UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report January 15, 1998
DATAMARINE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
0-8936
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(Commission File Number)
Massachusetts 04-2454559
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(State of Incorporation) (I.R.S. Employer
Identification Number)
7030 220th NW, Mountlake Terrace, Washington 98043
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(Address of principal executive offices)
(425)771-2182
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(Registrant's telephone number, including area code)
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Item 5. Other Events
Subsequent to Datamarine International, Inc's (the "Company") year end, and
prior to the release of its annual report, the Company received notice from
Alta Subordinated Debt Partners III, L.P. (the "Lenders") of an alleged
violation of certain covenants pursuant to the Debenture Purchase Agreement
dated December 19, 1995. The alleged violations relate to loans in the form of
subordinated short term notes (the "Notes") made to the Company during
September 1997 by a group of individuals including an officer and a director of
the Company (see Form 8-K filed September 22, 1997). The alleged violation is
based on a breach of financial covenants concerning additional debt, and is not
based on the particular terms of the Notes, nor is it a payment related
default.
The Lenders are claiming that an event of default has occurred, that the
default has remained uncured for more than thirty days, and that the
Convertible Subordinated Debentures (the "Debentures") are immediately due and
payable. Management of the Company believed that it had the consent of the
Lenders with respect to the Notes, and does not agree with the claims made by
the Lenders.
Since the scheduled maturity of the Debentures is December 19, 2000,
acceleration would have an effect on the Company's financial statements,
liquidity, and amortization of discount related to the debt. In an effort to
resolve the matter prior to filing year end financial statements, management of
the Company extended the filing of the annual report on Form 10-K to January
12, 1998. Due to the lack of availability of Lenders' representatives the
parties were not able to resolve the matter prior to January 12, 1998. On
January 9, 1998, the Lenders presented the Company with a preliminary outline
of terms for restructuring the Debentures and resolving the matter. The terms
include, among other things, changing the due date of the Debentures to
December 19, 1998, deferring all interest payments on the Debentures until
December 19, 1998, and modifying the collateral and payment terms of the Notes.
The Lenders are party to a subordination agreement with the Company's bank (the
"Subordination Agreement") and any agreement between the Company and the
Lenders must be approved by the bank. Under the terms of the Subordination
Agreement the Lenders must wait until May 23, 1998 to take any action or assert
any claim with respect to the Debentures. The Subordination Agreement prohibits
payment on acceleration of the of the Debentures as long as the Company is
indebted to the bank and, although management expects that it could obtain
approval to modify the maturity date, no such approval has been requested or
obtained at this time. At this time the Company does not have sufficient
liquidity to redeem the Debentures. Furthermore, there is no assurance that the
holders of the Notes will agree to any modification of the original terms.
Based upon the Lender's statements, the significance of the matter to the
Company, and the financial reporting implications, management has elected to
further delay issuing the annual report while it diligently pursues a
resolution with the Lenders. The Company intends to file its annual report by
January 30, 1998.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Datamarine International, Inc.
(Registrant)
Date: January 15, 1998 /S/ JAN KALLSHIAN
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Jan Kallshian
Chief Financial Officer
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