1. Nature of Operations
|9 Months Ended|
Sep. 30, 2016
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|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.
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.
Liquidity; Going Concern
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 an accumulated deficit of approximately $120.8 million and working capital of approximately $1.3 million at September 30, 2016. As of September 30, 2016, we had no debt and $20 thousand in commitments for capital expenditures.
Based on the Company’s projected cash requirements for operations and capital expenditures, its available cash of approximately $886 thousand and our projected cash flows pursuant to management’s plan, management believes it will have adequate resources to fund operations and capital expenditures for the near term. If cash generated from operations is insufficient to satisfy operational working capital and capital expenditure requirements, the Company may be required to obtain credit facilities to fund these initiatives. Any additional financing, if required, may not be available to us on acceptable terms or at all.
The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.
The Company’s history of operating cash flow deficits may raise doubt about its ability to continue as a going concern and its continued existence could be dependent upon several factors, including its ability to raise revenue levels and control costs to generate positive cash flows and/or to obtain credit facilities. Obtaining credit facilities may be more difficult as a result of limited access to equity markets and the tightening of credit markets. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount of or classification of liabilities that might be necessary as a result of this uncertainty.
The Company believes that the current lack of liquidity and “going concern” opinion with respect to its audited financial statements for the year ended December 31, 2015 resulted primarily from delays in entering into a new agreement with the U.S. Air Force (as discussed in our Annual Report on Form-K for the year ended December 31, 2015 in Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in an expected product order from Asia that was not received, as well as the Company’s cancellation of its existing lines of credit on March 24, 2016, as further discussed in Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the Annual Report and this Form 10-Q. As previously reported, the Company entered into the long-anticipated contract with the U.S. Air Force on July 1, 2016, and started receiving orders thereunder soon thereafter.
On October 21, 2016, the Company entered into a Securities Purchase Agreement with Brookstone Partners Acquisition XXIV, LLC (Brookstone), pursuant to which on such date the Company issued and sold 3,750,000 shares of its common stock to Brookstone for an aggregate of $2,737,500. See Note 13 Subsequent Events and the Company’s Form 8-K filed on October 21, 2016 for more details related to this transaction.
The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.
Reference 1: http://www.xbrl.org/2003/role/presentationRef