Mechanical Technology Inc. reported financial results for its second quarter ended June 30, 2006. For the three months ended June 30, 2006, the company reported net loss of $3.222 million, or $(0.10) per diluted share, on revenues of $1.793 million while total cash used during the quarter totaled $0.266 million. Revenues included $1.700 million in product revenue generated by the company's subsidiary, MTI Instruments, Inc. (MTI Instruments) and $0.093 million in funded research and development revenues generated by the company's subsidiary, MTI MicroFuel Cells Inc. (MTI Micro). This compares with net loss of $2.793 million, or $(0.09) per diluted share, on revenues of $1.665 million – $1.285 million generated by MTI Instruments and $0.380 million generated by MTI Micro – for the same period of 2005. The $0.415 million increase in MTI Instruments product revenue is the result of capacitance product sales, which have increased 18% since last year ($0.377 million in 2006 versus $0.319 million in 2005). Increases were also recorded totaling $0.249 million in aviation revenue and $0.087 million in semiconductor sales. There was also a $0.287 million decrease in funded research and development revenue at MTI Micro primarily due to the suspension of existing Department of Energy (DOE) funding for 2006 and the completion of other programs which were active in 2005.
Operating loss for the second quarter of 2006 increased by $0.688 million, to $4.961 million compared to $4.273 million for the same period in 2005. This increase includes positive and negative revenue and expense changes and the effects of the mandated adoption at the beginning of 2006 of the new accounting standard for share-based payments, which requires that the value of share-based compensation be estimated and recorded as an expense over the related service period. In the past, the company only disclosed this information in its footnotes. These changes include: increased costs for non-cash share-based compensation of $1.229 million; increased costs in research and product development expenses totaling $0.081 million – primarily related to an increase in development costs at MTI Instruments for new product development and current product enhancement programs and personnel; decreased funded research and development revenues of $0.287 million; partially offset by an increase of $0.206 million in gross margins related to the MTI Instruments sales increase and product mix change; and cost savings in selling, general and administrative expenses (SG&A) totaling $0.703 million – primarily reflecting savings attributable to reduced employee costs.
Results for the second quarter of 2006 included a $2.544 million gain on the sale of securities available for sale compared to a $9.635 million gain for the same period in 2005. Further, the second quarter of 2006 included no loss on derivatives while the comparable period in 2005 included a loss of $7.173 million. For the quarter ended June 30, 2006, cash used in operations was $3.737 million while cash used for capital expenditures was $0.251million.
