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
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(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.<PAGE>
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.<PAGE>
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<PAGE>
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<PAGE>
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.<PAGE>
(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<PAGE>
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<PAGE>
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.<PAGE>
Item 6. Selected Financial Data
<TABLE>
<S> <C> <C> <C> <C> <C>
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
</TABLE>
[1]Restated for 4:1 reverse stock split effective April 25, 1985.<PAGE>
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<PAGE>
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.<PAGE>
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<PAGE>
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.<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<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC. Consolidated Statement of Financial
AND SUBSIDIARIES Position as of December 31, 1996
(A Development Stage Company) and 1995
ASSETS
<S> <C> <C>
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
================= =================
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C>
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
================= =================
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C>
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)
=========== =========== ============ =================
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
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
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
---------- -------- ---------- --------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
---------- -------- ----------- ---------- ------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
---------- ----------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
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
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
---------- ---------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
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
========== ========== ============== ================ =================
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> 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
============= ============== ============= ===============
<CAPTION>
The accompanying notes are an integral part of these financial statements.<PAGE>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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:
<S> <C> <C> <C>
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
================ ============ ================
<CAPTION>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
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.<PAGE>
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<PAGE>
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<PAGE>
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.<PAGE>
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.<PAGE>
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)<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)<PAGE>
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.<PAGE>
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
========<PAGE>
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.<PAGE>
MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS
AND SUBSIDIARIES
(A Development Stage Company)
Spokane, Washington
NOTE 9 - SEGMENT FINANCIAL DATA
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C>
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<PAGE>
</TABLE>
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.<PAGE>
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<PAGE>
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<PAGE>
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.<PAGE>
(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
<PAGE>
Item 11. Executive Compensation
The following table shows the remuneration of officers and directors in
excess of $100,000 in 1996, 1995 and 1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
Annual Compensation Awards Payouts
Name and
Principal Other Stock Options LTIP All Other
Position Year Salary Bonus Compensation Awards SARs($) Payouts($) Compensation($)
- -------------------- ------ ------ ----- ------------ ------ ------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
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 ($/Sh) Grant Expiration Date
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NONE
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCIES IN LAST FISCAL YEAR
AND FYE OPTION/SAR VALUES
Unexercised in
the Money
Options/SAR
Number of Unexercised at FYE ($)
Shares Acquired Options/SARS FYE 1996 Exercisable/
Name on Exercise Value Realized Exercisable/Unexercisable Unexercisable
- ------------------- --------------- ---------------- ------------------------- --------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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.<PAGE>
[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.<PAGE>
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<PAGE>
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.<PAGE>
(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<PAGE>
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<PAGE>
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<PAGE>
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