MPM TECHNOLOGIES, INC.
199 POMEROY ROAD
PARSIPPANY, NJ 07054
December 28, 2007
Mr. Karl Hiller
Branch Chief
United States
Securities and Exchange Commission
Washington, D.C. 20549-0405
Re: MPM Technologies, Inc.
Form 10KSB for Fiscal Year Ended December 31, 2006
Filed April 17, 2007
File No. 0-14910
Dear Mr. Hiller,
This letter is in response to your December 11, 2007 letter with comments on the
above referenced filing. It is my understanding that we will need to file an
amended Form 10-KSB due to the problems with the certifications. With that in
mind, I offer the following in response to your and Ms. Towner's comments. I
believe that we should come to an agreement before we file the amended Form
10-KSB.
You have requested expanded disclosure regarding the systems we build, including
components, how the systems are built, the sources and availability of raw
materials, the number of systems currently under construction, and our method of
distribution and installation. I have added to the "Business" section of the
Form 10-KSB. My additions are in italics so that they can be easily
distinguished from the original filing. The changed pages follow the end of this
letter.
Results of Operations
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Disclosure will be expanded to include the following as shown on the pages
following this letter. Again, all changes are in italics.
Mineral Properties
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We believe the mineral properties are worth far in excess of their carrying
values. This is due to the value of the land itself, and to the dramatically
increasing market price for precious metals, particularly gold and silver. The
carrying value was adequate when gold was less than $400 an ounce and silver was
less than $5.00 an ounce. Gold is currently around $800 an ounce, and silver is
around $14.00 and ounce.
Prepaid Royalty
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We have consistently paid prepaid royalties, and have historically expensed them
due to the uncertainties involved in realizing the related revenues. This
particular item was related to the purchase of equipment by the inventor, and
was collateralized by that equipment. There are currently accruals for royalties
not paid that are in excess of this item. It may be that we should net them for
disclosure purposes, and this disclosure would no longer be needed.
Exhibit 32.1
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I am at a loss to explain why there was no Chief Financial Officer
certification. Since both certifications will need to be corrected, we will
remedy this with the amended Form 10-KSB. The amended certifications are as
shown on the pages following this letter.
Form 10-QSB for the Quarter Ended September 30, 2007
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The one-time charge related to settlements of disputes and back charges was
first disclosed in the Form 10-QSB as being $1,050,000. It was increased by
$100,000 as more information was obtained. We were not aware of the amounts and
magnitude of the settlements at the time of filing the Form 10-KSB. We did
discuss amending the Form 10-KSB when more information was available. We can
amend the 2006 Form 10-KSB for this item if you feel it is required.
We appreciate your comments, and look forward to finalizing the changes needed
to amend our Form 10-KSB for the year ended December 31, 2006.
Sincerely,
Glen Hjort
Chief Financial Officer
PART I
Item 1. Business
Incorporated in 1983, MPM Technologies, Inc. ("MPM" or "the Company") as of year
ended December 31, 2006, had three wholly owned subsidiaries: AirPol, Inc.
("AirPol"), Nupower, Inc. ("Nupower") and MPM Mining Inc. ("Mining"). For the
year ended December 31, 2006, AirPol was the only revenue generating entity.
On March 9, 2004, MPM management filed a petition for subsidiary Huntington
Environmental Systems Inc. ("Huntington") in federal court under Chapter 7 of
the U.S. Bankruptcy Code. There were no operations of Huntington in 2005. On
July 20, 2005, the bankruptcy trustee filed a report with the U.S. Bankruptcy
Court Northern District of Illinois under bankruptcy petition number 04-09160
stating that the trustee had examined the debtor in accordance with Section
341(d) of the Bankruptcy Code that he believed that there were no assets to be
administered for the benefit of creditors.
AirPol continues to operate in the air pollution control industry. It sells air
pollution control systems to Fortune 500 and other large industrial companies in
the U.S and worldwide.
The Company through wholly owed subsidiary NuPower Inc is engaged in the
development and commercialization of a waste-to-energy process known as
Skygas(TM). These efforts are largely through NuPower's participation in Nupower
Partnership in which MPM has a 58.21% partnership interest. Nupower Partnership
owns 85% of the Skygas Venture. In addition to its partnership interest through
Nupower Inc, MPM also owns 15% of the Venture.
Mining operations were discontinued several years ago. In 1998, MPM's Board of
Directors decided to sell the mining properties and the related buildings and
equipment. In early 2002 the Board of Directors, based upon the increase in
precious metal prices, decided to hold the properties as an investment.
Management is actively seeking a joint venture partner with the necessary
financial abilities to further explore and develop the properties thereby
greatly enhancing the company's investment.
AIRPOL, INC.
Effective July 1, 1998, the Company acquired certain of the assets and assumed
certain of the liabilities of part of a division of FLS miljo, Inc. The
agreement called for the Company to pay $300,000 stock and $234,610 in cash. The
transaction was accounted for as a purchase.
AirPol designs, engineers, supplies and services air pollution control systems
for Fortune 500 and other environmental and industrial companies.
The technologies of AirPol utilize wet and dry scrubbers, wet electrostatic
precipitators and venturi absorbers to control air pollution. AirPol brings over
30 years experience through its technologies and employees.
A typical air pollution control system consists of the following components:
1. A gas duct from the polluting process equipment that can be a boiler,
kiln, incinerator or dry;.
2. A scrubber, or a wet electrostatic precipitator for dust removal
purposes;
3. An acid gas absorber for the removal of acid gas from the flue gas;
4. An induced draft fan to provide suction to draw the flue gas through
the air pollution control system; and
5. A stack for the discharge of cleaned flue gas into the atmosphere.
In building the systems, AirPol personnel conduct engineering design work, and
produce design drawings for the fabrication of steel or plastic vessels, steel
supports and access facilities. AirPol personnel also prepare equipment
specifications for needed equipment such as spray nozzles, pumps, fans,
instrumentation and controls. AirPol personnel then retain a fabricator for the
fabrication of the system's components. AirPol personnel arrange for delivery of
these to the customer's location. Normally, AirPol is not responsible for the
installation of the systems. In this case, AirPol personnel will arrange for an
erection supervisor to make sure the installation meets AirPol quality
standards. If AirPol is responsible for the installation, they will hire
mechanical and electrical contractors to perform the installation.
As of April 15, 2007, there were two systems under construction. These systems
represent significant capital expenditures on the part of the customers, and are
unique to each application. The systems are quoted and sold through AirPol, but
are manufactured and installed by unrelated third parties
NUPOWER, INC.
The Company holds a 58.21% interest in Nupower Partnership through its ownership
of Nupower. No other operations were conducted through Nupower. Nupower
Partnership is engaged in the development and commercialization of a
waste-to-energy process. This 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. Nupower Partnership owns 85% of the Skygas
Venture. In addition to its partnership interest, MPM owns 15% of the Venture.
MPM MINING, INC.
The company owns 7.5 patented claims and 2 unpatented claims and leases 7
patented claims with options to purchase on approximately 300 acres in Montana's
historical Emery Mining District. It also owns a 200-ton per day onsite
floatation mill. Companies such as Exxon Corporation, Freeport McMoran Gold
Company and Hecla Mining Company in addition to MPM Mining have conducted
extensive exploration in the area. In 1998, the Board of Directors decided to
dispose of the mining properties but later rescinding that decision in early
2002 deciding to hold the properties as an investment. Management believes that
the investment would greatly increase with the addition of a joint venture
partner. To that end management is actively seeking a joint venture partner with
the necessary financial abilities to further explore and develop the properties.
Following several geologist reports, assays and recommendations, the company
built a 200 ton per day ball mill using floatation tanks to process screened and
crushed ore. It took two years to build, equip and test the mill at a cost of
approximately $800,000. The mill is in operable condition with all equipment in
good repair.
The company has Rake classifier ship, Wilfley Concentrate table, Marcy ball mill
5'x4', flotation machines and equipment, Denver water pumps, 3 deck concentrate
table, Hardinge ball mill and Elmco filter press. There is an office trailer and
living quarters for personnel including a deep well and septic system. There are
two storage ponds and a creek running through the property.
MPM's management continues to work to bring the Company to profitability. Other
businesses are being evaluated to consider moving the Company's business toward
other more profitable ventures. There have been significant consolidations in
the air pollution control industry in the past few years. MPM management's
short- term goal is to operate a lean, profitable company.
2006 COMPARED TO 2005
Revenues decreased $230,096 (12%) from $1,959,353 in 2005 to $1,729,257 in 2006.
This included an increase in project revenues of $258,300, while revenues from
parts and service decreased by $488,396. The increase in project revenues was
due primarily to increased demand for air pollution control systems stemming
from somewhat improved enforcement of the government's air pollution control
laws. Parts and services revenues, which includes sales of spare parts used to
maintain existing AirPol installations, and sales of services which customers
use to also maintain the existing systems, decreased because of the loss of a
major after-customer in 2006, and because 2005 had been an unusually high sales
year. The net loss from continuing operations for 2006 was $1,092,896 or $0.33
per share compared to $593,847 or $0.19 per share in 2005.
Selling, general and administrative expenses increased $3,510 (0.3%) from
$1,087,015 in 2005 to $1,090,523 in 2006.
LIQUIDITY AND CAPITAL RESOURCES
During 2006, funds for operations were provided principally by loans from an
officer/director. Current cash reserves and continuing operations of HES and
AirPol are not believed to be adequate to fund MPM's and its subsidiaries
operations for the foreseeable future. MPM management is considering alternative
sources of capital such as private placements, other stock offerings and loans
from shareholders and officers to fund its current business and expand in other
related areas through more acquisitions.
Following is a summary from MPM's consolidated statements of cash flows:
Year ended
December 31,
------------
2006 2005
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Net cash provided by (used in) operating activities $134,828 $(311,483)
Net cash provided by financing activities 303,600 309,500
Net increase (decrease) in cash and cash equivalents $438,428 $ (1,983)
The net cash provided by operating activities in 2006 was due to collections of
accounts receivable, non-cash costs such as depreciation and amortization, and
increases in billings in excess of costs and estimated earnings on projects in
progress. Cash used in operating activities in 2005 was due primarily to the net
loss. This was due mainly to the decreased activity levels at AirPol during
2005.
The net cash provided by financing activities in 2006 and 2005 of $303,600 and
$309,500, respectively, were due to loans from related parties.
Management believes its present sources of working capital are sufficient for
both its short and long-term purposes.
CERTIFICATION
I, Michael J. Luciano, CHIEF EXECUTIVE OFFICER of MPM TECHNOLOGIES, INC. certify
that:
1. I have reviewed this Form 10-KSB of MPM Technologies, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of
material fact or omit to state material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f)), for the registrant
and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this annual report is being prepared;
b) Designed such internal control over financial reporting, orcaused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purooses in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions abut the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected or is
reasonable likely to materially affect the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: April 12, 2007 /s Michael J. Luciano
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Chief Executive Officer
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CERTIFICATION
I, Glen Hjort, CHIEF FINANCIAL OFFICER of MPM TECHNOLOGIES, INC. certify that:
1. I have reviewed this Form 10-KSB of MPM Technologies, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of
material fact or omit to state material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f), for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected or is
reasonably likely to materially affect the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: April 12, 2007 /s Glen Hjort
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Chief Financial Officer
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Exhibit 32
CERTIFICATION
I, Michael J. Luciano, Chief Executive Officer of MPM Technologies, Inc. and I,
Glen Hjort, Chief Financial Officer of MPM Technologies, Inc., certify, pursuant
to Section 906 of the Sarbarnes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. The Annual Report on Form 10-KSB of the Company for the annual period
ended December 31, 2006 (the "Report") fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78m); and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: April 12, 2007 /s Michael J. Luciano /s Glen Hjort
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Chief Executive Officer Chief Financial Officer
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A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
MPM TECHNOLOGIES, INC.
199 POMEROY ROAD
PARSIPPANY, NJ 07054
February 25, 2008
Mr. Karl Hiller
Branch Chief
United States
Securities and Exchange Commission
Washington, D.C. 20549-0405
Re: MPM Technologies, Inc.
Form 10KSB for Fiscal Year Ended December 31, 2006
Filed April 17, 2007
File No. 0-14910
Dear Mr. Hiller,
This letter is in response to your January 30, 2008 letter with comments on the
above referenced filing. You have requested that we submit our letter of
correspondence dated December 28, 2007 on EDGAR. This will be done as soon as
practible. Again, we are submitting the requested changes in italics so that
they can be easily distinguished from the original filing. The changed pages
follow the end of this letter.
Note 11 - Mineral Properties
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We have added disclosures based on the guidance in paragraph 8 of SFAS 144 and
EITF 04-3.
Prepaid Royalty
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We believe we are able to offset the prepaid royalty since the conditions
described in paragraph 5 of FIN 39 have been satisfied. If you agree, we will
amend our filing to reflect the offset.
Exhibit 32.1
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I have amended the dates of signature to agree to the originally filed Form
10-KSB.
Form 10-QSB for the Quarter Ended September 30, 2007
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We have reviewed the information available when we filed the Form 10-KSB. We
believe the settlements were properly disclosed in the first quarter of 2007 as
that was when the settlements first came to our attention. We had no prior
knowledge of the potential liability before the Form 10-KSB was filed.
Again, we appreciate your comments, and look forward to finalizing the changes
needed to amend our Form 10-KSB for the year ended December 31, 2006.
Sincerely,
Glen Hjort
Chief Financial Officer
11. Mineral Properties
During 1998, the Board of Directors authorized a plan to dispose of the
Company's mineral properties and related mining assets. In 2001, the Board of
Directors changed this plan to hold the mineral properties as an investment.
Accordingly, the Company has classified these assets as mineral properties held
for investment in its balance sheet at December 31, 2006 and 2005.
In accordance with guidelines established by the American Institute of Certified
Public Accountants, we conducted impairment testing on these assets. Factors
evaluated included whether there was a significant decrease in the market prices
of the assets. This included not only the market price of the unimproved land,
but also the market prices of the precious metals on the land. We also evaluated
whether there was an adverse change in the extent or manner in which the
long-lived asset was being used, or its physical condition. The costs associated
with extracting the precious metals were also evaluated. We also evaluated
whether there were factors that would demonstrate any continuing losses
associated with the long-lived asset, and whether there was an expectation that,
more likely than not, the long-lived asset would be sold or otherwise disposed
of.
After all of these evaluations, management determined that there was no
impairment of these assets, and, accordingly, no provision necessary for any
losses on these assets.