-----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, ARZZGD20fkIIE0zQIXLPprQ6FgNEVvBmLzx+9wqOt9sL7nIgognwlYXUTxzrkRjn WiUPQcz/LEwUP77yo6F1ZA== 0000897101-97-000530.txt : 19970513 0000897101-97-000530.hdr.sgml : 19970513 ACCESSION NUMBER: 0000897101-97-000530 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19970512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH ATLANTIC TECHNOLOGIES INC CENTRAL INDEX KEY: 0000706021 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 411390785 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12768 FILM NUMBER: 97600443 BUSINESS ADDRESS: STREET 1: 8120 PENN AVE S STE 435 CITY: BLOOMINGTON STATE: MN ZIP: 55431 BUSINESS PHONE: 6128888553 MAIL ADDRESS: STREET 1: 8120 PENN AVE SOUTH STREET 2: STE 435 CITY: BLOOMINGTON STATE: MN ZIP: 55431 10QSB/A 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A AMENDMENT NO.1 (Mark One) X Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For quarterly period ended: March 31, 1996 or ___ Transition report under Section 13 or l5(d) of the Exchange Act of 1934 For the transition period from _____ to _____ Commission File Number: 2-85984-C North Atlantic Technologies, Inc. (Exact name of small business issuer as specified in its charter) Minnesota 41-1390785 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 8120 Penn Avenue South, Suite 435, Bloomington, Minnesota 5543l (Address of principal executive offices) (Zip Code) Issuer's telephone number 612-888-8553 - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 ___. State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date. 3,292,689 common shares as of March 31, 1996. Transitional business format? Yes_____ No X PART I - FINANCIAL INFORMATION ITEM I - FINANCIAL STATEMENTS
NORTH ATLANTIC TECHNOLOGIES, INC. (DEBTOR-IN-POSSESSION) BALANCE SHEETS (UNAUDITED) MARCH 31, DECEMBER 31, ASSETS 1996 1995 (As restated, See Note 4) ----------- ----------- CURRENT ASSETS Cash and equivalents $ 44,092 $ 44,607 Trade accounts receivable, net of allowance for doubtful accounts of $339,440 at March 31, 1996 and at December 31, 1995 1,086,230 818,887 Other receivable 171,404 171,404 Inventories 149,458 145,356 Costs and estimated earnings in excess of billings on uncompleted contracts 256,941 Other current assets 25,424 29,029 ----------- ----------- Total current assets 1,733,549 1,209,283 PROPERTY AND EQUIPMENT Land 695,792 92,510 Buildings and leasehold improvements 504,209 692,441 Machinery and equipment 477,871 1,211,914 Office furniture and equipment 26,423 153,945 Automobiles 0 11,666 ----------- ----------- Totals 1,704,295 2,162,476 Less accumulated depreciation 0 (1,305,351) ----------- ----------- Net property and equipment 1,704,295 857,125 OTHER ASSETS Patent rights 100,000 Other assets 12,399 3,652 Reorganization value in excess of amounts allocated to identifiable assets 420,886 ----------- ----------- Total other assets 533,285 3,652 ----------- ----------- $ 3,971,129 $ 2,070,060 =========== ===========
See notes to financial statements. ITEM 1 (Continued)
NORTH ATLANTIC TECHNOLOGIES, INC. (DEBTOR-IN-POSSESSION) BALANCE SHEETS (UNAUDITED) MARCH 31, DECEMBER 31, LIABILITIES AND EQUITY 1996 1995 (As restated, See Note 4) ----------- ----------- Current liabilities Postpetition Trade accounts payable $ 729,785 -- Billings in excess of costs and estimated earnings on uncompleted contracts 129,290 -- Accrued liabilities: Taxes other than income 6,329 -- Compensation 47,690 -- Interest 17,708 -- Other 11,078 -- ----------- ----------- Total 941,880 -- Prepetition (See Note 3) Current maturities of long-term debt $ 1,846,565 $ 3,547,622 Trade accounts payable 454,495 878,422 Other accounts payable 393,428 393,428 Billings in excess of costs and estimated earnings on uncompleted contracts -- 477,893 Accrued liabilities: Taxes other than income -- 15,219 Warranty reserve 175,000 200,000 Compensation 31,309 42,198 Interest -- 170,378 Other 87,830 -- ----------- ----------- Totals 2,988,627 5,725,160 Total current liabilities 3,930,507 5,725,160 Lease obligations, net of current maturities 14,957 12,251 Total liabilities 3,945,464 5,737,411 STOCKHOLDER'S DEFICIT Preferred stock 216 0 Common stock, $.01 par, authorized 5,000,000 shares, issued and outstanding 2,544,929 25,449 0 Common stock, no par value; authorized 5,000,000 shares; issued and outstanding 2,392,689 at December 31, 1995 0 3,047,804 Accumulated deficit 0 (6,715,155) ----------- ----------- Total stockholders' equity (deficit) 25,665 (3,667,351) ----------- ----------- $ 3,971,129 $ 2,070,060 =========== ===========
See notes to financial statements. ITEM 1 (Continued)
NORTH ATLANTIC TECHNOLOGIES, INC. (DEBTOR-IN-POSSESSION) STATEMENTS OF OPERATIONS (UNAUDITED) Quarter Ended March 31 ---------------------- 1996 1995 (As restated, See Note 4) ----------- ----------- REVENUES $ 1,394,512 $ 1,838,998 COST OF REVENUES 782,682 1,403,212 ----------- ----------- GROSS PROFIT 611,830 435,786 OPERATING COSTS 411,931 499,475 ----------- ----------- OPERATING INCOME (LOSS) 199,899 (63,689) OTHER INCOME (EXPENSE) Royalty and services income 6,245 1,244 Interest expense (contractual interest in 1996 was $123,891) (82,372) (105,284) Rental and other income 10,350 27,949 ----------- ----------- (65,777) (76,091) ----------- ----------- INCOME(LOSS) BEFORE REORGANIZATION ITEMS AND EXTRAORDINARY ITEM 134,122 (139,780) REORGANIZATION ITEMS (NOTE 4) 1,380,468 -- ----------- ----------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 1,514,590 ($ 139,780) EXTRAORDINARY ITEM - Gain on conversion of debt 2,154,736 0 NET INCOME (LOSS) $ 3,669,326 ($ 139,780) =========== =========== NET INCOME (LOSS) PER COMMON SHARE: Loss (income) before reorganization items and extraordinary item $ .13 ($ .18) Reorganization items 1.37 Extraordianry item 2.14 ----------- ----------- Net (loss) income $ 3.64 ($ .18) ----------- ----------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 1,008,552 797,563 =========== ===========
See notes to financial statements ITEM 1 (Continued)
NORTH ATLANTIC TECHNOLOGIES, INC. (DEBTOR-IN-POSSESSION) STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter Ended March 31 ---------------------- 1996 1995 (As restated, See Note 4) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 777,708 $ 1,088,775 Cash paid to suppliers & employees (1,021,749) (1,533,024) Interest, rent and royalties received 17,453 28,466 Interest paid (58,616) (45,436) ----------- ----------- Net cash used in operating activities (285,204) (461,219) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,213) (17,211) Proceeds from disposal of fixed assets -- 400 Additions of other assets (8,747) -- ----------- ----------- Net cash used in investing activities (9,960) (16,811) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 300,000 500,000 Payments of long-term debt (5,351) (23,636) ----------- ----------- Net cash provided by financing activities 294,649 476,364 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (515) (1,666) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 44,607 41,384 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 44,092 $ 39,718 =========== =========== RECONCILIATION OF NET INCOME (LOSS) TO NET CASH USED IN OPERATING ACTIVITIES: Net Income (loss) $ 3,669,326 $ (139,780) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 39,191 50,141 Stock issued for compensation 2,250 Gain on disposal of equipment -- (400) Gain on extinguishment of debt and affect of fresh start reporting (3,560,770) -- Changes in assets and liabilities: Receivables (267,343) (684,354) Inventories (4,102) (73,041) Other current assets 10,355 12,210 Accounts payable and accrued liabilities 431,433 337,709 Net increase (decrease) in billings related to costs and estimated earnings on uncompleted contracts (605,544) 36,296 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES $ (285,204) $ (461,219) =========== ===========
See notes to financial statements Item I (continued) NORTH ATLANTIC TECHNOLOGIES (DEBTOR-IN-POSSESSION) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the results of operations for the periods presented have been made. The Company's financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a result of the 1993, 1994 and 1995 net losses, the Company's financial resources have been strained. As of March 31, 1996, current liabilities exceed current assets by $2,221,958 and the Company has a net capital deficiency of $3,574,795. In addition, on February 1, l996, the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. A Plan of Reorganization was initially confirmed by the United States Bankruptcy Court on April 19, 1996 and approved on May 7, 1996, as amended (See Note 3). These factors, among others, indicate that the Company may be unable to continue as a going-concern for a reasonable period of time. In addition to emergence from Chapter 11 (as discussed in Item 2), the Company's continuation as a going-concern is dependent on its ability to generate sufficient cash flow from operations, and obtain additional financing to meet its obligations on a timely basis. The Company's business is currently dependent on large projects in the industrial sector. These projects involve long order cycles, and exact order placement dates are beyond the control of the Company. While the Company utilizes a progress billing procedure, there are periods of net cash outflows when cash flow is of concern. During l995 and through March 31, 1996, the Company was able to manage its normal operating cash flow through the use of internally generated funds and its established line of credit. 2. Earnings per share - when calculated on a fully diluted basis, per share amounts and average shares outstanding are identical to the amounts shown in the Statement of Operations. In January, 1996, 900,000 shares of the Company's common stock were issued at a market value of $.01 per share. The market value of the shares total $9,000 and is being charged to expense during 1996. 3. Subsequent Event - On February 1, 1996 the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. As stated in Note 1, the Plan of Reorganization was approved, as amended, on May 7, 1996. The Plan of Reorganization provided that: a) Subordinated Debenture Holders will receive one share of common stock for each $1.50 owed by the Company. In addition, each debenture holder will receive one share of convertible preferred stock at $0.01 par value, with $25 redemption value for each $100 of debenture debt of the Company, and b) Each existing equity holder will be issued one share of common stock in return for the cancellation of three shares owned by the shareholder. c) $500,000 of the line of credit borrowings would be converted to a five-year note bearing interest at a rate of up to 12%, with the remainder, including an additional $200,000 in financing which will become available upon approval of the plan, being financed under a new line of credit at comparable rates with required monthly reductions of $25,000 commencing May 1, 1996. It has been subsequently agreed to defer reduction of the line of credit in $25,000 increments until August 1, 1996. On May 8, 1996 a note was signed with the foregoing terms. d) All other general creditors claims will be settled in full upon a schedule to be agreed upon between the Company and its creditors. Under the terms of the Plan of Reorganization, Debenture Holders will receive 1,446,284 newly-issued common shares, and 21,695 newly-issued preferred shares. Following the 3-for-1 reverse split of the no par common stock, 3,292,689 common shares will be canceled and replaced with 1,097,563 newly-issued common shares. The total outstanding common shares following the above common stock adjustments will be 2,543,847. If the adjustments occurred on January 1, 1996, supplemental earnings per share for the first quarter of 1996 would have been unchanged as reported at $.04. The adjustments to reflect the consummation of the Plan have not been recorded in the accompanying financial statements. For the second quarter of 1996, the Company expects to record an extraordinary gain in the amount of $2,154,746 from the conversion of Subordinated Convertible Debentures into capital stock. Upon emerging from Chapter 11, the reorganization value of the assets immediately before the date of confirmation will be less than the total of all postpetition liabilities and allowed claims, and since holders of existing voting shares immediately before confirmation will receive less than 50 percent of the voting shares of the emerging entity, the Company will adopt Fresh-Start reporting in the second quarter, 1996. 4. Restatement Subsequent to the filing of the Predecesor Company's first quarter results on Form 10-QSB, the Successor Company elected to apply the provisions of "fresh-start" reporting under SOP 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." Under the provisions of SOP No. 90-7, the Company was required to apply "fresh start" reporting since the reorganization value, as defined, was less than the total of all postpetition liabilities and allowed claims, and holders of voting shares immediately before confirmation of the Plan received less than 50% of the voting shares of the emerging entity. Under this concept, all assets and liabilities are restated to reflect the reorganization value of the reorganized entity, which approximates its fair value at the date of reorganization. The financial statements of the reorganized entity are referred to herein as the Company or the Successor Company, and the financial statements of the entity up to the date the Plan was implemented are referred to herein as the Predecessor Company. To determine an estimate of its reorganization value, the Company utilized a combination of the estimated proceeds and recovery it would obtain from its assets and the value of its capital structure as perceived by the Company and others. Based upon these factors, the Company established a reorganization value (total assets less liabilities) of the reorganized entity of $25,665. The Company allocated the reorganization value to the net book value of tangible assets as follows: Land $603,282 Machinery and Equipment 268,759 Office Furniture and Equipment 13,107 Patent 100,000 -------- $985,148 ======== Under the provisions of SOP No. 90-7, the difference between the reorganization value of the assets and the fair value assigned to specific tangible and identified intangible assets was reported as an intangible asset identified as "reorganization value in excess of amounts allocable to identifiable assets." This amount is being amortized over ten years. In addition, the accumulated deficit of the Company was eliminated, and its capital structure was recast in conformity with the approved Plan. The net effect of all fresh start reporting adjustments resulted in income of $1,406,034 which is included within the Reorganization Item in the statement of operations of the Predecessor Company for the three months ended March 31, 1996, net of legal costs of $25,556 relating to the bankruptcy proceedings. The following table summarizes the adjustments required to record the reorganization of the Company and the issuance of various securities in connection with the implementation of the Plan. The presentation is presented as if the Plan of Reorganization was effective as of April 1, 1996.
Convertible Subordinated PRE- Debt Reverse SUCCESSOR DECESSOR Discharge Stock Split COMPANY'S COMPANY and Related for Existing Reorganized Pre- Issuance of Common "Fresh Start" Balance Confirmation Capital Stock Shareholders Reporting Sheet ------------ ------------- ------------ ------------- ----------- CURRENT ASSETS $1,733,549 $1,733,549 PROPERTY AND EQUIPMENT, net 819,147 $ 885,148 1,704,295 OTHER ASSETS: Patent 100,000 100,000 Reorganization value in excess of amounts allocable to identifiable assets 420,886 420,886 Other 12,399 12,399 ---------- ---------- $2,565,095 $ -- $ -- $1,406,034 $3,971,129 ========== ========== =========== ========== ========== LIABILITIES NOT SUBJECT TO COMPROMISE: Current liabilities $3,930,507 $3,930,507 Lease obligations (long-term) 14,957 14,957 ---------- ---------- 3,945,464 3,945,464 LIABILITIES SUBJECT TO COMPROMISE: Convertible Subordinated Debentures and related interest payable 2,169,426 (2,169,426) ---------- ---------- Total Liabilities 6,114,890 (2,169,426) 3,945,464 STOCKHOLDERS' EQUITY (DEFICIT): Preferred Stock 216 216 Common Stock (no par) 3,056,804 $(3,056,804) Common Stock ($.01 par) 14,474 10,975 25,449 Accumulated Deficit (6,606,599) 2,154,736 3,045,829 1,406,034 ---------- ---------- ----------- ---------- ---------- (3,549,795) 2,169,426 -- 1,406,034 25,665 ---------- ---------- ----------- ---------- ---------- $2,565,095 $ -- $ -- $1,406,034 $3,971,129 ========== ========== =========== ========== ==========
Because the Form 10-QSB had already been filed for the quarter ended March 31, 1996, the Successor Company did not present the fresh start adjustments in the statement of operations of the Predecessor Company for the quarter ended March 31, 1996. Accordingly, the financial statements of the Predecessor Company for the quarter ended March 31, 1996 have been restated to present the fresh start reporting adjustments. The Plan of Reorganization also resulted in the previously outstanding shares of no par common stock being cancelled and replaced with one share of $.01 par common stock for every three shares previously outstanding. The following table summarizes the affect of this restatement and the 3-for-1 reverse split on the previously reported financial statement amounts: STATEMENT OF OPERATIONS DATA THREE MONTHS ENDED MARCH 31, 1996 --------------------------------- As previously As Reported Amended ------------- ---------- REORGANIZATION ITEMS 25,566 1,380,468 EXTRAORDINARY ITEM 0 2,154,736 NET INCOME 108,556 3,669,326 NET INCOME PER COMMON SHARE Net income before reorganization items and extraordinary item 0.04 0.13 Reorganization items 1.37 Extraordinary item 2.14 ---------- ---------- Net income 0.04 3.64 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 3,015,766 1,008,552 ========== ========== BALANCE SHEET DATA MARCH 31, 1996 -------------------------- As previously As Reported Amended ------------- ---------- ASSETS Property and equipment, net 819,147 1,704,295 Patent -- 100,000 Reorganization value in excess of amounts allocable to identifiable assets -- 420,886 LIABILITIES SUBJECT TO COMPROMISE Convertible subordinated debentures and related interest payable 2,169,426 -- STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock -- 216 Common stock (no par) 3,056,804 -- Common stock ($.01 par) -- 24,559 Accumulated deficit (6,606,599) -- PART 1 - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On February 1, 1996 the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. As stated in Note 1, the Plan of Reorganization was approved, as amended, on May 7, 1996. The Plan of Reorganization provided that: 1. Subordinated Debenture Holders will receive one share of common stock for each $1.50 owed by the Company. In addition, each debenture holder will receive one share of convertible preferred stock at $0.01 par value, with $25 redemption value for each $100 of debenture debt of the Company, and 2. Each existing equity holder will be issued one share of common stock in return for the cancellation of three shares owned by the shareholder. 3. $500,000 of the line of credit borrowings would be converted to a five-year note bearing interest at a rate of up to 12%, with the remainder, including an additional $200,000 in financing which will become available upon approval of the plan, being financed under a new line of credit at comparable rates with required monthly reductions of $25,000 commencing May 1, 1996. It has been subsequently agreed to defer reduction of the line of credit in $25,000 increments until August 1, 1996. On May 8, 1996 a note was signed with the foregoing terms. 4. All other general creditors claims will be settled in full upon a schedule to be agreed upon between the Company and its creditors. Revenues of $1,394,512 reflect a decrease of 24% from the $1,838,998 in revenues reported for the similar 3 month period in 1995. The revenue decline is offset, however, by the higher gross profit orders completed in the 3 months ended March 31, l996. Gross profit improved 33% to 35% in l996 from 20% in l995. The primary reason for the reduced gross profit in l995 were competitive pressures affecting pricing and underutilization of production facilities which results in increased inventory absorption of fixed costs per project. The order backlog at March 31, 1996 was $916,650 ($1,512,450 at April 26, 1996) compared to $1,036,000 at March 31, 1995. Operating costs as a percent of revenues for the first quarter were 22% in l996 and 23% in l995. The relatively constant percentage comparison for the two periods while experiencing a decrease in revenue reflects realization of cost containment goals and productivity improvements. Interest expense for the first quarter was $82,372 in 1996 and $105,284 in 1995. The change of $22,912 is accounted for by approximately $41,500 in interest expense on subordinated debentures which are subject to compromise, and an increased borrowing level in the bank line of credit and mortgage loan (which was executed in June, 1995). The working capital position of the Company improved by $2,318,919 at March 31, 1996, which was almost solely accounted for by the cancellation of Subordinated Debentures payable (and related interest) in exchange for common shares. As of March 31, 1996, the Company was fully drawn on its available line of credit in the amount of $1,450,000, which includes approximately $100,000 in certain standby letters of credit. There are no assurances that any further funding will be available from current sources, or that the current sources (when renewed) will be sufficient. If these resources are insufficient, other sources of funding would need to be developed. There are also no assurances that such funding would be available or that the terms of such funding would be on terms acceptable to the Company. The cancellation of the Subordinated Debentures in exchange for common shares created a positive equity balance of $25,665 as compared to a deficiency in stockholders equity in 1995 of $3,667,351. The Company believes that the Plan of Reorganization, specifically the conversion of the debentures to equity and the cancellation of the debenture interest, and the improvement in the global marketplace for its products will strengthen its position as a going concern. However, the Company's ability to operate as a going concern is subject to a number of risks and uncertainties including the Company's ability to generate sufficient funds from operations and the demand for the Company's products, which is subject to general economic, competitive and industry-specific conditions. PART 2 - OTHER INFORMATION Item 1. Legal Proceedings. On February 1, 1996, North Atlantic Technologies, Inc. (the "Company") filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court, District of Minnesota (the "Bankruptcy Court"), case No. 3-96-0526. On April 19, 1996, the Bankruptcy Court entered an Order confirming the Company's Amended Plan of Reorganization dated March 8, 1996 (the "Plan"), and the Company's Second Amended Disclosure Statement dated March 13, 1996 (the "Disclosure Statement"). On April 26, 1996, the Company filed a Motion to Amend the Plan of Reorganization which was granted by the Bankruptcy Court on May 7, 1996. The amendment was not substantive, and dealt only with the mechanics of the contemplated reorganization transactions. Item 2. Changes in Securities. On April 19, 1996, the Bankruptcy Court entered an Order confirming the Plan and approved on May 7, 1996, a Motion to Amend the Plan. Under the terms of the Plan the Company will effect a 1-for-3 reverse split of its no par common stock ("Old Common Stock"), which is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended, issued and outstanding as of the date of the Plan's confirmation. In accordance with the Plan, on May 9, 1996 the Company declared the reverse split which will become effective at the close of business on May 31, 1996 for shareholders of record as of the close of business on May 21, 1996. The 3,292,689 shares of Old Common Stock which were issued and outstanding as of the record date will become approximately 1,097,563 shares of newly-authorized $0.01 par value common stock ("New Common Stock"). In addition, in accordance with the Plan, the Company's issued and outstanding 12.5 percent Subordinated Convertible Debentures ("Debentures") will be exchanged for a combination of New Common Stock and newly-authorized preferred stock ("Preferred Stock"). On May 9, 1996 the Company declared the exchange which will become effective at the close of business on May 31, 1996 for Debenture holders of record as of the close of business on May 21, 1996. In exchange for their Debentures, holders will receive a total of approximately 1,446,284 shares of New Common Stock and a total of approximately 21,695 shares of Preferred Stock. Each share of Preferred Stock will be convertible into one share of New Common Stock voluntarily through June 1, 1999, and will automatically become New Common Stock after June 1, 1999. Holders of shares of Preferred Stock will have one vote for each share of Preferred Stock held, and will be entitled to cast that vote as a class on all matters brought to a vote before the holders of Preferred Stock, and with all other capital stock holders on all matters brought before the Company's shareholders generally. After giving effect to the Plan, the collective ownership interest in the Company of holders of shares of the Company's Old Common Stock will effectively decrease from 100% to approximately 43%. In the case of a liquidation of the Company, holders of Preferred Stock will be entitled to receive up to $25 in value from the assets available for distribution to equity stock holders before any distribution may be made to holders of New Common Stock. Dividends will be paid on the Preferred Stock at the discretion of the Board of Directors. However, dividends may not be paid on New Common Stock unless like dividends per share are paid on Preferred Stock. Item 3. Defaults Upon Senior Securities. Upon confirmation of the Plan by the Bankruptcy Court the Company's two defaults have been eliminated. From November 15, 1995 through the Plan confirmation date the Company had been in default under the terms of the Indenture dated December 31, 1985 which governs the Company's outstanding Debentures. From November 15, 1995 through the Plan confirmation date the Company had also been in default under the terms of the Company's Line of Credit Agreement with First Bank, N.A., as amended. Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 27 Financial Data Schedule (b) Reports on Form 8-K. On February 13, 1996 the Company filed a Current Report on Form 8-K reporting the filing by the Company on February 1, 1996 of a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. No financial statements were included in the filing of the Current Report. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. North Atlantic Technologies, Inc. /s/ Bruce A. Watson May 14, 1996 Bruce A. Watson Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and principal accounting officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 MAR-31-1996 44,092 0 1,425,670 (339,440) 149,458 1,733,549 1,704,295 1,344,542 3,971,129 3,930,507 0 0 216 25,449 0 3,971,129 1,394,512 1,394,512 883,617 310,996 (16,595) 0 82,372 1,514,590 0 1,514,590 0 2,154,736 0 3,669,326 3.64 3.64
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