As required by ASU 2015-11, we measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement was unchanged for inventory that is measured using last-in, last-out (LIFO). The Company adopted this standard on a prospective basis. The adoption of this standard did not have a material impact on its consolidated financial statements.
~~On January 1, 2017, we adopted ASU 2015-17~~2019-12 (Income Taxes (Topic 740)~~: Balance Sheet Classification of Deferred~~ – Simplifying the Accounting for Income Taxes). ~~The amendments~~This standard removes exceptions to the general principles in ~~this standard require entities that present a classified balance sheet to classify all deferred~~Topic 740 for allocating tax ~~liabilities~~expense between financial statement components, accounting basis differences stemming from an ownership change in foreign investments and assets as a noncurrent amount. The requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount was not affected by the amendments in this standard. Additionally, the amendments in this standard align the deferredinterim period income tax ~~presentation with the requirements in International Accounting Standards (IAS) 1 (Presentation of Financial Statements). The Company adopted this standard on a prospective basis.~~accounting for year-to-date losses that exceed projected losses. The adoption of this standard did not have a material impact on the Company’s consolidated financial ~~statements as its deferred tax assets and liabilities are currently in a full valuation allowance. Prior periods were not retrospectively adjusted.~~statements.
On January 1, ~~2017, we~~2021, the Company adopted ASU ~~2016-09 (Compensation–Stock Compensation~~2020-01 (Investments - Equity Securities (Topic 718): Improvements to Employee Share-Based Payment Accounting). As required by ASU 2016-09, all income tax effects of awards, including excess tax benefits, recognized on stock-based compensation expense are reflected in the condensed consolidated statements of operations as a component of the provision for income taxes on a prospective basis. As required by ASU 2016-09, all tax related cash flows recognized on stock-based compensation expense are classified as an operating activity in our condensed consolidated statements of cash flows on a prospective basis. Accordingly, prior periods have not been adjusted. Additionally, ASU 2016-09 allows companies to make a policy election to account for forfeitures either upon occurrence or by estimating forfeitures. We have elected to continue estimating forfeitures expected to occur in order to determine the amount of compensation cost to be recognized each period. See Note 6 above for additional information.
~~On January 1, 2017, we adopted ASU 2017-03 (Accounting Changes and Error Corrections (Topic 250) and~~321), Investments –- Equity Method and Joint Ventures (Topic 323)~~; Amendments~~, and Derivatives and Hedging (Topic 815)). This standard clarifies certain interactions between the guidance to ~~SEC Paragraphs Pursuant~~account for certain equity securities under Topic 321, the guidance to ~~Staff Announcements at~~account for investments under the ~~September 22, 2016~~equity method of accounting in Topic 323, and ~~November 17, 2016 Emerging Issues Task Force (EITF) Meetings (SEC Update)),~~the guidance in Topic 815, which ~~amends certain topics~~could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the ~~ASC as defined~~forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in ~~this ASU~~accordance with Topic 825, Financial Instruments. This standard improves current GAAP by reducing diversity in practice and ~~also adds an SEC paragraph and amends other topics pursuant to an SEC Staff Announcement made at~~increasing comparability of the ~~September 22, 2016 EITF meeting.~~accounting for these interactions. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
There have been no other significant changes in ~~our~~the Company’s reported financial position or results of operations and cash flows as a result of ~~our~~its adoption of new accounting pronouncements or changes to ~~our~~its significant accounting policies that were disclosed in ~~our Annual Report on Form 10-K~~its consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2020.
12. Segment Information
The Company operates in two business segments, Test and Measurement Instrumentation and Cryptocurrency. The Test and Measurement Instrumentation segment designs, manufactures, markets and services computer-based balancing systems for aircraft engines, high performance test and measurement instruments and systems, and wafer characterization tools for the semiconductor and solar industries. The Cryptocurrency segment is focused on cryptocurrency and the blockchain ecosystem. The Company’s principal operations in both segments are located in North America.

15

The accounting policies of the Test and Measurement Instrumentation and Cryptocurrency segments are similar to those described in the summary of significant accounting policies herein and in the Annual Report. The Company evaluates performance based on profit or loss from operations before income taxes, accounting changes, items management does not deem relevant to segment performance, and interest income and expense. Inter-segment sales and expenses are not significant.
Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes corporate related items and items such as income taxes or unusual items, which are not allocated to reportable segments. In addition, segments’ non-cash items include any depreciation and amortization in reported profit or loss.
(Dollars in thousands)
Test and Measurement Instrumentation Cryptocurrency Other Condensed Consolidated Totals
Three months ended June 30, 2021
Product revenue $ 1,647 $ — $ — $ 1,647
Cryptocurrency revenue — 1,657 — 1,657
Research and product development expenses 406 — — 406
Selling, general and administrative expenses 526 292 2,212 3,030
Segment profit / (loss) from operations before income taxes (270 ) 710 (1,611 ) (1,171 )
Segment profit / (loss) (270 ) 710 (1,614 ) (1,174 )
Total assets 2,636 3,883 19,040 25,559
Capital expenditures 13 1,229 — 1,242
Depreciation and amortization 17 149 — 166

Three months ended June 30, 2020
Product revenue $ 2,390 $ — $ — $ 2,390
Cryptocurrency revenue — 50 — 50
Research and product development expenses 362 — — 362
Selling, general and administrative expenses 437 109 301 847
Segment profit / (loss) from operations before income taxes 831 (73 ) (156 ) 602
Segment profit / (loss) 831 (73 ) (156 ) 602
Total assets 3,687 1,090 2,480 7,257
Capital expenditures 5 335 — 340
Depreciation and amortization 21 9 — 30

Six months ended June 30, 2021
Product revenue $ 2,984 $ — $ — $ 2,984
Cryptocurrency revenue — 2,652 — 2,652
Research and product development expenses 792 — — 792
Selling, general and administrative expenses 1,066 855 2,946 4,867
Segment profit / (loss) from operations before income taxes (672 ) 771 (1,936 ) (1,837 )
Segment profit / (loss) (672 ) 771 (1,939 ) (1,840 )
Total assets 2,636 3,883 19,040 25,559
Capital expenditures 18 1,525 — 1,543
Depreciation and amortization 34 224 — 258

Six months ended June 30, 2020

Product revenue $ 3,973 $ — $ — $ 3,973
Cryptocurrency revenue — 50 — 50
Research and product development expenses 764 — — 764
Selling, general and administrative expenses 853 180 609 1,642
Segment profit / (loss) from operations before income taxes 959 (144 ) (353 ) 462
Segment profit / (loss) 959 (144 ) (350 ) 465
Total assets 3,687 1,090 2,480 7,257
Capital expenditures 13 335 — 348
Depreciation and amortization 44 9 — 53
16
The following table presents the details of “Other” segment loss:

(Dollars in thousands)
Three Months Ended
June 30,

Six Months Ended
June 30,

2021 2020 2021 2020
Corporate and other (expenses) income:
  Salaries and Benefits $ (1,279 ) $ (119 ) $ (1,480 ) $ (240 )
  Income tax (expense) benefit (3 ) — (3 ) 3
  Other expense, net (332 ) (37 ) (456 ) (113 )
Total income (expense) $ (1,614 ) $ (156 ) $ (1,939 ) $ (350 )
13. Line of Credit
On May 7, 2020, in connection with receipt of the $3.3 million United States Air Force delivery order, MTI Instruments obtained a $300 thousand secured line of credit from Pioneer Bank that will, among other things, assist with MTI Instruments' timely fulfillment of the delivery order. The line of credit may be drawn in the discretion of MTI Instruments and bears interest at a rate of Prime +1% per annum. Accrued interest is due monthly, and principal is payable over a period of 30 days following lender's demand. The line of credit is secured by the assets of MTI Instruments and is guaranteed by the Company. As of June 30, 2021 and December 31, 2020, there were 0 amounts outstanding under the line of credit.
14. Subsequent Events
Management has evaluated all events and transactions that occurred subsequent to June 30, 2021 through the date of issuance of these condensed consolidated financial statements. During this period, the Company did not have any significant subsequent events.
17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context requires otherwise, the terms “MTI,” “the Company”, “we,” “us,” and “our” refer to Mechanical Technology, Incorporated, ~~a New York Corporation, and~~ “MTI Instruments” refers to MTI Instruments, ~~Incorporated, a New York corporation~~Inc., and ~~our wholly-owned subsidiary.~~“EcoChain” refers to EcoChain, Inc.
The following discussion of our financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and the related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, ~~2016~~2020 contained in our ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021.

In addition to historical information, the following discussion contains forward-looking statements, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements. Important factors that could cause actual results to differ include those set forth in Part I Item 1A-Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, as filed on March 2, 2017,~~2020 and elsewhere in this Quarterly Report on Form 10-Q. Readers should not place undue reliance on our forward-looking statements. These forward-looking statements speak only as of the date on which the statements were made and are not guarantees of future performance. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q. Please see “Statement Concerning Forward-Looking Statements” below.

Overview

~~MTI’s core~~MTI conducts its business ~~is conducted~~ through its wholly-owned subsidiaries, MTI Instruments ~~Inc., a wholly-owned subsidiary.~~ and EcoChain.
MTI Instruments, incorporated in New York in 2000, is ~~a supplier~~engaged in the design, manufacture, and sale of vibration measurement and system balancing solutions, precision linear displacement sensors, instruments and system solutions, ~~vibration measurement and system balancing solutions, precision tensile measurement systems~~ and wafer inspection tools, serving markets that require 1) engine balancing and vibration analysis systems for both military and commercial aircraft, 2) the precise measurements and control of products and processes in automated manufacturing, assembly, and consistent operation of complex machinery, ~~2) engine balancing~~ and ~~vibration analysis systems for both military and commercial aircraft,~~ 3) metrology tools for semiconductor and solar wafer ~~characterization,~~characterization.
EcoChain, a Delaware corporation incorporated in January 2020, is engaged in cryptocurrency mining powered by renewable energy. Related to this new core business, we made a strategic investment, and ~~4) tensile stage systems~~hold an equity position, in Soluna Technologies, Ltd. (“Soluna”), a Canadian company that develops vertically-integrated, utility-scale computing facilities focused on cryptocurrency mining and cutting-edge blockchain applications. Through Soluna, we currently operate a mining facility in Wenatchee, Washington, that houses the majority of our cryptocurrency miners, which are the cryptocurrency assets, consisting of hardware and software, that perform the computations needed to mine cryptocurrencies. We purchased additional miners in April and May 2021, and in May 2021 entered into two ground leases for ~~materials testing~~a building located in the Southeast region of the United States that will be EcoChain’s second cryptocurrency mining facility, which includes surrounding land for potential additional capacity. The ground leases will not be effective until certain conditions set forth therein are met, and ~~precision linear displacement gauges all for use~~ in ~~academic and industrial research and development settings.~~the meantime the miners we purchased in April are located in this facility. We are ~~continuously working on ways~~paying the owner of that facility, at a flat fee per miner, for the space, electricity, and anything else needed for the miners to ~~increase~~operate, an arrangement known as “hosting”; this arrangement will terminate upon the effective date of the ground leases, at which time Soluna will commence operating this facility pursuant to an operations and management agreement between Soluna and EcoChain. The primary cryptocurrencies that EcoChain mines are Bitcoin and, to a lesser degree, Ethereum and LiteCoin. EcoChain recognizes revenue when its mined cryptocurrencies are transferred to its account at a cryptocurrency exchange (i.e. a platform that facilitates the exchange of cryptocurrencies for other assets, such as conventional money or other digital currencies). The applicable exchange converts the cryptocurrencies held in our ~~sales reach, including expanded worldwide sales coverage~~account to U.S. dollars daily. The Company intends to continue to grow EcoChain through acquisitions of existing cryptocurrency mining facilities and ~~enhanced internet marketing.~~ properties that can be repurposed to operate cryptocurrency mining facilities, as well as through constructing our own cryptocurrency mining facilities, along with purchases of any real property, equipment, and miners necessary to do so.
18

Consolidated Results of Operations
Consolidated Results of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 Compared to the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016.~~2020.

The following table summarizes changes in the various components of our net ~~income~~loss during the three months ended ~~September~~June 30, ~~2017~~2021 compared to the three months ended ~~September~~June 30, ~~2016.~~2020.
(Dollars in thousands)

Three Months
Ended
June 30,
2021

Three Months Ended
June 30,
2020

$
Change

%
Change

Product revenue $ 1,647 $ 2,390 $ (743 ) (31.1 %)
Cryptocurrency revenue $ 1,657 $ 50 $ 1,607 3,214.0 %
Operating costs and expenses:
    Cost of product revenue $ 502 $ 631 $ (129 ) (20.4 %)
    Cost of cryptocurrency revenue $ 545 $ — $ 545 100.0 %
    Research and product development expenses $ 406 $ 362 $ 44 12.2 %
    Selling, general and administrative expenses $ 3,030 $ 847 $ 2,183 257.7 %
Operating (loss) income $ (1,179 ) $ 600 $ (1,779 ) (296.5 %)
Other income, net $ 8 $ 2 $ 6 300.0 %
(Loss) income before income taxes $ (1,171 ) $ 602 $ (1,773 ) (294.5 %)
Income tax expense $ (3 ) $ — $ (3 ) (100.0 %)
  Net (loss) income $ (1,174 ) $ 602 $ (1,776 ) (295.0 %)
(Dollars in thousands)

Three Months
Ended
September 30,
2017


Three Months
Ended
September 30,
2016


$
Change

%
Change

Product revenue
$
1,857

$
2,232

$
(375
)

(16.8)%
Operating costs and expenses:

Cost of product revenue
$
563

$
774

$
(211
)

(27.3)%
Research and product development expenses
$
277

$
298

$
(21
)

(7.0)%
Selling, general and administrative expenses
$
674

$
829

$
(155
)

(18.7)%
Operating income
$
343

$
331

$
12

3.6%
Other income (expense), net
$
1

$
(1

)

$
2

200.0%
Income tax expense
$
—

$
(1

)

$
1

100.0%
Net income
$
344

$
329

$
15

4.6%


The following table summarizes changes in the various components of our net ~~income~~loss during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020.
(Dollars in thousands)
Nine
Months
Ended
September 30,
2017

Nine
Months
Ended
September 30,
2016


$
Change

%
Change

Six Months
Ended
June 30,
2021

Six Months Ended
June 30,
2020

$
Change

%
Change

Product revenue
$
5,047

$
5,265

$
(218
)

(4.1)%
$ 2,984 $ 3,973 $ (989 ) (24.9 %)
Cryptocurrency revenue $ 2,652 $ 50 $ 2,602 5,204.0 %
Operating costs and expenses:

Cost of product revenue
$
1,604

$
2,018

$
(414
)

(20.5)%
$ 954 $ 1,159 $ (205 ) (17.7 %)
Cost of cryptocurrency revenue $ 873 $ —   $ 873 100.0 %
Research and product development expenses
$
887

$
942

$
(55
)

(5.8)%
$ 792 $ 764 $ 28 3.7 %
Selling, general and administrative expenses
$
2,309

$
2,445

$
(136
)

(5.6)%
$ 4,867 $ 1,642 $ 3,225 196.4 %
Operating income (loss)
$
247

$
(140
)

$
387

276.4%
Other expense, net
$
(4

)

$
(7

)

$
3

42.9%
Income tax expense
$
—

$
(1
)

$
1

100.0%
Net income (loss)
$
243

$
(148
)

$
391

264.2%
Operating (loss) income $ (1,850 ) $ 458 $ (2,308 ) (503.9 %)
Other income, net $ 13 $ 4 $ 9 225.0 %
(Loss) income before income taxes $ (1,837 ) $ 462 $ (2,299 ) (497.6 %)
Income tax (expense) benefit $ (3 ) $ 3 $ (6 ) (200.0 %)
Net (loss) income $ (1,840 ) $ 465 $ (2,305 ) (495.7 %)

Product Revenue: Product revenue consists of revenue recognized from ~~the~~sales of MTI Instruments’ ~~product lines.~~products and the provision of related maintenance and repair services.
Product revenue for the three months ended ~~September~~June 30, ~~2017~~2021 decreased by ~~$375~~$743 thousand, or ~~16.8%~~31.1%, to ~~$1.9~~$1.6 million from ~~$2.2~~$2.4 million during the three months ended September 30, 2016. Product revenue for the nine months ended September 30, 2017 decreased by $218 thousand, or 4.1%, to $5.0 million from $5.3 million during the nine months ended September 30, 2016. The quarterly revenue decrease was driven primarily by activity under the U.S. Air Force contract for engine vibration analysis systems, accessories and maintenance, which we entered into on July 1, 2016. Upon execution of this contract in the third quarter of 2016, numerous U.S. Air Force systems that had been overdue for repair were finally sent in and repaired during the three months ended September 30, 2016. This concentrated activity last year drove the current decline in quarterly revenue. However, this decrease was partially offset by increased capacitance sales to our two largest commercial customers in Asia and Europe during the third quarter of 2017. The year-to-date decrease in revenue is attributable to fewer engine vibration analysis system sales to commercial customers partially offset by increased capacitance sales to our two largest commercial customers in Asia and Europe.
For the three months ended September 30, 2017, the largest commercial customer was an Asian electronics manufacturer, which accounted for 15.7% of the third quarter 2017 revenue. During the three months ended September 30, 2016, our largest commercial customer was a U.S. turbine engine tooling manufacturer, which accounted for 8.0% of the third quarter 2016 revenue. The U.S. Air Force was the largest government customer for the three months ended ~~September~~June 30, ~~2017~~2020. The primary reason for this decrease was a $935 thousand decline in portable balancing systems (“PBS”) revenue due to lower new PBS sales, of which $750 thousand was driven by a decrease in units shipped for the United States Air Force of 17 additional units in 2020, this was partially offset by increase of capacitance sales of $100 thousand and ~~September 30, 2016, accounting~~an increase of PBS repairs of $100 thousand for ~~9.3% and 36.4%, respectively, of revenue.~~
~~For~~ the ~~nine~~three months ended ~~September~~June 30, ~~2017,~~2021.
Product revenue for the ~~largest commercial customer~~six months ended June 30, 2021 decreased by $989 thousand, or 24.9%, to $3.0 million from $4.0 million during the six months ended June 30, 2020. The primary reason for the decrease was a ~~U.S.-based, Fortune 100 company that manufactures turbine engine tooling equipment~~$935 thousand decline in ~~Europe. This customer~~portable balancing systems (“PBS”) revenue due to lower new PBS sales, of which $750 thousand was driven by a decrease in units shipped for the United States Air Force of 15 additional units in 2020. In addition customers located in Asia accounted for ~~9.5%~~a decrease of $185 thousand in PBS revenue. The decrease was primarily due to a large order placed in 2020. The decline in Asia was due to lingering issues related to the ~~2017 revenue~~COVID pandemic and related travel restrictions, which challenged communications due to   ~~date. In 2016, our largest commercial customer was an Asian distributor,~~language barriers related to having to conduct sales presentations and otherwise interact with customers remotely, which accounted for 9.7% of revenue during the first nine months of 2016. The U.S. Air Force was the largest government customer for the nine months ended September 30, 2017 and September 30, 2016, accounting for 20.8% and 16.2%, respectively, of revenue. we have found to be less effective than in-person interactions.
19

Information regarding government contracts included in product revenue is as follows:
(Dollars in thousands)

Revenues for the
Three Months Ended

June 30,
Contract⁽¹⁾ Expiration 2021 2020

$9.35 million U.S. Air Force Systems, Accessories and Maintenance 06/30/2021 ⁽²⁾ $ 584 $ 1,764
(Dollars in thousands)

Revenues for the
Six Months Ended

Contract Revenues
to Date
Date

Total Contract
Orders Received
To Date

June 30, June 30, June 30,
Contract⁽¹⁾ Expiration 2021 2020 2021 2021

$9.35 million U.S. Air Force Systems, Accessories and Maintenance 06/30/2021 ⁽² ⁾ $ 814 $ 1,828 $ 9,474 $ 9,870
(Dollars in
thousands)

Revenues for the
Three Months Ended
September 30,
Revenues for the
Nine Months Ended
September 30,
Contract Revenues
to Date
September 30,
Total Contract
Orders Received
to Date
September 30,
Contract ⁽¹⁾
Expiration
2017

2016

2017

2016
2017
2017

$9.35 million U.S. Air Force Systems, Accessories and Maintenance
06/30/2021 ⁽²⁾
$
169

$
804

$
874

$
804

$
1,967

$
1,974
~~_________________~~
(1) Contract values represent maximum potential values at time of contract placement and may not be representative of actual results.
(2) Date represents expiration of contract, including the exercise of option extensions.
We are in discussions with the U.S. Air Force regarding renewing their current contract, which expired as of June 30, 2021. We do not anticipate any issues with the renewal of the contract and we expect to enter into a renewed contract with the U.S. Air Force in September. As a result, we do not expect that there will be any material impact on our results of operations, cash flows, liquidity, or financial condition as a result of the pending expiration of our current contract with the U.S. Air Force.
Cryptocurrency Revenue: Cryptocurrency revenue consists of revenue recognized from EcoChain’s cryptocurrency mining operations.
Cryptocurrency revenue was $1.7 million for the three months ended June 30, 2021, compared to $50 thousand for the three months ended June 30, 2020. Cryptocurrency revenue was $2.7 million for the six months ended June 30, 2021, compared to $50 thousand for the six months ended June 30, 2020. EcoChain did not commence its cryptocurrency mining operations until the second quarter of 2020, and therefore there was no material cryptocurrency revenue for the six months ended June 30, 2020. This revenue represents the cash received upon the daily sale of the various cryptocurrencies mined at EcoChain’s mining facility during the six months ended June 30, 2021.

~~(1)      Contract values represent maximum potential values at time of contract placement and may not be representative of actual results.~~
~~(2)      Date represents expiration of contract, including the exercise of the option extension.~~

Cost of Product Revenue; Gross Margin:Cost of product revenue includes the direct material and labor cost as well as an allocation of overhead costs that relate to the manufacturing of products that we sell. ~~In addition, cost~~Cost of product revenue also includes the labor and material costs incurred for product maintenance, replacement parts, and service under our contractual obligations.

Cost of product revenue for the three months ended ~~September~~June 30, ~~2017~~2021 decreased by ~~$211~~$129 thousand, or ~~27.3%~~20.4%, to ~~$563~~$502 thousand from ~~$774~~$631 thousand for the three months ended ~~September~~June 30, ~~2016. Gross profit,~~2021. Cost of product revenue for the six months ended June 30, 2021 decreased by $205 thousand, or 17.7%, to $954 thousand from $1.2 million for the six months ended June 30, 2020. The reason for this decrease for the three and six months was the decrease in product sales compared to the year to date of 2020, as discussed above in “Product Revenue.”
Cost as a percentage of product revenue ~~increased to 69.7% during the third quarter of 2017 compared to 65.3%~~was unfavorable comparable for the ~~third quarter of 2016. Cost of product revenue for the nine~~six months ended ~~September~~June 30, ~~2017 decreased by $414 thousand, or 20.5%,~~2021 comparable to ~~$1.6 million from $2.0 million for~~ the ~~nine~~six months ended ~~September~~June 30, ~~2016. Gross profit,~~2020, decreasing to, as a percentage of product revenue, ~~increased to 68.2%~~68.0% during the ~~nine months ended September 30, 2017~~year to date of 2021 compared to ~~61.7% during the nine months ended September 30, 2016.~~
~~The improvement in gross profit during the 2017 periods was attributable to lower material costs, a change~~70.8% in the ~~product~~comparable 2020 period. This was due to a mix ~~and reduced charges for excess inventory stemming~~change (lower volume in sales in the higher margin products) from ~~improved procurement management. The~~the decrease in the PBS sales and lower proportion to total sales.
20
Cost of Cryptocurrency Revenue: Cost of cryptocurrency revenue includes direct utility costs as well as overhead costs that relate to the operations of EcoChain’s cryptocurrency mining facility. Going forward, cost of ~~product~~cryptocurrency revenue will also include any costs related to the hosting of our miners in third-party facilities as well as the costs of operations of any additional EcoChain cryptocurrency mining facilities, including the anticipated Southeast region facility, discussed above, once the ground leases become effective.
Cost of cryptocurrency revenue was $545 thousand for the three months ended June 30, 2121. Cost of cryptocurrency revenue was $873 thousand for the six months ended June 30, 2021. As noted above, EcoChain did not commence cryptocurrency mining operations until the second quarter of 2020, and therefore there was no material cryptocurrency revenue or associated costs during the ~~2017 periods was attributable to the lower material costs and the reduced excess inventory charges that was partly responsible for the improvements in the profit margin.~~ first six month ended June 30, 2020.
Research and Product Development Expenses: Research and product development expenses includes the costs of materials to build development and prototype units, cash and non-cash compensation and benefits for the engineering and related staff, expenses for contract engineers, fees paid to outside suppliers for subcontracted components and services, fees paid to consultants for services provided, materials and supplies consumed, ~~facility related~~facility-related costs such as computer and network services, and other general overhead costs associated with our research and development activities, to the extent not reimbursed by our customers.
Research and product development expenses decreased ~~$21~~$28 thousand, ~~and $55 thousand, respectively,~~or 3.7%, during the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~comparable 2016 periods~~2020 period. This decrease was primarily due to ~~decreased material spending on current development projects and reduced staffing.~~ the movement of a highly-compensated engineering employee from full-time to part-time status during the third quarter of 2020.
Selling, General and Administrative Expenses:Selling, general and administrative expenses includes cash and non-cash compensation, benefits and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, selling and marketing, information technology, and legal services.
Selling, general and administrative expenses for the three months ended ~~September~~June 30, ~~2017 decreased~~2021 increased by ~~$155 thousand,~~$2.1 million, or ~~18.7%~~257.7%, to ~~$674 thousand~~$3.0 million from ~~$829~~$847 thousand for the three months ended June 30, 2020. This increase was a result of both expenses incurred in 2021 for which there was no comparable expense in 2020 as well as from changes in a number of our traditional selling, general and administrative expenses. Expenses for which there was no comparable outlay in 2020 consisted non-cash stock option grants of $1.0 million to our Chief Executive Officer (“CEO”) and Board of Directors, $480 in legal and other expenses related to pipeline acquisition costs and CEO and Board compensation review. The Company expects these expenses to a one-time expense.
Salaries and benefits expenses increased by $240 thousand during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, $130 thousand of which was related to the salary and benefits of our Chief Financial Officer and Compliance Manager, who were hired in July 2020 and November 2020, respectively, and change in employment status to full time for the Corporate Controller, $110 thousand of which is related to the salary, recruiting fees and benefits of the new President of MTI Instruments, who was originally hired as Director of Marketing in the third quarter of 2019 and promoted to Chief Operating Officer of MTI Instruments in May 2020 and President of MTI Instruments in September 2020, in addition to adding an HR manager. Compensation expense for Board members increased by $19 thousand due to the Company’s change in Board compensation and adding two Directors to the Board in February 2021. In addition, compared to the three months ended June 30, ~~2016.~~ 2020, we experienced an increase of $50 thousand in audit and consulting fees due to compliance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”). During the three months ended June 30, 2020, we did not file reports with the SEC and therefore the annual audit of our financial statements did not need to comply with PCAOB requirements, which resulted in lower audit fees for the 2020 period. Directors and Officers insurance premiums increased by $95 thousand during the three months ended June 30, 2021, compared to the three months ended June 30, 2020. This is due to our status as an SEC reporting company and the cryptocurrency business unit. We expect these expenses to continue and not to be one-time expenses.
Selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2021 increased by ~~$136 thousand,~~$3.2 million, or ~~5.6%~~196.4%, to ~~$2.3~~$4.9 million from ~~$2.4~~$1.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. These decreases were~~2020. This increase was a result of ~~staff reductions~~both expenses incurred in 2021 for which there was no comparable expense in 2020 as well as from changes in a number of our traditional selling, general and administrative expenses. Expenses for which there was no comparable outlay in 2020 consisted of non-cash stock option grants of $1.0 million to our CEO and Board of Directors, $790 thousand in legal fees, $440 thousand in expenses related to pipeline and due diligence activities, and $300 thousand in expenses related to investor relations matters. $455 thousand of such legal fees were related to the transaction to lease the building for EcoChain’s new cryptocurrency mining facility and the surrounding land located in the ~~sales~~Southeast region of the U.S., discussed above, and expenses for additional pipeline opportunities including expenses related to due diligence activities, $165 thousand in legal expenses. and the remaining $335 thousand were corporate legal expenses, $83 thousand of which was related to the Company’s reincorporation in Nevada, the preparation and adoption of its 2021 Stock Incentive Plan, and the special meeting of shareholders we held on March 25, 2021, at which the Company’s stockholders approved (among another matter) the reincorporation and the adoption of the Stock Incentive Plan. In addition, $65 thousand related to CEO and Board compensation consultation and the annual stockholders meeting, $38 thousand of the increase in legal fees related to the initial listing of our common stock on The Nasdaq Stock Market LLC (“Nasdaq”), and $141 thousand of such increase was for legal assistance in connection with other SEC filings, primarily our Annual Report on Form 10-K for the year ended December 31, 2020 and Form 8-K filings, which we did not have to file during the quarter ended June 30, 2020 as we were not then subject to the filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Of these $790 thousand of legal fees, the Company expects that approximately $680 thousand are one-time expenditures. The Company expects the $440 thousand incurred for activities related to pipeline and due diligence during the three months ended June 30, 2021 to be a one-time expense.
21
Investor relations expenses we incurred during the six months ended June 30, 2021, and for which there was no comparable expense during the six months ended June 30, 2020, were $300 thousand, consisting primarily of $88 thousand for Nasdaq registration fees in connection with the initial listing of our common stock, $84 thousand related to our retention of an investor relations consulting firm to assist us with creating a more formal investor relations strategy given our status as an SEC reporting and Nasdaq-listed company, $51 thousand related to the special meeting, including the fees and expenses of the proxy solicitor we retained in connection therewith, and $50 thousand in conjunction with the Company’s annual stockholders meeting. Of the $300 thousand in investor relations expenses for which there was no comparable expenditures during the six months ended June 30, 2020, we expect approximately $125 thousand thereof, to be one-time expenditures.
Salaries and benefits expenses increased by $515 thousand during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, $260 thousand of which is related to the salary and benefits of our Chief Financial Officer and Compliance Manager, who were hired in July 2020 and November 2020, respectively, and change in employment status to full time for the Corporate Controller, $255 thousand of which is related to the salary, recruiting fees and benefits of the new President of MTI Instruments, who was originally hired as Director of Marketing in the third quarter of 2019 and promoted to Chief Operating Officer of MTI Instruments in May 2020 and President of MTI Instruments in September 2020, in addition to adding an HR manager. Compensation expense for Board members increased by $38 thousand due to the Company’s change in Board compensation and adding two Directors to the Board in February 2021. In addition, compared to the six months ended June 30, 2020, we experienced an increase of $100 thousand in audit and consulting fees due to having to be conducted in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”). During the six months ended of 2020 we did not file reports with the SEC and therefore the annual audit of our financial statements did not need to comply with PCAOB requirements, which resulted in lower audit fees for the 2020 period. Directors and officers insurance premiums increased by $95 thousand during the six months ended June 30, 2021, compared to the six months ended June 30, 2020. This is due to our status as an SEC reporting company and the cryptocurrency business unit. We expect these expenses to continue and not to be one-time expenses.
The Company also expects selling, general and administrative ~~departments.~~ expenses to continue to increase in 2021 and generally going forward as a result of its resumption of filing periodic reports, annual proxy statements, and other filings with the SEC following the effectiveness of its Form 10 registration statement in November 2020.
Operating ~~Income (Loss):~~ Loss:
Operating ~~income was $343 thousand~~loss increased to $1.2 million for the three months ended ~~September~~June 30, ~~2017 compared to $331~~2021 from a profit of $600 thousand ~~for~~during the ~~three months ended September 30, 2016.~~comparable 2020 period. This ~~improvement~~decrease was athe result of the ~~factors noted above, that is, the improvement~~$2.1 million increase in ~~the profit margin, combined with decreased research and development and~~ selling, general and administrative expenses.
~~Operating income~~The increase in loss was ~~$247 thousand for the nine months ended September 30, 2017 compared to an operating loss of $140 thousand for the nine months ended September 30, 2016.This improvement was~~ ~~a result of the factors noted above, that is, the improvement in the profit margin, combined with decreased research and development expenses and~~ partially offset by ~~$205 thousand~~the EcoChain contribution margin (i.e. the aggregate incremental revenue generated from cryptocurrency revenue after deducting the direct costs) of ~~non-recurring severance costs associated with the departure~~$1.1 million. In addition, of the ~~prior CEO and another employee.~~
~~Other Income (Expense):~~~~Other income was $1 thousand for the three months ended~~ September 30, 2017 compared to other expense of $1 thousand for the three months ended September 30, 2016. Other expense was $4 thousand for the nine months ended September 30, 2017 and primarily related to miscellaneous bank fees. Other expense was $7 thousand for the nine months ended September 30, 2016, which was ~~primarily related to a $6 thousand loss recorded on the disposal of equipment~~$2.1 million increase in ~~the first quarter of 2016.~~
~~Net Income (Loss):~~Net income was $344 thousand for the three months ended September 30, 2017 compared to $329 thousand for the three months ended September 30, 2016. Net income was $243 thousand for the nine months ended September 30, 2017 compared to net loss of $148 thousand for the nine months ended September 30, 2016. The improvement in net income during the 2017 periods was primarily attributable to ~~the improvements in gross margins, as well as the decreased research and development and~~ selling, general and administrative expenses, we expect $1.5 million to be one-time expenses, as ~~discussed~~described above.

Operating loss increased to $1.8 million for the six months ended June 30, 2021 from a profit of $465 thousand during the comparable 2020 period. This decrease was the result of the $3.2 million increase in selling, general and administrative expenses. The increase in loss was partially offset by the EcoChain contribution margin (i.e. the aggregate incremental revenue generated from cryptocurrency revenue after deducting the direct costs) of $1.7 million. In addition, of the $3.2 million increase in selling, general and administrative expenses, we expect $2.2 million to be one-time expenses, as described above.
~~Management’s Plan,~~
Liquidity and Capital Resources
Several key indicators of our liquidity are summarized in the following table:
(Dollars in thousands) Six Months Ended or As of Six Months Ended or As of Year Ended or As of
June 30, June 31, December 31,
2021 2020 2020
Cash $ 12,096 $ 1,351 $ 2,630
Working capital 16,849 3,092 3,142
Net (loss) income (1,840 ) 602 1,946
Net cash provided by (used in) operating activities (5,037 ) (61 ) 1,622
Purchase of property, plant and equipment (1,543 ) (348 ) (835 )
22

(Dollars in thousands)
Nine Months
Ended or As of

Nine Months
Ended or As of

Year Ended or
As of

September 30,

September 30,

December 31,

2017

2016

2016
Cash
$
3,360

$
886

$
3,381

Working capital

4,352

1,342

3,990

Net income (loss)

243

(148
)

(359
)
Net cash (used in) provided by operating activities

(43
)

547

522

Purchase of property, plant and equipment

(54
)

(113
)

(136
)
The Company has historically incurred significant losses ~~(the majority, until 2012, stemming from the~~primarily due to its past efforts to fund direct methanol fuel cell product development and commercialization programs ~~of its former subsidiary, MeOH Power, Inc.)~~ and had a consolidated accumulated deficit of ~~$120.7~~approximately $119.6 million as of ~~September~~June 30, ~~2017. Management believes that~~2021. As of June 30, 2021, the Company ~~currently has adequate resources to avoid future cost-cutting measures that could adversely affect its business. As~~had working capital of ~~September 30, 2017, we had~~approximately $16.8 million, no debt, ~~$9 thousand in~~outstanding commitments related to EcoChain for $8.3 million for capital expenditures, and approximately ~~$3.4~~$12.0 million of cash available to fund our operations.
Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment ~~may be required~~ in the foreseeable future. WeWith respect to MTI and MTI Instruments, we expect to spend a total of approximately ~~$75~~$300 thousand on ~~capital~~computer equipment and ~~$1.2~~software and $1.6 million inon research and development ~~on MTI Instruments’ products~~ during ~~2017. We~~2021. As we have done historically, we expect to ~~fund any future~~finance these expenditures and continue funding ~~our~~their operations from our current cash position and our projected ~~2017 and 2018~~2021 cash flows pursuant to management’s plans. WeIf necessary, we may also seek to supplement our resources by ~~obtaining~~increasing credit facilities to fund operational working capital and capital expenditure requirements. With respect to EcoChain, we expect to fund growth (additional cryptocurrency mining facilities and miners) through capital raise activities, to the extent that we can successfully raise capital through additional securities sales. Any additional financing, if required, may not be available to us on acceptable terms or at all.
While it cannot be assured, management believes that, due in part to our current working capital level ~~recent realignment in sales~~ and projected cash requirements for operations and ~~stabilized spending,~~capital expenditures, its current available cash of approximately $12.0 million, and our projected 2021 cash flow pursuant to management’s plans, the Company will have adequate resources to fund operations and capital expenditures for MTI and MTI Instruments for the ~~remainder of 2017~~year ending December 31, 2021 and through at least the end of the third quarter of 2022. As noted above, we expect to fund capital expenditures for EcoChain through capital raises, while EcoChain’s operations will be funded through its cash flows. We expect to have adequate resources to fund EcoChain’s operations for the year ~~ended~~ending December 31, ~~2018. However, if~~2021 and through at least the third quarter of 2022.
If our revenue estimates are off either in timing or amount, or if cash generated from operations is insufficient to satisfy the operational working capital and capital expenditure requirements, the Company may need to implement additional steps to ensure liquidity including, but not limited to, the deferral of planned capital spending and/or delaying existing or pending product development initiatives, or the Company may be required to obtain credit facilities or other loans, if available, to fund these initiatives. ~~Such~~The Company has no other formal commitments for funding its future needs at this time and any additional financing we may require during the year ending December 31, 2021, may not be available to us on acceptable terms or at all. Any one or more of such steps, if required, could potentially have a material and adverse effect on our business, results of operations, and financial condition.
Debt
On May 7, 2020, in connection with receipt of a $3.3 million U.S. Air Force delivery order, MTI Instruments obtained a $300 thousand secured line of credit from Pioneer Bank. The line of credit may be drawn in the discretion of MTI Instruments and bears interest at a rate of Prime +1% per annum. Accrued interest is due monthly, and principal is payable over a period of 30 days following the lender’s demand. The line of credit is secured by the assets of MTI Instruments and is guaranteed by the Company. As of June 30, 2021, there were no amounts outstanding under the line of credit.
We had no additional credit facilities available or debt outstanding at either ~~September~~June 30, ~~2017~~2021 or ~~September 30, 2016.~~December 31, 2020.
Backlog, Inventory and Accounts Receivable

At ~~September~~June 30, ~~2017,~~2021, our order backlog was ~~$846~~$1,097 thousand compared to ~~$349~~$555 thousand at December 31, ~~2016.~~2020. The increase in backlog from December ~~2016~~2020 was due to three large orders ~~for capacitance systems and new balancing systems that, per~~placed at the ~~customers’ requests, will not be delivered until a later date in 2017/2018.~~ end of 2021 second quarter.
Our inventory turnover ratios and average accounts receivable days outstanding for the trailing 12 month periods and their changes at ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 are as follows:
2021 2020 Change
Inventory turnover 2.3 2.1 0.2
Average accounts receivable days outstanding 40 40 —
23

2017

2016

Change

Inventory turnover

3.0

2.1

0.9

Average accounts receivable days outstanding

45

40

5

The current twelve-month inventory turns have improved due to a 34% decline in average inventory balances corresponding to write-offs for excess inventory in late 2016 and recently improved procurement management.
The average accounts receivable days’ outstanding increased five days during the last 12 months due to a proportionate increase in sales to our two largest commercial customers, who pay later than the U.S. government.

~~Off-Balance Sheet Arrangements~~
~~We have no off balance sheet arrangements.~~
Critical Accounting Policies and Significant Judgments and Estimates
The above discussion and analysis of our financial condition and results of operations ~~are~~is based upon our ~~condensed~~ consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Note 2, Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 includes a summary of our most significant accounting policies. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020. The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes and stock-based compensation. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Periodically, our management reviews our critical accounting estimates with the Audit Committee of our Board of Directors.
Statement Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”).~~Act. Any statements contained in this Form 10-Q that are not statements of historical fact may be forward-looking statements. When we use the words “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” “should,” “could,” “may,” “will” and similar words or phrases, we are identifying forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding:
● management’s strategy and planned initiatives, including anticipated growth;
● management’s belief that it will have adequate resources to fund MTI’s and MTI Instruments’ operations and capital expenditures and EcoChain’s operations for the year ending December 31, 2021 and through the end of the third quarter of 2022;
● the expected impact of recent accounting updates;
● our expectations regarding the renewal of our contract with the U.S. Air Force which expired on June 30, 2021 and the expected impact thereof;
● our expectations regarding increases in certain selling, general and administrative expenses, including from increased business travel going forward;
● potential acquisitions by EcoChain;
● our expectations with respect to future capital raises;
● our expectations with respect to pending legal proceedings;
● future capital expenditures and spending on research and development; and
● expected funding of future cash expenditures.
~~management’s belief that it will have adequate resources to fund the Company’s operations and capital expenditures   for the remainder of 2017 and the year ending December 31, 2018;~~
~~projected taxable income and the ability to use deferred tax assets (currently held at a full valuation allowance);~~
~~the expected impact of recent accounting updates;~~
~~the expectation that future cost-cutting measures will be avoided;~~
~~future capital expenditures and spending on research and development; and~~
~~expected funding of future cash expenditures.~~
Forward-looking statements involve risks, uncertainties, estimates and assumptions that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. Important factors that could cause these differences include the following:
~~sales revenue growth may not be achieved or maintained;~~
the dependence of our business on a small number of customers and potential loss of government contracts - particularly in light of potential cuts that may be imposed as a result of U.S. government budget appropriations;
~~our lack of long-term purchase commitments from our customers and the ability of our customers to cancel, reduce, or delay orders for our products;~~
~~our inability to build and maintain relationships with our customers;~~
~~our inability to develop and utilize new technologies that address the needs of our customers;~~
~~our inability to obtain new credit facilities;~~
~~the cyclical nature of the electronics and military industries;~~
~~the uncertainty of the U.S. and global economy, including as a result of the United Kingdom’s impending exit from the European Union;~~
~~the impact of future exchange rate fluctuations;~~
~~failure of our strategic alliances to achieve their objectives or perform as contemplated and the risk of cancellation or early termination of such alliance by either party;~~
~~the loss of services of one or more of our key employees or the inability to hire, train, and retain key personnel;~~
~~risks related to protection and infringement of intellectual property;~~
~~our occasional dependence on sole suppliers or a limited group of suppliers;~~
~~our ability to generate income to realize the tax benefit of our historical net operating losses;~~
~~risks related to the limitation of the use, for tax purposes, of our net historical operating losses in the event of certain ownership changes;~~
the risk that potential deterioration in the relationships between the United States and other countries might impact our foreign customers’ willingness to conduct business with U.S. companies like MTI; and
~~other factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~
· the course of the COVID-19 pandemic in the United States and internationally, particularly in Asia and, to a lesser extent, in Europe, and the related uncertainty of the U.S. and global economy as a result thereof;
· sales revenue growth may not be achieved or maintained;
· the dependence of our business on a small number of customers and potential loss of government contracts - particularly in light of potential cuts that may be imposed as a result of U.S. government budget appropriations;
· our lack of long-term purchase commitments from our customers and the ability of our customers to cancel, reduce, or delay orders for our products;
· our inability to build and maintain relationships with our customers;
· our inability to develop and utilize new products and technologies that address the needs of our customers;
· our inability to retain existing or obtain new credit facilities;
· the cyclical nature of the electronics and military industries;
· the impact of future exchange rate fluctuations;
· failure of our strategic alliances to achieve their objectives or perform as contemplated and the risk of cancellation or early termination of such alliance by either party;
· the loss of services of one or more of our key employees or the inability to hire, train, and retain key personnel;
· risks related to protection and infringement of intellectual property;
· our occasional dependence on sole suppliers or a limited group of suppliers;
· risks related to the limitation of the use, for tax purposes, of our net historical operating losses in the event of certain ownership changes;
· the risks related to EcoChain’s development efforts with respect to its current cryptocurrency mining facility and the construction of additional operational cryptocurrency mines;
· the risks related to the volatility in the EcoChain business and cryptocurrency mining facilities, including that they may not achieve or maintain profitability in our expected timeframe or at all depending on numerous uncertainties, including the costs of operation, the future price of cryptocurrencies and fluctuations in such prices, government and quasi-government regulation of cryptocurrencies and their use, restrictions on or regulation of access to and operation of blockchain networks or similar systems, and the availability and popularity of other forms or methods of buying and selling goods and services, including government-backed cryptocurrencies;

17
24

· risks related to scaling EcoChain’s cryptocurrency operations to larger-scale (multiple) cryptocurrency mining operations;
· the general risk that the EcoChain business may not be successful;
· uncertainty regarding EcoChain’s ability to consistently monetize cryptocurrency;
· fluctuating valuations of cryptocurrency; and
· other factors discussed under the heading “Risk Factors” in this report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.
Item 4. Controls and Procedures
The ~~certification~~certifications of our Chief Executive Officer and Chief Financial ~~Officer~~Officers are attached as ~~Exhibit~~Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q include, in paragraph 4 of such certification, information concerning our disclosure controls and procedures and internal control over financial reporting. Such certification should be read in conjunction with the information contained in this Item 4 for a more complete understanding of the matters covered by such certification.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of MTI’s disclosure controls and procedures as of ~~September~~June 30, ~~2017.~~2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the ~~U.S. Securities and Exchange Commission’s (the “SEC”)~~SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and we necessarily apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2017,~~2021, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
(b) Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our fiscal quarter ended ~~September~~June 30, ~~2017~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
At any point in time, we may be involved in various lawsuits or other legal proceedings. Such lawsuits could arise from the sale of products or services or from other matters relating to our regular business activities, compliance with various governmental regulations and requirements, or other transactions or circumstances.
We have been named as a party in the December 19, 2019 United States Environmental Protection Agency (“EPA”) Demand Letter regarding the Malta Rocket Fuel Area Superfund Site (“Site”) located in Malta and Stillwater, New York, in connection with an alleged release of hazardous materials into the environment. The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences (“ESD”) of the Site, and implementation of the work contemplated by the ESD. We consider the likelihood of a material adverse outcome with respect to this matter to be remote and do not currently anticipate that any expense or liability that we may incur as a result of this matter in the future will be material to the Company’s business or financial condition. Further, we are not presently involved in any other litigation that we believe ~~there are any such proceedings presently pending. See Note 8, Commitments and Contingencies,~~is likely, individually or in the aggregate, to have a material adverse effect on our ~~condensed~~ consolidated financial ~~statements for further information.~~condition, results of operations or cash flows.
Item 1A. Risk Factors
~~Item 1A.        Risk Factors~~
Part II, Item 1A (Risk Factors) of our most recently filed Annual Report on Form 10-K with the SEC, filed on March ~~2, 2017,~~31, 2021, sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition and operating results. Except as to the risk factors set forth below and to the extent that information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters described in Part I, Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations – Statement Concerning Forward Looking Statements)), there have been no material changes to our risk factors disclosed in our most recently filed Annual Report on Form 10-K. ~~However, those~~Those risk factors continue to be relevant to an understanding of our business, financial condition and operating results, however, and, accordingly, you should review and consider such risk factors in making any investment decision with respect to our securities.
In connection with the ground leases for our new cryptocurrency mining operations, we rely on the landlord to sell us the power required for our operations, and any failure of the landlord to supply such power, whether as a result of its failure to pay the Tennessee Valley Authority (“TVA”) or otherwise, would materially impact our operations.
EcoChain Block, a wholly-owned subsidiary of EcoChain, entered into the Power Supply Agreement, in connection with the ground leases executed on May 4, 2021. Under the terms of the Power Supply Agreement, EcoChain Block will purchase the power for its cryptocurrency mining operations from the landlord, who purchases such power directly from the TVA. The rates payable by EcoChain Block to the landlord will be at the same pre-negotiated rates paid by landlord, which are less than EcoChain could obtain directly from the TVA. landlord’s failure to provide power to EcoChain, as a result of the termination of such power supply to the landlord by the TVA, as a result of the landlord’s failure to pay the TVA for such power, or otherwise, would, in all likelihood, result in our inability to obtain the power we need for our cryptocurrency mining operations, unless and until we were able to obtain such power directly from the TVA, which would result in a significant interruption to our business. We may also incur significant costs associated with negotiating and entering into a new agreement with the TVA to supply power to EcoChain Block’s cryptocurrency mining facilities, and with setting up the corresponding infrastructure to receive such power directly. Further, there can be no assurance that EcoChain Block will be able to negotiate a power supply agreement with the TVA on equally favorable terms as the landlord, if at all.
The properties on which certain of our ground leases are located are subject to possible forfeiture to the U.S. government, and, if seized, would, in all likelihood, require us to spend significant funds to maintain our cryptocurrency mining rights.
In August 2020, the United States Department of Justice’s Money Laundering & Asset Recovery Section (“DOJ”), together with the U.S. Attorney’s Office for the Southern District of Florida, filed civil asset forfeiture complaints against parties related to the landlord (the “Landlord Owners”) in connection with certain real properties, including the real properties that are the subject of the Ground Leases (the “Subject Properties”). The complaints, which are all currently pending before a federal judge, alleged that the funds used by Landlord Owners to purchase the Subject Properties were traceable to the proceeds of a bank fraud purportedly committed internationally in Ukraine by the Landlord Owners. Though the DOJ has not filed a civil forfeiture action against the Subject Properties, the complaint the government submitted in support of its asset forfeiture requests against certain properties, including the Subject Properties, included a description of the Ukrainian bank fraud and the various properties located in the United States that the DOJ believes were purchased with the proceeds of that international bank fraud, including the Subject Properties. In the event that the Subject Properties are seized by the U.S. government, EcoChain Block may be required to negotiate with the U.S. government for the supply of power which EcoChain was receiving from the landlord pursuant to the Power Supply Agreement. Additionally, the U.S. government, in all likelihood, would place the Subject Properties for sale at an auction, or otherwise, and we would likely be required to purchase the Subject Properties to assure the continuation of our cryptocurrency mining operations at such facility, all of which would require our expenditure of significant funds and could have a material adverse impact on our results of operations.
26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
~~Item 2.           Unregistered Sales~~On May 13, 2021, the Company granted to its CEO Michael Toporek under the Company’s 2021 Stock Incentive Plan: options to purchase 500,000 shares of ~~Equity~~common stock, at an exercise price of $6.84 per share to vest in equal installments on the first, second and third anniversaries of May 13, 2021, so long as he remains in the service of the Company on each subsequent anniversary. These options were granted pursuant to Section 4(a)(2) of the Securities Act because Mr. Toporek had sufficient sophistication and ~~Use~~knowledge of ~~Proceeds~~the Company, and the grant did not involve any form of general solicitation or general advertising. Mr. Toporek made representations that the options were being acquired for investment purposes and not with a view towards resale.
~~None~~
On May 13, 2021, the Company granted to its directors under the Company’s 2021 Stock Incentive Plan: options to purchase 26,600 shares of common stock, at an exercise price of $7.52 per share. These options were granted pursuant to Section 4(a)(2) of the Securities Act because the directors had sufficient sophistication and knowledge of the Company, and the grants did not involve any form of general solicitation or general advertising. The directors made representations that the options were being acquired for investment purposes and not with a view towards resale.
Item 3. Defaults Upon Senior Securities
~~Item 3.           Defaults Upon Senior Securities~~None
~~None~~
Item 4. Mine Safety Disclosures
~~Item 4.           Mine Safety Disclosures~~
Not applicable.
Item 5. Other Information
~~Item 5.           Other Information~~None
~~None~~
Item 6. Exhibits

~~Item 6.           Exhibits~~
Exhibit No.
Description
~~31.1~~3.1
~~Rule 13a-14(a)/15d-14(a)~~ Certificate of Amendment filed with the Secretary of State of Nevada dated June 9, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2021).
4.1 Amendment No. 2 to Registration Rights Agreement, dated as of June 24, 2021, by and between Mechanical Technology, Incorporated and American Stock Transfer & Trust Company, LLC (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021).
4.2 Form of Common Purchase Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.3 Form of Underwriters’ Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.4 Form of Pre-Funded Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.5 Form of Warrant Agent Agreement between Mechanical Technology, Incorporated and American Stock Transfer & Trust Company, LLC (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 29, 2021).
10.1 Form of Purchase Agreement dated April 11, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2021).
10.2 Form of Ground Lease Agreement, dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.3 Form of Land Lease Agreement (Vacant Land) (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).

10.4 Form of Power Supply Agreement dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.5 Form of Transition Services Agreement, dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.6 Form of Guaranty of Rent dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC May 4, 2021).
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002, of Frederick W. Jones~~2002.
~~32.1~~31.2
Certification of Chief Financial Officer Pursuant to ~~18 U.S.C.~~ Section ~~1350, as Adopted~~302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002, of Frederick W. Jones~~2002.
101.INS*32.2
~~XBRL Instance Document~~Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH*
~~XBRL Taxonomy Extension Schema Document~~
101.CAL*
~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*
~~XBRL Taxonomy Definition Linkbase Document~~
101.LAB*
~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*
~~XBRL Taxonomy Extension Presentation Linkbase Document~~
All other exhibits for which no other filing information is given are filed herewith.
# Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. Such information is both not material and is the information that the registrant customarily and actually treats as private or confidential. The omitted information is identified in the exhibit with brackets and "**".
* Submitted electronically herewith. Attached as Exhibit 101 are the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in eXtensible Business Reporting Language (XBRL) and tagged as blocks of text and including detailed tags: (i) Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (ii) Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016; (iii) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016; and (iv) related notes.28

SIGNATURES

~~SIGNATURES~~
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
      Mechanical Technology, Incorporated

Date: ~~November 2~~, ~~2017~~
August 10, 2021
By:

/s/ ~~Frederick W. Jones~~
Michael Toporek
~~Frederick W. Jones~~
Michael Toporek
Chief Executive Officer ~~and~~
By: /s/ Jessica L. Thomas
Jessica L. Thomas
Chief Financial Officer
29
20

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____

Title of each class	Trading Symbol	Name of each exchange on which registered

Common Stock ($0.001 par value)	MKTY	The Nasdaq Stock Market LLC

Large accelerated filer ¨ ☐	Accelerated filer ¨ ☐
Non-accelerated filer¨ ~~(Do not check if a smaller reporting company)~~ ☒	Smaller reporting company x☒
	Emerging growth company ¨☐

PART I. FINANCIAL INFORMATION		2
*Item 1. Financial Statements*		2

Condensed Consolidated Balance Sheets
As of ~~September~~June 30, ~~2017~~2021 (Unaudited) and December 31, ~~2016~~2020		2

Condensed Consolidated Statements of Operations (Unaudited)
For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020		3

Condensed Consolidated Statements of Changes in Equity For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)		4-5
~~For the Year Ended December 31, 2016 and the Nine Months Ended September 30, 2017 (Unaudited)~~	4

Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2021 and 2020		6
~~For the Nine Months Ended September 30, 2017 and 2016~~	5

Notes to Condensed Consolidated Financial Statements (Unaudited)	6	7

*Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations*	13	18

*Item 3. Quantitative and Qualitative Disclosures About Market Risk*	18	25

*Item 4. Controls and Procedures*	18	25

PART II. OTHER INFORMATION		1926

*Item 1.* Legal Proceedings	19	26

*Item 1A.*Risk Factors	19	26

*Item 2.*Unregistered Sales of Equity Securities and Use of Proceeds	19	27

*Item 3.*Defaults Upon Senior Securities	19	27

*Item 4.*Mine Safety Disclosures	19	27

*Item 5.* Other Information	19	27

Item 6. Exhibits~~Exhibits~~	19	27

*SIGNATURES*	20	29

(Dollars in thousands, except per share)	September 30,			December 31,				June 30,			December 31,
	2017			2016				2021			2020
Assets	Assets						Assets
Current Assets:
Cash	$	3,360		$	3,381			$	12,096		$	2,630
Accounts receivable		1,397			881				780			975
Inventories		658			676				1,187			828
Prepaid expenses and other current assets		68			82				6,499			346
Total Current Assets		5,483			5,020				20,562			4,779
Other assets									311			309
Deferred income taxes, net									759			759
Equity investment									750			750
Property, plant and equipment, net		154			160				2,132			847
Operating lease right-of-use assets									1,045			1,203
Total Assets	$	5,637		$	5,180			$	25,559		$	8,647

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	242		$	124			$	2,009		$	300
Accrued liabilities		889			906				1,375			1,019
Operating lease liability									327			316
Income taxes payable									2			2
Total Current Liabilities		1,131			1,030				3,713			1,637

Other liabilities									264			203
Operating lease liability									725			891
Total Liabilities									4,702			2,731

Commitments and Contingencies (Note 8)

Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 75,000,000; 10,162,511 issued in 2017 and 10,026,136 issued in 2016		102			100
Common stock, par value $0.001 per share, authorized 75,000,000; 13,715,163 issued and outstanding as of June 30, 2021 and 10,750,100 issued and outstanding as of December 31, 2020									14			11
Additional paid-in capital		138,905			138,794				154,240			137,462
Accumulated deficit		(120,737	)		(120,980	)			(119,633	)		(117,793	)
Common stock in treasury, at cost, 1,015,493 shares		(13,764	)		(13,764	)
Common stock in treasury, at cost, 1,015,493 shares in both 2021 and 2020									(13,764	)		(13,764	)
Total Stockholders’ Equity		4,506			4,150				20,857			5,916
Total Liabilities and Stockholders’ Equity	$	5,637		$	5,180			$	25,559		$	8,647


(Dollars in thousands, except per share)	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2021			2020		2021			2020

Product revenue	$	1,647		$	2,390	$	2,984		$	3,973
Cryptocurrency revenue		1,657			50		2,652			50
Total revenue		3,304			2,440		5,636			4,023
Operating costs and expenses:
Cost of product revenue		502			631		954			1,159
Cost of cryptocurrency revenue		545			0		873			0
Research and product development expenses		406			362		792			764
Selling, general and administrative expenses		3,030			847		4,867			1,642
Operating (loss) income		(1,179	)		600		(1,850	)		458
Other income, net		8			2		13			4
(Loss) income before income taxes		(1,171	)		602		(1,837	)		462
Income tax (expense) benefit		(3	)		0		(3	)		3
Net (loss) income	$	(1,174	)	$	602	$	(1,840	)	$	465

Net loss per share (Basic)	$	(.10	)	$	.06	$	(.17	)	$	.05
Net loss per share (Diluted)	$	(.10	)	$	.06	$	(.17	)	$	.05

Weighted average shares outstanding (Basic)		11,709,851			9,570,677		10,758,641			9,570,677

Weighted average shares outstanding (Diluted)		11,709,851			9,651,615		10,758,641			9,655,514

(Dollars in thousands, except per share)	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017		2016			2017			2016

Product revenue	$	1,857	$	2,232		$	5,047		$	5,265
Operating costs and expenses:
Cost of product revenue		563		774			1,604			2,018
Research and product development expenses		277		298			887			942
Selling, general and administrative expenses		674		829			2,309			2,445
Operating income (loss)		343		331			247			(140	)
Other income (expense), net		1		(1	)		(4	)		(7	)
Income (loss) before income taxes		344		330			243			(147	)
Income tax expense		—		(1	)		—			(1	)
Net income (loss)	$	344	$	329		$	243		$	(148	)

Income (loss) per share attributable to MTI (Basic)	$	.04	$	.06		$	.03		$	(.03	)
Income (loss) per share attributable to MTI (Diluted)	$	.04	$	.06		$	.03		$	(.03	)

Weighted average shares outstanding (Basic)		9,146,216		5,248,482			9,103,276			5,250,082
Weighted average shares outstanding (Diluted)		9,429,402		5,458,871			9,424,982			5,250,082


	Common Stock									Treasury Stock
	Shares	Amount		Additional Paid- in Capital		Accumulated Deficit			Shares		Amount			Total Stockholders’ Equity
December 31, 2020	10,750,100	$	11	$	137,462	$	(117,793	)		1,015,493	$	(13,764	)	$	5,916

Net loss	—		—		—		(666	)		—		—			(666	)

Stock based compensation	—		—		34		—			—		—			34

Issuance of shares – option exercises	77,250		—		62		—			—		—			62

Issuance of shares – restricted stock	57,500		—		49		—			—		—			49

March 31, 2021	10,884,850		11		137,607		(118,459	)		1,015,493		(13,764	)		5,395
Net loss	—		—		—		(1,174	)		—		—			(1,174	)

Stock based compensation	—		—		1,005		—			—		—			1,005

Issuance of shares – stock offering	2,782.258		3		15,400		—			—		—			15,403

Issuance of shares – option exercises	27,650		—		21		—			—		—			21

Issuance of shares – restricted stock	20,405		—		207		—			—		—			207

June 30, 2021	13,715,163	$	14	$	154,240	$	(119,633	)		1,015,493	$	(13,764	)	$	20,857

(Dollars in thousands, except per share)	Common Stock									Treasury Stock
	Shares	Amount		Additional Paid-in Capital			Accumulated Deficit			Shares	Amount			Total Stockholders’ Equity (Deficit)

January 1, 2016	6,263,975	$	63	$	135,839		$	(120,621	)	1,005,092	$	(13,754	)	$	1,527

Net loss	-		-		-			(359	)	-		-			(359	)

Stock based compensation	-		-		449			-		-		-			449

Issuance of shares – stock purchase	3,750,000		37		2,700			-		-		-			2,737

Costs of stock purchase	-		-		(201	)		-		-		-			(201	)

Issuance of shares – option exercises	12,161		-		7			-		-		-			7

Purchase of common stock for treasury	-		-		-			-		10,401		(10	)		(10	)

December 31, 2016	10,026,136	$	100	$	138,794		$	(120,980	)	1,015,493	$	(13,764	)	$	4,150

Net income	-		-		-			243		-		-			243

Stock based compensation	-		-		37			-		-		-			37

Costs of stock purchase	-		-		(25	)		-		-		-			(25	)

Issuance of shares – option exercises	136,375		2		99			-		-		-			101

September 30, 2017	10,162,511	$	102	$	138,905		$	(120,737	)	1,015,493	$	(13,764	)	$	4,506

(Dollars in thousands)	Nine Months Ended September 30,
	2017			2016
Operating Activities
Net income (loss)	$	243		$	(148	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation		60			64
Loss on disposal of equipment		—			6
Bad debt recovery		—			(21	)
Stock based compensation		37			131
Provision for excess and obsolete inventories		(50	)		244
Changes in operating assets and liabilities:
Accounts receivable		(516	)		257
Inventories		68			(130	)
Prepaid expenses and other current assets		14			9
Accounts payable		118			(47	)
Accrued liabilities		(17	)		182
Net cash (used in) provided by operating activities		(43	)		547
Investing Activities
Purchases of equipment		(54	)		(113	)
Net cash used in investing activities		(54	)		(113	)
Financing Activities
Costs of stock purchase		(25	)		—
Purchases of common stock for treasury		—			(10	)
Proceeds from stock option exercises		101			—
Net cash provided by (used in) financing activities		76			(10	)
(Decrease) increase in cash		(21	)		424
Cash – beginning of period		3,381			462
Cash – end of period	$	3,360		$	886


(Dollars in thousands)	Six Month Ended June 30,
	2021			2020
Operating Activities
Net (Loss) income	$	(1,840	)	$	465
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		258			53
Stock based compensation		1,039			24
Consultant stock compensation		49			—
Provision (recovery) for excess and obsolete inventories		(20	)		—
Loss on disposal of equipment		—			3
Changes in operating assets and liabilities:
Accounts receivable		195			(511	)
Inventories		(339	)		(498	)
Prepaid expenses and other current assets		(6,487	)		(32	)
Other long-term assets		(2	)		(289	)
Accounts payable		1,689			395
Operating lease, net		4			—
Other liabilities		61			203
Accrued liabilities		356			126
Net cash used in operating activities		(5,037	)		(61	)
Investing Activities
Purchases of equipment		(1,336	)		(348	)
Purchase of stock in equity investment		—			(750	)
Net cash used in investing activities		(1,336	)		(1,098	)
Financing Activities
Proceeds from equity offering		17,250			0
Costs of equity offering		(1,495	)		0
Proceeds from stock option exercises		84			0
Net cash provided by financing activities		15,839			0
Increase (decrease) in cash		9,466			(1,159	)
Cash – beginning of period		2,630			2,510
Cash – end of period	$	12,096		$	1,351

Supplemental Disclosure of Cash Flow Information
Purchase of miner equipment using restricted stock		(207	)		—
Registration statement fees in prepaids and accounts payable		352			—


Stock options outstanding	~~984,303~~	1,010,050
Restricted stock units outstanding		15,000
Common stock available for future equity awards or issuance of options	~~67,161~~	692.616
Number of common shares reserved	~~1,051,464~~	1,717,666


(Dollars in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

Operating lease cost	$	93	$	66	$	187	$	121
Short-term lease cost		—		2		—		2
Total net lease cost	$	93	$	68	$	187	$	123

	Six Months Ended June 30, 2021

Weighted Average Remaining Lease Term (in years):
Operating leases		3.64

Weighted Average Discount Rate:
Operating leases		5.51	%

(Dollars in thousands)	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020

Supplemental Cash Flows Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	187	$	121

Non-Cash Activity Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	387

(Dollars in thousands)	Nine Months Ended September 30,
	2017			2016
Balance, January 1	$	14		$	16
Accruals for warranties issued		13			13
Settlements made (in cash or in kind)		(11	)		(6	)
Balance, end of period	$	16		$	23

(Dollars in thousands)	Test and Measurement Instrumentation			Cryptocurrency			Other			Condensed Consolidated Totals
Three months ended June 30, 2021
Product revenue	$	1,647		$	—		$	—		$	1,647
Cryptocurrency revenue		—			1,657			—			1,657
Research and product development expenses		406			—			—			406
Selling, general and administrative expenses		526			292			2,212			3,030
Segment profit / (loss) from operations before income taxes		(270	)		710			(1,611	)		(1,171	)
Segment profit / (loss)		(270	)		710			(1,614	)		(1,174	)
Total assets		2,636			3,883			19,040			25,559
Capital expenditures		13			1,229			—			1,242
Depreciation and amortization		17			149			—			166

Three months ended June 30, 2020
Product revenue	$	2,390		$	—		$	—		$	2,390
Cryptocurrency revenue		—			50			—			50
Research and product development expenses		362			—			—			362
Selling, general and administrative expenses		437			109			301			847
Segment profit / (loss) from operations before income taxes		831			(73	)		(156	)		602
Segment profit / (loss)		831			(73	)		(156	)		602
Total assets		3,687			1,090			2,480			7,257
Capital expenditures		5			335			—			340
Depreciation and amortization		21			9			—			30

Six months ended June 30, 2021
Product revenue	$	2,984		$	—		$	—		$	2,984
Cryptocurrency revenue		—			2,652			—			2,652
Research and product development expenses		792			—			—			792
Selling, general and administrative expenses		1,066			855			2,946			4,867
Segment profit / (loss) from operations before income taxes		(672	)		771			(1,936	)		(1,837	)
Segment profit / (loss)		(672	)		771			(1,939	)		(1,840	)
Total assets		2,636			3,883			19,040			25,559
Capital expenditures		18			1,525			—			1,543
Depreciation and amortization		34			224			—			258

Six months ended June 30, 2020
Product revenue	$	3,973		$	—		$	—		$	3,973
Cryptocurrency revenue		—			50			—			50
Research and product development expenses		764			—			—			764
Selling, general and administrative expenses		853			180			609			1,642
Segment profit / (loss) from operations before income taxes		959			(144	)		(353	)		462
Segment profit / (loss)		959			(144	)		(350	)		465
Total assets		3,687			1,090			2,480			7,257
Capital expenditures		13			335			—			348
Depreciation and amortization		44			9			—			53

(Dollars in thousands)	Three Months Ended June 30, 2021			Three Months Ended June 30, 2020		$ Change			% Change

Product revenue	$	1,647		$	2,390	$	(743	)		(31.1	%)
Cryptocurrency revenue	$	1,657		$	50	$	1,607			3,214.0	%
Operating costs and expenses:
Cost of product revenue	$	502		$	631	$	(129	)		(20.4	%)
Cost of cryptocurrency revenue	$	545		$	—	$	545			100.0	%
Research and product development expenses	$	406		$	362	$	44			12.2	%
Selling, general and administrative expenses	$	3,030		$	847	$	2,183			257.7	%
Operating (loss) income	$	(1,179	)	$	600	$	(1,779	)		(296.5	%)
Other income, net	$	8		$	2	$	6			300.0	%
(Loss) income before income taxes	$	(1,171	)	$	602	$	(1,773	)		(294.5	%)
Income tax expense	$	(3	)	$	—	$	(3	)		(100.0	%)
Net (loss) income	$	(1,174	)	$	602	$	(1,776	)		(295.0	%)

(Dollars in thousands)	Three Months Ended September 30, 2017		Three Months Ended September 30, 2016			$ Change			% Change

Product revenue	$	1,857	$	2,232		$	(375	)	(16.8)%
Operating costs and expenses:
Cost of product revenue	$	563	$	774		$	(211	)	(27.3)%
Research and product development expenses	$	277	$	298		$	(21	)	(7.0)%
Selling, general and administrative expenses	$	674	$	829		$	(155	)	(18.7)%
Operating income	$	343	$	331		$	12		3.6%
Other income (expense), net	$	1	$	(1	)	$	2		200.0%
Income tax expense	$	—	$	(1	)	$	1		100.0%
Net income	$	344	$	329		$	15		4.6%

(Dollars in thousands)	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			$ Change			% Change	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020		$ Change			% Change

Product revenue	$	5,047		$	5,265		$	(218	)	(4.1)%	$	2,984		$	3,973	$	(989	)		(24.9	%)
Cryptocurrency revenue											$	2,652		$	50	$	2,602			5,204.0	%
Operating costs and expenses:
Cost of product revenue	$	1,604		$	2,018		$	(414	)	(20.5)%	$	954		$	1,159	$	(205	)		(17.7	%)
Cost of cryptocurrency revenue											$	873		$	—	$	873			100.0	%
Research and product development expenses	$	887		$	942		$	(55	)	(5.8)%	$	792		$	764	$	28			3.7	%
Selling, general and administrative expenses	$	2,309		$	2,445		$	(136	)	(5.6)%	$	4,867		$	1,642	$	3,225			196.4	%
Operating income (loss)	$	247		$	(140	)	$	387		276.4%
Other expense, net	$	(4	)	$	(7	)	$	3		42.9%
Income tax expense	$	—		$	(1	)	$	1		100.0%
Net income (loss)	$	243		$	(148	)	$	391		264.2%
Operating (loss) income											$	(1,850	)	$	458	$	(2,308	)		(503.9	%)
Other income, net											$	13		$	4	$	9			225.0	%
(Loss) income before income taxes											$	(1,837	)	$	462	$	(2,299	)		(497.6	%)
Income tax (expense) benefit											$	(3	)	$	3	$	(6	)		(200.0	%)
Net (loss) income											$	(1,840	)	$	465	$	(2,305	)		(495.7	%)

(Dollars in thousands)				Revenues for the Three Months Ended
				June 30,
Contract⁽¹⁾	Expiration			2021		2020

$9.35 million U.S. Air Force Systems, Accessories and Maintenance		06/30/2021	⁽²⁾	$	584	$	1,764

(Dollars in thousands)					Revenues for the Six Months Ended				Contract Revenues to Date Date		Total Contract Orders Received To Date
					June 30,				June 30,		June 30,
Contract⁽¹⁾	Expiration				2021		2020		2021		2021

$9.35 million U.S. Air Force Systems, Accessories and Maintenance		06/30/2021	⁽²	⁾	$	814	$	1,828	$	9,474	$	9,870

(Dollars in thousands)		Revenues for the Three Months Ended September 30,				Revenues for the Nine Months Ended September 30,					Contract Revenues to Date September 30,			Total Contract Orders Received to Date September 30,
Contract ⁽¹⁾	Expiration	2017		2016			2017		2016		2017			2017

$9.35 million U.S. Air Force Systems, Accessories and Maintenance	06/30/2021 ⁽²⁾	$	169	$	804		$	874	$	804		$	1,967		$	1,974

(1)	Contract values represent maximum potential values at time of contract placement and may not be representative of actual results.
(2)	Date represents expiration of contract, including the exercise of option extensions.

(Dollars in thousands)	Six Months Ended or As of			Six Months Ended or As of			Year Ended or As of
	June 30,			June 31,			December 31,
	2021			2020			2020
Cash	$	12,096		$	1,351		$	2,630
Working capital		16,849			3,092			3,142
Net (loss) income		(1,840	)		602			1,946
Net cash provided by (used in) operating activities		(5,037	)		(61	)		1,622
Purchase of property, plant and equipment		(1,543	)		(348	)		(835	)

(Dollars in thousands)	Nine Months Ended or As of			Nine Months Ended or As of			Year Ended or As of
	September 30,			September 30,			December 31,
	2017			2016			2016
Cash	$	3,360		$	886		$	3,381
Working capital		4,352			1,342			3,990
Net income (loss)		243			(148	)		(359	)
Net cash (used in) provided by operating activities		(43	)		547			522
Purchase of property, plant and equipment		(54	)		(113	)		(136	)

	2021		2020		Change
Inventory turnover		2.3		2.1		0.2
Average accounts receivable days outstanding		40		40		—

	2017	2016	Change
Inventory turnover	3.0	2.1	0.9
Average accounts receivable days outstanding	45	40	5

Exhibit No.	Description
~~31.1~~3.1	~~Rule 13a-14(a)/15d-14(a)~~ Certificate of Amendment filed with the Secretary of State of Nevada dated June 9, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2021).
4.1	Amendment No. 2 to Registration Rights Agreement, dated as of June 24, 2021, by and between Mechanical Technology, Incorporated and American Stock Transfer & Trust Company, LLC (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2021).
4.2	Form of Common Purchase Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.3	Form of Underwriters’ Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.4	Form of Pre-Funded Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the SEC on April 12, 2021).
4.5	Form of Warrant Agent Agreement between Mechanical Technology, Incorporated and American Stock Transfer & Trust Company, LLC (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 29, 2021).
10.1	Form of Purchase Agreement dated April 11, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2021).
10.2	Form of Ground Lease Agreement, dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.3	Form of Land Lease Agreement (Vacant Land) (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).

10.4	Form of Power Supply Agreement dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.5	Form of Transition Services Agreement, dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2021).
10.6	Form of Guaranty of Rent dated as of May 3, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC May 4, 2021).

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002, of Frederick W. Jones~~2002.
~~32.1~~31.2	Certification of Chief Financial Officer Pursuant to ~~18 U.S.C.~~ Section ~~1350, as Adopted~~302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002, of Frederick W. Jones~~2002.
101.INS*32.2	~~XBRL Instance Document~~Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH*	~~XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*	~~XBRL Taxonomy Definition Linkbase Document~~
101.LAB*	~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~

	Mechanical Technology, Incorporated
Date: ~~November 2~~, ~~2017~~ August 10, 2021	By:	/s/ ~~Frederick W. Jones~~ Michael Toporek
		~~Frederick W. Jones~~ Michael Toporek Chief Executive Officer ~~and~~

	By:	/s/ Jessica L. Thomas
		Jessica L. Thomas Chief Financial Officer