UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange act of 1934
For the quarterly period ended March 31, 2009
Commission File Number 0-14910
MPM TECHNOLOGIES, INC.
(Exact Name of registrant 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)
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
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
As of May 14, 2009, 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.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2009 December 31, 2008
------------------- ----------------------
(UNAUDITED) (AUDITED)
Current assets:
Cash and cash equivalents $7,531 $16,290
Accounts receivable, net of allowance for doubtful accounts
of $-0- 50,032 57,101
Other current assets 5,150 8,250
------------------- ----------------------
Total current assets 62,713 81,641
------------------- ----------------------
Property, plant and equipment, net 4,290 5,013
Mineral properties held for sale 1,070,368 1,070,368
Other assets, net 136,375 136,375
------------------- ----------------------
$1,273,746 $1,293,397
=================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $384,770 $350,741
Accrued expenses 379,332 395,841
Billings in excess of costs and estimated earnings - 49,498
Notes payable 5,528,214 5,457,565
Related party debt 7,520,860 7,216,660
------------------- ----------------------
Total current liabilities 13,813,176 13,470,305
------------------- ----------------------
Commitments and contingencies - -
Stockholders' equity (impairment):
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, 6,307,510 shares issued and outstanding 6,308 6,308
Additional paid-in capital 12,279,698 12,279,698
Accumulated deficit (24,825,436) (24,462,914)
------------------- ----------------------
Total stockholders' equity (impairment) (12,539,430) (12,176,908)
------------------- ----------------------
$1,273,746 $1,293,397
=================== ======================
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
2009 2008
------------- ---------------
Revenues - Projects $102,998 $35,430
Revenues - Parts and service 81,075 71,964
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Total Revenues 184,073 107,394
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Cost of sales - Projects 58,757 13,367
Cost of sales - Parts and service 42,346 29,042
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Total cost of sales 101,103 42,409
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Gross margin 82,970 64,985
Selling, general and administrative expenses 231,834 254,128
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Loss from operations (148,864) (189,143)
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Other income (expense):
Interest expense (213,658) (180,419)
-------------- ---------------
Net other income (expense) (213,658) (180,419)
-------------- ---------------
Net loss ($362,522) ($369,562)
============== ===============
Income per share - basic and diluted:
Net loss ($0.06) ($0.06)
============== ===============
Weighted average shares of common stock outstanding -
Basic and diluted 6,307,510 6,263,064
============== ===============
MPM TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
2009 2008
----------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($362,522) ($369,562)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 723 723
Accrued interest and expenses on long-term debt 70,649 67,618
Accrued interest and deferred expenses on related party debt 178,200 148,150
Change in assets and liabilities:
Accounts receivable 7,069 13,852
Other current assets 3,100 1,257
Accounts payable and accrued expenses 17,520 (88,754)
Billings in excess of costs and estimated earnings (49,498) -
----------------- ---------------
Cash used in operating activities (134,759) (226,716)
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Cash flows from financing activities:
Proceeds from related party debt 126,000 208,000
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Net cash provided by financing activities 126,000 208,000
----------------- ---------------
Net decrease in cash and cash equivalents (8,759) (18,716)
Cash and cash equivalents, beginning of period 16,290 47,243
----------------- ---------------
Cash and cash equivalents, end of period $7,531 $28,527
================= ===============
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-K for the
year ended December 31, 2008. 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, 2008. 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, 2009 should not necessarily be taken as indicative of the results of
operations that may be expected for the entire year 2009.
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, 2008, the Company has not been
able to generate any significant revenues and has a working capital deficiency
of $13,750,463 at March 31, 2009. 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, 2008. 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, 2009
- -----------------------------------------
Weighted-
Net Average Per-Share
Loss Shares Amount
------------- -------------- ---------------
Basic EPS
Income available to common
stockholders $(362,522) 6,307,510 $(0.06)
Effect of Dilutive Securities
Common stock options - 2,085,084 -
------------- -------------- ---------------
Diluted EPS
Income available to common
stockholders - assumed
conversions $(362,522) 8,392,594 $(0.06)
============= ============== ===============
For the Three Months Ended March 31, 2008
- -----------------------------------------
Weighted-
Net Average Per-Share
Loss Shares 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)
============= ============== ===============
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 March 31, 2009, the Company has $4,326,499 of principal
advances and accrued interest and expenses of $1,201,715. During the quarters
ended March 31, 2009 and 2008, the Company recorded interest expense of $70,649
and $67,618, respectively. This note payable was not paid at maturity. The
lender has informally agreed to not pursue collection 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, 2009,
amounts owed these related parties totaled $7,520,860, due on demand. For the
three months ended March 31, 2009 and 2008, the Company recorded $126,000 and
$208,000 in advances and an additional $178,200 and $148,150 in interest expense
and deferred expenses and reimbursements, respectively.
6. Patent Pending
In February 2009, the Company filed a provisional new patent for a significantly
improved Skygas process. There can be no guarantee that the new patent will be
approved at this time. There is also a Canadian patent on the Skygas process
that is due to expire in April 2009.
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-K. 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, Inc. 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.
In 2008, a new company was incorporated named Skygas Energy Ontario Limited.
NuPower, Inc. owns all 100 of the issued and outstanding shares of the new
company. It is anticipated that this company will be part of a business venture
in Canada to commercialize the Skygas process. Management is currently in
negotiations with unrelated third parties with regard to this venture. It is
unclear at this time what form this venture will take.
The United States patent on the Skygas process expired in November 2008. The
Company filed a provisional new patent for a significantly improved Skygas
process in February 2009. There can be no guarantee that the new patent will be
approved at this time. There is also a Canadian patent on the Skygas process
that is due to expire in April 2009.
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, 2009 and 2008 include the operations of AirPol, Skygas and MPM.
MPM's consolidated net loss from operations for the three months ended March 31,
2009 was $362,522 or $0.06 per share compared to a net loss of $369,562, or
$0.06 per share for the three months ended March 31, 2008.
Three months ended March 31, 2009 compared to three months ended March 31, 2008
- -------------------------------------------------------------------------------
For the three months ended March 31, 2009, MPM had a net loss $362,522, or $0.06
per share compared to a net loss of $369,562, or $0.06 per share for the three
months ended March 31, 2008. Revenues increased 71% to $184,073 for the three
months ended March 31, 2009 compared to $107,394 for the three months ended
March 31, 2008. This was due to the completion of a project started in December
2008, and a slight increase in sales of parts and service. Costs of sales
increased 138% to $101,103 for the three months ended March 31, 2009 compared to
$42,409 for the three months ended March 31, 2008. This was due to increases in
project revenues and parts and service revenues as noted above. Operating
expenses decreased 9% to $231,834 for the three months ended March 31, 2009
compared to $254,128 for the three months ended March 31, 2008.
The Company currently has no backlog of project work.
Financial Condition and Liquidity
For the three months ended March 31, 2009, the Company relied principally on
cash from operations and loans from an officer/director to fund its activities.
Working capital deficit at March 31, 2009 was $13,750,463 compared to
$13,388,664 at December 31, 2008. 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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
This item is not applicable because we are a "smaller reporting company," as
defined by applicable SEC regulations.
Item 4. Controls and Procedures.
Management's Report on Disclosure Controls and Procedures.
- -----------------------------------------------------------------
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Securities Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to
allow timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, we recognized that any
controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives, as ours
are designed to do, and we were required to apply our judgment in evaluating the
cost-benefit relationship of possible changes or additions to our controls and
procedures.
As of March 31, 2009, we carried out an evaluation, under the supervision and
with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures had a material weakness because it did not
have a sufficient number of personnel with adequate knowledge, experience and
training in U.S. generally accepted accounting policies commensurate with MPM's
reporting requirements. This material weakness required the identification of
adjustments during the financial statement close process that have been recorded
in MPM's consolidated financial statements. As a result of this material
weakness, management has concluded that internal controls over disclosure
controls and procedures and financial reporting were not effective at March 31,
2009, in enabling us to record, process, summarize and report information
required to be included in our periodic SEC filings within the required time
period.
Changes in Internal Control Over Financial Reporting.
- -----------------------------------------------------
There have been no changes in our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, our 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
- ----------- -----------
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 Certification 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.
May 15, 2009 /s/ Michael J. Luciano
--------------- ------------------------
(date) Michael J. Luciano
Chairman & CEO