-----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, LuJVqzmnMVtV9gpZfvCp38mam6CrzNZ71UxN4v/4zX0MVf02YTUepVTY57wzkzDY zojT1R60SjF8fEsuB41oVw== 0001157523-06-005213.txt : 20060515 0001157523-06-005213.hdr.sgml : 20060515 20060515172341 ACCESSION NUMBER: 0001157523-06-005213 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060515 DATE AS OF CHANGE: 20060515 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: 1934 Act SEC FILE NUMBER: 000-14910 FILM NUMBER: 06842964 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 a5149261.txt MPM TECHNOLOGIES, INC. 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934 For the quarter ended March 31, 2006 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) 199 Pomeroy Road. Parsippany, NJ 07054 - --------------------------- --------------------------- (Address of principal (Zip Code) executive offices) Issuer's telephone number, including area code: 973-428-5009 As of May 15, 2006, the registrant had outstanding 3,183,064 shares of common stock and no outstanding shares of preferred stock, which are the registrant's only classes of stock. PART I - FINANCIAL INFORMATION Item 1. Financial Statements MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31, March 31, 2006 2005 -------------- -------------- (UNAUDITED) Current assets: Cash and cash equivalents $12,969 $4,795 Accounts receivable, net of allowance for doubtful accounts of $154,000 220,114 98,448 Costs and estimated earnings in excess of billings 13,014 15,901 Other current assets 36,503 27,519 -------------- -------------- Total current assets 282,600 146,663 Property, plant and equipment, net 23,132 18,487 Mineral properties held for sale 1,070,368 1,070,368 Prepaid royalty 273,000 273,000 Purchased intangible, net of accumulated amortization of $556,875 and $540,000 118,125 135,000 Other assets, net 70,474 96,474 -------------- -------------- $1,837,699 $1,739,992 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $859,705 $764,467 Accrued expenses 55,122 73,029 Billings in excess of costs and estimated earnings 3,356 22,564 Related party debt 5,388,502 5,108,606 -------------- -------------- Total current liabilities 6,306,685 5,968,666 Notes payable 3,291,688 3,247,041 -------------- -------------- Total liabilities 9,598,373 9,215,707 -------------- -------------- Commitments and contingencies - - Stockholders' equity (deficiency): Preferred stock, no stated value, 10,000,000 shares authorized, no shares issued or outstanding - - Common stock, $.001 par value, 100,000,000 shares authorized, 3,183,064 shares issued and outstanding 3,183 3,183 Additional paid-in capital 11,313,019 11,313,019 Accumulated deficit (19,076,876) (18,791,917) -------------- -------------- Total stockholders' equity (deficiency) (7,760,674) (7,475,715) -------------- -------------- $1,837,699 $1,739,992 ============== ============== MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31, 2006 2005 ---- ---- Revenues - Projects $289,385 $300,126 Revenues - Parts and service 104,103 168,630 -------------- -------------- Total Revenues 393,488 468,756 -------------- -------------- Cost of sales - Projects 169,639 135,655 Cost of sales - Parts and service 47,941 63,989 -------------- -------------- Total cost of sales 217,580 199,644 -------------- -------------- Gross margin 175,908 269,112 Selling, general and administrative expenses 298,107 354,606 -------------- -------------- Loss from operations (122,199) (85,494) -------------- -------------- Other income (expense): Interest expense (162,760) (112,658) Miscellaneous - 21,915 -------------- -------------- Net other income (expense) (162,760) (90,743) -------------- -------------- Net loss ($284,959) ($176,237) ============== ============== Income per share - basic and diluted: Net loss ($0.09) ($0.06) ============== ============== Weighted average shares of common stock outstanding - Basic and diluted 3,183,064 3,183,064 ============== ============== MPM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2006 2005 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss ($284,959) ($176,237) Adjustments to reconcile net losss to net cash used in operating activities: Depreciation and amortization 25,766 26,662 Change in assets and liabilities: Accounts receivable (121,666) (100,517) Costs and estimated earnings in excess of billings 2,887 45,198 Other assets 17,016 (2,851) Accounts payable and accrued expenses 77,331 (78,312) Accrued interest on long-term debt 44,647 - Accrued interest and deferred expenses On related party debt 146,296 196,639 Billings in excess of costs and estimated earnings (19,208) 64,870 -------------- -------------- Cash used in operating activities (111,890) (24,548) -------------- -------------- Cash flows from investing activities: -------------- -------------- Purchases of property and equipment (13,536) - -------------- -------------- Net cash used in investing activities (13,536) - -------------- -------------- Cash flows from financing activities: Repayment of related party debt - (41,000) Proceeds from related party debt 133,600 114,700 -------------- -------------- Net cash provided by financing activities 133,600 73,700 -------------- -------------- Net increase in cash and cash equivalents 8,174 49,152 Cash and cash equivalents, beginning of period 4,795 6,778 -------------- -------------- Cash and cash equivalents, end of period $12,969 $55,930 ============== ============== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $916 $953 Income taxes $- $3,000 MPM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. Unaudited Financial Statements These consolidated 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, 2005. 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 refer to the footnotes to the consolidated financial statements of the Company as of December 31, 2005. In the opinion of management, these unaudited interim consolidated financial statements reflect all adjustments and disclosures necessary for a fair statement of the financial position and results of operations and cash flows of the Company for the interim period presented. Such adjustments consisted only of those of a normal recurring nature. Results of operations for the period ended March 31, 2006 should not necessarily be taken as indicative of the results of operations that may be expected for the entire year 2006. 2. Earnings Per Share Earnings per share ("EPS") is computed by dividing net income by the weighted average number of common shares outstanding in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share". The following table reconciles the number of common shares used in the basic and diluted EPS calculations: For the Three Months Ended March 31, 2006 - ----------------------------------------- Weighted- Net Average Per-Share Loss Shares Amount ------------- ------------- ------------- Basic EPS Income available to common stockholders $ (284,959) 3,183,064 $ (0.09) Effect of Dilutive Securities Common stock options - 1,854,008 - ------------- ------------- ------------- Diluted EPS Income available to common stockholders - assumed conversions $ (284,959) 5,037,072 $ (0.09) ============= ============= ============= For the Three Months Ended March 31, 2005 - ----------------------------------------- Weighted- Net Average Per-Share Loss Shares Amount ------------- ------------- ------------- Basic EPS Income available to common stockholders $ (176,237) 3,183,064 $ (0.06) Effect of Dilutive Securities Common stock options - 1,854,008 - ------------- ------------- ------------- Diluted EPS Income available to common stockholders - assumed conversions $ (176,237) 5,037,072 $ (0.06) ============= ============= ============= 3. Concentrations of Credit Risk Financial instruments, which potentially subject the Company to a concentration of credit risk, consist of cash and cash equivalents. The Company places its cash and cash equivalents with various high quality financial institutions; these deposits may exceed federally insured limits at various times throughout the year. The Company provides credit in the normal course of business. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. 4. Note Payable and Long-Term Debt In December 2002, the Company entered into a revolving credit agreement with an insurance company. Under the terms of its agreement, the Company may borrow up to $500,000 at 5.25% per annum, which was increased to $3,000,000 in 2003. The note is secured by stock and mineral property held for investment and matures on January 2, 2008. As of March 31, 2006, the Company has $2,769,790 of principal advances and accrued interest of $521,898. During the quarter ended March 31, 2006, the Company recorded interest expense of $44,647. 5. Related Party Debt Related party debt consists of advances received from and deferred expenses and reimbursements to various directors and related parties. At March 31, 2006, amounts owed these related parties totaled $5,388,502 due on demand. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations - --------------------- This Quarterly Report on Form 10-QSB, including the information incorporated by reference herein, includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All of the statements contained in this Quarterly Report on Form 10-QSB, other than statements of historical fact, should be considered forward looking statements, including, but not limited to, those concerning the Company's strategies, ability to generate sufficient cash flow or secure additional sources of financing, collectability of project payments, future customer revenue, variability of quarterly operating results, completion of remaining contracts, attraction and retention of employees and key management personnel, political and economic uncertainty and other competitive factors. Additionally, there can be no assurance that these expectations will prove to have been correct. Certain important factors that could cause actual results to differ materially from the Company's expectations (the Cautionary Statements") are disclosed in the annual report filed on Form 10-KSB. All subsequent written and oral forward looking statements by or attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by such Cautionary Statements. Investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or reflect the occurrence of unanticipated events. MPM Technologies, Inc. ("MPM") acquired certain of the assets and assumed certain of the liabilities of a part of a division of FLS Miljo, Inc. as of July 1, 1998. MPM formed AirPol, Inc. ("AirPol") to run this air pollution control business. AirPol designs, engineers, supplies and services air pollution control systems for Fortune 500 and other industrial and environmental companies. The technologies of AirPol utilize wet and dry scrubbers, wet electrostatic precipitators and venturi absorbers to control air pollution. 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 designed, engineered, supplied and serviced high temperature and chemical air pollution control systems for Fortune 500 and other industrial and environmental companies. HES management filed a petition under Chapter 7 of the United States Bankruptcy Code in court on March 7, 2004. On July 20, 2005, the trustee in bankruptcy filed a report with the U.S. Bankruptcy Court Northern District of Illinois (Chicago) for Bankruptcy Petition # 04-09160 indicating that he believed that there were no assets to be administered for the benefit of creditors. MPM holds a 58.21% interest in Nupower Partnership through its ownership of Nupower. No other operations were conducted through Nupower. Nupower Partnership is engaged in the development and commercialization of a waste-to-energy process. This 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. Nupower Partnership owns 85% of the Skygas Venture. In addition to its ownership in the partnership, MPM separately owns 15% of the Venture. Mining controls 15 claims on approximately 300 acres in the historical Emery Mining District in Montana. It also owns a 200-ton per day floatation mill on site. Extensive exploration has been conducted in the area by companies such as Exxon-Mobil Corporation, Freeport McMoran Gold Company and Hecla Mining Company in addition to the efforts of MPM Mining. In early 2002, the Board of Directors decided to hold the properties as an investment. AirPol is an active continuing concern. The development of the Skygas process through Nupower Partnership is also an ongoing process. No other operations were conducted. Accordingly, the financial statements for the three months ended March 31, 2006 and 2005 include the operations of AirPol, Skygas and MPM. MPM's consolidated net loss from continuing operations for the three months ended March 31, 2006 was $284,959 or $0.09 per share compared to a net loss of $176,237, or $0.06 per share for the three months ended March 31, 2005. MPM continues to negotiate with interested entities with the goal of building Skygas units. These negotiations are also ongoing, and include entities in the United States, other North American countries, Europe and Asia. Management is hopeful there will be some type of formal agreement in place, and that construction of a unit can begin in the near future. There can, however, be no assurances that MPM will be successful in its negotiations. MPM faces significant challenges, including, without limitation, the ability to generate or raise sufficient operating capital, and a difficult sales environment. Organizations in the United States are obligated to comply with environmental laws that reduce air pollution emissions. In view of, in our opinion, a perception of limited enforcement of environmental laws in general, companies that require or benefit from MPM's environmental technology and knowledge are not procuring or replacing equipment, or are delaying purchasing decisions. Three months ended March 31, 2006 compared to three months ended March 31, 2005 - ------------------------------------------------------------------------------- For the three months ended March 31, 2006, MPM had a net loss from continuing operations of $284,959, or $0.09 per share compared to a net loss of $176,237, or $0.06 per share for the three months ended March 31, 2005. Revenues decreased 16% to $393,488 for the three months ended March 31, 2006 compared to $468,756 for the three months ended March 31, 2005. Costs of sales increased 9% to $217,580 for the three months ended March 31, 2006 compared to $199,644 for the three months ended March 31, 2005. Operating expenses decreased 16% to $298,107 for the three months ended March 31, 2006 compared to $354,606 for the three months ended March 31, 2005. The Company currently has a backlog of approximately $750,000. Management believes that this backlog will be consumed during the rest of the fiscal year 2006. Financial Condition and Liquidity - --------------------------------- For the three months ended March 31, 2006, the Company relied principally on cash from operations and from loans from two officers/directors to fund its operations. Working capital deficit at March 31, 2006 was $6,024,085 compared to $5,822,003 at December 31, 2005. The Company is working to narrow its losses and to get to a cash flow neutral position. There can be no assurances that management will be successful in attaining this goal. Accordingly, management is continuing to seek alternative sources of capital such as private placements, stock offerings and other financing alternatives. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None 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 None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MPM Technologies, Inc. May 15, 2006 /s/ Michael J. Luciano ------------------------------ ---------------------------------- Michael J. Luciano Chairman & CEO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of MPM Technologies, Inc. (the "Company") on Form 10-QSB for the period ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael J. Luciano, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbarnes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael J. Luciano - ---------------------- Michael J. Luciano Chairman and Chief Executive Officer May 15, 2006 CERTIFICATION I, Michael J. Luciano, CHIEF EXECUTIVE OFFICER of MPM TECHNOLOGIES, INC. certify that: 1. I have reviewed this Form 10-QSB of MPM Technologies, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 45 days prior to the filing date of this report (the Evaluation Date"); and c) Presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls: and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 6. The registrant's other certifying officer and I have indicated in this report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2006 /s/ Michael J. Luciano - ------------------ ----------------------------------- Chief Executive Officer CERTIFICATION I, Glen Hjort, CHIEF FINANCIAL OFFICER of MPM TECHNOLOGIES, INC. certify that: 1. I have reviewed this Form 10-QSB of MPM Technologies, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 45 days prior to the filing date of this report (the Evaluation Date"); and c) Presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls: and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 6. The registrant's other certifying officer and I have indicated in this report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2006 /s/ Glen Hjort - ------------------ ----------------------------------- Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----