FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: June 30, 1997 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 West Mission, Ste 30
Spokane, WA 99201-2261
------------------------------- -----------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (509) 326-3443
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.
(X) Yes ( ) No
As of August 5, 1997, the registrant had outstanding 16,459,404 shares of
common stock which is the registrant's only class of stock.<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Financial Statements follow on the next page.<PAGE>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
Financial Statements
June 30, 1997 and December 31, 1996<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC. Consolidated Statement of Financial
AND SUBSIDIARIES Position as of June 30, 1997
and December 31, 1996
UNAUDITED
ASSETS
<S> <C> <C>
June December
30, 1997 31, 1996
--------------- ---------------
CURRENT ASSETS
Cash (Note 2) $ 1,639,294 $ 40,566
Receivables, net of allowance for doubtful
accounts of $180,902 2,303,532 37,017
Inventory 309,909
Other current assets 54,847 1,438
--------------- ---------------
Total current assets 4,307,582 79,021
--------------- ---------------
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 473,519 117,630
Software 3,258 3,258
--------------- ---------------
Total property, plant and equipment 1,022,882 666,993
Less accumulated depreciation 469,013 422,167
--------------- ---------------
Net property, plant and equipment 553,869 244,826
--------------- ---------------
OTHER ASSETS
Deferred exploration and development costs 1,195,466 1,195,466
(Note 1)
Investment (Note 1) 1,200,000 1,200,000
Notes receivable 275,000 275,000
Licenses, net of accumulated amortization of
$5,097 and $4,595, respectively (Note 2) 28,991 29,494
Advance minimum royalties (Note 2) 50,750 50,750
Mineralized material in place (Note 3) 10 10
--------------- ---------------
Total other assets 2,750,217 2,750,720
--------------- ---------------
TOTAL ASSETS $ 7,611,668 $ 3,074,567
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC. Consolidated Statement of Financial
AND SUBSIDIARIES Position as of June 30, 1997
and December 31, 1996
UNAUDITED
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
June December
30, 1997 31, 1996
--------------- ---------------
CURRENT LIABILITIES
Accounts payable $ 1,740,466 $ 963
Interest payable - other 40 5,859
Interest payable - related parties (Note 4) 129,997 129,997
Notes payable - other (Note 4) 542,141 570,234
Notes payable - related parties (Note 4) 314,765 314,765
--------------- ---------------
Total current liabilities 2,727,409 1,021,818
--------------- ---------------
OTHER LIABILITIES
Deferred credit 1,200,000 -
--------------- ---------------
MINORITY INTEREST (NOTES 2 and 6)
Minority interest in consolidated entities
(735,815) (718,888)
--------------- ---------------
COMMITMENTS (NOTE 7)
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000 shares
authorized, 16,459,404 shares and 14,399,773 shares
outstanding June 30, 1997, and December 31, 1996,
respectively
(Notes 1, 6 and 8) 16,459 14,399
Additional paid-in capital 9,138,342 7,417,996
Accumulated deficit during the development stage (4,734,727) (4,660,758)
--------------- ---------------
Total stockholders' equity 4,420,074 2,771,637
--------------- ---------------
TOTAL LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY $ 7,611,668 $ 3,074,567
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC. Consolidated Statement of Operations for
AND SUBSIDIARIES the Quarters Ended June 30, 1997 and
1996
UNAUDITED
Quarter Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
----------------- ------------------- ------------------ -----------------
REVENUES
Management fees - related party $ 12,549 $ -0- $ 12,549 $ -0-
Sales of product and services 2,881,786 2,881,786
Sales of equipment
----------------- ------------------- ------------------ -----------------
Total revenues 2,894,335 - 2,894,335 -
----------------- ------------------- ------------------ -----------------
COST OF REVENUES
Cost of Sales 2,406,618 2,406,618
----------------- ------------------- ------------------ -----------------
Gross profit 487,717 - 487,717 -
----------------- ------------------- ------------------ -----------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
Bank service fees 27 10 27
Contract labor 4,795 22,795
Depreciation and amortization 36,087 2,940 47,347 6,040
Dues and subscriptions 627 288 657 288
Employee benefits
Equipment rental
Freight
Insurance 3,257 3,047 6,515 5,923
Professional services 93,088 14,445 121,945 51,550
Licenses, taxes and other fees 26,237 36,320 60,290 40,660
Office 4,729 4,941 8,060 7,657
Public relations
Rent - office 1,980 2,000 3,520 3,140
Repairs and maintenance
Research and development
Selling 203,760 203,760
Telephone and utilities 1,080 473 1,803 847
Transfer and registration fees 505 451 850 819
Travel and entertainment (2,050) 9,891 8,165 16,251
Watchman 300 1,080 600 1,380
Miscellaneous, general and 97,634 850 100,739 3,850
administrative
Reimbursed expenses (2,722) (10,833) (6,401) (20,721)
----------------- ------------------- ------------------ -----------------
Total expenses 464,512 70,715 557,860 140,506
----------------- ------------------- ------------------ -----------------
INCOME (LOSS) BEFORE NON-OPERATING ITEMS 23,205 (70,715) (70,143) (140,506)
----------------- ------------------- ------------------ -----------------
NON-OPERATING INCOME (EXPENSE)
Interest income 2,026 965 2,717 1,494
Interest expense (13,930) (13,377) (27,567) (26,867)
Forgiveness of debt 4,098 4,098
Gain on sale of securities
Other income
----------------- ------------------- ------------------ -----------------
Total non-operating income (expense) (7,806) (12,412) (20,752) (25,373)
----------------- ------------------- ------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES
AND SUBSIDIARY LOSS (INCOME) 15,399 (83,127) (90,895) (165,879)
----------------- ------------------- ------------------ -----------------
INCOME TAXES AND SUBSIDIARY LOSS (INCOME)
Income taxes
Minority interest in subsidiary loss 7,244 9,643 16,927 18,182
(income) ----------------- ------------------- ------------------ -----------------
Total income taxes and subsidiary 7,244 9,643 16,927 18,182
loss (income) ----------------- ------------------- ------------------ -----------------
NET INCOME (LOSS) $ 22,643 $ (73,484) $ (73,968) $ (147,697)
================= =================== ================== =================
NET INCOME (LOSS) PER SHARE (NOTE 2) $ NIL $ (0.01) $ (0.01) $ (0.01)
================= =================== ================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC. Consolidated Statement of Cash Flows for
AND SUBSIDIARIES the Quarters Ended June 30, 1997, and 1996
UNAUDITED
Quarter Ended
June 30,
<S> <C> <C>
1997 1996
--------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ 22,643 $ (147,697)
Add items not requiring the use of cash:
Depreciation and amortization 36,087 5,472
Forgiveness of debt
Minority interest
(7,244) (18,182)
Loss (gain) on sale of equipment
Stock granted for operating expenses
Stock options issued for services
Accrued interest payable converted to debt 1,014
Net (increase)/decrease in:
Accounts receivable (2,298,026) 3,579
Current Assets (48,151) 3,048
Inventory (309,909)
Net increase/(decrease) in:
Accounts payable 1,740,466
Interest payable (399) 506
--------------- ------------
NET CASH FLOWS PROVIDED FROM
OPERATING ACTIVITIES
(864,533) (152,260)
--------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Additions)/reductions:
Mining claims
Deferred exploration and development costs
Property, plant and equipment
(355,889) (3,518)
Mining leases
Leasehold improvements
Patents and licenses 570
Advance minimum royalties
Partnership investment
Organization costs
Proceeds from:
Sale of equipment
Redemption of bonds and deposits
Loans made
Less repayments
NET CASH FLOWS PROVIDED (USED)
FROM INVESTING ACTIVITIES
--------------- ------------
(355,889) (2,948)
--------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of short term debt 175,000
Payments to settle debt (92,975) (80,005)
Deferred Credit 1,200,000
Sale of treasury stock
Contributed capital 1,620,797 57,824
Issuance of common stock 1,608 24,000
--------------- ------------
NET CASH FLOWS PROVIDED
FROM FINANCING ACTIVITIES 2,729,430 176,819
--------------- ------------
NET INCREASE (DECREASE) IN CASH 1,509,008 21,611
CASH AT BEGINNING OF QUARTER 130,286 138,675
--------------- ------------
CASH AT END OF QUARTER $ 1,639,294 $ 160,286
--------------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MPM TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS
AND SUBSIDIARIES
Spokane, Washington
NOTE 1 - UNAUDITIED FINANCIAL STATEMENTS
These financial statements should be read in conjunction with the audited
financial statements included in the Annual Report on Form 10-KSB for the
year ended December 31, 1996. Since certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting standards have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission, these
financial statements specifically incorporate by reference the footnotes to
the consolidated financial statements of the Company as of December 31, 1996.
In the opinion of management, these unaudited interim financial statements
reflect all adjustments necessary for a fair presentation of the financial
position and results of operations and cash flows of the Company. Such
adjustments consisted only of those of a normal nature. Results of
operations for the period ended June 30, 1997, should not necessarily be
taken as indicative of the results of operations that my be expected for the
entire year 1997.
(The Remainder of This Page Intentionally Left Blank)<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
A major change occurred during the Second Quarter ended June 30, 1997.
Management, under direction of the Board of Directors, dramatically changed
its focus by increasing its presence in the environmental industry. The
Company acquired 100% of the assets of U.S. Filter/Engineered Systems -
"Oxidation Group" (renamed Huntington Environmental Systems, Inc.) for 1.32
million shares of common stock. This acquisition was the first step in the
Company's plan, instituted by the Board of Directors in 1996, to build a core
business around air pollution control systems and related environmental
remediation technologies. This recent acquisition is an important event for
MPM as the corporation has been transformed into a functioning company, no
longer a development stage company. Management will continue to focus
efforts in negotiations with additional acquisition and merger candidates
throughout 1997 and 1998.
WASTE-TO-ENERGY
Skygas venture partner USF Smogless moved forward with permitting pursuant to
the agreement entered with a consortium of European companies during 1996.
The agreement calls for utilization of the Skygas technology along with USF
Smogless' proprietary Flotherm technology for the destruction of selected
wastes and for the creation of fuel gas. The project is estimated to be in
excess of $10 million of capital investment. Management expects to obtain
all necessary permits during the third quarter of 1997.
The Company is continuing with on-going negotiations for Skygas installations
in Taiwan, South Korea, Thailand, China, Europe and North America.
The Skygas process is a patented process for converting carbonaceous
materials into clean-burning medium BTU fuel gas which can be used for
electrical power generation or for conversion into a variety of valuable
chemicals. In March of 1990, NuPower, a Montana general partnership, in
which NuPower, Inc., a wholly owned subsidiary of MPM Technologies, Inc.,
owns a 58.21% interest, entered into an agreement with Smogless S.p.A.,
Milan, Italy, and Unitel Technologies, Inc., Mt. Prospect, IL, for the
purpose of commercializing the Skygas process. Smogless agreed to finance,
engineer build, test and operate a commercial demonstration facility. Unitel
agreed to handle all promotional work, public relations, advertising and
marketing of the process.
In 1994, Smogless S.p.A was purchased by United States Filter Corp. (NYSE:
USF), Palm Desert, CA, and renamed USF Smogless. In December of 1996, MPM
announced it had purchased Unitel's 15% interest in the Skygas Venture for
1.2 million shares of common stock. Management believes that by acquiring
this interest the Company has a better positioned itself financially
regarding future sales of the technology. Percentage of interest in the
Skygas Venture is as follows: NuPower - 70%; MPM Technologies, Inc. - 15%;
and USF Smogless - 15%.
HUNTINGTON ENVIRONMENTAL SYSTEMS, INC.
Previously stated, during the Second Quarter of 1997, the Company acquired
U.S. Filter/Engineered Systems - "Oxidation Group", from United States Filter
Corporation for 1.32 million shares of common stock. Renamed Huntington
Environmental Systems, Inc., it is a highly specialized air pollution control<PAGE>
equipment company, which designs, engineers, supplies and services systems
for Fortune 500 and other environmental and industrial companies worldwide.
The assigned amount of the 1.32 million shares is $1,562,406. The method of
accounting for the combination is by the purchase method. As part of the
asset purchase agreement, Huntington Environmental Systems "HES" received
credit for $1,200,000 for future patent license fees that may be paid
pursuant to another agreement. That agreement calls for annual license fees
in the amount of $75,000 as long as HES uses the patented technology, or for
the life of the underlying patents, whichever is shorter. The period for
which the results of operations for HES are included in the MPM Technologies,
Inc., Consolidated Statement of Operations and Statement of Cash Flows is
April 1, 1997 through June 30, 1997.
MINING
The Company owns or controls 32 patented and unpatented lode claims amounting
to approximately 750 acres in the heart of the historical Emery Mining
District, Powell County, Montana. The 32 claims include eight patented
claims and sixteen unpatented claims owned by the Company and eight patented
claims leased by the Company. During the Second Quarter of 1996, the Company
did not renew leases on thirteen unpatented claims to better consolidate its
holdings and cut expenses. To date, the Company has expended over $1.3
million on exploration and development, lease payments and claims. Over
$532,000 has been expended by the Company on buildings, mill machinery,
vehicles and equipment. Management is seeking a joint venture partner to
further explore and develop the properties.<PAGE>
QUARTER ENDED 6/30/97 COMPARED TO QUARTER ENDED 6/30/96
Results of Operations
1997 1996 Inc/(Dec) % of Change
---------- ---------- ----------- -----------
Working Capital (Deficit) 1,580,173 (904,391) 2,484,564) 274.7
Total Operating Expenses 464,512 70,715 393,797 556.9
Interest Expenses 13,930 13,377 553 4.1
Contract Services 4,795 (4,795) (100.0)
Insurance 3,257 3,047 210 6.9
Professional Services 93,088 14,445 78,643 544.4
Office and Postage 4,729 4,941 (212) (4.3)
Reimbursed Expenses 2,722 10,833 (8,111) (74.9)
Travel and Entertainment (2,050) 9,891 (11,941) 120.7
Net Income (Loss) 22,643 (73,484) 96,127 130.8
Changes from the Second Quarter 1996 to the Second Quarter 1997 reflect the
Company's acquisition and financial consolidation with Huntington Environmental
Systems, Inc.<PAGE>
PART II
Item 1. Legal Proceeding
The Company knows of no litigation present, threatened or contemplated or
unsatisfied judgment against the Company, its officers or directors or any
proceedings in which the Company, its officers or directors are a party.
Item 2. Changes in Securities
The rights of the holders of the Company's securities have not been modified
nor have the rights evidenced by the securities been limited or qualified by
the issuance or modification of any other class of securities.
Item 3. Defaults upon Senior Securities
There are no senior securities issued by the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders during the Second
Quarter of 1997.
Item 5. Other Information
8-K Filings
On May 2, 1997, the Company announced it had acquired U.S. Filter/Engineered
Systems, "Oxidation Group" from United States Filter Corporation for
1,320,000 shares of the Company's common stock.
June 20, 1997, the Company filed with the Securities and Exchange Commission
a Segmented Statement of Financial Position as of March 31, 1997, for
Huntington Environmental Systems. Inc.
Supplemental Pro Forma Information
Results of operations, presented in comparative statements for the
immediately preceding period, are not readily available. The Subsidiary
acquired was previously a segment of a large corporation. It does not appear
practical to research information to create pro forma statements at or as of
March 31, 1997.<PAGE>
SIGNATURES
Pursuant to the requirements 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.
8/7/97 /s/Robert D. Little
----------------------- -------------------------
(Date) Robert D. Little
Secretary<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1639294
<SECURITIES> 0
<RECEIVABLES> 2484434
<ALLOWANCES> 180902
<INVENTORY> 309909
<CURRENT-ASSETS> 4307582
<PP&E> 1022882
<DEPRECIATION> 469013
<TOTAL-ASSETS> 7611668
<CURRENT-LIABILITIES> 2727409
<BONDS> 0
0
0
<COMMON> 16459
<OTHER-SE> 4403615
<TOTAL-LIABILITY-AND-EQUITY> 7611668
<SALES> 2881786
<TOTAL-REVENUES> 2894335
<CGS> 2406618
<TOTAL-COSTS> 2964478
<OTHER-EXPENSES> 557860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27567
<INCOME-PRETAX> (73968)
<INCOME-TAX> 0
<INCOME-CONTINUING> (73968)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (73968)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
