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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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):
October 16, 1997
COMPOSITECH LTD.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-20701 11-2710467
(Commissioner File Number) (IRS Employer Identification Number)
120 Ricefield Lane
Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 436-5200
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Item 5. Other Events.
On October 16, 1997, Compositech Ltd. (the "Company") closed a transaction
with four Quebec institutional investors (collectively, the "Quebec Investors")
to form a 50/50 joint venture for the establishment of a plant in the greater
Montreal area to manufacture Compositech's laminates. The investor group is
comprised of four institutional investors: Societe Generale de Financement du
Quebec, Fonds de solidarite des travailleurs du Quebec (F.T.Q.), Societe
Innovatech du Grand Montreal and Fonds regional de solidarite Ile de Montreal.
The project cost is estimated to be approximately $24.5 million with an initial
capitalization by the parties of approximately $11 million with the balance to
be in debt financing for which firm commitments have been obtained from the
National Bank of Canada and governmental agencies. The Company's approximately
$5.4 million capital investment in the joint venture was funded by the Quebec
Investors purchasing 1,066,192 shares of the Company's Common Stock at $5.09 per
share (representing the weighted average closing price for the 60 day trading
period ending two days before the closing). The Quebec Investors will have an
option to sell their 50% interest in the joint venture to the Company for a like
number of shares and, under certain circumstances, the Company has an option to
purchase the interest for the same number of shares. The plant is planned to
start production late in 1998.
The following unaudited pro forma condensed balance sheet as at September
30, 1997 was prepared to illustrate the effect of the Company's sale of shares
of Common Stock to the Quebec Investors and the investment of the proceeds
therefrom in CTEK Laminates Inc., a 50/50 joint venture with the Quebec
Investors for the establishment of a plant to manufacture the Company's
laminates, as if each event had occurred on September 30, 1997. The estimated
transaction fees and expenses included in the following Pro Forma Balance Sheet
are provided solely for the purpose of presenting the Pro Forma Balance Sheet
set forth below. The actual transaction fees and expenses may differ from the
assumptions set forth below. The Pro Forma Balance Sheet does not purport to
represent what the Company's financial position would actually have been if such
events had occurred on September 30, 1997, or to project the Company's financial
position for any future date.
The following financial information should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1996 and in the Quarterly Report
on Form 10-QSB for the quarterly period ended September 30, 1997.
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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, 1997
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Actual Adjustments(1) Pro Forma
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(In thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and equivalents $ 2,574 $ 2,574
Other current assets 720 $ (7) 713
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Total current assets 3,294 (7) 3,287
Property and equipment - net 5,271 5,271
Advance payments on construction in progress 237 237
Investment in joint venture 5,609 5,609
Other assets and deferred charges 826 (99) 727
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Total assets $ 9,628 $ 5,503 $ 15,131
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 605 $ 605
Deferred salaries 716 716
Other accrued liabilities 517 $ 83 600
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Total current liabilities 1,838 83 1,921
Long-term debt to directors/stockholders 1,595 1,595
5% Convertible debentures - net 6,421 6,421
Capital lease obligations and other liabilities 96 96
Stockholders' equity
Series A convertible preferred stock 1,842 1,842
Common stock 62 11 73
Additional paid in capital 23,883 5,409 29,292
Deficit (26,109) (26,109)
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Total stockholders' equity (322) 5,420 5,098
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Total liabilities and stockholders' equity $ 9,628 $ 5,503 $ 15,131
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(1) Reflects the net proceeds of the sales of common stock to the Quebec
Investors and the investment of the proceeds therefrom in CTEK Laminates
Inc., a 50/50 joint venture with the Quebec Investors.
(a) Includes $99,481 of expenses related to the transaction incurred
through September 30, 1997 and included in other assets and deferred
charges.
(b) Includes $83,000 of estimated additional expenses incurred subsequent
to September 30, 1997 and shown as a pro forma adjustment to other
accrued liabilities.
SIGNATURES
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 hereunto duly authorized.
COMPOSITECH LTD.
By: /s/ Samuel S. Gross
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Date: December 2, 1997 Samuel S. Gross
Executive Vice President
and Treasurer
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