U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For quarterly period ended: September 30, 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 _____
Check whether 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 court. 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; 2,021,631 common shares as of
September 30, 1996.
Transitional small business disclosure format? Yes ____ No __X__
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NORTH ATLANTIC TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
SUCCESSOR COMPANY PREDECESSOR COMPANY
----------------- -------------------
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
----------------- -------------------
CURRENT ASSETS
<S> <C> <C>
Cash and equivalents $ 95,821 $ 44,607
Trade accounts receivable, net of allowance for
doubtful accounts of $339,440 at Sept 30,
1996 and at Dec 31, 1995 1,514,103 818,887
Other receivable 171,404 171,404
Inventories 262,990 145,356
Other current assets 39,646 29,029
----------- -----------
Total current assets 2,083,964 1,209,283
PROPERTY AND EQUIPMENT
Land 695,792 92,510
Buildings and leasehold improvements 692,441 692,441
Machinery and equipment 1,214,257 1,211,914
Office furniture and equipment 159,273 153,945
Automobiles 11,666 11,666
----------- -----------
Totals 2,773,429 2,162,476
Less accumulated depreciation (1,152,609) (1,305,351)
----------- -----------
Net property and equipment 1,620,820 857,125
OTHER ASSETS
Patent rights, less accumulated amortization
of $5,000 95,000
Reorganization value in excess of amounts
allocable to identifiable assets, less
accumulated amortization of $20,960 399,944
Other 12,399 3,652
----------- -----------
Total other assets 507,343 3,652
----------- -----------
$ 4,212,127 $ 2,070,060
=========== ===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NORTH ATLANTIC TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
SUCCESSOR COMPANY PREDECESSOR COMPANY
----------------- -------------------
SEPTEMBER 30, DECEMBER 31,
LIABILITIES AND EQUITY 1996 1995
----------------- -------------------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 932,793 $ 3,547,622
Trade accounts payable 1,149,936 878,422
Other accounts payable 393,428 393,428
Billings in excess of costs and estimated earnings
on uncompleted contracts 585,374 477,893
Accrued liabilities:
Taxes other than income 52,974 15,219
Warranty reserve 169,468 200,000
Compensation 77,710 42,198
Interest 13,578 170,378
Other 129,812
---------- -----------
Total current liabilities 3,505,073 5,725,160
LONG-TERM DEBT, NET OF CURRENT MATURITIES
Note payable to Bank 402,093
Mortgage note payable 473,004
Lease obligations 13,716 12,251
----------- -----------
Total Long-Term Debt 888,813 12,251
Total Liabilities 4,393,886 5,737,411
STOCKHOLDER'S EQUITY (DEFICIT)
Preferred stock, Series A Convertible, $.01 par
value; authorized 22,000 shares, 21,600
shares issued under Plan of Reorganization 216
Common stock, no par value; authorized
5,000,000 shares; issued and outstanding
2,392,689 at December 31, 1995; shares
canceled under Plan of Reorganization 3,047,804
Common stock, $.01 par value; authorized
5,000,000 shares, 2,546,689 shares issued
under Plan of Reorganization 25,467
Retained (deficit) (207,442) (6,715,155)
----------- -----------
Total stockholders' (deficit) (181,759) (3,667,351)
----------- -----------
$ 4,212,127 $ 2,070,060
=========== ===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
NORTH ATLANTIC TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------------- --------------------------------------------------
3 MONTHS ENDED 6 MONTHS ENDED 3 MONTHS ENDED 3 MONTHS ENDED 9 MONTHS ENDED
SEPT 30, 1996 SEPT 30, 1996 MARCH 31, 1996 SEPT 30, 1995 SEPT 30, 1995
-------------- -------------- -------------- -------------- --------------
DEBTOR-IN-
POSSESSION
<S> <C> <C> <C> <C> <C>
REVENUES $ 959,303 $ 2,645,684 $ 1,394,512 $ 464,898 $ 3,217,217
COST OF REVENUES 863,452 1,931,924 883,617 429,105 2,796,119
----------- ----------- ----------- ----------- -----------
Gross Profit 95,851 713,760 510,895 35,793 421,098
OPERATING COSTS 393,498 821,282 310,996 418,962 1,340,838
----------- ----------- ----------- ----------- -----------
Operating (Loss) Income (297,647) (107,522) 199,899 (383,169) (919,740)
OTHER INCOME (EXPENSE)
Royalty and services income (8,289) 5,950 6,245 (14,830) (13,275)
Interest expense (Contractural (65,156) (122,420) (82,372) (124,870) (345,235)
interest for 3 months ended
March 31, 1996 was $123,891)
Rental and other income 6,525 16,550 10,350 10,950 49,849
Write-down of patent (184,505)
(66,920) (99,920) (65,777) (128,750) (493,166)
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE REORGANIZATION
ITEM (364,567) (207,442) 134,122 (511,919) (1,412,906)
REORGANIZATION ITEM, PROFESSIONAL FEES
25,566
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME ($ 364,567) ($ 207,442) $ 108,556 ($ 511,919) ($1,412,906)
=========== =========== =========== =========== ===========
NET (LOSS) INCOME PER COMMON SHARE
($ .14) ($ .08) $ .04 ($ .21) ($ .59)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
2,546,689 2,546,689 3,015,766 2,392,689 2,392,689
=========== =========== =========== =========== ===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
NORTH ATLANTIC TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SUCCESSOR COMPANY PREDECESSOR COMPANY
----------------- --------------------------------
6 MONTHS ENDED 3 MONTHS ENDED 9 MONTHS ENDED
SEPT 30, 1996 MARCH 31, 1996 SEPT 30, 1995
----------------- -------------- --------------
DEBTOR-IN-
POSSESSION
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 2,670,065 $ 777,708 $ 2,809,791
Cash paid to suppliers & employees (2,471,742) (1,021,749) (3,632,835)
Interest, rent and royalties received 26,330 17,453 62,056
Interest paid (126,550) (58,616) (274,643)
----------- ----------- -----------
Net cash provided by (used in) operating
activities 98,103 (285,204) (1,035,631)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,458) (1,213) (27,866)
Proceeds from restricted cash 0 39,500
Additions of other assets (8,747)
----------- ----------- -----------
Net cash (used in) provided by investing
activities (6,458) (9,960) 11,634
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 700,000 300,000 1,800,000
Payments of long-term debt (739,916) (5,351) (791,271)
----------- ----------- -----------
Net cash (used in) provided by financing
activities (39,916) 294,649 1,008,729
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
51,729 (515) (15,268)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
44,092 44,607 41,384
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$ 95,821 $ 44,092 $ 26,116
----------- ----------- -----------
RECONCILIATION OF NET (LOSS) INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net (loss) Income ($ 207,442) $ 108,556 ($1,412,906)
Adjustments to reconcile net (loss) income
to net cash provided by (used in) operating
activities:
Depreciation and amortization 115,893 39,191 321,879
Stock issued for compensation 4,500 2,250
Gain on disposal of equipment (400)
Changes in assets and liabilities:
Receivables (427,873) (267,343) (107,368)
Inventories (113,532) (4,102) 44,424
Other current assets (18,722) 10,355 40,892
Accounts payable and accrued liabilities 32,254 431,433 (46,674)
Net increase (decrease) in billings related to
costs and estimated earnings on
uncompleted contacts 713,025 (605,544) 124,522
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
$ 98,103 ($ 285,204) ($1,035,631)
=========== =========== ===========
See notes to financial statements.
</TABLE>
NORTH ATLANTIC TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. On February 1, 1996 the Company filed a petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. The Plan of Reorganization
was approved on April 19, 1996, and amended on May 7, 1996. The
accompanying financial statements for the 6 months ended September 30, 1996
are presented as if the Plan of Reorganization was effective as of April 1,
1996. The Plan of Reorganization provided that:
a) Holders of the Company's 12.5% Subordinated Convertible Debentures due
in 1995 (the "Debentures") will be entitled to receive one share of
common stock for each $1.50 of Debenture debt owed by the Company. In
addition, each Debenture holder will be entitled to receive one share
of convertible preferred stock at $0.01 par value for each $100 of
Debenture debt of the Company, and
b) Each existing stockholder will be issued one share of common stock in
cancellation of three shares owned by the shareholder, effective for
shareholders of record on May 21, 1996.
c) $500,000 of the line of credit borrowings will 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 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.
d) All other general creditors claims are to 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, subject to the delivery of
Debentures to the Company for cancellation, Debenture holders are entitled
to receive up to 1,447,366 newly-issued common shares, and up to 21,600
newly-issued convertible preferred shares. As of September 30, 1996, the
Company had issued 2,021,631 shares of common stock and 13,763 shares of
convertible preferred stock in exchange for Debentures submitted to the
Company for cancellation.
The 3,292,689 shares of no par common stock outstanding as of May 21, 1996
have been canceled and replaced with 1,099,323 newly-issued common shares.
The total outstanding common shares following the above common stock
adjustments will be 2,546,689. 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.
2. Fresh Start Reporting
Under the provisions of Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code", the Company was
required to apply "fresh start" reporting since the reorganization value,
as defined, was less than the total of all post-petition liabilities and
pre-petition claims, and holders of voting shares immediately before
confirmation of the Plan received less than fifty percent 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 Successor Company and the financial statements of
the Company 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 $25,683. 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 Statement of Position 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 identified assets." This amount will be amortized over 10
years.
In addition, the Accumulated Deficit of the Company was eliminated and its
capital structure was recast in conformity with the approved Plan of
Reorganization. As such, the Balance Sheet of the Company as of September
30, 1996 represents that of a Successor Company which, in effect, is a new
entity with assets, liabilities and a capital structure having carrying
values not entirely comparable with prior periods.
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.
<TABLE>
<CAPTION>
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
------------ ------------- ------------ --------- -----
<S> <C> <C> <C> <C> <C>
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 --- 420,904 420,904
assets
Other 12,399 12,399
---------- ---------- ---------- ---------- ----------
$2,565,095 $1,406,052 $3,971,147
========== ========== ========== ========== ==========
LIABILITIES NOT SUBJECT TO
COMPROMISE:
Current liabilities $3,930,507 $3,930,507
Lease obligations
(long-term) 14,957 14,957
---------- ---------- ---------- ---------- ----------
3,945,464 3,945,464
LIABILITIES SUBJECT TO
COMPROMISE:
Convertible Subordinated
Debentures and related
interest payable 2,169,426 (2,169,426) ---
---------- ---------- ---------- ---------- ----------
Total Liabilities 6,114,890 (2,169,426) 3,945,464
Liabilities
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred Stock --- 216 216
Common Stock (no par) 3,056,804 (3,056,804) ---
Common Stock ($.01 par) --- 14,474 10,993 25,467
Retained Earnings
(Deficit) (6,606,599) 2,154,736 3,045,811 1,406,052 ---
---------- ---------- ---------- ---------- ----------
(3,549,795) 2,169,426 0 1,406,052 25,683
---------- ---------- ---------- ---------- ----------
$2,565,095 $0 $0 $1,406,052 $3,971,147
========== ========== ========== ========== ==========
</TABLE>
3. 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. The Predecessor Company (see
Note 2) incurred net losses for 1993, 1994 and 1995 and, as a result,
financial resources have been strained. As of September 30, 1996, the
Successor Company's current liabilities exceed current assets by
$1,421,109. While the Company, through its Plan of Reorganization which was
initially confirmed by the United States Bankruptcy Court on April 19, 1996
and amended on May 7, 1996, (See Note 1), has significantly reduced its
debt commitments, the Successor 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 Successor 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
Successor Company. While the Successor Company utilizes a progress billing
procedure, there are periods of net cash outflows when cash flow is of
concern. Both the Predecessor Company and the Successor Company have been
able to manage normal operating cash flow through the use of internally
generated funds and an established line of credit.
4. 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 Statements of Operations.
In January, 1996, 900,000 shares (300,000 on a post reverse split basis) of
the Predecessor 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.
5. Preferred Stock - The Successor Company is required to issue up to 21,600
shares of convertible preferred stock, par value $.01 per share in
connection with the discharge of the, and in exchange for, Debentures and
related interest payable. Each preferred share is convertible, at the
holder's option until June 1, 1999, and automatically after June 1, 1999,
into one share of common stock. Each preferred share has a liquidation
preference of $25 per share and may be redeemed at the Successor Company's
option at any time prior to conversion into common stock, at $25 per share.
6. On July 10, 1996, the Successor Company was notified of a claim in the
amount of $542,738, which the Company erroneously believed to have been
extinguished in the Bankruptcy Court action. The Successor Company settled
the claim for $6,500 in October, 1996 with no further action or liability
on the part of the Successor Company.
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 to the
financial statements, the Plan of Reorganization was approved on April 19, 1996,
and amended on May 7, 1996. The Plan of Reorganization provided that:
1. Holders of the Company's 12.5% Subordinated Convertible Debentures due in
1995 (the "Debentures") will be entitled to receive one share of common
stock for each $1.50 of Debenture debt owed by the Company. In addition,
each Debenture holder will be entitled to receive one share of convertible
preferred stock at $0.01 par value for each $100 of Debenture debt of the
Company, and
2. Each existing equity holder (of record as of May 21, 1996) will be issued
one share of common stock in cancellation of three shares owned by the
shareholder.
3. $500,000 of the line of credit borrowings will 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.
4. All other general creditors claims will be settled in full upon a schedule
to be agreed upon between the Company and its creditors.
The accompanying financial statements for the period subsequent to March 31,
1996 are presented as if the Plan of Reorganization, which became effective
subsequent to March 31, 1996 was effective on April 1, 1996 and are prepared on
the basis of "fresh start" reporting as required by SOP 90-7. 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 Successor Company and the financial statements of the
Company up to the date the Plan was implemented are referred to herein as the
Predecessor Company.
To determine an estimate of its reorganizational 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 $25,683.
As more fully described in Note 2 to the Financial Statements, the Accumulated
Deficit of the Predecessor Company was eliminated and its capital structure was
recast in conformity with the Plan of Reorganization. As such, the Balance Sheet
of the Company as of September 30, 1996 represents that of a Successor Company
which, in effect, is a new entity with assets and liabilities having carrying
values not entirely comparable with prior periods.
The following analysis compares the Successor Company (effective April 1, 1996)
with the results of the Predecessor Company. With the exception of the Balance
Sheet at September 30, 1996, which utilizes "Fresh Start" reporting, the
comparison for the Statements of Operations for 1996 (Successor Company) and
1995 (Predecessor Company) are comparable except for interest expenses related
to the convertible debentures and professional fees incurred in connection with
the bankruptcy.
GOING CONCERN
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. The Predecessor Company (see Note 2) incurred
net losses for 1993, 1994 and 1995 and, as a result, financial resources have
been strained. As of September 30, 1996, the Successor Company's current
liabilities exceed current assets by $1,421,109. While the Company, through its
Plan of Reorganization which was initially confirmed by the United States
Bankruptcy Court on April 19, 1996 and amended on May 7, 1996, (See Note 1), has
significantly reduced its debt commitments, the Successor 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 Successor 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 Successor Company.
While the Successor Company utilizes a progress billing procedure, there are
periods of net cash outflows when cash flow is of concern. Both the Predecessor
Company and the Successor Company have been able to manage normal operating cash
flow through the use of internally generated funds and an established line of
credit.
RESULTS OF OPERATIONS
Revenues of $959,303 for the 3 months ended September 30, 1996 of the Successor
Company reflect an increase of 106% from the $464,898 in revenues reported for
the comparable 3 month period in 1995. 1996 revenues reflected increased demand
compared to 1995 for the Company's product. Gross profit for the 3 months ended
September 30, 1996 of the Successor Company improved marginally to 10% from 8%
for the same period in 1995. Gross profit in 1996 reflects a charge to cost of
revenues in the amount of $135,000 representing warranty costs on a previously
completed project. This charge represents 14% of revenues.
Revenues of the Successor Company decreased for the 3 months ended September 30,
1996 from the 3 months ended June 30, 1996 by $727,078 or 43%. The decrease is
primarily attributable to the production concentration of a longer term project
that is expected to be shipped at the end of 1996 and the beginning of 1997.
Operating costs as a percent of revenues for the 3 months ended September 30,
1996 of the Successor Company were 41%, and 90% in 1995 for the same period.
However, total operating costs for both years were relatively unchanged..
Interest expense for the 3 months ended September 30, 1996 of the Successor
Company was $65,156, and $124,870 in 1995 for the same period. The change of
$59,714 is primarily accounted for by interest expense on subordinated
debentures which was discharged pursuant to the approved Plan of Reorganization.
Operating costs and interest expense of the Successor Company for the 3 months
ended September 30, 1996 and for the 3 months ended June 30, 1996 remained
relatively unchanged.
LIQUIDITY AND CAPITAL RESOURCES
The working capital deficit position of the Successor Company was ($1,421,109)
at September 30, 1996 which was an improvement of $775,849 from April 1, 1996,
this was the result of the reclassification of a portion of the mortgage payable
to long term in the amount of approximately $490,000, a reclassification of
$500,000 of the line of credit to a term loan ($90,000 of which is considered
current), and an increase in the line of credit in the amount of $200,000.
As of September 30, 1996, the Company had approximately $100,000 available under
the line of credit that has a maximum available in the amount of $1,025,000.
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 Company believes that the conversion of the Debentures into equity and the
cancellation of the Debenture interest, and the improvement of demand in the
global marketplace for its products will strengthen its position as a going
concern. However, the Company's ability to continue as a going concern is
subject to a number of risks and uncertainties including, among others, the
Company's ability to generate sufficient funds from operations and the overall
demand for the Company's product, which is subject to general economic,
competitive and industry - specific conditions.
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
Bruce A. Watson, President, CEO and CFO of the Company resigned his
position as an Officer and Director of the Company effective October 15, 1996.
Effective October 16, 1996 Allen R. Karson was elected as President, CEO and CFO
of the Company.
Item 6. Exhibits and Reports on form 8-K.
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
Dated: November 11, 1996
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.
North Atlantic Technologies, Inc.
/s/ Allen R. Karson November 11, 1996
- -------------------
Allen R. Karson
Chief Executive Officer (principal executive officer)
and Chief Financial Officer (principal financial officer
and principal accounting officer).
NORTH ATLANTIC TECHNOLOGIES, INC.
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 95,821
<SECURITIES> 0
<RECEIVABLES> 1,682,737
<ALLOWANCES> 339,440
<INVENTORY> 262,990
<CURRENT-ASSETS> 1,829,269
<PP&E> 2,773,429
<DEPRECIATION> 1,152,609
<TOTAL-ASSETS> 3,957,432
<CURRENT-LIABILITIES> 3,250,378
<BONDS> 0
0
216
<COMMON> 25,467
<OTHER-SE> (207,442)
<TOTAL-LIABILITY-AND-EQUITY> 3,957,432
<SALES> 2,645,684
<TOTAL-REVENUES> 2,645,684
<CGS> 1,931,924
<TOTAL-COSTS> 821,282
<OTHER-EXPENSES> (22,500)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,420
<INCOME-PRETAX> (207,442)
<INCOME-TAX> 0
<INCOME-CONTINUING> (207,442)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (207,442)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
