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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 (Date of earliest event reported): September 3, 1998
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Connectivity Technologies Inc.
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(exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-12113 94-2691724
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
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680 Mechanic Street, Ste 1201, PO Box 786, Leominster, Massachusetts 01453
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(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including Area Code: (978) 537-9138
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 3, 1998, the Registrant, Connectivity Technologies, Inc
(together with its subsidiary Connectivity Products Incorporated, hereinafter
called "Connectivity") concluded a formal, written Forbearance Agreement and
Amendment to its Revolving Credit and Term Loan Agreement (the "Forbearance
Agreement") with its lending Banks under which the Banks agree, subject to
certain terms and conditions, not to enforce their rights to proceed against
Connectivity and its assets prior to November 30, 1998. The probable conclusion
of the forbearance was anticipated in previous reports of Connectivity to the
Securities and Exchange Commission on Form 8-K.
The provisions of the Forbearance Agreement conditioning the Banks'
agreement to forbear include, among other things, the absence of steps contrary
to Connectivity by its creditors and the compliance by Connectivity with various
covenants including those related to sales and other elements of future
financial performance. Therefore, the continued forbearance by its Banks is
dependent upon the support of Connectivity by its suppliers and customers. No
assurances can be given that such support will be forthcoming or that any of the
circumstances freeing the Banks from their obligation to forbear will not occur,
or that the operations of Connectivity will not require further borrowings which
the Banks are under no obligation to provide, and the happening of any such
adverse events would have a substantial adverse effect upon Connectivity, its
financial position and its future operations. Forbearance beyond November 30,
the date on which full payment would be required under present documentation,
has not been discussed with the Banks, and would be entirely at the Banks'
discretion. The Forbearance Agreement provides for a maximum principal balance
of $17,946,680 (the amount outstanding on September 1, 1998), the loan balance
having been reduced by approximately $2,050,000 in August with proceeds received
from the sale of marketable securities. Interest continues to accrue at Banks'
base rate (8.5% at August 25, 1998) plus 2% and in the event of any default
would accrue at the Banks' base rate plus 6%.
In addition to the Forbearance Agreement Connectivity is taking other steps
intended to reduce its indebtedness to the Banks and otherwise improve its
financial position. As previously reported, Connectivity has reduced its
subordinated debt by approximately $5,015,825 or 86% of the original total of
such subordinated debt. Connectivity is in active discussions looking to the
sale of its EEA division, the proceeds of which sale would significantly further
reduce its obligations to the Banks. However, no assurances can be given that
the sale of the EEA division will be concluded successfully or of the extent of
the positive effect of any such sale upon Connectivity.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
None.
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SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This report contains, in addition to historical information,
forward-looking statements, including, but not limited to, information related
to the operation of terms and conditions of the Forbearance Agreement and steps
intended to be taken to reduce Connectivity's indebtedness. Forward-looking
statements are subject, by their nature, to risks and uncertainties, and actual
results could differ materially from those set forth in the forward-looking
statements. Typical risks and uncertainties include whether the various
conditions entitling the Banks to proceed against the Company will occur as well
as the outcome of negotiations on the sale of EEA, and the ability of
Connectivity to achieve, through sales and otherwise, the financial goals set in
the Forbearance Agreement and other factors described from time to time in
Connectivity's reports filed with the Securities and Exchange Commission
including Connectivity's Form 10-KSB for the year ended December 31, 1997 and
subsequent reports on form 8-K. Any forward-looking statements are made pursuant
to the Private Securities Litigation Reform Act of 1995 and, as such, speak only
as of the date made. Connectivity is not undertaking to update any information
in the foregoing reports.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CONNECTIVITY TECHNOLOGIES INC.
(Registrant)
Dated: September 3, 1998 By: /s/ GEORGE H. BUCKHAM
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Name: George H. Buckham
Title: Secretary
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