ALBANY, N.Y.-- MTI MicroFuel Cells Inc. (MTI Micro), developer of the award-winning Mobion® micro fuel cell ("Mobion® MFC") technology for handheld electronic devices and a subsidiary of Mechanical Technology Incorporated (MTI) (Nasdaq: MKTY - News), today announced a continuing collaboration with its Korean partner and MTI Micro's plans to commercialize and market Mobion® MFC technology for mobile phone and mobile phone accessories.

MTI Micro's previous agreement expired on its own terms on July 31, 2007, and the new collaboration extends until the end of 2009, or six months after MTI Micro's first commercial product launch should MTI Micro accelerate its timeline.

Under the continuing non-exclusive collaboration with its Korean Partner, MTI Micro will prepare Mobion® MFC products for mobile phone applications leading to commercialization in 2009. MTI Micro will continue to refine the Mobion® baseline product design up until its projected December 2008 design freeze. MTI Micro will also share development updates with its Korean partner and loan them prototypes for evaluation. They may also request changes to product specifications until December of 2008 and may purchase commercial DMFC samples as soon as they are available.

As part of its commercialization schedule, MTI Micro will prepare for the manufacturing of its Mobion® baseline product from the third quarter of 2008 through the second quarter of 2009, with a production decision anticipated at the start of the third quarter of that year. The suggested commercialization timeline is as follows:

"We have worked closely with our Korean partner and gained a great deal of insight into the mobile phone and mobile phone accessories market," said Peng Lim, CEO of MTI. "This collaboration shows further interest in MTI Micro's Mobion® MFC technology, and in this next phase, we expect to develop the baseline Mobion® product design while preparing for manufacturing readiness in 2008 and a consumer product launch in 2009."

Under the terms of the Company's initial Alliance Agreement with its Korean partner, Mobion®, MTI Micro's patented 100% methanol fuel feed, passive water management technology was chosen to power a series of prototypes designed for mobile cell phone and cell phone accessories. MTI Micro delivered two rounds of prototypes in a short period of time demonstrating significant size reductions, the latest of which contains Mobion® chips, a power module with patent pending fluid conditioning technology that allows its fuel cell system to run in a wide environmental range including temperatures from 0oC to 40oC at any humidity level - an industry standard in consumer electronics and a requirement of many OEMs.

This non-exclusive collaboration allows MTI Micro to pursue its goal of providing a DMFC power source to different consumer electronics customers with a wide range of portable consumer electronic products, from digital cameras to mobile phones to handheld entertainment devices. MTI Micro has focused on developing key partnerships in all aspects of its business including materials, manufacturing, and distribution.

"As we move forward, we continue to see strong interest from numerous OEMs in the benefits that micro fuel cells can provide including longer run-time and instant recharge," said Lim. "Our goal is to make our Mobion® technology available to these OEMs as soon as possible and bring products to market that will have great benefits to consumers."

About MTI MicroFuel Cells

MTI MicroFuel Cells Inc., a subsidiary of Mechanical Technology Incorporated, (Nasdaq: MKTY - News), is the developer of the award winning Mobion® direct methanol micro fuel cell technology. The Company has a world-class team of entrepreneurial business executives, researchers and scientists; a number of system prototypes demonstrating size reductions and performance improvements; significant related intellectual property; and has received government awards and developed strategic partnerships to help accelerate commercialization. More information is available at www.mtimicrofuelcells.com.

About our Korean Partner

The company is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies. Employing approximately 128,000 people in over 90 offices in 51 countries, the company consists of five main business units: Digital Appliance Business, Digital Media Business, LCD Business, Semiconductor Business and Telecommunication Network Business. Recognized as one of the fastest growing global brands, the company is a leading producer of digital TVs, memory chips, mobile phones, and TFT-LCDs.