MTI's Fuel Cell Dreams are Running on Empty


Mechanical Technology, Inc. (s MKTY), the Albany, N.Y.,-based parent of fuel-cell developer MTI Micro, said late Monday it’s voluntarily delisting its shares from Nasdaq. In a statement, MTI said its low share price (95 cents at Monday’s close) and the zombie-like trading activity – 21,000 shares a day on average over the last year, or less than a half a percent of its outstanding shares) just weren’t worth the expense and glamor of a Nasdaq listing.

Of course, it also didn’t help that, just last Tuesday, MTI received a letter from Nasdaq warning of an impending and involuntary delisting. So MTI is quitting Nasdaq just in time to avoid getting kicked off (the company said it was thinking of delisting even before Nasdaq’s warning).


Nasdaq pretty much bends over backwards to make it easy for companies to stay on the exchange. Once a stock is listed, it needs to meet at least one of three criteria: Net income from continuing operations of $500,000 in the last fiscal year, $35 million in market value of listed shares, or $2.5 million in stockholders’ equity. MTI had a net loss of at least $9.6 million for the past three years, a recent market cap below $5 million and, as of December 2008, $1.5 million in stockholder’s equity.

It gets worse. In MTI’s annual report to investors last week, PriceWaterhouseCoopers expressed concern about the company’s ability to continue to operate as a going concern.

The catalyst driving these unhappy events is MTI Micro, a subsidiary making methanol fuel cells as an alternative to lithium-ion batteries in portable devices. The biodegradable fuel cells used a proprietary technology called Mobion; the company intended to start selling Mobion products this year. In 2007, executives were confident about getting its fuel cells to market. Just last fall, the company was busy making them at once smaller and more powerful.

But the cost of developing and commercializing the fuel cells was crippling. At the end of 2008, MTI Micro helped build up a deficit of $118 million and left the company with $252,000 in working capital. As MTI said in its annual report:

“Because of these losses, limited current cash, cash equivalents and securities available for sale, negative cash flows and accumulated deficit, the report of the Company’s independent registered public accounting firm for the year ended December 31, 2008 expressed substantial doubt about the Company’s ability to continue as a going concern.”

That’s after MTI raised $1 million by selling 1.1 million shares of Plug Power last year and raised $2 million by issuing convertible notes to a board member and others. But without more funding from the government or private investors, MTI said it “does not expect to continue to fund MTI Micro’s portable power source business.” MTI’s other operations can make it through December with the cash on hand, but MTI Micro looks to have enough to keep operating into this month.

MTI said its stock is likely to continue trading on the over-the-counter or the pink sheets markets.

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