<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>y49458e10qsb.txt
<DESCRIPTION>MPM TECHNOLOGIES, INC.
<TEXT>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange act of 1934
For the quarter ended March 31, 2001
Commission File Number 0-14910
MPM TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as specified in its Charter)
Washington 81-0436060
------------------------------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 W. Mission Ave.
Suite 30
Spokane, WA 99201
--------------------------------------- -------------------------------
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: 509-326-3443
As of May 8, 2001, the registrant had outstanding 2,948,795 shares of common
stock and no outstanding shares of preferred stock, which are the registrant's
only classes of stock.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Financial Statements follow on the next page.
<PAGE> 3
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MARCH DECEMBER
31, 2001 31, 2000
----------- --------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $428,668 $573,974
Accounts receivable, net of allowance for doubtful accounts
of $25,000 4,458,706 4,297,089
Inventories 600,029 530,730
Costs and estimated earnings in excess of billings 1,146,655 669,249
Other current assets 822,144 621,145
----------- ----------
Total current assets 7,456,202 6,692,187
----------- ----------
Property, plant and equipment, net 220,823 240,201
Mineral properties held for sale 1,086,346 1,086,346
Prepaid royalty 273,000 273,000
Purchased intangible, net of accumulated amortization of $286,875
and $270,000 388,125 405,000
Other assets, net 640,949 825,123
----------- ----------
$10,065,445 $9,521,857
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,348,750 $2,506,121
Accrued expenses 1,142,831 1,452,255
Billings in excess of costs and estimated earnings 2,262,522 2,376,387
Related party debt 272,180 190,000
Current portion of long-term debt 300,000 300,000
----------- ----------
Total current liabilities 7,326,283 6,824,763
----------- ----------
Long-term debt, less current portion 510,389 510,389
Negative goodwill, net 15,550 20,158
----------- ----------
Total liabilities 7,852,222 7,355,310
=========== ==========
Commitments and contingencies
Stockholders' equity:
Preferred stock, no stated value, 10,000,000 shares
authorized, no shares issued or outstanding
Common stock, $.001 par value, 100,000,000 shares
authorized, 2,948,795 and 2,933,291 shares issued and outstanding 2,949 2,933
Additional paid-in capital 11,179,072 11,163,122
Accumulated deficit (8,968,798) (8,999,508)
----------- ----------
Total stockholders' equity 2,213,223 2,166,547
----------- ----------
$10,065,445 $9,521,857
=========== ==========
</TABLE>
<PAGE> 4
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2001 2000
---------- ----------
<S> <C> <C>
Revenues $4,861,218 $4,260,620
Cost of sales 3,991,087 3,308,733
---------- ----------
Gross margin 870,131 951,887
Selling, general and administrative expenses 822,528 891,396
---------- ----------
(Loss) income from operations 47,603 60,491
---------- ----------
Other income (expense):
Interest expense (19,276) (29,360)
Interest income 2,383 1,015
---------- ----------
Net other expense (16,893) (28,345)
---------- ----------
Net income $30,710 $32,146
========== ==========
Income per share - basic and diluted:
Net (loss) income $0.01 $0.01
========== ==========
Weighted average shares of common stock outstanding -
basic 2,937,857 2,643,502
========== ==========
Weighted average shares of common stock outstanding -
diluted 3,936,105 3,622,116
========== ==========
</TABLE>
<PAGE> 5
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2001 2000
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $31,710 $32,146
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 31,645 30,722
Interest imputed on related party debt 2,219 2,867
Change in assets and liabilities:
Accounts receivable (161,617) (188,564)
Costs and estimated earnings in excess of billings (477,406) (493,546)
Inventories (69,299) (5,880)
Other assets (16,825) (54,280)
Accounts payable and accrued expenses 533,205 198,008
Billings in excess of costs and estimated earnings (113,865) 311,676
---------- ----------
Net cash used in operating activities (240,233) (166,851)
---------- ----------
Cash flows from investing activities:
Acquisition of property, plant and equipment - (7,027)
---------- ----------
Net cash used in investing activities - (7,027)
---------- ----------
Cash flows from financing activities:
Proceeds from related party debt 82,180 90,000
Repayment of related party debt - (30,000)
Proceeds from stock issues 13,747 -
---------- ----------
Net cash provided by financing activities 95,927 60,000
---------- ----------
Net decrease in cash and cash equivalents (144,306) (113,878)
Cash and cash equivalents, beginning of period 573,974 194,399
---------- ----------
Cash and cash equivalents, end of period $429,668 $80,521
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $2,317 $1,838
Income taxes $ - $ -
Supplemental disclosure of non cash financing activities:
Common stock exchanged for amounts due to related party $ - $63,115
</TABLE>
<PAGE> 6
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. UNAUDITED FINANCIAL STATEMENTS
These financial statements should be read in conjunction with the audited
financial statements included in the Annual Report on Form 10-KSB for the year
ended December 31, 2000. Since certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting standards have been omitted pursuant to the instructions to
Form 10-QSB of Regulation S-X as promulgated by the Securities and Exchange
Commission, these financial statements specifically incorporate by reference the
footnotes to the consolidated financial statements of the Company as of December
31, 2000. In the opinion of management, these unaudited interim financial
statements reflect all adjustments necessary for a fair presentation of the
financial position and results of operations and cash flows of the Company. Such
adjustments consisted only of those of a normal recurring nature. Results of
operations for the period ended March 31, 2001 should not necessarily be taken
as indicative of the results of operations that may be expected for the entire
year 2001.
2. EARNINGS PER SHARE
Earnings per share ("EPS") is computed by dividing net income by the weighted
average number of common shares outstanding in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share".
The following table reconciles the number of common shares used in the basic and
diluted EPS calculations:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 2001
-------------------------------------------------
WEIGHTED-
NET AVERAGE PER-SHARE
(LOSS) SHARES AMOUNT
------ ------ ------
<S> <C> <C> <C>
BASIC EPS
Income available to common
stockholders $ 30,710 2,937,857 $ 0.01
EFFECT OF DILUTIVE SECURITIES
Common stock options - 998,248 -
--------- --------- -------
DILUTED EPS
Income available to common
stockholders - assumed
conversions $ 69,290 3,936,105 $ 0.01
========= ========= =======
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 2000
-------------------------------------------------
WEIGHTED-
NET AVERAGE PER-SHARE
INCOME SHARES AMOUNT
------ ------ ------
<S> <C> <C> <C>
BASIC EPS
Income available to common
stockholders $ 32,146 2,643,502 $ 0.01
EFFECT OF DILUTIVE SECURITIES
Common stock options - 978,614 -
-------- --------- -------
DILUTED EPS
Income available to common
stockholders - assumed
conversions $ 32,146 3,622,116 $ 0.01
======== ========= ========
</TABLE>
3. SEGMENT INFORMATION
The Company's consolidated financial statements include certain reportable
segment information. These segments include Huntington Environmental Systems,
Inc., a wholly owned subsidiary engaged in designing, engineering, supplying and
servicing air pollution control systems which primarily utilize heat and
chemicals to control air pollution, and AirPol, Inc., a wholly owned subsidiary
engaged in designing, engineering, supplying and servicing air pollution control
systems which utilize wet and dry scrubbers, wet electrostatic precipitators and
venturi absorbers to control air pollution. The Company evaluates the
performance of these segments based upon multiple variables including revenues
and profit or loss.
The segments' profit and loss components and schedule of assets as of March 31,
2001 are as follows:
<TABLE>
<CAPTION>
AIR AIR
POLLUTION POLLUTION
CONTROL CONTROL ALL
(HEAT) (SCRUBBERS) OTHERS TOTAL
------ ----------- ------ -----
<S> <C> <C> <C> <C>
Revenue external $ 2,665,216 $ 2,196,002 $ -- $ 4,761,218
Revenue internal -- -- -- --
Segment profit (loss) 124,913 118,280 (212,483) 30,710
Segment assets 4,560,046 4,783,052 5,901,276 15,244,374
</TABLE>
Reconciliation of segment revenues, net income, total assets and other
significant items for the three months ended March 31, 2000 are as follows:
<TABLE>
<CAPTION>
REVENUES AMOUNT
-------- ------------
<S> <C>
Total revenues for reportable segments.............. $ 4,861,218
------------
Total consolidated revenues.............................$ 4,861,218
============
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
PROFIT OR LOSS
--------------
<S> <C>
Total profit or loss for reportable segments.........$ 243,193
Other profit or loss................................. (212,483)
-------------
Total consolidated profit or loss....................$ 30,710
=============
ASSETS
------
Total assets for reportable segments................. $ 9,343,098
Other assets......................................... 4,814,931
Assets of discontinued operation..................... 1,086,346
Elimination of intersegment assets................... (5,178,930)
-------------
Total consolidated assets............................$ 10,065,445
=============
</TABLE>
The segments' profit and loss components and schedule of assets as of March 31,
2000 are as follows:
<TABLE>
<CAPTION>
AIR AIR
POLLUTION POLLUTION
CONTROL CONTROL ALL
(HEAT) (SCRUBBERS) OTHERS TOTAL
------ ----------- ------ -----
<S> <C> <C> <C> <C>
Revenue external $ 2,042,277 $ 2,218,343 $ -- $ 4,260,620
Revenue internal -- -- -- --
Segment profit (loss) 54,488 128,254 (150,596) 32,146
Segment assets 3,504,216 2,209,209 4,449,049 10,162,474
</TABLE>
Reconciliation of segment revenues, net income, total assets and other
significant items for the three months ended March 31, 2000 are as follows:
<TABLE>
<CAPTION>
REVENUES AMOUNT
-------- ------------
<S> <C>
Total revenues for reportable segments.............. $ 4,260,620
------------
Total consolidated revenues......................... $ 4,260,620
------------
PROFIT OR LOSS
--------------
Total profit or loss for reportable segments.........$ 182,742
Other profit or loss................................. (150,596)
============
Total consolidated profit or loss....................$ 32,146
============
ASSETS
------
Total assets for reportable segments.................$ 5,713,425
Other assets......................................... 2,747,384
Assets of discontinued operation..................... 1,086,346
Elimination of intersegment assets................... (3,465,857)
------------
Total consolidated assets............................$ 6,081,298
============
</TABLE>
<PAGE> 9
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
---------------------
This Quarterly Report on Form 10-QSB, including the information incorporated by
reference herein, includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All of the statements contained in this Quarterly Report on Form 10-QSB,
other than statements of historical fact, should be considered forward looking
statements, including, but not limited to, those concerning the Company's
strategies, objectives and plans for expansion of its operations, products and
services and growth in demand for the Company's services. There can be no
assurance that these expectations will prove to have been correct. Certain
important factors that could cause actual results to differ materially from the
Company's expectations (the Cautionary Statements") are disclosed in the annual
report filed on Form 10-KSB. All subsequent written and oral forward looking
statements by or attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by such Cautionary Statements. Investors
are cautioned not to place undue reliance on these forward looking statements,
which speak only as of the date hereof and are not intended to give any
assurance as to future results. The Company undertakes no obligation to publicly
release any revisions to these forward looking statements to reflect events or
reflect the occurrence of unanticipated events.
MPM Technologies, Inc. ("MPM") acquired certain of the assets and assumed
certain of the liabilities of a part of a division of FLS miljo, Inc. as of July
1, 1998. MPM formed AirPol, Inc. ("AirPol") to run this air pollution control
business. AirPol designs, engineers, supplies and services air pollution control
systems for Fortune 500 and other industrial and environmental companies. The
technologies of AirPol utilize wet and dry scrubbers, wet electrostatic
precipitators and venturi absorbers to control air pollution. AirPol brought
over 30 years experience to MPM through its technologies and employees.
As of April 1, 1997, MPM acquired certain of the assets and assumed certain of
the liabilities of a portion of a division of United States Filter Corporation,
and formed Huntington Environmental Systems, Inc. ("HES") to operate this air
pollution control business. HES designs, engineers, supplies and services high
temperature and chemical air pollution control systems for Fortune 500 and other
industrial and environmental companies. HES brought has over 25 years of
experience and over 300 installations across the globe to MPM through its
technologies and employees.
Both HES's and AirPol's engineering staffs are uniquely prepared to address the
full scope of customers' process problems. Their policies of handling clients'
individual concerns include in-depth analysis and evaluation, followed by
complete engineering and design services leading to application-specific
engineered solutions.
MPM holds a 58.21% interest in Nupower Partnership through its wholly-owned
<PAGE> 10
subsidiary, Nupower, Inc. Nupower Partnership is engaged in the development and
commercialization of a waste-to-energy process which has been named "Skygas".
Skygas is an innovative technology for the disposal and gasification of
carbonaceous wastes such as municipal solid waste, municipal sewage sludge, pulp
and paper mill sludge, auto fluff, medical waste and used tires. The process
converts solid and semi-solid wastes into a clean-burning medium BTU gas that
can be used for steam production for electric power generation. The gas may also
be a useful building block for downstream conversion into valuable chemicals.
MPM controls 32 claims on approximately 1,000 acres in the historical Emery
Mining District in Montana through its wholly-owned subsidiary, MPM Mining, Inc.
In accordance with the Board of Directors' mandates, MPM's management is
actively seeking out mining and other businesses to purchase its mining
properties and equipment.
HES and AirPol are active continuing concerns. The development of the Skygas
process through Nupower Partnership is also an ongoing process. No other
operations were conducted. Accordingly, the financial statements for the three
months ended March 31, 2001 and 2000 include the operations of HES, AirPol,
Skygas and MPM.
MPM's consolidated net income for the quarter ended March 31, 2001 was $30,710,
or $0.01 per share compared to net income of $32,146, or $0.01 per share for the
quarter ended March 31, 2000. This was due to some customers delaying projects
at both HES and AirPol, and to less than expected activity at HES.
MPM continues to negotiate with interested entities with the goal of building
Skygas units. These negotiations are also ongoing, and include entities in the
United States, Europe, South America and Asia. Management is hopeful there will
be some type of formal agreement in place and that construction of a unit can
begin before the end of the year. There can, however, be no assurances that MPM
will be successful in its negotiations.
Three months ended 3/31/01 compared to three months ended 3/31/00
------------------------------------------------------------------
For the three months ended 3/31/01, MPM had net income of $30,710, or $0.01 per
share compared to a net income of $32,146, or $0.01 per share for the quarter
ended 3/31/00. Revenues increased 14.1% to $4,861,218 for the three months ended
3/31/00 compared to $4,260,620 for the three months ended 3/31/00. This was
mainly due to revenues from a large project at AirPol which started shortly
after the first quarter 2000, Costs of sales increased 20.6% to $3,991,087 for
the three months ended March 31, 2001 compared to $3,308,733 for the three
months ended March 31, 2000. This was due to the increased levels of activity at
AirPol, and some smaller margins experienced there. Operating expenses were down
7.7% to $822,528 for the three months ended March 31, 2001 compared to $891,396
for the three months ended 3/31/00. This was due to some personnel reductions at
HES.
Backlog at March 31, 2001 was approximately $11,600,000. Management expects that
this will grow during the year. There was a recent Supreme Court ruling that was
favorable to pollution control companies. The Court ruled that cost should not
be a consideration in enforcement of environmental rules and regulations. While
it is unclear how that ruling and future enforcement by the Environmental
Protection Agency will impact the industry, it is evident that there is a great
deal of activity and interest in the
<PAGE> 11
products of both HES and AirPol. Requests for quotations are at unprecedented
levels.
Financial Condition and Liquidity
---------------------------------
For the three months ended March 31, 2001, the Company relied partly on related
party advances to fund the operations of HES and AirPol. Current cash reserves
and continuing operations are believed to be adequate to fund MPM's and its
subsidiaries' operations for the foreseeable future. Working capital at 3/31/01
was $129,919 compared to $534,489 at 3/31/00.
MPM is considering alternative sources of capital such as private placements,
stock offerings and loans from shareholders and officers to fund its current
business and expand in other related areas through more acquisitions.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company knows of no litigation present, threatened or contemplated or
unsatisfied judgment against the Company, its officers or directors or any
proceedings in which the Company, its officers or directors are a party.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The rights of the holders of the Company's securities have not been modified nor
have the rights evidenced by the securities been limited or qualified by the
issuance or modification of any other class of securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities issued by the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters presented to the shareholders for vote during the first
quarter of 2001.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
On January 30, 2001, MPM announced the departure of its president, and that it
had a dispute with a financial advisor.
On January 30, 2001, MPM announced that it had engaged the accounting firm of
Rosenberg, Rich, Baker, Berman & Company of Bridgewater, New Jersey, as its
independent auditors for the fiscal year ended December 31, 2000. During the
last two
<PAGE> 12
years, and to the date hereof, MPM did not consult Rosenberg, Rich,
Baker, Berman & Company regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MPM Technologies, Inc.
May 15, 2001 /s/ Robert D. Little
--------------------- -------------------------------------
(date) Robert D. Little
Corporate Secretary
</TEXT>
</DOCUMENT>