-----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, BidR3IvNpt3wLGSZ6KlJhB399ssEdWPsKocNpzqWCLGE7zM7wdS3h0RDJch83VTw ZtDJTUg3w7+mluSQgaVvLg== 0000722839-97-000009.txt : 19970318 0000722839-97-000009.hdr.sgml : 19970318 ACCESSION NUMBER: 0000722839-97-000009 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970317 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08662 FILM NUMBER: 97557621 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: 7118 BEECH RIDGE TRAIL STREET 2: SUITE 402 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/A 1 FORM 10-QSB/A 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: December 31, 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 February 1, 1997 was 13,229,342. Transitional Small Business Disclosure Format (Check one):Yes ________ No ___X____ PROACTIVE TECHNOLOGIES, INC. Table of Contents Page No. PART I FINANCIAL INFORMATION Item 1.(a) Introduction 3 Item 1.(b) Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance 4 December 31, 1996 Condensed Consolidated Statements of Income for the Three Months and Six Months Ended December 31, 1996 and 1995 5 Condensed Consolidated Statements of Cash Flows for the Three Months and Six Months Ended December 31, 1996 and 1995 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II OTHER INFORMATION Item 1. Legal Proceedings 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURE 13 EXHIBIT INDEX 14 Item 1.(a) Introduction As previously reported 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. Therefore, this Form 10-QSB for the three months and six months ending December 31, 1996 contains financial information for Capital First for the three months and six months ending December 31, 1995 since comparisons to the three months and six months ending December 31, 1995 reported in Form 10-QSB filed May 17, 1996 (conforming copy) filed on EDGAR on October 12, 1996) are not applicable. On November 16, 1996, the Company and the original owners of the 82% of QuinStone Industries, Inc. mutually decided to rescind its original agreement whereby the Company acquired 82% of QuinStone Industries, Inc. in exchange for 750,000 newly issued shares of restricted common stock, together with a registration rights agreement which provided for 225,000 additional shares to be issued if the restricted stock was not registered within one year. Following the rescission, the Company returned and signed over all shares of QuinStone Industries it had received, and received back its 750,000 shares. Additionally, and contemporaneously, James H. Dahl rescinded his agreement with the Company whereby in exchange for his 81,700 shares of Killearn Properties, Inc. stock he received 326,800 shares of Company stock. After the rescission, the Company returned the 81,700 shares of KPI stock and received back its 326,800 shares of Company stock. Because of the rescission, no operations of QuinStone Industries are reported in this Form 10-QSB. Additionally, the Company's interest in Killearn Properties, Inc. has been reduced by 81,700, and the weighted number of outstanding shares has been reduced accordingly to account for the return of the above shares from the rescission of the QuinStone agreement and James H. Dahl KPI agreement. PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES (NOTE 1) CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000's except for outstanding shares)
December 31, 1996 ASSETS: Real estate inventories $ 37,442 Cash and equivalents 207 Property and equipment, net 1,380 Deferred income taxes 310 Other assets 221 Investments 3,197 Notes Receivable 5,132 ___________ TOTAL ASSETS 47,889 ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable 24,444 Accounts payable and accrued expenses 914 Income taxes payable 1,070 Deferred revenue 1,462 Deferred compensation payable 410 Customer deposits 639 ______________ Total Liabilities 28,937 Minority Interest 51 Stockholders' Equity: Common stock - par value $.04 per share; authorized 60,000,000 shares; issued 13,229,342 529 Paid-in capital 16,565 Retained earnings 1,807 ____________ Total Stockholders' Equity 18,901 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 47,889 ============ See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES (NOTE 1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In 000's, except for earnings per share and outstanding shares)
Three Months Ended Six Months Ended December 31, December 31, 1996 1995 1996 1995 Net sales $ 2,128 $ 6,292 $8,128 $ 13,623 Cost of sales 1,278 4,970 5,047 11,057 Selling, general and administrative expenses 345 299 860 1,298 __________ _________ _______ ______ Income from operations 505 1,023 2,221 1,268 Other Income (deductions): Interest (expense) (352) (389) (717) (1,316) Other income, net 8 537 115 468 Minority Interest 20 0 (1) 0 __________ ________ ______ ________ Income from continuing operations before income taxes 181 1,171 1,618 420 Income tax expense 63 398 474 398 ___________ _______ _______ ______ Net income $ 118 $ 773 $ 1,144 $ 22 ========== ============ =========== ========== Net income per common and common equivalent share - primary and fully diluted $ .01 $ .07 $ .09 $ .002 =========== =========== =========== ========== Adjusted shares outstanding primary and fully diluted 13,229,342 10,739,405 13,229,342 10,739,405 Dividends Paid NONE NONE NONE NONE See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In 000's)
Six months ended December 31, 1996 1995 Net Cash provided by operating activities $ (938) $ 2,146 ____________ ________ Cash Flows from Investing Activities: Distribution from real estate ventures 32 0 Investment in real estate ventures (5) 0 Purchase of investments in equity securities (76) 0 Purchase of property and equipment (5) (1) ____________ _______ Net Cash used in investing activities ( 54) (1) Cash Flows from Financing Activities: Proceeds from exercise of stock warrants 1,119 0 Proceeds from issuance of notes payable 3,183 9,249 Repayments of amounts borrowed (3,257) (12,089) ____________ _________ Net Cash provided by (used by) financing activities 1,045 ( 2,840) _____________ _________ Net Increase (Decrease) in Cash and Cash Equivalents 53 ( 695) _____________ ____________ Cash and Cash Equivalents, Beginning of Period 154 988 _____________ ____________ Cash and Cash Equivalents, End of Period $ 207 $ 293 ============ ============ See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Form 10-QSB for the Three Months and Six Months Ended December 31, 1996 (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 PTE (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., 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, and Form 10-QSB/A for the three months ended September 30, 1996 (filed by EDGAR on February 12, 1997). 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. 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 (82%) of the issued and outstanding shares of QuinStone Industries, Inc. In exchange for 750,000 shares of PTE voting common stock. Additionally, the Company had agreed to file a registration statement within the next year in order to register the shares issued under the agreement and was contingently obligated to issue an additional 225,000 shares of restricted stock if this registration did not occur. QuinStone Industries is a manufacturer of synthetic stone and marble fixtures with a plant located in Quincy, Florida. On November 16, 1996, this transaction was rescinded by the mutual agreement of the Company and the entities/persons which the QuinStone Industries stock was originally acquired, thus canceling any and all remaining obligations to register shares under the original arrangement and terminating any penalties should registration not occur. Simultaneous with this rescission, the Company also transferred back 81,700 shares of Killearn Properties, Inc. (AMEX:KPI) stock to James H. Dahl in exchange for the return of 326,800 shares of Company stock which shares had been acquired during May and August 1996 as explained below. 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, PTE proposed a transaction with KPI whereby KPI would exchange certain assets (consisting of the golf course and country club, a newly constructed inn and certain joint venture interests) 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, PTE would be required to 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 PTE 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. On November 1, 1996, J.T. Williams, Jr., President, resigned his position and the Borad of Killearn Properties, Inc. (AMEX:KPI) named Mark A. Conner as President and Chief Executive Officer. The transaction was completed on November 16, 1996, at which time, PTE's holdings in KPI will be increased to approximately 25.6%. (3) Debt As a result of the Flowers acquisitions noted above, the Company assumed notes payable in the aggregate approximate amount of $7,000,000, which are secured by the land owned by the three Flowers entities. Further, on December 6, 1996, the Company borrowed $600,000 to develop Golden Eagle Phase VI; on October 28, 1996, the Company borrowed $170,000 from lenders to finance the acquisition of some land between Tallahassee and Havana, Florida, which the Company intends to develop. Lastly, on October 10, 1996, the Company borrowed $150,000 from lenders to finance the acquisition of 43.3 acres in Tallahassee, which the Company also intends to develop. (4) Earnings Per Share Primary and fully diluted earnings per share are calculated based on the following number of weighted average shares of stock outstanding including stock options as common stock equivalent. The weighted number of shares outstanding for the period presented was 13,229,342. This number was achieved after the return of both 750,000 shares of PTE stock to the Company for the rescission of the QuinStone Industries transaction, and 326,800 shares of PTE stock to the Company for the rescission of the purchase of 81,700 shares of KPI stock to James H. Dahl. 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. ("PTE")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 PTE by Capital First. Accordingly, the historical results of operations and financial position are those of Capital First and include the accounts of PTE 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 December 31, 1996 Balance Sheet of Worldwide and the results of operations from October 1, 1996 to December 31, 1996. QuinStone Industries, Inc., ("QuinStone") a manufacturer of synthetic building products, became an 82% owned subsidiary of the Company on September 9, 1996. This transaction was rescinded, however, on November 16, 1996. Consequently, the December 31, 1996 balance sheet of QuinStone and results of operations from October 1, 1996 to December 31, 1996 are not included in this report. Results of Operations Net sales decreased approximately $4,164,000, (66%) during the current three month period and $5,495,000 (40.3%) during the current six month period compared to the same period a year ago. The decrease in the current three month period is due to the inclusion of $400,000 in condominium sales in the three month period ending December 31, 1995 with no corresponding income in the current three month period due to the completion of the project. Further, real estate market conditions were generally down in the southeastern United States, and specifically in the northern Florida, both in the first and second quarter, resulting in a decline in overall general sales. Cost of sales, as a percentage of sales, was 60.0% for the current three month period and 78.9% for the same period a year ago. The cost of land sold for the current six month period decreased to 62.1% as compared to 81.2% for the same period a year ago. This increase in profit margin on net sales was primarily due to the sale of commercial property during the first three months of this fiscal year which had a gross profit margin of approximately 61%, as well as several residential lots during the current quarter, both of which contained an abnormally low basis. Profit margins between 19% and 24% are expected to be maintained assuming no great fluctuations in the current interest rates. Selling, general, and administrative ("SG&A") expenses increased $46,000, during the three months ended December 31, 1996 as compared to the three months ended December 31, 1995. Management attributes this cost increase to the addition of new salaried employees with the Company in sales and research. SG&A decreased $438,000 for the six months ended December 31, 1996 as compared to that same period one year ago, primarily due to an SG&A expense of approximately $740,000 in the first quarter last year, which was attributable to Golden Eagle Country Club, which is no longer a part of the Company. Remaining SG&A was about 4% of sales. SG&A for the six months ended December 31, 1996 was about 10.6% of sales, fairly constant with necessary additional professional and other administrative fees associated with being a public corporation. Interest expense decreased $37,000 or 9.5% for the three months ended December 31, 1996 as compared to the three months ended December 31, 1995. Interest expense for the six months ended December 31, 1996 decreased $599,000 over the same six month period in 1995, primarily due to the capitalization of interest due to the development of the raw land inventory in accordance with Financial Accounting Standards Board Statement 34 relating to interest. Other income was down $529,000 for the three months ended December 31, 1996 compared to that same period in 1995. This decrease was primarily due to a timber sale revenue of approximately $224,000, a gain of $130,000 during a condominium sale involving the restructure of some Company debt, and several smaller infrequent occurrences in 1995. Liquidity Management believes that the Company, through the generation of cash flow from operations and the utilization of unused borrowing capacity, has sufficient financial resources available to maintain its current operations and provide for its current capital expenditure requirements. The Company intends to concentrate its future efforts on expanding the volume of business in Tallahassee and Vero Beach. 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 which will complement its existing businesses, as well as to search out other areas for residential and commercial development in other geographic areas. Financial Condition Total assets increased a net total of $19,423,000 from June 30, 1996 to December 31, 1996; Real estate inventories increased $14,951,000 primarily due to the Flowers acquisitions which brought $ 15,000,000 into the land inventories. Notes receivable increased $4,015,000 from $1,117,000 at June 30, 1996 to $4,628,000 at December 31, 1996. The bulk of this increase is due primarily the following factors: a $2,500,000 one year note from the sale of the Piney Z commercial property; approximately $1,300,000 in notes receivable for the issuance of stock pursuant to warrants to raise capital; and approximately $800,000 was acquired as a part of the Flowers transaction. Investments increased approximately $483,000 as a result of the acquisition of additional shares of Killearn Properties, Inc. (AMEX:KPI), bringing its total investment to 25.6% of the total issued and outstanding shares of KPI. Total liabilities increased $7,006,000 from June 30, 1996 to December 31, 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; and deferred compensation payable decreased $149,000 to $410,000 at December 31, 1996 from $559,000 at June 30, 1996 due to a distribution. Total Shareholders' equity increased $12,425,000 to $18,793,000 at December 31, 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 its residential development business in Florida and Georgia state, and will continue to look explore other possible acquisitions to complement its existing businesses. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings 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. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: None 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: March 17, 1997 By: /s/ Mark A. Conner Mark A. Conner, President, and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description Page No. 27 Financial Data Schedule 16 13 EX-27 2
5 6-MOS JUN-30-1996 DEC-31-1996 206,532 773,712 5,132,000 0 37,441,628 42,857,510 1,380,198 0 47,889,000 2,263,000 24,550,000 0 0 644,000 18,149,000 47,889,000 2,128,477 2,136,645 1,278,988 696,991 0 0 351,990 180,666 62,691 117,975 0 0 0 117,975 .09 .09
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