FORM 10-QSB
CONFIRMING COPY
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: March 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 May 30, 1996 was 11,562,712.
Transitional Small Business Disclosure Format (Check one):
Yes No X
PROACTIVE TECHNOLOGIES, INC.
Table of Contents
Page No.
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidated Balance Sheets 3-4
March 31, 1996 and June 30, 1995
Condensed Consolidated Statements of
Income for the Three Months and Nine
Months Ended March 31, 1996 and 1995 5
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
March 31, 1996 and 1995 6-7
Condensed Consolidated Statement of Changes
in Stockholders' Equity for the Nine
Months Ended March 31, 1996 and the
Year Ended June 30, 1995 8
Notes to Condensed Consolidated Financial
Statements 9-11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 12-14
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16-17
ROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 June 30
1996 1995
(Unaudited) (Audited)
ASSETS:
Current Assets:
Cash and equivalents, including
restricted cash of approximately
$ 274,241 $ 348,428 $ 98,911
Marketable equity securities,
net 175,171 559,005
Accounts receivable, net 119,021 110,081
Notes receivable 5,984 ------
Inventory 18,574,150 ------
Due from related parties 23,971 4,625
Prepaid expenses 46,123 7,454
Deferred income tax asset,
net 1,004,786 266,460
--------- -------
Total Current Assets 20,297,634 1,046,536
Property and equipment, net 1,277,654 426,208
Notes receivable 240,517 ------
Deferred income tax asset, net 280,000 280,000
Other assets, net 268,948 10,763
Goodwill, net 143,550 -----
--------- -------
TOTAL ASSETS $ 22,508,303 $1,763,507
---------- ---------
---------- ---------
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 June 30
1996 1995
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Notes payable $ 9,310,352 $ 221,010
Current portion of obligations
under capital leases 50,660 69,600
Accounts payable 341,392 219,103
Accrued expense 399,888 117,596
Customer deposits 92,451 -------
Income taxes payable 1,082,816 -------
Accrued salaries 13,522 179,461
Due to related parties 49,313 102,044
Deferred revenue 1,480,152 ------
Deferred compensation payable 737,382 ------
--------- --------
Total Current Liabilities 13,557,928 908,814
Notes Payable 4,452,648 105,407
Obligations under capital leases 15,430 47,801
Minority Interest 65,278 -------
---------- --------
Total Liabilities 18,091,284 1,062,022
Stockholders' Equity:
Common stock 446,971 88,217
Capital in excess of par value 1,543,282 27,989,381
Accumulated deficit ( 27,573,234) (27,376,113)
------------ ------------
Total Stockholders' Equity 4,417,019 701,485
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 22,508,303 $ 1,763,507
------------ ------------
------------ ------------
See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Nine Months
Ended Ended
March 31, March 31,
1996 1995 1996 1995
Net sales $ 2,132,441 $ 244,050 $ 2,815,840 $1,229,066
Cost of sales 1,020,541 70,559 1,161,900 222,362
Selling, general
and administrative
expenses 650,467 315,493 1,308,896 939,184
---------- -------- --------- ----------
Income (loss)
from operations 461,433 (142,002) 345,044 67,520
Other Income (deductions)
Interest expense ( 94,412) (4,856) ( 121,016) (17,277)
Interest income 6,149 1,923 11,826 11,718
Gain (loss) on sale
of marketable equity
securities ( 1,884) (364,303) ( 48,806) (365,267)
Unrealized gain(loss)on
marketable equity
securities (108,887) 93,279 ( 333,118) 233,712
Other income and
expense 6,381 ----- 6,381 75,000
Minority Interest 6,722 ----- 6,722 -----
------- -------- ---------- ----------
Income(loss) from continuing operations
before income
taxes 275,502 (415,959) ( 132,967) 5,406
Income tax (expense)
benefit ( 72,633) 108,610 5,760 54,875
-------- -------- ---------- ----------
Net income (loss) from continuing
operations 202,869 (307,349) ( 127,207) 60,281
Loss from operations of
discontinued Proactive
Solutions, Inc. ----- ----- ( 69,914) ----
Net income (loss) $ 202,869 $ (307,349) $( 197,121) $ 60,281
Net income (loss) per common and
common equivalent share -
primary and fully
diluted $ .025 $ ( .140) $ ( .048) $ .028
Adjusted shares outstanding
primary and fully
diluted 8,164,912 2,200,624 4,078,455 2,131,177
See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in Cash
(UNAUDITED)
Nine months ended
March 31, 1996
1996 1995
Cash Flows From Operating Activities:
Net Income (Loss) $ ( 197,121) $ 60,281
Adjustment to reconcile net income (loss)
to net cash (used in )provided by operating activities:
Depreciation and
amortization 79,511 82,983
Loss on sale of marketable
equity securities 48,805 365,267
Unrealized loss (gain)on marketable
equity securities 333,119 ( 233,712)
Allocate net loss to minority
interest ( 6,722) -----
Current expenses paid with
common stock 51,386 -----
Deferred tax benefit ( 15,014) ( 54,875)
Decrease in accounts receivable 20,267 9,674
Decrease in notes receivable 48,901 -----
(Increase) in inventories (242,674) -----
(Increase) in due from related
parties ( 327) -----
(Increase) decrease in prepaid
expenses (39,924) 6,758
(Increase) decrease in other
assets (53,841) 662
Decrease in accounts payable (61,803) ( 53,568)
Increase (decrease) in accrued
expenses 4,648 ( 91,301)
Decrease in customer deposits (151,751) -----
Decrease in income taxes payable (576,449) -----
Increase in accrued salaries 13,522 -----
Increase in due to related parties 98,954 -----
Decrease in deferred revenue ( 45,585) -----
Decrease in deferred compensation
payable (124,000) -----
-------- ----------
Net Cash (used in)provided by
Operating Activities ( 816,098) 92,169
Cash Flows from Investing Activities:
Purchases of property and
equipment ( 35,753) ( 101,813)
Purchases of marketable equity
securities ( 16,913) ( 325,173)
Capitalized software
expenditures ( 12,362) ( 878,337)
Cash to discontinued operations ( 6,977) -----
Purchase of subsidiary ( 144,000) -----
Minority interest purchase
of subsidiary 72,000 -----
Proceeds from sale of investments 18,823 119,731
Cash received on purchase of
subsidiary 296,916 -----
----------- ----------
Net Cash provided by (used in)
investing activities 171,734 (1,185,592)
Cash Flows from Financing Activities:
Proceeds from exercise of stock
warrants 1,151,154 -----
Proceeds from exercise of
stock options 458 -----
Proceeds from issuance of common
stock ----- 744,940
Repayment of obligations under
capital leases ( 51,311) ( 46,208)
Proceeds from notes payable 1,825,726 -----
Principal payments on notes
payable (2,033,446) -----
Loans to employees 1,300 4,550
---------- ---------
Net Cash provided by financing
activities 893,881 703,282
Net Increase (Decrease) in Cash
and Cash Equivalents 249,517 ( 390,141)
Cash and Cash Equivalents,
Beginning of Period 98,911 611,038
---------- ---------
Cash and Cash Equivalents,
End of Period $ 348,428 $ 220,897
Supplemental Disclosure of Cash Flow Information:
Cash Payments of:
Interest $ 256,189 $ 17,277
Income Taxes $ 585,000 ------
Non-cash investing and financing activities:
Reacquire common stock in exchange for
assets and liabilities of Proactive
Solutions, Inc. 294,754 -----
Cancel common stock received ( 15,000) -----
Issue stock in payment of debt 317,822 -----
Issue stock to purchase CFHI 2,163,467 -----
See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Capital In
Excess of TOTAL
Common Stock Par Accumulated Stockholders'
Shares Amount Value Deficit Equity
Balance
June 30,
1994 2,055,288 $82,211 $27,317,250 ($23,511,876) $3,887,585
Exercise of
Common Stock
options 150,139 6,006 672,131 678,137
Net Loss for Year (3,864,237) (3,864,237)
Balance
June 30,
1995 2,205,427 88,217 27,989,381 (27,376,113) 701,485
Common stock
issued for debt
extinguish-
ment 201,500 8,060 309,762 317,822
Reacquired and canceled
stock from dissolution of
Proactive Solutions,
Inc. (375,000) ( 15,000) 294,754 279,754
Exercise of common
stock
options 11,444 458 458
Exercise of common
stock
warrants 571,827 22,873 1,128,281 1,151,154
Common stock issued
Purchase of Capital First
Holdings,
Inc. 8,559,077 342,363 1,821,104 2,163,467
Net Loss for
the Nine Months
ended March 31,
1996 ( 197,121) ( 197,121)
- -------------------------------------------------------------------
Total as of
March 31,
1996 11,174,275 $446,971 $31,543,282 $(27,573,234) $4,417,019
See Accompanying Notes to Condensed Consolidated Financial Statements
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Financial Presentation
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 accompanying consolidated
financial statements and related notes should be read in conjunction with
the audited financial statements of Proactive Technologies, Inc. (the Company)
, and notes thereto, as found in Form 10-KSB for the fiscal year ended June
30, 1995. A copy of such consolidated financial statements and notes thereto
may be obtained by writing to the Company. 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
periods presented. The results of operations for the interim periods are
not indicative of the results to be expected for the full year.
(2) Chapter 11 Bankruptcy
As was reported on Form 8-K which was filed on September 13, 1995, the
Company, along with two operating subsidiaries, Keystone Laboratories, Inc.
(KLI) and Proactive Solutions, Inc. (PSI), was voluntarily placed under the
protection of the United States Bankruptcy Court for the Northern District
of Oklahoma (the Court) on September 1, 1995, the Court confirmed the
Equity Security Holders' Plan of Reorganization (the Plan), one result of
which is PSI is no longer a subsidiary of the Company. The Company
transferred all assets and liabilities of PSI to the former shareholders of
PSI in exchange for the return of the original shares of the Company issued
upon the acquisition of PSI. The Company canceled these returned shares in
December of 1995. In connection with the confirmation of the Plan, the
Court dissolved the order administratively consolidating the Company's
Chapter 11 proceeding with the Chapter 11 proceeding of PSI. KLI's Chapter
11 bankruptcy petition was dismissed without prejudice by the Court on
September 25, 1995.
Under the Plan, primarily all the Company's creditors were to be paid in
full within six months of the effective date of the Plan. Most of these
creditors were paid in December of 1995 with the issuance of the Company's
common stock, and all but one remaining creditor was paid in January of 1996.
As of the date of this filing, all claims have been paid and the Company has
requested a hearing of the Bankruptcy Court dismissing the Company from
bankruptcy.
Under the Plan, the Company is authorized to issue a total of sixty
million (60,000,000) shares of common stock. In addition, certain classes of
current stockholders of the Company received warrants entitling them to
purchase shares of the Company's common stock at a price of $.50 per share
($2.00 per share after the reverse stock split) for a period of six months
in exchange for the release of their respective shareholder claims against
the Company. As of March 31, 1996, 571,827 warrants have been exercised.
(3) Reverse Stock Split
A one for four reverse stock split of the Company's common stock was
approved through written consent by the holders of 51.28% of the outstand-
ing shares of the Company and became effective January 31, 1996. This
decreases the number of issued and outstanding shares of common stock by
75%, and increases the par value of each such share from $0.01 to $0.04. All
references in the accompanying consolidated financial statements to the
number of common shares, par value per share and other per share information
have been restated to give retroactive effect to the one for four reverse
stock split for all periods presented.
(4) Acquisitions
On February 10, 1996, the Company entered into an agreement to
incorporate a wholly-owned subsidiary called Decocrete Worldwide, Inc.
(Worldwide) for the purpose of purchasing the net assets of Decocrete
International, Inc. (International) for the purchase price of $144,000 a
total of $72,000 was distributed to International and $72,000 was given to
Worldwide in payment of twenty per cent of the Worldwide stock to be issued
to the International shareholders. Subsequent to the acquisition,
International was dissolved with the $72,000, the only remaining asset being
distributed to its shareholders. The net after-tax profits of Worldwide will
be allocated sixty percent (60%) to the Company and forty percent (40%) to
Worldwide's minority shareholders. The results of operations of Worldwide
are included with the results of the Company beginning February 10, 1996.
Next, as reported on Form 8-K which was filed on February 22, 1996, on
February 12, 1996, the Company acquired all of the issued and outstanding
shares of common stock of Capital First Holdings, Inc. and its subsidiaries
(Capital) from Mark A. Conner in exchange for a total of 8,559,077
(approximately eighty percent (80%)) of the issued and outstanding shares of
common stock of the Company. The acquisition of Capital was accounted for in
a manner similar to a reverse acquisition. Finally in connection with this
acquisition, Mr. Conner was also elected Chairmain of the Board and
President and Chief Executive Officer of the Company, pursuant to a five year
employment agreement.
Capital is a real estate developer in Florida which designs and develops
single-family subdivisions for residential lots and condominiums principally
in the Tallahassee, Leon County and Vero Beach areas. For the twelve (12)
month period ended December 31, 1995, Capital generated approximately
$30,000,000 in revenues and approximately $2,700,000 in net income before tax
and loss from discontinued operations. As of December 31, 1995, Capital
owned approximately $22,000,000 in total assets. The results of operations of
Capital are included with the results of the Company beginning February 12,
1996.
On February 12, 1996, the Company acquired from Capital $20,856,707 in
total assets, $18,693,240 in total liabilities and $2,163,467 in total
equity. No purchase price allocation adjustments have been made at this time
but the balances are subject to adjustments which may be determined later.
The consolidated pro forma condensed income statement which follows
assumes that the acquisition of Worldwide and Capital had occurred at the
beginning of each period presented. The calculations include adjustments for
depreciation, amortization and interest. The weighted number of shares
assumes that the reverse stock split has occurred and the 8,559,077 shares
have been issued to Mark A. Conner.
Nine Months Year
Ended Ended
March, June 30
1996 1995
(Unaudited) (Unaudited)
Revenues $ 21,713,666 $31,727,791
Net Income (Loss) 910,162 ($ 3,055,009)
Net Income (Loss) per share $ .084 ($ 0.29)
PROACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(continued)
Weighted Average Number
of shares 10,829,039 10,704,544
The pro forma statements presented above are not necessarily indicative
of what actually would have occurred if the acquisitions had been in effect
for the entire periods presented. In addition they are not intended to be a
projection of future results.
(5) Subsequent Events
On or about 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. Subsequently, in May 1996, the
Company has entered into an agreement to purchase a controlling interest in
KPI, the details of which are in the process of being finalized.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company had four subsidiaries for the periods included in this
report; Capital First Holdings, Inc. (Capital), Decocrete Worldwide, Inc.,
(Worldwide), Keystone Laboratories, Inc. (KLI) and Proactive Solutions, Inc.
(PSI).
Capital, a real estate development company, became a wholly owned
subsidiary of the Company on February 12, 1996. The March 31, 1996 Balance
Sheet of Capital and results of Operations of Capital from February 12, 1996
to March 31, 1996 are included in this report.
Worldwide, a manufacturer of decorative concrete, became an 80% owned
subsidiary of the Company on February 10, 1996. Included in this report is
the March 31, 1996 Balance Sheet of Worldwide and the results of operations
from February 10, 1996 to March 31, 1996. Sixty percent of the net income
(loss) is included in the Company's results of operations with the remaining
forty percent allocated to the minority shareholders.
KLI is a wholly-owned subsidiary of the Company and operates a urine
drug screening laboratory in Asheville, North Carolina. Approximately 90% of
the Company's drug testing customers are located in the mid-South region and
many of them are in the textiles and furniture manufacturing industries.
PSI was a company in the product development stage which never actually
commenced operations. As mentioned above, as a result of the confirmation by
the Court of the Equity Holders' Plan of Reorganization on November 21, 1995,
PSI is no longer a subsidiary of the Company. For the periods included in
this report, PSI was developing computer software for business management and
project management and the resulting losses from these endeavors were
recorded as losses from discontinued operations for the nine months ended
March 31, 1996.
Results of Operations
Nine months and three months ended March 31, 1995 compared to nine months
and three months ended March 31, 1996.
Net sales increased $ 1,586,774, or 129% from the first nine months of
fiscal year 1995 to the first nine months of fiscal year 1996. Net sales
increased $ 1,888,391, or 774% from the third quarter of fiscal year 1995 to
the same period in fiscal year 1996. The increase in net sales for the nine
months and three months ended March 31, 1996 reflected net sales of
$ 1,864,615 attributable to the acquisitions made during the third quarter of
fiscal 1996 with the remaining changes due to fluctuations of volume at KLI.
Cost of sales increased $ 939,538, or 423% and $ 949,982, or 1,346%, for
the first nine months and three months, respectively, of fiscal year 1995
compared to the first nine months and three months, respectively, of fiscal
year 1996. This was due primarily to the increase in net sales volume
generated by the acquisitions made during the third quarter of fiscal 1996.
Selling, general, and administrative expenses increased $ 369,712, or
39% from the first nine months of fiscal year 1995 to the first nine months
of fiscal year 1996. Selling, general and administrative expenses increased
$ 334,974, or 106% from the third quarter of fiscal year 1995 to the third
quarter of fiscal year 1996. Selling, general and administrative expenses
of the operations acquired during the third quarter of fiscal year 1996
accounted for $ 314,577 of the respective increases for the the three and
nine months ended March 31, 1996.
Interest expense increased $ 103,739 or 600% and $ 89,556, or 1,840%
from the nine month and three month period ended March 31, 1995,
respectively, compared to the nine and three month period ended March 31,
1996, primarily due to the interest on the notes payable of the companies
acquired during the third quarter of fiscal year 1996.
The realized loss on sale of marketable securities decreased $ 316,461
and $ 362,419 from the nine month period and three month period ended March
31, 1995, respectively, compared to the nine month and three month period
ended March 31, 1996. These losses are due to the sale of investments for a
price less than their respective purchase prices.
The Company recorded an unrealized gain on marketable equity securities
of $ 233,712 and $ 93,279 for the nine month and three month periods ended
March 31, 1995, respectively, compared to an unrealized loss on marketable
securities of $ 333,118 and $ 108,887 for the same periods in fiscal
year 1996. These unrealized gains and losses are attributable to
adjustments of the book value of the marketable equity securities to the
market value for each reporting period.
In the nine months ended March 31, 1995, $75,000 in other income was of
a non-recurring nature. The minority interest of $6,722 for the nine and
three months ended March 31, 1996, reflects the Worldwide net loss that was
allocated to the minority shareholders.
Financial Condition
For the nine months ended March 31, 1996, the Company experienced a net
increase in cash of $ 249,517 which is primarily attributable to cash
received from the exercise of warrants of $1,151,154 and cash received from
acquisitions of $296,916 offset by cash used to purchase Worldwide, service
debt and outlays for operations.
Total assets increased $ 20,744,796 from June 30, 1995 to March 31, 1996
primarily due to the following factors: an increase of $ 20,943,227 due to
the acquisitions made in the third quarter of fiscal year 1996: a decrease of
$ 383,834 in the value of marketable equity securities which consisted of a
$ 333,118 reduction in market value and a $ 50,716 reduction due to sales of
securities offset by purchases; an increase in inventories of $254,656;
goodwill of $143,550 recorded for the Worldwide purchase and the transfer of
all the assets of PSI in the amount of $168,091 back to the orginial PSI
shareholders.
Total liabilities increased $ 16,963,984 from June 30, 1995 to March 31,
1996, primarily due to the following factors: an increase of $ 18,779,759 due
to the acquisitions made in the third quarter of fiscal year 1996; a decrease
of $585,000 from payment of income taxes; a decrease due to all of the
liabilities of PSI in the amount of $447,846 being transferred back to the
original PSI shareholders and $263,250 from debt being paid off by the
issuance of common stock.
Liquidity
The Company believes that, for the foreseeable future, funds from the
Company's operations will be sufficient to support its current operations.
The proceeds from the exercise of warrants issued in the bankruptcy plan
produced sufficient cash flow to pay the Company's remaining creditors under
the bankruptcy plan.
The Company is in negotiations with several interested purchasers for
KLI and the Company has a target date of the end of calendar 1996 to
complete the transaction.
As a result of the acquisitions of Capital and Worldwide along with the
contemplated sale of KLI, 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 in Tallahassee and Vero Beach, Florida areas and of
developing the business of Worldwide. The Company's pending acquisition of
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.
Finally, it is anticipated in the near future that the Company will
acquire approximately $10,000,000 in real estate holdings in the Albany and
Thomasville, Georgia area and in Cape San Blas, Florida.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
As was discussed above in ITEM 2 of the Notes to the financial
statements, on September 1, 1995, the Company along with its two
subsidiaries at the time, KLI and PSI, voluntarily filed for protection
under Chapter 11 of the United States Bankruptcy Code with the United States
Bankruptcy Court for the Northern District of Oklahoma. On November 21, 1995
the Court confirmed the Equity Security Holders' Plan of Reorganization. The
information contained in that discussion therein is incorporated herein by
reference. All of the creditors in the Plan as well as claimants of the
Court have been paid; the Company has petitioned the Bankruptcy Court for a
hearing to allow its discharge from bankruptcy.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Bankruptcy Court ordered that a summary of the Disclosure Statement
and Plan of Reorganization, along with a ballot for voting be mailed to all
shareholders; holders of 8,221,285 shares voted to accept the Plan, and
holders of 1,080 shares voted to reject the Plan.
On December 22, 1995 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 issued and outstanding agreed to enter
into the stock purchase agreement with Capital First Holdings, Inc. and
agreed to effect a one for four reverse stock split of the outstanding shares
of common stock of the corporation.
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:
The following reports on Form 8-K were prepared and filed during the
quarter ended March 31, 1996:
(1) February 22, 1996: The Company announced it had completed its
acquisition of all the issued and outstanding shares of the common stock of
Capital First Holdings, Inc. and its subsidiaries from Mark A. Conner in
exchange for approximately eighty percent of the issued and outstanding
shares of the Company.
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)
By: /s/ Mark A. Conner
Mark A. Conner, President,
and Chief Executive Officer
Date: June , 1996