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SEC FILE NUMBER
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CUSIP NUMBER
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q
[ ] Form N-SAR
For Period Ended: February 27, 2000
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[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
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Read Instruction (on back page) Before Preparing Form. Please
Print or Type.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
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If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
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Full name of registrant:
NANTUCKET INDUSTRIES, INC.
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Former name if applicable:
73 FIFTH AVENUE, SUITE 6A
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Address of principal executive office (Street and number)
New York, New York 10003
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City, state and zip code
PART II -- RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate.)
|(a) The reasons described in reasonable detail in Part III of this form
| could not be eliminated without unreasonable effort or expense;
|
|(b) The subject annual report, semi-annual report, transition report on
| Form 10-K, 20-F, 11-K or Form N-SAR, or portion thereof will be
[X] | filed on or before the fifteenth calendar day following the
| prescribed due date; or the subject quarterly report or transition
| report on Form 10-Q, or portion thereof will be filed on or before
| the fifth calendar day following the prescribed due date; and
|
|(c) The accountant's statement or other exhibit required by Rule
| 12b-25(c) has been attached if applicable.
PART III -- NARRATIVE
State below in reasonable detail the reasons why Form 10-K, 11-K, 20-F, 10-Q,
N-SAR, or the transition report or portion thereof, could not be filed within
the prescribed time period. (Attach Extra Sheets if Needed)
(Attach Extra Sheet if Needed)
SEC 1344(11-91)
<PAGE>
PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Frances Kate Levine 718 981-8485
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that
the registrant was required to file such report(s) been filed? If answer
is no, identify report(s).
[X] Yes [ ] No
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(3) Is it anticipated that any significant changes in results of operations
from the corresponding period for the last fiscal year will be reflected
by the earnings statements to be included in the subject report or portion
thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
================================================================================
NANTUCKET INDUSTRIES, INC.
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(Name of Registrant as Specified in Charter)
Has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: May 26, 2000 By: /s/ John A. Treglia
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Instruction: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
ATTENTION
----------------------------------- ------------------------------------
Intentional misstatements or omissions of fact constitute Federal Criminal
Violations (See 18 U.S.C. 1001).
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GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the
General Rules and Regulations under the Act. Thhe information contained in
or filed with the form will be made a matter of public record in the
Commission files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of
the registrant is registered.
4. Amendments to the notifications must also be filed on form 12b-25 but need
not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
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PART III - NARRATIVE
The Form 10-K for the fiscal year ended February 27, 2000 could not be
filed within the prescribed time period because, during the said fiscal year,
Nantucket Industries, Inc. (the "Company") became insolvent and ceased all
business operations.
During the year, there was also a fundamental change in the makeup of the
management of the Company. All of the executive officers of the Company resigned
during the year and were not replaced until January 2000 by (i) one person who
was never previously employed by the Company; and (ii) one person who was never
employed by the Company in such capacity. In January 2000, one new outside
director was appointed to fill the vacancy resulting from a director's
resignation earlier in the fiscal year. On February 17, 2000, three of the
directors who were with the Company prior to January 2000 resigned and another
new outside director was appointed to fill one of the vacancies thus created.
Because of the change in the Company's management and in its financial
position and prospects, the Company's independent certifying accountant was also
changed. Due to these recent and very fundamental changes and the extremely
limited resources of the Company in terms of both personnel and finances, the
Company was unable to file its annual report on a timely basis, but expects to
file it within the prescribed period set forth in PART II (b).
PART IV - OTHER INFORMATION
(3) It is anticipated that there will be significant changes in results of
operations from the corresponding period for the last fiscal year which will be
reflected by the earnings statement to be included in the subject report. This
change is reflective of the Company's having ceased all business activities in
October 1999. An outline of the reasons for such anticipated change, will be set
forth in the Management's Discussion to be included in the said report. A draft
of the pertinent parts of which follows, with the caveat that there may be
changes in some of the numbers in the final definitive text and in the financial
statements. Such changes are not anticipated to be significant.
Termination of Operations
The Company experienced significant losses from operations in recent
years which resulted in severe cash flow issues that negatively impacted
the ability of the Company to continue its business as formerly
structured. During fiscal 2000, the effect of sharply decreasing revenues
over the previous four years, continuing losses from operations, interest
payment defaults on outstanding debt, the lack of a long-term credit
facility, and the concentration of all sales among only three customers
forced the Company to discontinue all of its business and
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operations. The Company was unable to maintain the financing of its
working capital requirements on a continuing basis. In fiscal 1995 and
1996, the Company had funded its operating losses by refinancing its debt
and increasing its capital through (i) the sale of $1 million of
non-voting convertible preferred stock to management; (ii) the sale of
treasury stock which increased equity by $2.9 million; (iii) the
completion of a $3.5 million private placement. During the several years
prior to the termination of its operations, the Company had implemented a
restructuring strategy aimed at improving operating results, through the
reduction of costs, the streamlining of operations, and the closing of the
Company's Puerto Rico plant. These efforts failed to bring the Company's
operations to a profitable level. Some of the major factors and
occurrences which led to the Company's insolvency and the termination of
its operations are described below. For a discussion in more detail of
each of the matters discussed below, reference is made to the Company's
annual report on Form 10-K for the fiscal year ended February 27, 1999.
The factors noted above resulted in the termination of all of the
Company's business activities in October 1999 and the filing, on March 3,
2000, of a Voluntary Petition under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of
New York. Chief among the factors leading to the present insolvency of the
Company were: (i) the loss of the Company's largest customer because of
Levi-Strauss's decision, late in fiscal 1997, to sell its "Brittania" line
of men's underwear and other products which the Company was licensed to
manufacture and sell; (ii) the failure to meet sales goals required under
various other licenses held by the Company and the resultant loss of such
licenses; and (iii) the Company's incurrance of substantial amounts of
debt in order to fund losses from operations and the inability of the
Company to repay such debt, including the following:
1. Termination of Levi Strauss/Brittania Operations. Commencing in
September 1998, the Company held a license (the "Brittania License")
from Brittania Sportswear Ltd. ("Brittania"). Levi Strauss & Co.
("Levi Strauss") was the parent company of Brittania. Under the
Brittania License, the Company had the right to manufacture and
market men's underwear and other products under the trademark
"Brittania from Levi Strauss & Co". Sales under the Brittania
License aggregated $14.9 million in fiscal 1997 and $4.5 million in
fiscal 1998, accounting for 49% of the Company's fiscal 1997 sales,
and 21% of the Company's fiscal 1998 sales. During the fiscal year
ended February 27, 1999, the Company made no sales under the
Brittania License. As of January 1, 1997, the Brittania License had
been renewed for a five-year term, including automatic renewals of
two years if certain minimum sales levels were achieved. However, on
January 22, 1997, Levi's announced its intention to sell Brittania.
As a result of the action taken by Levi Strauss, K-Mart, the largest
retailer of the Brittania brand, and the
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Company's largest customer (accounting for sales of Brittania
product of approximately $11 million in fiscal year 1997, and $3
million in fiscal year 1998), advised the Company that it would no
longer continue its commitment to carry the Brittania trademark. In
response, the Company filed a multi-million lawsuit against Levi
Strauss and Brittania in March 1997, alleging that Brittania had
breached various obligations under its license agreement with the
Company, including without limitation it's covenant of good faith
and fair dealing. This litigation was settled in June 1998, with the
Company realizing approximately $725,000 in gross value out of such
settlement.
2. Discontinuance of GUESS? Product Line. From December 7, 1992 until
the first quarter of the fiscal year ended February 27, 1999, the
Company held the exclusive United States rights to produce and sell
undergarments bearing the "GUESS?" trademark and variations thereof.
The license was subject to termination prior to its expiration if
certain minimum sales goals were not met, with the payment of
minimum royalties required in the amounts of $560,000, $700,000 and
$840,000 for the contract years ended May 31, 1997, 1998 and 1999
respectively. Minimum sales goals were never achieved under this
license. Due to the lack of capital resources necessary to develop
and support the GUESS? product line at the levels required in the
licensing agreement, during fiscal 199 -- the Company, with the
support of the licensor, initiated a strategy to terminate the
GUESS? license, and the Company discontinued its GUESS? division
during the first quarter of fiscal year 1999.
3. Termination of "Arrow" License. Pursuant to an agreement, dated
October 5, 1992, with Cluett, Peabody & Co., Inc., the Company held
the exclusive United States rights (the "Arrow License") to produce
and sell men's and boys' fashion underwear, T-shirts, V- neck
shirts, tank tops, briefs and boxer shorts bearing the "ARROW"
trademark during the period commencing January 1, 1993 and expiring,
as extended, December 31, 1999. The terms of the Arrow License
required that the Company pay a minimum royalty of $162,500 for each
annual period through December 31, 1996, increasing to $250,000 for
each annual period from January 1, 1997 through December 31, 1999.
Because the Company was unable to meet the minimum sales
requirements under the Arrow License, as of March 12, 1999, the
Company reached an agreement with the licensor to terminate the
Arrow License.
4. Failure to Meet Minimum Sales Requirements Under "Botany 500"
License. On December 21, 1992, the Company obtained from the
McGregor Corporation the exclusive United States rights (the "Botany
500 License") to produce and sell men's and boys' fashion knit
underwear briefs bearing the "BOTANY 500" trademark during the
period commencing on January 1, 1993 and expiring,
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<PAGE>
pursuant to an extension, December 31, 2001. Under the terms of the
license agreement, the McGregor Corporation had the right to
terminate the Botany 500 License prior to its expiration if certain
minimum sales goals were not met. Minimum sales levels required
under the Botany 500 License for calendar 1996 were $750,000 and $1
million for each calendar year thereafter. The Company was never
able to meet the minimum sales requirements under the Botany 500
License with net sales under the license for fiscal 1997 (which
included most of calendar 1996) being $652,000 and $225,000 for
fiscal 1998 (which included most of calendar 1997). After fiscal
1998, the Company ceased all operations under the Botany 500
License.
5. Loss of Revolving Credit Line. Until October 15, 1999, the Company
had a fifteen million dollar revolving credit facility with Congress
Financial Corp. ("Congress"). This facility provided for: (i) loans
based upon eligible accounts receivable and inventory; (ii) a
$3,000,000 letter of credit facility; and (iii) purchase money term
loans of up to 75% of the orderly liquidation value of newly
acquired and eligible equipment. Borrowings bore interest at 2-3/4%
above prime. The Company's agreement with Congress required, among
other things, that the Company maintain of minimum working capital
and net worth levels. Borrowings under the agreement were
collateralized by a lien on substantially all of the assets of the
Company. As at February 27, 1999 the Company was not in compliance
with the net worth and working capital covenants. This credit
facility utilized was terminated by Congress on October 15, 1999
and, because of its poor financial status and outlook, the Company
was not able to replace it.
6. Continuing Default on Outstanding Debentures. On August 15, 1996,
the Company completed a $3.5 million private placement with NAN
Investors, L.P., an investment partnership ("NAN Investors"). Terms
of this transaction included the issuance of 250,000 shares of the
Company's common stock and two convertible subordinated debentures
in the aggregate principal amount of $2,760,000 (the "NAN
Debenture") The NAN DEBENTURES bore interest at an annual rate of
12.5%, payable semi-annually, with the principal amount due and
payable on August 15, 2001. Although the NAN Debentures were
convertible into the Company's common stock, NAN Investors
eventually waived all conversion rights.
Beginning in August 1997, the Company was in default on interest
payments due under the NAN Debentures. The NAN DEBENTURES were
secured by a second mortgage on the Company's manufacturing and
distribution facility located in Cartersville, Georgia. This
property was sold on October 1, 1997. To release NAN's security
interest in the property and to extend the cure period with respect
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<PAGE>
to a $172,500 interest payment default on the Debentures, the
Company prepaid $707,000 of the principal amount of the Nan
Debentures plus a $176,000 prepayment penalty.(1) In connection
therewith, in September 1997, the Company entered into an agreement
with NAN Investors (the "First NAN Forbearance Agreement") providing
for the extension of cure period for the default on the interest
payments. The NAN Forbearance Agreement was extended month by month
until May 1998, at which time, the Company entered into an another
forbearance agreement with NAN Investors (the "Second NAN
Forbearance Agreement") to extend, until December 1998, the cure
period for interest payments then in default (totalling $322,551) as
well as the interest payment, which was to fall due in August 1998.
In consideration for such extension, the Company agreed to secure
the NAN Debentures by a first priority lien on all the assets of the
Company, both tangible and intangible, to the extent not otherwise
prohibited under the Congress revolving credit facility and to issue
to NAN Investors five-year warrants convertible to a total of
16,500,000 shares of the Company's stock at an exercise price of
$.10 per share. Subsequent to its entering into the Second NAN
Forbearance Agreement, the Company again fell into default on all
interest payments due after August 1997. There was no forbearance
agreement in effect with respect to interest payments which fell due
subsequent to December 1998 and therefore, at that point, the
Company was in default with respect to the full principal amount of
the NAN Debentures and all unpaid interest accrued thereon, which at
that time totalled $2,052,986. Pursuant to their rights under the
NAN Security Agreement, NAN Investors took possession of all of the
Company's assets, subject to the release of the senior creditor
(Congress). These assets consisted entirely of inventory and
receivables. NAN Investors ultimately realized a total of $1,222,654
from the sale or collection of such assets, reducing the Company,'s
indebtedness to $826,845 as at the end of fiscal 2000. In
recognition of NAN Investors rights, under the NAN Security
Agreement, to any and all remaining assets of the Company, on
February 17, 2000, the Company surrendered to NAN Investors, all of
its right, title, and interest in certain unasserted claims it
believes it had against Target Stores, Inc. and SGS U.S. Testing
Co., Inc. (the "Claims") on the condition that the net amount
collected in respect of the Claims be set off against the amount of
the Company's indebtedness to NAN Investors. Management believed
that the value of the Claims would thus be maximized because the
Company lacked the financial resources to assert the Claims and NAN
Investors already had an existing right to any amounts that the
Company might
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(1) Total proceeds from the sale of the Cartersville facility were
$2,850,000. In addition to the $883,000 paid to NAN Investors by way of a
$707,000 prepayment of principal and a $176,000 prepayment penalty, the Company
used $525,000 to pay other financing secured by this property. The remaining
proceeds were utilized to reduce the Company's revolving credit financing.
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<PAGE>
collect in respect of the Claims. Management believed that the
Claims consisted of: (i) a claim against Target Stores, Inc. for
unauthorized off-sets and credits taken in a presently undetermined
amount; (ii) a claim against SGS U.S. Testing Co., Inc. in the
approximate amount of $35,000. To the best of present management's
knowledge, NAN Investors is currently pursuing all legal remedies
available with respect to these claims.
In the years preceding the termination of operations, the Company
had experienced difficulty in filling all of its orders, caused in large
part by recurring cash shortages, the expiration of its working capital
financing arrangements, and the failure to obtain the investment necessary
to support and develop the GUESS? product line. From at least fiscal 1996
onwards, the Company had attempted to address its liquidity issues by the
infusion of debt and equity financing, including (i) a refinancing in
March 1994; (ii) additional equity of $3.9 million raised in fiscal 1995;
(iii) an August 1996 $3.5 million private placement, which left the
Company with $2,760,000 in debt under the NAN Debentures, bearing interest
at an annual rate of 12.5%; and (iv) by the reduction in costs associated
with the consolidation and restructuring of the operations in fiscal 1998
and 1999, and the attempt to more effective management of working capital.
All of these efforts, however, failed to keep the Company solvent and with
the loss of the Brittania License, continuing losses from operations,
interest payment defaults, and the lack of any credit facilities, the
Company was forced to discontinue all business operations by the end of
October 1999. For a discussion in more detail of the restructuring
strategy which the Company implemented in attempts to improve operating
results and enhance its financial resources, reference is made to Item 7
of Part II of the Company's annual report on Form 10-K for the fiscal year
ended February 27, 1999.
In fiscal year 1998, the financial statements, through operating
results, reflects $1.8 million in restructuring charges including $1.2
million associated with the phase out of the GUESS? division ($660,000
inventory write-offs, $540,000 in deferred costs and other charges), with
the balance associated with write-downs, and reserves of asset values, and
other non cash items. The operating results for fiscal 1999 include
$1,930,000 in other income all of which is a result of settled litigation
as discussed earlier. The operating results for fiscal 2000 do not include
any unusual credits or charges.
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Results of Operations
Sales
Total net sales for the fiscal year ended February 27, 2000 were
$5,344,223, which represented a decrease of approximately 53.6% from
fiscal 1999 when total net sales were approximately $11.5 million. In
turn, fiscal 1999 net sales had represented a decrease of 47% from fiscal
1998, when net sales totaled $21.7 million. Net sales for 1998 also
represented a decrease from net sales for 1997 which had totaled $30.4
million.
No sales were generated under the discontinued Brittania license in
fiscal 2000 or fiscal 1999 as compared to $4.5 million in fiscal 1998.
Sales under the Brittania license in fiscal 1998, in turn, had represented
a decrease of $10.4 million from Brittania sales in fiscal 1997.
Operations under the GUESS? License were completely phased out by
the first quarter of fiscal 1999. There were, therefore, no sales
attributable to this line in fiscal 2000, as compared to $2.4 million in
fiscal 1999 and $7 million in fiscal 1998.
Former management of the Company has attributed the steady decline
in total net sales, since fiscal 1998, primarily to the phase out of the
Brittania product associated with the actions announced by Levi to dispose
of the Brittania brand, and the loss of certain styles to competitors
within the Company's business environment as well as a lack of sufficient
working capital.
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