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Previous: TELETOUCH COMMUNICATIONS INC, SB-2, 1996-11-05 |
Next: MERIT SECURITIES CORP, S-3, 1996-11-05 |
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: September 30, 1996 Commission file number: 3383526
MATERIAL TECHNOLOGY, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-4453386
- --------------------------------------------- ------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization) identification No.)
11835 West Olympic Boulevard
East Tower 705
Los Angeles, California
---------------------------------------
(address of principal executive offices)
(Zip Code) 90064
(310) 208-5589
---------------------------------------
(Registrant's telephone number including area code)
Securities Registered pursuant to Section 12(g) of the Act:
Common
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 or Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this form 10-K. [ ]
The aggregate market value of the voting stock held by Non-affiliates
of the registrant at October 25, 1996 was 3,447,211.
Documents incorporated by reference - None.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part 1. Financial Statements
Balance Sheets 3 - 4
Statements of Operations -
Third Quarter Ended September 30, 1995 and 1996 and from
the Company's inception (October 21, 1983) through
September 30, 1996 5
Statements of Cash Flows
Third Quarter Ended September 30, 1995 and 1996 and from
the Company's inception (October 21, 1983) through
September 30, 1996 6 - 7
Notes to Financial Statements 8
Management's Discussion and Analysis 9 - 10
Part 2. Other Information 11
</TABLE>
2
<PAGE> 3
MATERIAL TECHNOLOGY, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
----------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 1,226 $ 23,165
Loan Recievable - 1,616
--------- -----------
TOTAL CURRENT ASSETS 1,226 24,781
--------- -----------
FIXED ASSETS
Property and Equipment, Net
of Accumulated Depreciation 100,958 97,788
--------- -----------
OTHER ASSETS
Intangible Assets, Net of
Accumulated Amortization 22,658 31,167
Investment in Tensiodyne Corporation - -
Note Receivable (Including
Accrued Interest) 23,661 25,185
Refundable Deposit 2,189 2,189
--------- -----------
TOTAL OTHER ASSETS 48,508 58,541
--------- -----------
TOTAL ASSETS $ 150,692 $ 181,110
========= ===========
</TABLE>
See accompanying notes
3
<PAGE> 4
MATERIAL TECHNOLOGY, INC.
(A Development Stage Company)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
----------- -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Legal Fees Payable $ 111,343 $ 106,343
Accounts Payable - Other 30,236 30,023
Accrued Officers Salary 172,000 389,500
Loan Payable - Officer 23,272 1,796
Loan Payable - Others 84,439 84,269
Payable on Research and
Development Sponsorship 188,495 188,495
----------- -----------
TOTAL CURRENT LIABILITIES 609,785 800,426
Loans Payable - Officer 113,268 122,285
Loans Payable - Other 60,829 63,567
----------- -----------
TOTAL LIABILITIES 783,882 986,278
----------- -----------
REDEEMABLE PREFERRED STOCK
Class B Preferred Stock, $.001 Par Value
Authorized 510 Shares, Outstanding 15 Shares at December
31, 1995 and March 31, 1996; Redeemable at $10,000 Per Share
After January 31, 2004 150,000 150,000
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Class A Common Stock, $.001 Par Value, Authorized 10,000,000
Shares, Outstanding 2,157,880, at December 31, 1995, and
2,221,880 Shares at September 30, 1996 2,157 2,221
Class B Common Stock, $.001 Par Value, Authorized 300,000
Shares, Outstanding 60,000 Shares 60 60
Class A Preferred, $.001 Par Value, Authorized 10,000,000 Shares
Outstanding 350,000 Shares 350 350
Additional Paid in Capital 1,763,698 1,937,674
Less Notes Receivable - Common Stock (14,720) (14,720)
Deficit Accumulated During the Development Stage (2,380,135) (2,726,153)
----------- -----------
(628,590) (800,568)
Less: Treasury Stock (62,000 Shares of Class A Common) - At Cost (154,600) (154,600)
----------- -----------
TOTAL STOCKHOLDERS' (DEFICIT) (783,190) (955,168)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 150,692 $ 181,110
=========== ===========
</TABLE>
See accompanying notes
4
<PAGE> 5
MATERIAL TECHNOLOGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Nine Months Ended (October 21, 1983)
September 30, September 30, Through
1995 1996 1995 1996 September 30, 1996
----------- ----------- ----------- ------------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Sale of Fatigue Fuses $ -- $ -- $ -- $ -- $ 64,505
Sale of Royalty Interests -- -- -- -- 198,750
Research and Development Revenue -- -- -- -- 712,580
Test Services -- -- -- -- 10,870
--------- ---------- ---------- ------------- ------------
TOTAL REVENUES -- -- -- -- 986,705
--------- ---------- ---------- ------------- ------------
COSTS AND EXPENSES
Research and Development 3,964 -- 15,104 -- 1,497,596
General and Administrative 50,020 163,772 138,912 357,198 2,035,220
--------- ---------- ---------- ------------- ------------
TOTAL COSTS AND EXPENSES 53,984 163,772 154,016 357,198 3,532,816
--------- ---------- ---------- ------------- ------------
INCOME (LOSS) FROM OPERATIONS (53,984) (163,772) (154,016) (357,198) (2,546,111)
--------- ---------- ---------- ------------- ------------
OTHER INCOME (EXPENSE)
Expense Reimbursed -- -- (18,802)
Interest Income 485 500 1,433 1,524 38,584
Gain on Sale of Tensiodyne Corporation Common Stock -- -- -- 9,656 9,656
Miscellaneous Income -- -- -- -- 25,145
Loss on Sale of Equipment -- -- -- -- (12,780)
Settlement of Teaming Agreement -- -- -- -- 50,000
Litigation Settlement -- -- -- -- 18,095
--------- ---------- ---------- ------------- ------------
TOTAL OTHER INCOME 485 500 1,433 11,180 109,898
--------- ---------- ---------- ------------- ------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS AND PROVISION FOR INCOME TAXES (53,499) (163,272) (152,583) (346,018) (2,436,213)
PROVISION FOR INCOME TAXES -- -- -- -- (7,000)
--------- ---------- ---------- ------------- ------------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS (53,499) (163,272) (152,583) (346,018) (2,443,213)
EXTRAORDINARY ITEMS
Forgiveness of Debt -- -- -- -- (289,940)
Utilization of Operating Loss Carry forward -- -- -- -- 7,000
--------- ---------- ---------- ------------- ------------
NET INCOME (LOSS) $ (53,499) $ (163,272) $ (152,583) $ (346,018) $ (2,726,153)
========= ========== ========== ============= ============
PER SHARE DATA
Income (Loss) Before Extraordinary Item $ (0.16)
Extraordinary Items --
-------------
NET INCOME (LOSS) $ (0.16)
-------------
COMMON SHARES OUTSTANDING 2,221,880
=============
</TABLE>
See accompanying notes
5
<PAGE> 6
MATERIAL TECHNOLOGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Nine Months Ended (October 21, 1983)
September 30, September 30, Through
1995 1996 1995 1996 September 30, 1996
----------- ----------- ---------- ---------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(53,499) $(163,272) $(152,583) $(346,018) $(2,726,153)
-------- --------- --------- --------- -----------
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
(Used) by Operating Activities
Depreciation and Amortization 1,389 1,885 4,166 4,661 159,445
Gain on Sale of Tensiodyne Corporation
Common Stock -- -- -- (9,656) (9,656)
Charge off of Deferred Offering Costs -- -- 31,480 -- 31,480
Loss on Sale of Equipment -- -- -- -- 12,780
Issuance of Common Stock for Services -- -- -- -- 279,498
Issuance of Stock for Agreement Modification -- -- -- -- 152
Forgiveness of Indebtedness -- -- -- -- 165,000
Increase (Decrease) in Accounts
Payable and Accrued Expenses 702 112,500 2,054 212,286 525,864
Interest Accrued on Note Payable -- 3,919 -- 11,755 22,625
Increase in Research and Development
Sponsorship Payable -- -- -- -- 188,495
(Increase) in Note for Litigation Settlement (484) (500) (1,424) (1,523) (25,184)
(Increase) in Deposits -- -- -- -- (2,189)
-------- --------- --------- --------- -----------
TOTAL ADJUSTMENTS 1,607 117,804 36,276 217,523 1,348,310
-------- --------- --------- --------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (51,892) (45,468) (116,307) (128,495) (1,377,843)
-------- --------- --------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sale of Equipment -- -- -- -- 10,250
Proceeds from Sale of Tensiodyne Corporation --
Common Stock -- -- -- 9,656 9,656
Purchase of Property and Equipment -- -- -- -- (226,109)
(Increase) in Patent Costs -- -- (10,000) (10,000)
(Increase) in Other Assets -- -- -- -- (69,069)
Payment for License Agreement -- -- -- -- (6,250)
-------- --------- --------- --------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES -- -- -- (344) (291,522)
-------- --------- --------- --------- -----------
</TABLE>
See accompanying notes
6
<PAGE> 7
MATERIAL TECHNOLOGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Nine Months Ended (October 21, 1983)
September 30, September 30, Through
1995 1996 1995 1996 September 30, 1996
------------ ---------- ---------- ---------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock
Net of Offering Costs $ -- $ 36,540 -- 174,040 732,319
Costs incurred in Offering -- -- -- -- (31,480)
Sale of Common Stock Warrants -- -- -- -- 18,250
Sale of Preferred Stock -- -- -- -- 258,500
Sale of Redeemable Preferred Stock -- -- -- -- 150,000
Capital Contributions -- -- -- -- 301,068
Loans From Officers -- -- 70,685 34,324 347,381
Repayments to Officer -- (25,200) -- (55,800) (221,386)
( Increase) in Loans - Other -- -- (1,616) (1,616)
Increase (Decrease) in Loan Payable-Others 58,000 -- 58,000 (170) 139,494
-------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES: 58,000 11,340 128,685 150,778 1,692,530
-------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,108 (34,128) 12,378 21,939 23,165
BEGINNING BALANCE CASH AND
CASH EQUIVALENTS -- 57,293 (6,270) 1,226 --
-------- --------- --------- --------- ---------
ENDING BALANCE CASH AND CASH
EQUIVALENTS $ 6,108 $ 23,165 $ 6,108 $ 23,165 23,165
======== ========= ========= ========= =========
</TABLE>
See accompanying notes
7
<PAGE> 8
MATERIAL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. In the opinion of the Company's management, the accompanying unaudited
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position
of the Company as of September 30, 1995 and 1996 and the results of
operations and cash flows for the three month periods then ended. The
operating results of the Company on a quarterly basis may not be
indicative of operating results for the full year.
8
<PAGE> 9
MATERIAL TECHNOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
The Company had no sales during the nine month periods ended September 30,
1995, and 1996. The only revenue generated during the first three quarters of
1995 was interest in the amount of $1,433 which consisted of interest that
accrued on a note due the Company. Revenue generated during the first three
quarters of 1996 consisted of interest of $1,524 which accrued on a note due
the Company and $9,656 on the sale common stock of Tensiodyne Corporation which
the Company received on settlement of past claims which it had against
Tensiodyne.
During the nine month period ended September 30, 1995, the Company incurred
approximately $15,104 in development costs all of which related to testing.
The Company did not incur any expenses relating to its product development
during 1996.
General and administration costs were $138,912 and $357,198, respectively, for
the nine-month periods ended September 30, 1995 and 1996. The major costs
incurred during the first nine months of 1995 consisted of travel of $27,214,
telephone of $16,800, rent of $8,760, professional fees of $19,617, office
expense of $19,737, and the charge off to operations of deferred offering costs
of $31,480. The major costs incurred during 1996, consisted of officer's
salary of $217,500, professional fees of approximately $54,259, telephone
expense of approximately $16,231, office expense of $6,717, rent of $16,307,
interest expense of $11,757, and filing fees of $3,050.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
The Company had no sales during the three month periods ended September 30,
1995, and 1996. The only revenue generated during the third quarters of 1995 and
1996 was interest in the amounts of $485 and $500, respectively. The interest
income consisted of interest which accrued on a note due the Company.
During the three month period ended September 30, 1995, the Company incurred
approximately $3,964 in development costs all of which related to testing.
The Company did not incur any expenses relating to its product development
during the 1996.
General and administration costs were $50,020 and $163,772 respectively, for
the three-month periods ended September 30, 1995 and 1996. The major costs
incurred during the three months of 1995 consisted of travel expense of $9,388,
telephone of $6,302, office expense of $11,968, and the professional services
of $18,047. The major costs incurred during 1996, consisted of professional
fees of approximately $19,811, telephone expense of approximately $5,522,
travel of $5,846, rent of $5,435, interest expense of $3,919, and officer's
salary of $112,500.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents as of September 30, 1995 and 1996 were $6,108, and
$23,165, respectively. During 1995, the Company received $70,685 from officer
loans and $58,000 in loans from a third party. Of the $128,685 borrowed in 1995,
$116,307 was used in operations and $6,270 covered the Company's overdraft as of
December 31, 1994. During 1996, the Company received $174,040 through the
issuance of 64,000 shares of its common stock pursuant to the Company's Stock
Option Plan, $34,324 from Officer advances, and $9,656 from the sale of
Tensiodyne Corporation common stock. Of the $218,020 received in 1996, $45,468
was used in operations, $10,000 was used in obtaining a patent, $55,800 was
repaid on officer advances, and $1,786 was repaid on third party loans.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the nine month period ended September 30, 1996, the Company
recieved $174,040 through the issuance of 64,000 shares of its common
stock pursuant to the Company's Stock Option Plan. $25,000 was
received during the first quarter through the issuance of 10,000
shares to the Company's Secretary. $112,500 was received through the
issuance of 40,000 shares to Company consultants during the second
quarter and $36,540 was received during the third quarter through the
issuance of 14,000 shares to the Company's Secretary.
11
<PAGE> 12
PURSUANT TO THE REQUIREMENTS OF SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
MATERIAL TECHNOLOGY, INC.
REGISTRANT
/s/ ROBERT M. BERNSTEIN
-----------------------------------
ROBERT M. BERNSTEIN,
PRESIDENT AND CHIEF
FINANCIAL OFFICER
DATE: ,1996
-----------------------
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 23,165
<SECURITIES> 0
<RECEIVABLES> 1,616
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,781
<PP&E> 97,788
<DEPRECIATION> 0
<TOTAL-ASSETS> 181,110
<CURRENT-LIABILITIES> 800,426
<BONDS> 0
350
0
<COMMON> 2,281
<OTHER-SE> (955,168)
<TOTAL-LIABILITY-AND-EQUITY> 181,110
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 357,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (346,018)
<INCOME-TAX> 0
<INCOME-CONTINUING> (346,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (346,018)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
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