UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: March 31, 2000 Commission file number: 33-23617
MATERIAL TECHNOLOGIES, INC.
- ---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-4622822
-------- ----------
(State or other jurisdiction of incorporation (IRS Employer
or organization) identification No.)
11661 San Vicente Boulevard
Suite 707
LOS ANGELES, CALIFORNIA 90049
-----------------------------
(address of principal executive offices)
(Zip Code) 90064
(310) 208-5589
--------------
(Registrant's telephone number including area code)
Securities Registered pursuant to Section 12(g) of the Act:
COMMON
------
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 or Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this form 10-K. [ ]
The aggregate market value of the voting stock held by Non-affiliates
of the registrant at April 24, 2000 was $2,749,322.
Documents incorporated by reference-None.
1
<PAGE>
INDEX
PAGE
-----
Part 1. Financial Statements
Balance Sheets 3 - 4
Statements of Operations -
First Quarter Ended March 31, 1999 and 2000
and from the Company's inception (October
21, 1983) through March 31, 2000 5
Statements of Cash Flows
First Quarter Ended March 31, 1999 and 2000
and from the Company's inception (October
21, 1983) through March 31, 2000 6 - 7
Notes to Financial Statements 8
Management's Discussion and Analysis 9
Part 2. Other Information 10
2
<PAGE>
<TABLE>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<CAPTION>
December 31, March 31,
1999 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents .................... $ 62,904 $216,212
Accounts Receivable .......................... 144,796 73,950
Receivable from Officer ...................... -- 169
Employee Advance ............................. 1,500 1,500
-------- --------
TOTAL CURRENT ASSETS ....................... 209,200 291,831
-------- --------
FIXED ASSETS
Property and Equipment, Net
of Accumulated Depreciation .............. 3,949 3,709
-------- --------
OTHER ASSETS
Intangible Assets, Net of
Accumulated Amortization ................. 14,701 14,204
Investments .................................. 20,055 20,055
Refundable Deposit ........................... 2,136 2,136
-------- --------
TOTAL OTHER ASSETS ......................... 36,892 36,395
-------- --------
TOTAL ASSETS ............................... $250,041 $331,935
======== ========
</TABLE>
See accompanying Notes
3
<PAGE>
<TABLE>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEETS
<CAPTION>
December 31, March 31,
1999 2000
(Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Legal Fees Payable ............................................ $ 145,900 $ 152,658
Fees Payable to R&D Subcontractor ............................. 101,322 --
Consulting Fees Payable ....................................... 159,000 159,202
Accounting Fees Payable ....................................... 24,153 31,293
Other Accounts Payable ........................................ 18,122 6,804
Accrued Expenses .............................................. 24,269 24,269
Notes Payable - Current Portion ............................... 84,007 84,818
Loan Payable - Officer ........................................ 10,270 --
----------- -----------
TOTAL CURRENT LIABILITIES ................................... 567,043 459,044
Payable on Research and
Development Sponsorship .................................... 303,543 317,203
----------- -----------
TOTAL LIABILITIES ........................................... 870,586 776,247
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Class A Common Stock, $.001 Par Value, Authorized 100,000,000
Shares, Outstanding 14,597,435 at December 31, 1999, and
15,101,796 shares at March 31, 2000 ........................ 14,597 15,101
Class B Common Stock, $.001 Par Value, Authorized 100,000
Shares, Outstanding 60,000 Shares at December 31, 1999, and
100, 000 Shares at March 31, 2000 .......................... 60 100
Class A Preferred, $.001 Par Value, Authorized 900,000 Shares
Outstanding 350,000 Shares ................................. 350 350
Additional Paid in Capital .................................... 3,455,004 3,503,410
Less Notes Receivable - Common Stock .......................... (39,694) (40,648)
Deficit Accumulated During the Development Stage .............. (4,052,917) (3,924,680)
Unrealized Holding Gain on Investment Securities .............. 2,055 2,055
----------- -----------
TOTAL STOCKHOLDERS' (DEFICIT) ................................. (620,545) (444,312)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) ................................................ $ 250,041 $ 331,935
=========== ===========
</TABLE>
See accompanying Notes
4
<PAGE>
<TABLE>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<CAPTION>
From Inception
For the Three Months Ended (October 21,
March 31, 1983) Through
1999 2000 March 31, 2000
------------ ------------ --------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES
Sale of Fatigue Fuses ..................... $ -- $ -- $ 64,505
Sale of Royalty Interests ................. -- -- 198,750
Research and Development Revenue .......... 198,860 180,847 2,528,645
Test Services ............................. -- -- 10,870
------------ ------------ ------------
TOTAL REVENUES .......................... 198,860 180,847 2,802,770
------------ ------------ ------------
COSTS AND EXPENSES
Research and Development .................. 8,077 90,617 2,465,816
General and Administrative ................ 192,373 198,809 4,367,973
------------ ------------ ------------
TOTAL COSTS AND EXPENSES ................ 200,450 289,426 6,833,789
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS ........... (1,590) (108,579) (4,031,019)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Expense Reimbursed ........................ -- -- 4,510
Interest Income ........................... 66 1,038 43,154
Interest Expense .......................... -- (15,220) (200,105)
Gain on Sale of Stock .................... 4,396 251,798 459,295
Miscellaneous Income ...................... -- -- 25,145
Loss on Sale of Equipment ................. -- -- (12,780)
Gain on Foreclosure ....................... -- -- 18,697
Modification of Royalty Agreement ......... -- -- (7,332)
Settlement of Teaming ..................... -- -- 50,000
Litigation Settlement ..................... -- -- 18,095
------------ ------------ ------------
TOTAL OTHER INCOME ...................... 4,462 237,616 398,679
------------ ------------ ------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS AND PROVISION FOR INCOME TAXES ...... 2,872 129,037 (3,632,340)
PROVISION FOR INCOME TAXES .................. (800) (800) (9,400)
------------ ------------ ------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 2,072 128,237 (3,641,740)
EXTRAORDINARY ITEMS
Forgiveness of Debt ....................... -- -- (289,940)
Utilization of Operating Loss Carry forward -- -- 7,000
------------ ------------ ------------
NET INCOME (LOSS) ....................... $ 2,072 $ 128,237 $ (3,924,680)
============ ============ ============
PER SHARE DATA
Basic Income (Loss) Before Extraordinary
Item .................................... $ 0.0002 $ 0.0087
Basic Extraordinary Items ................. -- --
------------ ------------
BASIC NET INCOME (LOSS) PER SHARE ......... $ 0.0002 $ 0.0087
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,236,897 14,791,730
============ ============
</TABLE>
See accompanying Notes
5
<PAGE>
<TABLE>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<CAPTION>
From Inception
(October 21,
For the Three Months Ended 1983) Through
March 31, March 31,
1999 2000 2000
----------- ----------- ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ........................... $ 2,072 $ 128,237 $(3,897,113)
----------- ----------- -----------
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
(Used) by Operating Activities
Depreciation and Amortization ............... 1,222 737 172,362
Interest Income Accrued on Stock Subscription
Receivable ................................ -- (954) (2,386)
Bad Debts ................................... -- -- 50,000
Gain on Sale of Securities .................. (4,396) (251,798) (459,295)
Charge off of Deferred Offering Costs ....... -- -- 36,480
Charge off of Long-lived Assets due to
Impairmant ................................ -- -- 92,919
Modification of Royalty Agreement ........... -- -- 7,332
Gain on Foreclosure ......................... -- -- (18,697)
(Increase) Decrease in Accounts Receivable .. 39,768 70,846 (125,450)
(Increase) Decrease in Prepaid Expense ...... -- -- 53
Loss on Sale of Equipment ................... -- -- 12,780
Issuance of Common Stock for Services ...... -- 48,950 554,647
Issuance of Stock for Agreement Modification -- -- 152
Forgiveness of Indebtedness ................. -- -- 165,000
Increase (Decrease) in Accounts
Payable and Accrued Expenses .............. (18,321) (98,540) 812,891
Interest Accrued on Note Payable ............ 12,661 14,532 162,507
Increase in Research and Development
Sponsorship Payable ...................... -- -- 218,000
(Increase) in Note for Litigation Settlement -- -- (25,753)
(Increase) in Deposits ...................... -- -- (2,189)
----------- ----------- -----------
TOTAL ADJUSTMENTS ......................... 30,934 (216,227) 1,651,353
----------- ----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES ....................... 33,006 (87,990) (2,245,760)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sale of Equipment ............. -- -- 10,250
Purchase of Property and Equipment .......... -- -- (230,903)
Proceeds from Sale of Securities ............ 4,396 251,798 535,394
Purchase of Securirties ..................... -- -- (90,000)
Proceeds from Foreclosure ................... -- -- 44,450
Investment in Joint Venture ................. -- -- (87,069)
Payment for License Agreement ............... -- -- (6,250)
----------- ----------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES ....................... 4,396 251,798 175,872
----------- ----------- -----------
</TABLE>
See accompanying Notes
6
<PAGE>
<TABLE>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<CAPTION>
From Inception
(October 21,
For the Three Months Ended 1983) Through
March 31, March 31,
1999 2000 2000
----------- ----------- ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock Net
of Offering Costs ......................... $ -- $ -- $ 1,121,220
Costs incurred in Offering .................. -- -- (31,480)
Sale of Common Stock Warrants ............... -- -- 18,250
Sale of Preferred Stock ..................... -- -- 258,500
Sale of Redeemable Preferred Stock .......... -- -- 150,000
Capital Contributions ....................... -- -- 301,068
Payment on Proposed Reorganization .......... -- -- (5,000)
Loans From Officers ....................... 50,000 -- 728,005
Repayments to Officer ....................... (16,000) (10,500) (426,532)
Increase in Loan Payable-Others ............. -- -- 172,069
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES: ......... 34,000 (10,500) 2,286,100
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ................................. 71,402 153,308 216,212
BEGINNING BALANCE CASH AND CASH EQUIVALENTS ... 20 62,904 --
----------- ----------- -----------
ENDING BALANCE CASH AND CASH EQUIVALENTS ...... $ 71,422 $ 216,212 $ 216,212
=========== =========== ===========
</TABLE>
See accompanying Notes
7
<PAGE>
MATERIAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. In the opinion of the Company's management, the accompanying
unaudited financial statements contain all adjustments (consisting
of normal recurring accruals) necessary to present fairly the
financial position of the Company as of March 31, 2000, and 1999,
and the results of operations and cash flows for the three month
periods then ended. The operating results of the Company on a
quarterly basis may not be indicative of operating results for the
full year.
8
<PAGE>
MATERIAL TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- ------------------------------------------------------------------------
During the three month period ended March 31, 2000, the Company generated
approximately $180,847 under its research and development contracts as
compared to $198,860 generated during the three-month period ended March 31,
1999.
During the three month periods ended March 31, 2000 and 1999, the Company
incurred approximately $90,617, and $8,077, respectively, in development
costs all of which related to the above indicated contracts.
General and administration costs were $198,809, and $192,373, respectively,
for the three-month periods ended March 31, 2000 and 1999. The major
expenses incurred during 2000, consisted of consulting fees of $64,521,
professional fees of $46,333, officer's compensation of $30,000, interest
expense of $15,230, travel expenses of $14,800, rent expense of $6,033 and
office expense of $8,285. The major expenses incurred during 1999, consisted
of Officer's compensation of $50,000, consulting fees of $42,050,
professional fees of $26,827, travel expense of $14,663, interest expense of
$13,347, telephone expense of $4,015, and rent expense of $7,544.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash equivalents as of March 31, 2000 and 1999 were $216,212 and
$71,422, respectively. During the first quarter of 2000, the Company received a
total of $503,491, which consisted of $251,693 from its research and development
contracts, and a net proceeds from the sale of investment securities totaling
$251,798. Of the $503,491 received, $339,683 was used in operations and $10,500
was repaid to the Company's President.
During the first quarter of 1999, the Company received a total of $293,024,
which consisted of $238,628 from its research and development contracts, $50,000
in loans from its President, and $4,396 from the sale of investment securities.
Of the $293,024 received, $205,622 was used in operations and $16,000 was repaid
to its President.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Through a reserve established by the Company to issue shares
of its Common Stock to individuals who were defrauded by a
former consultant of the Company, the Company issued 48,223
shares in January 2000, 4,944 shares if February 2000, and
1,694 shares in March 2000.
In January 2000, the Company issued 50,000 shares of its
common stock to a member of its advisory committee.
In February 2000, the Company increased its number of
authorized shares of its Class A Common Stock to 100,000,000
shares and its Class B Common Stock to 100,000 shares.
On February 2000, the Company issued 214,500 to consultants
for services rendered.
In March 2000, the Company issued 225,000 shares to
consultants for services rendered.
In March 2000, the Company's President cancelled 40,000 shares
of Class A common stock in exchange for receiving 40,000
shares of Class B Common Stock.
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MATERIAL TECHNOLOGIES, INC.
Registrant
/S/ ROBERT M. BERNSTEIN
-----------------------
Robert M. Bernstein, President and Chief
Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Company's unaudited financial statements for the quarter ended
March 31, 2000 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 216,212
<SECURITIES> 20,055
<RECEIVABLES> 73,950
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 291,831
<PP&E> 123,447
<DEPRECIATION> (119,738)
<TOTAL-ASSETS> 331,935
<CURRENT-LIABILITIES> 459,044
<BONDS> 0
0
0
<COMMON> 15,101
<OTHER-SE> (459,413)
<TOTAL-LIABILITY-AND-EQUITY> 331,935
<SALES> 0
<TOTAL-REVENUES> 180,847
<CGS> 0
<TOTAL-COSTS> 289,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,220
<INCOME-PRETAX> 129,037
<INCOME-TAX> (800)
<INCOME-CONTINUING> 128,237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 128,237
<EPS-BASIC> 0.009
<EPS-DILUTED> 0.00
</TABLE>
