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: March 31, 2003 |
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 registrant as specified in its charter)
| Delaware |
13-3764753 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
3100 Copper Avenue, Fenton, Michigan 48430
(Address of Principal Offices) (Zip Code)
(810) 714-0200
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 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 x No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of May 14, 2003: 2,475,000 shares, $.001 par value common stock.
Productivity Technologies Corp.
INDEX
| Page Number | ||||
| PART I |
3 | |||
| Item 1. |
3 | |||
| Consolidated Balance Sheets at March 31, 2003 (un-audited) and June 30, 2002 |
3 | |||
| 5 | ||||
| Consolidated Statement of Stockholders’ Equity for March 31, 2003 (un-audited) |
6 | |||
| 7 | ||||
| 8 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3. |
13 | |||
| Item 4. |
13 | |||
| PART II |
13 | |||
| Item 1. |
13 | |||
| Item 2. |
13 | |||
| Item 3. |
13 | |||
| Item 4. |
Submission of Matters to a Vote of Security Holders (not applicable) |
14 | ||
| Item 5. |
14 | |||
| Item 6. |
14 | |||
| 14 | ||||
| 14 | ||||
2
PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
| March 31, 2003 |
June 30, 2002 | |||||
| (Unaudited) |
||||||
| Assets |
||||||
| Current Assets |
||||||
| Cash |
$ |
3,051,508 |
$ |
4.971,837 | ||
| Short-term investments, including accrued interest |
|
94,780 |
|
149,720 | ||
| Contract receivables, net of allowance for doubtful accounts of $227,663 and $250,198 |
|
4,425,821 |
|
2,898,107 | ||
| Costs and estimated earnings in excess of billings on uncompleted contracts |
|
1,588,381 |
|
1,773,141 | ||
| Inventories |
|
1,150,243 |
|
1,211,249 | ||
| Prepaid expenses and other |
|
260,442 |
|
352,542 | ||
| Deferred income taxes |
|
282,000 |
|
282,000 | ||
| Total current assets |
|
10,853,175 |
|
11,638,596 | ||
| Property and equipment |
||||||
| Land |
$ |
591,514 |
$ |
591,514 | ||
| Buildings and improvements |
|
4,917,459 |
|
4,917,459 | ||
| Machinery and equipment |
|
4,226,184 |
|
4,223,506 | ||
| Transportation equipment |
|
21,000 |
|
21,000 | ||
|
|
9,756,157 |
|
9,753,479 | |||
| Less accumulated depreciation |
|
3,499,829 |
|
3,042,568 | ||
| Net property and equipment |
|
6,256,328 |
|
6,710,911 | ||
| Other assets |
||||||
| Goodwill |
|
2,985,909 |
|
4,926,448 | ||
| Patent |
|
378,756 |
|
451,875 | ||
| Deferred income taxes |
|
468,000 |
|
468,000 | ||
| Other assets |
|
264,209 |
|
297,959 | ||
| Total other assets |
|
4,096,874 |
|
6,144,282 | ||
| $ |
21,206,377 |
$ |
24,493,789 | |||
See accompanying notes to unaudited consolidated financial statements.
3
PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| March 31, 2003 |
June 30, 2002 |
|||||||
| (Unaudited) |
||||||||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities |
||||||||
| Current portion of long-term debt |
$ |
7,424,426 |
|
$ |
12,190,338 |
| ||
| Accounts payable |
|
2,817,116 |
|
|
2,193,920 |
| ||
| Accrued expenses |
||||||||
| Commissions payable |
|
310,000 |
|
|
189,000 |
| ||
| Payroll and related withholdings |
|
35,624 |
|
|
370,178 |
| ||
| Warranty Reserve |
|
325,000 |
|
|
315,000 |
| ||
| Royalties Payable |
|
— |
|
|
— |
| ||
| Interest |
|
593,902 |
|
|
1,122,552 |
| ||
| Other |
|
359,810 |
|
|
367,148 |
| ||
| Billings in excess of costs and estimated earnings on uncompleted contracts |
|
2,886,530 |
|
|
750,970 |
| ||
| Current maturities of executive deferred compensation agreements |
|
974,933 |
|
|
974,933 |
| ||
| Total current liabilities |
$ |
15,727,341 |
|
$ |
18,474,039 |
| ||
| Executive deferred compensation agreements, less current maturities |
|
— |
|
|
— |
| ||
| Long-term debt, less current maturities |
|
3,092,000 |
|
|
3,800,000 |
| ||
| Total liabilities |
|
18,819,341 |
|
|
22,274,039 |
| ||
| Stockholders’ equity |
||||||||
| Common stock, $.001 par value, 20,000,000 shares authorized; 2,475,000 shares issued and outstanding |
|
2,475 |
|
|
2,475 |
| ||
| Additional paid-in capital |
|
9,966,408 |
|
|
9,966,408 |
| ||
| Deficit |
|
(7,581,847 |
) |
|
(7,749,133 |
) | ||
| Total stockholders’ equity |
|
2,387,036 |
|
|
2,219,750 |
| ||
| $ |
21,206,377 |
|
$ |
24,493,789 |
| |||
See accompanying notes to unaudited consolidated financial statements.
4
PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| March 31, 2003 |
March 31, 2002 |
March 31, 2003 |
March 31, 2002 |
|||||||||||||
| Revenues Earned |
$ |
6,663,341 |
|
$ |
5,837,150 |
|
$ |
21,017,260 |
|
$ |
19,353,827 |
| ||||
| Cost of Revenues Earned |
|
4,954,846 |
|
|
4,511,673 |
|
|
16,017,265 |
|
|
14,657,181 |
| ||||
| Gross Profit |
|
1,708,495 |
|
|
1,325,477 |
|
|
4,999,995 |
|
|
4,696,646 |
| ||||
| Selling, general and administrative expenses |
|
1,518,669 |
|
|
1,407,695 |
|
|
4,452,843 |
|
|
4,545,964 |
| ||||
| Income (loss) from operations |
|
189,826 |
|
|
(82,218 |
) |
|
547,152 |
|
|
150,682 |
| ||||
| Other income (expense) |
||||||||||||||||
| Interest income |
|
485 |
|
|
21,474 |
|
|
8,890 |
|
|
35,643 |
| ||||
| Interest expense |
|
(144,875 |
) |
|
(281,417 |
) |
|
(507,740 |
) |
|
(965,018 |
) | ||||
| Miscellaneous |
|
61,838 |
|
|
(5,402 |
) |
|
89,003 |
|
|
6,838 |
| ||||
| Total other expenses |
|
(82,552 |
) |
|
(265,345 |
) |
|
(409,847 |
) |
|
(922,537 |
) | ||||
| Income (loss) before income taxes |
|
107,274 |
|
|
(347,563 |
) |
|
137,305 |
|
|
(771,855 |
) | ||||
| Income tax expense (benefit) |
|
0 |
|
|
(22,245 |
) |
|
(29,981 |
) |
|
(39,672 |
) | ||||
| Net income (loss) |
$ |
107,274 |
|
$ |
(325,318 |
) |
$ |
167,286 |
|
$ |
(732,183 |
) | ||||