SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange act of 1934
For the quarter ended March 31, 1998
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 Ave.
Suite 30
Spokane, WA 99201
- ------------------------------- --------------------------
(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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of May 5, 1998, the registrant had outstanding 16,530,404 shares of common
stock which is the registrant's only class of stock.<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Financial Statements follow on the next page.<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS OF MARCH 31, 1998 AND
DECEMBER 31, 1997
(UNAUDITED)
<S> <C> <C>
MARCH DECEMBER
31, 1998 31, 1997
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equilavents $904,730 $2,010,596
Receivables, net of allowance for doubtful accounts 1,615,904 603,925
Costs and estimated earnings in excess of billings 75,077 445,205
Inventories 544,114 718,434
Other current assets 73,572 28,814
------------ ------------
Total current assets 3,213,397 3,806,974
------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Land and buildings 203,005 203,005
Mining property 54,047 54,047
Equipment and machinery 549,062 539,413
Software 3,258 3,258
------------ ------------
Total property, plant and equipment 809,372 799,723
Less accumulated depreciation 479,394 470,450
------------ ------------
Net property, plant and equipment 329,978 329,273
------------ ------------
OTHER ASSETS
Deferred exploration and development costs 1,195,465 1,195,465
Investment 1,200,000 1,200,000
Notes receivable 275,000 275,000
Licenses, net of accumulated amortization of $5,849
and $5,598, respectively 28,239 28,490
Advance minimum royalties 50,750 50,750
------------ ------------
Total other assets 2,749,454 2,749,705
------------ ------------
TOTAL ASSETS $6,292,829 $6,885,952
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS OF MARCH 31, 1998 AND
DECEMBER 31, 1997
(UNAUDITED)
<S> <C> <C>
MARCH DECEMBER
31, 1998 31, 1997
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $186,697 $419,625
Accounts payable - related party 55,116 55,116
Accrued expenses 199,526 273,959
Billings in excess of costs and estimated earnings 834,924 760,224
Interest payable 56,279 43,601
Interest payable - related parties 130,242 129,997
Advance from officer 200,000 200,000
Notes payable 259,517 282,369
Notes payable - related parties 314,766 314,765
Customer deposits - 27,000
Long-term debt - current portion 67,634 67,634
Other current liabilities - 8,692
------------ ------------
Total current liabilities 2,304,701 2,582,982
------------ ------------
LONG-TERM DEBT, net of current portion 583,961 583,961
------------ ------------
MINORITY INTEREST IN CONSOLIDATED ENTITIES (763,408) (753,748)
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000 shares
authorized, 16,530,404 and 16,480,404 shares issued
at March 31, 1998 and December 31, 1997, respectively 16,531 16,481
Additional paid-in capital 9,359,748 9,359,748
Accumulated deficit (5,208,704) (4,903,472)
------------ ------------
Total stockholders' equity 4,167,575 4,472,757
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 6,292,829 6,885,952
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
Quarter Ended
March 31,
------------------------------
<S> <C> <C>
1998 1997
------------ ------------
REVENUES $1,769,598 $ -
COSTS OF REVENUES 1,565,418 -
------------ ------------
GROSS PROFIT 204,180 -
OPERATING EXPENSES
Marketing 141,344 -
Operating overhead 317,844 -
Depreciation and amortization 8,536 11,261
Other operating expenses 47,097 82,087
------------ ------------
Total operating expenses 514,821 93,348
------------ ------------
LOSS BEFORE NON-OPERATING ITEMS (310,641) (93,348)
NON-OPERATING INCOME (EXPENSE)
Interest income 17,574 691
Interest expense (21,826) (13,637)
------------ ------------
Total non-operating income (expense) (4,252) (12,946)
------------ ------------
LOSS BEFORE MINORITY INTEREST (314,893) (106,294)
MINORITY INTEREST IN SUBSIDIARY LOSS 9,661 9,682
------------ ------------
NET LOSS ($305,232) ($96,612)
============ ============
NET LOSS PER SHARE ($0.02) ($0.01)
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
Quarter Ended
March 31,
------------------------------
<S> <C> <C>
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (305,182) (96,612)
Add items not requiring the use of cash:
Depreciation and amortization 9,195 11,261
Minority interest in subsidiary loss (9,661) (9,682)
(Increase) decrease in receivables (1,011,979) 31,511
Decrease in costs and estimated earnings in excess of billings 370,128 -
Decrease in inventory 174,320 -
(Increase) in other assets (44,758) (5,258)
(Decrease) in accounts payable (232,928) (963)
(Decrease) in accrued expenses (74,432) -
Increase in billings in excess of costs and estimated earnings 74,700 -
Increase (Decrease) in interest payable 12,924 (5,420)
(Decrease) in customer deposits (27,000) -
(Decrease) in other current liabilities (8,692) -
------------ ------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (1,073,365) (75,163)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment and machinery (9,649) -
------------ ------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (9,649) -
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable (22,852) (35,117)
Proceeds from notes payable 200,000
------------ ------------
NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES (22,852) 164,883
------------ ------------
NET (DECREASE) INCREASE IN CASH (1,105,866) 89,720
CASH AT BEGINNING OF PERIOD 2,010,596 40,566
------------ ------------
CASH AT END OF PERIOD 904,730 130,286
============ ============
</TABLE>
Supplemental disclosure of non cash financing activities:
During the quarter ended March 31, 1998, the Company issued 50,000 shares of
its common stock under the terms of an agreement with an unrelated entity.
<PAGE>
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - UNAUDITED FINANCIAL STATEMENTS
These financial statements should be read in conjunction with the audited
financial statements included in the Annual Report on Form 10-KSB for the year
ended December 31, 1997. 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, 1997. In
the opinion of management, these unaudited interim financial statements reflect
all adjustments necessary for a fair presentation of the financial position and
results of operations and cash flows of the Company. Such adjustments
consisted only of those of a normal recurring nature. Results of operations
for the period ended March 31, 1998 should not necessarily be taken as
indicative of the results of operations that may be expected for the entire
year 1998.
MPM Technologies, Inc. acquired certain of the assets and assumed certain of
the liabilities of a part of a division of United States Filter Corporation on
April 1, 1997. In connection with the acquisition, the Company formed a
wholly-owned subsidiary, Huntington Environmental Systems, Inc. ("HES") which
assumed the assets and liabilities acquired. United States Filter Corporation
had acquired HES as part of a large group of divisions known collectively as
"Wheelabrator Clean Air Systems" from Waste Management in November 1996.
Because of this, and the fact that HES was also a part of a division when it
was owned by Waste Management, the Company was unable to obtain sufficient
historical data to determine the pro forma results for prior periods to make
the required disclosures assuming the purchase of HES had been consummated as
of January 1, 1997. As a result, these disclosures have been omitted.
Certain reclassifications have been made to the December 1997 amounts to
conform to the March 1998 presentation.<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Huntington Environmental Systems, Inc.
March 31, 1998 marks the completion of the first full year of operations of
this subsidiary. HES designs, engineers, supplies and services air pollution
control systems for Fortune 500 and other environmental and industrial
companies worldwide. Through the technologies and employees acquired, HES has
over 25 years of experience and over 300 installations across the globe. HES
is a leader in the design, fabrication, installation, start-up and maintenance
of high temperature pollution control equipment.
For the three months ended March 31, 1998, HES had revenues of $1,769,598.
Since the HES was a portion of a division and had only been owned by United
States Filter Corporation since November 1996, and was formerly a part of a
division of Waste Management prior to that, comparative sufficient detailed
data was not available to determine prior comparative balances.
HES continues to increase its sales and marketing efforts. There continues to
be high levels of requests for quotations, both for firm quotations and for
budget quotations. Quotations for repeat customers are high for both new and
replacement equipment. Quotations for new projects abroad include
installations in Canada, the United Kingdom, Australia and India.
Market conditions were highly competitive during the first quarter. While this
is expected to continue for the upcoming quarters, management believes that its
sales and marketing efforts will prove successful in improving its revenues and
profits in the second and subsequent quarters.
Nupower, Inc. (Skygas process)
Skygas venture partner USF Smogless moved forward with obtaining permits
pursuant to the 1996 agreement with a consortium of European companies. That
agreement includes, among other things, the utilization of the Skygas
technology 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 the necessary permits by the end of the year.
The Company is in the final stages of negotiations which will lead to the
construction of a prototype commercial demonstration Skygas facility in the
United States. The unit will be constructed with the assistance of the
Institute of Gas Technology who will also be doing the testing of the unit.
Skygas 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. The Company has an
agreement with USF Smogless and Unitel Technologies, Inc. of Mount Prospect,
Illinois for the purpose of commercializing the Skygas process. Under the
terms of the agreement, USF Smogless is to finance, engineer, build, test and
operate a commercial demonstration facility. Unitel Technologies, Inc. has
agreed to handle the promotional, public relations, advertising and marketing
of the process. USF Smogless is owned by United States Filter Corporation
(NYSE-USF) of Palm Desert, California. Interests in the Skygas process are
Nupower (which the Company owns 58.21%) - 70%; USF Smogless - 15%;
MPM Technologies, Inc. - 15%.
Mining
On March 11, 1998, the Company's Board of Directors mandated the sale of the<PAGE>
Company's mining property, equipment and mill in accordance with its continuing
restructuring plans. It is anticipated that this sale will be concluded during
the current fiscal year. The Company owns or controls 32 patented and
unpatented lode claims amounting to approximately 750 acres of land in the
Emery mining district of Montana. The Company has expended over $1.3 million
on exploration and development, lease payments and claims. Approximately
$532,000 has been expended on buildings, machinery and equipment.
Quarter ended 3/31/98 compared to quarter ended 3/31/97
The Company was a development stage company for the first quarter of 1997. It
acquired certain of the assets and assumed certain of the liabilities of a part
of a division of United States Filter Corporation on April 1, 1997. It formed
Huntington Environmental Systems, Inc., a wholly-owned subsidiary, which
assumed the assets and liabilities acquired. As noted above, the Company was
unable to obtain sufficient data to present proforma historical data.
For the quarter ended 3/31/98, the Company had a net loss of $305,232, or $.02
per share compared to a net loss of $96,612, or $.01 per share for the quarter
ended 3/31/97. Revenues were $1,769,598 for the quarter ended 3/31/98 compared
to no revenues for the quarter ended 3/31/97. Operating expenses were $514,821
for the quarter ended 3/31/98 compared to $93,348 for the quarter ended
3/31/97. Working capital at 3/31/98 was $908,696 compared to a deficit of
$937,829 at 3/31/97.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company knows of no litigation present, threatened or contemplated or
unsatisfied judgment against the Company, its officers or directors or any
proceedings in which the Company, its officers or directors are a party.
ITEM 2. CHANGES IN SECURITIES
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
There were no matters presented to the shareholders for vote during the first
quarter of 1998.
ITEM 5. OTHER INFORMATION
On February 25, 1998, the Board of Directors had appointed Anthony L. Lee,
Michael J. Luciano and Glen Hjort to serve as directors. Additionally, Mr. Lee
and Mr. Hjort were appointed to serve on the Company's audit committee.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MPM Technologies, Inc.
5/15/98 /s/Robert D. Little
- ---------------------------- --------------------------
(date) Robert D. Little
Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 904730
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<RECEIVABLES> 1647688
<ALLOWANCES> 50000
<INVENTORY> 544114
<CURRENT-ASSETS> 3213397
<PP&E> 809372
<DEPRECIATION> 479394
<TOTAL-ASSETS> 6292829
<CURRENT-LIABILITIES> 2304701
<BONDS> 0
0
0
<COMMON> 16531
<OTHER-SE> 4151044
<TOTAL-LIABILITY-AND-EQUITY> 6292829
<SALES> 1769598
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<CGS> 1565418
<TOTAL-COSTS> 467724
<OTHER-EXPENSES> 47097
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21826
<INCOME-PRETAX> (314893)
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<INCOME-CONTINUING> (305232)
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<EXTRAORDINARY> 0
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<NET-INCOME> (305232)
<EPS-PRIMARY> (.02)
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</TABLE>
