UNITED STATES
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 quarterly period ended September 30, 2008
Commission File Number 0-14910
MPM TECHNOLOGIES, INC.
(Exact Name of registrant as specified in its Charter)
Washington 81-0436060
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
199 Pomeroy Road.
Parsippany, NJ 07054
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 973-428-5009
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. X Yes No
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ___ Accelerated filer ___
Non-accelerated filer ___ Smaller reporting company _X_
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes X No
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As of November 5, 2008, the registrant had outstanding 6,307,510 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
September 30, 2008 December 31, 2007
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(UNAUDITED)
Current assets:
Cash and cash equivalents $2,536 $47,243
Accounts receivable, net of allowance for doubtful accounts
of $-0- and $10,000 30,621 23,916
Costs and estimated earnings in excess of billings - -
Other current assets 17,423 24,118
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Total current assets 50,580 95,277
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Property, plant and equipment, net 5,736 7,905
Mineral properties held for sale 1,070,368 1,070,368
Other assets, net 82,000 82,000
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$1,208,684 $1,255,550
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $289,552 $257,883
Accrued expenses 251,139 299,369
Billings in excess of costs and estimated earnings - -
Notes payable 5,386,481 5,180,203
Related party debt 6,951,227 5,988,604
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Total current liabilities 12,878,399 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 6,308 6,263
Additional paid-in capital 12,279,698 12,268,631
Accumulated deficit (23,955,721) (22,745,403)
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Total stockholders' equity (deficiency) (11,669,715) (10,470,509)
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$1,208,684 $1,255,550
================== =================
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------------ -------------------------------
2008 2007 2008 2007
----------------- --------------- -------------- -------------
Revenues - Projects $35,430 $1,165,904 $ - $236,601
Revenues - Parts and service 438,437 589,576 246,351 254,604
----------------- --------------- -------------- -------------
Total Revenues 473,867 1,755,480 246,351 491,205
----------------- --------------- -------------- -------------
Cost of sales - Projects 13,367 1,012,206 - 284,768
Cost of sales - Parts and service 206,827 368,456 106,808 179,937
----------------- --------------- -------------- -------------
220,194 1,380,662 106,808 464,705
----------------- --------------- -------------- -------------
Gross margin 253,673 374,818 139,543 26,500
Selling, general and administrative expenses 879,075 834,674 331,807 255,829
----------------- --------------- -------------- -------------
(Loss) income from operations (625,402) (459,856) (192,264) (229,329)
----------------- --------------- -------------- -------------
Other income (expense):
Interest expense (584,916) (533,197) (207,237) (181,433)
Settlements - (1,150,000) - -
Miscellaneous - 226,228 - (4,175)
----------------- --------------- -------------- -------------
Net other income (expense) (584,916) (1,456,969) (207,237) (185,608)
----------------- --------------- -------------- -------------
Net loss ($1,210,318) ($1,916,825) ($399,501) ($414,937)
================= =============== ============== =============
Income per share - basic and diluted:
Net loss ($0.19) ($0.31) ($0.06) ($0.07)
================= =============== ============== =============
Weighted average shares of common stock
outstanding -
basic and diluted 6,266,795 6,263,064 6,274,176 6,263,064
================= =============== ============== =============
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
September 30,
-----------------------------------------
2008 2007
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($1,210,318) ($1,916.825)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 2,169 52,864
Accrued interest and expenses on notes payable 206,278 187,188
Accrued interest and deferred expenses on related party debt 804,623 441,727
Change in assets and liabilities:
Accounts receivable (6,705) (47,148)
Costs and estimated earnings in excess of billings - 24,315
Other assets 6,695 (68,166)
Accounts payable and accrued expenses (16,561) (67,297)
Billings in excess of costs and estimated earnings - (103,548)
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Cash used in operating activities (213,819) (1,496,890)
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Cash flows from investing activities:
Purchase of property and equipment - -
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Net cash used in investing activities - -
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Cash flows from financing activities:
Proceeds from related party debt 158,000 22,000
Stock issued for exercised options 11,112
Proceeds from debt financing - 1,050,000
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Net cash provided by financing activities 169,112 1,072,000
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Net increase (decrease) in cash and cash equivalents (44,707) (424,890)
Cash and cash equivalents, beginning of period 47,243 443,223
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Cash and cash equivalents, end of period $2,536 $18,133
================== =================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $- $878
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Income taxes $- $-
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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 September 30, 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 for the year ended December 31, 2007, the
Company has not been able to generate any significant revenues and has a working
capital deficiency of $12,827,819 at September 30, 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 for the year ended 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 loss by the weighted
average number of common shares outstanding in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". Diluted net loss
per common share adjusts basic net loss per common share for the effects of
outstanding common stock equivalents, only in the periods in which such effect
is dilutive under the treasury stock method.
The following table reconciles the number of common shares used in the basic and
diluted EPS calculations:
For the Nine Months Ended September 30, 2008
- --------------------------------------------
Weighted-
Net Average Per-Share
Los Shares Amount
----------- ----------- -----------
Basic EPS
Income available to common
stockholders $(1,210,318) 6,266,795 $(0.19)
Effect of Dilutive Securities
Common stock options - 2,158,213 -
----------- ----------- -----------
Diluted EPS
Income available to common
stockholders - assumed
conversions $(1,210,318) 8,425,008 $(0.19)
=========== =========== ===========
For the Three Months Ended September 30, 2008
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Weighted-
Net Average Per-Share
Los Shares Amount
----------- ----------- -----------
Basic EPS
Income available to common
stockholders $ (399,501) 6,274,176 $(0.06)
Effect of Dilutive Securities
Common stock options - 2,143,452 -
----------- ----------- -----------
Diluted EPS
Income available to common
stockholders - assumed
conversions $ (399,501) 8,417,628 $(0.06)
=========== =========== ===========
For the Nine Months Ended September 30, 2007
- --------------------------------------------
Weighted-
Net Average Per-Share
Los Shares Amount
----------- ----------- -----------
Basic EPS
Income available to common
stockholders $(1,916,825) 6,263,064 $(0.31)
Effect of Dilutive Securities
Common stock options - 1,885,675 -
----------- ----------- -----------
Diluted EPS
Income available to common
stockholders - assumed
conversions $(1,916,825) 8,148,739 $(0.31)
=========== =========== ===========
For the Three Months Ended September 30, 2007
- ---------------------------------------------
Weighted-
Net Average Per-Share
Los Shares Amount
----------- ----------- -----------
Basic EPS
Income available to common
stockholders $ (414,937) 6,263,064 $(0.07)
Effect of Dilutive Securities
Common stock options - 1,885,675 -
----------- ----------- -----------
Diluted EPS
Income available to common
stockholders - assumed
conversions $ (414,937) 8,148,739 $(0.07)
=========== =========== ===========
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% per 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 September 30, 2008, the Company has $4,326,499 of
principal advances and accrued interest and expenses of $1,059,982. During the
nine and three months ended September 30, 2008, the Company recorded interest
expense of $206,278 and $70,159, respectively. This note 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 September 30, 2008,
amounts owed these related parties totaled $6,625,936, due on demand. For the
nine and three months ended Septe,ber 30, 2008, the Company recorded $483,500
and $158,000 in advances, respectively, and $479,123 and $167,291, respectively,
in interest and deferred expenses and reimbursements.
6. 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 nine and three months
ended September 30, 2008 and 2007 include the operations of AirPol, Skygas and
MPM.
MPM's consolidated net loss from operations for the nine months ended September
30, 2008 was $1,210,318 or $0.19 per share compared to a net loss of $1,916,825,
or $0.31 per share for the nine months ended September 30, 2007.
Nine and three months ended September 30, 2008 compared to nine and three months
- --------------------------------------------------------------------------------
ended September 30, 2007
- ------------------------
For the nine months ended September 30, 2008, MPM had a net loss of $1,210,318,
or $0.19 per share compared to net loss of $1,916,825, or $0.31 per share for
the nine months ended September 30, 2007. Revenues decreased 73% to $473,867 for
the nine months ended September 30, 2008 compared to $1,755,480 for the nine
months ended September 30, 2007. The revenue decrease was due to the lack of
project work, and backlog for projects in 2008. Costs of sales decreased 84% to
$220,194 for the nine months ended September 30, 2008 compared to $1,380,662 for
the nine months ended September 30, 2007. This was again due to the decreases in
project revenues. Operating expenses increased 5% to $879,075 for the nine
months ended September 30, 2008 compared to $834,674 for the nine months ended
September 30, 2007.
For the three months ended September 30, 2008, MPM had a net loss $399,501, or
$0.06 per share compared to a net loss of $414,937, or $0.07 per share for the
three months ended September 30, 2007. Revenues decreased 50% to $246,351 for
the three months ended September 30, 2008 compared to $491,205 for the three
months ended September 30, 2007. This was due to the lack of project work in
2008. Costs of sales decreased 77% to $106,808 for the three months ended
September 30, 2008 compared to $464,705 for the three months ended September 30,
2007. This was due to the lack of project work. Operating expenses increased 30%
to $331,807 for the three months ended September 30, 2008 compared to $255,829
for the three months ended September 30, 2007.
Financial Condition and Liquidity
- ---------------------------------
For the nine months ended September 30, 2008, the Company relied principally on
cash from loans from related parties to fund its activities. Working capital
deficit at September 30, 2008 was $12,827,819 compared to $11,630,782 at
December 31, 2007. The Company is working 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Management of MPM does not invest in marketable securities in the normal course
of business. Financial instruments consisting of cash and cash equivalents can
potentially subject the Company to a concentration of credit risk. 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.
Item 4. Controls and Procedures
MPM management, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of our disclosure controls and procedures as of September 30, 2008. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures are effective. There were
no changes during the period covered by this Form 10-Q in the internal control
over financial reporting that have materially affected, or are reasonably likely
to materially affect, the internal control over financial reporting.
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
- ----------- -----------------------
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
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(date) Michael J. Luciano
Chairman & CEO