-----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, Gv52K/0vjWtKBgfrLBixl6gH1B3AqOe7WwgIxOl+wSPca8qNQvm6Uffgn925+oIC LTKZTvLPaerwwnYquCqewg== 0001015402-99-000834.txt : 19990816 0001015402-99-000834.hdr.sgml : 19990816 ACCESSION NUMBER: 0001015402-99-000834 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: 99686472 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: June 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 of (IRS Employer incorporation or organization) identification No.) 11661 San Vicente Boulevard Suite 707 Los Angeles, California 90049 ---------------------------------- (address of principal executive offices) (Zip Code) (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 August 10, 1999 was $2,057,874. Documents incorporated by reference-None. 1 INDEX PAGE ------ Part 1. Financial Statements Balance Sheets 3 - 4 Statements of Operations - Second Quarter Ended June 30, 1998 and 1999 and from the Company's inception (October 21, 1983) through June 30, 1999 5 Statements of Cash Flows Second Quarter Ended June 30, 1998 and 1999 and from the Company's inception (October 21, 1983) through June 30, 1999 6 - 7 Statements of Comprehensive Income Second Quarter Ended June 30, 1998 and 1999 and from the Company's inception (October 21, 1983) through June 30, 1999 8 Notes to Financial Statements 9 Management's Discussion and Analysis 10 - 11 2 PART 1. FINANCIAL STATEMENTS
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS ASSETS December 31, June 30, 1998 1999 ------------ -------- (Unaudited) CURRENT ASSETS Cash and Cash Equivalents . . . . . . $ 20 $ 64,848 Accounts Receivable . . . . . . . . . 202,737 77,991 Employee Advance. . . . . . . . . . . 1,500 1,500 ------------ -------- TOTAL CURRENT ASSETS. . . . . . . . 204,257 144,339 ------------ -------- FIXED ASSETS Property and Equipment, Net of Accumulated Depreciation . . . 2,712 1,262 ------------ -------- OTHER ASSETS Intangible Assets, Net of Accumulated Amortization. . . . . 16,690 15,696 Investment in Marketable Securities. 8,219 8,219 Investment in Joint Venture . . . . . - 10,000 Refundable Deposit . . . . . . . . . 1,868 1,868 ------------ -------- TOTAL OTHER ASSETS. . . . . . . . . 26,777 35,783 ------------ -------- TOTAL ASSETS. . . . . . . . . . . . 233,746 181,384 ============ ========
See accompanying notes 3
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' (DEFICIT) --------------------------------------- December 31, June 30, 1998 1999 -------------- ------------ (Unaudited) CURRENT LIABILITIES Legal Fees Payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 149,453 145,528 Consulting Fees Payable. . . . . . . . . . . . . . . . . . . . . . . 101,669 76,355 Accounting Fees Payable. . . . . . . . . . . . . . . . . . . . . . . 23,308 15,711 Other Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . 17,334 6,305 Accrued Wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . - Accrued Payroll Taxes. . . . . . . . . . . . . . . . . . . . . . . . 25,197 24,269 Loan Payable - Officer . . . . . . . . . . . . . . . . . . . . . . . 73,177 27,723 Loan Payable-Others. . . . . . . . . . . . . . . . . . . . . . . . . 46,273 48,594 -------------- ------------ TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . . . . . . 436,411 346,484 Payable on Research and Development Sponsorship . . . . . . . . . . . . . . . . . . . . . 257,240 275,240 Note Payable - Other . . . . . . . . . . . . . . . . . . . . . . . . 25,527 25,688 -------------- ------------ TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . 719,178 647,412 -------------- ------------ STOCKHOLDERS' EQUITY (DEFICIT) Class A Common Stock, $.001 Par Value, Authorized 30,000,000 Shares, Outstanding 10,061,897 shares at December 31, 1998, and 12,886,897 shares at June 30, 1999. . . . . . . . . . . . . . . . 10,062 12,887 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 3,193,006 Less Notes Receivable - Common Stock . . . . . . . . . . . . . . . . (14,720) (14,720) Deficit Accumulated During the Development Stage . . . . . . . . . . (3,486,067) (3,663,831) Unrealized Holding Gain on Investment Securities . . . . . . . . . . 8,219 8,219 -------------- ------------ TOTAL STOCKHOLDERS' (DEFICIT). . . . . . . . . . . . . . . . . . . . (485,432) (464,029) -------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 233,746 $ 183,383 ============== ============
See accompanying notes 4
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS From Inception For the Three Months Ended For the Six Months Ended (October 21, 1983) June 30, June 30, Through 1998 1999 1998 1999 June 30, 1998 ----------- -------------- ------------- -------------- ------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES Sale of Fatigue Fuses . . . . . . . . . . . . $ - $ - $ - $ - $ 64,505 Sale of Royalty Interests . . . . . . . . . . - - - - 198,750 Income from Research Contracts . . . . . . . 48,849 76,091 145,594 274,950 1,698,264 Test Services . . . . . . . . . . . . . . . . - - - - 10,870 ----------- -------------- ------------- -------------- ------------- TOTAL REVENUES. . . . . . . . . . . . . . . 48,849 76,091 145,594 274,950 1,972,389 ----------- -------------- ------------- -------------- ------------- COSTS AND EXPENSES Research and Development. . . . . . . . . . . 63,617 26,581 94,070 34,658 1,873,620 General and Administrative. . . . . . . . . . 195,339 216,398 292,775 395,424 3,689,144 ----------- -------------- ------------- -------------- ------------- TOTAL COSTS AND EXPENSES. . . . . . . . . . 258,956 242,979 386,845 430,082 5,562,764 ----------- -------------- ------------- -------------- ------------- INCOME (LOSS) FROM OPERATIONS . . . . . . . (210,107) (166,888) (241,251) (155,132) (3,590,375) ----------- -------------- ------------- -------------- ------------- OTHER INCOME (EXPENSE) Expense Reimbursed. . . . . . . . . . . . . . - - - - 4,510 Interest Income . . . . . . . . . . . . . . . - 107 - 173 39,676 Gain on Sale of Securities. . . . . . . . . . 53,880 - 53,880 4,396 207,497 Gain on Foreclosure . . . . . . . . . . . . . - - - - 18,697 Miscellaneous Income. . . . . . . . . . . . . - - - - 25,145 Loss on Sale of Equipment . . . . . . . . . . - - - - (12,780) Settlement of Teaming Agreement . . . . . . . - - - - 50,000 Modification of Royalty Agreement . . . . . . (12,332) - (12,332) - (7,332) Interest Expense. . . . . . . . . . . . . . . (14,383) (13,054) (24,308) (26,401) (152,991) Litigation Settlement . . . . . . . . . . . . - - - - 18,095 ----------- -------------- ------------- -------------- ------------- TOTAL OTHER INCOME (EXPENSES) . . . . . . . 27,165 (12,947) 17,240 (21,832) 190,517 ----------- -------------- ------------- -------------- ------------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AND PROVISION FOR INCOME TAXES. . . . . (182,942) (179,835) (224,011) (176,964) (3,399,858) PROVISION FOR INCOME TAXES. . . . . . . . . . . - (800) - (800) (8,600) ----------- -------------- ------------- -------------- ------------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS . . . . . . . . . . . (182,942) (180,635) (224,011) (177,764) (3,408,458) EXTRAORDINARY ITEMS Forgiveness of Debt . . . . . . . . . . . . . - - -- -- (289,940) Utilization of Operating Loss Carry forward. - - -- -- 7,000 NET (LOSS) . . . . . . . . . . . . . . . . $ (182,942) $ (180,635) $ (224,011) $ (177,764) (3,691,398) =========== ============== ============= ============== ============= PER SHARE DATA Income (Loss) Before Extraordinary Item . . . (0.020) $ (0.017) (0.030) $ (0.017) Extraordinary Items . . . . . . . . . . . . . - - - - ----------- -------------- ------------- -------------- NET INCOME (LOSS) . . . . . . . . . . . . . (0.020) $ (0.017) (0.030) $ (0.017) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING. . . . . . . . . . . . . . 9,130,778 10,860,359 7,565,087 10,524,278 =========== ============== ============= ==============
See accompanying notes 5
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS From Inception For the Three Months Ende For the Six Months Ended (October 21, 1983) June 30, June 30, Through 1998 1999 1998 1999 June 30, 1999 ----------- ----------- -------------- ------------ ------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss). . . . . . . . . . . . . . . . . $ (182,942) (180,635) $ (224,011) $ (177,764) (3,691,398) ----------- ----------- -------------- ------------ ------------- Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities Depreciation and Amortization. . . . . . . . . . . 1,195 1,222 2,391 2,444 171,827 Bad Debts. . . . . . . . . . . . . . . . . . . . . 50,000 Gain on Sale of Securities . . . . . . . . . . . . (53,880) - (53,880) (4,396) (193,596) Gain on Foreclosure. . . . . . . . . . . . . . . . - - - - (18,697) Charge off of Deferred Offering Costs. . . . . . . - - - - 36,480 Charge off of Long-lived Assets Due to Impairment. 92,919 Loss on Sale of Equipment. . . . . . . . . . . . . - - - - 12,780 Modification of Royalty Agreement. . . . . . . . . 7,332 Issuance of Common Stock for Services . . . . . . 5,617 32,500 5,617 32,500 470,664 Issuance of Stock for Agreement Modification . . . 7,332 - 7,332 - 152 Forgiveness of Indebtedness. . . . . . . . . . . . - - - - 165,000 (Increase) Decrease in Accounts Receivable. . . . 27,346 84,978 52,738 124,746 (129,491) (Increase) in Employee Advances. . . . . . . . . . - - (848) - - (Increase) Decrease in Prepaid Expense . . . . . . - - - - 321 Increase (Decrease) in Accounts Payable and Accrued Expenses . . . . . . . . . . 75,223 36,994 53,411 17,874 706,834 Interest Accrued on Notes Payable. . . . . . . . . 9,000 12,367 23,059 25,028 115,503 Increase in Research and Development Sponsorship Payable . . . . . . . . . . . . . . - - - - 218,000 (Increase) in Note for Litigation Settlement . . . - - - - (25,753) (Increase) in Deposits . . . . . . . . . . . . . . - - - - (2,189) ----------- ----------- -------------- ------------ ------------- TOTAL ADJUSTMENTS. . . . . . . . . . . . . . . . 71,833 168,061 89,820 198,196 1,678,086 ----------- ----------- -------------- ------------ ------------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES. . . . . . . . . . . . . . . (111,109) (12,574) (134,191) 20,432 (2,013,312) ----------- ----------- -------------- ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds From Sale of Equipment. . . . . . . . . . - - - - 10,250 Proceeds from Sale of Securities . . . . . . . . . 116,880 - 116,880 4,396 283,596 Purchase of Securities . . . . . . . . . . . . . . (90,000) - (90,000) - (90,000) Purchase of Property and Equipment . . . . . . . . - - - - (229,413) Investment in Joint Venture. . . . . . . . . . . . - (10,000) - (10,000) (10,000) Proceeds from Foreclosure. . . . . . . . . . . . . - - - - 44,450 (Increase) in Other Assets . . . . . . . . . . . . - - - - (69,069) Payment for License Agreement. . . . . . . . . . . - - - (6,250) ----------- ----------- -------------- ------------ ------------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES. . . . . . . . . . . . . . . 26,880 (10,000) 26,880 (5,604) (66,436) ----------- ----------- -------------- ------------ -------------
See accompanying notes 6
MATERIAL TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS From Inception For the Three Months Ended For the Six Months Ended (October 21, 1983) June 30, June 30, Through 1998 1999 1998 1999 June 30, 1999 ------------ ------------- ------------- -------------- -------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of Common Stock Net of Offering Costs . . . . . . . $ - $ - $ - $ - $ 957,319 Costs incurred in Offering. . . . . . - - - - (31,480) Sale of Common Stock Warrants . . . . - - - - 18,250 Payment on Proposed Reoganization . . - - - - (5,000) Sale of Preferred Stock . . . . . . . - - - - 258,500 Sale of Redeemable Preferred Stock. . - - - - 150,000 Capital Contributions . . . . . . . . - - - - 301,068 Loans From Officers . . . . . . . . 57,500 25,000 106,500 75,000 700,807 Repayments to Officer . . . . . . . . - (9,000) - (25,000) (369,532) ( Increase) Decrease in Loans - Other. - - - - 164,664 ------------ ------------- ------------- -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: . 57,500 16,000 106,500 50,000 2,144,596 ------------ ------------- ------------- -------------- -------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . . . . . . (26,729) (6,574) (811) 64,828 64,848 BEGINNING BALANCE CASH AND CASH EQUIVALENTS. . . . . . . . . 28,369 71,422 2,451 20 - ------------ ------------- ------------- -------------- -------------- ENDING BALANCE CASH AND CASH EQUIVALENTS . . . . . . . . . . . . $ 1,640 $ 64,848 1,640 $ 64,848 64,848 ============ ============= ============= ============== ==============
See accompanying notes 7
MATERIAL TECHNOLOGIES, INC. (Formerly Tensiodyne Scientific Corporation) (A Development Stage Company) STATEMENTS OF COMPREHENSIVE INCOME From Inception For the Three Months Ended For the Six Months Ended (October 21, 1983) June 30, June 30, Through 1998 1999 1998 1999 June 30, 1999 ------------ ------------- ----------- ------------ ------------------ NET (LOSS). . . . . . . . . . . . . . . . $ (182,942) $ (180,635) $ (224,011) $ (177,764) $ (3,691,398) OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Gains (Losses) on Securities. 81,000 - 81,000 - 8,219 ------------ ------------- ----------- ------------ ------------------ TOTAL COMPREHENSIVE INCOME . . . . . . $ (101,942) $ (180,635) $ (143,011) $ (177,764) (3,683,179) ============ ============= =========== ============ ==================
See accompanying notes 8 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 June 30, 1999 and 1998 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. 9 MATERIAL TECHNOLOGIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - ----------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 The Company had no sales during the six month period ended June 30, 1999, or during the six month periods ended June 30, 1998. The Company generated $274,950 under its research and development contracts during the first two quarters of 1999, as compared to $145,594 which was earned during the same period in 1998. The Company realized a $4,396 gain from the sale of marketable securities and interest income of $173 during the six-month period ended June 30, 1999. During the same period in 1998, the Company realized a net gain from the sale of marketable securities of $53,880. During the six month period ended June 30, 1999, the Company incurred $34,658 in development costs. Development costs incurred during the six months ended June 30, 1998, amounted to $94,070. General and administration costs were $394,356 and $292,775 respectively, for the six-month periods ended June 30, 1999 and 1998. The major costs incurred during 1999, consisted of professional fees of $55,971, consulting fees of $159,805, officer's salary of $70,000, travel of $27,792, telephone expense of $9,565, rent of $13,452, and office expense of $9,317. The major costs incurred during 1998, consisted of professional fees of $104,894, consulting fees of $72,231, officer's salary of $45,000, telephone expense of $11,562, rent of $8,487, and office expense of $7,156. Interest expense for the six-months ended June 30, 1999 totaled $26,401 as compared to $24,308 incured during the for the first six-months of 1998. FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998 The Company had no sales during the three month period ended June 30, 1999 or during the three month period ended June 30, 1998. During the three month period ending June 30, 1999, the Company earned $76,091 from its research contract as compared to $48,849 earned during the same period in 1998. During the three months ended June 30, 1998, the Company realized a gain from the sale of marketable securities of $53,880. During the three-month period ended June 30, 1999, the Company incurred $26,581 in development costs as compared to $63,.617 incurred during the same three month period of 1998. 10 General and administration costs were $216,398 and $195,339, respectively, for the three-month periods ended June 30, 1999 and 1998. The major costs incurred during 1999, consisted of professional fees of $29,144, consulting fees of $117,755, officer's salary of $20,000, travel expenses of $13,128, telephone expense of $5,550, office expense of $4,381, and rent of $5,908. The major costs incurred during 1998, consisted of professional fees of $83,625, consulting fees of $52,599, officer's salary of $22,500, interest expense of $9,625, and telephone expense of $5,686. LIQUIDITY AND CAPITAL RESOURCES - ---------------------------------- Cash and cash equivalents as of June 30, 1999 and 1998 were $64,848, and $1,640, respectively. During 1999, the Company generated net cash from operations of $20,432, received $4,396 through the sale of marketable securities, and received $75,000 from officer advances. During 1999, the Company invested $10,000 in a joint venture and repaid $25,000 in officer advances. During 1998, the Company received $116,880 through the sale of marketable securities, and $106,500 from officer advances. Of the $223,180 received in 1998, $134,191 was used in operations, and $90,000 was used to purchase marketable securities. ITEM 2. CHANGES IN SECURITIES During the three months ended June 30, 1999, the Corporation issued 625,000 shares of its Class A Common Stock to several consultants and 200,000 shares of its Class A Common Stock to an attorney, all for services rendered. In addition, the Company issued 2,000,000 shares of its Class A Common Stock to its President in exchange for the cancellation of $100,000 of indebtedness due him by the Company. The Company also issued options to various consultants and advisors to acquire 775, 000 shares of the Company's Class A Common Stock. Options to acquire 100,000 of those shares, at a price of $.0025, expire on December 2, 1999. Options to acquire the remaining 675,000 shares at a price of $.25 per share expire on June 17, 2009. 11 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. Berstein______________ --------------------------------------- ROBERT M. BERNSTEIN, PRESIDENT AND CHIEF FINANCIAL OFFICER DATE: AUGUST 10, 1999 12 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED June 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 64848 0 77991 0 0 144339 121957 120695 181384 344485 0 12947 0 350 (477326) 181364 0 274950 0 430082 21832 0 26401 (176964) (800) (177764) 0 0 0 (177764) (.01) 0
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