-----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, Gbo+v7kL2wc90Aq/5/k9LDeFfjA4pI1IRySw5aq/meifTTY2EziicnV1/a26G5gD +qr6hJ0y1PLoHwxwOSPM/w== 0001004522-99-000021.txt : 19990817 0001004522-99-000021.hdr.sgml : 19990817 ACCESSION NUMBER: 0001004522-99-000021 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-14910 FILM NUMBER: 99690729 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 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934 For the quarter ended June 30, 1999 Commission File Number 0-14910 MPM TECHNOLOGIES, INC. ------------------------------------------------------------------ (Exact Name of Small Business Issuer as specified in its Charter) Washington 81-0436060 - ------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 222 W. Mission Ave. Suite 30 Spokane, WA 99201 - ------------------------------- ----------------- (Address of principal (Zip Code) executive offices) Issuer's telephone number, including area code: 509-326-3443 Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 --- --- As of August 5, 1999, the registrant had outstanding 2,627,961 shares of common stock which is the registrant's only class of stock. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Financial Statements follow on the next page.
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS JUNE DECEMBER 30, 1999 31, 1998 (UNAUDITED) Current assets: -------------- ------------ Cash and cash equilavents $497,694 $2,634,570 Accounts receivable, net of allowance for doubtful accounts of $90,000 4,200,988 1,630,630 Inventories 339,411 496,964 Costs and estimated earnings in excess of billings 3,149,581 1,571,833 Other current assets 145,394 66,999 -------------- ------------ Total current assets 8,333,068 6,400,996 -------------- ------------ Property, plant and equipment, net 307,379 320,026 Mineral properties held for sale 1,086,346 1,086,346 Goodwill, net of accumulated amortization of $76,053 and $38,027 684,479 722,505 Note receivable 275,000 275,000 Purchased intangible, net of accumulated amortization of $168,750 and $135,000 506,250 540,000 Other assets, net 119,176 123,420 -------------- ------------ $11,311,698 $9,468,293 ============== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,912,027 $821,600 Accrued expenses 166,390 386,869 Billings in excess of costs and estimated earnings 2,211,121 3,819,204 Accrued expenses - related party 63,116 63,116 Notes payable 5,461 5,461 Related party debt 230,000 270,000 Current portion of long-term debt 43,034 43,034 Preferred stock deposit - 760,035 -------------- ------------ Total current liabilities 6,631,149 6,169,319 -------------- ------------ Long-term debt, less current portion 961,518 561,518 Negative goodwill, net of accumulated amortization of $212,600 and $165,356 732,289 779,533 -------------- ------------ Total liabilities 8,324,956 7,510,370 -------------- ------------ Commitments and contingencies Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 2,627,961 and 2,146,128 shares issued and outstanding 2,628 2,146 Additional paid-in capital 9,814,127 8,844,883 Accumulated deficit (6,830,013) (6,889,106) -------------- ------------ Total stockholders' equity 2,986,742 1,957,923 -------------- ------------ $11,311,698 $9,468,293 ============== ============
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Quarter Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 (Restated) (Restated) ----------- ------------ ------------ ------------ Revenues $6,647,177 $2,431,531 $10,724,089 $4,201,129 Cost of sales 5,348,764 1,732,317 8,460,614 3,297,735 ----------- ------------ ------------ ------------ Gross margin 1,298,413 699,214 2,263,475 903,394 Selling, general and administrative expenses 975,388 640,690 1,902,962 1,152,414 ----------- ------------ ------------ ------------ Income (loss) from operations 323,025 58,524 360,513 (249,020) ----------- ------------ ------------ ------------ Other income (expense): Interest expense (318,151) (25,274) (350,834) (47,100) Other income, net 12,643 11,791 49,414 29,365 ----------- ------------ ------------ ------------ Net other income (expense) (305,508) (13,483) (301,420) (17,735) ----------- ------------ ------------ ------------ Income (loss) from continuing operations 17,517 45,041 59,093 (266,755) Discontinued operations: Loss from discontinued mining operations - (11,312) - (14,458) ----------- ------------ ------------ ------------ Net income (loss) $17,517 $33,729 $59,093 ($281,213) =========== ============ ============ ============ Basic earnings per share: Income (loss) from continuing operations $0.01 $0.02 $0.03 ($0.15) (Loss) from discontinued operations Nil ($0.01) Nil ($0.01) ----------- ------------ ------------ ------------ Net income (loss) $0.01 $0.01 $0.03 ($0.16) =========== ============ ============ ============ Diluted earnings per share: Income (loss) from continuing operations $0.00 $0.02 $0.02 ($0.15) (Loss) from discontinued operations Nil ($0.01) Nil ($0.01) ----------- ------------ ------------ ------------ Net income (loss) $0.00 $0.01 $0.02 ($0.16) =========== ============ ============ ============ Weighted average shares of common stock outstanding - basic 2,537,668 1,837,569 2,342,883 1,835,160 =========== ============ ============ ============ Weighted average shares of common stock outstanding - diluted 3,516,282 1,837,569 3,321,497 1,835,160 =========== ============ ============ ============
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 1999 1998 (Restated) ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $59,093 ($281,213) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 66,062 15,077 Interest imputed on related party debt 7,408 13,594 Interest imputed on issue of stock 266,666 - Change in assets and liabilities: Accounts receivable (2,570,358) (230,794) Costs and estimated earnings in excess of billings (1,577,748) 59,979 Inventories 157,553 194,604 Other assets (74,151) 501 Accounts payable and accrued expenses 2,109,913 (109,352) Billings in excess of costs and estimated earnings (1,608,083) (408,192) ------------ ------------ Net cash used in operating activities (3,163,645) (745,796) ------------ ------------ Cash flows from investing activities: Acquisition of property, plant and equipment (28,883) (9,649) ------------ ------------ Net cash used in investing activities (28,883) (9,649) ------------ ------------ Cash flows from financing activities: Repayment of related party debt (40,000) - Repayment of notes payable - (60,605) Repurchase and retirement of common stock (4,348) (43,783) Proceeds from stock issue 700,000 - Proceeds from related party debt 400,000 - ------------ ------------ Net cash provided by (used in) financing activities 1,055,652 (104,388) ------------ ------------ Net decrease increase in cash and cash equivalents (2,136,876) (859,833) Cash and cash equivalents, beginning of period 2,634,570 2,010,596 ------------ ------------ Cash and cash equivalents, end of period $497,694 $1,150,763 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $28,304 $ - Income taxes $ - $ -
Supplemental disclosure of non cash financing activities: During the six months ended June 30, 1998, the Company issued 5,556 shares of its common stock under the terms of an agreement with a unrelated entity. MPM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS 1. Unaudited Financial Statements These financial statements should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-KSB for the year ended December 31, 1998. Since certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting standards have been omitted pursuant to the instructions to Form 10-QSB of Regulation S-X as promulgated by the Securities and Exchange Commission, these financial statements specifically incorporate by reference the footnotes to the consolidated financial statements of the Company as of December 31, 1998. In the opinion of management, these unaudited interim financial statements reflect all adjustments necessary for a fair presentation of the financial position and results of operations and cash flows of the Company. Such adjustments consisted only of those of a normal recurring nature. Results of operations for the period ended June 30, 1999 should not necessarily be taken as indicative of the results of operations that may be expected for the entire year 1999. 2. Earnings Per Share Earnings per share ("EPS") is computed by dividing net income (loss) by the weighted average number of common shares outstanding in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share". The following table reconciles the number of common shares used in the basic and diluted EPS calculations: For the Six Months Ended June 30, 1999 Weighted- Net Average Per-Share Income Shares Amount ---------- ------------ -------------- Basic EPS Income available to common stockholders $ 59,093 2,342,883 $ 0.03 Effect of Dilutive Securities Common stock options - 978,614 ( 0.01) ---------- ------------ -------------- Diluted EPS Income available to common stockholders - assumed conversions $ 59,093 3,321,497 $ 0.02 ========== ============ ============== For the Three Months Ended June 30, 1999 Weighted Net Average Per-Share Income Shares Amount ---------- ----------- -------------- Basic EPS Income available to common stockholders $ 17,517 2,537,668 $ 0.01 Effect of Dilutive Securities Common stock options - 978,614 - ---------- ----------- -------------- Diluted EPS Income available to common stockholders - assumed conversions $ 17,517 3,516,282 $ 0.01 ========== =========== ============== At June 30, 1998, outstanding options to purchase 101,000 shares of the Company's common stock were not included in the computation of diluted EPS as their effect would have been antidilutive. Accordingly, basic and diluted EPS are the same for the three and six months ended June 30, 1998. 3. Segment Information The Company's consolidated financial statements include certain reportable segment information. These segments include Huntington Environmental Systems, Inc., a wholly owned subsidiary engaged in designing, engineering, supplying and servicing air pollution control systems which primarily utilize heat and chemicals to control air pollution, and AirPol, Inc., a wholly owned subsidiary engaged in designing, engineering, supplying and servicing air pollution control systems which utilize wet and dry scrubbers, wet electrostatic precipitators and venturi absorbers to control air pollution. The Company evaluates the performance of these segments based upon multiple variables including revenues and profit or loss. The segments' profit and loss components and schedule of assets as of June 30, 1999 are as follows: Air Air Pollution Pollution Control Control All (Heat) (Scrubbers) Others Total ------------- ------------ ---------- ------------ Revenue external $ 4,436,328 $ 6,287,761 $ - $10,724,089 Revenue internal - - 66,000 66,000 Segment profit (loss) 133,199 388,733 (462,839) 59,093 Segment assets 4,439,946 5,328,314 4,930,525 14,698,785 Reconciliation of segment revenues, net income, total assets and other significant items for the six months ended June 30, 1999 are as follows: Revenues Amount -------------- Total revenues for reportable segments $ 10,724,089 Other revenues 66,000 Elimination of intersegment revenues (66,000) -------------- Total consolidated revenues $ 10,724,089 ============== Profit or loss Total profit or loss for reportable segments $ 521,932 Other profit or loss (451,310) Discontinued operations ( 11,529) -------------- Total consolidated profit or loss $ 59,093 ============== Assets Total assets for reportable segments $ 9,768,260 Other assets 3,844,179 Assets of discontinued operation 1,086,346 Elimination of intersegment assets (3,387,087) -------------- Total consolidated assets $ 11,311,698 ============== 4. Financing In December 1998, MPM filed a registration statement with the Securities and Exchange Commission, and received funds pending the completion of the registration statement. Pursuant to an agreement in April, an MPM director invested $1,100,000 in cash which was used to repay the funds received and many of the related expenses. MPM then formally withdrew its registration statement. Under the terms of the agreement, MPM issued 150,000 shares of its common stock at the market price in exchange for $300,000, and issued convertible debentures aggregating $400,000 which could be converted to MPM common stock at a discount. The debentures were converted concurrently with the stock issue resulting in issuing an additional 333,333 shares of common stock. The amount of the discount is treated as a current period expense with the offset being credited to additional paid-in capital. The effect on MPM's results for the three and six months ended June 30, 1999 was to decrease net income by approximately $267,000. The $400,000 balance of the $1,100,000 was a note payable with interest only payments at 8% per annum through March 2004 with the balance due April 2004. PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations MPM Technologies, Inc. ("MPM") acquired certain of the assets and assumed certain of the liabilities of a part of a division of FLS miljo, Inc. as of July 1, 1998. MPM formed AirPol, Inc. ("AirPol") to run this air pollution control business. AirPol designs, engineers, supplies and services air pollution control systems for Fortune 500 and other industrial and environmental companies. The technologies of AirPol utilize wet and dry scrubbers, wet electrostatic precipitators and venturi absorbers to control air pollution. AirPol brought over 30 years experience to MPM through its technologies and employees. As of April 1, 1997, MPM acquired certain of the assets and assumed certain of the liabilities of a portion of a division of United States Filter Corporation, and formed Huntington Environmental Systems, Inc. ("HES") to operate this air pollution control business. HES designs, engineers, supplies and services high temperature and chemical air pollution control systems for Fortune 500 and other industrial and environmental companies. HES brought has over 25 years of experience and over 300 installations across the globe to MPM through its technologies and employees. Both HES's and AirPol's engineering staffs are uniquely prepared to address the full scope of customers' process problems. Their policies of handling clients' individual concerns include in-depth analysis and evaluation, followed by complete engineering and design services leading to application-specific engineered solutions. MPM holds a 58.21% interest in Nupower Partnership through its wholly-owned subsidiary, Nupower, Inc. Nupower Partnership is engaged in the development and commercialization of a waste-to-energy process which has been named "Skygas". Skygas is an innovative technology for the disposal and gasification of carbonaceous wastes such as municipal solid waste, municipal sewage sludge, pulp and paper mill sludge, auto fluff, medical waste and used tires. The process converts solid and semi-solid wastes into a clean-burning medium BTU gas that can be used for steam production for electric power generation. The gas may also be a useful building block for downstream conversion into valuable chemicals. MPM controls 32 claims on approximately 1,000 acres in the historical Emery Mining District in Montana through its wholly-owned subsidiary, MPM Mining, Inc. In accordance with the Board of Directors' mandates, MPM's management is actively seeking out mining and other businesses to purchase its mining properties and equipment. HES and AirPol are active continuing concerns. The development of the Skygas process through Nupower Partnership is also ongoing. No other operations were conducted. Accordingly, the financial statements for the six months ended June 30, 1999 include the operations of HES, AirPol, Skygas and MPM, and for the six months ended June 30, 1998, include HES, Skygas and MPM, but not AirPol since it was acquired July 1, 1998. MPM's consolidated net income for the six months ended June 30, 1999 was $59,093, or $0.03 per share compared to a loss of $281,213, or $0.16 per share for the six months ended June 30, 1998. This was due to the performance of AirPol for the first six months of 1999, and improved results for HES for the same period. MPM's results for the six months included one-time charges related to its aborted preferred stock offering and registration filing, and subsequent funding by a director of the Company of approximately $360,000. Without these charges, MPM's basic earnings per share would have been approximately $0.18. Management expects that MPM's performance will improve during the upcoming quarters. This is supported by its backlog of work at June 30, 1999 of approximately $13,200,000, and steady sales activity in July and early August. MPM announced that is has agreed in principal with a consortium in Europe to furnish four to five Skygas units initially, with an additional 11 to 12 units to follow by 2003. The first of these units will begin construction late in the third quarter of 1999 with an anticipated completion date in mid 2000. Total funding to be provided by the consortium for these units is approximately $125,000,000. It is anticipated that revenues from these units will begin to enhance MPM's financial results by the end of the calendar year. Six and three months ended 6/30/99 compared to six and three months ended 6/30/98 For the six months ended 6/30/99, MPM had net income of $59,093, or $0.03 per share compared to a net loss of $281,213, or $0.16 per share for the six months ended 6/30/98. Revenues increased 155.3% to $10,724,089 for the six months ended 6/30/99 compared to $4,201,129 for the six months ended 6/30/98. This was due to the addition of AirPol's operations in the 1999 six months. Costs of sales increased 156.6% to $8,460,614 for the six months ended June 30, 1999 compared to $3,297,735 for the six months ended June 30, 1998. This was due to the increased revenues through the addition of AirPol's operations in 1999. Operating expenses were up 64.1% to $1,891,433 for the six months ended June 30, 1999 compared to $1,152,414 for the six months ended 6/30/98. This was also due to the inclusion of the AirPol results in 1999 and not in 1998. Working capital at 6/30/99 was $1,701,919 compared to $1,137,144 at 6/30/98. For the three months ended 6/30/99, MPM had net income of $17,517, or $0.01 per share compared to a net income of $33,729, or $0.01 per share for the three months ended 6/30/98. Revenues increased 173.4% to $6,647,177 for the three months ended 6/30/99 compared to $2,431,531 for the three months ended 6/30/98. This was due to the addition of AirPol's operations in the 1999 three months. Costs of sales increased 208.8% to $5,348,764 for the three months ended June 30, 1999 compared to $1,732,317 for the three months ended June 30, 1998. This was due to the increased costs through the addition of AirPol's operations in 1999. Operating expenses were up 52.2% to $975,388 for the three months ended June 30, 1999 compared to $640,690 for the three months ended 6/30/98. This was also due to the inclusion of the AirPol results in 1999 and not in 1998. Financial Condition and Liquidity For the six months ended June 30, 1999, funds for operations were provided by cash reserves previously generated from the continuing operations of HES and AirPol. In December 1998, MPM filed a registration statement with the Securities and Exchange Commission, and received funds pending the completion of the registration statement. Pursuant to an agreement in April, a director invested $1,100,000 in cash which was used to repay the funds received in anticipation of the registration and many of the related expenses. MPM then formally withdrew its registration statement. Under the terms of the agreement with the director, MPM issued 150,000 shares of its common stock at the market price for $300,000, and convertible debentures for the issue of additional shares of common stock at a discount for $400,000. The debentures were converted concurrently with the issue of the original shares, and resulted in an additional 333,333 shares of common stock being issued. The amount of the discount is treated as a current period expense with the offset being credited to additional paid in capital. The effect on MPM's results for the six months ended June 30, 1999 was to decrease net income by approximately $267,000. The balance of $400,000 was in the form of an 8% note payable to the director with interest only payments due monthly through March 2004, and the principal balance due in April 2004. Current cash reserves and continuing operations are believed to be adequate to fund MPM's and its subsidiaries' operations for the foreseeable future. MPM will consider alternative sources of capital such as private placements, stock offerings and loans from shareholders and officers to fund its current business and expand in other related areas through more acquisitions. Impact of Year 2000 The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of MPM's computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than 2000. This could result in a system failure or miscalculations causing disruptions of operations. Based on recent and continuing assessments, MPM management has determined that its basic computer systems are year 2000 compliant, and will properly utilize dates beyond December 31, 1999. MPM has also identified other areas where minor modifications will be required for some of its less critical software to make it year 2000 compliant, and has taken steps to make sure that these modifications are completed in a timely manner. Accordingly, management believes that the Year 2000 Issue will not have a material impact on its operations. MPM is also making inquiries of its major suppliers to determine their systems' compliance with the Year 2000 Issue. Management has determined based on responses received to date that the majority of its suppliers are in compliance with the Issue. Accordingly, the effect of a third party's non-compliance is not expected to have a material impact on the financial condition of MPM. During the six months ended June 30, 1999, MPM's expenditures on issues related to its compliance with the Year 2000 Issue were not significant. MPM expects to spend approximately $2,000 in the balance of 1999 to ensure that its systems are in compliance with the Year 2000 Issue. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company knows of no litigation present, threatened or contemplated or unsatisfied judgment against the Company, its officers or directors or any proceedings in which the Company, its officers or directors are a party. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS The rights of the holders of the Company's securities have not been modified nor have the rights evidenced by the securities been limited or qualified by the issuance or modification of any other class of securities. ITEM 3. DEFAULTS UPON SENIOR SECURITIES There are no senior securities issued by the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A meeting of the shareholders was held on June 28, 1999. The following are the results of the meeting. Election of Directors: Name For Withheld Myron Katz 1,574,250 14,998 Charles A. Romberg 1,582,065 7,183 Daniel D. Smozanek 1,579,842 9,406 To approve the amendment to the 1989 Stock Option Plan: For Against Abstain 1,057,494 42,802 10,550 To ratify the appointment of BDO Seidman, LLP to serve as independent auditors for the year ending December 31, 1999: For Against Abstain 1,572,630 12,680 3,938 The total voted shares of 1,589,248 represented 74.05% of the common stock outstanding. At record date May 24, 1999, common stock outstanding was 2,146,128 shares. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K On April 5, 1999 MPM filed a Form 8-K announcing that its transfer agent had been acquired. On April 12, 1999, the Company announced that it had contacted the Securities and Exchange Commission and requested that the Registration Statement on Form S-3 filed with the Commission on December 21, 1998 be withdrawn. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MPM Technologies, Inc. August 13, 1999 /s/ Robert D. Little - ------------------------ --------------------------- (date) Robert D. Little Corporate Secretary EX-27 2
5 6-MOS DEC-31-1999 JUN-30-1999 497694 0 4250988 50000 339411 8333068 797771 490392 11311698 7031149 0 0 0 2628 2984114 11311698 10724089 10724089 8460614 0 0 0 350834 70622 0 70622 (11529) 0 0 59093 0.03 0.02
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