<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: March 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-24242
PRODUCTIVITY TECHNOLOGIES CORP.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3764753
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
206 South Main Street, 2nd Floor, Ann Arbor, Michigan 48104
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(Address of Principal Offices)(Zip Code)
Registrant's Telephone Number, Including Area Code (734) 996-1700
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509 Madison Avenue, 4th Floor, New York, New York 10022
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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
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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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 15, 2000: 2,475,000 shares, $ .001 par value common
stock.
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PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
Productivity Technologies Corp. is filing this amendment to correct an error
made by its Edgar filer. In the Statement of Operations, the first digit in the
amount of Revenues and Cost of Revenues under the columns for the nine months
ended March 31, 2000 and March 31, 1999 was inadvertently dropped. Each of
these amounts was correctly reflected in Management's Discussion and Analysis
of Financial Condition and Results of Operations in the original filing. Only
Item 1 of Part 1 is being restated.
PART I: FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements for Productivity Technologies Corp. ("PTC"
or the "Company") and its subsidiaries, Atlas Technologies, Inc. ("Atlas") and
Westland Control Systems, Inc. ("Westland"), have been prepared in accordance
with generally accepted accounting principles for interim financial information
and in accordance with instructions 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. Operating results
for the three and nine months ended March 31, 2000, are not necessarily
indicative of the results that may be expected for the year ending June 30,
2000.
The aforementioned consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999. Information provided includes the consolidated audited
financial statements, including footnotes for the year ended June 30, 1999 and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
2
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Productivity Technologies Corp. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000 June 30, 1999
<S> <C> <C>
Assets
Current assets
Cash $ 605,797 $ 244,400
Short-term investments, including accrued interest 228,173 392,059
Receivables, net of allowance for doubtful accounts 6,710,385 7,310,072
Costs and estimated earnings in excess of billings on
uncompleted contracts 9,899,581 9,714,477
Inventories 1,625,993 641,615
Prepaid expenses and other 432,039 414,366
Deferred income taxes 584,197 431,000
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Total current assets 20,086,165 19,147,989
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Property and equipment
Land 591,514 591,514
Buildings and improvements 4,893,829 4,854,799
Machinery and equipment 4,097,230 3,848,921
Transportation equipment 31,500 31,500
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9,614,073 9,326,734
Less accumulated depreciation 1,937,118 1,483,000
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Net property and equipment 7,676,955 7,843,734
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Other assets
Goodwill, net of accumulated amortization of
$442,401 and $340,521 6,915,027 2,484,204
Patents, net of accumulated amortization of $5,010 744,990 --
Other assets 566,097 632,053
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Total other assets 8,226,114 3,116,257
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$35,989,234 $30,107,980
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Productivity Technologies Corp. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000 June 30, 1999
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities
Accounts payable $3,956,614 $1,879,817
Accrued expenses
Commissions payable 539,700 795,959
Payroll and related withholdings 299,302 239,536
Other 1,106,815 1,291,567
Billings in excess of costs and estimated
earnings on uncompleted contracts 111,491 348,049
Current maturities of executive deferred
compensation agreements 326,706 326,706
Current maturities of long-term debt 442,328 448,353
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Total current liabilities 6,782,956 5,329,987
Executive deferred compensation agreements, less
current maturities 781,646 1,109,677
Long-term debt, less current maturities 18,882,673 13,951,043
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Total liabilities 26,447,275 20,390,707
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Stockholders' equity
Common stock, .$001 par value, 20,000,000
shares authorized; 2,475,000 shares outstanding 2,475 2,475
Additional paid-in capital 9,966,408 9,966,408
Deficit (426,924) (251,610)
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Total stockholders' equity 9,541,959 9,717,273
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$35,989,234 $30,107,980
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
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Productivity Technologies Corp. and Subsidiaries
Consolidated Statement of Operations ( Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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March 31, March 31, March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues $8,030,262 $8,193,888 $23,446,021 $24,194,140
Cost of Revenues 6,061,184 5,988,940 18,399,517 17,611,494
---------- ---------- ---------- ----------
Gross profit 1,969,078 2,204,948 5,046,504 6,582,646
Selling, general and administrative expenses 1,651,711 1,773,725 4,595,426 5,678,402
---------- ---------- ---------- ----------
Income from operations 317,367 431,223 451,078 904,244
---------- ---------- ---------- ----------
Other income ( expense)
Interest income 24,744 5,621 49,296 45,047
Interest expense (303,689) (233,815) (820,764) (620,514)
Miscellaneous (7,726) (10,050) 55,076 22,398
---------- ---------- ---------- ----------
Total other expenses (286,671) (238,244) (716,392) (553,069)
---------- ---------- ---------- ----------
Income (Loss) before income taxes 30,696 192,979 (265,314) 351,175
Income tax expense (benefit) 11,000 46,839 (90,000) 92,500
---------- ---------- ---------- ----------
Net income (loss) $19,696 $146,140 ($175,314) $258,675
========== ========== ========== ==========
Basic and Diluted Earnings per share $0.01 $0.06 ($0.07) $0.11
========== ========== ========== ==========
Weighted average number of
common shares outstanding 2,475,000 2,425,000 2,475,000 2,425,000
</TABLE>
See accompanying notes to financial statements.
5
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Productivity Technologies Corp. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Total
----------------------- Paid-In Stockholders'
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance July 1, 1999 2,475,000 $2,475 $9,966,408 $(251,610) $9,717,273
Net loss (unaudited) -- -- -- $(175,314) $ (175,314)
--------- ------ ---------- --------- ----------
March 31, 2000 2,475,000 $2,475 $9,966,408 $(426,924) $9,541,959
========= ====== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
6
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Productivity Technologies Corp. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
March 31, March 31,
2000 1999
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<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (175,314) $ 258,675
Adjustments to reconcile net income (loss)to net cash
Provided by (used in) operating activities:
Depreciation 454,118 414,076
Amortization 106,890 39,278
Deferred income tax (153,197) (371,239)
Changes in operating assets and liabilities:
Receivables 1,399,687 (832,480)
Inventories, prepaid expenses and other (602,051) 227,083
Costs and estimated earnings in excess of
billings on uncompleted contracts, net effect (421,662) (1,902,676)
Accounts payable, accrued expenses and other 1,695,552 (292,894)
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Net cash provided by (used in) operating activities 2,304,023 (2,460,177)
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Cash flows from investing activities
Acquisition of Westland, net of borrowings (242,703) --
Collections on notes receivable 65,956 86,415
Proceeds from sale of short-term investments --net 163,886 (542,378)
Expenditures for property and equipment (177,339) (150,614)
Increase in notes receivable -- 111,001
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Net cash provided by (used in) investing activities (190,200) (495,576)
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Cash flows from financing activities
(Payments) or borrowings on revolving credit agreement (1,424,395) 813,953
Payments on executive deffered compensation agreement (328,031)
Proceeds from additions of long-term debt -- 153,357
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Net cash provided by (used in) financing activities (1,752,426) 967,310
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Net increase (decrease) in cash 361,397 (1,988,443)
Cash at the beginning of the period 244,400 2,172,457)
-- --
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Cash at the end of the period $ 605,797 $ 184,014
=========== ===========
Supplemental cash flow Information
Cash paid during the period for interest $ 820,764 $ 620,514
Cash paid during the period for income taxes -- --
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The consolidated financial statements of Productivity Technologies Corp. (the
"Company" or "PTC") have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance with
instructions 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. Operating results for the three and nine months ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending June 30, 2000.
The consolidated financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the fiscal year ended June 30, 1999 and
the current report on Form 8-K filed in May 2000 related to the Company's
purchase of Westland Control Systems, Inc. Information provided includes the
consolidated audited financial statements, including footnotes for the year
ended June 30, 1999 and Management's Discussion and Analysis of the Company's
Financial Condition and Results of Operations.
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 completed an initial
public offering ("IPO") of common stock in July 1994 and raised net proceeds of
approximately $9.0 million. In May 1996, the Company changed its name to
Productivity Technologies Corp. and acquired, through a merger, Atlas
Technologies, Inc. ("Atlas") as a wholly owned subsidiary. On February 23,
2000, the Company purchased, through a wholly-owned subsidiary formed for this
purpose, substantially all of the assets of Westland Control Systems, Inc.
("Westland").
The accompanying financial statements include the consolidated accounts of PTC,
Atlas and Westland. All significant intercompany accounts and transactions have
been eliminated upon consolidation.
Nature of Business
The Company operates in a single segment through its Atlas and Westland
subsidiaries. Atlas is a leading innovator and supplier of quick die change,
flexible transfer, and stacking/destacking equipment used to automate automotive
and other metal stamping operations. Atlas operates two manufacturing plants in
Fenton, Michigan and has sales and engineering offices in Michigan, Europe and
China.
Westland designs and manufactures custom electrical control panels primarily for
use in production machinery and machine tools utilized in automotive, adhesive &
sealant, food processing, and other industrial applications. Westland operates
one manufacturing plant in Canton, Michigan, which is located less than one hour
from Atlas' plants in Fenton, Michigan. The Canton plant comprises
approximately 29,000 square feet of manufacturing and assembly space and 11,000
square feet for offices.
Sales of Atlas products have principally been to automobile and automotive parts
manufacturers and appliance manufacturers. Other customers include steel
service centers and manufacturers of lawn and garden equipment, office
furniture, heating, ventilation and air conditioning equipment, and large
construction equipment. Sales to automotive related customers account for the
majority of sales. Westland's customers participate in the automotive, food
processing, adhesive and sealant, and other industries.
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<PAGE>
Revenue and Cost Recognition
At Atlas, 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.
Revenues from time-and-material contracts are recognized currently as the work
is performed. Westland recognizes sales and cost of sales upon shipment to the
customer.
Earnings Per Share
Earnings per share has been computed by dividing the income by the weighted
average number of common shares outstanding. The per share amounts reflected in
the consolidated statements of operations are presented in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share";
the amounts of the Company's "basic" and "diluted" earnings per share (as
defined in SFAS N. 128) are the same.
3. Pro Forma Statements of Operations
The following unaudited pro forma statements of operations for the quarters and
nine months ended March 31, 2000 and 1999 are presented as if the Company had
completed the asset purchase of Westland on July 1, 1998. These unaudited pro
forma consolidated statements of operations do not purport to be indicative of
the results which actually could have been obtained had such transaction been
completed as of the assumed date or which may be obtained in the future. In
management's opinion, all adjustments necessary to reflect the asset purchase
have been made. These adjustments include the following: (1) The excess of the
purchase price over the fair value of assets purchased is allocated to goodwill.
Additional amortization of goodwill based on a 20-year life has been charged to
operations. (2) To record additional amortization of a patent acquired over its
remaining useful life of 16.67 years. (3) To record a decrease in wages paid to
the previous owner of Westland based on his new employment agreement. (4) To
record additional depreciation expense of machinery and equipment acquired. (5)
To record interest expense related to new borrowings associated with the asset
purchase, and (6) To record income tax effect of additional income at an
effective rate of 34% on taxable income.
9
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Productivity Technologies Corp. and Subsidiaries
Consolidated Statement of Operations (Unaudited) PROFORMA
<TABLE>
<CAPTION>
PROFORMA PROFORMA PROFORMA PROFORMA
Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Sales $9,074,394 $9,161,499 $ 28,706,653 $29,739,771
Cost of Sales 6,519,554 6,621,311 21,562,147 21,251,800
---------- ---------- ------------ -----------
Gross Profit 2,554,840 2,540,188 7,144,506 8,487,971
Selling, General and Administrative
expenses, including officers' bonus 1,884,666 $2,167,905 $ 5,545,987 $ 6,964,410
---------- ---------- ------------ -----------
Income from Operations 670,174 372,283 1,598,519 1,523,561
---------- ---------- ------------ -----------
Other Income (Expenses)
Interest Income 24,744 5,621 49,296 45,047
Interest Expense (441,569) (408,415) $ (1,234,404) $(1,072,314)
Miscellaneous (25,734) 6,432 $ 68,547 $ 92,467
---------- ---------- ------------ -----------
Total Other Expenses $ (442,559) $ (396,362) (1,116,561) (934,800)
---------- ---------- ------------ -----------
Income Before Income Taxes 227,615 (24,079) 481,958 588,761
Income Taxes 85,900 54,880 164,000 200,500
---------- ---------- ------------ -----------
Net Income $ 141,715 $ (78,959) $ 317,958 $ 388,261
========== ========== ============ ===========
Net Income Per Share of
Common Stock $ 0.06 $ (0.03) $ 0.13 $ 0.16
Weighted Average Number of
Common Shares Outstanding 2,475,000 2,425,000 2,475,000 2,425,000
========== ========== ============ ===========
</TABLE>
10
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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: May 26, 2000 By: /s/ Samuel N. Seidman
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Samuel N. Seidman, President
Date: May 26, 2000 By: /s/ Jesse Levine
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Jesse Levine, Chief Financial Officer
11
