8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 13, 2007

Modtech Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdictionof Incorporation)

000-25161	33-0825386
(Commission File Number)	(IRS Employer Identification No.)
2830 Barrett Avenue, Perris, CA	92571
(Address of Principal Executive Offices)	(Zip Code)

(951) 943-4014

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition.

On November 13, 2007, Modtech Holdings, Inc. issued a press release reporting the results of operations for the three-month and nine-month periods ended September 30, 2007. A copy of the press release is attached as Exhibit 99.1. The company will hold a previously announced telephone conference call on November 13, 2007 at 4:30 p.m. Eastern Standard Time to discuss the results.

The information in this Form 8-K and the Exhibit attached hereto is being furnished pursuant to this Item 2.02 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the company under the Securities Act of 1933 or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release dated November 13, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 13, 2007
	Modtech Holdings, Inc.
	By:	/s/ Kenneth S. Cragun
		Kenneth S. Cragun
		Chief Financial Officer

EX-99.1

Dennis Shogren	Ken Cragun	Phil Bourdillon/Gene Heller
Chief Executive Officer	Chief Financial Officer	Silverman Heller Associates
(951) 943-8800	(951) 943-8889	(310) 208-2550

MODTECH HOLDINGS, INC.

REPORTS THIRD-QUARTER, NINE-MONTH 2007 FINANCIAL RESULTS

Perris, Calif.—November 13, 2007—Modtech Holdings, Inc. (Nasdaq: MODT) reported financial results for the third quarter and nine months ended September 30, 2007.

Net sales for the three and nine months ended September 30, 2007 were $21.8 million and $73.3 million, respectively, compared to $45.6 million and $126.8 million, respectively, for the three and nine months ended September 30, 2006. The decrease in sales in 2007 was primarily due to lower sales volumes in the education market in California and Florida due to project delays and a general slowdown in those markets. Net sales for the three and nine months ended September 30, 2006 included $2.7 million and $8.1 million, respectively, from Modtech’s Texas operations, for which there were no revenues to date in 2007 due to the closing of the Texas factory at the beginning of 2007 because of poor sales throughout 2006.

Gross profit margin for the third quarter of 2007 was negative $1.2 million, or 5.5% of sales, versus a positive margin of $2.9 million, or 6.4% of sales, in the third quarter a year ago. For the first nine months of 2007, gross profit margin was negative $0.6 million, or 0.9% of sales, versus $8.1 million, or 6.4% of sales, in the first nine months of 2006. Gross profit margin declined due to the low volume of production resulting from project delays and because the gross profits on the work we completed did not adequately cover the fixed manufacturing overhead costs.

Selling, general, and administrative expenses (SG&A) for the three and nine months ended September 30, 2007, were $3.7 million and $11.1 million, respectively, compared to $3.7 million and $10.5 million, respectively, for the three and nine months ended September 30, 2006. The increase in SG&A was primarily attributable to an increase in non-cash stock compensation expense.

Other expenses, net for the third quarter of 2007 were $0.2 million compared to other income, net of $1.3 million in the third quarter of 2006, reflecting the fact that in the third quarter of 2007 the company recognized a non-cash gain of $0.8 million related to warrant derivatives compared to a non-cash gain of $2.2 million in the third quarter of 2006. The gain in each period was due to a decrease in the trading price of the company’s stock.

Net loss for the quarter was $5.2 million, or $0.24 per share, on 21.4 million weighted-average shares outstanding, compared to net income of $0.5 million, or $0.03 per share, on 19.4 million weighted-average shares outstanding, in the third quarter of 2006. Net loss for the first nine months of 2007, which includes a previously announced second-quarter non-cash goodwill impairment charge of $38.3 million, was $47.6 million, or $2.23 per share, on 21.3 million weighted-average shares outstanding, compared to a net loss of $3.7 million, or $0.20 per share, on 18.0 million weighted-average shares outstanding, in the first nine months of 2006.

Total backlog as of October 31, 2007 was $57.5 million, consisting of orders of $45.8 million from California, $3.9 million from Arizona and $7.8 million from Florida.

Modtech Chief Financial Officer Ken Cragun commented: “Our financial performance continues to be disappointing. The third quarter of 2007 was negatively impacted by continued delays in large projects, primarily in the California education market, compounded by softness in all markets in what is typically a seasonally strong quarter. In order to minimize losses and improve operating results in the remainder of 2007 and into 2008, we reduced overhead, direct and indirect labor expenses and selling, general and administrative expenses to bring these costs in line with our current revenue levels. On October 9, 2007, we laid off approximately 30% of our workforce, which included a significant number of general and administrative staff. We centralized certain administrative and accounting functions in our California location.”

Modtech President and Chief Executive Officer Dennis Shogren commented: “Our education business continues to lag behind even recent expectations in both California and Florida. Florida has been particularly difficult with very little demand - even to the point of cancellation of previously awarded projects. California demand for both permanent and temporary classrooms continues to be flat, resulting in increased pricing pressure, probably through the first half of 2008.

“We have had to take some very difficult steps to keep our costs in line with our revenue projections over the near term. While we protected sales and marketing from the brunt of the cuts, virtually every other function was affected.

“I am encouraged by the continued positive response to our new product initiatives. Our backlog is up more than 12% over last quarter and our pipeline continues to grow. We have recently been awarded significant contracts in our new markets - some of which took more than a year from concept to award.

“Although the strong positive outlook generated by our expansion into our new markets will not be reflected in near-term results, the opportunities in private schools, government work, public restrooms, multi-family residential and specialty commercial projects are growing and bode well for our longer-term success.”

Teleconference Information:

At 1:30 p.m. PST (4:30 p.m. EST) today the company will hold a teleconference to discuss the financial results and outlook. To participate in the teleconference, please call toll-free 800-291-8929 (or 706-634-0478 for international callers) approximately 10 minutes prior to the start time. You may also listen to the teleconference live via the Internet at www.modtech.com., under the investor relations link, or at www.earnings.com. For those unable to attend, this website will host an archive of the call. A telephone replay will be available for 48 hours beginning at approximately 4:30 p.m. PST today. The playback can be accessed by calling 800-642-1687 (or 706-645-9291 for international callers) and providing Conference ID 22713718.

About Modtech Holdings, Inc.

Modtech^® is a leading national designer and manufacturer of modular buildings, both permanent and relocatable. In the school industry, the company has advanced typical modular building technology to greater dimensions of flexibility and architectural integrity. Modtech^® has substantial product and geographic diversification throughout the southwestern states and Florida. Modtech’s commercial and industrial buildings are sold to a diverse end-user market and may be leased through national, regional, and local dealers. The company also designs and manufactures modular buildings to customer specifications for a wide variety of uses.

Forward-looking Statements:

Some statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Refer to the company’s filings with the U.S. Securities and Exchange Commission for further discussion of such factors. The forward-looking statements are made as of the date of this press release and the company assumes no obligation to update such statements.

[Financial data on following pages]

MODTECH HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2007			December 31, 2006
Assets
Current assets:
Cash and cash equivalents	$	2,846,000		$	6,292,000
Restricted cash		3,348,000			9,139,000
Contracts receivable, less allowance for contract adjustments of $2,165,000 and $2,358,000 in 2007 and 2006, respectively		17,567,000			27,910,000
Costs and estimated earnings in excess of billings on contracts		11,744,000			16,144,000
Inventories		5,839,000			6,282,000
Prepaid assets		604,000			1,032,000
Insurance receivable		3,391,000			3,535,000
Other current assets		405,000			112,000
Total current assets		45,744,000			70,446,000
Property and equipment, net		10,278,000			11,118,000
Goodwill		—			38,303,000
Debt issuance costs, net		862,000			1,369,000
Other assets		1,953,000			1,574,000
Total assets	$	58,837,000		$	122,810,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	13,208,000		$	22,419,000
Accrued liabilities		7,328,000			16,190,000
Billings in excess of costs and estimated earnings on contracts		2,702,000			2,009,000
Current maturities of long-term debt, net		2,646,000			3,508,000
Total current liabilities		25,884,000			44,126,000
Long-term debt, net, excluding current portion		9,497,000			10,326,000
Other long-term liabilities		1,457,000			1,517,000
Total liabilities		36,838,000			55,969,000
Shareholders’ equity:
Series A preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding in 2007 and 2006		—			—
Common stock, $0.01 par value. Authorized 55,000,000 shares; issued and outstanding 21,419,415 and 21,008,855 in 2007 and 2006, respectively		214,000			210,000
Additional paid-in capital		136,288,000			133,571,000
Accumulated deficit		(114,503,000	)		(66,940,000	)
Total shareholders’ equity		21,999,000			66,841,000
Total liabilities and shareholders’ equity	$	58,837,000		$	122,810,000

MODTECH HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Net sales	$	21,817,000		$	45,583,000		$	73,348,000		$	126,794,000
Cost of goods sold		23,024,000			42,668,000			73,995,000			118,724,000
Gross (loss) profit		(1,207,000	)		2,915,000			(647,000	)		8,070,000
Selling, general and administrative expenses		3,737,000			3,672,000			11,118,000			10,526,000
Impairment loss on goodwill		—			—			38,303,000			—
Loss from operations		(4,944,000	)		(757,000	)		(50,068,000	)		(2,456,000	)
Other (expense) income:
Interest expense		(448,000	)		(379,000	)		(1,506,000	)		(2,044,000	)
Interest income		61,000			60,000			200,000			299,000
Loss on extinguishment of debt		—			—			—			(2,057,000	)
Gain on warrant and embedded derivatives		783,000			2,220,000			6,552,000			6,698,000
Amortization of debt issuance costs		(122,000	)		(146,000	)		(507,000	)		(600,000	)
Accretion of debt discount		(533,000	)		(569,000	)		(2,321,000	)		(1,949,000	)
Early debt conversion fee		—			—			—			(1,864,000	)
Other income, net		40,000			74,000			87,000			278,000
		(219,000	)		1,260,000			2,505,000			(1,239,000	)
(Loss) income before income taxes		(5,163,000	)		503,000			(47,563,000	)		(3,695,000	)
Income tax expense (benefit)		—			—			—			—
Net (loss) income	$	(5,163,000	)	$	503,000		$	(47,563,000	)	$	(3,695,000	)
Basic (loss) income per common share	$	(0.24	)	$	0.03		$	(2.23	)	$	(0.20	)
Basic weighted-average shares outstanding		21,419,000			18,966,000			21,334,000			18,044,000
Diluted (loss) income per common share	$	(0.24	)	$	0.03		$	(2.23	)	$	(0.20	)
Diluted weighted-average shares outstanding		21,419,000			19,432,000			21,334,000			18,044,000