SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q/A2
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange act of 1934
For the quarter ended March 31, 2008
Commission File Number 0-14910
MPM TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as specified in its Charter)
Washington 81-0436060
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
199 Pomeroy Road.
Parsippany, NJ 07054
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(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: 973-428-5009
As of May 14, 2008, the registrant had outstanding 6,263,064 shares of common
stock and no outstanding shares of preferred stock, which are the registrant's
only classes of stock.
This amended Form 10-Q/A2 (Amendment #2) is being filed to change the
officers' certifications pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2008 December 31, 2007
-------------- -----------------
(UNAUDITED)
Current assets:
Cash and cash equivalents $28,527 $47,243
Accounts receivable, net of allowance for doubtful accounts
of $-0- and $10,000 10,064 23,916
Costs and estimated earnings in excess of billings - -
Other current assets 22,861 24,118
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Total current assets 61,452 95,277
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Property, plant and equipment, net 7,182 7,905
Mineral properties held for sale 1,070,368 1,070,368
Other assets, net 82,000 82,000
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$1,221,002 $1,255,550
=================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $247,879 $257,883
Accrued expenses 220,619 299,369
Billings in excess of costs and estimated earnings - -
Notes payable 5,247,821 5,180,203
Related party debt 6,344,754 5,988,604
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Total current liabilities 12,061,073 11,726,059
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Commitments and contingencies - -
Stockholders' equity (deficiency):
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, 6,263,064 shares issued and outstanding 6,263 6,263
Additional paid-in capital 12,268,631 12,268,631
Accumulated deficit (23,114,965) (22,745,403)
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Total stockholders' equity
(deficiency) (10,920,071) (10,470,509)
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$1,221,002 $1,255,550
=================== ======================
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
2008 2007
-------------- ---------------
Revenues - Projects $35,430 $411,527
Revenues - Parts and service 71,964 84,751
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Total Revenues 107,394 496,278
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Cost of sales - Projects 13,367 308,302
Cost of sales - Parts and service 29,042 29,548
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Total cost of sales 42,409 337,850
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Gross margin 64,985 158,428
Selling, general and administrative expenses 254,128 263,806
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Loss from operations (189,143) (105,378)
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Other income (expense):
Interest expense (180,419) (175,601)
Miscellaneous - 206,191
Settlement - (1,050,000)
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Net other income (expense) (180,419) (1,019,410)
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Net loss ($369,562) ($1,124,788)
============== ===============
Income per share - basic and diluted:
Net loss ($0.06) ($0.18)
============== ===============
Weighted average shares of common stock outstanding -
Basic and diluted 6,263,064 6,263,064
============== ===============
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
2008 2007
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($369,562) ($1,124,788)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 723 17,633
Accrued interest and expenses on long-term debt 67,618 56,383
Accrued interest and deferred expenses on related party debt 148,150 145,439
Change in assets and liabilities:
Accounts receivable 13,852 (342,212)
Costs and estimated earnings in excess of billings - 61,089
Other assets 1,257 9,719
Accounts payable and accrued expenses (88,754) (125,729)
Billings in excess of costs and estimated earnings - (46,633)
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Cash used in operating activities (226,716) (1,349,099)
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Cash flows from financing activities:
Proceeds from note payable 1,050,000
Proceeds from related party debt 208,000 -
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Net cash provided by financing activities 208,000 1,050,000
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Net increase (decrease) in cash and cash equivalents (18,716) (299,099)
Cash and cash equivalents, beginning of period 47,243 443,223
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Cash and cash equivalents, end of period $28,527 $144,124
================= ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
MPM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Unaudited Financial Statements
These consolidated 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, 2007. 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-Q of Regulation S-X as promulgated by the Securities
and Exchange Commission, these financial statements specifically refer to the
footnotes to the consolidated financial statements of the Company as of December
31, 2007. In the opinion of management, these unaudited interim consolidated
financial statements reflect all adjustments and disclosures necessary for a
fair statement of the financial position and results of operations and cash
flows of the Company for the interim period presented. Such adjustments
consisted only of those of a normal recurring nature. Results of operations for
the period ended March 31, 2008 should not necessarily be taken as indicative of
the results of operations that may be expected for the entire year 2008.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in the notes to the
Consolidated Financial Statements of December 31, 2007, the Company has not been
able to generate any significant revenues and has a working capital deficiency
of $11,999,621 at March 31, 2008. These conditions raise substantial doubt about
the Company's ability to continue as a going concern without the raising of
additional debt and/or equity financing to fund operations. Management's plans
in regard to these matters are described in the notes to the Consolidated
Financial Statements of December 31, 2007. The consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
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, 2008
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Net Loss Weighted-Average Shares Per-Share Amount
------------- ------------------------- ------------------------
Basic EPS
Income available to
common stockholders $(369,562) 6,263,064 $ (0.06)
Effect of Dilutive
Securities
Common stock options - 2,165,675 -
---------- --------- ----------
Diluted EPS
Income available to
common stockholders -
assumed conversions $(369,562) 8,428,739 $ (0.06)
========== ========= ========
For the Three Months Ended March 31, 2007
- -----------------------------------------
Net Loss Weighted-Average Shares Per-Share Amount
-------------------------- ------------------------ -----------------------
Basic EPS
Income available to
common stockholders $(1,124,788) 6,263,064 $ (0.18)
Effect of Dilutive
Securities
Common stock options - 1,885,675 -
---------- --------- ----------
Diluted EPS
Income available to
common stockholders -
assumed conversions $(1,124,788) 8,148,739 $ (0.18)
============ ========= ========
3. Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to a concentration
of credit risk, consist of cash and cash equivalents. The Company places its
cash and cash equivalents with various high quality financial institutions;
these deposits may exceed federally insured limits at various times throughout
the year. The Company provides credit in the normal course of business. The
Company performs ongoing credit evaluations of its customers and maintains
allowances for doubtful accounts based on factors surrounding the credit risk of
specific customers, historical trends, and other information.
4. Note Payable
In December 2002, the Company entered into a revolving credit agreement with an
insurance company. Under the terms of its agreement, the Company may borrow up
to $500,000 at 5.25% pr annum, which was increased to $3,000,000 in 2003. The
note is secured by stock and mineral property held for investment and matured on
January 2, 2008. As of March 31, 2008, the Company has $4,326,499 of principal
advances and accrued interest and expenses of $921,322. During the quarter ended
March 31, 2008, the Company recorded interest expense of $67,618. This note
payable was not paid at maturity. The lender has informally agreed to not pursue
collection until August 2008 while revised terms are being negotiated. As of the
date of this report, negotiations continue, but no revised agreement has been
reached.
5. Related Party Debt
Related party debt consists of advances received from and deferred expenses and
reimbursements to various directors and related parties. At March 31, 2008,
amounts owed these related parties totaled $6,344,754, due on demand. For the
three months ended March 31, 2008, the Company recorded 208,000 in advances and
an additional $148,150 in interest expense and deferred expenses and
reimbursements.
6. Settlement Expenses
During the first quarter of 2007, MPM recorded settlement expenses of
$1,050,000. This was related to a project for which AirPol was a subcontractor.
The general contractor's systems were found to be faulty, and ultimately were
removed. The customer made claims against the general contractor. The general
contractor then made claims against its subcontractors. The disputes went
through mediation, and were about to go to arbitration. AirPol management
decided to settle the disputes rather than incur the costs of arbitration.
Airpol is attempting to recover the losses through its insurance carrier. There
can, however, be no assurances that AirPol will be successful in its recovery
attempts.
7. Joint Venture
On April 11, 2007, MPM announced that it had agreed with Losonoco, Inc. to form
a new joint venture company, Losonoco Skygas, LLC to develop bio-fuel and
chemical manufacturing facilities based on the Skygas technology for waste
gasification. On April 28, 2008, MPM notified Losonoco, Inc. of its intent to
terminate its relationship with Losonoco effective immediately.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
This Quarterly Report on Form 10-Q, 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-Q,
other than statements of historical fact, should be considered forward looking
statements, including, but not limited to, those concerning the Company's
strategies, ability to generate sufficient cash flow or secure additional
sources of financing, collectability of project payments, future customer
revenue, variability of quarterly operating results, completion of remaining
contracts, attraction and retention of employees and key management personnel,
political and economic uncertainty and other competitive factors. Additionally,
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.
MPM 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 ownership
in the partnership, MPM separately owns 15% of the Venture.
Mining controls 15 claims on approximately 300 acres in the historical Emery
Mining District in Montana. It also owns a 200-ton per day floatation mill on
site. Extensive exploration has been conducted in the area by companies such as
Exxon-Mobil Corporation, Freeport McMoran Gold Company and Hecla Mining Company
in addition to the efforts of MPM Mining.
MPM management believes that resuming mining operations is a way to generate
positive cash flows and mitigate the continuing losses from other operations
given the current market prices and conditions for precious metals. Accordingly,
management will investigate its needs to make this happen.
AirPol is an active continuing concern. 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, 2008 include the operations of AirPol, Skygas and MPM.
MPM's consolidated net loss from operations for the three months ended March 31,
2008 was $(369,562) or $0.06 per share compared to a net loss of $1,124,788, or
$0.18 per share for the three months ended March 31, 2007.
Three months ended March 31, 2008 compared to three months ended March 31, 2007
- -------------------------------------------------------------------------------
For the three months ended March 31, 2008, MPM had a net loss $369,562, or $0.06
per share compared to a net loss of $1,124,788, or $0.18 per share for the three
months ended March 31, 2007. Revenues decreased 78% to $107,394 for the three
months ended March 31, 2008 compared to $496,278 for the three months ended
March 31, 2007. This was due to the lack of project work and backlog for
projects in 2008. Costs of sales decreased 87% to $42,409 for the three months
ended March 31, 2008 compared to $337,850 for the three months ended March 31,
2007. This was due to decreases in project revenues as noted above. Operating
expenses decreased 4% to $254,128 for the three months ended March 31, 2008
compared to $263,806 for the three months ended March 31, 2007. During the first
quarter of 2007, there was a one-time charge of approximately $1,050,000 related
to settlements of disputes and back charges from systems that were designed in
2000 and 2001.
The Company currently has no backlog of project work.
Financial Condition and Liquidity
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For the three months ended March 31, 2008, the Company relied principally on
cash from operations and loans from an officer/director to fund its activities.
Working capital deficit at March 31, 2008 was $11,999,621 compared to
$11,630,782 at December 31, 2007. The Company continues to work to narrow its
losses and get to a cash flow neutral position. There can be no assurances that
management will be successful in attaining this goal. Accordingly, management is
continuing to seek alternative sources of capital such as private placements,
stock offerings and other financing alternatives.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
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
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description of Document
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31.1 Chief Executive Officer's Certificate, pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Chief Financial Officer's Certificate, pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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.
March 17, 2009 /s/ Michael J. Luciano
-------------------------------- -----------------------
(date) Michael J. Luciano
Chairman & CEO