<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: March 31, 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-affilitates
of the registrant at May 1, 1996 was 3,167,211.
Documents incorporated by reference-None.
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part 1. Financial Statements
Balance Sheets 3 - 4
Statements of Operations -
First Quarter Ended March 31, 1995 and 1996 and from
the Company's inception (October 21, 1983) through
March 31, 1996 5
Statements of Cash Flows
First Quarter Ended March 31, 1995 and 1996 and from
the Company's inception (October 21, 1983) through
March 31, 1996 6 - 7
Notes to Financial Statements 8
Management's Discussion and Analysis 9
Part 2. Other Information 10
</TABLE>
2
<PAGE> 3
[LETTERHEAD OF JONES, JENSEN & COMPANY]
INDEPENDENT AUDITORS' REPORT
April 25, 1996
The Board of Directors
Blue Jay Enterprises, Inc.
(A Development Stage Company)
Los Angeles, California
The accompanying balance sheet as of March 31, 1996, and the related statements
of operations, stockholders' equity (deficit), and cash flows as of March 31,
1996 and 1995 and from inception on December 1, 1980 through March 31, 1996
were not audited by us and, accordingly, we do not express an opinion on them.
The accompanying balance sheet as of December 31, 1995 was audited by us and we
expressed an unqualified opinion on it in our report dated February 14, 1996.
/s/ Jones, Jensen & Company
- - ---------------------------
Jones, Jensen & Company
<PAGE> 4
MATERIAL TECHNOLOGY, INC.
(Formerly Tensiodyne Scientific Corporation)
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
-------- --------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 1,226 $ 16,896
-------- --------
TOTAL CURRENT ASSETS 1,226 16,896
-------- --------
FIXED ASSETS
Property and Equipment, Net
of Accumulated Depreciation 100,958 100,067
-------- --------
OTHER ASSETS
Intangible Assets, Net of
Accumulated Amortization 22,658 22,161
Investment in Tensiodyne Corporation -- --
Note Receivable (Including
Accrued Interest) 23,661 24,168
Refundable Deposit 2,189 2,189
-------- --------
TOTAL OTHER ASSETS 48,508 48,518
-------- --------
TOTAL ASSETS $150,692 $165,481
======== ========
</TABLE>
See accompanying notes
3
<PAGE> 5
MATERIAL TECHNOLOGY, INC.
(Formerly Tensiodyne Scientific Corporation)
(A Development Stage Company)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accrued Legal Fees $ 111,343 $ 106,343
Other Accrued Expenses 30,236 30,236
Accrued Officers Salary 172,000 277,000
Loan Payable - Officer 23,272 49,522
Loan Payable - Others 84,439 84,439
Payable on Research and
Development Sponsorship 188,495 188,495
----------- -----------
TOTAL CURRENT LIABILITIES 609,785 736,035
Loans Payable - Officer 113,268 115,817
Loans Payable - Other 60,829 62,198
----------- -----------
TOTAL LIABILITIES 783,882 914,049
----------- -----------
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
2,167,880 Shares at March 31, 1996 2,157 2,167
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 1,788,688
Less Notes Receivable - Common Stock (14,720) (14,720)
Deficit Accumulated During the Development Stage (2,380,135) (2,520,513)
----------- -----------
(628,590) (743,968)
Less: Treasury Stock (62,000 Shares of Class A Common) - At Cost (154,600) (154,600)
----------- -----------
TOTAL STOCKHOLDERS' (DEFICIT) (783,190) (898,568)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) $ 150,692 $ 165,481
=========== ===========
</TABLE>
See accompanying notes
4
<PAGE> 6
MATERIAL TECHNOLOGY, INC.
(Formerly Tensiodyne Scientific Corporation)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months From Inception
Ended (October 21, 1983)
March 31, March 31, Through
1995 1996 March 31, 1996
--------- --------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (54,530) $(140,378) $(2,520,513)
--------- --------- -----------
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
(Used) by Operating Activities
Depreciation and Amortization 3,744 1,388 156,172
Gain on Sale of Tensiodyne Corporation
Common Stock -- (9,656) (9,656)
Charge off of Deferred Offering Costs -- -- 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 -- 100,000 413,578
Interest Accrued on Note Payable 3,634 3,917 14,787
Increase in Research and Development
Sponsorship Payable -- -- 188,495
(Increase) in Note for Litigation Settlement (465) (507) (24,168)
(Increase) in Deposits -- -- (2,189)
--------- --------- -----------
TOTAL ADJUSTMENTS 6,913 95,142 1,225,929
--------- --------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (47,617) (45,236) (1,294,584)
--------- --------- -----------
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 Other Assets -- -- (69,069)
Payment for License Agreement -- -- (6,250)
--------- --------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES -- 9,656 (281,522)
--------- --------- -----------
</TABLE>
See accompanying notes
6
<PAGE> 7
MATERIAL TECHNOLOGY, INC.
(Formerly Tensiodyne Scientific Corporation)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months From Inception
Ended (October 21, 1983)
March 31, March 31, Through
1995 1996 March 31, 1996
--------- -------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock
Net of Offering Costs $ -- $ 25,000 $ 583,279
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 53,253 26,250 339,307
Repayments to Officer -- -- (165,586)
Increase in Loan Payable-Others 668 -- 139,664
--------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES: 53,921 51,250 1,593,002
--------- -------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,304 15,670 16,896
BEGINNING BALANCE CASH AND
CASH EQUIVALENTS (6,270) 1,226 --
--------- -------- ----------
ENDING BALANCE CASH AND CASH
EQUIVALENTS $ 34 $ 16,896 $ 16,896
========= ======== ==========
</TABLE>
See accompanying notes
7
<PAGE> 8
MATERIAL TECHNOLOGY, INC.
(FORMERLY TENSIODYNE SCIENTIFIC CORPORATION)
(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 March 31, 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 THREE MONTHS ENDED MARCH 31, 1995 AND 1996
The Company had no sales during the three month periods ended March 31, 1995 and
1996. The only revenue generated during the first quarter of 1995 was interest
in the amount of $464 which consisted of interest of that accrued on a note due
the Company. Revenue generated during the first quarter of 1996 consisted of
interest of $507 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 three month periods ended March 31, 1995, the Company incurred
approximately $7,467 in development costs all of which related to testing. The
Company did not incur any expenses relating to its product development during
the first quarter of 1996.
General and administration costs were $47,527 and $150,541, respectively, for
the three-month periods ended March 31, 1995 and 1996. The major costs incurred
during the first quarter of 1995 consisted of travel of $14,141, telephone of
$4,737, rent of $8,760, and professional fees of $8,199. The major costs
incurred during the first quarter of 1996 consisted of officer's salary of
$105,000, professional fees of approximately $20,183, telephone expense of
approximately $4,813, office expense of $8,051, and rent of $3,862.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents as of March 31, 1995 and 1996 were $1,226 and $16,896,
respectively. During the first quarter of 1995, the Company received $53,253
from officer loans and increase loans from third party by $683. Of the $53,921
borrowed, $47,617 was used in operations and $6,270 covered the Company's
overdraft as of December 31, 1994. During the first quarter of 1996, the Company
received $25,000 from its officers on the sale of its Class A Common Stock,
$26,250 from Officer advances and $9,656 from the sale of Tensiodyne Corporation
common stock. Of the $60,906 received in 1996, $45,236 was used in operations.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On February 9, 1996, the Corporation's Board of Directors
adopted Material Technology, Inc.'s 1996 Stock Option Plan.
The plan authorizes the Corporation to issue to the
Corporation's key employees, advisors, consultants, directors,
and officers options to purchase shares of the Corporation's
common stock. Under the plan, the Corporation may issue
options to purchase up 120,000 shares of the Corporation's
Common Stock on terms and conditions consistent with the Plan
and determined by the officers of the Corporation at the time
the options are issued.
On February 21, 1996, the Corporation registered the shares to
be issued pursuant to the plan with the Securities and
Exchange Commission by filing a Form S-8 registration
statement.
As of May 10, 1996, the Corporation has granted 40,000 options
under the Corporation's 1996 Stock Option Plan.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
From 1994 to 1995, no annual meeting of stockholders of the
Corporation has been held. Delaware law specifies that an
annual meeting of stockholders should be held but provides no
penalty for failure of the corporation to do so. Since the
Corporation has not conducted significant business operations
for the last several years, the Corporation's directors and
officers deemed that no annual meeting was necessary or
advisable. Given the Corporation's lack of funds, the cost of
an annual meeting was prohibitively expensive.
On April 10, 1996, in accordance with Section 228(a) of the
General Corporation Law of Delaware, the majority shareholder
Robert M. Bernstein consented on behalf of the Corporation's
shareholders to the election of Robert M. Bernstein, Joel R.
Freedman, and John Goodman as the Corporation's directors and
approved the Board of Directors' adoption of the
Corporation's 1996 Stock Option Plan. By unanimous consent,
these Directors then named Robert M. Bernstein as the
Corporation's Chief Executive Officer, President, and Chief
Financial Officer and named Joel R. Freedman as the Secretary
of the Corporation.
In accordance with Section 228(d) of the General Corporation
Law of Delaware, the Corporation notified its nonvoting
shareholders of the shareholder action by consent electing
directors and approving the 1996 Stock Option Plan.
10
<PAGE> 11
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Material Technology, Inc.
-------------------------
Registrant
---------------------------------
Robert M. Bernstein, President and Chief
Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 16,896
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,896
<PP&E> 100,067
<DEPRECIATION> 0
<TOTAL-ASSETS> 165,481
<CURRENT-LIABILITIES> 736,035
<BONDS> 0
0
350
<COMMON> 2,227
<OTHER-SE> 1,788,688
<TOTAL-LIABILITY-AND-EQUITY> 165,481
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 150,541
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (140,378)
<INCOME-TAX> 0
<INCOME-CONTINUING> (140,378)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (140,378)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
