-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kp+u/yEDknnLhc0Cjn3a3bwzk8DV6aTFeGS51soUCvZ0CwZV4zoBI/OpJdTPWI8v IsB6FUeDPca/UnNT5O0IeA== 0001004522-97-000056.txt : 19970416 0001004522-97-000056.hdr.sgml : 19970416 ACCESSION NUMBER: 0001004522-97-000056 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970415 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MPM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000799268 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 810436060 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14910 FILM NUMBER: 97581541 BUSINESS ADDRESS: STREET 1: 222 W MISSION AVE STREET 2: STE 30 CITY: SPOKANE STATE: WA ZIP: 99201 BUSINESS PHONE: 5093263443 MAIL ADDRESS: STREET 1: 908 N HOWARD SUITE 100 STREET 2: 908 N HOWARD SUITE 100 CITY: SPOKANE STATE: WA ZIP: 99201 FORMER COMPANY: FORMER CONFORMED NAME: MONTANA PRECISION MINING LTD DATE OF NAME CHANGE: 19920703 10KSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-KSB Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1996 Commission File Number 0-14910 MPM TECHNOLOGIES, INC. --------------------------------------------------------- (Exact Name of Registrant 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, Ste. 30 Spokane, WA 99201 - --------------------------------- ---------------------- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: 509-326-3443. Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.001 Par Value Nasdaq - ---------------------------------- -------------------------- Title of Each Class Name of Exchange On Which Registered Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Aggregate market value of the registrant's common stock held by non-affiliates as of April 1, 1997, was $4,168,985. As of April 1, 1997, the registrant had outstanding 14,851,624 shares of common stock which is the registrant's only class of common stock. DOCUMENTS INCORPORATED BY REFERENCE The following document is incorporated by reference into Part IV of this report: (1) Form 10, effective October 21, 1986, Commission File No. 1-14910. PART I Item 1. Business a)GENERAL DEVELOPMENT OF BUSINESS The Company was incorporated as Okanogan Development, Inc., on July 18, 1983, under the laws of the State of Washington. On April 25, 1985, the Company combined with MADD Exploration, a Montana partnership , and changed its name to Montana Precision Mining, Ltd. As a result of the combination, the Company acquired mining properties. The Company, during 1995, remained in the development stage. In August, 1995, the Company changed its name to MPM Technologies, Inc. The Company controls 45 claims on 500 acres in the heart of the Emery Mining District, Powell County, Montana. The Company has been involved in negotiations with a number of gold companies for a joint venture. It is expected that negotiations will continue until a joint venture partner is found. The Company has two wholly-owned subsidiaries, MPM Mining, Inc., and NuPower, Inc. As of December 31, 1996, no operations were conducted through such subsidiaries. The Company does operate through NuPower Partnership, a Montana general partnership, in which the Company retains a 58.21% interest. NuPower Partnership is engaged in the research and development of a waste-to- energy process known as "Skygas". "Skygas" is the designated name for an innovative two reactor technology for the disposal/gasification of carbonaceous wastes such as municipal solid waste, municipal sewage sludge, pulp and paper mill sludge, auto fluff, medical waste and used rubber tires. This 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 composition of the gas also makes it a useful building block for downstream conversion into valuable chemicals. In March, 1990, the Company entered into an agreement with Smogless S.p.A. of Milan, Italy, and Xytel Technologies of Mt. Prospect, Illinois, for the purpose of commercializing the Skygas process. Completion of the facility located in Italy was achieved in December, 1991. Testing and debugging began on January 17, 1992; and on June 11, 1993, the Company announced that after a successful development program conducted by Smogless, the Skygas process was ready for active worldwide marketing. In September, 1994, the Company announced that United States Filter Corp., Palm Desert, California, had acquired Laidlaw, Inc.'s, interest in Smogless S.p.A. Laidlaw had purchased an 80% interest in Smogless in January, 1993. PLANS FOR OPERATINS MINING The Company is involved in negotiations with a number of mining companies for a future joint venture. WASTE-TO-ENERGY Negotiations with a number of foreign and domestic companies relating to the Skygas process are expected to continue during 1997. b)Financial Information About Industry Segments. As a result of the acquisition of a controlling interest in NuPower in 1987, the Company's operations expanded from mining alone to both mining and waste- to-energy. Waste-to- Corporate 1996 Mining Energy and Other Total - ---------------- ---------- ---------- ---------- ---------- Net Sales $ -0- $ -0- $ -0- $ -0- Depreciation and Amortization $ 90,050 $ (748) $ -0- $ 89,302 Research and Development $ -0- $ -0- $ -0- $ -0- (Loss) from Operations $(110,107) $ (75,862) $(188,599) $(374,568) Net (Loss) $(110,107) $ (75,763) $(208,736) $(394,606) Capital Expenditures $ -0- $ -0- $ 3,515 $ 3,515 Identifiable Assets $1,462,953 $ 329,492 $1,282,122 $3,074,567 c)Narrative Description of Business. New Enterprise The Company is a recently formed, relatively new enterprise commencing business prospects. It is anticipated that the Company may incur losses during its early periods of operation; and it cannot be predicted when, or if, it is expected to become profitable. Conflicts of Interest All of the Company's officers and directors have been in the past, are presently, and will continue to be active in other companies on their own behalf, and on the behalf of individuals and companies, who are potential competitors of the Company. All officers and directors have retained the right to conduct their own independent business interest. None of the officers expect to devote substantially full time to the Company. The Company has a contract with R.D. Little Company to provide shareholder relations services. R.D. Little Company is owned by Robert D. Little, Secretary of the Company. The activities described above could give rise to conflicts with the interests of the Company. Also, the participation by some of the Company's officers and directors in such outside activities may create potential conflicts of interests regarding the time and efforts of such persons. It is possible that other situations may arise in the future where the personal interests of the officers and directors may conflict with the interests of the Company. Such conflicts could include determining what portion of their working time will be spent on the Company and what portion on other business interests, salary amounts, and other forms of compensation. To the best ability and in the best judgment of the Company the personal interests of the officers and directors of the Company will be resolved in a fair manner which will protect the interests of the Company. The Company's Board of Directors intends to continually review all corporate opportunities to further attempt to safeguard against conflicts of interest between their other business interests and the interest of the Company. No Dividends It is not anticipated that the Company will distribute any dividends to shareholders in the foreseeable future. Earnings of the Company, if any, are expected to be retained by it to enhance its capital and to expand its operations. Possible Need for Additional Financing The Company's only definite sources of operating funds are its current cash reserves and receivable, cash contributions from directors, and from the sale of unneeded mining equipment. There is no assurance that the Company will produce revenues in the foreseeable future. The Company presently has no firm arrangements for additional financing and there can be no assurance that such financing will be available or that, if available, it will be available on acceptable terms. It is the opinion of management that the Company's cash reserves will be adequate to sustain it over the next 12 months. In accordance with Regulation S-K, Section 101(c), the following information relative to the Company is presented: (i) Principal Products. MINING The principal products of the Company have been mineralized material. The sale of such over the previous four fiscal years has not contributed 15% or more of the revenue of the Company. WASTE-TO-ENERGY The principal product of the Company is expected to be gasification plants for use primarily in waste-to-energy and co-generation projects. As the process only recently has began to be marketed, there have been no sales of the product to date. (ii)Status of Products MINING The Company is primarily in the exploration and development stage with regard to its properties. Although the Company could be operational on a portion of its properties, the current price of gold and silver on the market has been deemed by management of the Company to be inadequate to make operations economically feasible. WASTE-TO-ENERGY The Company has been engaged in the testing and debugging phase of the Skygas process. Testing and debugging began in January, 1992. In June, 1993, the Company announced the process was ready for active marketing. Negotiations with potential customers is an ongoing activity. Management believes that negotiations with a number of companies will be concluded during 1997. (iii) Sources and Availability of Raw Material. MINING In the opinion of management, all raw materials (mineralized material) necessary for the operations of the Company can be acquired from properties currently leased or claimed by the Company. WASTE-TO-ENERGY As there are no specialized components, the Skygas process can be constructed with readily available materials and technology. Due to the wide variety of possible fuel materials which can be utilized in the process, no difficulties obtaining feed materials for the completed plants are expected. (iv)Patents, Trademarks and Licenses Held. MINING The Company currently holds patents related to its mining operations as discussed elsewhere in this document. WASTE-TO-ENERGY The Company, through NuPower Partnership, has obtained the exclusive license to use the Skygas process from A.C. Lewis, its inventor. On July 10, 1991, the Company announced that the Skygas patent claims had been allowed by the U.S. Patent Office. Patents have been received or are pending from a number of foreign countries. (v) Seasonal Variations in Business. MINING The operations of the Company may be curtailed during the winter months due to the large amounts of snow and frozen ground. It is anticipated that reactivation of underground mining operations with subsequent on- site milling operations could be continued throughout the year. It is possible that should open-pit mining operations be commenced, these operations may be curtailed by frozen ground. The extent of any curtailment in open-pit mining is not presently determinable by management. WASTE-TO-ENERGY There are currently no seasonal influences on the ongoing research and development of the Skygas process. It is not anticipated that significant seasonal variations will exist should production begin. (vi) Working Capital Practices. MINING Although management anticipates carrying inventories of stockpiled mineralized material to meet its needs, there is currently no requirement that the Company maintain significant amounts. WASTE-TO-ENERGY While current research and development requires significant working capital, should production begin, the plants will be produced to order, and no significant inventories are expected. (vii) Dependence Upon Limited Number of Customers. MINING The Company has no single customer, or few customers, the loss of any one or more of which may have a material adverse effect on the Company. WASTE-TO-ENERGY The Company is currently negotiating with a number of potential customers but has no customers at the present time. (viii) Backlog. MINING There is currently no backlog of orders, nor were there any backlogs of orders during the preceding fiscal year. WASTE-TO-ENERGY As the Company is not yet in production, there have been no orders. (ix) Government Contracts. MINING AND WASTE-TO-ENERGY As the Company has not engaged in any contracts for any government or government agency, there is no material portion of the business that may be subjected to re-negotiation or profits or termination of contracts or subcontracts at the election of the Government. (x) Competitive Conditions. MINING Due to the large number of persons and companies engaged in exploration for and production of mineralized material, there is a high degree of competition. Fluctuations in gold and silver prices and regulations set by various governmental agencies increase the risk of success of the Company. WASTE-TO-ENERGY A significant number of persons and companies are developing or have developed various waste-to-energy systems intended for co-generation projects. (xi) Research and Development Expenditures. MINING During the year ended December 31, 1996, the Company did not expend any funds on exploration and development and only a minimal amount on mining claims and leases under its control. WASTE-TO-ENERGY During 1996, the Company did not expend any funds on research and development related to the Skygas process. (xii) Compliance with Environmental Regulations. MINING Although the Company has been able to obtain permits for operations limited to 11,000 tons per year from the State of Montana, there is no guarantee that it will be able to obtain the permits necessary to allow it to commence leaching operations on a scale larger than that limitation. These permits contain restrictions enacted to regulate the discharge of materials into the environment. While the Company currently has an impoundment area consisting of two acres with a capacity of approximately 48,000 tons of tailings, it has the area available to increase the containment to approximately 10 acres providing approximately 725,000 tons of tailings. This impoundment area retains an adequate supply so that no water is discharged into existing streams. It is not anticipated that the increased capacity will be necessary within the next fiscal year, should the mill be placed back in operation. WASTE-TO-ENERGY There are no known environmental restrictions which would affect the operation of the Skygas process. To the contrary, one of the main competitive advantages of the process is its ability to utilize as a fuel many toxic substances while not producing hazardous emissions. (xiii) Number of Employees. MINING AND WASTE-TO-ENERGY The Company currently has no permanent employees. Employees are hired as needed on a seasonal basis. Other work is performed on a contract basis. d) Financial Information About Foreign and Domestic Operations and Export Sales. As previously stated, the Company has entered into an agreement with USF Smogless S.p.A., Milan, Italy, to commercialize the Skygas process. Item 2.Properties MINING The principal properties of the Company are mineral interests in several mining properties. Presently the Company has the following claims under control: Owned by MPM: 10 Patented Claims 16 Unpatented Claims Leased by MPM: 8 Patented Claims 13 Unpatented Claims These claims amount to approximately 500 acres in the heart of the Emery Mining District, Powell County, Montana. MPM, Ltd., controls 18 former mine sites that have been inactive since 1930. Each of these have old adits, tunnels, and dump piles of known mineralized material. All testing and metallurgical work has been completed. WASTE-TO-ENERGY The Company presently has no property related to its waste-to-energy operations. Operations on premises leased by a party contracted to debug, refine and further develop the process have been closed down. The property, located in Libby, Montana, is not unique; and should the need arise, alternate sites are readily available. It is anticipated that any testing, debugging and refining work will be completed at one of USF Smogless sites in Italy. Item 3.Legal Proceedings The Company knows of no litigation present, threatened, or contemplated, or unsatisfied judgments against the Company, its officers, or directors, or any proceedings in which the Company, its officers or directors are a party. Item 4.Submission of Matters to a Vote of Security Holders There were no matters brought to a vote by shareholders during the Fourth Quarter of 1996. PART II Item 5.Market for the Registrant's Common Equity and Related Stockholder Matters a) Market Information The Company's common stock trades on The Nasdaq Small-Cap Market under the symbol MPML. High Bid Low Bid -------- -------- 1994 First Quarter 4.37 2.34 Second Quarter 2.87 1.62 Third Quarter 2.25 1.56 Fourth Quarter 2.37 1.00 1995 First Quarter 2.00 1.18 Second Quarter 2.18 1.25 Third Quarter 1.75 1.25 Fourth Quarter 1.87 0.75 1996 First Quarter 1.75 0.62 Second Quarter 2.00 1.00 Third Quarter 1.50 0.93 Fourth Quarter 0.68 0.43 b) Holders As of April 1, 1997, there were 685 holders of records of the Registrant's common stock. c) Dividends The Company has not paid dividends in the past. It is not anticipated that the Company will distribute any dividends to shareholders in the foreseeable future. Earnings of the Company, if any, are expected to be retained by it to enhance its capital and to expand its operations. Item 6. Selected Financial Data 1996 1995 1994 1993 1992 Results of Operations ------------ ------------ ------------ ------------ ------------ - --------------------- Gain on Sale of Securities $ -0- $ -0- $ -0- $ -0- $ -0- Operating Revenues -0- -0- 200,147 -0- -0- Interest Expense 54,773 68,257 79,125 127,871 161,752 Income Before Taxes (394,607) (271,052) (227,991) (495,513) (817,804) Income Taxes -0- -0- -0- -0- -0- Net Income (Loss) (394,607) (271,052) (227,991) (495.513) (817,804) Financial Position - --------------------- Working Capital (942,797) (822,860) (1,047,464) (1,111,925) (1,545,253) Total Assets 3,074,568 2,051,541 2,015,304 2,074,009 1,866,868 Long-Term Debt -0- -0- -0- -0 72,211 Deficit Accumulated During the Exploration and Development (4,660,759) (4,266,152) (3,995,000) (3,767,109) (3,404,425) Stage Stockholders' Equity 2,771,638 1,745,657 1,617,394 1,449,368 970,728 Return on Stockholders' Equity (14.24%) (15.53%) (14,10%) (25.02%) (74.11%) Per Common Share - --------------------- Net Income (Loss) $ (0.03) $ (0.02) $ (0.02) $ (0.03) $ (0.07) Dividends -0- -0- -0- -0- -0- Book Value $ 0.19 $ 0.14 $ 0.14 $ 0.12 $ 0.10 Average Shares Outstanding [1] 13,339,445 12,534,158 12,107,813 11,970,255 11,857,255
[1]Restated for 4:1 reverse stock split effective April 25, 1985. Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations a) Review of Operations MINING The Company owns or controls 45 contiguous patented and unpatented lode claims. These claims amount to approximately 500 acres in the heart of the historical Emery Mining District, Powell County, Montana. The Pioneer mines located within this claim block accounted for more than 90% of the district's total base and Nobel metal production. The Emery and Bonanza are the largest of these Pioneer mines and both still contain mineralized material. During the last eight years, extensive exploration work has been conducted in the Emery Mining District by Exxon Corporation, Freeport-McMoRan Gold, Inc., Hecla Mining Company and the Company. The Exxon and MPM efforts were initiated in 1984 and concluded in 1986 and 1987, respectively. Hecla's efforts were initiated in 1991 and terminated in 1992. The Company owns the Emery property and is purchasing the Bonanza property. To date, the Company has expended over $1.3 million on exploration and development, lease payments and claims. In addition, over $532,000 has been expended by the Company on vehicles and equipment, buildings and mill machinery. The Company is negotiating with a number of mining companies for a future joint venture. WASTE-TO-ENERGY Construction in Italy of the first Skygas demonstration facility was completed in December, 1991, by Skygas venture partner USF Smogless S.p.A. Testing and debugging began on January 17, 1992, and was concluded in June, 1993. The Skygas process is a new innovative process for converting carbonaceous wastes into a clean burning medium BTU fuel gas. On March 2, 1990, the Company announced it had entered into an agreement with USF Smogless S.p.A. of Milan, Italy, and Xytel Technologies of Mt. Prospect, Illinois, for the purpose of commercializing the Skygas process. USF Smogless agreed to finance, engineer, build and operate a full-sized plant in Italy. Using this facility, Smogless has run tests utilizing refuse derived fuel (RDR), medical and infectious waste, industrial sludge, auto fluff and various types of biomass as feed material. Xytel agreed to handle all promotional work, public relations, advertising, and marketing activities. On January 16, 1996, the Company announced that Xytel Technologies, Inc., had changed its name to Unitel Technologies, Inc., and all previous agreements between that company and Itochu International of Japan had been terminated. In September, 1994, the Company announced that United States Filter Corporation had acquired Laidlaw, Inc.'s, interest in Smogless S.p.A. (renamed USF Smogless S.p.A.). Laidlaw, Inc., had purchased an 80% interest in Smogless in January, 1993. To date, United States Filter Corporation has not made any commitments to the Skygas venture or the Company. On December 27, 1996, the Company announced it had purchased Unitel Technologies, Inc.'s, 15% interest in the Skygas venture for 1.2 million shares of the Company's common stock. In October, 1994, the Company announced it had entered into a joint venture agreement with Winnerway Industries (Holding) Co., Ltd., of Dong Guan City, Guangdon Province, P.R.C. In June, 1993, the Company announced it had received a Letter of Intent from Winnerway to purchase up to two Skygas plants. In addition, Winnerway would become involved in promoting and expanding the Skygas applications in ten Chinese cities. The plan would require construction of a minimum twenty Skygas plants with an estimated aggregate cost of $160 million. In February, 1994, the Company announced that USF Smogless had reached an agreement with steel producer Montello S.p.A., Bergamo of Montello, Italy, to build a pilot plant to convert auto fluff gas into clean burning fuel gas. The plant will use Skygas' secondary reactor in conjunction with Montello's process in thermal decomposition of auto fluff. In November, 1994, the Company announced that testing of the secondary reactor had begun. The testing phase has since been delayed as a weak steel market in Europe forced Montello to close. It is expected that the steel industry will strengthen in 1997. Year Ended 12/31/94 Compared to Year Ended 12/31/93 Net Loss for 1994, 1993 and 1992 were ($227,911); ($445,513); and ($817,804) respectively. Operating Expenses for 1994, 1993 and 1992 were $337,173; $417,400; and $812,259 respectively. Non-Operating Expenses for 1994, 1993 and 1992 were ($79,125); ($127,871); and ($161,752) respectively. Contract Services for 1994 was $82,500 compared to $91,383 in 1993. Professional Services for 1994 was $77,157 compared to $91,383 in 1993. Travel and Entertainment Expense for 1994 was $35,822 compared to $14,799 in 1993. The increase is due to costs incurred during marketing of the Skygas technology. Licenses, Taxes and Fees for 1994 was $60,071 compared to $10,313 in 1993. The increase was a result of fees paid regarding Skygas and the Agreement For License the MAW, dated July 21, 1988. Legal and Accounting for 1994 was $41,760 compared to $25,588 in 1993. The increase was due to an increase in patent costs related to the Skygas process. Miscellaneous Expense for 1994 was $11,632 compared to $3,667 in 1993. The increase is due to newly increased costs for mining claims set by the Bureau of Land Management. Year Ended 12/31/95 Compared to Year Ended 12/31/94 Net Loss for 1995, 1994 and 1993 were ($271,052); ($227,911); and ($445,513) respectively. Operating Expenses for 1995, 1994 and 1993 were $231,928; $337,173; and $417,400 respectively. Non-Operating Expenses for 1995, 1994 and 1993 were ($70,737); ($79,125); and ($127,871) respectively. Contract Services for 1995 was $72,000 compared to $82,500 in 1994. Professional Services for 1995 was $72,276 compared to $77,157 in 1994. Travel and Entertainment for 1995 was $13,915 compared to $35,822 in 1994. Licenses, Taxes and Fees for 1995 was $4,937 compared to $60,071 in 1994. Legal and Accounting for 1995 was $25,709 compared to $41,760 in 1994. Miscellaneous Expense for 1995 was $13,463 compared to $11,632 in 1994. Year Ended 12/31/96 Compared to Year Ended 12/31/95 Net Loss for 1996, 1995 and 1994 were ($394,607); ($271,052); and ($227,991) respectively. Operating Expenses for 1996, 1995, and 1994 were $374,569; $231,928; and $337,173 respectively. Non-Operating Expenses for 1996, 1995 and 1994 were ($51,741); ($70,737); and ($76,220) respectively. Contract Services for 1996 was $2,190 compared to $72,000 in 1995. Professional Services for 1996 was $130,679 compared to $72,276 in 1995. Travel and Entertainment for 1996 was $25,574 compared to $13,915 in 1995. Licenses, Taxes and Fees for 1996 was $83,271 compared to $4,937 in 1995. Legal and Accounting for 1996 was $32,916 compared to $25,709 in 1995. Miscellaneous Expense for 1996 was $336 compared to $13,463 in 1995. b) Liquidity and Capital Resources During 1996, the primary source of revenue was interest on invested funds. Funds for operations were provided primarily by the existing cash reserves, sale of company stock and cash contributions from officers and directors. These funds were expended primarily for general operations of the Company. It is expected that the joint venture agreement with USF Smogless S.p.A. to develop the Skygas process will significantly reduce future debt. Reimbursements from Smogless are expected to be $70,000 during 1997. It is also expected that a joint venture agreement with another mining company will significantly reduce the expenditures required of the Company to develop its mining properties. Management is attempting to locate mining companies for a future joint venture, but as of the date herein, has been unsuccessful. During 1996, the Company entered into a Subordinated Convertible Note Purchase Agreement with Sage Capital Investments Limited (Sage), Nassau, Bahamas, whereby the Company received $100,000. The note has a one year date from Closing and is convertible into the number of shares of common stock of the Company at a 38% discounted price of the five day average bid price prior to the date of conversion as reported by Nasdaq. The Company has completed an extensive up-date of all mining information related to our properties and will continue to active market these properties to various mining companies. The formation of a joint venture would reduce expenses for property taxes, lease payments and insurance premiums. Expenditures related to mining operations were minimal during 1996. At this time, management projects no revenue from the Company's mining properties. Management has oral agreements from banks and major shareholders that will enable the Company to extend the payment terms of the loans payable to major stockholders as well as renew short-term bank loans. Certain officers and directors of the Company, namely Messrs. Appleby, Smozanek, Katz and Luciano have orally agreed to fund operations through cash contributions and have orally agreed to personally secure all notes of the Company. The Company is confident it will be able to extend the payment terms of the loans, as historically over the past few years, this has been the case. The oral agreements are not binding and are not legally enforceable as there are no written agreements in place. Management believes its present and currently anticipated sources of working capital for both short and long term purposes are sufficient to sustain its anticipated growth. Operational expenses of the Company are projected to be $500,000 during 1997. Management believes that the inability to obtain contributions from officers will have a material effect on the financial condition and operations of the Company. Management at this time does not have other specific plans to generate material revenue although successful negotiations for sales of Skygas plants are expected during 1997. Management anticipates that the formation of the Skygas venture will reduce material expenses as each entity is responsible for costs equal to their percentage of interest in the venture, e.g. the Company/NuPower 85%; USF Smogless 15%. The Company believes that during 1997 the venture will accelerate an aggressive marketing plan for the sale, lease, option or a combination thereof of the Skygas process. Other than the potential revenue to be derived from the Skygas process, Management during 1996 began active negotiations with a number of companies interested in being acquired by the Company. Management believes that acquisition of other companies would have a positive effect on revenues. Management expects to conclude acquisitions of one or more companies during 1997. Other than noted above, Management has no other specific plans or ability to generate material revenue in the next three years. Management does intend to reduce material expenditures in the next three years by selling tangible assets in order to reduce the principal on debt, thereby reducing interest expense. The Company also estimates receipts from the sale of certain Company assets, including $200,000 for non-essential mining and milling equipment. Management believes that the equipment will be sold at the fair market value as compared to like equipment for sale in the market place. Receipts from such sales will be used to reduce debt, fund operations and participation costs associated with the Skygas venture. As of the date herein, there are no firm contractual commitments for the sale of such equipment. While management believes further development of the Skygas project will enhance our position for potential marketing and sales, there are no commitments requiring the Company to continue to fund these activities at current levels. c) Inflation Since the Company did not engage in any mining operations, sales of metals or metal bearing ores, and was only in the research and development stage of the waste-to-energy process, inflation and changing prices did not materially impact the financial performance of the Company. Management believes the daily operation of the Company during 1996 were only nominally impacted by increasing prices. d) Compensated Absences The Company has not adopted a policy regarding compensated absences since the Company has not had any employees. At such time as it is required that the Company have employees, then the Company will adopt a policy and provide for their absences. e) Federal or State Income Taxes The Company has not made a provision for Federal or State income taxes, as the Company has sustained losses from inception, and there are Net Operating Losses available to offset substantial future income. Item 8. Financial Statements and Supplementary Date Financial Statements follow on the next page. MPM TECHNOLOGIES, INC. CONSOLIDATED FINANCIAL STATEMENTS CONTENTS Page Independent Auditor's Report 1 Consolidated Statement of Financial Positions as of December 31, 1996 and 1995 2-3 Consolidated Statement of Operations for the Years Ended December 31, 1996, 1995, 1994 and Cumulative Amounts from Inception (May 1, 1983) Through December 31, 1996 4 Consolidated Statement of Changes in Stockholders' Equity for the Period from Inception (May 1, 1983) Through December 31, 1996 5-9 Consolidated Statement of Cash Flows for the Years Ended December 31, 1996, 1995,1994 and Cumulative Amounts from Inception (May 1, 1983) Through December 31, 1996 10-11 Notes to Financial Statements 12-23 To The Board of Directors MPM Technologies, Inc. Spokane, Washington INDEPENDENT AUDITOR'S REPORT I have audited the consolidated statement of financial position of MPM Technologies, Inc., (a Washington corporation in the development stage) and its subsidiaries, as of December 31, 1996, and December 31, 1995, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these consolidated financial statements based on my audit. The consolidated statements of operations, changes in stockholders' equity and cash flows for the year ended December 31, 1994, and from inception (may 1, 1983) through December 31, 1994 were audited by other auditors whose report, dated March 4, 1995, expressed an unqualified opinion on those consolidated financial statements. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatment. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentations. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MPM Technologies, INC., and its subsidiaries as of December 31, 1996 and 1995, and the results of its operations, changes in stockholders' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency, which raises substantial doubt about its ability to continue as a going concern. As is shown in the statement of financial position, the primary assets of the Company are the mining properties and the related deferred exploration and development costs, and the Company's investment in another development stage company. The ultimate outcome of the recoverability of the investment in these assets cannot presently be determined. Management's plans regarding these maters are described in Note 1. Accordingly, the financial statements do not include any adjustments that might result from the outcome of these uncertainties. Terrence J. Dunne Certified Public Accountant Spokane, Washington April 14, 1997
MPM TECHNOLOGIES, INC. Consolidated Statement of Financial AND SUBSIDIARIES Position as of December 31, 1996 (A Development Stage Company) and 1995 ASSETS 1996 1995 ----------------- ----------------- CURRENT ASSETS Cash (Note 2) $ 40,566 $ 138,675 Receivables 37,017 25,440 Prepaid insurance 1,438 6,094 ----------------- ----------------- Total current assets 79,021 170,209 ----------------- ----------------- PROPERTY, PLANT AND EQUIPMENT (NOTE 2) Land 70,000 70,000 Mining claims (Note 3) 48,600 48,600 Mining leases (Notes 3 and 7) 5,437 5,437 Buildings 133,005 133,005 Mill machinery 289,063 289,063 Vehicles and equipment 117,630 114,115 Software 3,258 3,258 ----------------- ----------------- Total property, plant and equipment 666,993 663,478 Less accumulated depreciation 422,167 332,117 ----------------- ----------------- Net property, plant and equipment 244,826 331,361 ----------------- ----------------- OTHER ASSETS Deferred exploration and development costs (Note 1,195,466 1,195,466 1) Investment (Note 1) 1,200,000 Notes receivable 275,000 275,000 Licenses, net of accumulated amortization of $4,595 and $5,344, respectively (Note 2) 29,494 28,745 Advance minimum royalties (Note 2) 50,750 50,750 Mineralized material in place (Note 3) 10 10 ----------------- ----------------- Total other assets 2,750,720 1,549,971 ----------------- ----------------- TOTAL ASSETS $ 3,074,567 $ 2,051,541 ================= ================= The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Financial AND SUBSIDIARIES Position as of December 31, 1996 (A Development Stage Company) and 1995 LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ----------------- ----------------- CURRENT LIABILITIES Accounts payable $ 963 $ 14,356 Interest payable - other 5,859 Interest payable - related parties (Note 4) 129,997 129,997 Notes payable - other (Note 4) 570,234 533,951 Notes payable - related parties (Note 4) 314,765 314,765 ----------------- ----------------- Total current liabilities 1,021,818 993,069 ----------------- ----------------- MINORITY INTEREST (NOTES 2 and 6) Minority interest in consolidated entities (718,888) (687,185) ----------------- ----------------- COMMITMENTS (NOTE 7) STOCKHOLDERS' EQUITY Common stock, $.001 par value, 50,000,000 shares authorized, 14,399,773 shares and 12,842,176 shares outstanding December 31, 1996 and 1995, respectively (Notes 1,6 14,399 12,842 and 8) Additional paid-in capital 7,417,996 5,998,967 Accumulated deficit during the development stage (4,660,758) (4,266,152) ----------------- ----------------- Total stockholders' equity 2,771,637 1,745,657 ----------------- ----------------- TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY $ 3,074,567 $ 2,051,541 ================= ================= The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Operations for the Years Ended AND SUBSIDIARIES December 31, 1996, 1995, 1994 and Cumulative Amounts (A Development Stage Company) from Inception (May 1, 1983) Through December 31, 1996 Cumulative 1996 1995 1994 Amounts ----------- ----------- ------------ ----------------- REVENUES Management fees - related party $ -0- $ -0- $ -0- $ 77,000 Sales of equipment 200,147 200,147 ----------- ----------- ------------ ----------------- Total revenues -0- -0- 200,147 277,147 ----------- ----------- ------------ ----------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Bank service fees 37 35 84 2,781 Contract labor 2,190 72,000 82,500 1,297,314 Depreciation and amortization 89,302 12,399 21,446 611,654 Dues and subscriptions 525 457 4,697 38,884 Employee benefits 3,704 Equipment rental 24,056 Exploration 132,829 Freight 10,553 Insurance 10,408 11,417 12,531 138,183 Professional services 163,675 97,985 118,917 1,467,992 Licenses, taxes and other fees 79,004 4,937 60,071 226,272 Office 23,432 19,593 22,269 200,147 Public relations 1,405 74,168 Rent - office 6,895 3,418 4,529 170,833 Repairs and maintenance 1,739 607 53,397 Research and development 447,111 Telephone and utilities 2,098 1,962 2,817 56,890 Transfer and registration fees 6,376 5,171 2,251 42,490 Travel and entertainment 25,575 13,915 35,822 259,607 Watchman 3,205 1,550 1,560 33,837 Miscellaneous 8,934 13,463 11,632 121,067 Reimbursed expenses (50,232) (26,981) (43,953) (498,384) ----------- ----------- ------------ ----------------- Total expenses 374,568 231,928 337,173 4,915,385 ----------- ----------- ------------ ----------------- (LOSS) BEFORE NON-OPERATING ITEMS (374,568) (231,928) (137,026) (4,638,238) ----------- ----------- ------------ ----------------- NON-OPERATING INCOME (EXPENSE) Interest income 3,032 1,887 2,905 36,324 Interest expense (54,773) (68,257) (79,125) (1,087,444) Forgiveness of debt by related (4,367) 101,509 parties Gain on sale of securities 6,160 Other income 42,965 ----------- ----------- ------------ ----------------- Total non-operating income (51,741) (70,737) (76,220) (900,486) (expense) ----------- ----------- ------------ ----------------- (LOSS) BEFORE INCOME TAXES AND SUBSIDIARY LOSS (426,309) (302,665) (213,246) (5,538,724) ----------- ----------- ------------ ----------------- INCOME TAXES AND SUBSIDIARY LOSS Income taxes (768) Minority interest in subsidiary 31,703 31,613 (14,745) 891,150 loss (income) Equity in loss of unconsolidated (12,416) subsidiary ----------- ----------- ------------ ----------------- Total income taxes and 31,703 31,613 (14,745) 877,966 subsidiary loss (income) ----------- ----------- ------------ ----------------- NET (LOSS) $ (394,606) $ (271,052) $ (227,991) $ (4,660,758) =========== =========== ============ ================= NET (LOSS) PER SHARE (NOTE 2) $ (.03) $ (.02) $ (.02) $ (.42) =========== =========== ============ ================= The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Changes in Stockholders' AND SUBSIDIARIES Equity for the Period from Inception (May 1, 1983) (A Development Stage Company) Through December 31, 1996 Accumulated Deficit Additional During the Common Stock Paid-In Development Shares Amount Capital Stage Totals ------------ ------------- ------------- ------------ ------------- Balances, May 1, 1983 -0- $ -0- $ -0- $ -0- $ -0- Stock issued for cash, July 1983, $.01 per share 400,000 4,000 4,000 Stock issued for mining claims and leases, at $.015 per share 30,130,328 471,397 471,397 4:1 Reverse stock split (22,897,746) Change from no-par to $.001 par (467,764) 467,764 ------------ ------------- ------------- ------------ ------------- Balances, December 31, 1983 7,632,582 7,633 467,764 -0- 475,397 Stock issued for cash, March 1984, $.08 per share 937,500 938 74,062 75,000 Cost of offering (9,081) (9,081) Net income 4,349 4,349 ------------ ------------- ------------- ------------ ------------- Balances, December 31, 1984 8,570,082 8,571 532,745 4,349 545,665 Net (loss) (115,602) (115,602) ------------ ------------- ------------- ------------ ------------- Balances, December 31, 1985 8,570,082 8,571 532,745 (111,253) 430,063 Stock issued for cash, July 1986, $.60 per share 705,211 705 422,415 423,120 Costs of offering (9,848) (9,848) Stock issued for cash, December 1986: $.60 per share 166,667 167 99,833 100,000 $1.00 per share 100,000 100 99,900 100,000 Net (loss) (133,173) (133,173) ------------ ------------- ------------- ------------ ------------- Balances, December 31, 1986 9,541,960 9,543 1,145,045 (244,426) 910,162 Prior period adjustment (12,416) (12,416) ------------ ------------- ------------- ------------ ------------- Balances, December 31, 1986 as 9,541,960 9,543 1,145,045 (256,842) 897,746 restated The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Changes in Stockholders' AND SUBSIDIARIES Equity for the Period from Inception (May 1, 1983) (A Development Stage Company) Through December 31, 1996 Accumulated Deficit Additional During the Common Stock Paid-In Treasury Stock Development Shares Amount Capital Shares Amount Stage Totals ---------- -------- ---------- --------- ------ ------------ ------------ Balances, December 31, 1986 as restated 9,541,960 $ 9,543 $1,145,045 -0- $ -0- $ (256,842) $ 897,746 Stock issued for: Services, February 1987, $.60 per share 21,784 22 13,048 13,070 Services, March 1987, $.60 per share 6,660 6 3,990 3,996 Cash, April-September 1987, $1.40 per 576,123 576 805,999 806,575 share Services, June 1987, $1.40 per share 3,699 4 5,175 5,179 Buildings, land, equipment, mining leases, July 1987, $1.06 per share 761,548 762 809,151 809,913 Increased partnership interest, October 1, 1987, $.10 per share 269,167 269 (45,367) (45,098) (Note 2) Treasury stock acquired (237,900) Net (loss) (301,868) (301,868) ---------- -------- ---------- --------- ------ ------------ ------------ Balances, December 31, 1987 11,180,941 11,182 2,737,041 (237,900) -0- (558,710) 2,189,513 Stock issued for: Services, February 1988, $1.40 per share 683 1 955 956 September 1988, $1.50 per share 200 300 300 Sales of treasury stock 1,272 20,000 1,272 Net (loss) (446,594) (446,594) ---------- -------- ---------- --------- ------ ------------ ------------ Balances, December 31, 1988 11,181,824 11,183 2,739,568 (217,900) -0- (1,005,304) 1,745,447 Stock issued for: Assets September 1989, $.90 per share 1,000 1 899 900 Operating expenses May-December 1989 8,200 8 6,647 6,655 Net (loss) (549,042) (549,042) ---------- -------- ---------- --------- ------ ------------ ------------ Balances, December 31, 1989 11,191,024 11,192 2,747,114 (217,900) -0- (1,554,346) 1,203,960 The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Changes in Stockholders' AND SUBSIDIARIES Equity for the Period from Inception (May 1, 1983) (A Development Stage Company) Through December 31, 1996 Accumulated Deficit Additional During the Common Stock Paid-In Treasury Stock Development Shares Amount Capital Shares Amount Stage Totals ---------- -------- ----------- ---------- ------ ------------- ------------ Balances, December 31, 1989 11,191,024 $ 11,192 $ 2,747,114 (217,900) $ -0- $ (1,554,346) $ 1,203,960 Stock issued for: Services 1,000 Operating expenses at $.047 per share 200 94 94 at $.81 per share 27,231 27 22,098 22,125 at $1.25 per share 5,000 5 6,245 6,250 Patents, October 1990, $1.25 per share 8,000 8 9,992 10,000 Cash, 4th Quarter, $1.25 per share 188,456 189 235,319 235,508 Net (loss) (515,868) (515,868) ---------- -------- ----------- ---------- ------ ------------- ------------ Balances, December 31, 1990 11,419,911 11,421 3,020,862 (216,900) -0- (2,070,214) 962,069 Stock issued for: Cash, 1st Quarter 16,500 16 20,609 20,625 Operating expenses September 1991, $1.00 per share 1,000 1 999 1,000 October 1991, $.905 per share 10,000 10 9,040 9,050 Recision of Treasury Stock, 2nd Quarter 216,900 Contributed capital from directors 208,036 208,036 Net (loss) (383,578) (383,578) ---------- -------- ----------- ---------- ------ ------------- ------------ Balances, December 31, 1991 11,447,411 11,448 3,259,546 -0- -0- (2,453,792) 817,202 Stock issued for: Reduction of debt, 3rd Quarter 50,262 50 26,338 26,388 Cash, 4th Quarter 40,000 40 3,960 4,000 Exercise of 1990 option 435,912 436 (436) Options granted for services 533,975 533,975 Contributed capital from directors 467,290 467,290 Net (loss) (817,804) (817,804) ---------- -------- ----------- ---------- ------ ------------- ------------ Balances, December 31, 1992 11,973,585 11,974 4,290,673 -0- -0- (3,271,596) 1,031,051 The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Changes in Stockholders' AND SUBSIDIARIES Equity for the Period from Inception (May 1, 1983) (A Development Stage Company) Through December 31, 1996 Accumulated Deficit Additional During the Common Stock Paid-In Development Shares Amount Capital Stage Totals ---------- ----------- ---------------- ---------------- --------------- Balances, December 31, 1992 11,973,585 $ 11,974 $ 4,290,673 $ (3,271,596) $ 1,031,051 Stock issued for: Cash at $.10 per share 90,000 90 8,910 9,000 at $1.25 per share 1,000 1 1,249 1,250 at $.10 per share 10,000 10 990 1,000 Operating expenses 10,000 10 12,690 12,700 Exercise of 1990 options 2,000 2 (2) Contributed capital from directors 816,124 816,124 Contributed capital - other 1,250 1,250 Net (loss) (495,513) (495,513) ---------- ----------- ---------------- ---------------- --------------- Balances, December 31, 1993 12,086,585 12,087 5,131,884 (3,767,109) 1,376,862 Stock issued for: Cash at $.97 per share 50,000 50 48,550 48,600 at $.88 per share 30,000 30 26,430 26,460 at $.97 per share 65,574 66 63,574 63,640 Operating expenses 12,800 13 39,987 40,000 Prepaid expenses 12,800 13 39,987 40,000 Reduction of debt 8,380 8 29,992 30,000 Operating expenses 9,120 9 32,706 32,715 Options 110,000 110 10,890 11,000 Contributed capital from directors 176,108 176,108 Net (loss) (227,991) (227,991) ---------- ----------- ---------------- ---------------- --------------- Balances, December 31, 1994 12,385,259 12,386 5,600,108 (3,995,100) 1,617,394 Contributed capital from directors 190,752 190,752 Stock issued for: Cash at $.97 per share 82,580 83 79,917 80,000 at $.87 per share 115,077 115 99,885 100,000 at $.95 per share 159,260 159 151,804 151,963 Investment in NuPower 100,000 100 (119,349) (119,249) Stock registration fees (4,151) (4,151) Net (loss) (271,052) (271,052) ---------- ----------- ---------------- ---------------- --------------- Balances, December 31, 1995 12,842,176 12,843 5,998,966 (4,266,152) 1,745,657 The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Changes in Stockholders' AND SUBSIDIARIES Equity for the Period from Inception (May 1, 1983) (A Development Stage Company) Through December 31, 1996 Accumulated Deficit Additional During the Common Stock Paid-In Development Shares Amount Capital Stage Totals ---------- ---------- -------------- ---------------- ----------------- Balances, December 31, 1995 12,842,176 $ 12,843 $ 5,998,966 $ (4,266,152) $ 1,745,657 Common stock issued for services at $.375 per share 34,000 34 20,026 20,060 Cash contributed to additional paid-in capital 55,528 55,528 Notes payable converted to common stock at $.729 per share 34,305 34 24,964 24,998 Common stock options exercised for cash at $.10 per share 50,000 50 4,950 5,000 Notes payable converted to common stock at $.646 per share 61,895 62 39,938 40,000 Notes payable converted to common stock at $.454 per share 110,193 110 49,890 50,000 Notes payable converted to common stock at $.372 per share 67,204 67 24,933 25,000 Common stock issued for 15% of a development stage company (Note 1) 1,200,000 1,200 1,198,800 1,200,000 Contributed capital from directors Net (loss) (394,606) (394,606) ---------- ---------- -------------- ---------------- ----------------- Balances, December 31, 1996 14,399,773 $ 14,400 $ 7,417,995 $ (4,660,758) $ 2,771,637 ========== ========== ============== ================ ================= The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Cash Flows for the Years Ended AND SUBSIDIARIES December 31, 1996, 1995, 1994 and Cumulative Amounts (A Development Stage Company) from Inception (May 1, 1983) Through December 31, 1996 Cumulative 1996 1995 1994 Amounts ------------- -------------- ------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ (394,606) $ (271,052) $ (227,991) $ (4,660,758) Add items not requiring the use of cash: Depreciation and amortization 89,301 12,399 21,446 620,740 Forgiveness of debt 4,367 (101,509) Minority interest (31,703) (31,612) 14,745 (878,732) Loss (gain) on sale of equipment (200,147) (199,220) Stock granted for operating expenses 20,060 72,715 174,150 Stock options issued for services 533,975 Accrued interest payable converted to 56,631 debt Net (increase)/decrease in: Accounts receivable (11,577) (10,430) (2,908) (24,915) Prepaid insurance 4,656 (2,031) (1,437) Stock issued for prepaid expenses 40,000 40,000 Net increase/(decrease) in: Accounts payable (13,393) (6,001) (24,000) 3,937 Interest payable 5,859 (6,571) 6,571 135,856 ------------- -------------- ------------- --------------- NET CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES (331,403) (308,900) (301,600) (4,301,282) ------------- -------------- ------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES (Additions)/reductions: Mining claims (10,728) Deferred exploration and development costs (485,000) Property, plant and equipment (3,515) (3,500) (302,970) Mining leases (5,330) Leasehold improvements (9,357) Patents and licenses (195) (726) (72,856) Advance minimum royalties (25,000) (52,591) Partnership investment 119,249 90,749 Organization costs (1,296) Proceeds from: Sale of equipment 286,875 296,876 Redemption of bonds and deposits 3,091 Loans made (275,000) (395,456) Less repayments 108,354 ------------- -------------- ------------- --------------- NET CASH FLOWS PROVIDED (USED) FROM INVESTING ACTIVITIES (3,515) 115,554 (13,851) (836,514) ------------- -------------- ------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of short term debt 2,283,112 Payments to settle debt (123,719) (171,458) (194,048) (1,733,706) Issuance of long term debt 300,000 588,184 Sale of treasury stock 1,272 Contributed capital 60,478 190,752 176,108 1,920,038 Issuance of common stock 50 208,563 149,700 2,119,462 ------------- -------------- ------------- --------------- NET CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES 236,809 227,857 131,760 5,178,362 ------------- -------------- ------------- --------------- NET INCREASE (DECREASE) IN CASH (98,109) 34,511 (183,691) 40,566 CASH AT BEGINNING OF YEAR 138,675 104,164 287,855 ------------- -------------- ------------- --------------- CASH AT END OF YEAR $ 40,566 $ 138,675 $ 104,164 $ 40,566 ============= ============== ============= =============== The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. Consolidated Statement of Cash Flows for the Years Ended AND SUBSIDIARIES December 31, 1996, 1995, 1994 and Cumulative Amounts (A Development Stage Company) from Inception (May 1, 1983) Through December 31, 1996 SUPPLEMENTAL CASH FLOW INFORMATION: 1996 1995 1994 ---------------- ------------ ---------------- Noncash Investing and Financing Activities Long term debt converted to 273,597 shares of common stock $ 139,998 ================ Issuance of 1,200,000 shares of common stock for investment in corporation $ 1,200,000 ================ Issuance of 100,000 shares of common stock for partnership interest $ 62,500 ============ Issuance of 8,380 shares of common stock to satisfy debt obligation $ 30,000 ================ Forgiveness of related party debt $ (4,367) ============ Interest payments in cash $ 44,075 $ 74,828 $ 72,554 ================ ============ ================ The accompanying notes are an integral part of these financial statements.
MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 1 - ORGANIZATION Company Business The Company was incorporated as Okanogan Development, Inc., on July 18, 1983 under the laws of the State of Washington. It was formed primarily for the purpose of investing in real estate and interests in real estate. On April 25, 1985, the Company combined with MADD Exploration, a Montana partnership, and changed its name to Montana Precision Mining, Ltd. In August, 1995, the Company changes its name to MPM Technologies, Inc. As a result of the combination, the Company acquired mining properties, and since that time has been engaged in the development of those properties and further exploration for minerals. Prior to the acquisition of the mining properties from MADD Exploration, which began operations on May 1, 1983, (Notes 3 and 7), the partners of MADD had expended approximately $2.25 million in exploration and development of the properties and the construction of a 200 ton per day mill. Since April 30, 1985, the partners in MADD have become officers and directors of the Company and subsequently advanced additional funds for further development and operation of the properties (Notes 4 and 7). The mining claims are located in Powell County, Montana. During 1996, the Company purchased Unitel Technologies, Inc.'s, 15% interest in the Skygas venture for 1.2 million shares of common stock. The Skygas venture was formed in 1990 for the purpose of commercializing the Skygas technology. As of December 31, 1996, participants in the venture included USF Smogless, Milan, Italy, a subsidiary of United States Filter Corporation, Palm Desert, California, and the Company. Skygas is a disposal/gasification process that converts solid and semi-solid waste into clean, medium BTU synthesis gas. Deferred Exploration and Development Costs The Company capitalizes those costs of exploration and development (incurred or acquired) which, in the opinion of management, benefit future periods. These costs will be used to offset future productions on the properties or will be written off if the related property is abandoned, or if data does not delineate a commercial ore body. These costs do not exceed net realizable value. All general and administrative costs are expensed as incurred. Going Concern The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplates continuation of the Company as a going concern. The Company has sustained substantial losses in recent years and used substantial amounts of working capital. Current liabilities exceed current assets by approximately $942,797 as of December 31, 1996. MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 1 - ORGANIZATION (Continued) Going Concern (Continued) The principal asset of the Company is Deferred Exploration and Development Costs ($1,195,466 and $1,195,466 at December 31, 1996 and 1995 respectively) related to the Company's mining properties. The recovery of these costs is based on the successful future development and production of the related properties. Should these costs not be recoverable, doubt arises about the continued existence of the Company. Management believes this likelihood is mitigated by its continued negotiations with major mining companies to form a joint venture to develop these properties. Also, management believes that geological, geophysical and engineering data to date has identified mineralized material in place which are in commercial quantities to be of value, and which would attach to the properties if disposed (Note 3). Management also believes the agreement with USF Smogless, S.p.A., to develop and build a commercial Skygas plant in Europe is of value and will significantly reduce the Company's expenditures related to its waste-to- energy program. It is anticipated the Company will finalize current negotiations for the sale of a Skygas plant during 1997. Management intends to actively seek out and successfully negotiate the acquisition of other companies during 1997. The Company plans to investigate ways to raise capital specifically through various stock offerings. In view of these matters, the continuation of the Company as a going concern is dependent upon the Company's ability to meet its financing requirements and success of its future operations. Management believes that actions presently being taken to form a joint venture, to develop the Company's mining properties, to actively pursue acquisition of companies and the agreement with USF Smogless, provide the opportunity for the Company to continue as a going concern. Mining Properties On April 25, 1985, the shareholders of the Company approved the acquisition of 50% of the interest owned by the partners of MADD Exploration (a Montana partnership and a related party) in certain mining claims and leases located in the Zosell Mining District, Powell County, Montana, by issuance of 4,616,252 shares (after giving effect to the 4:1 split) of the Company's previously unissued common stock (Note 6). The interests acquired pursuant to this approval had previously been purchased, leased or staked by the partners of MADD Exploration. The Company also assumed a liability related to the patented mining claims and the mineral interest acquired on the patented mining claims (Note 5). On January 20, 1986, the partners of MADD exercised an option allowing them to transfer an additional 42% of their interest in those claims and leases in exchange for 2,800,000 additional MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 1 - ORGANIZATION (Continued) Mining Properties (Continued) shares (after giving effect to the 4:1 split) of the Company's previously unissued common stock. The financial statements have been retroactively restated as if these transactions had occurred at the beginning of all periods presented. All assets acquired were recorded at the carry-over cost basis to the partners of MADD Exploration. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation The accompanying consolidated financial statements include the accounts of MPM Technologies, Inc., and its subsidiaries, MPM Mining, Inc., NuPower, Inc., and NuPower (a General Partnership). Intercompany items and transactions between companies have been eliminated. MPM Mining, Inc., a wholly owned subsidiary, was formed during 1987 to conduct the Company's mining operations. As of December 31, 1996, MPM Mining, Inc., had not yet begun operations. NuPower, Inc., a wholly owned subsidiary, was formed during 1986 to conduct the Company's waste-to-energy operations. As of December 31, 1996, NuPower, Inc., had not yet begun operations. NuPower, a 58.21% owned partnership, is engaged in the research and development of an electrothermal gasification process which would be utilized primarily in the waste-to-energy field, although the process is expected to have applications in other areas. The partnership was formed in 1986. During 1995, the Company issued 100,000 shares of previously unissued common stock to acquire an additional 7.21 percent interest in NuPower Partnership from an unrelated partner. This stock had a fair market value of $62,500, but the acquired interest had a deficit capital account balance from the former partner of $119,249. During 1987, the Company acquired an additional 36% interest in NuPower in exchange for 269,167 shares of its previously unissued common stock. This acquisition increased the Company's interest in NuPower from 15% to 51%. As other partners in NuPower include officers and directors of the Company, the acquisition has been treated as a related party transaction. Property and Depreciation Property and equipment are stated at cost. Depreciation is provided primarily using the straight-line method over estimated useful lives, as determined by management. Major improvements and betterments to existing MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Depreciation (Continued) property and equipment are capitalized. Expenditures for repairs and maintenance which do not extend the useful lives of the applicable assets are charged to operations as incurred. Leasehold improvements relate to the _Skygas_ project and are amortized over 7 years. Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Bonding Deposit To satisfy various requirements of the state of Montana and the United States Forest Service regarding surety bonds, the Company has on deposit certificates of deposit for these purposes. The interest on the certificates accrues to the Company. Expense Reimbursements Expenses which have been reimbursed by other companies or joint venturers are recorded in the Statement of Operations as a single line item, and not offset against the individual expense accounts. Reimbursements, specifically from Xytel and Smogless, include license fees and patent costs. Net Income(Loss) Per Share Net income(loss) per share is computed based on the weighted average number of shares outstanding during the period (after giving effect to the 4:1 reverse stock split) as follows (Note 6): Number of Shares Period 13,339,445 Year Ended December 31, 1996 12,534,158 Year Ended December 31, 1995 12,107,813 Year Ended December 31, 1994 11,030,228 Inception to December 31, 1996 Licenses The Company has a license from A.C. Lewis, the inventor of the _Skygas_ process, for the manufacture and construction of units. Using the straight-line method, capitalized license costs are amortized over 408 months. MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Advance Minimum Royalties Advance minimum royalties are amounts paid to property owners for the right to explore and extract any mineralized present. The amounts paid will be offset against the Company's lease agreement, which provides for a royalty on the minerals extracted. These payments in advance of production are part of the underlying lease and are set at a minimum level to the property owner. Advanced royalties were paid to A.C. Lewis related to the agreement for the Skygas License dated July 21, 1988. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principals requires the use of the Company's management estimates for various accounts. Concentration of Risk As of December 31, 1996, the Company had no cash deposits in excess of federally insured limits. Cash accounts at banks are insured by FDIC for up to $100,000. NOTE 3 - MINING CLAIMS Patented The Company acquired 92% of the mineral interest in five (5) patented claims, referred to as the Emery Group, owned by the partners of MADD Exploration. The Company's interest is recorded at cost to the partners of MADD Exploration. The Company currently owns eight patented mining claims in Montana as of December 31, 1996. These claims are recorded at cost. Unpatented The Company owns 16 unpatented claims as of December 31, 1996. Leases The Company leases 8 patented claims and 13 unpatented claims as of December 31, 1996. MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 3 - MINING CLAIMS (Continued) Mineralized Material Management carries mineralized material in an amount of $10 on the balance sheet as a nominal amount for purposes of disclosure. A mineral deposit or mineralized material is a mineralized underground body which has been intersected by sufficient closely spaced drill holes and/or underground sampling to support sufficient tonnage and average grade of metal(s) to warrant further exploration-development work. This deposit does not qualify as a commercially mineable ore body (reserves), as prescribed under Commission standards, until a final and comprehensive economic, technical and legal feasibility study based upon the test results is concluded. (Forward to Next Page) MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 4 - NOTES PAYABLE Notes Payable - Related Parties 1996 1995 ------------------------------- --------- ---------- Alfred Luciano (Director of the Company), Unsecured, Interest at 11%, Due on Demand $ 6,827 $ 6,827 Rudolph Bottiglione (Partner - NuPower), Unsecured, Interest at 11%, Due on Demand 25,000 25,000 Richard Appleby (Director of the Company), Unsecured, Interest at 11%, Due on Demand 129,682 129,682 Michael Luciano (Partner - NuPower), Unsecured, Interest at 11%, Due on Demand 35,000 35,000 Myron Katz (Director of the Company), Unsecured, Interest at 11%, Due on Demand 52,139 52,139 Daniel D. Smozanek (Director of the Company), Unsecured, Interest at 11%, Due on Demand 66,117 66,117 --------- --------- Notes Payable - Related Parties $ 314,765 $ 314,765 ========= ========= On August 13, 1987, the principal shareholders subordinated their loans to outside creditors and claims, in any, by other shareholders to the Company. Unpaid interest on the notes payable to the former partners of MADD Exploration totaled $17,452 as of December 31, 1996, and $17,452 as of December 31, 1995. (Continued) MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 4 - NOTES PAYABLE (Continued) Accrued interest to related parties totaled $129,997 at December 31, 1996, and $129,997 at December 31, 1995. Related parties are in voluntary agreement to terminate their current and future interest as of December 31, 1995. Notes Payable - Others 1996 1995 ---------------------- --------- --------- Notes Payable to First Morris Bank of New Jersey, With Interest at Prime Plus 1%, Payable on Demand $ 328,800 $ 434,000 Note Payable to Chesterton Trading, Ltd., of London, England, With Interest at 5%, Payable April 1, 1999. This Note is Convertible into Common Stock of the Company. 88,406 Note Payable to Sage Capital Investment, Limited, of Nassau, Bahamas, Interest Unstated, Payable September 17, 1997. This Note is Convertible into Common Stock of the Company. 76,432 Note Payable to First National Bank of Libby, Montana, With Interest at Prime Plus 1%, Payable on Demand 76,596 99,951 --------- --------- Notes Payable - Other $ 570,234 $ 533,951 ========= ========= NOTE 5 - RELATED PARTY TRANSACTIONS The Company contracts for its shareholder relations services with a shareholder and officer of the Company. Fees paid to this related party for services for 1994, 1995 and 1996 were $39,600, $41,350, and $52,655 respectively. The Company acquired a mill, land, equipment, mining properties, has assumed certain notes and contracts, and borrowed funds from MADD Exploration, which is a related party. The four partners of MADD are all officers and directors of the Company (Notes 1, 2 and 4). Related party notes payable are listed in Note 4. MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 6 - MINORITY INTEREST IN CONSOLIDATED ENTITIES NuPower, a general partnership, is 58.21% owned by the Company. Since the Company has the 58.21% ownership and significant control, it is consolidated for financial statements purposes The _less than 50% partners_ of NuPower partnership are liable for the accumulated deficit balances in their collective partnership equity accounts pursuant to the general partnership rules, as well as specific agreements. Under these guidelines, the Company has recorded on its books the accumulated deficit in the _Minority Interest in Consolidated Entities_ line item. NOTE 7 - COMMITMENTS Mining Leases The Company entered into certain mining lease agreements. The following schedule of future minimum lease payments required under lease agreements that have initial or remaining noncancelable lease terms in excess of one year for the five years ending after December 31, 1996. 1997 $ 6,300 1998 6,300 1999 6,300 2000 6,300 2001 6,300 -------- $ 31,500 ======== Skygas Technology The Company, through NuPower, entered into an exclusive license rights agreement with Skygas inventor, A.C. Lewis, whereby the Company agreed to pay Lewis the sum of $72,000 annually through April 1, 2007. Following is a schedule of payments for the five years ending after December 31, 1996. 1997 $ 72,000 1998 72,000 1999 72,000 2000 72,000 2001 72,000 -------- $360,000 ======== MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 8 - STOCK OPTION PLAN On May 22, 1990, the shareholders of the Company voted to approve a stock options plan for selected key employees, officers and directors of the Company. The plan is administered by a Compensation Committee of the Board of Directors (the _committee_) consisting of those directors of the Company and individuals who are elected annually by the Board of Directors to the Committee. The Board of Directors has chosen one of the Company's directors and one outside individual to serve on the Committee. No director eligible to receive options under the plan may vote upon the granting of an option or Stock Appreciation Rights (SAR) to himself or herself or upon any decision of the Board of Directors or the committee relating to the Plan. Generally, the plan provides that the terms under which options may be granted are to be determined by a Committee subject to certain requirements as follows: (1) the exercise price will be not less than 100% of the market price per share of the Common Stock of the Company at the time an Incentive Stock Option is granted, or as established by the Committee for Non-qualified Stock Options or Stock Appreciation Rights; and (2) the option purchase price will be paid in full on the date of purchase. The Plan provides that options may be transferred only by will or by the laws of descent and distribution and maybe exercised during the optionee's lifetime only by the optionee or by the optionee's guardian or legal representative. No options have yet been issued. A maximum of 2,130,000 shares were approved by the shareholders for allocation to such stock option plan. During 1996, an officer of the Company exercised options to purchase 50,000 shares of common stock for $5,000. As of December 31, 1996, of the original 2,130,000 options available in the plan, 921,000 options remained available for granting. As of December 31, 1996, 1,209,000 options from the plant had been granted. Of the 1,209,000 options granted, 300,000 options had been exercised as of December 31, 1996. Therefore, there are currently 909,000 shares under option that are available to be exercised at $.10 per share. The 909,000 shares under option will expire in 2002. MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 9 - SEGMENT FINANCIAL DATA
The Company's operations are classified into three principal industry segments: mining, waste-to-energy, corporate and other. Following is a summary of segment information for 1996, 1995 and 1994. Year Ended December 31, 1996 Waste-to- Corporate 1996 Mining Energy And Other Total ---------- ---------- ---------- ---------- Net Sales $ -0- $ -0- $ -0- $ -0- Depreciation and Amortization 90,050 (748) -0- 89,302 Research and Development -0- -0- -0- -0- Operating (Loss) (110,107) (75,862) (188,599) (374,568) Net (Loss) (110,107) (75,763) (208,736) (394,606) Capital Expenditures -0- -0- 3,515 3,515 Identifiable Assets 1,462,953 329,492 1,282,122 3,074,567 Year Ended December 31, 1995 Waste-to- Corporate 1995 Mining Energy And Other Total ---------- ---------- ---------- ---------- Net Sales $ -0- $ -0- $ -0- $ -0- Depreciation and Amortization 10,668 4,731 -0- 12,399 Research and Development -0- -0- -0- -0- Operating (Loss) (65,191) (68,826) (97,911) (231,928) Net (Loss) (63,304) (68,826) (138,922) (271,052) Capital Expenditures -0- -0- -0- -0- Identifiable Assets 1,552,586 354,477 144,478 2,051,541 Year Ended December 31, 1994 Waste-to- Corporate 1994 Mining Energy And Other Total ---------- ---------- ---------- ---------- Net Sales $ 11,875 $ 188,272 $ -0- $ 200,147 Depreciation and Amortization 10,668 10,778 -0- 21,446 Research and Development -0- -0- -0- -0- Operating (Loss) (52,652) 30,092 (114,466) (137,026) Net (Loss) (49,747) 30,092 (208,336) (227,991) Capital Expenditures -0- -0- -0- -0- Identifiable Assets 1,559,754 351,762 103,788 2,015,304
MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS AND SUBSIDIARIES (A Development Stage Company) Spokane, Washington NOTE 10 - ACCOUNTING FOR INCOME TAXES The implementation of FAS 109 is not expected to have a material effect on the operations of the Company. The Company has operating loss carryovers of $3,688,144 to the year ended December 31, 1997. Currently there are no temporary differences reported in the financial statements. These net operating losses will commence to expire in 2001. The Company has not recorded a deferred tax asset for net operating loss carryovers because of the uncertainty of any future taxable income. CONSENT OF CERTIFIED PUBLIC ACCOUNTANT Board of Directors MPM TECHNOLOGIES, INC. Spokane, Washington I hereby consent to the use of my name and report dated April 14, 1997, of MPM TECHNOLOGIES, INC., and the inclusion of my name in the subcaption _Experts_. Terrence J. Dunne Certified Public Accountant April 14, 1997 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no disagreements on accounting and financial disclosures during 1996, nor has there been a change in accountants. PART III Item 10. Directors and Executive Officers of the Registrant a) Identification of Directors FIRST ELECTED NAME AGE POSITION DIRECTOR Charles A. Romberg 48 President/Director 04/25/85 Richard E. Appleby 57 Vice President/Director 04/25/85 Myron Katz 66 Vice President/Director 04/25/85 Daniel D. Smozanek 71 Treasurer/Director 04/25/85 L. Craig Cary Smith 47 Director 04/25/85 Alfred J. Luciano 65 Director 06/19/92 The directors will serve until the next meeting of shareholders or until their successors are elected and qualified. b) Identification of Executive Officers NAME AGE POSITION OFFICER SINCE Charles A. Romberg 48 President/Director 04/25/85 Richard E. Appleby 57 Vice President/Director 04/25/85 Myron Katz 66 Vice President/Director 04/25/85 Daniel D. Smozanek 71 Treasurer/Director 04/25/85 Robert D. Little 47 Secretary 01/03/91 The officers will serve until the next meeting of shareholders or until their successors are elected and qualified. c) Identification of Certain Significant Employees As of December 31, 1996, the Company had no employees; however, the Company is presently dependent upon the services of its principal officers and directors. In the event that one of these persons should leave the Company, there is no assurance that the Company can employ a suitable replacement. d) Family Relations There are no family relationships, whether by blood, marriage or adoption, between any executives and directors. e) Business Experience (1) Background Charles A. Romberg, is President and Director of the Company. Mr. Romberg is a graduate of Linfield College where he received a Bachelor of Science Degree in Economics and Business Administration. He was elected President of MPM Technologies, Inc., in 1990. Mr. Romberg has been the President of Andre-Romberg Insurance Brokerage since 1980. His responsibilities include the overall management of a company generating annual sales in excess of $14 million. Over the past 20 years, Mr. Romberg has worked with numerous clients restructuring existing businesses and organizing and launching new ventures. Mr. Romberg resides in Spokane, Washington. Richard E. Appleby, is Vice President and Director of the Company. He attended post graduate courses at Rutger in Landscape Design, Landscape Maintenance, Landscape Construction and Pesticide Application. From 1957 to 1973, Mr. Appleby was Superintendent and Manager of A-L Services and for Farm Harvesting Co. constructing all types of site development and landscape construction projects. From 1973 to 1980, he was Vice President of A-L Services. Since 1980, he has been President of A-L Services. Mr. Appleby resides in Mendham, New Jersey. Myron Katz, is Vice President and Director of the Company. He received his Bachelor of Science Degree in Merchandising from Fairleigh Dickinson University in 1952 and graduated from Lewis Hotel School in 1953. Mr. Katz has over 30 years diversified administrative and managerial experience. He is the past President of Central Credit Clearing Bureau in Newark and East Orange, New Jersey. Mr. Katz is currently a private consultant facilitating various business ventures. Mr. Katz resides in Lake Hopatcong, New Jersey. Daniel D. Smozanek, is Treasurer and Director of the Company. From 1947 to 1972, Mr. Smozanek was owner and President of Spring House Tree Service in Summit, New Jersey. He has been involved in extensive real estate and land development in New Jersey, Montana and Florida. From 1972 to 1980, he was a partner in land development and real estate sales in the Eureka, Montana area. During this time, he was also a partner in the exploration of 29 silver and copper mining claims in the Flathead National Forest. Mr. Smozanek resides in Port St. Lucie, Florida. Robert D. Little, is Secretary of the Company. He is a graduate of Central Washington University with a Bachelor of Arts Degree in Sociology; graduate studies at the University of Washington in Education and completed Teacher Certification at Seattle University. From 1975 to 1985, he was the Founder and Director of Education of the Meridian School in Seattle, Washington. From 1985 to the present, Mr. Little has been Operations Manager for the Company and became Secretary of the Company in 1991. Mr. Little has been owner of R.D. Little Company which specializes in assisting small public companies with shareholder and investor relations from 1985 to the present. Mr. Little resides in Spokane, Washington. L. Craig Cary Smith, is a Director of the Company. Mr. Smith graduated from Gonzaga Law School in 1981 and was admitted to the Washington State Bar that same year. From 1974 to 1976, he was involved with the U.S. Department of Interior and U.S. Department of Fish and Wildlife as a surveyor and Graduate Student. From 1981 to present, Mr. Smith has been a partner in general practice at Smith and Hemingway in Spokane, Washington. Mr. Smith resides in Spokane, Washington. Alfred J. Luciano, is Director of the Company. Mr. Luciano was Founder and President of Farm Harvesting Company from 1950 to 1978. From 1960 to 1979, Mr. Luciano was Founder and President of A-L Services maintaining corporate sites including Allied Chemical, Exxon Research, Sandoz, Inc., Interpace, Warner Chilcott, and the Mennen Co. He is past President of the Associated Independent Contractors of the State of New Jersey and Co-Founder and Director of First Morris Bank in Morristown, New Jersey. From 1973 to the present, Mr. Luciano has been engaged in ranching; 1978 to 1980, he was engaged in developing a copper and silver deposit in Hungry Horse, Montana. From 1981 to 1986, he was engaged in developing the Emery Mine property in Powell County, Montana. From 1985 to until his resignation in 1990, Mr. Luciano was President of Montana Precision Mining, Ltd. From 1990 to the present he has been Senior Manager of Operations and Development of the Skygas Process. (2) Directorships None of the directors of the Company are directors of other companies with securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such act or any company registered under the Investment Company Act of 1940. f) Involvement in Certain Legal Proceedings Not Applicable g) Promoter and Control Persons Not Applicable Item 11. Executive Compensation The following table shows the remuneration of officers and directors in excess of $100,000 in 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE LONG TERM COMPENSATION Annual Compensation Awards Payouts Name and Principal Other Stock Options LTIP All Other Position Year Salary Bonus Compensation Awards SARs($) Payouts($) Compensation($) - -------------------- ------ ------ ----- ------------ ------ ------- ---------- --------------- Charles A. Romberg President 1996 1995 1994 1993 403,000 Robert D. Little Secretary 1996 1995 1994 1993 403,000 L. Craig Cary Smith 1996 1995 1994 1993 403,000
OPTION GRANTS IN 1996 FISCAL YEAR INDIVIDUAL GRANTS % of Total Options/SARs Exercise Date Options Granted to Employees Or Base of Market Price on Name SARs Granted In Fiscal Year 1996 Price ($/Sh) Grant Expiration Date - -------------------------------------------------------------------------------------------- NONE
AGGREGATED OPTION/SAR EXERCIES IN LAST FISCAL YEAR AND FYE OPTION/SAR VALUES Unexercised in the Money Options/SAR Number of Unexercised at FYE ($) Shares Acquired Options/SARS FYE 1996 Exercisable/ Name on Exercise Value Realized Exercisable/Unexercisable Unexercisable - ------------------- --------------- ---------------- ------------------------- -------------- Charles A. Romberg President/Director 313,000 Exercisable $136,938 Exercisable Robert D. Little Secretary 243,000 Exercisable $106,312 Exercisable L. Craig Cary Smith Director 353,000 Exercisable $154,438 Exercisable
a) Current Remuneration None of the officers or directors are compensated for their services as an officer or director. Each is reimbursed for out-of-pocket expenses incurred on Company business. b) Proposed Remuneration It is not contemplated that any salaries will be paid unless, and until such time as, the Company may require full-time commitments from any officer or director. c) Incentive and Compensation Plans and Arrangements The Company has no retirement, profit sharing, pension, or insurance plans covering its officers and directors. No advances have been made, nor are any contemplated by the Company, to any of its officers or directors. The shareholders of the Company, at the Annual Shareholders Meeting on May 22, 1989, voted to approve a stock option plan for selected employees, officers and directors of the Company. The purpose of the option plan is to promote the interests of the Company and its stockholders by attracting, retaining and stimulating the performance of selected employees, officers and directors and giving such employees the opportunity to acquire a proprietary interest in the Company's business and an increased personal interest in its continued success and progress. Item 12. Security Ownership of Certain Beneficial Owners and Management a) Security Ownership and Certain Beneficial Owners Other than as set forth in Part b) of this Item, Security Ownership of Management, no person or group was known by the Registrant to own more than five percent of the Company's common stock. b) Security Ownership of Management as of February 15, 1996 The following table sets forth, as of February 15, 1996, the amount and percentage of the Common Stock of the Company, which according to the information supplied to the Company, is beneficially owned by management, including officers and directors of the Company. Except as otherwise specified, the persons named in the table have sole voting power and investment power with respect to all shares of Common Stock beneficially owned by them. Title of Name of Amount and Nature of Percent Class Beneficial Owner Beneficial Ownership of Class -------- --------------------- ------------------------ -------- Common Charles A. Romberg 64,500 [1] [8] 0.45 Common Richard E. Appleby 825,345 [2] -- 5.73 Common Myron Katz 769,351 [3] -- 5.34 Common Robert D. Little 50,000 [4] [8] 0.35 Common Daniel D. Smozanek 1,005,063 [5] -- 6.98 Common L. Craig Cary Smith 17,000 [6] [8] 0.12 Common Alfred J. Luciano 1,009,308 [7] -- 7.01 [1] Does not include 1,000 shares (0.006%) of the Company's outstanding common stock owned by the wife, children and parents of Mr. Romberg, with respect to which he declines beneficial ownership. [2] Does not include 638,010 shares (4.43%) of the Company's outstanding common stock owned by the wife and children and siblings of Mr. Appleby, with respect to which he declines beneficial ownership. [3] Does not include 253,160 shares (1.78%) of the Company's outstanding common stock owned by the wife and children of Mr. Katz, with respect to which he declines beneficial ownership. [4] Does not include 22,500 shares (0.15%) of the Companies outstanding common stock owned by a parent, children and siblings of Mr. Little, with respect to which he declines beneficial ownership. [5] Does not include 232,207 shares (1.61%) of the Company's outstanding common stock owned by the wife, children, grandchildren and siblings of Mr. Smozanek, with respect to which he declines beneficial ownership. [6] Does not include 3,050 shares (0.02%) of the Company's outstanding common stock owned by the parents and children of Mr. Smith, with respect to which he declines beneficial ownership. [7] Does not include 585,668 shares (4.07%) of the Company's outstanding common stock owned by the children, siblings and grandchildren of Mr. Luciano, with respect to which he declines beneficial ownership. [8] Does not include options for the purchase of shares of the Company's common stock. Options available for exercise as of December 31, 1996, for Charles A. Romberg, L. Craig Cary Smith and Robert D. Little are 313,000; 353,000; and 243,000 respectively. c) Changes in Control There are no contractual arrangements of any kind, known to the Company, which may at a subsequent date result in a change in control of the Company. Item 13. Certain Relationships and Related Transactions a) Transactions with Management and Others No officers or directors of the Company, or nominees for election as director, or beneficial owners of more than five percent of the Company's voting stock, or members of their immediate families had any material transactions with the Company other than as set forth in Part b) of this item. b) Certain Business Relationships The Company entered into several transactions with MADD Exploration, a Montana partnership. Certain officers and directors of the Company were the partners of MADD Exploration; namely, Richard Appleby, Vice President and Director; Myron Katz, Vice President and Director; Daniel Smozanek, Treasurer and Director; and Alfred Luciano, Director. On April 25, 1985, the shareholders of the Company approved the acquisition of 50% of the interest owned by the partners of MADD Exploration in certain mining claims and leases located in the Emery Mining District of Powell County, Montana, by the issuance of 4,616,252 shares of the Company's previously unissued common stock. At that time, the Company also granted the partners an option to transfer an additional 42% of their interest in those claims and leases to the Company in exchange for 2,800,000 additional shares of the Company's previously unissued common stock. On January 20, 1986, the partners exercised their option. The properties and their basis are as follows. Patented Mining Claims The Company acquired 92% of the mineral interests in five (5) patented claims, referred to as the Emery Group, owned by the partners of MADD Exploration. The Company's interest is recorded at cost to the partners of MADD Exploration. Mining Leases The Company acquired interests ranging from 48% to 92% of the total mineral interest in seventeen (17) leases from MADD Exploration; these leases were recorded at a nominal value of $10 per lease. Additionally, the Company has had to rely on the resources and abilities of the four principal shareholders, who are also officers and directors of the Company, to make loans to the Company. These loans have enabled the Company to continue its locations and staking of claims as well as geological work on a limited basis. These individuals are: Richard Appleby, Vice President and Director; Myron Katz, Vice President and Director; Daniel Smozanek, Treasurer and Director; and Alfred Luciano, Director. The Company has a contract with R.D. Little Co. to provide shareholder and investor relations services. R.D. Little Co. Is owned by Robert D. Little, Secretary of the Company. During the period from January 1, 1996, through December 31, 1996, total cost for services was $45,600. It is the opinion of management of the Company that the amount and terms for leases and services from affiliates are comparable to those which might be obtained from unaffiliated parties. In December, 1996, the Company announced it had purchased Unitel Technologies, Inc.'s, 15% interest in Skygas venture for 1,200,000 shares of common stock. These shares have not been registered under the Securities Act of 1933 and are _restricted securities_ as that term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold, traded or transferred except pursuant to the effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. c) Other Information None PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K a) The following documents are filed as part of this report: (1) All financial statements Consolidated Financial Statements (2) Those Financial Statement Schedules required to be filed by Item 8 of Form 10-K and paragraph (d) of Item 14 of Form 10-KSB. Page Schedule I Marketable Securities - Other Investments N/A Schedule II Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other than Related Parties [1] Schedule III Condensed Financial Information of Registrant N/A Schedule IV Indebtedness of and to Related Parties - Not Current N/A Schedule V Property, Plant and Equipment 47 Schedule VI Accumulated Depreciation, Depletion, and Amortization of Property, Plant and Equipment 48 Schedule VII Guarantees of Securities of Other Issuers N/A Schedule VIII Valuation and Qualifying Accounts N/A Schedule IX Short-Term Borrowing N/A Schedule X Supplementary Income Statement Information N/A Schedule XI Real Estate and Accumulated Depreciation N/A Schedule XII Mortgage Loans on Real Estate N/A Schedule XIII Other Investments N/A Schedule XIV Supplemental Information Concerning Property-Casualty Insurance Operations N/A [1] Substantially equivalent information is provided in Note 2 to the Financial Statements. (3) Those exhibits required to be filed by Item 601 of Regulation S-K and paragraph (c) of Item 15 of Form 10-K. (Exhibits are numbered in accordance with Item 601(b) of Regulation S-K.) Exhibit Page (3) Articles of Incorporation and By-lays Filed as Exhibit 3 to Form 10 Registration Statement No. 0-14910 filed October 21, 1986, and incorporated herein by reference. * (4) Instruments defining the rights of security holders (Refer to Articles IV, VII, VIII and IX of the Articles of Incorporation and to the By-laws of the Corporation.) N/A (9) Voting Trust Agreement (Refer to Article VII of the Articles of Incorporation.) N/A (10) Material Contracts N/A (11) Statement re Computation of Per Share Earnings (Refer to Note 1 to the Attached Financial Statements Dated December 31, 1996) N/A (12) Statement re Computation of Ratios N/A (13) Annual Report to Security Holders N/A 1. Annual Report to Stockholders, for the Year Ended December 31, 1996, has not yet been prepared. The report will be filed as a supplement to this Form 10-KSB (18) Letter re Change in Accounting Principles N/A (19) Previously Unfiled Documents N/A (22) Subsidiaries of the Registrant N/A (24) Consents of Experts and Counsel 1. Consent of Terrence J. Dunne, P.S. Certified Public Accountants 49 (25) Power of Attorney N/A (27) Financial Data Schedule EX-27 (28) Additional Exhibits: 1. Glossary * (29) Information From Reports Furnished to State Insurance Regulatory Authorities N/A *Reference is made to the full text of such Exhibits contained in Form 10 as filed with the Securities and Exchange Commission, Washington, D.C. and which are incorporated by reference herein. Copies of the completed Form 10 can be obtained from the Securities and Exchange Commission of from the Company. b) Reports on Form 8-K: January 16, 1996, the Company announced that its Skygas venture partners Xytel Technologies, Inc., had changed its name to Unitel Technologies, Inc. New Headquarters are located at 411 Business Center Drive, Mt. Prospect, Illinois 60056. Telephone number is (708)297-2265. All previous agreements between Unitel Technologies, Inc., and Itochu International of Japan have been terminated. March 19, 1996, the Company announced the signing of an agreement with a consortium of European companies that would utilize the Skygas technology in combination with USF Smogless' proprietary Flotherm technology for the destruction of organic wastes. April 11, 1996, the Company announced it had received notification from their auditor, Robert Moe & Associates, P.S., that they would not be able to audit the Company's December 31, 1995, financial statement. May 8, 1996, the Company announced that reports for years ended 1993 and 1994 by Robert Moe & Associates, independent auditor for the Company, did not contain an adverse opinion or disclaimer of opinion or modified as to uncertainty, audit scope, or accounting principles. During the Company's two most recent fiscal years and subsequent interim period proceeding dismissal by Robert Moe & Associates, there were no disagreements with the former accountant on any disclosure, or auditing scope or procedures, which disagreements if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. December 27, 1996, the Company announced it had purchased Unitel Technologies, Inc.'s, 15% interest in the Skygas venture for 1.2 million shares of common stock. c) Exhibits: Those exhibits required to be filed by Item 601(a) of Regulation S-K follow on the next page. d) Financial Statement Schedules: Those Financial Statement Schedules required to be filed under Rule 5-04 and Article 12 of Regulation S-X, together with the accountant's report thereon, follow on the next page. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities 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. By: /s/Charles A. Romberg -------------------------- Title: President -------------------------- Date: 4/14/97 ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date /s/Charles A. Romberg 4/14/97 - --------------------- Officer/Director ------------ Charles A. Romberg /s/Richard Appleby 4/14/97 - --------------------- Officer/Director ------------ Richard Appleby /s/Myron Katz 4/14/97 - --------------------- Officer/Director ------------ Myron Katz /s/Danial Smozanek 4/14/97 - --------------------- Officer/Director ------------ Daniel Smozanek /s/L. Craig Cary Smith 4/14/97 - --------------------- Director ------------ L. Craig Cary Smith /s/Alfred J. Luciano 4/14/97 - --------------------- Director ------------ Alfred J. Luciano EX-27 2
5 YEAR DEC-31-1996 DEC-31-1996 40566 0 0 0 0 79021 666993 422167 3074567 1021818 0 0 0 14399 2757238 3074567 0 0 0 0 374568 0 54793 (426309) 0 (394606) 0 0 0 (394606) (.03) (.03)
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