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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): March 5, 1997
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NACO INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Utah 33-85044-D 48-08369713
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(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
395 West 1400 North
Logan, Utah 84321
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(Address of principal executive offices, including zip code)
(801) 753-8020
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(Registrant's telephone number, including area code)
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Item 9. Sale of Unregistered Securities Pursuant to Regulation S.
Securities Sold
On March 5, 1997, the Registrant sold 343,750 units (the "Units") for
an aggregate purchase price of $825,000 to Britannia Holdings Ltd. of England
(the "Purchaser"). The sale was made without registration under the Securities
Act of 1933 in reliance upon Regulation S. Each Unit consists of: (i) one share
of Common Stock; and (ii) forty four hundredth (.44) of a warrant (the
"Warrant") to purchase an additional share of Common Stock at an exercise price
of $3.50 per share. The Warrant will expire in three years, subject to extension
as described below. The Warrants are currently callable by the Registrant
anytime after its Common Stock trades for a bid price of $7.50 or higher for 30
trading days in a row.
Option
The Registrant also granted the Purchaser a 12 month option (the
"Option") to purchase an additional 343,750 Units at a purchase price of $2.40
per Unit in connection with the sale of the Units. If the Purchaser purchases
all of the Units subject to the Option, the Registrant will (i) extend the
exercise period of all of the Warrants issued as part of Units (including the
Units issued on March 5, 1997) from 3 years to 7 years, and (ii) increase the
call price on such Warrants from $7.50 to $15.00.
The Registrant may call the Option any time after either of the
following events:
A. The Registrant obtains a signed contract or a letter of intent to
manufacture a patented storage compartment, for either a major
automobile manufacturer or the owner of the patent, provided that the
Registrant receives an indication that the Registrant will be required
to produce at least $6 million of parts annually under such
arrangement; or
B. The Registrant obtains a new individual or single contract from any
other source that would indicate a minimum increased annual sales
volume of $6 million.
The Purchaser will have 30 days to exercise the Option after being notified by
the Registrant that the Option is called.
Stock Performance Agreement
In the event the Registrant's Common Stock does not trade for at least
$6 per share for 10 consecutive days at any time during the first twenty-four
months following the date of the sale, the Registrant will be required to issue
additional shares of its Common Stock to the Purchaser (referred to hereinafter
as the "Stock Performance Agreement"). The number of shares to be issued shall
be determined on a monthly basis beginning on the last day of the twenty fifth
month following March 5, 1997, and continuing thereafter on the last day of each
succeeding month until the Registrant's Common Stock trades for $6 or more for
at least 10 consecutive trading days. The number of additional shares to be
issued under the Stock Performance Agreement for each applicable month will be
determined in accordance with the following calculation:
(Preliminary Sum * .0058333 ) / Average Share Price
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For purposes of this calculation, "Preliminary Sum" shall be the product of (i)
the number of shares of Common Stock purchased by the Purchaser in this
transaction that are still owned by the Purchaser at the end of said month
(excluding any shares acquired upon exercise of the Warrants) multiplied by (ii)
$2.40; and "Average Share Price" shall be the higher of (A) the average bid
price for the Registrant's Common Stock for the previous month, if any, or (B)
$2.40. Within 30 days of each annual anniversary of the date of the agreement
pursuant to which the Units were sold, the Company shall issue to the Purchaser
the cumulative number of shares accrued under the Stock Performance Agreement
during each of the preceding 12 months.
The Stock Performance Agreement will be permanently discontinued at
such time as the Registrant's Common Stock trades for $6 or more for 10
consecutive trading days on a public market. The Purchaser cannot transfer
rights or privileges under the Stock Performance Agreement.
Finder's Fee
A finder's fee of 10% was paid to James Czirr who is an employee of
Extol International and is nominated to the board of directors of the
Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NACO INDUSTRIES, INC.
/s/ Jeffrey J. Kirby
Jeffrey J. Kirby
Vice President and Secretary
Date: March 19, 1997
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