-----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, Jth0nQJlnztqoGHEt4Da7rgfsrml4tAjJj6hcj4+1lKvZ5HVZdEFT1bBr3bYDUeq 16aWHi7Z639UvyUY4M51kg== 0000722839-96-000030.txt : 19961118 0000722839-96-000030.hdr.sgml : 19961118 ACCESSION NUMBER: 0000722839-96-000030 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961114 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-08662 FILM NUMBER: 96666041 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 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended: September 30, 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) (I.R.S. Employer ID No.) 7118 Beech Ridge Trail, Tallahassee, Florida 32312 (Address of principal executive offices) (Zip Code) (904) 668-8500 (Registrant's telephone number, including area code) 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 such shorter period that registrant was to require such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __________ No ___X_____ Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ___X____No ________ The number of shares outstanding of registrant's common stock, par value $.04 per share, as of November 13, 1996 was 14,803,018. Transitional Small Business Disclosure Format (Check one): Yes ________ No ___X____ Page 1 PROACTIVE TECHNOLOGIES, INC. Table of Contents Page No. PART I FINANCIAL INFORMATION Introduction 3 Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 4 September 30, 1996 and December 31, 1995 Condensed Consolidated Statements of Income for the Three Months Ended September 30, 1996 and 1995 5 Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 1996 and 1995 6 Notes to Condensed Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II OTHER INFORMATION Item 1. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURE 13 EXHIBIT INDEX 14 Page 2 Introduction As reported on Form 10-QSB on October 15, 1996 and on Form 8-K filed on February 12, 1996 (conforming copy filed on EDGAR on October 6, 1996), and Form 8-K/A filed (electronically) on October 10, 1996, on February 12, 1996, Proactive Technologies, Inc. ("PTE") acquired 100% of the issued and outstanding common stock of Capital First Holdings, Inc. ("Capital First"). In connection with the preparation and audit of PTE's financial statements for the fiscal year ending June 30, 1996, it was determined that such a transaction was a reverse acquisition, and would be treated, for financial reporting purposes, as the acquisition of PTE by Capital First. Under this treatment as a reverse acquisition, the historical information is that of Capital First. To be consistent with the reporting of the Form 10-KSB as a reverse acquisition, this Form 10-QSB for the three months ending September 30, 1996 contains financial information for Capital First for the three months ending September 30, 1995 since comparisons to the three months ending September 30, 1995 reported in Form 10-QSB filed May 17, 1996 (conforming copy filed on EDGAR on October 12, 1996) are not applicable. Page 3 ITEM I. FINANCIAL INFORMATION ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES (NOTE 1) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (000's)
September 30, June 30, 1996 1996 ASSETS: Real estate inventories $36,185 $22,491 Cash and equivalents 585 271 Property and equipment, net 1,757 1,338 Deferred income taxes 294 284 Other assets 3,411 251 Investments 2,983 2,714 Notes Receivable 4,790 1,117 ______________ _____________ TOTAL ASSETS 50,005 28,466 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable $ 23,543 $17,709 Accounts payable and accrued expenses 966 1,108 Income taxes payable 1,486 1,099 Deferred revenue 1,467 824 Deferred compensation payable 439 559 Customer deposits 768 740 ______________ ____________ Total Liabilities $ 28,669 22,039 Minority Interest $ 51 59 Stockholders' Equity: Common stock - par value $.04 per share; authorized 60,000,000 shares; issued 14,803,018 $ 674 496 Paid-in capital 19,045 5,317 Retained earnings 1,566 555 ________ ______ Total Stockholders' Equity 21,285 6,368 ________ _____ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,005 $ 28,466 ======= ====== See Accompanying Notes to Condensed Consolidated Financial Statements
Page 4 PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES (NOTE 1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (000's) except for per share and number of shares information
Three Months Ended September 30 1996 1995 Net sales $ 6,109 $ 7,331 Cost of sales 3,822 6,087 Selling, general and administrative expenses 586 999 ____________ __________ Income from operations 1,701 245 Other Income (deductions): Interest (expense) (365) (927) Other income, net 107 (69) Minority Interest (21) 0 ____________ ___________ Income (loss) from continuing operations before income taxes 1,422 (751) _____________ __________ Income tax expense 411 0 _____________ __________ Net income (loss) $ 1,011 $ (751) ============= ============ Net income (loss) per common and common equivalent share - primary and fully diluted $ .07 (.06) ============= ============ Adjusted shares outstanding primary and fully diluted 14,306,142 10,739,405 ============= ============ See Accompanying Notes to Condensed Consolidated Financial Statements
Page 5 PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended September 30 1996 1995 (000's) Net Cash (used in) provided by operating activities $ (480) $ 1,362 __________ ________ Cash Flows from Investing Activities Distribution from real estate ventures 21 0 Investment in real estate ventures 2 0 Purchase of investments in equity securities (66) 0 Purchase of property and equipment (294) (1) Acquisitions of businesses net of cash 84 0 __________ ________ Net Cash used in investing activities (253) (1) __________ ________ Cash Flows from Financing Activities: Proceeds from exercise of stock warrants 890 0 Proceeds from issuance of notes payable 1,616 2,101 Repayments of amounts borrowed (1,644) (3,466) __________ _________ Net Cash provided by (used by) financing activities 862 (1,365) __________ _________ Net Increase (Decrease) in Cash and Cash Equivalents 129 (4) __________ _________ Cash and Cash Equivalents, Beginning of Period 154 179 __________ _________ Cash and Cash Equivalents, End of Period $ 283 $ 175 ========== ========= See Accompanying Notes to Condensed Consolidated Financial Statements
Page 6 Notes to Condensed Consolidated Financial Statements (1) Basis of Financial Presentation On February 12, 1996, Proactive Technologies, Inc. ("PTE" or the "Company") acquired 100% of the outstanding common stock of Capital First Holdings, Inc. ("Capital First") in a reverse acquisition in which Capital First's sole shareholder acquired voting control of the Company. The acquisition was accomplished through the issuance of approximately 8,559,000 shares of PTE stock which represented approximately 80% of the voting stock of PTE immediately after the transaction. For accounting purposes, the acquisition has been treated as a recapitalization of Capital First with Capital First as the acquiror. The historical financial statements prior to February 12, 1996 are those of Capital First. As a result of the acquisition, Capital First effectively changed its accounting year end to June 30 from December 31. Capital First is a developer of residential subdivisions with its principal operations in Tallahassee, Florida. Pro forma financial information is not provided since the continuing operations Capital First acquired from PTEK (i.e., Keystone Laboratories, Inc.) are insignificant. The accompanying unaudited consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim period presented. The accompanying consolidated financial statements and related notes should be read in conjunction with the audited financial statements of Capital First Holdings, Inc. (the "Company"), and notes thereto, as found in Form 8-KA for the year ended December 31, 1995, and the Company's Form 10-KSB for the six months ended June 30, 1996. A copy of such consolidated financial statements and notes thereto may be obtained by writing to the Company. (2) Acquisitions Effective August 12, 1996, the Company acquired all of the voting common stock of Flowers Properties, Inc., Highland Properties, Construction Company, Inc., and Barrier Dunes Development Corporation in exchange for approximately 2,565,000 shares of PTE common stock with a stated value of $3.50 per share. Under the agreement, the number of shares may be adjusted in the event the quoted market price of the shares at December 31, 1996 is less than $3.50 per share and a final audited reconciliation of a current net asset value of at least $8,977,500 exists. The Company is required to issue such additional shares as necessary for the aggregate value of the total shares to approximate the original purchase price. The purchased corporations operations principally consist of land development in Middle and South Georgia, and Cape San Blas, Florida. The land owned by these corporations has been added to the land inventory of the Company. This acquisition will be accounted for under the purchase method of accounting. Effective September 16, 1996, the Company acquired eighty two per cent Page 7 PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements September 30, 1996 (continued) (82%) of the issued and outstanding shares of QuinStone Industries, Inc. In exchange for 750,000 shares of PTEK voting common stock. Additionally, the Company has agreed to file a registration statement within the next year in order to register the shares issued under the agreement and is contingently obligated to issue an additional 225,000 shares of restricted stock should this registration not occur. QuinStone Industries is a manufacturer of synthetic stone and marble fixtures with a plant located in Quincy, Florida. This acquisition will be accounted for under the purchase method of accounting. During April, 1996, the Company acquired for investment purposes approximately 8.1% of the issued and outstanding shares of Killearn Properties, Inc.(AMEX "KPI"). KPI is in the business of real estate development in the Stockbridge, Georgia area. The Company filed its Schedule 13D regarding this event on April 25, 1996. In May 1996, PTEK proposed a transaction with KPI whereby KPI would exchange certain assets (consisting of a golf course and country club, a newly constructed inn and certain joint venture interests, which would be placed in a newly formed wholly- owned subsidiary of KPI) to KPI's then Chairman of the Board and Chief Executive Officer, for his approximate 42% ownership interest in KPI, or 551,321 shares of KPI voting common stock. In connection with this proposed transaction, PTEK would loan KPI $2 million dollars, which would be used to facilitate the transfer of the assets. During August 1996, PTE acquired approximately 85,950 additional shares of KPI stock, increasing its ownership interest in KPI to approximately 22%. On July 29, 1996, PTE proposed to KPI's Board of Directors that PTEK be retained to provide sales personnel and sales training techniques in order to improve the sales of residential lots. In addition, PTE proposed that KPI's board include two additional representatives of PTE. On July 31, 1996, KPI's Board of Directors approved the transaction and the PTE proposals, and an agreement was entered into on August 2, 1996 between KPI and KPI's Chairman. The split-off transaction was voted upon and approved at KPI's shareholders' meeting held on September 30, 1996. At the Board meeting following the shareholders' meeting, Mark A. Conner was named Chairman of the Board of KPI. Additionally, Mark A. Conner, President of the Company, was elected to the KPI Board of Directors, and Langdon S. Flowers, Jr., and Robert E. Maloney, Jr. were named as Directors of KPI. After completion of the proposed split-off and the return of the 551,321 to KPI's treasury, PTE's holdings in KPI will be increased to approximately 35%. (3) Debt As a result of the Flowers acquisitions noted above, the Company assumed notes payable in the approximate aggregate amount of $7,000,000, which are secured by the land owned by the three Flowers entities. Further, on August 20, 1996, the Company borrowed $875,000 from lenders to finance the acquisition of some land in Tallahassee, which the Company intends to develop. Page 8 PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements September 30, 1996 (continued) (4) Subsequent Events On November 1, 1996, J.T. Williams, Jr., President of Killearn Properties, Inc. (AMEX: KPI)resigned his position as President and the KPI Board named Mark A. Conner as President and Chief Executive Officer. The Company anticipates the closing of the transaction with KPI and Williams to be on November 16, 1996, or shortly thereafter. PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On February 12, 1996, Proactive Technologies, Inc. ("PTEK")acquired 100% of the outstanding common stock of Capital First Holdings, Inc. ("Capital First") in a reverse acquisition in which Capital First's sole shareholder acquired voting control of the Company. For financial reporting purposes, the transaction is treated as the acquisition of PTEK by Capital First. Accordingly, the historical results of operations and financial position are those of Capital First and include the accounts of PTEK from February 12, 1996. As a result of the acquisition, Capital First effectively changed its accounting year end to June 30 from December 31. Worldwide, a manufacturer of decorative concrete, became an 80% owned subsidiary of the Company on February 10, 1996. On September 30, 1996, the Company purchased 15% of the remaining Worldwide stock from Garat Oates, bringing its ownership percentage to 95%. Included in this report is the September 30, 1996 Balance Sheet of Worldwide and the results of operations from July 1, 1996 to September 30, 1996. Sixty percent of the net income (loss) is included in the Company's results of operations with the remaining forty percent allocated to Worldwide's minority shareholders. QuinStone Industries, Inc., ("QuinStone") a manufacturer of synthetic building products, became an 82% owned subsidiary of the Company on September 9, 1996. Included in this report is the September 30, 1996 balance Sheet of QuinStone and the results of operations from September 9, 1996 to September 30, 1996. Results of Operations Three months ended September 30, 1996 compared to three months ended September 30, 1995. Net sales decreased $1,222,000, or 16.67% from the first three months of 1995 to the first three months of 1996. This decrease is due to several factors. First, sales of approximately $550,000 from the Golden Eagle Country Club for membership fees, restaurant sales, and other income were included in the September 30, 1995 figures. The Country Club was sold in October of 1995 and is no longer an asset of the Company. Further, September 30, 1995 figures contained condominium sales of $1,500,000 from a project which has sold out. Page 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued Cost of Sales decreased $2,265,000, or 37.2%, during the three month period ended September 30, 1996, over the same period in 1995, which was due primarily to a gross profit margin of approximately 61% with regard to the sale of the commercial property in the Piney Z for $3,500,000. The Company has a 67% ownership in Piney Z, which translates to $2,345,000 in revenue with a basis of $900,000. Lots sales profit margins remained fairly constant at 20% to 21% between the three month periods ending September 30, 1996 and 1995. Said profit margin between 19% and 21% is expected to be maintained assuming no great fluctuations in the current interest rates. Selling, general, and administrative ("SG&A") expenses decreased $413,000, during the three months ended September 30, 1996 as compared to the three months ended September 30, 1995. Management attributes this cost decrease to two primary factors: First, for the three months ended September 30, 1995, Golden Eagle Country Club, no longer a part of the Company, had SG&A expenses of approximately $740,000. Remaining SG&A expense was about 3.6% of sales. SG&A for the three months ended September 30, 1996 were about 9.6%, fairly constant with necessary additional professional and other administrative fees associated with being a public corporation. Interest expense decreased $562,000 or 60.6%, primarily due to the reduction in overall debt, and the acquisition of new debt which is now capitalized. Other income was up $176,000 at September 30, 1996 from September 30, 1995. This increase includes $80,000 in utility rebates from the City of Tallahassee. Also, During the three months ended September 30, 1995, the Company recorded an approximate $63,000 loss from the sale of Northhampton Office Park in August 1995. Liquidity The Company believes that, for the foreseeable future, funds from the Company's operations will be sufficient to support its current operations. As a result of the acquisitions by Capital First and of Worldwide and QuinStone, along with the sale of Keystone, it is anticipated that the overall sales and net income of the Company will increase significantly in the near future. The Company intends to concentrate its future efforts on expanding the volume of business of Capital First in Tallahassee and Vero Beach, Florida areas and of developing the businesses of Worldwide and QuinStone. The Company's investment in Killearn Properties, Inc. will allow the Company to expand into the Atlanta area. The Company is continuing to explore other possible acquisitions in construction-related industries which will complement its existing businesses, as well as to search out other areas for residential and commercial development in other areas. Financial Condition Total assets increased a net total of $21,539,000 from December 31, 1995 to September 30, 1996; Real estate inventories increased $13,694,000 Page 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued primarily due to the Flowers acquisitions which brought $ 15,000,000 into the land inventories. Notes receivable increased $3,673,000 from $1,117,000 at June 30, 1996 to $4,790,000 at September 30, 1996. The bulk of this increase is due primarily the following factors: a $1,500,000 one year note from the sale of the Piney Z commercial property; approximately $1,300,000 in subscriptions receivable for the issuance of stock pursuant to warrants to raise capital; and approximately $800,000 was acquired onto the books of the Company from the Flowers transaction. Other assets increased greater than $3,000,000, due to the addition of QuinStone Industries, including approximately $2,750,000 in goodwill. Investments increased approximately $269,000 as a result of the acquisition of additional shares of Killearn Properties, Inc. (AMEX:KPI), bringing its total investment to 21.9% of the total issued and outstanding shares of KPI. Total liabilities increased $5,834,000 from June 30, 1996 to September 30, 1996, primarily due to the following factors: The Flowers acquisitions brought an additional $7,000,000 in notes payable to the books of the Company; a net decrease of approximately $1,600,000 in notes payable as a result of payment on overall debt; a net increase in income taxes payable of $387,000 to $1,486,000 at September 30, 1996 from $1,099,000 at June 30, 1996; Deferred Compensation payable decreased $120,000 to $439,000 at September 30, 1996 from $559,000 at June 30, 1996 due to a distribution. Total Shareholders' equity increased $14,917,000 to $21,285,000 at September 30, 1996 from $6,368,000 at June 30, 1996. The increase was due primarily to the increase in paid in capital as a result of the issuance of common stock upon exercise of warrants as well as the Flowers acquisition Management hopes to continue to grow this business as well as its manufacturing division through its acquisitions of Decocrete and QuinStone, and will continue to look explore other possible acquisitions to complement its existing businesses. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings None ITEM 4. Submission of Matters to a Vote of Security Holders On February 12, 1996 in a Consent to Action in lieu of a special meeting of shareholders of Proactive Technologies, Inc., the holders of a majority of shares of voting stock agreed to elect the following directors of the corporation: Mark A. Conner, Chairman of the Board, Joel C. Holt, and Robert Maloney. The directors then elected Mark A. Conner President and Chief Executive Officer of the Company. Joel C. Holt subsequently resigned his position as a Board of Director. Page 11 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: The following reports on Form 8-K or Form 8-K/A were prepared and filed during the quarter ended September 30, 1996: (1) September 26, 1996: 8-K: The Company engaged Coopers & Lybrand LLP,of Atlanta, Georgia as its new certifying accountant. The engagement was due to the change of the Company's management as a result of the acquisition of Capital First Holdings, Inc. (See Form 8-K filed on February 12, 1996) and the relocation of the Company from Tulsa, Oklahoma to Tallahassee, Florida. The report of the former accountant, Guest & Co., P.C. of Tulsa, Oklahoma, who did the report accompanying the Company's financial statements for the fiscal years ended June 30, 1995 and June 30, 1994 did not contain any adverse opinion or disclaimer of opinion. The Decision of the Company to engage new certifying accountants was approved by the Company's Board of Directors. The Company is not aware of any unresolved disagreements with Guest & Company, P.C., with regard to any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. (2) September 30, 1996 - 8-K/A: The Company filed audited financial statements for Capital First Holdings, Inc. for its fiscal year ended December 31, 1995 after the reverse acquisition of Capital First (See Form 8-K filed on February 12, 1996) Page 12 SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PROACTIVE TECHNOLOGIES, INC. (Registrant) Date: November 14, 1996 By: /s/ Mark A. Conner -------------------- Mark A. Conner, President, and Chief Executive Officer In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PROACTIVE TECHNOLOGIES, INC (Registrant) Date: November 14, 1996 By: /s/ Mark A. Conner -------------------------- Mark A. Conner, President, and Chief Executive Officer Page 13 EXHIBIT INDEX Exhibit No. Description Page No. 27 Financial Data Schedule 15 Page 14 EX-27 2
5 6-MOS SEP-30-1996 SEP-30-1996 585,205 303,542 4,790,359 0 36,184,677 41,560,241 1,757,478 0 50,005,000 5,948,726 22,771,432 674,017 0 0 20,610,984 50,005,000 6,109,152 6,109,152 3,822,019 4,861,159 0 0 365,205 1,422,966 411,985 1,010,981 0 0 0 0 .059 .059
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