Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 1-May-14 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'MECHANICAL TECHNOLOGY INC | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0000064463 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 5,256,883 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)(Dollars in thousands, except per share) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS: | ' | ' |
Cash | $739 | $1,211 |
Accounts receivable | 827 | 824 |
Inventories | 701 | 742 |
Deferred income taxes, net | 22 | 25 |
Prepaid expenses and other current assets | 110 | 111 |
Total Current Assets | 2,399 | 2,913 |
Deferred income taxes, net | 1,478 | 1,475 |
Property, plant and equipment, net | 125 | 146 |
Total Assets | 4,002 | 4,534 |
Current Liabilities: | ' | ' |
Accounts payable | 205 | 149 |
Accrued liabilities | 822 | 993 |
Total Current Liabilities | 1,027 | 1,142 |
Commitments and Contingencies (Note 9) | 0 | 0 |
Equity: | ' | ' |
Common stock, par value $0.01 per share, authorized 75,000,000; 6,261,975 issued in both 2014 and 2013 | 63 | 63 |
Additional paid-in-capital | 135,627 | 135,612 |
Accumulated deficit | -118,961 | -118,529 |
Common stock in treasury, at cost, 1,005,092 shares in both 2014 and 2013 | -13,754 | -13,754 |
Total MTI stockholders' equity | 2,975 | 3,392 |
Total Liabilities and Equity | $4,002 | $4,534 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICALS (Unaudited)(Dollars in thousands, except per share) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Parentheticals | ' | ' |
Common Stock, no par value | $0.01 | $0.01 |
Common Stock, shares authorized | 75,000,000 | 75,000,000 |
Common Stock, shares issued | 6,261,975 | 6,261,975 |
Common Stock, treasury at cost | 1,005,092 | 1,005,092 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (Dollars in thousands, except per share) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Revenues: | ' | ' |
Product revenue | $1,382 | $2,200 |
Operating costs and expenses: | ' | ' |
Cost of product revenue | 578 | 976 |
Unfunded research and product development expenses | 361 | 340 |
Selling, general and administrative expenses | 875 | 819 |
Operating (loss) income | -432 | 65 |
Income tax benefit | 0 | 1 |
Net (loss) income | -432 | 66 |
Plus: Net loss attributed to non-controlling interest | 0 | 20 |
Net income (loss) attributed to MTI | ($432) | $86 |
(Loss) income per share attributable to MTI (Basic and Diluted) | ($0.08) | $0.02 |
Weighted average shares outstanding (Basic and Diluted) | 5,256,883 | 5,256,883 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Unaudited) (USD $) | Common Stock Shares | Common Stock Amount | Additional Paid in Capital | Accumulated Deficit | Treasury Stock Shares | Treasury Stock Amount | Total MTI Stockholders' Equity (Deficit) | Non-Controlloing Interest (NCI) | Total Equity |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||
Balance at Dec. 31, 2012 | 6,261,975 | 63 | 135,561 | -122,183 | 1,005,092 | -13,754 | -313 | 3,311 | 2,998 |
Net income attributed to MTI | ' | $0 | $0 | $3,654 | ' | $0 | $3,654 | $0 | $3,654 |
Stock based compensation | ' | 0 | 51 | 0 | ' | 0 | 51 | 0 | 51 |
Net loss attributed to NCI | ' | 0 | 0 | 0 | ' | 0 | 0 | -75 | -75 |
Equity contribution to NCI | ' | 0 | 0 | 0 | ' | 0 | 0 | 25 | 25 |
Variable interest entity deconsolidation | ' | 0 | 0 | 0 | ' | 0 | 0 | -3,261 | -3,261 |
Balance. at Dec. 31, 2013 | 6,261,975 | 63 | 135,612 | -118,529 | 1,005,092 | -13,754 | 3,392 | 0 | 3,392 |
Balance at Dec. 31, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock based compensation | ' | 0 | 15 | 0 | ' | 0 | 15 | 0 | 15 |
Net loss attributed to MTI | ' | $0 | $0 | ($432) | ' | $0 | ($432) | $0 | ($432) |
Balance, at Mar. 31, 2014 | 6,261,975 | 63 | 135,627 | -118,961 | 1,005,092 | -13,754 | 2,975 | 0 | 2,975 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands.) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net (loss)income | ($432) | $66 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Depreciation | 24 | 24 |
Stock based compensation | 15 | 5 |
Provision for excess and obsolete inventories | 16 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -3 | 782 |
Inventories | 25 | 204 |
Prepaid expenses and other current assets | 1 | 8 |
Accounts payable | 56 | 257 |
Deferred revenue | 0 | -511 |
Accrued liabilities | -171 | -150 |
Net cash provided by (used in) operating activities | -469 | 685 |
Investing Activities | ' | ' |
Purchases of equipment | -3 | -41 |
Net cash (used in) provided by investing activities | -3 | -41 |
(Decrease) increase in cash | -472 | 644 |
Cash - beginning of period | 1,211 | 289 |
Cash - end of period | $739 | $933 |
Nature_of_Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2014 | |
Nature of Operations | ' |
Nature of Operations | ' |
1. Nature of Operations | |
Description of Business | |
Mechanical Technology, Incorporated (MTI or the Company), a New York corporation, was incorporated in 1961. The Company’s core business is conducted through MTI Instruments, Inc. (MTI Instruments), a wholly-owned subsidiary and the sole component of the Company’s Test and Measurement Instrumentation segment. Through the year ended December 31, 2013, the Company also operated in a New Energy segment with business conducted through MTI MicroFuel Cells, Inc. (MTI Micro). On December 31, 2013, as a result of a stock warrant exercise, the Company transferred management of MTI Micro to Dr. Walter L. Robb (a member of the Company’s and MTI Micro’s board of directors) and his new management team. The Company is consequently no longer reporting MTI Micro as a variable interest entity (VIE) as of the close of business on December 31, 2013 (date of MTI Micro deconsolidation). | |
MTI Instruments was incorporated in New York on March 8, 2000 and is a supplier of: precision linear displacement solutions, vibration measurement and system balancing systems, and wafer inspection tools, consisting of electronic gauging instruments for position, displacement and vibration application within the industrial manufacturing/production markets, as well as the research, design and process development market; tensile stage systems for materials testing at academic and industrial research settings; and engine vibration analysis systems for both military and commercial aircraft. These tools, systems and solutions are developed for markets and applications that require the precise measurements and control of products, processes, and the development and implementation of automated manufacturing, assembly, and consistent operation of complex machinery. | |
MTI Micro was incorporated in Delaware on March 26, 2001, and, until its operations were suspended in late 2011, had been developing a handheld energy-generating device to replace current lithium-ion and similar rechargeable battery systems in many handheld electronic devices for the military and consumer markets. | |
Liquidity | |
The Company has incurred significant losses primarily due to its past efforts to fund MTI Micro’s direct methanol fuel cell product development and commercialization programs, and has an accumulated deficit of approximately $119.0 million and working capital of approximately $1.4 million at March 31, 2014. | |
Based on the Company’s projected cash requirements for operations and capital expenditures for 2014, its current available cash of approximately $739 thousand, the $400 thousand available from its existing line of credit at MTI Instruments, current cash flow requirements and revenue and expense projections, management believes it will have adequate resources to fund operations and capital expenditures for at least the next twelve months. | |
However, the Company may need to do one or more of the following to raise additional resources, or reduce its cash requirements: | |
1) Reduce its current expenditure run rate; | |
2) Defer its capital expenditures; | |
3) Defer its hiring plans; and | |
4) Secure additional debt or equity financing. | |
There is no guarantee that such resources will be available to the Company on terms acceptable to it, or at all, or that such resources will be received in a timely manner, if at all, or that the Company will be able to reduce its expenditure run-rate, defer its capital expenditures or hiring plans without materially and adversely effecting its business. | |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Basis of Presentation: | ' | |||
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 Generally Accepted Accounting Principles (U.S. GAAP) and with the instructions to Form 10-Q in Article 10 of the Securities and Exchange Commissions (SEC) Regulation S-X. 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, 2013. | ||||
The information presented in the accompanying condensed consolidated balance sheet as of December 31, 2013 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 months ended March 31, 2014 and March 31, 2013. | ||||
Principles of Consolidation | ||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MTI Instruments. The consolidated financial statements also include the accounts of a former VIE, MTI Micro, through December 31, 2013. The Company was considered the primary beneficiary of the VIE until December 31, 2013, when the Company transferred management of MTI Micro to Dr. Robb and his new management team. For purposes of these consolidated financial statements, the deconsolidation of MTI Micro was effective as of the close of business on December 31, 2013. All intercompany balances and transactions are eliminated in consolidation. The Company reflected the impact of the equity securities issuances in its investment in a VIE and additional paid-in-capital accounts for the dilution or anti-dilution of its ownership interest in the VIE. | ||||
The Company determined that the effect of the deconsolidation of the VIE was to remove MTI Micro in the consolidated balance sheet as of December 31, 2013 but include MTI Micro’s activity in the consolidated statement of operations for the year ended December 31, 2013. The following assets and liabilities of MTI Micro were not included in the consolidated balance sheet as of December 31, 2013 as a result of the VIE deconsolidation: | ||||
(dollars in thousands) | 2013 | |||
Cash | $ | 25 | ||
Prepaid expenses and other current assets | 1 | |||
Accounts payable | 3 | |||
Related party note payable (see Note 12 for more detail) | 380 | |||
The fair value of the Company’s current non-controlling interest (NCI) in MTI Micro has been determined to be $0 as of March 31, 2014 and December 31, 2013 (date of MTI Micro deconsolidation), based on MTI Micro’s net position and expected cash flows. The Company records its investment in MTI Micro using the equity method of accounting. As of March 31, 2014, the Company owned an aggregate of approximately 47.5% of MTI Micro’s outstanding common stock, or 75,049,937 shares, and 53.3% of the common stock and warrants issued, which includes 32,904,136 warrants outstanding. | ||||
As of December 31, 2013, NCI is classified as equity in the consolidated financial statements. The consolidated statement of operations presents net income (loss) for both the Company and the non-controlling interests. The calculation of earnings per share is based on net income (loss) attributable to the Company. |
Accounts_Receivable
Accounts Receivable | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Accounts Receivable | ' | |||||||
Accounts Receivable | ' | |||||||
3. Accounts Receivable | ||||||||
Accounts receivables consist of the following at: | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||
(Dollars in thousands) | ||||||||
U.S. and State Government | $ | 42 | $ | 37 | ||||
Commercial | 785 | 787 | ||||||
Total | $ | 827 | $ | 824 | ||||
For the three months ended March 31, 2014 and 2013, the largest commercial customer represented 14.5% and 8.1%, respectively, and the largest governmental agency represented 11.0% and 30.7%, respectively, of the Company’s Test and Measurement Instrumentation segment product revenue. As of March 31, 2014 and December 31, 2013, the largest commercial receivable represented 24.3% and 12.8%, respectively, and the largest governmental receivable represented 5.1% and 3.9%, respectively, of the Company’s Test and Measurement Instrumentation segment accounts receivable. | ||||||||
As of March 31, 2014 and December 31, 2013, the Company had no allowance for doubtful trade accounts receivable. |
Inventories
Inventories | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Inventories: | ' | ||||||
Inventories | ' | ||||||
4. Inventories | |||||||
Inventories consist of the following at: | |||||||
31-Mar-14 | 31-Dec-13 | ||||||
(Dollars in thousands) | |||||||
Finished goods | $ | 275 | $ | 287 | |||
Work in process | 181 | 188 | |||||
Raw materials | 245 | 267 | |||||
Total | $ | 701 | $ | 742 | |||
Property_Plant_and_Equipment
Property, Plant, and Equipment | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Property, Plant, and Equipment | ' | |||||||
Property, Plant and Equipment | ' | |||||||
5. Property, Plant and Equipment | ||||||||
Property, plant and equipment consist of the following at: | ||||||||
(Dollars in thousands) | 31-Mar-14 | 31-Dec-13 | ||||||
Leasehold improvements | $ | 32 | $ | 32 | ||||
Computers and related software | 1,279 | 1,281 | ||||||
Machinery and equipment | 813 | 810 | ||||||
Office furniture and fixtures | 125 | 125 | ||||||
2,249 | 2,248 | |||||||
Less: Accumulated depreciation | 2,124 | 2,102 | ||||||
$ | 125 | $ | 146 | |||||
Depreciation expense was $24 thousand and $91 thousand for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively. In conjunction with the suspension of MTI Micro operations in late 2011, sales of certain surplus equipment on hand were made during 2013. This resulted in a net gain on sale of $13 thousand for the year ended December 31, 2013. As of December 31, 2013, all $13 thousand in sales proceeds have been received. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
6. Income Taxes | |
During the three months ended March 31, 2014, the Company’s effective income tax rate was 0.0%. The projected annual effective tax rate is less than the Federal statutory rate of 34%, primarily due to permanent differences, the change in the valuation allowance and changes to estimated taxable income for 2014. For the three months ended March 31, 2013, the Company’s effective income tax rate was 0%. | |
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. | |
As a result of our analyses in 2011, the Company released a portion of our valuation allowance against its deferred tax assets. The partial release of the valuation allowance caused an incremental tax benefit of $1.5 million that was recognized in the fourth quarter of 2011. The release of a portion of the valuation allowance was based upon a recent cumulative income history for MTI and its subsidiary exclusive of MTI Micro (MTI Micro files separate federal and state tax returns) causing the Company to evaluate what portion of the Company's deferred tax assets it believes are more likely than not to be realized. | |
The Company has determined that it expects to generate sufficient levels of pre-tax earnings in the future to realize the net deferred tax assets recorded on the balance sheet at March 31, 2014. The Company has projected such pre-tax earnings utilizing a combination of historical and projected results, taking into consideration existing levels of permanent differences, non-deductible expense and the reversal of significant temporary differences. We project that our taxable income for the next three years is adequate to ensure the realizability of the $1.5 million of deferred tax assets recorded on our balance sheet at March 31, 2014. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to adjust the recorded valuation allowance, which could materially impact our financial position and results of operations. We will continue to evaluate the ability to realize our deferred tax assets and related valuation allowance on a quarterly basis. | |
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 valuation allowance was $17.0 million at March 31, 2014 and $16.8 million at December 31, 2013. The Company will continue to evaluate the ability to realize its deferred tax assets and related valuation allowances on a quarterly basis. | |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Stockholders' Equity | ' | |||
Stockholders' Equity | ' | |||
7. Stockholders’ Equity | ||||
Common Stock | ||||
The Company has one class of common stock, par value $.01. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. As of March 31, 2014 and December 31, 2013, there were 5,256,883 shares of common stock issued and outstanding. | ||||
Reservation of Shares | ||||
The Company had reserved common shares for future issuance as follows as of March 31, 2014: | ||||
Stock options outstanding | 716,662 | |||
Common stock available for future equity awards or issuance of options | 2,000 | |||
Number of common shares reserved | 718,662 | |||
Earnings (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 equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share 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, 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, 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 three months ended March 31, 2014, were options to purchase 716,662 shares of the Company’s common stock. These potentially dilutive items were excluded because the Company incurred a loss during this period and their inclusion would be anti-dilutive. | ||||
Not included in the computation of earnings per share, assuming dilution, for the three months ended March 31, 2013, were options to purchase 293,119 shares of the Company’s common stock. These potentially dilutive items were excluded because the average market price of the common stock did not exceed the exercise prices of the options during this period. | ||||
Segment_Information
Segment Information | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Segment Information | ' | ||||||||||||||||
8. Segment Information | |||||||||||||||||
During 2013, the Company operated in two business segments, Test and Measurement Instrumentation and New Energy. As a result of the deconsolidation of MTI Micro operations on December 31, 2013 (see Note 2), the New Energy segment will no longer remain in our consolidated operations. The Test and Measurement Instrumentation segment designs, manufactures, markets and services high performance test and measurement instruments and systems, wafer characterization tools for the semiconductor and solar industries, tensile stage systems for materials testing at academic and industrial settings, and computer-based balancing systems for aircraft engines. The New Energy segment was focused on commercializing direct methanol fuel cells. The Company’s principal operations are located in North America. | |||||||||||||||||
The accounting policies of the Test and Measurement Instrumentation and New Energy segments are similar to those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K (Note 2). The Company evaluates performance based on profit or loss from operations before income taxes. Inter-segment sales and expenses are not significant. | |||||||||||||||||
Summarized financial information concerning the Company’s reportable segments is shown in the following tables. The “Other” column includes corporate related items and items such as income taxes or unusual items, which are not allocated to reportable segments. The “Reconciling Items” column includes non-controlling interests in a consolidated entity. In addition, segments’ non-cash items include any depreciation in reported profit or loss. The New Energy segment figures include the Company’s direct micro fuel cell operations. As a result of the deconsolidation of MTI Micro operations on December 31, 2013 (see Note 2), the New Energy segment will no longer remain in our consolidated operations. | |||||||||||||||||
As of January 1, 2014, the Company operates in one segment and therefore segment information is not presented. | |||||||||||||||||
Test and Measurement Instrumentation | New | Other | Reconciling Items | Condensed Consolidated Totals | |||||||||||||
(Dollars in thousands) | Energy | ||||||||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
Product revenue | $ | 2,200 | $ | — | $ | — | $ | — | $ | 2,200 | |||||||
Unfunded research and product development expenses | 340 | — | — | — | 340 | ||||||||||||
Selling, general and administrative expenses | 509 | 24 | 286 | — | 819 | ||||||||||||
Segment profit (loss) from operations before non-controlling interest | 254 | -38 | (150) | — | 66 | ||||||||||||
Segment profit (loss) | 254 | -38 | (150) | 20 | 86 | ||||||||||||
Total assets | 1,983 | 85 | 2,444 | — | 4,512 | ||||||||||||
Capital expenditures | 41 | — | — | — | 41 | ||||||||||||
Depreciation | 21 | 3 | — | — | 24 | ||||||||||||
The following table presents the details of “Other” segment loss: | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
2013 | |||||||||||||||||
Corporate and other (expenses) income: | |||||||||||||||||
Salaries and benefits | $ | (78) | |||||||||||||||
Income tax benefit | 1 | ||||||||||||||||
Other expense, net | (73) | ||||||||||||||||
Total “Other” segment loss | $ | (150) |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Commitments and Contingencies {1} | ' | |||||||
Commitments and Contingencies | ' | |||||||
9. Commitments and Contingencies | ||||||||
Commitments: | ||||||||
Leases | ||||||||
The Company and its subsidiary lease certain manufacturing, laboratory and office facilities. The leases generally provide for the Company to pay either an increase over a base year level for taxes, maintenance, insurance and other costs of the leased properties or the Company’s allocated share of insurance, taxes, maintenance and other costs of leased properties. The leases contain renewal provisions. | ||||||||
There are no future minimum rental payments required under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 31, 2014. The current lease agreement expires on November 30, 2014 and negotiations are underway for leasing facilities beyond this time period. | ||||||||
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) | Three Months Ended | |||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Balance, January 1 | $ | 17 | $ | 20 | ||||
Accruals for warranties issued | 3 | 7 | ||||||
Settlements made (in cash or in kind) | (3 | ) | (5 | ) | ||||
Balance, end of period | $ | 17 | $ | 22 | ||||
Employment Agreement | ||||||||
The Company has an employment agreement with one employee that provides certain payments upon termination of employment under certain circumstances, as defined in the agreement. As of March 31, 2014, the Company’s potential minimum obligation to this employee was approximately $67 thousand. | ||||||||
Contingencies: | ||||||||
Legal | ||||||||
We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. 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. | ||||||||
Line_of_Credit
Line of Credit | 3 Months Ended |
Mar. 31, 2014 | |
Line of Credit | ' |
Line of Credit | ' |
10. Line of Credit | |
On September 20, 2011, MTI Instruments entered into a working capital line of credit with First Niagara Bank, N.A. Under this agreement, MTI Instruments could borrow from time to time up to $400 thousand to support its working capital needs. The note was payable upon demand, and the interest rate on the note was equal to the prime rate with a floor of 4.0% per annum. The note was secured by a lien on all of the assets of MTI Instruments and was guaranteed by the Company. The line of credit was renewed on September 23, 2013, with a review date of June 30, 2014. Under this line of credit, MTI Instruments was required to maintain a line balance of $0 for 30 consecutive days during each calendar year. As of March 31, 2014 and December 31, 2013, there were no amounts outstanding under the line of credit. | |
Stock_Based_Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2014 | |
Stock Based Compensation | ' |
Stock Based Compensation | ' |
11. Stock Based Compensation | |
The Mechanical Technology Incorporated 2012 Equity Incentive Plan (the 2012 Plan) was adopted by the Company’s Board of Directors on April 14, 2012 and approved by stockholders on June 14, 2012. The 2012 Plan provides an initial aggregate number of 600,000 shares of common stock which may be awarded or issued. The number of shares which may be awarded under the 2012 Plan and awards outstanding can be subject to adjustment on account of any recapitalization, reclassification, stock split, reverse stock split and other dilutive changes in Common Stock. Under the 2012 Plan, the Board of Directors is authorized to issue stock options (incentive and nonqualified), stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers, directors, consultants and advisors of the Company and its subsidiaries. Incentive stock options may only be granted to employees of the Company and its subsidiaries. | |
During 2014, the Company granted 140,000 options to purchase the Company’s common stock from the 2012 Plan, which generally vest 25% on each of the first four anniversaries of the date of the award. The exercise price of these grants was $1.08 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 $1.07 per share and was estimated at the date of grant. | |
During 2013, the Company granted 298,000 options to purchase the Company’s common stock from the 2012 Plan, which generally vest 25% on each of the first four anniversaries of the date of the award. The exercise price of these grants was from $0.46 to $0.90 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 $0.58 per share and was estimated at the date of grant. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
12. Related Party Transactions | |
MTI Micro | |
On December 18, 2013, MTI Micro and the Company executed a Senior Demand Promissory Note (the Note) in the amount of $380 thousand to secure the intercompany amounts due to the Company from MTI Micro upon the deconsolidation of MTI Micro. 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. Interest began accruing on January 1, 2014. 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 MTI Micro at a rate of $0.07 per share. As of March 31, 2014 and December 31, 2013, the Company has recorded a full allowance against the Note. As a result of this allowance, any interest earned on this Note will be recorded when received on a cash basis. As of March 31, 2014 and December 31, 2013, $383 thousand and $380 thousand, respectively of principal and interest are available to convert into shares of common stock of MTI Micro. | |
On December 31, 2013, Dr. Robb exercised a portion of his outstanding MTI Micro warrants to purchase 357,143 shares of MTI Micro Common Stock at an exercise price of $0.07 per share. | |
As of March 31, 2014, the Company owned an aggregate of approximately 47.5% of MTI Micro’s outstanding common stock, or 75,049,937 shares, and 53.3% of the common stock and warrants issued, which includes 32,904,136 warrants outstanding. | |
Consulting Services | |
During the year ended December 31, 2013, the Company paid $80 thousand to Loudon Advisors for Kevin Lynch’s services as the Acting Chief Executive Officer of the Company, through April 30, 2013. | |
New_Accounting_Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2014 | |
New Accounting Pronouncements | ' |
New Accounting Pronouncements | ' |
13. New Accounting Pronouncements | |
There are no recently issued accounting standards or standards with pending adoptions that the Company’s management currently anticipates will have any material impact upon its financial statements. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events | ' |
Subsequent Events | ' |
14. Subsequent Events | |
On May 2, 2014, MTI Instruments entered into Amendment No. 2 to Lease Agreement with Carl E. Touhey (Landlord). Under the agreement, the lease term for our office, manufacturing and research and development space was extended for five years from December 1, 2014 through November 30, 2019. MTI Instruments has an option to terminate the lease as of December 1, 2016. If MTI Instruments terminates the lease prior to November 2019, MTI Instruments is required to reimburse Landlord for all unamortized costs that Landlord is incurring for renovations to the leased space in conjunction with this lease renewal. | |
On May 5, 2014, the Company entered into a new revolving line of credit with Bank of America, N.A. (the Bank) to replace MTI Instruments’ line of credit as discussed above (see Note 10). The Company may borrow under the line of credit from time to time up to $1 million to support its working capital needs. The line of credit is available until July 31, 2015 and may be renewed subject to all the terms and conditions as set forth in the Loan Agreement (the Loan). The Loan is payable no later than the expiration date of the Loan and interest is payable on the last day of each month beginning on May 30, 2014 and until payment has been made in full. The interest rate on funds borrowed under the line of credit is equal to the LIBOR Daily Floating Rate plus 2.75%. The Loan is secured by equipment and fixtures, inventory and receivables owned by the Company and guaranteed by MTI Instruments. The Company is required to hold a balance of $0 for 30 consecutive days during the period from May 5, 2014 through July 31, 2015, and each subsequent one-year period of the Loan, if any. Upon the occurrence of an event of default, the Bank may set off against our repayment obligations any amounts we maintain at the Bank. The Company is also subject to other restrictions as set forth in the Loan. |
Assets_and_liabilities_of_MTI_
Assets and liabilities of MTI Micro not included in consolidated balance sheet (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Assets and liabilities of MTI Micro not included in consolidated balance sheet | ' | |||
Assets and liabilities of MTI Micro not included in consolidated balance sheet | ' | |||
(dollars in thousands) | 2013 | |||
Cash | $ | 25 | ||
Prepaid expenses and other current assets | 1 | |||
Accounts payable | 3 | |||
Related party note payable (see Note 12 for more detail) | 380 |
Accounts_receivables_Tables
Accounts receivables (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Accounts receivables consist of tables | ' | |||||||
Accounts receivables (TABLE) | ' | |||||||
Accounts receivables consist of the following at: | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||
(Dollars in thousands) | ||||||||
U.S. and State Government | $ | 42 | $ | 37 | ||||
Commercial | 785 | 787 | ||||||
Total | $ | 827 | $ | 824 |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Inventories consist of tables | ' | ||||||
Schedule of Inventory | ' | ||||||
Inventories consist of the following at: | |||||||
31-Mar-14 | 31-Dec-13 | ||||||
(Dollars in thousands) | |||||||
Finished goods | $ | 275 | $ | 287 | |||
Work in process | 181 | 188 | |||||
Raw materials | 245 | 267 | |||||
Total | $ | 701 | $ | 742 |
Property_Plant_and_Equipments_
Property Plant and Equipments (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Property, plant and equipment consist of tables | ' | |||||||
Property, Plant and Equipment | ' | |||||||
Property, plant and equipment consist of the following at: | ||||||||
(Dollars in thousands) | 31-Mar-14 | 31-Dec-13 | ||||||
Leasehold improvements | $ | 32 | $ | 32 | ||||
Computers and related software | 1,279 | 1,281 | ||||||
Machinery and equipment | 813 | 810 | ||||||
Office furniture and fixtures | 125 | 125 | ||||||
2,249 | 2,248 | |||||||
Less: Accumulated depreciation | 2,124 | 2,102 | ||||||
$ | 125 | $ | 146 |
Schedule_Of_Reserved_Common_Sh
Schedule Of Reserved Common Shares (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Schedule Of Reserved Common Shares Table | ' | |||
Schedule Of Reserved Common Shares | ' | |||
The Company had reserved common shares for future issuance as follows as of March 31, 2014: | ||||
Stock options outstanding | 716,662 | |||
Common stock available for future equity awards or issuance of options | 2,000 | |||
Number of common shares reserved | 718,662 |
Geographic_and_Segment_Informa
Geographic and Segment Information As Follows (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Geographic and Segment Information As Follows | ' | ||||||||||||||||
Summarized financial information concerning the Company's reportable segments | ' | ||||||||||||||||
As of January 1, 2014, the Company operates in one segment and therefore segment information is not presented. | |||||||||||||||||
Test and Measurement Instrumentation | New | Other | Reconciling Items | Condensed Consolidated Totals | |||||||||||||
(Dollars in thousands) | Energy | ||||||||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
Product revenue | $ | 2,200 | $ | — | $ | — | $ | — | $ | 2,200 | |||||||
Unfunded research and product development expenses | 340 | — | — | — | 340 | ||||||||||||
Selling, general and administrative expenses | 509 | 24 | 286 | — | 819 | ||||||||||||
Segment profit (loss) from operations before non-controlling interest | 254 | -38 | (150) | — | 66 | ||||||||||||
Segment profit (loss) | 254 | -38 | (150) | 20 | 86 | ||||||||||||
Total assets | 1,983 | 85 | 2,444 | — | 4,512 | ||||||||||||
Capital expenditures | 41 | — | — | — | 41 | ||||||||||||
Depreciation | 21 | 3 | — | — | 24 | ||||||||||||
Schedule Of Segment Reporting Information For Corporate And Other Segment | ' | ||||||||||||||||
The following table presents the details of “Other” segment loss: | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
2013 | |||||||||||||||||
Corporate and other (expenses) income: | |||||||||||||||||
Salaries and benefits | $ | (78) | |||||||||||||||
Income tax benefit | 1 | ||||||||||||||||
Other expense, net | (73) | ||||||||||||||||
Total “Other” segment loss | $ | (150) |
Accrued_liabilities_consist_of
Accrued liabilities consist of (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Accrued liabilities consist of tables | ' | |||||||
Accrued liabilities consist of the following tables | ' | |||||||
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) | Three Months Ended | |||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Balance, January 1 | $ | 17 | $ | 20 | ||||
Accruals for warranties issued | 3 | 7 | ||||||
Settlements made (in cash or in kind) | (3 | ) | (5 | ) | ||||
Balance, end of period | $ | 17 | $ | 22 |
Nature_of_Operations_Details
Nature of Operations (Details) (USD $) | Mar. 31, 2014 |
Liquidity Details | ' |
Company had accumulated deficit in millions | $119 |
Company working capital in millions | 1.4 |
Available cash in thousands | 739 |
Existing line of credit at MTI in thousands | $400 |
Inventories_consist_of_the_fol
Inventories consist of the following (dollars in thousands) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Inventories consist of the following | ' | ' |
Finished goods | $275 | $287 |
Work in process | 181 | 188 |
Raw materials | 245 | 267 |
Total Inventories | $701 | $742 |
Property_plant_and_equipment_c
Property, plant and equipment consist of the following (dollars in thousands) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property, plant and equipment consist of the following | ' | ' |
Leasehold improvements | $32 | $32 |
Computers and related software | 1,279 | 1,281 |
Machinery and equipment | 813 | 810 |
Office furniture and fixtures | 125 | 125 |
Property, plant and equipment gross | 2,249 | 2,248 |
Less: Accumulated depreciation | 2,124 | 2,102 |
Total Property, plant and equipment | $125 | $146 |
Depreciation_expenses_and_surp
Depreciation expenses and surplus (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Depreciation expenses and surplus | ' | ' |
Depreciaiton expense was | $24,000 | $91,000 |
Net gain on sales of certain surplus equipment on hand | ' | 13,000 |
Sale proceeds received on sale of surplus equipment | ' | $13,000 |
Reservation_of_Shares_for_futu
Reservation of Shares for future issuance as follows (Details) | Mar. 31, 2014 |
Reservation of Shares for future issuance as follows | ' |
Stock options outstanding | 716,662 |
Common stock available for future equity awards or issuance of options | 2,000 |
Number of common shares reserved | 718,662 |
Accounts_receivables_consist_o
Accounts receivables consist of the following (dollars in thousands) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Accounts receivables consist of the following | ' | ' |
U.S. and State Government | $42 | $37 |
Commercial | 785 | 787 |
Total | $827 | $824 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Related Party Transactions | ' | ' |
Principal and interest available to convert into shares of common stock of MTI Micro (Dollars in thousands) | $383 | $380 |
Note may be converted to shares of common stock of MTI Micro at a rate per share of | $0.07 | $0.07 |
Dr.Robb Exercised portion of his outstanding MTI Micro warrants to purchase shares of MTI Micro Common stock at an exercise price per share of $0.07 per share | ' | 357,143 |
Company owned aggregate percentage of MTI Micros outstanding common stock | 47.50% | ' |
Company owned aggregate number of shares of MTI Micros outstanding common stock | 75,049,937 | ' |
Company owned aggregate percentage of MTI Micros outstanding warrants | 53.30% | ' |
Company owned aggregate number of MTI Micros outstanding warrants | 32,904,136 | ' |
Company paid amount to Loudon Advisors for Kevin Lynch's services as the Acting Chief Executive Officer of the Company, through April 30, 2013 | $80,000 | ' |
Assets_and_liabilities_of_MTI_1
Assets and liabilities of MTI Micro were not included (dollars in thousands) (Details) (USD $) | Dec. 31, 2013 |
Assets and liabilities of MTI Micro were not included: | ' |
Cash | $25 |
Prepaid expenses and other current assets | 1 |
Accounts payable | 3 |
Related party note payable (see Note 12 for more detail) | $380 |
Companys_current_noncontrollin
Company's current non-controlling interest (NCI) in MTI Micro (Details) | Mar. 31, 2014 |
Fair value details | ' |
The fair value of the Company's current non-controlling interest (NCI) in MTI Micro | 0 |
Company owned an aggregate of 47.5%MTI Micro's outstanding common stock | 75,049,937 |
MTI Micro common stock and Warrants issued | 53.30% |
MTI Micro common stock Warrants Outstanding | 32,904,136 |
Income_Tax_Details
Income Tax (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Tax Details | ' | ' |
Company's effective income tax rate was | 0.00% | 0.00% |
Federal Statutory rate | 34.00% | ' |
Deferred_Tax_Asset_Details
Deferred Tax Asset (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Deferred Tax Asset dollars in millions | ' | ' |
Deferred tax asset recorded | $1.50 | ' |
The valuation allowance | $17 | $16.80 |
Common_Stock_Details
Common Stock (Details) | Mar. 31, 2014 | Dec. 31, 2013 |
Common Stock | ' | ' |
Common stock issued and outstanding with par value of $0.01 per share | 5,256,883 | 5,256,883 |
Summary_of_Stock_based_compens
Summary of Stock based compensation textual (Dollars in thousands) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Jun. 14, 2012 |
Stock based compensation textuals | ' | ' | ' |
The 2012 Plan provides an initial aggregate number of shares of common stock which may be awarded or issued | ' | ' | 600,000 |
Company granted options to purchase the Company's common stock from the 2012 Plan, which generally vest 25% on each of the first four anniversaries of the date of the award | 140,000 | 298,000 | ' |
The exercise price of these grants per share was | $1.08 | ' | ' |
Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options per share and was estimated at the date of grant was | $1.07 | $0.58 | ' |
The Minimum exercise price of these grants per share was based on the closing market price of the Company's common stock on the dates of grant | ' | $0.46 | ' |
The Maximum exercise price of these grants per share was based on the closing market price of the Company's common stock on the dates of grant | ' | $0.90 | ' |
Earnings_Loss_per_Share_Detail
Earnings (Loss) per Share (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings (Loss) per Share | ' | ' |
Potentially dilutive options to purchase shares of the Company's common stock | 716,662 | 293,119 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended |
Mar. 31, 2013 | |
Test and Measurement Instrumentation | ' |
Segment Product revenue | $2,200 |
Segment Unfunded research and product development expenses | 340 |
Segment Selling, general and administrative expenses | 509 |
Segment profit (loss) from operations before non-controlling interest | 254 |
Segment profit (loss) | 254 |
Segment Total assets | 1,983 |
Segment Capital expenditures | 41 |
Segment Depreciation | 21 |
New Energy | ' |
Segment Selling, general and administrative expenses | 24 |
Segment profit (loss) from operations before non-controlling interest | -38 |
Segment profit (loss) | -38 |
Segment Total assets | 85 |
Segment Depreciation | 3 |
Other. | ' |
Segment Selling, general and administrative expenses | 286 |
Segment profit (loss) from operations before non-controlling interest | -150 |
Segment profit (loss) | -150 |
Segment Total assets | 2,444 |
Reconciling Items | ' |
Segment profit (loss) | 20 |
Condensed Consolidated Totals | ' |
Segment Product revenue | 2,200 |
Segment Unfunded research and product development expenses | 340 |
Segment Selling, general and administrative expenses | 819 |
Segment profit (loss) from operations before non-controlling interest | 66 |
Segment profit (loss) | 86 |
Segment Total assets | 4,512 |
Segment Capital expenditures | 41 |
Segment Depreciation | $24 |
Below_is_a_reconciliation_of_c
Below is a reconciliation of changes in product warranty liabilities: (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Below is a reconciliation of changes in product warranty liabilities: dollars in thousands | ' | ' |
Balance, January 1 | $17 | $20 |
Accruals for warranties issued | 3 | 7 |
Settlements made (in cash or in kind) | -3 | -5 |
Balance, end of period | $17 | $22 |
The_following_table_presents_t
The following table presents the details of "Other" segment loss: (Details) (USD $) | 3 Months Ended |
Mar. 31, 2013 | |
Corporate and other (expenses) income: dollars in thousands | ' |
Segment Salaries and benefits | ($78) |
Segment Income tax benefit | 1 |
Segment Other expense, net | -73 |
Total "Other" segment loss | ($150) |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 5-May-14 |
Subsequent Events {2} | ' |
The Company may borrow under the line of credit from time to time up to a limit to support its working capital needs. | $1,000,000 |
The interest rate on funds borrowed under the line of credit is equal to the LIBOR Daily Floating Rate plus | 2.75% |
The Company is required to hold a balance of loan amount for 30 consecutive days | $0 |