-----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, I69er9aZ99D5Bc9tyKxbhlXd5K4774Jk0ttLTUSZ5JPBzeQniLFtB0/2Qr4/SBxz LPKf0miGHMBpU/XuzHzm/w== 0000722839-96-000020.txt : 19961011 0000722839-96-000020.hdr.sgml : 19961011 ACCESSION NUMBER: 0000722839-96-000020 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19961010 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROACTIVE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000722839 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 232265039 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08662 FILM NUMBER: 96642003 BUSINESS ADDRESS: STREET 1: 7118 BEECH RIDGE TRAIL STREET 2: SUITE 402 CITY: TALLAHASSEE STATE: FL ZIP: 32312 BUSINESS PHONE: 9046685800 MAIL ADDRESS: STREET 1: 711 BEECH RIDGE TRAIL CITY: TALLAHASSEE STATE: FL ZIP: 32312 FORMER COMPANY: FORMER CONFORMED NAME: KEYSTONE MEDICAL CORPORATION DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: KEYSTONE MEDICAL CORP INC DATE OF NAME CHANGE: 19910103 8-K/A 1 U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________ FORM 8-K/A __________________________ Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report February 12, 1996 __________________________ Commission File Number 1-8662 PROACTIVE TECHNOLOGIES, INC. (formerly KEYSTONE MEDICAL CORPORATION) (Exact name of registrant as specified in its charter) Delaware 23-2265039 (State of Incorporation) (IRS Employer Identification No.) 7118 Beech Ridge Trail Tallahassee, Florida 32312 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (904) 668-8500 Item 1. CHANGES IN CONTROL OF REGISTRANT (a) On February 12, 1996, Proactive Technologies, Inc. (the "Company"), a publicly-traded Delaware corporation (Nasdaq symbol "PTEK") completed its acquisition all of the issued and outstanding shares of common stock of Capital First Holdings, Inc. and its subsidiaries ("Capital") from Mark A. Conner in exchange for approximately eighty percent (80%) of the issued and outstanding shares of common stock of the Company. In connection with such acquisition, Mr. Conner was also elected Chairman of the Board and President and Chief Executive Officer of the Company. Capital is a real estate developer in Florida which designs and develops single-family subdivisions for residential lots and condominiums principally in the Tallahassee, Leon County and Vero Beach areas. For the twelve (12) month period ended December 31, 1995, Capital generated approximately $30.5 million in revenues and approximately $3.3 million in net income before tax. As of December 31, 1995, Capital owned approximately $26 million in Total Assets. The Company's other primary operating subsidiary, Keystone Laboratories, Inc., will continue to operate its forensic using drug screening and confirmatory testing laboratory in Asheville, North Carolina. Item 2. Acquisition or Disposition of Assets In connection with the Company's acquisition of all of the outstanding common stock of Capital First, the Company acquired all of the real estate and other assets of Capital First. See discussion of this acquisition in Item 1 above, and Financial Statements in Item 7, below. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits The following are included in this Item 7 with respect to Capital First Holdings, Inc. and Subsidiaries: Report of Independent Accountants. Consolidated Balance Sheet, December 31, 1995. Consolidated Statement of Operations and Retained Earnings for the year ended December 31, 1995. Consolidated Statement of Cash Flows for the year ended December 31, 1995. Notes to the Consolidated Financial Statements. Report of Independent Accountants We have audited the accompanying consolidated balance sheet of Capital First Holdings, Inc. and Subsidiaries as of December 31, 1995, and the related consolidated statements of operations and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Capital First Holdings,Inc. and Subsidiaries as of December 31, 1995, and the consolidated results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Atlanta, Georgia April 19, 1996 Capital First Holdings, Inc. and Subsidiaries Consolidated Balance Sheet December 31, 1995 ASSETS Real estate inventories: Houses and condominiums $1,749,448 Developed lots 8,912,142 Land under development 6,887,158 Land 2,306,893 ----------- 19,855,641 Cash and cash equivalents, including restricted cash of approximately $237,717 292,935 Notes receivable 265,211 Property and equipment, net 985,385 Deferred income taxes 723,312 Other assets 184,148 ----------- Total assets $22,306,632 ============ LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Notes payable $15,127,200 Accounts payable and accrued expenses 850,733 Customer deposits 156,222 Income taxes payable 1,611,928 Deferred revenue 1,578,064 Deferred compensation payable 923,382 ----------- Total liabilities 20,247,529 Shareholder's equity: Commitments and contingent liabilities Common stock, $.001 par value, 10,000,000 shares authorized, 6,000,000 issued and outstanding 6,000 Additional paid-in capital 595,210 Retained earnings 1,457,893 ----------- Total shareholder's equity 2,059,103 ----------- Total liabilities and shareholder's equity $22,306,632 ============ The accompanying notes are an integral part of these consolidated financial statements. Capital First Holdings, Inc. and Subsidiaries Consolidated Statement of Operations and Retained Earnings for the year ended December 31, 1995 Sales $29,970,961 Cost of sales 23,701,542 ----------- Gross profit 6,269,419 Selling, general and administrative expenses 1,577,420 Interest expense 2,435,605 Other, net (480,132) ----------- Income before income taxes and discontinued operations 2,736,526 Income tax expense 980,501 ----------- Net income before discontinued operations 1,756,025 Discontinued operations: Loss from operations of Golden Eagle (less applicable income tax benefit of $186,996) 309,936 Loss on disposal of Golden Eagle (less applicable income tax benefit of $67,862) 112,477 ----------- Net income 1,333,612 Retained earnings, beginning of the year 124,281 ------------ Retained earnings, end of the year $1,457,893 ============ The accompanying notes are an integral part of these consolidated financial statements. Capital First Holdings, Inc. and Subsidiaries Consolidated Statement of Cash Flows for the year ended December 31, 1995 Cash flows from operating activities: Net income $1,333,612 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 301,385 Loss on completed venture 200,534 Loss on disposal of Golden Eagle 180,339 Loss on impairment of real estate 535,683 Decrease in real estate inventories 8,932,661 Decrease in deferred income taxes 325,980 Decrease in accounts receivable 301,011 Increase in notes receivable (137,524) Decrease in other assets 166,868 Decrease in accounts payable and accrued expenses (731,531) Decrease in customer deposits (513,857) Decrease in deferred compensation payable (301,618) Increase in deferred revenue 1,143,422 Increase in accrued income taxes 176,524 ------------ Net cash provided by operating activities 11,913,489 ----------- Cash flows from investing activities: Proceeds from disposal of Golden Eagle 3,116,003 Distribution from completed venture 497,752 Investment in real estate ventures (162,562) Purchase of property and equipment (245,482) Proceeds from disposal of property, plant and equipment 56,482 Decrease in due to affiliates (2,526,889) ------------ Net cash provided by investing activities 735,304 ------------ Cash flows from financing activities: Repayment of amounts borrowed (17,672,939) Proceeds from issuance of notes payable 4,927,451 ------------ Net cash used in financing activities (12,745,488) ------------ Net decrease in cash and cash equivalents (96,695) Cash and cash equivalents at beginning of period 389,630 ------------ Cash and cash equivalents at end of period $292,935 ============ Supplemental disclosures of cash flow information: Cash paid during period for: Interest $2,302,657 Taxes $549,119 The accompanying notes are an integral part of these consolidated financial statements. Capital First Holdings, Inc. and Subsidiaries Notes to the Consolidated Financial Statements 1. Summary of Significant Accounting Policies: Description of the Business Capital First Holdings, Inc. and Subsidiaries (the "Company") is a developer of land for sale to residential home-builders and individuals with its principal operations located in Northern Florida. As of December 31, 1995,the Company owns property in approximately 35 subdivisions. The Company was formed on January 27, 1994 primarily to acquire Capital First, Inc., Marketprice Properties, Inc., Jamesmark, Inc., North Beach Holdings, Inc., and Golden Eagle of Tallahassee, Inc. (the "Subsidiaries"). The acquisition of the Subsidiaries was effective January 31, 1994 and occurred through the issuance of 6,000,000 shares of the Company's common stock for all of the outstanding stock of the acquired companies. On December 28, 1995, the Company was party to a stock purchase agreement between the sole shareholder and Proactive Technologies, Inc. ("PTEK"), a Delaware Corporation. Under the terms of the agreement, which closed on February 15, 1996, PTEK purchased all of the outstanding stock of the Company from the sole shareholder in return for a specified number of shares of previously unissued PTEK common stock. Subsequent to this transaction, the sole shareholder of the Company owned approximately 80% of PTEK, and the Company became a wholly owned subsidiary of PTEK. Principles of Consolidation The financial statements include the Company and its wholly-owned subsidiaries. Investments in which the Company does not own a majority interest but exerts significant but not controlling influence are reported under the equity method. All significant intercompany balances and transactions have been eliminated. Cash and Cash Equivalents The Company classifies as cash equivalents any investments which can be readily converted to cash and have an original maturity of less than three months. At times cash and cash equivalent balances at a limited number of banks and financial institutions may exceed insurable amounts. The Company believes it mitigates its risks by depositing cash or investing in cash equivalents in major financial institutions. The Company is required under certain mortgages to maintain deposits as collateral. Such balances are reflected as restricted cash on the accompanying balance sheet. Real Estate Inventories Real estate inventories are recorded at the lower of cost or estimated net realizable value. Expenditures for land development are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific lots based on a ratio of the lot sales price to the estimated total project sales price times the total project costs incurred. Interest costs and real estate taxes are capitalized while development is in progress. Total interest capitalized in 1995 was approximately $760,000. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line basis over the assets' estimated useful lives. Expenditures for maintenance and repairs are expensed as incurred and expenditures for improvements which extend the useful life or add value to the asset are capitalized. Sales and disposals of assets are recorded by removing the related cost and accumulated depreciation amounts with any resulting gain or loss reflected in income. Revenue Recognition The Company records revenue on the sale of real estate properties once the Company has fulfilled its obligation under the sales contract and is not obligated to perform significant activities after the sale to earn its profit. Revenue is only recognized when the collectibility of the sales price is reasonably assured. When land is sold prior to the completion of development by the Company, the related revenue and profit is recognized under the percentage- of-completion method as the development is completed. Generally, the Company does not provide financing on its sales of property. Utility rebates due from the City of Tallahassee for water and sewer lines built by the Company are recognized in income in the year the rebates are fixed and determinable. During 1995, rebate income of approximately $506,000 is recorded as a reduction of cost of sales. Income Taxes The Company's income taxes are accounted for in accordance with the liability method as provided under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Accordingly, deferred income taxes are recognized for the tax consequences of differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any benefits that, based on available evidence, are not expected to be realized. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Property and Equipment: Property and equipment consists of the following: Land and land improvements $253,267 Buildings and building improvements 403,426 Vehicles 277,089 Furniture, fixtures and equipment 205,538 --------- 1,139,320 Accumulated depreciation (153,935) --------- $985,385 ========= 3. Investments In Real Estate Ventures: The Company has certain investments in real estate partnerships formed to manage specific development projects. The investment balances at December 31, 1995 are included in other assets and consist of the following: Piney-Z, Ltd., 33 1/3% interest $103,000 Countryside Partnership, 50% interest 69,563 --------- $172,563 ========= The Company is a general partner in these partnerships and has a significant but not controlling interest. Day-to-day operations are managed by the other partner with major transactions, such as the acquisition, disposition or financing of property requiring joint approval. As general partner, the Company is liable for the debt and obligations of the partnerships. Piney-Z, Ltd. was formed on October 26, 1995 and was substantially inactive during 1995. Summarized financial information for Countryside Partnership as of and for the year ended December 31, 1995 is as follows: (Unaudited) Real estate $1,549,740 Other assets 4,339 --------- Total assets $1,554,079 Mortgage debt 1,186,351 Other liabilities 204,318 --------- 1,390,669 Partnership equity 163,410 --------- $1,554,079 =========== Revenues and net income $27,007 =========== During 1995 Northampton Partners, a partnership in which the Company held a 50% interest, completed the development and sale of its land, settled all remaining liabilities and distributed its equity to the Partners. The Company received net proceeds of approximately $498,000 and recorded a loss of approximately $201,000. The loss is included in other, net on the statement of operations and retained earnings. 4. Mortgage loans payable: At December 31, 1995 mortgage debt consisted of the following: Notes payable to Killearn Properties, Inc. ("KPI") with interest rates ranging from 7% to 10% and varying maturity dates through 1998. Interest is paid either quarterly or semi-annually. The notes were in default as certain scheduled principal payments had not been made; accordingly, on December 29, 1995, the agreement was modified to waive any existing default and modify the payment terms such that principal and interest payments are due when lots of the related collateral are released for sale. These notes are collateralized by portions of the developed lots, land under development and land. $7,172,473 Notes payable to financial institutions with interest rates ranging from 9.75% to 10.5% with several of the notes having variable interest rates at prime plus 1% or 1 1/2%. Interest is due monthly and principal is due in balloon payments at varying dates through 1997. The notes are collateralized by portions of the developed lots, land under development and land. 6,270,318 Notes payable to financial institutions with interest rates ranging from 7.25% to 8%. Payment terms differ with some paying interest monthly with balloon payments in 1996 and others paying principal and interest monthly with maturity dates from 2013 to 2025. The notes are collateralized by portions of the houses and condominiums. 1,151,513 Other notes payable 532,896 ----------- $15,127,200 All indebtedness which is collateralized by real property include contingent principal and interest payments due when lots of the related collateral are released for sale. Substantially all of the notes are guaranteed by the sole stockholder. Additionally, approximately $1,733,000 of the notes payable to financial institutions are guaranteed by KPI. The Company has approximately $1.5 million available under existing loan arrangements for use in completing development of certain of its properties. The notes payable to KPI and approximately $1,733,000 of the notes payable to financial institutions are collateralized by the stock of the Company with KPI's collateral position being subordinate. Maturities of the notes payable, some of which are dependent on the sale of lots, are as follows at December 31, 1995: Year Amount 1996 $9,999,034 1997 4,393,572 1998 13,854 1999 14,928 2000 16,087 2001 and thereafter 689,725 ----------- Total $15,127,200 ============ 5. Income Taxes: The components of income tax expense attributable to continuing operations at December 31, 1995 are as follows: Federal State Total Current $558,856 $95,665 $654,521 Deferred 394,665 (68,685) 325,980 --------- -------- --------- $953,521 $26,980 $980,501 ========= ========= ========= Total income tax expense attributable to continuing operations differs from the amount computed by applying the U.S. federal statutory tax rate to pretax income from continuing operations primarily due to the effect of state taxes. Income taxes payable at December 31, 1995 includes taxes payable from 1994 of approximately $1,212,000 which were paid in February 1996. The components of the net deferred tax asset at December 31, 1995 are as follows: Real estate inventories $(217,232) Deferred compensation 347,192 Deferred revenue 593,352 ---------- $723,312 ========== The valuation allowance at December 31, 1994 of approximately $138,000 was recognized into income during 1995 due to the profitable operations of the Company. 6. Commitments and Contingencies: The Company is obligated under a purchase agreement with KPI to purchase certain lots for a set price per lot. As the Company locates a third party buyer for each lot, the Company purchases the lot from KPI and subsequently sells it to the third party. During 1995, the Company purchased 18 lots from KPI for approximately $566,000 and earning revenues of approximately $628,000. As of December 31, 1995, 21 lots with an approximate purchase price of $641,000 remained under this commitment. 7. Related Party Transactions: During the year, the Company made aggregate advances and repayments ofloans of approximately $2.1 million to the sole stockholder, approximately $605,000 to affiliated companies, and approximately $1.6 million to a former stockholder. All related party advances were repaid during 1995 either through cash payments or increases in compensation expense to the sole stockholder. In March 1995, the sole stockholder of the Company acquired from the Company's then other stockholder, the remaining 50% of the outstanding stock of the Company. The Company has a compensation agreement with the former stockholder which resulted in the Company agreeing to pay compensation to the former stockholder of $1.4 million for services rendered. The $1.4 million is payable in five equal, monthly payments of $10,000 made throughout 1995 and in $4,000 payments for each lot sale made in specified developments. During 1995 a total of $412,000 was paid under this compensation agreement. Based on an imputed interest rate of 10%, total interest incurred in 1995 amounted to approximately $133,000 and the remaining principal balance at December 31, 1995 equals approximately $882,000 and is included in deferred compensation payable. Additionally, as part of the compensation agreement, a payable of $65,000 was established for utility rebates to be passed through to the former stockholder. Approximately $24,000 of these rebates were paid during 1995. The remaining payable of approximately $41,000 is included in deferred compensation payable. 8. Concentration of Credit Risks: The Company currently utilizes only one vendor in the development of its land inventories. Although there are a limited number of development companies in the area, management believes that other suppliers could provide similar services on comparable terms. A change in vendors, however, could cause a delay in development and a possible loss of sales, which would adversely affect operating results. 9. Discontinued Operations: In a prior year, the Company acquired a golf and country club in connection with its purchase of contiguous land which it planned to develop. The Company operated the country club in order to ensure the retention of value and maintenance of certain standards to support the value in the surroundin property. On September 27, 1995, the Company sold the country club to an unrelated party for aggregate proceeds of approximately $3.1 million. The Company had previously provided a reserve against the valuation of the property of $1.5 million and the net loss realized during 1995, after giving effect to the provision previously recorded, was approximately $180,000. The operating results of Golden Eagle have been presented as a discontinued operation for the period in 1995 up to the date sold and the resulting loss on disposal has been presented as the loss on disposal of discontinued operation in the accompanying financial statements. 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 hereunto duly authorized. PROACTIVE TECHNOLOGIES, INC. Date: 10/9/96 By: /s/ Mark A. Conner Mark A. Conner President -----END PRIVACY-ENHANCED MESSAGE-----