U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended: September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from ____________________ to ____________________
Commission file number 0-24242
PRODUCTIVITY TECHNOLOGIES CORP.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-3764753
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
509 Madison Avenue, New York, New York 10022
- --------------------------------------- ----------------
(Address of Principal Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 843-1480
----------------------------
Not Applicable
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check 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 |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes _____ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of November 16, 1998: 2,425,000 shares, $ .001 par value
common stock.
<PAGE>
TABLE OF CONTENTS
Page
Part I. Financial Information for
Productivity Technologies Corp. ("PTC" or "Company") and
Subsidiary Atlas Technologies, Inc. ("Atlas")
Item 1. Interim Financial Statements 3
Consolidated Balance Sheets 4-5
Consolidated Statements of Operations 6
Consolidated Statement of Stockholders' Equity 7
Consolidated Statements of Cash Flows 8
Notes to Financial Statements 9-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
2
<PAGE>
PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARY
PART I: FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with instruction to Form 10-Q and Article 10 of Regulation S-X.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted from the accompanying interim financial statements. The
information furnished in the accompanying balance sheets, statements of
operations, stockholders' equity and cash flows, reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
aforementioned financial statements for the interim periods. Operation results
for the three months ended September 30, 1998, are not necessarily indicative of
the results that may be expected for the year ending June 30, 1999.
The aforementioned consolidated financial statements should be read in
conjunction with Productivity Technologies Corp. and Subsidiary's Form 10-K for
the fiscal year ended June 30, 1998. Information provided includes the
consolidated audited financial statements, including footnotes for the year
ended June 30, 1998 and Management's Discussion and Analysis of Financial
Condition and Results of Operations.
3
<PAGE>
Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets ( Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
----- ----
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $55,754 $2,172,457
Short-term investments and accrued interest 1,144,795 482,280
Contracts receivable 7,385,770 5,217,421
Notes receivable 0 86,415
Costs and estimated earnings in excess of billings on
uncompleted contracts 4,687,800 5,435,957
Inventories 678,078 628,481
Prepaid expenses and other 154,006 773,522
Deferred income taxes 885,239 475,000
Total current assets 14,991,442 15,271,533
----------- ----------
Property and equipment
Land $591,514 $591,514
Buildings and improvements 4,856,753 4,854,799
Machinery and equipment 3,708,933 3,676,415
Transportation equipment 31,500 31,500
------- --------
Total fixed assets 9,188,700 9,154,228
Less accumulated depreciation 987,219 865,473
-------- ---------
Net property and equipment 8,201,481 8,288,755
---------- ---------
Other assets
Goodwill, net of accumulated amortization of $263,301 and
$57,191 2,609,936 2,587,164
Other assets 648,911 661,936
-------- ---------
Total other assets 3,258,847 3,249,100
---------- ---------
Total assets $26,451,770 $26,809,388
============ ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
------------- ---------
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities
Accounts payable $2,212,295 $1,970,769
Accrued expenses
Executive bonus agreement 0 810,000
Commissions payable 597,799 482,512
Payroll and related withholdings 99,049 240,329
Other 853,667 770,096
Billings in excess of costs and estimated
earnings on uncompleted contracts 678,212 580,262
Current maturities of long term debt 615,677 615,677
-------- -------
Total current liabilities $5,056,699 $5,469,645
Executive deferred compensation 1,436,383 1,436,383
Long-term debt less current maturities 11,134,627 11,254,127
----------- ----------
Total liabilities 17,627,709 18,160,155
----------- ----------
Stockholders' equity
Preferred Stock, $.001 par value, 1,000,000
shares authorized; none outstanding
Common Stock, .$001 par value, 20,000,000
shares authorized; 2,425,000 and 2,125,000
shares outstanding 2,425 2,125
Common Stock to be issued 0 695,520
Additional paid-in capital 9,872,708 9,177,488
Deficit (1,051,072) (1,225,900)
----------- -----------
Total stockholders' equity 8,824,061 8,649,233
---------- ---------
Total liabilities and stockholders' equity $26,451,770 $26,809,388
============ ===========
</TABLE>
See accompany notes to financial statements.
5
<PAGE>
Productivity Technologies Corp. and Subsidiary
Consolidated Statements of Operations ( Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
--------------------------------------------------
September 30, September 30,
1998 1997
------------- -----------
<S> <C> <C>
Net sales $8,150,682 $9,352,486
Cost of sales 5,672,750 6,635,080
---------- ---------
Gross profit 2,477,932 2,717,406
Selling, general and administrative expenses 2,032,424 2,012,488
Officers' bonuses 0 255,066
---------- ---------
Income (loss) from operations 445,508 449,852
-------- --------
Other income ( expenses)
Interest income 11,804 25,498
Interest expense (200,272) (291,851)
Miscellaneous 2,788 92,846
------ ---------
Total other expenses (185,680) (173,507)
--------- ---------
Income before income taxes 259,828 276,345
Income taxes 85,000 110,500
------- -------
Net income $174,828 $165,845
======== ========
Net income per share of Common Stock $0.07 $0.08
===== =====
Weighted average number of
common shares outstanding 2,425,000 2,125,000
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Productivity Technologies Corp. and Subsidiary
Consolidated Statement of Stockholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Common Stock Common Additional Total
-------------------- Stock to be Paid-In Stockholders'
Shares Amount Issued Capital Deficit Equity
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance July 1, 1998 2,125,000 $2,125 $695,520 $9,177,488 ($1,225,900) $8,649,233
Common Stock issued 300,000 $300 ($695,520) $695,220
Net income (unaudited) $174,828 $174,828
---------- ------- ---------- --------- --------- --------
Balance as of
September 30, 1998 2,425,000 $2,425 $0 $9,872,708 ($1,051,072) $8,824,061
========== ======= === =========== ============ ==========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Productivity Technologies Corp. and Subsidiary
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
-------------------------------------
September 30, September 30,
1998 1997
------ ----
<S> <C> <C>
Cash flows from operating activities
Net income $174,828 $165,845
Adjustments to reconcile net income to net cash
Provided by (used in ) operating activities:
Depreciation 121,746 107,794
Amortization (22,772) (417,271)
Deferred income tax (410,239) 5,382
Changes in operating assets and liabilities:
Contract receivables (2,168,349) 3,218,528
Inventories, prepaid expenses and other 569,919 596,335
Costs and estimated earnings in excess of
billings on uncompleted contracts 846,107 (3,147,804)
Accounts payable, accrued expenses and other (510,896) (262,683)
---------- ---------
Net cash provided by (used in) operating activities ($1,399,656) $266,126
============ ========
Cash flows from investing activities
Collection of notes receivable $86,415 $160,631
Maturity of US securities in deposited trust fund (662,515) (537,471)
Expenditures for property and equipment (34,472) 513,358
Increase in notes receivable 13,025 103,810
-------- --------
Net cash provided by (used in) investing activities ($597,547) $240,328
========== ========
Cash flows from financing activities
(Payments) or borrowings on long-term debt ($1,924)
Proceeds from additional long-term debt ($119,500) (1,245,424)
---------- -----------
Net cash provided by (used in) financing activities ($119,500) ($1,247,348)
========== ============
Net increase (decrease) in cash and cash equivalents ($2,116,703) ($740,894)
Cash and cash equivalents at the beginning of the period 2,172,457 843,709
---------- --------
Cash and cash equivalents at the end of the period $55,754 $102,815
========= =========
Supplemental cash flow Information
Cash paid during the period for interest $200,272 $291,851
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Notes to Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements for the first quarter ended
September 30, 1998 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The consolidated balance
sheet at June 30, 1998 has been derived from the audited consolidated financial
statements at that date. Operating results for the first quarter ended September
30, 1998 are not necessarily indicative of the results that may be expected for
the year ended June 30, 1999 or any other interim period. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report for the period ended June 30,
1998.
2. Summary of Significant Accounting Policies
History of the Company and Basis of Presentation
The Company was incorporated in June 1993 under the name Production Systems
Acquisition Corporation with the objective of acquiring an operating business
engaged in the production systems industry. The Company originally selected
March 31 as its fiscal year-end. The Company completed an initial public
offering ("Offering") of common stock in July 1994 and raised net proceeds of
approximately $9.0 million. In May 1995, the Company changed its name to
Productivity Technologies Corp. ("PTC" or the "Company"), and acquired, through
a merger, Atlas Technologies, Inc. ("Atlas") as a wholly owned subsidiary.
The accompanying financial statements presented for the first quarter ended
September 30, 1998 include the consolidated accounts of PTC and Atlas. All
significant inter-company accounts and transactions have been eliminated upon
consolidation.
Nature of Business
Atlas, PTC's sole operating subsidiary, is a leading innovator and supplier of
quick die change, flexible transfer, and stacking/destacking equipment used to
automate automotive and appliance metal stamping operations. Atlas operates two
manufacturing plants in Fenton, Michigan and has sales and engineering offices
in Michigan, Europe and China.
Sales of products have principally been to automobile and automotive parts
manufacturers and appliance manufacturers. Other customers include manufacturers
of garden and lawn equipment, office furniture, heating, ventilation and air
conditioning equipment and large construction equipment. Sales to automotive
related customers have accounted for the majority of sales during the past two
years.
Revenue and Cost Recognition
Contract revenues from fixed price contracts, and the related contract costs,
are recognized using the percentage-of-completion method. The
percentage-of-completion method measures the percentage of contract costs
incurred to date and compares these costs to the total estimated costs for each
contract. The Company estimates the status of individual contracts when progress
reaches a point where experience is sufficient to estimate final results with
reasonable accuracy. Contract costs include all direct material and labor costs
and those indirect costs related to contract performance, such as indirect
labor, supplies, repairs and depreciation costs. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job condition, estimated profitability,
and final contract settlement may result in revisions to costs and income, and
are recognized in the period the revisions are determined.
9
<PAGE>
Revenues from time-and-material contracts are recognized currently as the work
is performed.
Net Income Per Common Share
Net income per common share for the first quarter ended September 30, 1998 has
been computed based on the weighted average number of 2,425,000 common and
diluted common equivalent shares outstanding. In September, 1998, 300,000 shares
were issued as partial consideration for the restructuring of the Atlas
executive bonus program. The issuance of the 300,000 shares was effective as of
June, 1998. The bonus restructuring agreement is described in detail in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998.
3. Commitments
Atlas is a party to employment agreements with its two principal executive
officers. One agreement expires on December 31, 1998, and the other expires on
December 31, 2001. Each agreement requires the executive to devote substantially
all of his business time and attention to the affairs of the Company. Annual
compensation under each agreement is $198,588, subject to cost of living
increases after December 31, 1998 under the agreement continuing after that
date. The employment agreements also provide that each executive, regardless of
future employment, will receive four annual payments of $207,571 commencing July
30, 1999. Each executive also received 150,000 shares of restricted common stock
of the Company which were issued effective as of June, 1998. The following items
related to the employment agreements are included in the accompanying financial
statements as of and for the year ended June 30, 1998:
Balance Sheet
Executive Deferred Compensation Agreement $1,436,383
Common stock issued (.001 par value) 300
Paid in capital 696,320
----------
Statement of Operations
Bonus restructuring expense $2,131,903
4. Contingencies
Atlas is undergoing an Internal Revenue Service audit for the fiscal year ended
June 30, 1995. The main area of review is a research and experimentation tax
credit Atlas has calculated and filed for over the past six years. Atlas had
applied $459,000 of credit towards Federal Taxes due for the fiscal periods
ended June 1998, June 1996 and June 1995, and had a carry forward of $23,000
expected to be used as a reduction in future tax payments. Atlas' management and
Atlas' accountants believe this issue is a matter of interpretation of the
research and experimentation regulations. Atlas' management believes that the
IRS may seek a reduction in the amount of credit calculated which may adversely
affect the financial statements of the Company. The Company is entitled to
indemnification up to $560,000 (subject to certain exclusions and limitations)
from the former principal stockholders of Atlas for amounts it may be required
to pay as a result of the audit.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Unaudited sales revenues for the quarter ended September 30, 1998 were
$8,150,682, down 13% from the quarter ended September 30, 1997 revenues of
$9,352,486. Decreased sales were primarily due to lower customer demand during
the quarter. The order backlog as of September 30, 1998 was $16.6 million, down
11% from the June 30, 1998 backlog of $18.2 million. The decline in backlog was
mainly due to slower closings of new orders. The volume of new business quotes,
both domestic and foreign, remains active.
Costs of products sold for the quarter ended September 30, 1998 were $5,672,750,
down 15% from $6,635,080 for the quarter ended September 30, 1997. The decrease
in cost of sales from a quarter a year ago was a slight improvement over the
corresponding 13% decrease in quarterly revenues versus the quarter a year ago.
Cost of products sold as a percent of revenues decreased to 69% of revenues
during the quarter compared to 71% of revenues during the quarter ended
September 30, 1997. The reduction in cost of sales as a percent of revenues was
primarily due to a more favorable product mix, and improved production
processing during the quarter relative to the quarter one year ago.
Gross profit for the quarter ended September 30, 1998 was $2,477,932, a 9%
decrease compared to $2,717,406 for the quarter ended September 30, 1997. Gross
profit decreased primarily due to lower volume and to slightly higher research
and development costs and warranty expenses. The Company's gross profit margin
increased 2% relative to the gross profit margin one year ago for the reasons
cited in the paragraph above in connection with the decline in cost of sales as
a percent of revenues.
Consolidated selling, general and administrative (SG&A) expenses were
$2,032,424, up 1% from the quarter ended September 30, 1997 of $2,012,488.
Though legal and accounting fees were substantially reduced from the quarter one
year ago, selling expenses for outside representative commissions and royalties
increased approximately $163,000 versus the first quarter last year.
Officer bonuses were $ -0- during the quarter ended September 30, 1998, compared
to $255,066, from the quarter ended September 30, 1997. Officer bonuses were
eliminated as part of the bonus restructuring plan detailed in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1998.
Consolidated earnings from operations (net income before interest and income
taxes) for the quarter ended September 30, 1998 were $445,508, down 1% from the
quarter ended a year ago of $449,852. As adjusted for the elimination of
executive bonuses, earnings during the period were approximately 36% lower than
the previous year. The decrease was the result of slower than expected sales
demand combined with increased selling, research and warranty expenses described
above.
Interest expenses for the quarter ended September 30, 1998 were $200,272, down
31% from $291,851for the quarter ended September 30, 1997. Decreased interest
costs were due to reduced work in process and a lower level of outstanding
receivables which the Company carried during the quarter.
Net consolidated income for the quarter ended September 30, 1998 was $174,828,
up 5% from $165,845 for the quarter ended September 30, 1998. Net profits for
the quarter one year ago consisted of income from operations of $88,845 and
$77,000 from a gain on sale of the Argentine facility during the quarter. Basic
earnings per share was $0.07 for the first quarter in fiscal 1999 compared to
$0.08 for the first quarter in fiscal 1998. There were 2,425,000 weighted
average common shares outstanding during the first quarter in fiscal 1999,
compared to 2,125,000 weighted average common shares outstanding in the first
quarter 1998.
11
<PAGE>
Liquidity and Capital Resources
Atlas believes it has sufficient capital to meet short and long term funding
needs. Management expects financing facilities currently in place, along with
anticipated continued cash available from operations, will be sufficient for
general operations and any required current year asset purchases.
During the fiscal year ended June 30, 1998, Atlas entered into a new debt
financing agreement with First of Chicago NBD. The bank consolidated all of
Atlas' long and short term debts, bundling the various notes and lines of credit
into one new two year committed line of credit, with increased maximum debt
usage of $14,500,000 based on collateral of the company's receivables,
work-in-process inventories, and other assets. Interest rates were reduced to
the bank prime rate and a revised amortization of certain asset based debt to
quarterly payments of $62,500 reduced the overall annual principal payment
requirements, improving the current ratio and working capital.
Atlas also entered into an agreement with First of Chicago NBD to fund the
construction of the new building and equipment through the sale of $4,500,000 in
tax exempt Industrial Revenue Bonds (IRB). The proceeds, most of which have been
spent as of the end of the first quarter of fiscal 1999, were used for the
construction, furnishing and equipping of the new 59,000 sq. ft. manufacturing
building and the purchase of a new manufacturing resource planning system for
Atlas. Unused funds have been invested and earn interest until spent. The bonds
are state and federal tax exempt and, consequently, the floating rate of
interest is significantly reduced compared to conventional construction or real
estate financing. IRB terms are as follows for each fiscal year:
1991--2001 $400,000 annual principal payments plus quarterly interest payments.
2001--1012 $300,000 annual principal payments plus quarterly interest payments.
At September 30, 1998, Atlas had financed (a) debt of $6,536,065 under the line
of credit, and $4,500,000 under the Industrial Revenue Bond, payable over 15
years, (b) deferred executive compensation of $1,436,382 scheduled to be paid
over four equal annual installments commencing July 1999, (c) $560,000 due to
Atlas executives and held in escrow awaiting the IRS audit results, and (d)
other debt of $154,240. This compares to total combined long term debt financing
and line of credit current and long term balances of $13,186,687 as of June 30,
1998.
The Company believes that, as a result of the current loan facility, its
short-term credit availability is adequate to support its business operation at
current and near-term anticipated sales levels.
Working capital at September 30, 1998 was $9,934,743 and the current ratio was
3.0 to 1, compared to $9,801,888 and 2.8 to 1, respectively, for the Company at
June 30, 1998.
Year 2000 Compliance
The Company is installing an "enterprise resource planning" system at Atlas,
which includes computer systems for its internal accounting and reporting
activities and its manufacturing operations and processes which are "Year 2000
compliant" (which means that such computer systems and other information
technology will accurately process date/time data regardless of whether the date
is in the twentieth or twenty-first century). The acquisition and installation
of the system are expected to cost approximately $340,000, of which
approximately $210,000 was expensed by September 30, 1998. Because the system is
being implemented as an overall upgrade to Atlas's operations and not
specifically to address Year 2000 compliance concerns, management has not
estimated the portion of the cost which may be allocable to Year 2000
compliance. Management has not yet assessed whether or not the failure of
Atlas's internal information technology to be Year 2000 compliant would have a
material adverse effect upon the Company's financial position, liquidity or
results of operations although it is confident that installation and operation
of the new system will be accomplished in advance of December 31, 1999.
12
<PAGE>
The Company is also assessing its vendors, customers, utilities, banks and
others with whom it does business to determine if their failure to be Year 2000
compliant would have a material adverse effect upon the Company or its financial
position, liquidity or results of operations. To date, nothing has come to the
attention of management that leads it to conclude that the likelihood of such
adverse effect reasonably exists. The Company's and Atlas's operations utilize
relatively little electronic data interchange with vendors, customers and other
third parties. However, to the extent that such third parties, particularly
utilities and banks, may not be Year 2000 compliant, the Company and Atlas may
be adversely effected, although the magnitude of such effect cannot be
estimated. The cost to the Company of making its third-party Year 2000
compliance assessment is not expected to be material.
Certain Atlas products contain processors which address and utilize date/time
data. Management believes that such processors incorporated in equipment sold
within the past five years are virtually all Year 2000 compliant. However, it is
not able to determine the compliance status of processors used in equipment sold
in earlier periods with any reasonable degree of certainty. Although such
equipment is beyond the warranty periods applicable to Atlas's products, it is
possible that customers who purchased equipment from Atlas which is not Year
2000 compliant may nevertheless assert claims against Atlas to correct the
compliance deficiencies or for resulting damages. While management believes that
Atlas would not be legally responsible to such persons, based on the terms of
its purchase orders and warranties, there can be no assurance that this position
would prevail if challenged. Management is unable to estimate the potential cost
that the Company might incur if such claims are made and successfully sustained
or whether or not such cost would have a material adverse effect upon its
financial position, liquidity or results of operations.
Forward-Looking Statements
When used in this and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized executive officer of the Company, the words
or phrases "will likely result," "plans," "will continue," "is anticipated,"
"estimated," "project" or "outlook" or similar expressions (including
confirmations by an authorized executive officer of the Company of any such
expressions made by a third party with respect to the Company) are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements, each of
which speaks only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. Factors
that may cause actual results to differ materially from those contemplated by
such forward- looking statements include, among others, the following:
competitive pressures in the industry in which the Company is engaged; an
unfavorable outcome of the IRS audit currently underway; adverse changes in the
Company's banking loan requirements; major fluctuations in the strength of the
U.S. dollar versus international currencies; Year 2000 compliance; and general
economic conditions. The Company has no obligation to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect anticipated or unanticipated events or circumstances occurring after the
date of such statements.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 Financial Data Schedule (filed electronically only).
B. Reports on Form 8-K -- None
SIGNATURES
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.
PRODUCTIVITY TECHNOLOGIES CORP.
Date: November 20, 1998 By: /s/ Samuel N. Seidman
---------------------------
Samuel N. Seidman, President
Date: November 20, 1998 By: /s/ Jesse Levine
----------------------
Jesse Levine, Chief Financial Officer
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 55,754
<SECURITIES> 1,144,795
<RECEIVABLES> 7,495,770
<ALLOWANCES> (110,000)
<INVENTORY> 678,078
<CURRENT-ASSETS> 14,991,442
<PP&E> 9,188,700
<DEPRECIATION> (987,219)
<TOTAL-ASSETS> 26,451,770
<CURRENT-LIABILITIES> 5,056,699
<BONDS> 0
<COMMON> 2,425
0
0
<OTHER-SE> 8,821,636
<TOTAL-LIABILITY-AND-EQUITY> 26,451,770
<SALES> 8,150,682
<TOTAL-REVENUES> 8,165,274
<CGS> 5,672,750
<TOTAL-COSTS> 5,672,750
<OTHER-EXPENSES> 2,032,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 200,272
<INCOME-PRETAX> 259,828
<INCOME-TAX> 85,000
<INCOME-CONTINUING> 174,828
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174,828
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.03
</TABLE>
