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, 2000
Commission File Number 0-14910
MPM TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer 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)
Issuers's telephone number, including area code: 509-326-3443
As of May 8, 2000, the registrant had outstanding 2,659,493 shares of common
stock and no outstanding shares of preferred stock, which are the registrant's
only classes of stock.
PART I _ FINANCIAL INFORMATION
Item 1. Financial Statements
Financial Statements follow on the next page.
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
ASSETS
MARCH DECEMBER
31, 2000 31, 1999
-------------- -------------
(UNAUDITED)
Current assets:
Cash and cash equivalents $80,521 $194,399
Accounts receivable, net of allowance for doubtful accounts
of $25,000 2,182,356 1,993,792
Inventories 319,178 313,298
Costs and estimated earnings in excess of billings 1,028,798 535,252
Other current assets 217,490 168,516
-------------- -------------
Total current assets 3,828,343 3,205,257
-------------- -------------
Property, plant and equipment, net 290,721 302,150
Mineral properties held for sale 1,086,346 1,086,346
Prepaid royalty 273,000 275,000
Purchased intangible, net of accumulated
amortization of $219,375 and $202,500 455,625 472,500
Other assets, net 147,263 139,957
-------------- -------------
$6,081,298 $5,481,210
-------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,446,451 $1,412,097
Accrued expenses 340,163 239,624
Billings in excess of costs and estimated earnings 557,240 245,564
Related party debt 725,000 665,000
Current portion of long-term debt 225,000 225,000
-------------- -------------
Total current liabilities 3,293,854 2,787,285
-------------- -------------
Long-term debt, less current portion 537,054 537,054
Negative goodwill, net 33,984 38,593
-------------- -------------
Total liabilities 3,864,892 3,362,932
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Commitments and contingencies
Stockholders' equity:
Preferred stock, no stated value, 10,000,000 shares
authorized, no shares issued or outstanding
Common stock, $.001 par value, 100,000,000 shares
authorized, 2,659,493 and 2,641,961 2,659 2,642
shares issued and outstanding
Additional paid-in capital 10,016,113 9,950,148
Accumulated deficit (7,802,366) (7,834,512)
-------------- -------------
Total stockholders' equity 2,216,406 2,118,278
-------------- -------------
$6,081,298 $5,481,210
============== =============
</TABLE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
<S> <C> <C>
2000 1999
-------------- -------------
Revenues $4,260,620 $4,076,912
Cost of sales 3,308,733 3,111,850
-------------- -------------
Gross margin 951,887 965,062
Selling, general and administrative expenses 891,396 927,574
-------------- -------------
Income from operations 60,491 37,488
-------------- -------------
Other income (expense):
Interest expense (29,360) (24,845)
Interest income 1,015 28,933
-------------- -------------
Net other income (expense) (28,345) 4,088
-------------- -------------
Net income $32,146 $41,576
============== =============
Income per share - basic and diluted:
Net income $0.01 $0.02
============== =============
Weighted average shares of common stock outstanding -
basic 2,643,502 2,146,128
============== =============
Weighted average shares of common stock outstanding -
diluted 3,622,116 2,393,741
============== =============
</TABLE>
<TABLE>
<CAPTION>
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
<S> <C> <C>
2000 1999
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $32,146 $41,576
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 30,722 34,121
Interest imputed on related party debt 2,867 3,926
Change in assets and liabilities:
Accounts receivable (188,564) (1,381,133)
Costs and estimated earnings in excess of billings (493,546) (284,481)
Inventories (5,880) 31,023
Other assets (54,280) 53,182
Accounts payable and accrued expenses 198,008 937,882
Billings in excess of costs and estimated earnings 311,676 (520,046)
-------------- -------------
Net cash used in operating activities (166,851) (1,083,950)
-------------- -------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (7,027) (17,218)
-------------- -------------
Net cash used in investing activities (7,027) (17,218)
-------------- -------------
Cash flows from financing activities:
Proceeds from related party debt 90,000 -
Repayment of related party debt (30,000) (25,000)
Proceeds from preferred stock deposit - 291,365
-------------- -------------
Net cash provided by financing activities 60,000 266,365
-------------- -------------
Net decrease in cash and cash equivalents (113,878) (834,803)
Cash and cash equivalents, beginning of period 194,399 2,634,570
-------------- -------------
Cash and cash equivalents, end of period $80,521 $1,799,767
============== =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ - $2,236
Income taxes $ - $ -
Supplemental disclosure of non cash financing activities:
Common stock exchanged for amounts due to related party $63,115 $ -
</TABLE>
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
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, 1999. 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 instructions to
Form 10-QSB of Regulation S-X as promulgated by 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, 1999. 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, 2000 should not
necessarily be taken as indicative of the results of operations that may be
expected for the entire year 2000.
2. Earnings Per Share
Earnings per share ("EPS") is computed by dividing net income by the weighted
average number of common shares outstanding in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share".
The following table reconciles the number of common shares used in the basic
and diluted EPS calculations:
For the Three Months Ended March 31, 2000
Weighted-
Net Average Per-Share
Income Shares Amount
---------- -------------- -------------
Basic EPS
Income available to common
stockholders $ 32,146 2,643,502 $ 0.01
Effect of Dilutive Securities
Common stock options - 978,614 -
---------- -------------- -------------
Diluted EPS
Income available to common
stockholders _ assumed
conversions $ 32,146 3,622,116 $ 0.01
========== ============== =============
For the Three Months Ended March 31, 1999
Weighted-
Net Average Per-Share
Income Shares Amount
----------- ----------- ----------
Basic EPS
Income available to common
stockholders $ 41,576 2,146,128 $ 0.02
Effect of Dilutive Securities
Common stock options - 247,613 -
----------- ----------- ----------
Diluted EPS
Income available to common
stockholders _ assumed
conversions $ 41,576 2,393,741 $ 0.02
=========== =========== ==========
3. Segment Information
The Company's consolidated financial statements include certain reportable
segment information. These segments include Huntington Environmental Systems,
Inc., a wholly owned subsidiary engaged in designing, engineering, supplying
and servicing air pollution control systems which primarily utilize heat and
chemicals to control air pollution, and AirPol, Inc., a wholly owned subsidiary
engaged in designing, engineering, supplying and servicing air pollution
control systems which utilize wet and dry scrubbers, wet electrostatic
precipitators and venturi absorbers to control air pollution. The Company
evaluates the performance of these segments based upon multiple variables
including revenues and profit or loss.
The segments' profit and loss components and schedule of assets as of March 31,
2000 are as follows:
Air Air
Pollution Pollution
Control Control All
(Heat) (Scrubbers) Others Total
-------------- ------------ ---------- --------------
Revenue external $ 2,042,277 $ 2,218,343 $ - $ 4,260,620
Revenue internal - - - -
Segment profit (loss) 54,488 128,254 (150,596) 32,146
Segment assets 3,504,216 2,209,209 4,449,049 10,162,474
Reconciliation of segment revenues, net income, total assets and other
significant items for the three months ended March 31, 2000 are as follows:
Revenues Amount
---------------- -------------
Total revenues for reportable segments $ 4,260,620
------------
Total consolidated revenues $ 4,260,620
------------
Profit or loss
Total profit or loss for reportable segments $ 182,742
Other profit or loss (150,596)
------------
Total consolidated profit or loss $ 32,146
------------
Assets
----------
Total assets for reportable segments $ 5,713,425
Other assets 2,747,384
Assets of discontinued operation 1,086,346
Elimination of intersegment assets (3,465,857)
------------
Total consolidated assets $ 6,081,298
------------
The segments' profit and loss components and schedule of assets as of March 31,
1999 are as follows:
Air Air
Pollution Pollution
Control Control All
(Heat) (Scrubbers) Others Total
------------ ------------- ---------- -----------
Revenue external $ 1,471,014 $ 2,605,898 $ - $ 4,076,912
Revenue internal - - 33,000 33,000
Segment profit (loss) (66,545) 203,867 (95,746) 41,576
Segment assets 4,629,944 3,868,669 4,981,568 13,480,181
Reconciliation of segment revenues, net income, total assets and other
significant items for the three months ended March 31, 1999 are as follows:
Revenues Amount
------------ -----------
Total revenues for reportable segments $ 4,076,912
Other revenues 33,000
Elimination of intersegment revenues (33,000)
-----------
Total consolidated revenues $ 4,076,912
-----------
Profit or loss
Total profit or loss for reportable segments $ 137,322
Other profit or loss (95,746)
-----------
Total consolidated profit or loss $ 41,576
-----------
Assets
Total assets for reportable segments $ 8,498,613
Other assets 3,922,500
Assets of discontinued operation 1,086,346
Elimination of intersegment assets (3,333,085)
-----------
Total consolidated assets $ 10,174,374
-----------
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
This Quarterly Report on Form 10-QSB, including the information incorporated by
reference herein, includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All of the statements contained in this Quarterly Report on
Form 10-QSB, other than statements of historical fact, should be considered
forward looking statements, including, but not limited to, those concerning the
Company's strategies, objectives and plans for expansion of its operations,
products and services and growth in demand for the Company's services. There
can be no assurance that these expectations will prove to have been correct.
Certain important factors that could cause actual results to differ materially
from the Company's expectations (the Cautionary Statements") are disclosed in
the annual report filed on Form 10-KSB. All subsequent written and oral forward
looking statements by or attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by such Cautionary Statements.
Investors are cautioned not to place undue reliance on these forward looking
statements, which speak only as of the date hereof and are not intended to give
any assurance as to future results. The Company undertakes no obligation to
publicly release any revisions to these forward looking statements to reflect
events or reflect the occurrence of unanticipated events.
MPM Technologies, Inc. ("MPM") acquired certain of the assets and assumed
certain of the liabilities of a part of a division of FLS miljo, Inc. as of
July 1, 1998. MPM formed AirPol, Inc. ("AirPol") to run this air pollution
control business. AirPol designs, engineers, supplies and services air
pollution control systems for Fortune 500 and other industrial and
environmental companies. The technologies of AirPol utilize wet and dry
scrubbers, wet electrostatic precipitators and venturi absorbers to control air
pollution. AirPol brought over 30 years experience to MPM through its
technologies and employees.
As of April 1, 1997, MPM acquired certain of the assets and assumed certain of
the liabilities of a portion of a division of United States Filter Corporation,
and formed Huntington Environmental Systems, Inc. ("HES") to operate this air
pollution control business. HES designs, engineers, supplies and services high
temperature and chemical air pollution control systems for Fortune 500 and
other industrial and environmental companies. HES brought has over 25 years of
experience and over 300 installations across the globe to MPM through its
technologies and employees.
Both HES's and AirPol's engineering staffs are uniquely prepared to address the
full scope of customers' process problems. Their policies of handling clients'
individual concerns include in-depth analysis and evaluation, followed by
complete engineering and design services leading to application-specific
engineered solutions.
MPM holds a 58.21% interest in Nupower Partnership through its wholly-owned
subsidiary, Nupower, Inc. Nupower Partnership is engaged in the development and
commercialization of a waste-to-energy process which has been named "Skygas".
Skygas is an innovative technology for the disposal and gasification of
carbonaceous wastes such as municipal solid waste, municipal sewage sludge,
pulp and paper mill sludge, auto fluff, medical waste and used tires. The
process converts solid and semi-solid wastes into a clean-burning medium BTU
gas that can be used for steam production for electric power generation. The
gas may also be a useful building block for downstream conversion into valuable
chemicals.
MPM controls 32 claims on approximately 1,000 acres in the historical Emery
Mining District in Montana through its wholly-owned subsidiary, MPM Mining,
Inc. In accordance with the Board of Directors' mandates, MPM's management is
actively seeking out mining and other businesses to purchase its mining
properties and equipment.
HES and AirPol are active continuing concerns. The development of the Skygas
process through Nupower Partnership is also an ongoing process. No other
operations were conducted. Accordingly, the financial statements for the three
months ended March 31, 2000 and 1999 include the operations of HES, AirPol,
Skygas and MPM.
MPM's consolidated net income for the quarter ended March 31, 2000 was $32,146,
or $0.01 per share compared to net income of $41,576, or $0.02 per share for
the quarter ended March 31, 1999. This was due to the delaying of some
projects at both HES and AirPol, and to less than expected activity at AirPol.
AirPol has recently concluded negotiations on its previously announced project
in Utah. The total contract price will be $6.4 million. It is expected that
this contract will be completed over the next year or more.
MPM has not yet closed its recently announced acquisition of Environmental
Consulting and Characterization, Inc. Negotiations are ongoing and are
expected to be finalized in the next few weeks. MPM has also not completed the
sale of its mining properties as the buyer has not completed its due diligence
reviews.
MPM continues to negotiate with interested entities with the goal of building
Skygas units. These negotiations are also ongoing, and include entities in the
United States, Europe and Asia. Management is hopeful there will be some type
of formal agreement in place and that construction of a unit can begin before
the end of the year. There can, however, be no assurances that MPM will be
successful in its negotiations.
Three months ended 3/31/00 compared to three months ended 3/31/99
For the three months ended 3/31/00, MPM had net income of $32,146, or $0.01 per
share compared to a net income of $41,576, or $0.02 per share for the quarter
ended 3/31/99. Revenues increased 4.54% to $4,260,620 for the three months
ended 3/31/00 compared to $4,076,912 for the three months ended 3/31/99. Costs
of sales increased 6.3% to $3,308,733 for the three months ended March 31, 2000
compared to $3,111,850 for the three months ended March 31, 1999. Operating
expenses were down 3.9% to $891,396 for the three months ended March 31, 2000
compared to $927,574 for the three months ended 3/31/99. There were no
significant changes in operations between the years and revenues were
relatively flat.
Backlog at March 31, 2000 was approximately $9,000,000 including the previously
announced large contract at AirPol. The amount of this contract was initially
announced at $5.7 million. The actual contract to be signed nest week was $6.4
million.
Financial Condition and Liquidity
For the three months ended March 31, 2000, the Company relied partly on related
party advances to fund the operations of HES and AirPol. Current cash reserves
and continuing operations are believed to be adequate to fund MPM's and its
subsidiaries' operations for the foreseeable future. Working capital at
3/31/00 was $534,489 compared to $417,972 at 3/31/99. Through the first week
of May, the Company had received approximately $640,000 as the down payment for
the $6.4 million contract at AirPol.
MPM is considering alternative sources of capital such as private placements,
stock offerings and loans from shareholders and officers to fund its current
business and expand in other related areas through more acquisitions.
Impact of Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of MPM's computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than 2000. This could
result in a system failure or miscalculations causing disruptions of
operations.
Based on recent and continuing assessments, MPM management has determined that
its basic computer systems are year 2000 compliant, and will properly utilize
dates beyond December 31, 1999. MPM has also identified other areas where
minor modifications will be required for some of its less critical software to
make it year 2000 compliant, and has taken steps to make sure that these
modifications are completed in a timely manner. Accordingly, management
believes that the Year 2000 Issue will not have a material impact on its
operations.
MPM had also made inquiries of its major suppliers to determine their systems'
compliance with the Year 2000 Issue. Management has determined based on
responses received that the majority of its suppliers are in compliance with
the Issue. Accordingly, the effect of a third party's non-compliance is not
expected to have a material impact on the financial condition of MPM.
During the three months ended March 31, 2000, MPM's expenditures on issues
related to its compliance with the Year 2000 Issue were not significant. MPM
does not expect to spend any significant amounts of money in the future related
to compliance with the Year 2000 Issue.
PART II _ OTHER INFORMATION
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 AND USE OF PROCEEDS
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 2000.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended March 31, 2000.
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.
May 11, 2000 /s/ Robert D. Little
- -------------------------- --------------------------
(date) Robert D. Little
Corporate Secretary
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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0
0
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</TABLE>
