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 26, 1999
DATAMARINE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
0-8936
(Commission File Number)
Massachusetts 04-2454559
(State of Incorporation) (I.R.S. Employer Identification Number)
7030 220th SW, Mountlake Terrace, Washington 98043
(Address of principal executive offices)
(425)771-2182
(Registrant's telephone number, including area code)
Item 5. Other Events
On December 19, 1995 Datamarine International, Inc. (the "Company")
completed a private placement issuance of $2,000,000 in Subordinated
Convertible Debentures (the "Debentures") with Alta Subordinated Debt
Partners III (the "Lender"), originally due December 19, 2000.
On November 24, 1997 the Company received notice from the Lender of an
alleged violation of certain covenants related to the Debenture Purchase
Agreement dated December 19, 1995. The alleged violations related 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 Forms 8-K filed September 22, 1997 and
January 15, 1998). The alleged default was based on a breach of financial
covenants concerning additional debt, and was not based on the particular
terms of the Notes, nor was it payment-related. The Lender claimed that an
event of default had occurred, that the default had remained uncured for
more than thirty days, and that the Debentures were immediately due and
payable. Management of the Company believed that it had obtained the
consent of the Lender and did not agree with the claims made by the Lender.
On February 24, 1998 the Company and the Lender reached a tentative
agreement to modify certain provisions of the Debentures, which was
memorialized in a term sheet. That agreement was reached in order to
resolve the Lender's November 24, 1997 claims. The new terms changed the
maturity date of the Debentures from December 19, 2000 to February 19, 1999,
deferred all interest payments on the Debentures until February 19, 1999 and
required the Company to issue to the Lender on February 19, 1999
approximately 175,600 common shares of the Company. These common shares are
the shares that the lender is otherwise entitled to receive upon conversion
of the convertible preferred stock component of the Debentures.
The February 24, 1998 modifications set forth in the term sheet were
executed by both parties, and were subject to satisfaction of certain
conditions including the execution of final documents at a later date. On
July 10, 1998 the Company executed final documents prepared by the Lender's
counsel (the "Amendments"). The Company believed that it had complied with
the terms of the Amendments demanded by the Lender and that an agreement had
been reached between the parties.
However, the Company recently received notice from the Lender's counsel that
the Lender had not executed the Amendments, did not intend to do so at that
time and that it demanded numerous additional conditions placed upon its
acceptance of the Amendments. Until receipt of this notice, the Company had
not been aware that this was the Lender's position with respect to the
Amendments. After considering carefully its options and bearing in mind the
best interests of the Company, the Company notified the Lender on January
22, 1999 that the Company revoked the offer to amend that had been
manifested by its own execution of the Amendment. Because the Amendments
are not effective the original terms of the Debenture Agreement are in
effect, in which case the Company faces an alleged and unresolved default
under the Debenture Agreement dating back to November 24, 1997. The Lender
may argue that accrued interest on the Debentures is due and payable and
that Debentures retain their original maturity date of December 19, 2000.
Accrued and unpaid interest on the Debentures as of December 31, 1998 was
approximately $616,575. At this time the Company does not have sufficient
liquidity to repay the Debentures or the accrued interest thereon.
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 26, 1999 /S/ JAN KALLSHIAN
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Jan Kallshian
Chief Financial Officer
