As filed with the Securities and Exchange Commission on December 21, 1998
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
MPM TECHNOLOGIES, INC.
(Name of registrant as specified in its charter)
Washington 81-0436060
(State or Jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
222 W. Mission Ave., Ste. 30 Charles Romberg
Spokane, Washington 99201 222 W. Mission Ave., Ste. 30
(509) 326-3443 Spokane, Washington 99201
Facsimile (509) 326-3228 (509) 326-3443
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area code and telephone number, including
of Registrant's principal executive offices) area code, of agent for service)
COPY TO:
Jehu Hand, Esq.
Hand & Hand
24901 Dana Point Harbor Drive, Suite 200
Dana Point, California 92629
(949) 489-2400
Facsimile (949) 489-0034
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this
registration statement.
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933 other than securities offered only
in connection with dividend or
interest reinvestment plan, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act
registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the
earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:
[ ]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share(1) Offering Price Registration Fee
Common Stock issuable upon
conversion of Series A
<S> <C> <C> <C> <C> <C>
Convertible Preferred Stock(2)....... 762,126 $3.00 $ 2,286,378 $ 749.73
Common Stock offered by
selling shareholders(3).............. 116,009 $3.00 $ 348,027 $ 119.78
Common Stock issuable upon
exercise of options(4)............... 150,000 $3.00 $ 450,000 $ 154.88
Total(5)(6)............................ 1,028,135 $ 3,472,473 $ 1,024.39
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Includes 762,126 shares estimated to be issuable upon conversion of 670
shares($670,000) aggregate principal amount) of Series A Convertible Preferred
Stock convertible at 70% of the closing bid price
of the Common Stock averaged over the five trading days prior
to the date of conversion. The conversion price of $1.1375 per share is
based upon the closing bid price of the Common Stock on
October 14, 1998, the closing date for the offering. The maximum
offering price per share is based upon the closing price of the Common Stock on
December 18, 1998, or $3.50 since it is higher than the
estimated conversion price per share of the Series A Convertible Preferred Stock
(in accordance with Rule 457(g)).
(3) Includes 19,125 shares issued as fees in connection with the placement
of the Series A Convertible Preferred Stock.
(4) Includes options to purchase shares of Common Stock at the following
prices, held as follows:
<TABLE>
<CAPTION>
Holder Number of Shares Exercise Price
<S> <C> <C>
World Capital Funding, Inc. 20,000 $ 2.03
Synergy Communications, Inc. 20,000 $ 1.50
Synergy Communications, Inc. 20,000 $ 2.00
Synergy Communications, Inc. 20,000 $ 3.00
Synergy Communications, Inc. 50,000 $ 4.00
Synergy Communications, Inc. 20,000 $ 5.00
</TABLE>
The maximum offering price per share is based upon the closing price of
the Common Stock on October 30, 1998 of $3.75 per share
since it is higher than the exercise price, in accordance with Rule
457(g).
(5) Includes in each case reoffers of the Common Stock offered hereby and
shares issuable pursuant to antidilution provisions pursuant to
Rule 416.
(6) Paid herewith.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary
to delay its effective date until the Registrant shall file a further amendment
which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date
as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
PROSPECTUS
MPM TECHNOLOGIES, INC.
1,028,135 Shares of Common Stock
The estimated 1,028,135 shares (the "Shares") of Common Stock, $.001
par value (the "Common Stock") of MPM Technologies, Inc., a Washington
corporation (the "Company") are being registered by the Company and include an
estimated 762,126 shares issuable upon conversion of $670,000 in principal
amount of Series A Convertible Preferred Stock (the "Series A Preferred"),
150,000 shares issuable
upon exercise of options and 96,884
shares already outstanding and 19,125 shares to be issued prior to the date of
this Prospectus. The Company will
not receive any proceeds from the sale of Common Stock by the selling
stockholders (the "Selling Stockholders").
See "Selling Stockholders." The expenses of the offering, estimated at $20,000,
will be paid by the Company.
The Common Stock currently trades on the NASDAQ Small Cap Market under
the symbol "MPML" On
December 8, 1998, the last sale price of the Common Stock as reported on NASDAQ
was $3.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PURCHASE OF THESE SECURITIES INVOLVES RISKS. See "Risk Factors" on page 3.
Information contained herein is subject to completion or amendment.
A registration statement relating to
these securities has been filed with the Securities and Exchange Commission.
These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in
any State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the
securities laws of any such State.
The date of this Prospectus is December __, 1998
1
<PAGE>
No person has been authorized in connection with this offering to give
any information or to make any
representation other than as contained in this Prospectus and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or the solicitation of an offer to buy any securities covered by this Prospectus
in any state or other jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such state or jurisdiction. Neither the delivery
of this Prospectus nor any sales made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of the
Company since the date hereof.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, as well as proxy
statements and other information filed by the Company with the Commission, can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its Regional Offices located at 7 World Trade Center, New York, New York 10048,
and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, Washington, D.C. 20549, during
regular business hours. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers such as the Company that file electronically with the Commission at
http://www.sec.gov.
This Prospectus incorporates by reference the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997, its Quarterly Reports on
Form 10-QSB for the quarters ended March 31, 1998, June 30, 1998 and September
30, 1998, its Current Reports on Form 8-K dated February 25, 1998, June 12,
1998, and August 25, 1998, its definitive proxy statement dated August 27, 1998,
the description of securities included in the Company's Registration Statement
on Form 8-A, File No. 0-14910, and all other documents subsequently filed by the
Company pursuant to Section 13(a), 13(c) or 14 of the Exchange Act prior to the
termination of the offering made hereby. Statements contained in this Prospectus
as to the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract or
document filed as an exhibit to the Registration Statement, each such statement
being qualified in its entirety by such reference. The Company will provide,
without charge upon oral or written request of any person, a copy of any
information incorporated by reference herein. Such request should be directed to
the Company at 222 W. Mission Avenue, Suite 30, Spokane, Washington 99201,
telephone (509) 326-3443.
INDEMNIFICATION
Pursuant to the Company's Articles of Incorporation, as amended, the
Company may indemnify each of its directors and officers with respect to all
liability and loss suffered and reasonable expense incurred by such person in
any action, suit or proceeding in which such person was or is made or threatened
to be made a party or is otherwise involved by reason of the fact that such
person is or was a director of the Company. In addition, the Company may pay the
reasonable expenses of indemnified directors and officers incurred in defending
such proceedings if the indemnified party agrees to repay all amounts advanced
should it be ultimately determined that such person is not entitled to
indemnification.
In addition, as permitted by the Washington Business Corporation Act,
the Company's Articles of Incorporation provides that the Company's directors
will not be held personally liable to the Company or its stockholders for
monetary damages for a breach of fiduciary duty as a director except to the
extent such exemption from liability or limitation thereof is not permitted
under the Washington General Corporation Law. This provision does not eliminate
the duty of care, and injunctive or other forms of non-monetary equitable relief
will remain available under Washington law. In addition, each director continues
to be liable for monetary damages for (i) misappropriation of any corporate
opportunity in violation of the director's duties, (ii) acts or omissions in bad
faith or involving intentional dishonesty, (iii) knowing violations of law, and
(iv) any transaction from which a director derives an improper personal benefit.
The provision does not affect a director's responsibilities under any other law,
such as the federal securities laws of state or federal environmental laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the information
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety.
The Company
The Company's principal executive offices are located at 222 W.
Mission Ave., Ste. 30, Spokane,
Washington 99201. Its telephone number is (509) 326-3443 and its fax number is
(509) 326-3228.
The Offering
Securities Offered:........ An estimated 1,028,135 shares of Common Stock, no
par value, including an estimated 762,126 shares issuable
upon conversion of 670 shares of Series A Preferred
Stock at a conversion price per share of Series A
Preferred Stock equal to 70% of the average closing bid
price of the Common Stock on the five trading days
prior to conversion (or an estimated $1.1375 per share,
150,000 shares issuable upon exercise of options, and
116,009 shares currently outstanding as of the date of
this Prospectus.
Common Stock Outstanding Before Offering:................ 2,275,119(1) shares
Common Stock Outstanding After Offering:................. 3,206,370 shares
NASDAQ symbol............................................ MPML
(1) Based on shares outstanding as of November 30, 1998. Does not include
19,125 shares offered hereby
which were not yet issued as of November 30, 1998.
Risk Factors
Investment in the Shares offered hereby involves a high degree of risk,
including the limited operating history of the Company and competition.
Investors should carefully consider the various risk factors before investing in
the Shares. This Prospectus contains forward looking statements which may
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors." See "Risk Factors."
RISK FACTORS
The shares of Common Stock offered hereby are highly speculative and
involve a high degree of risk. The following risk factors should be considered
carefully in addition to the other information in this Prospectus before
purchasing the shares of Common Stock offered hereby. The discussion in this
Prospectus contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere herein.
3
<PAGE>
Limited Operating History; Past and Possible Future Operating Losses.
The Company acquired its operating subsidiary, Huntington Environmental Systems,
Inc. ("HES") in April, 1997 and acquired Air Pul Environmental on July 1, 1998.
Prior to the acquisition of HES the Company had no significant operations and
has operated at a loss for the past five years. As of September 30, 1998, the
cumulative loss since inception was $5,095,101. The Company's limited operating
history makes the prediction of future sales and operating results difficult.
There can be no assurance that the Company's sales will grow or be sustained in
future periods or that the Company will become or remain profitable in any
future period.
Possible Need for Additional Financing. The Company's planned expansion
of its operations (including increased overhead, depreciation, marketing and
salaries) combined with the Company's lack of liquidity may require that the
Company obtain additional debt or equity financing for these or other general
corporate purposes. There can be no assurance that the Company will be able to
obtain additional debt or equity financing on terms favorable to the Company, or
at all, or if obtained, there can be no assurance that such debt or equity
financing will be sufficient for the financing needs of the Company.
Intense and Increasing Competition. The Company competes with a large
number of firms engaged in the design, fabrication installation, start-up on the
maintenance of high-temperature pollution control equipment, many of whom have
substantially greater financial, design and fabrication installation and
maintenance resources and have achieved a higher level of brand recognition than
the Company.
Potential Fluctuations in Quarterly Results. The Company's quarterly
operating results may in the future vary significantly depending on factors such
as timing of contract performance and recognition of revenue, increased
competition, fluctuations in the price of materials, general economic factors
and environmental regulations. The Company's expense levels are based, in part,
on its backlog. If sales levels are below expectations, operating results are
likely to be materially adversely affected. As of September 30, 1998, the
Company had backlog of $17,400,000.
Based upon the risks of potential fluctuations in quarterly results
discussed above and unpredictability of demand, discussed below, the Company
believes that quarterly sales and operating results are likely to vary
significantly in the future and that period-to-period comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance. Further, it is possible that in some future
quarter the Company's revenues or operating results will be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock could be materially adversely affected.
Ability to Manage Growth. The Company has experienced growth that has
resulted in new and increased responsibilities for management personnel which
has challenged and continues to challenge the Company's management, operating
and financial systems and resources. To compete effectively and manage future
growth, if any, the Company will be required to continue to implement and
improve its operational, financial and management information systems,
procedures and controls on a timely basis and to expand, train, motivate and
manage its work force. There can be no assurance that the Company's personnel,
systems, procedures and controls will be adequate to support the Company's
existing and future operations. Any failure to implement and improve the
Company's operational, financial and management systems or to expand, train,
motivate or manage employees could have a material adverse effect on the
Company's operating results and financial condition.
No Assurance of Ability to Protect Intellectual Property Rights. The
Company considers its intellectual property rights related to its "Skygas"
waste-to-energy process to be of significant value. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy or obtain and use information that the Company regards as proprietary.
There can be no assurance that the steps taken by the Company to protect its
proprietary information will be adequate to obtain the legal protection sought
or will prevent misappropriation of such information and such protection may not
preclude competitors from developing confusingly similar brand names or
promotional materials or developing products with taste and other qualities
similar to the Company's products.
Risk of Third Party Claims of Patent Infringement. While the Company
believes that its Intellectual Property does not infringe upon the proprietary
rights of third parties, there can be no assurance that the Company will not
receive future communications from third parties asserting that the Company's
Intellectual Property infringes,
4
<PAGE>
or may infringe, upon the proprietary rights of third parties. The potential for
such claims will increase as the Company increases operations. Any such claims,
with or without merit, could be time-consuming, result in costly litigation and
diversion of management's attention, cause product distribution delays or
require the Company to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms economical
or acceptable to the Company or at all. In the event of a successful claim of
infringement against the Company and failure or inability of the Company to
license the infringed or similar proprietary information, the Company's
operating results and financial condition could be materially adversely
affected.
Dependence on Key Personnel. The Company's success depends to a
significant degree upon the continuing contributions of, and on its ability to
attract and retain, qualified management, sales, production and marketing
personnel of its HES and Air Pul subsidiaries. The Company has no employment
agreements with these persons. The competition for qualified personnel is
intense and the loss of any of such persons as well as the failure to recruit
additional key personnel in a timely manner, could adversely affect the Company.
There can be no assurance that the Company will be able to continue to attract
and retain qualified management and sales personnel for the development of its
business. Failure to attract and retain key personnel could have a material
adverse effect on the Company's operating results and financial condition.
Operating Hazards; No Assurance of Adequate Insurance. The Company's
operations are subject to certain hazards and liability risks faced by all
operations in the environmental remediation business. While the Company has not
experienced problems in the past, the occurrence of such a problem could result
in a costly remediation and serious damage to the Company's reputation. The
Company's operations are also subject to certain injury and liability risks
normally associated with the operation and possible malfunction of maintaining
equipment. Although the Company maintains insurance against certain risks under
various general liability and product liability insurance policies, there can be
no assurance that the Company's insurance will be adequate.
Concentration of Ownership by Management. As of October 31, 1998, the
executive officers and directors of the Company on that date beneficially owned
approximately 20.74% of the Common Stock. Such concentration of ownership may
have the effect of delaying or preventing a change in control of the Company.
Antitakeover Provisions in the Company's Corporate Documents. The
Company's Board of Directors has the authority to issue to up 10,000,000 shares
of preferred stock, no stated value (the "Preferred Stock"), of the Company
including 1,200 shares of Series A Preferred Stock of which 670 shares have been
issued to date and to determine the price, rights, preferences, privileges and
restrictions thereof, including voting rights, without any further vote or
action by the Company's stockholders. The voting and other rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future. The
Company's Board may similarly issue additional shares of Common Stock without
any further vote or action by stockholders. Such an issuance could occur in the
context of another public or private offering of shares of Common stock or
Preferred Stock or in a situation where the Common or Preferred Stock is used to
acquire the assets or stock of another company. The issuance of Common or
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no current plans to issue any additional shares of Common or
Preferred Stock other than the Series A Preferred or as described herein. See
"Description of Securities."
Moreover, the Articles of Incorporation ("Articles") of the Company
contain certain provisions which, among other things, maintain a "staggered"
Board of Directors and, limit the personal liability of, and provide
indemnification for, the directors of the Company.
Common Stock Equivalents. As of November 30, 1998, the Company had
3,307,370 shares of common stock issued and outstanding or reserved for later
issuance. The increase in common shares outstanding or reserved is the result of
762,126 shares estimated to be issuable upon the conversion of Series A
Preferred Stock and options to purchase 150,000 shares and 101,001 shares
issuable upon exercise of options held by officers or directors, and 19,125
shares to be issued as fees in connection with the placement of the Series A
Preferred Stock. An increase in the number of shares of Common Stock (or Common
Stock equivalents) outstanding will have a negative effect
5
<PAGE>
on the Company's per share ratios, including earnings per share, which could
negatively impact the market for the Company's Common Stock and the price of the
Common Stock in the market. The Company has scheduled a special meeting of its
stockholders on January 25, 1999 to obtain approval for the issuance of shares
hereunder in order to comply with NASDAQ's corporate governance rule. There can
be no assurance that the issuance of common stock will be approved by
stockholders. If the increase in issuance of common shares is not approved the
holders of outstanding Preferred Stock, including Series A Preferred Stock will
be unable to convert all of their Shares into common stock, which would likely
lead to litigation.
Limitations on Liability of Management. The Company has adopted
provisions in its Articles that eliminate to the fullest extent permissible
under Washington law the liability of its directors for monetary damages except
to the extent that it is proved that the director actually received an improper
benefit or profit in money, property or services or the director's action or
failure to act was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. While it may
limit stockholder actions against the directors of the Company for various acts
of misfeasance, the provision is designed to ensure that the ability of the
Company's directors to exercise their best business judgment in managing the
Company's affairs, subject to their continuing fiduciary duties to the Company
and its stockholders, is not unreasonably impeded by exposure to potentially
high personal costs or other uncertainties of litigation.
Indemnification of Management. The Company's Articles, consistent with
Washington law, provide that the Company will indemnify and advance expenses to
any director, officer, employee or agent of the Company who is, or is threatened
to be made, a party to any action, suit or proceeding. Such indemnification
would cover the cost of attorney's fees as well as any judgment, fine or amounts
paid in settlement of such action provided that the indemnified party meets
certain standards of conduct necessary for indemnification under applicable law.
Such indemnity may or may not be covered by officer and director liability
insurance and could result in an expense to the Company even if such person is
not successful in the action. This provision is designed to protect such persons
against the costs of litigation which may result from his or her actions on
behalf of the Company.
6
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial and operating data should be read in
conjunction with the Company's financial statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-KSB (the "Annual
Report") and Form 10-QSB for the quarter ended June 30, 1998 (the "10QSB"),
incorporated by reference herein. The balance sheet data and statement of
operations data as of and for the years ended December 31, 1997, 1996, 1995,
1994 and 1993, incorporated by reference herein, are derived from financial
statements of the Company that have been audited. The balance sheet data and
statement of operations data as of September 30, 1998 and for the nine months
ended June 30, 1997 and 1998 are derived from unaudited financial statements of
the Company that are included in the 10-QSB. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report
and the 10QSB.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended
1998 1997 1997 1996 1995 1994 1993
Results of Operations
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $7,079,491 $4,359,620 $6,076,936 $-0- $-0- $200.147 $-0-
Interest expense 69,503 40,527 96,068 54,773 68,257 79,125 127,871
Net (loss) (191,689) (49,428) (277,573) (394,607) (271,052) (227,991) (459,513)
Financial Position
Working Capital 393,590 1,170,091 (942,947) (822,860) (1,047,464) (1,111,925)
Total Assets 8,681,739 6,885,952 3,074,567 2,051,541 2,015,304 2,074,009
Long-term Debt 583,961 530,000 -0- -0- -0- -0-
Accumulated Deficit (5,095,161) 4,903,473 4,660,759 4,266,152 3,995,000 3,767,109
Stockholders' Equity 4,212,805) 4,472,756 2,771,637 1,745,657 1,617,394 1,449,368
Per Common Share
Net (loss) (0.10) (0.03) (0.02) (0.03) (0.02) (0.02) (0.03)
Book value 2.33 -- 0.27 0.19 0.14 0.14 0.12
Average shares
Outstanding -- -- 15,440,089 13,339,445 12,534,158 12,107,813 11,857,255
</TABLE>
MARKET PRICE OF COMMON STOCK
The following table sets forth the high and low bid prices for the
Common Stock as reported on NASDAQ for each quarter since January 1, 1995. Such
information reflects inter dealer prices without retail mark-up, mark down or
commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
High Low
1998
<S> <C> <C>
First Quarter $ 1.1875 $ 0.50
Second Quarter $ 0.875 $ 0.50
Third Quarter $ 3.875 $ 0.50
1997
First Quarter $ 0.50 $ 0.25
Second Quarter $ 1.25 $ 0.38
Third Quarter $ 0.93 $ 0.56
Fourth Quarter $ 0.88 $ 0.50
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
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
</TABLE>
7
<PAGE>
As of November 30, 1998, there were approximately 690 holders of
record of the Company's common
stock.
The Company has not paid any dividends on its Common Stock. The Company
currently intends to retain any earnings for use in its business, and therefore
does not anticipate paying cash dividends in the foreseeable future.
8
<PAGE>
SELLING STOCKHOLDERS
The shares of Common Stock of the Company offered by the Selling
Stockholders (the "Shares") will be offered at market prices, as reflected on
NASDAQ. The shares include 115,634 shares currently outstanding as well as
150,000 shares issuable upon exercise of options and an estimated 762,126 shares
being offered by the holders upon conversion of the Series A Preferred. The
aggregate number of shares offered for resale upon conversion of the Series E
Preferred will be based on the conversion rate in effect at the time of
conversion. It is anticipated that Selling Stockholders will sell their shares
of Common Stock on NASDAQ in which case registered broker-dealers will be
allowed the commissions which are usual and customary in open market
transactions. Selling Stockholders may also sell their shares of Common Stock in
off-the-market transactions at market price in which case no commissions would
be paid.
The number of shares of Common Stock estimated to be issuable upon
conversion of each of the 670 shares of Series A Preferred, and the consequent
number of shares of Common Stock available for resale under this Prospectus, is
based upon a conversion ratio which is $1,000 divided by 70% of the closing bid
price of the Common Stock on NASDAQ averaged over the five trading days
immediately prior to the date of conversion. The number of shares in the table
below is based upon a rate of $1.1375, or approximately 879.12087 shares of
Common Stock per share of Series A Preferred. The Selling Stockholders do not
own any Common Stock except as registered hereby and will own no shares after
the completion of the offering. The relationship, if any, between the Company
and any Selling Stockholder is set forth below.
<TABLE>
Percent of
<CAPTION>
Number of Common Stock
Series A Number of Before
Name Preferred Shares Common Shares Offering
<S> <C> <C> <C> <C>
Tabacalera, Ltd.(1) 175 199,063 9.8%
Augustine Fund, LP(2) 200 227,500 11.0%
Bertek Realty(3) 95 108,063 5.6%
Congregation Beth Mordecai 200 227,500 11.0%
Synergy Communications, Inc.(4) -- 130,000 7.1%
World Capital Funding, LLC.(5) -- 39,125 2.1%
FLS Miljo, Inc.
100 Glenborough Drive
Houston, Texas 77067-3611(6) -- 96,884 __%
TOTALS 670 1,028,135 52.9%
*less than 1%
</TABLE>
(1) The controlling shareholder of this holder is ___________.
(2) The controlling shareholder of this holder is Thomas Duszynski.
(3) The controlling shareholder of this holder is ___________.
(4) The controlling shareholder of this holder is ___________. Synergy
Communications received these options in connection with a financial
public relations contract.
(5) The controlling shareholder of this holder is Keith Mazer. Includes
options to purchase 20,000 shares.
(6) The controlling shareholder of this holder is Preben Lausen.
9
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, $.001 par value per share, of which
2,275,119 shares were outstanding as of November 30, 1998. Holders of shares of
Common Stock are entitled to one vote for each share on all matters to be voted
on by the shareholders. Holders of Common Stock have no cumulative voting
rights. Holders of shares of Common Stock are entitled to share ratably in
dividends, if any, as may be declared, from time to time by the Board of
Directors in its discretion, from funds legally available therefor. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
shares of Common Stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. Holders of Common Stock have no preemptive
rights to purchase the Company's Common Stock. There are no conversion rights or
redemption or sinking fund provisions with respect to the Common Stock. All of
the outstanding shares of Common Stock are validly issued, fully paid and
non-assessable.
The transfer agent for the Common Stock is TranSecurities
International, 2510 N. Pines, Suite 202, Spokane, Washington, 99206.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of
10,000,000 shares of preferred stock, of which 1,200 shares of Series A
Preferred, are authorized and 670 shares are outstanding. The Series A Preferred
Stock is convertible into shares of common stock (see "Selling Stockholders" and
"Risk Factors - Common Stock Equivalents"). The annual dividend rate for the
Series A Preferred is $60.00 per share per annum, when, as and if declared by
the Company's Board of Directors. If not declared, dividends will accumulate and
be payable in the future. Full dividends must be paid or set aside on the Series
A, Preferred Stock before dividends may be paid or set aside on the Company's
Common Stock. The Company has the option to pay dividends on the Series A
Preferred by the issuance of Common Stock valued at the then effective
conversion rate of the Series A Preferred Stock. The holders of Series A
Preferred Stock have a liquidation preference of $1,300 per share over the
Common Stock. The Company does not expect to declare or pay such dividends in
the foreseeable future. The Company may issue additional preferred stock in the
future. The Company's Board of Directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series.
The Company considers it desirable to have preferred stock available to
provide increased flexibility in structuring possible future acquisitions and
financings and in meeting corporate needs which may arise. If opportunities
arise that would make desirable the issuance of preferred stock through either
public offering or private placements, the provisions for preferred stock in the
Company's Articles of Incorporation would avoid the possible delay and expense
of a shareholder's meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result, however, in a series
of securities outstanding that will have certain preferences with respect to
dividends and liquidation over the Common Stock which would result in dilution
of the income per share and net book value of the Common Stock. Issuance of
additional Common Stock pursuant to any conversion right which may be attached
to the terms of any series of preferred stock may also result in dilution of the
net income per share and the net book value of the Common Stock. The specific
terms of any series of preferred stock will depend primarily on market
conditions, terms of a proposed acquisition or financing, and other factors
existing at the time of issuance. Therefore, it is not possible at this time to
determine in what respect a particular series of preferred stock will be
superior to the Company's Common Stock or any other series of preferred stock
which the Company may issue. The Board of Directors may issue additional
preferred stock in future financings.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Further, certain provisions of Washington law could delay
or make more difficult a merger, tender offer or proxy contest involving the
Company. While such provisions are intended to enable the Board of Directors to
maximize stockholder value, they may have the effect of discouraging takeovers
which could be in the best interest of certain stockholders. There is no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future.
10
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the
Company by Hand & Hand, a law corporation, Dana Point, California.
EXPERTS
The financial statements of the Company as of December 31, 1997 and
1996 and for the years ended December 31, 1997 and 1996, incorporated by
reference in this Prospectus from the Annual Report on Form 10-KSB, have been
incorporated herein in reliance on the report of Terrance J. Dunne, certified
public accountant given on the authority of said firm as experts in accounting
and auditing.
11
<PAGE>
No dealer, salesman or other person is authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offer made hereby, and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
to an offer to buy the securities offered hereby to any person in any state or
other jurisdiction in which such offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that the information contained herein
is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Additional Information...................... 2
Prospectus Summary.......................... 3
Risk Factors................................ 6
Market Price of Common Stock................ 8
Selling Stockholders........................ 10
Description of Securities................... 10
Legal Matters............................... 11
Experts..................................... 11
MPM TECHNOLOGIES, INC.
PART II
Item 14. Other Expenses of Issuance and Distribution.
Filing fee under the Securities Act of 1933 $ 909.90
Printing and engraving(1) 500.00
Legal Fees 10,000.00
Accounting Fees MPM TECHNOLOGIES, INC.6,000.00
Miscellaneous(1) 2,590.10
TOTAL $ 20,000.00
==========
(1) Estimates 1,028,135 SHARES
Item 15. Indemnification of Directors and Officers.
Pursuant to the Company's Articles of Incorporation, as
amended, the Company may indemnify each of its directors and officers with
respect to all liability and loss suffered and reasonable expense incurred by
such person in any action, suit or proceeding in which such person was or is
made or threatened to be made a party or is otherwise involved by reason of the
fact that suchPperson is or was a director of the Company. In addition, the
Company may pay the reasonable expenses of indemnified directors and officers
incurred in defending such proceedings if the indemnified party agrees to repay
all amounts advanced should it be ultimately determined that such person is not
entitled to indemnification.
In addition, as permitted by the Washington Business
Corporation Act, the Company's Articles of Incorporation provides that the
Company's directors will not be held personally liable to the Company or its
stockholders for monetary damages for a breach of fiduciary duty as a director
except to the extent such exemption from liability or limitation thereof is not
permittedmunder_the9Washington General Corporation Law. This provision does not
eliminate the duty of care, and injunctive or other forms of non-monetary
equitable relief will remain available under Washington law. In addition, each
director continues to be liable for monetary damages for (i) misappropriation of
any corporate opportunity in violation of the director's duties, (ii) acts or
omissions in bad faith or involving intentional dishonesty, (iii) knowing
violations of law, and (iv) any transaction from which a director derives an
improper personal benefit. The provision does not affect a director's
responsibilities under any other law, such as the federal securities laws of
state or federal environmental laws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
Item 16. Exhibits
3._ Certificate of Designation, Series A Preferred Stock.
5.1 Opinion of Hand & Hand.
23.1 Consent of Auditors.
23.2 Consent of Hand & Hand included in Exhibit 5.
25. Powers of Attorney - on signature page.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant
to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities offered at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel that matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Item 18. Not Applicable.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Spokane,
State of Washington on November __, 1998.
MPM TECHNOLOGIES, INC.
By: /s/ Charles Romberg
Charles Romberg
The undersigned officer and/or director of MPM Technologies, Inc., a
Washington corporation (the "Corporation"), hereby constitutes and appoints
Charles Romberg and Daniel D. Smozanek, with full power of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities this Registration Statement and any and all amendments thereto, and
any and all applications or other documents to be filed pertaining to this
Registration Statement with the Securities and Exchange Commission or with any
states or other jurisdictions in which registration is necessary to provide for
notice or sale of all or part of the securities to be registered pursuant to
this Registration Statement and with full power and authority to do and perform
any and all acts and things whatsoever required and necessary to be done in the
premises, as fully to all intents and purposes as the undersigned could do if
personally present. The undersigned hereby ratifies and confirms all that said
attorney-in-fact and agent, or any of his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof and incorporate such changes as
any of the said attorneys-in-fact deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on November__, 1998.
By: President
Charles Romberg (principal executive officer) and Director
By: Treasurer (principal accounting
Daniel D. Smozanek and financial officer)
By: Vice President and Director
Myron Katz
By: Vice President and Director
Richard E. Appleby
By: Director
L. Craig Cary Smith
By: Vice President and Director
Michael J. Luciano
By: Director
Glen Hjorst
By: Director
Anthony L. Lee
II-11
<PAGE>
CERTIFICATE OF DESIGNATION Exhibit 3.1
Charles A. Romberg and Robert D. Little certify that they are the President
and Secretary, respectively, of MPM Technologies, Inc., a Washington corporation
(hereinafter referred to as the "Corporation" or the "Company"); that, pursuant
to the Corporation's Articles of Incorporation, as amended, and Section
23B.06.020 of the Washington Business Corporation Act pursuant to the Articles
of Incorporation, as amended, the Board of Directors of the Corporation adopted
the following resolutions on September __, 1998; and that none of the Series A
Convertible Preferred Stock referred to in this Certificate of Designation has
been issued.
1. Creation of Series A Convertible Preferred Stock. There is hereby
created a series of preferred stock consisting of 600 shares and designated as
the Series A Convertible Preferred Stock, having the voting powers, preferences,
relative, participating, limitations, qualifications optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth below.
2. Dividend Provisions. The holders of shares of Series A Convertible
Preferred Stock shall be entitled to receive, a 6% annual dividend, equal in
value to $60.00 per share, payable on each July 1 commencing on July 1, 1999, or
on conversion pro rata based on a 360-day year. In the option of the
Corporation, such dividend may be paid in cash or in Common Stock valued at the
Conversion Rate in effect as of such July 1 or the Conversion Date, as the case
may be. Each share of Series A Convertible Preferred Stock shall rank on a
parity with each other share of Series A Convertible Preferred Stock with
respect to dividends.
3. Redemption Provisions. The Series A Convertible Preferred Stock
shall nor be redeemable
without the consent of the holder.
4. Liquidation Provisions. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the Series A
Convertible Preferred Stock shall be entitled to receive an amount equal to
$1,300.00 per share. After the full preferential liquidation amount has been
paid to, or determined and set apart for the Series A Convertible Preferred
Stock and all other series of Preferred Stock hereafter authorized and issued,
if any, the remaining assets of the Corporation available for distribution to
shareholders shall be distributed ratably to the holders of the common stock. In
the event the assets of the Corporation available for distribution to its
shareholders are insufficient to pay the full preferential liquidation amount
per share required to be paid the Corporation's Series A Convertible Preferred
Stock, the entire amount of assets of the Corporation available for distribution
to shareholders shall be paid up to their respective full liquidation amounts
first to the Series A Convertible Preferred Stock, then to any other series of
Preferred Stock hereafter authorized and issued, all of which amounts shall be
distributed ratably among holders of each such series of Preferred Stock, and
the common stock shall receive nothing. A reorganization or any other
consolidation or merger of the Corporation with or into any other corporation,
or any other sale of all or substantially all of the assets of the Corporation,
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 4, and the Series A Convertible
Preferred Stock shall be entitled only to (i) the right provided in any
agreement or plan governing the reorganization or other consolidation, merger or
sale of assets transaction, (ii) the rights contained in the Washington Business
Corporation Act and (iii) the rights contained in other Sections hereof.
1
<PAGE>
5. Conversion Provisions. The holders of shares of Series A Convertible
Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. (1) Each share of Series A Convertible Preferred
Stock (the "Preferred Shares") shall be convertible, at the option of its
holder, at any time, into a number of shares of common stock of the Company
(the "Common Stock") at the initial conversion rate (the "Conversion Rate")
defined below. The initial Conversion Rate, subject to the adjustments
described below, shall be a number of shares of Common Stock equal to
$1,000 divided by Seventy Percent (70%) of the average Market Price of the
Common Stock for the five trading days immediately prior to the Conversion
Date (defined below). For purposes of this Section 5(a)(1), Market Price
for any date shall be the closing bid price of the Common Stock on such
date, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or the closing bid price in the
over-the-counter market if other than NASDAQ.
(2) No fractional shares of Common Stock shall be issued upon conversion of
the Preferred Shares, and in lieu thereof the number of shares of Common
Stock issuable for each Preferred Share converted shall be rounded to the
nearest whole number. Such number of whole shares of Common Stock issuable
upon the conversion of one Preferred Share shall be multiplied by the
number of Preferred Shares submitted for conversion pursuant to the Notice
of Conversion (defined below) to determine the total number of shares of
Common Stock issuable in connection with any conversion.
(3) In order to convert the Preferred Shares into shares of Common Stock,
the holder of the Preferred Shares shall: (i) complete, execute and deliver
to the Corporation the conversion certificate attached hereto as Exhibit A
(the "Notice of Conversion"); and (ii) surrender the certificate or
certificates representing the Preferred Shares being converted (the
"Converted Certificate") to the Corporation. The Notice of Conversion shall
be effective and in full force and effect if delivered to the Corporation
by facsimile transmission at (509) 326-3228. Provided that a copy of the
Notice of Conversion is delivered to the Corporation on such date by
facsimile transmission or otherwise, and provided that the original Notice
of Conversion and the Converted Certificate are delivered to the
Corporation within three (3) business days thereafter at 222 W. Mission
Avenue, Suite 30, Spokane, Washington 99201, the date on which notice of
conversion is given (the "Conversion Date") shall be deemed to be the date
set forth therefor in the Notice of Conversion; and the person or persons
entitled to receive the shares of Common stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock as of the Conversion Date. If the original Notice of
Conversion and the Converted Certificate are not delivered to the
Corporation within three (3) business days following the Conversion Date,
the Notice of Conversion shall become null and void as if it were never
given and the Corporation shall, within two (2) business days thereafter,
return to the holder by overnight courier any Converted Certificate that
may have been submitted in connection with any such conversion. In the
event that any Converted Certificate submitted represents a number of
Preferred Shares that is greater than the number of such shares that is
being converted pursuant to the Notice of Conversion delivered in
connection therewith, the Corporation shall deliver, together with the
certificates for the shares of Common Stock issuable upon such conversion
as provided herein, a certificate representing the remaining number of
Preferred Shares not converted.
2
<PAGE>
(4) Upon receipt of a Notice of Conversion, the Corporation shall
absolutely and unconditionally be obligated to cause a certificate of
certificates representing the number of shares of Common Stock to which a
converting holder of Preferred Shares shall be entitled as provided herein,
which shares shall constitute fully paid and nonassessable shares of Common
Stock that are freely transferable on the books and records of the
Corporation and its transfer agents, to be issued to, delivered by
overnight courier to, and received by such holder by the fifth (5th)
calendar day following the Conversion Date. Such delivery shall be made at
such address as such holder may designate therefor in its Notice of
Conversion or in its written instructions submitted together therewith.
(5) No less than 25 shares of Series A Convertible Preferred Stock may be
converted at any one time, unless the holder then holds less than 25 shares
and converts all shares at that time.
(b) Adjustments to Conversion Rate. (1) Reclassification, Exchange and
Substitution. If the Common Stock issuable on conversion of the Series A
Convertible Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification, reverse stock split or forward stock
split or stock dividend or otherwise (other than a subdivision or
combination of shares provided for above), the holders of the Series A
Convertible Preferred Stock shall, upon its conversion, be entitled to
receive, in lieu of the Common Stock which the holders would have become
entitled to receive but for such change, a number of shares of such other
class or classes of stock that would have been subject to receipt by the
holders if they had exercised their rights of conversion of the Series A
Convertible Preferred Stock immediately before that change.
(2) Reorganizations, Mergers, Consolidations or Sale of Assets. If at any
time there shall be a capital reorganization of the Corporation's common
stock (other than a subdivision, combination, reclassification or exchange
of shares provided for elsewhere in this Section (5) or merger of the
Corporation into another corporation, or the sale of the Corporation's
properties and assets as, or substantially as, an entirety to any other
person, then, as a part of such reorganization, merger or sale, lawful
provision shall be made so that the holders of the Series A Convertible
Preferred Stock shall thereafter be entitled to receive upon conversion of
the Series A Convertible Preferred Stock, the number of shares of stock or
other securities or property of the Corporation, or of the successor
corporation resulting from such merger, to which holders of the Common
Stock deliverable upon conversion of the Series A Convertible Preferred
Stock would have been entitled on such capital reorganization, merger or
sale if the Series A Convertible Preferred Stock had been converted
immediately before that capital reorganization, merger or sale to the end
that the provisions of this paragraph (b)(2) (including adjustment of the
Conversion Rate then in effect and number of shares purchasable upon
conversion of the Series A Convertible Preferred Stock) shall be applicable
after that event as nearly equivalently as may be practicable.
(c) No Impairment. The Corporation will not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer
of assets, merger, dissolution, or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provision of this
Section 5 and in the taking of all such action
3
<PAGE>
as may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Series A Convertible Preferred Stock against
impairment.
(d) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Rate for any shares of Series A
Convertible Preferred Stock, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof
and prepare and furnish to each holder of Series A Convertible Preferred
Stock effected thereby a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at
any time of any holder of Series A Convertible Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion Rate at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of such holder's shares of Series A Convertible Preferred Stock.
(e) Notices of Record Date. In the event of the establishment by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, the
Corporation shall mail to each holder of Series A Preferred Stock at least
twenty (20) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution and the amount and character of such dividend or
distribution.
(f) Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of the Series A Convertible Preferred Stock such number of
its shares of Common Stock as shall from time to time be sufficient, based
on the Conversion Rate then in effect, to effect the conversion of all then
outstanding shares of the Series A Preferred Stock. If at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, then, in addition to all rights, claims and damages to
which the holders of the Series A Convertible Preferred Stock shall be
entitled to receive at law or in equity as a result of such failure by the
Corporation to fulfill its obligations to the holders hereunder, the
Corporation will take any and all corporate or other action as may, in the
opinion of its counsel, be helpful, appropriate or necessary to increase
its authorized but unissued shares of Common Stock to such number of shares
as shall be sufficient for such purpose.
(g) Notices. Any notices required by the provisions hereof to be given to
the holders of shares of Series A Convertible Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid and
return receipt requested, and addressed to each holder of record at its
address appearing on the books of the Corporation or to such other address
of such holder or its representative as such holder may direct.
6. Voting Provisions. Except as otherwise expressly provided or
required by law, the Series
A Convertible Preferred Stock shall have no voting rights.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Series A Convertible Preferred Stock to be duly executed by its President and
attested to by its Secretary this _____ day of September, 1998 who, by signing
their names hereto, acknowledge that this Certificate of Designation is the act
of the Company and state to the best of their knowledge, information and belief,
under the penalties of perjury, that the above matters and facts are true in all
material respects.
MPM TECHNOLOGIES, INC.
Charles A. Romberg, President
Robert D. Little, Secretary
5
<PAGE>
EXHIBIT A
CONVERSION CERTIFICATE
MPM TECHNOLOGIES, INC.
Series A Convertible Preferred Stock
The undersigned holder ( the "Holder") is surrendering to MPM
Technologies, Inc., a Washington corporation (the "Company"), one or more
certificates representing shares of Series A Convertible Preferred Stock of the
Company (the "Preferred Stock") in connection with the conversion of all or a
portion of the Preferred Stock into shares of Common Stock, $.001 par value per
share, of the Company (the "Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock were issued by the
Company pursuant to the exemption from registration under the United States
Securities Act of 1933, as amended (the "Securities Act"), provided by
Regulation D promulgated thereunder.
2. The Holder represents and warrants that all offers and sales of the
Common Stock issued to the Holder upon such conversion of the Preferred Stock
shall be made (a) pursuant to an effective registration statement under the
Securities Act, (in which case the Holder represents that a prospectus has been
delivered) (b) in compliance with Rule 144, or (c) pursuant to some other
exemption from registration.
Number of Shares of Preferred Stock being converted:
Applicable Conversion Price:
Number of Shares of Common Stock Issuable:
Number of Dividend Shares:
Conversion Date:
Delivery Instructions for certificates of Common Stock and for new
certificates representing any remaining shares of Preferred Stock:
NAME OF HOLDER:
(Signature of Holder)
6
<PAGE>
December 8, 1998 Exhibit 5.1
The Board of Directors and Selling Stockholders
MPM Technologies, Inc.
222 W. Mission Avenue, Suite 30
Spokane, Washington 99201
Re: Registration Statement on
Form S-3 ("Registration Statement")
Gentlemen:
You have asked for our opinion regarding the legality of 1,028,135
Shares of common stock, $.001 par value, including 762,126 shares issuable upon
conversion of the Series A Convertible Preferred Stock, 116,009 shares of common
stock held by certain shareholders, and 150,000 shares issuable upon exercise of
options, all as set forth in the Registration Statement.
As your counsel, we have reviewed and examined:
1. The Articles of Incorporation of the Corporation;
2. The Bylaws of the Corporation;
3. A copy of certain resolutions of the Corporation;
4. The Registration Statement; and
5. The Certificate of Designation filed with the Washington
Secretary of State
describing the terms of the Series A Convertible Preferred
Stock.
In giving our opinion, we have assumed without investigation the
authenticity of any document or instrument submitted us as an original, the
conformity to the original of any document or instrument submitted to us as a
copy, and the genuineness of all signatures on such originals or copies.
Based upon the foregoing, we are of the opinion that the Shares to be
offered pursuant to the Registration Statement, if sold as described in the
Registration Statement will be legally issued, fully paid and nonassessable,
provided that no less than par value is paid for any Shares.
No opinion is expressed herein as to the application of state
securities or Blue Sky laws.
This opinion is furnished by us as counsel to you and is solely for
your benefit. Neither this opinion nor copies hereof may be relied upon by,
delivered to, or quoted in whole or in part to any governmental agency or other
person without our prior written consent.
Notwithstanding the above, we consent to the reference to our firm name
in the Prospectus filed as a part of the Registration Statement and the use of
our opinion in the Registration Statement. In giving these consents, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
HAND & HAND
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