-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HKLCPHT7xJgx6erEuKde6+T3B4GZkaenbfT4q8MeA2/M8nbJnQxAvmrTHflCBQQk F2mF6Jw1ButSYgj3K1rXEg== 0001015402-99-001179.txt : 19991102 0001015402-99-001179.hdr.sgml : 19991102 ACCESSION NUMBER: 0001015402-99-001179 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATERIAL TECHNOLOGIES INC /CA/ CENTRAL INDEX KEY: 0001036668 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 954622822 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-23617 FILM NUMBER: 99738783 BUSINESS ADDRESS: STREET 1: 11835 OLYMPIC BLVD STREET 2: SUITE 705 EAST TOWER CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3102085589 MAIL ADDRESS: STREET 1: 11835 OLYMPIC BLVD STREET 2: SUITE 705 EAST TOWER CITY: LOS ANGELES STATE: CA ZIP: 90064 10-Q 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: September 30, 1999 Commission file number: 33-23617 MATERIAL TECHNOLOGIES, INC. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 95-4622822 -------------------------------- -------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) identification No.) 11661 San Vicente Boulevard Suite 707 Los Angeles, California 90049 ---------------------------------------- (address of principal executive offices) (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-affiliates of the registrant at October 28, 1999 was approximately $6,019,492 Documents incorporated by reference-None. 1
INDEX PAGE ------ Part 1. Financial Statements Balance Sheets 3 - 4 Statements of Operations - Third Quarter Ended September 30, 1998 and 1999 and from the Company's inception (October 21, 1983) through September 30, 1999 5 Statements of Cash Flows - Third Quarter Ended September 30, 1998 and 1999 and from the Company's inception (October 21, 1983) through September 30, 1999 6 - 7 Notes to Financial Statements 8 Management's Discussion and Analysis 9 - 11 Part 2. Other Information 11
2 PART 1. FINANCIAL STATEMENTS
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS ASSETS December 31, September 30, 1998 1999 ------------- -------------- (Unaudited) CURRENT ASSETS Cash and Cash Equivalents. . . . . . $ 20 $ 22 Accounts Receivable - Net. . . . . . 202,737 92,998 Receivable - Other . . . . . . . . . - 5,000 Employee Advances. . . . . . . . . . 1,500 1,500 ------------- -------------- TOTAL CURRENT ASSETS . . . . . . . 204,257 99,520 ------------- -------------- FIXED ASSETS Property and Equipment, Net of Accumulated Depreciation. . . 2,712 537 ------------- -------------- OTHER ASSETS Intangible Assets, Net of Accumulated Amortization . . . . 16,690 15,199 Investment in Marketable Securities. 8,219 8,219 Investment in Joint Venture. . . . . - 18,000 Refundable Deposit . . . . . . . . . 1,868 1,868 ------------- -------------- TOTAL OTHER ASSETS . . . . . . . . 26,777 43,286 ------------- -------------- TOTAL ASSETS . . . . . . . . . . . $ 233,746 $ 143,343 ============= ==============
See accompanying notes. 3
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' (DEFICIT) ---------------------------------------- December 31, September 30, 1998 1999 ------------ ------------- (Unaudited) CURRENT LIABILITIES Legal Fees Payable. . . . . . . . . . . . . . . . . . . . . . . $ 149,453 $ 150,986 Consulting Fees Payable . . . . . . . . . . . . . . . . . . . . 101,669 75,000 Accounting Fees Payable . . . . . . . . . . . . . . . . . . . . 23,308 24,481 Accounts Payable - Other. . . . . . . . . . . . . . . . . . . . 17,334 2,234 Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . - 4,266 Accrued Payroll Taxes . . . . . . . . . . . . . . . . . . . . . 25,197 24,752 Loan Payable - Officer. . . . . . . . . . . . . . . . . . . . . 73,177 6,059 Loan Payable-Others . . . . . . . . . . . . . . . . . . . . . . 46,273 49,754 ------------ ------------- TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . 436,411 337,532 Payable on Research and Development Sponsorship . . . . . . . . . . . . . . . . . . . 257,240 284,240 Note Payable - Other. . . . . . . . . . . . . . . . . . . . . . . 25,527 25,527 TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 719,178 647,299 ------------ ------------- STOCKHOLDERS' EQUITY (DEFICIT) Class A Common Stock, $.001 Par Value, Authorized 30,000,000 Shares, Outstanding 10,061,897, at December 31, 1998, and 13,617,102 Shares at September 30, 1999. . . . . . . . . . . 10,062 13,617 Class B Common Stock, $.001 Par Value, Authorized 100,000 Shares, Outstanding 60,000 Shares. . . . . . . . . . . . . . 60 60 Class A Preferred, $.001 Par Value, Authorized 900,000 Shares Outstanding 350,000 Shares . . . . . . . . . . . . . . . . . 350 350 Additional Paid in Capital. . . . . . . . . . . . . . . . . . . 2,996,664 3,195,176 Less Notes Receivable - Common Stock. . . . . . . . . . . . . . (14,720) (14,720) Deficit Accumulated During the Development Stage. . . . . . . . (3,486,067) (3,706,658) Unrealized Holding Gain on Investments in Securities. . . . . . 8,219 8,219 ------------ ------------- TOTAL STOCKHOLDERS' (DEFICIT) . . . . . . . . . . . . . . . . . (485,432) (503,956) ------------ ------------- TOTAL LIABILITIES AND STOCKHOLDERS' . . . . . . . . . . . . . $ 233,746 $ 143,343 ============ =============
See accompanying notes. 4
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS From Inception For the Three Months Ended For the Nine Months Ended (October 21, 1983) September 30, September 30, Through 1998 1999 1998 1999 September 30, 1999 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES Sale of Fatigue Fuses $ - $ - $ - $ - $ 64,505 Sale of Royalty Interests - - - - 198,750 Research and Development Revenue 13,000 130,354 158,594 405,304 1,828,618 Test Services - - - - 10,870 ------------ ------------ ------------ ------------ -------------------- TOTAL REVENUES 13,000 130,354 158,594 405,304 2,102,743 ------------ ------------ ------------ ------------ -------------------- COSTS AND EXPENSES Research and Development 46,993 17,044 141,907 51,702 1,890,664 General and Administrative 191,044 156,441 507,282 578,266 3,844,419 ------------ ------------ ------------ ------------ -------------------- TOTAL COSTS AND EXPENSES 238,037 173,485 649,189 629,968 5,735,083 ------------ ------------ ------------ ------------ -------------------- INCOME (LOSS) FROM OPERATIONS (225,037) (43,131) (490,595) (224,664) (3,632,340) ------------ ------------ ------------ ------------ -------------------- OTHER INCOME (EXPENSE) Expense Reimbursed - - - - 4,510 Rental Income - - - - 39,503 Interest Income - 304 - 477 203,578 Gain on Sale of Marketable Securities 115,371 - 169,250 4,396 23,093 Gain on Sale of Real Estate - - - - 25,145 Gain on Foreclosure of Real Estate - - - - (12,780) Miscellaneous Income - - - - 50,000 Loss on Sale of Equipment - - - - (7,332) Settlement of Teaming Agreement - - - - (126,590) Cancellation of Royalty - - (12,332) - 18,095 ------------ ------------ ------------ ------------ -------------------- TOTAL OTHER INCOME 115,371 304 156,918 4,873 217,222 ------------ ------------ ------------ ------------ -------------------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AND PROVISION FOR INCOME TAXES (109,666) (42,827) (333,677) (219,791) (3,415,118) PROVISION FOR INCOME TAXES - - - (800) (8,600) ------------ ------------ ------------ ------------ -------------------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (109,666) (42,827) (333,677) (220,591) (3,423,718) EXTRAORDINARY ITEMS Forgiveness of Debt - - - - (289,940) Utilization of Operating Loss Carry forward - - - - 7,000 ------------ ------------ ------------ ------------ -------------------- NET INCOME (LOSS) $ (109,666) $ (42,827) $ (333,677) $ (220,591) $ (3,706,658) ============ ============ ============ ============ ==================== PER SHARE DATA Basic Income (Loss) Per Share Before Extraordinary Item (0.011) $ (0.003) (0.040) $ (0.019) Extraordinary Items - - - - ------------ ------------ ------------ ------------ NET INCOME (LOSS) (0.011) $ (0.003) (0.040) $ (0.019) ============ ============ ============ ============ WEIGHTED AVERAGE ============ ============ ============ ============ COMMON SHARES OUTSTANDING 9,792,549 13,588,239 8,315,734 11,672,184 ============ ============ ============ ============
See accompanying notes. 5
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS From Inception For the Three Months Ended For the Nine Months Ended (October 21, 1983) September 30, September 30, Through 1998 1999 1998 1999 September 30, 1999 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ------------- ------------- ------------ ----------- ------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) . . . . . . . . . . . . . . $ (109,666) $ (42,827) $ (333,677) $ (220,591) $ (3,706,658) ------------- ------------- ------------ ----------- ------------------ Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities Depreciation and Amortization . . . . . . . . 1,195 1,222 3,585 3,666 173,049 Bad Debt. . . . . . . . . . . . . . . . . . . 50,000 - 50,000 50,000 Gain on Sale of Marketable Securities . . . . (115,371) - (169,250) (189,200) Gain on Real Estate Foreclosure . . . . . . . - - - (18,697) Gain on Sale of Real Estate . . . . . . . . . - - - 36,480 Charge off of Deferred Offering Costs . . . . 92,919 Charge off of Deferred Offering Costs . . . . - - - 12,780 Loss on Sale of Equipment . . . . . . . . . . - - - 7,332 Issuance of Common Stock for Services. . . . 2,000 2,900 7,617 35,400 445,997 Issuance of Stock for Agreement Modification. - - 7,332 152 Forgiveness of Indebtedness . . . . . . . . . - - - 165,000 (Increase) Decrease in Accounts Receivable. . (4,454) (15,007) 48,284 109,739 (144,498) Decrease in Prepaid Expenses. . . . . . . . . - - - 321 Increase (Decrease) in Accounts . . . . . . . - Payable and Accrued Expenses. . . . . . . . 2,930 13,551 54,858 31,425 720,385 Interest Accrued on Note Payable. . . . . . . - 1,835 5,695 8,863 99,338 Increase in Research and Development. . . . . - Sponsorship Payable. . . . . . . . . . . . 9,000 9,000 27,000 27,000 245,000 (Increase) in Note for Litigation Settlement. - (25,753) (Increase) in Deposits. . . . . . . . . . . . - (2,189) ------------- ------------- ------------ ----------- ------------------ TOTAL ADJUSTMENTS . . . . . . . . . . . . . (54,700) 13,501 35,121 216,093 1,668,416 ------------- ------------- ------------ ----------- ------------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES . . . . . . . . . . . . (164,366) (29,326) (298,556) (4,498) (2,038,242) ------------- ------------- ------------ ----------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds From Sale of Equipment . . . . . . . - - - - 10,250 Proceeds from Sale of Marketable Securities . 133,321 - 250,200 - 279,200 Purchase of Marketable Securities . . . . . . - - (90,000) - (90,000) Investment in Joint Venture . . . . . . . . . (8,000) (18,000) (18,000) Purchase of Property and Equipment. . . . . . - - - - (229,413) Net Proceeds from Sale of Real Estate . . . . - - - - 44,450 (Increase) in Other Assets. . . . . . . . . . - - - - (69,069) Payment for License Agreement . . . . . . . . - - - - (6,250) ------------- ------------- ------------ ----------- ------------------ NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES . . . . . . . . . . . . 133,321 (8,000) 160,200 (18,000) (78,832) ------------- ------------- ------------ ----------- ------------------
See accompanying notes. 6
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS From Inception For the Three Months Ended For the Nine Months Ended (October 21, 1983) September 30, September 30, Through 1998 1999 1998 1999 September 30, 1999 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) -------------- ------------- ------------ ----------- ------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of Common Stock Net of Offering Costs. . . . . . . $ 125,000 $ - $ 125,000 $ - $ 957,319 Costs incurred in Offering . . . . . - - - - (31,480) Sale of Common Stock Warrants. . . . - - - - 18,250 Payment on Proposed Reorganization . (5,000) Sale of Preferred Stock. . . . . . . - - - - 258,500 Sale of Redeemable Preferred Stock . - - - - 150,000 Capital Contributions. . . . . . . . - - - - 301,068 Loans From Officers. . . . . . . . - 5,000 106,500 80,000 705,807 Repayments to Officer. . . . . . . . (13,100) (27,500) (13,100) (52,500) (397,032) (Increase) in Loans - Other. . . . . (5,000) (5,000) 159,664 -------------- ------------- ------------ ----------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES:. 111,900 (27,500) 218,400 22,500 2,117,096 -------------- ------------- ------------ ----------- ------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . 80,855 (64,826) 80,044 2 22 BEGINNING BALANCE CASH AND CASH EQUIVALENTS . . . . . . . . 1,640 64,848 2,451 20 - -------------- ------------- ------------ ----------- ------------------ ENDING BALANCE CASH AND CASH EQUIVALENTS. . . . . . . . . . . . $ 82,495 $ 22 $ 82,495 $ 22 22 ============== ============= ============ =========== ==================
See accompanying notes. 7 MATERIAL TECHNOLOGIES, INC. (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 September 30, 1998 and 1999 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 MATERIAL TECHNOLOGIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - ----------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 During the nine month period ended September 30, 1998, the Company generated approximately $327,844 which consisted of $158,594 under its research and development contract, and $169,250 from the sale of marketable securities. During the nine month period ended September 30, 1999, the Company generated approximately $410,177, which consisted of $405,304 under its research and development contracts, $4,396 from the sale of marketable securities, and $477 in interest earned from savings. During the nine month periods ended September 30, 1998 and 1999, the Company incurred approximately $141,907, and $51,702, respectively, in development costs all of which related to the above indicated contracts. General and administration costs were $507,282, and $578,266, respectively, for the nine-month periods ended September 30, 1998, and 1999. The major expenses incurred during the nine-month period ended September 30, 1998, consisted of $121,455 in consulting fees, $67,500 in officer's salary, $50,000 charged off as a bad debt, $33,933 in interest expense, $130,996 in professional fees, $15,161 in telephone expense, $16,562 in salaries, and $11,582 in travel costs. The major expenses incurred during the nine-month period ended September 30, 1999, consisted of $206,982 in consulting fees, $90,000 in officer's salary, $60,100 in interest expense, $92,308 in professional fees, $19,610 in rent, $14,818 in telephone expense, $20,956 in salaries, and $39,514 in travel costs. FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 During the three month period ended September 30, 1998, the Company generated approximately $128,371, which consisted of $13,000 under its research and development contracts, and a net gain of $115,371 from the sale of marketable securities. 9 During the three month period ended September 30, 1999, the Company generated approximately $130,658 which consisted of $130,354 under its research and development contracts, and interest earned on savings totaling $304. During the three month period ended September 30, 1998, the Company incurred approximately $46,993 in development costs, all of which related to the above-indicated contracts. During the three month period ended September 30, 1999, the Company incurred approximately $17,044 in development costs, all of which related to the above-indicated contract. General and administration costs were $191,044 and $156,441, respectively, for the three-month periods ended September 30, 1998 and 1999. The major expenses incurred in 1998, consisted of bad debt of $50,000, $22,500 in officer's salary, $9,625 in interest expense, $49,224 in consulting fees, and $26,101 in professional fees. The major expenses incurred in 1999, consisted of officer's salaries of $30,000, interest expense of $11,523, office salaries of $3,456, consulting of $47,177, professional services of $20,348, rent of $6,158, and travel expense of $11,723. LIQUIDITY AND CAPITAL RESOURCES - ---------------------------------- Cash and cash equivalents as of September 30, 1998 and 1999 were $82,495, and $22, respectively. During 1998, the Company received $125,000 through the issuance of its common stock, $106,500 through advances made by its President, $205,391 from its research and development contracts, and $250,200 from the sale of marketable securities. Of the $687,091 received in 1998, $503,947 was used in operations, $90,000 was used to purchase marketable securities, and $13,100 was used to pay down loans made by the Company's President. During 1999, the Company received $295,565 through its research contracts, and $80,000 through advances from its President. Of the $375,565 received, $300,063 was used in operations, $18,000 was invested in a joint Venture, $52,500 was repaid to its President, and the $5,000 was loaned to a third party. 10 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES On July 7, 1999, the Company issued 672,205 shares of its common stock to the University of Pennsylvania. These shares are issued pursuant to the 1998 agreement whereby the Company agreed to issue 5% of the Company's total outstanding shares to the University. On August 24, 1999, the Company issued 50,000 shares of its Common Stock to a consultant for services. On September 30, 1999, the Company issued 8,000 shares of its Common Stock to a consultant for services. PURSUANT TO THE REQUIREMENTS OF 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 TECHNOLOGIES, INC. --------------------------- REGISTRANT /s/ Robert M. Bernstein --------------------------------------------- ROBERT M. BERNSTEIN, PRESIDENT AND CHIEF FINANCIAL OFFICER DATE: OCTOBER 28, 1999 11 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 22 8219 92998 0 0 99520 121957 (121420) 143343 337532 0 0 0 13677 (517633) 143343 0 405304 0 629968 0 0 37924 (219791) (800) (220591) 0 0 0 (220591) (.01) 0
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