FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended: March 31, 1997
Commission file number: 0-18729
Continental American Transportation, Inc.
(Exact name of registrant as specified in its Charter)
Colorado 84-1089599
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
495 Lovers Lane Road, Calhoun, Georgia 30701
(Address of principal executive offices)
(Zip Code)
(706) 629-8682
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the 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.....
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the 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.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
As of August 15, 1997, 6,023,224 shares of Common Stock were
outstanding.
Transitional Small Business Disclosure Format:
Yes..X..No.....
CONTINENTAL AMERICAN TRANSPORTATION, INC. AND SUBSIDIARIES
CONTENTS
Pages
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements and Information
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Item 2. Management's Discussion and Analysis 6
of Financial Condition and Results
of Operations
Part II OTHER INFORMATION
Item 1. Legal Proceedings. 8
Item 2. Changes in Securities. 11
Item 3. Defaults Upon Senior Securities. 11
Item 4. Submission of Matters to a Vote 11
of Security Holders.
Item 5. Other Information. 11
Item 6. Exhibits and Reports on Form 8-K. 11
Continental American Transportation, Inc. and Subsidiaries
Consolidated Balance Sheet
March 31, 1997
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 52,545
Restricted cash 703,308
Trade accounts receivable, net of allowance for doubtful accounts of $852,301 9,136,655
Notes receivable - current portion 654,092
Inventories 244,193
Other current assets 1,893,985
---------------
Total Current Assets 12,684,778
Property and Equipment - at cost less accumulated depreciation 51,832,272
Notes receivable, excluding current portion 267,165
Deferred charges 470,667
Excess purchase price over fair value of net assets acquired less accumulated amortization 4,501,718
Other assets 608,885
---------------
Total Assets 70,365,485
===============
Liabilities and Stockholders' Equity
Current Liabilities
Lines of credit 4,595,067
Current maturities of long-term debt 2,980,740
Current maturities of capital lease obligations 15,011,650
Accounts payable 8,902,128
Accrued expenses 4,116,312
---------------
Total Current Liabilities 35,605,897
Long Term debt, excluding current maturities 14,496,038
Capital lease obligations, excluding current maturities 19,899,164
---------------
Total Liabilities 70,001,099
---------------
Stockholders' Equity (Impairment)
Convertible preferred stock, $1 par value, 400,000 shares authorized, 200,000
shares issued 200,000
Common stock, no par value, 20,000,000 shares authorized,
501,489 shares issued, 4,984,689 shares outstanding 9,835,064
Treasury stock, 30,000 shares at cost (137,808)
Demand notes receivable from sale of stock and exercise of stock options and warrants (325,000)
Retained earnings (deficit) (9,207,870)
---------------
Total Stockholders' Equity (Impairment) 364,386
---------------
Total Liabilities and Stockholders' Equity $ 70,365,485
===============
See notes to the consolidated financial statements.
3
Continental American Transportation, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------------------- ----------------------------------
1997 1996 1997 1996
--------------- --------------- -------------- ---------------
Operating Revenues $ 18,277,599 $ 9,600,202 $ 54,579,474 $ 15,329,101
--------------- --------------- -------------- ---------------
Cost of Operations
Operating Expenses 15,759,662 9,206,055 50,112,621 14,809,603
Depreciation and amortization 4,374,414 1,038,568 9,743,414 1,677,493
(Gain) loss on disposal of equipment (1,828,908) (25,744) (1,805,694) (99,480)
--------------- --------------- -------------- ---------------
Total Cost of Operations 18,305,168 10,218,879 58,050,346 16,387,616
--------------- --------------- -------------- ---------------
Operating Loss (27,569) (618,677) (3,470,867) (1,058,515)
--------------- --------------- -------------- ---------------
Other Income (Expense)
Interest expense (1,387,588) (343,864) (3,762,837) (469,820)
Other income 9,516 6,483 41,353 75,537
--------------- --------------- -------------- ---------------
Total Other Income (Expense) (1,378,072) (337,381) (3,721,484) (394,283)
--------------- --------------- -------------- ---------------
(Loss) Before Income Taxes (1,405,641) (956,058) (7,192,351) (1,452,798)
Provision for (Benefit From) income taxes x 6,025 (15,757) 397,671 (15,757)
--------------- --------------- -------------- ---------------
Net (Loss) $ (1,411,666) $ (971,815) $ (7,590,022) $ (1,437,041)
=============== =============== ============== ===============
(Loss) Per Share $ (.28) $ (.25) $ (1.56) $ (.50)
=============== =============== ============== ===============
5,014,689 3,791,356 4,854,493 2,893,489
Weighted Average Common Shares
Outstanding
=============== =============== ============== ===============
See notes to the consolidated financial statements.
4
Continental American Transportation, Inc. & Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
March 31,
-----------------------------------
1997 1996
--------------- ---------------
Cash Flows From Operating Activities $ 7,888,457 $ (1,040,838)
--------------- ---------------
Cash Flows From Investing Activities (2,068,178) 1,623,831
--------------- ---------------
Cash Flows From Financing Activities (6,404,505) 455,215
--------------- ---------------
Net Increase in Cash, Including Restricted Cash (584,226) 1,038,208
Cash, Including Restricted Cash, Beginning of Period 1,340,079 480
--------------- ---------------
Cash, Including Restricted Cash, End of Period $ 755,853 $ 1,038,688
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid (received) during
the nine months for
Interest $ 3,762,837 $ 469,820
=============== ===============
Income Taxes $ - $ (15,757)
=============== ===============
SUPPLEMENTAL DISCLOSURES OF NON CASH
FINANCING ACTIVITIES
Conversion of subordinated debt into convertible preferred stock $ 200,000 $ -0-
=============== ============
See notes to the consolidated financial statements.
5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The Company reported consolidated revenue of $18,277,599 and a net loss
of $1,411,666, or $.28 loss per share, compared to $9,600,202 and a net loss of
$971.815, or $.25 per share, for the three months ending March 31, 1997 and 1996
respectively. The Company's operating loss was $27,569, for the quarter ending
March 31, 1997, compared to an operating loss of $618,677, for the quarter ended
March 31, 1996. The Company's depreciation and amortization for the three months
ended March 31, 1997 was $4,374,414, compared to $1,038,568 for the three months
ended March 31, 1996.
The revenues of the Company are presented on a consolidated basis and
are the cumulative results from the operations of the Company's three operating
subsidiaries, Blue Mack Transportation, Inc., Carpet Transport, Inc. and Chase
Brokerage, Inc., as well as certain non-operating activities conducted under the
aegis of another subsidiary, Carpet Transport Properties, and the parent
company. Blue Mack reported revenue of $2,384,308 and a net loss of $207,132, or
$.04 per share for the three months ended March 31, 1997. Carpet Transport
reported revenue of $14,796,970, and a net loss of $788,586, or $.16 per share
for the three months ended March 31, 1997. Chase Brokerage reported revenue of
$1,091,381 and a net income of $293,663 or $.05 per share for the three months
ended March 31, 1997. The parent reported revenue of $4,940 and a net loss of
$211,161, or $.16 per share for the three months ended March 31, 1997, while
Carpet Transport Properties reported a loss of $438,450, or $.09 per share for
the quarter ended March 31, 1997, all on a post-consolidated basis.
The Company's subsidiaries, CTI and A&P, may be liable, jointly and
severally to a future Internal Revenue Service claim or claims that they
understated revenues in the approximate amount of $3,400,000 arising out of the
criminal proceedings pending against Messrs. Charles B. Prater and Lynwood S.
Warmack, former owners of these companies. In addition, these subsidiaries may
also be faced with a liability in a wrongful death lawsuit and accompanying
proceedings in West Virginia Federal Court, in amounts not covered by applicable
insurance policies. The Company has an agreement of indemnification from Messrs.
Prater and Warmack to protect against these contingent liabilities and may
set-off the aggregate amount of any liabilities arising against these
subsidiaries against the $7,290,000 Company Note due Messrs. Warmack and Prater.
The Board of Directors has no reason to believe that the aggregate amount of
potential liability under future Internal Revenue Service claims and this
lawsuit would exceed $7,290,000. However, if either one
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or both of these liabilities were to attach currently, they would have a
material adverse effect on the financial condition of the Company and its
subsidiaries.
Subsequent Events:
At a special meeting of the Board of Directors held on February 11,
1997 the Board voted to change the fiscal year for the Company and its
subsidiaries from June 30th to December 31st. At a subsequent meeting held on
July 11, 1997 the Board unanimously voted to rescind this decision and return
the fiscal year to June 30th.
On March 6, 1997, the Company, as a result of its due diligence, was
notified that a Foreign Government Bond deposited with the Company by an outside
investor was deemed to be fraudulent. The Company immediately notified the
appropriate federal and local authorities. The subsequent investigation is
continuing at this time.
On April 6, 1997, Mr. Erik Bailey, Director and Chief
Financial Officer of the Company resigned citing personal
reasons. He was replaced as Chief Financial Officer by Mr.
Brian Henninger.
On July 21, 1997, Mr. Brian Henninger resigned as Chief
Financial Officer of the Company. Mr. Henninger was replaced
on the Board by Mr. Donald Conord, Vice President of Terminal
operations for Carpet Transport, Inc., for the past eleven
years.
On July 22, 1997, the Company reinstated the services of
Mr. Charles Prater, a former owner of Carpet Transport, Inc.
Mr. Prater was retained to lend his expertise in the
recruitment of drivers, the retention of the existing customer
base and in the operations area Mr. Prater is paid at the rate
of $1250 per week.
* May contain "forward-looking statements".
7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to ordinary routine litigation incidental to its
business, primarily involving claims for personal injury or property damage
incurred in the transportation of freight. The Company maintains insurance to
cover liabilities in amounts in excess of self-insured retentions.
A&P Transportation, Inc. ("A&P") was sued in a wrongful death action in
Federal Court in West Virginia prior to its acquisition by the Company. The
case, Elizabeth Crawley, Administratrix of the Estate of William Crawley v.
Lionel Robertson, A&P Transportation, Inc., Carpet Transport, Inc., Charles B.
Prater and Lynwood S. Warmack is pending in the Circuit Court of McDowell
County, West Virginia and was commenced on March 18, 1996. In addition, other
claims have also been made against A&P arising out of the same accident. Company
management believes that A&P's liability, which under its applicable insurance
policy has a $1,000,000 maximum limit coverage, and Carpet Transport Inc.'s
liability, which has a under its applicable insurance policy a $1,000,000
maximum limit coverage, could exceed these insurance coverage limits. In the
event the claims arising out of this accident exceed this insurance coverage and
A&P is found liable therefor, the Company intends to seek indemnification from
the previous owners of A&P pursuant to the provisions of the acquisition
agreement that provides for such relief.
The Board of Directors of the Company recently learned that Mr. Timothy
Holstein, the President and Chief Executive Officer of the Company, delivered a
letter, dated September 27, 1996, to Messrs. Charles B. Prater and Lynwood S.
Warmack, the former owners of Carpet Transport, Inc., Chase Brokerage, Inc. and
A&P, allegedly on behalf of Carpet Transport Holdings Corp, a wholly owned
subsidiary of the Company which was formed to purchase Carpet Transport, Inc.,
Chase Brokerage, Inc. and A&P and which subsidiary currently owns all of the
issued and outstanding shares of these companies. Pursuant to the general terms
of this letter delivered by Mr. Holstein, the Company agreed to indemnify
Messrs. Prater and Warmack from and against any liability or claims against them
personally that may arise out of or in connection with this lawsuit. The Board
of Directors did not authorize the execution or delivery of this letter by Mr.
Holstein and will vigorously defend against any and all claims made by either or
both Messrs. Prater and Warmack that may be made against the Company or its
subsidiaries under any indemnification claim arising from this letter.
8
Blue Mack Transport, Inc. v. Trustee for Mural Transport,
Inc.: Blue Mack commenced a core proceeding in the U.S.
Bankruptcy Court, Trenton, New Jersey, seeking the return of
a $100,000 loan it made to this debtor. Company management
has recently learned that the Bankruptcy Court has recognized
this claim as valid.
Mural Transport, Inc. v. GMAC: The Company and Blue Mack are defendants
in a core proceeding in the U.S. Bankruptcy Court, Trenton, New Jersey, in which
GMAC seeks payment for and/or lease payments allegedly due it as a result of the
alleged utilization of its revenue-generating equipment by these parties; the
Company and Blue Mack have, and continue to, vigorously prosecute their defense
against these claims. The Complainant has failed to specify any specific amount
of its claims against the Company and Blue Mack, and Company has filed a motion
for summary judgment in this matter.
Trustee for Mural Transport, Inc. v. Continental American
Transportation, Inc., et al: The Company and Blue Mack are
defendants in a core proceeding in the U.S. Bankruptcy Court,
Trenton, New Jersey, in which the Trustee is suing on a
$15,000 claim representing the alleged value of a piece of
revenue equipment allegedly in Defendants' possession.
On June 3, 1997, a complaint was filed in the U.S.
District Court for the Northern District of Georgia, Rome
Division, styled RANA Investment Company and RIC Investment
Fund, Ltd. (fka Reg-S Investment Fund Ltd.) v. Continental
American Transportation, Inc., Case No. 4:97-CV-0165-HLM. In
this action, the plaintiffs sought injunctive relief and
damages for the Company's allegedly improper refusal to
convert several convertible debentures owned by the plaintiffs
into the Company's common stock. On July 3, 1997, the court
denied a motion for preliminary injunction sought by the
plaintiffs. This action is currently in the discovery phase.
On June 3, 1997, a complaint was filed with the American
Arbitration Association in Atlanta, Georgia styled RIC
Investment Fund, Ltd. (formerly known as REG-S Investment
Fund, Ltd.) v. Continental American Transportation, Inc., Case
No. 30 168 00201 97. In this action, the plaintiff sought
damages of approximately $701,000 and/or an award of specific
performance based on the Company's allegedly improper refusal
to abide by a Redemption and Escrow Agreement dated January
28, 1997. The matter has not yet been scheduled for an
arbitration hearing.
On June 17, 1997, the Company filed a complaint in the
U.S. District Court for the Northern District of Georgia,
Atlanta Division, styled Continental American Transportation,
Inc. and Carpet Transport, Inc. v. Charles B. Prater, Sr.,
9
Case No. 1:97-CV-1743. In this action, the Company is seeking to recover damages
from Mr. Prater based on two schemes in which Mr. Prater was allegedly involved.
In the complaint, the Company contends that Mr. Prater converted hundreds of
thousands of dollars from the Company by (1) illegally cashing checks for his
benefit by taking advantage of the ComData wire system and (2) obtaining
fraudulent expense reimbursements. The complaint contends that Mr. Prater
violated the Racketeer Influenced and Corrupt Organizations (RICO) statute and
committed various torts including fraud, conversion, breach of fiduciary duty,
and money had and received. Mr. Prater has not yet been served with the
complaint.
10
Item 2. Changes in Securities
(a), (b) & (c)
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On January 15, 1997, a Special Meeting of the Stockholders of the
Company was held at its corporate offices in Calhoun, Georgia. At this Special
Meeting, stockholders elected all of the then directors to a further one (1)
year term to the Board of Directors: Timothy Holstein received 3,894,164 share
votes for his election, 30,925 against and 100 abstained; Mr. Erik Bailey
received 3,925,089 share votes for his election, no votes against and 100
abstained, and; Mr. Brian Henninger received 3,925,089 share votes for his
election, no votes against and 100 abstained. Proposal Two, ratification of the
adoption by the Board of Directors of the Company's 1996 Stock Option Plan,
received 3,785,367 share votes for ratification, 139,760 against and 62
abstained. The last matter voted upon, Proposal Three, the ratification of the
Board's appointment of the accounting firm of Rosenberg Rich Baker Berman and
Company to serve as the Company's independent auditors for the fiscal year
ending June 30, 1997, received 3,808,920 share votes for ratification of
appointment, none against and 116,269 abstained.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) (3)(i) Articles of Incorporation: Incorporated
by reference to Item 13 (a)(3.1) of
Company's Amendment No. 2 to Form 10-KSB
for the Year Ended June 30, 1996.
(3)(ii) Bylaws: Incorporated by reference to
Item 13 (a)(3.2) of Company's Amendment
No. 2 to Form 10-KSB for the Year Ended
June 30, 1996
(27) Financial Data Schedule
11
(b) The Registrant filed the following Current Reports on Forms 8-K
during the subject period:
Date Filed
Date Signed: with the SEC:
Annual Meeting January 20, 1997 January 22, 1997
Change of Fiscal Year February 11, 1997 February 11, 1997
Notice of SEC Full Review February 21, 1997 February 21, 1997
Japanese Government Bond March 6, 1997 March 6, 1997
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Form 10-QSB for the period ended
March 31, 1997, to be signed on its behalf by the undersigned thereunto duly
authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President and
Chief Executive Officer
By: s/Glenn Singleton
Glenn Singleton, Principal Financial
and Chief Accounting Officer
Dated: August 22, 1997
cat10q97.mar
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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): January 15, 1997
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Exact name of Registrant as specified in charter)
Colorado 0-18729 84-1089599
(State or other (Commission (IRS employee
jurisdiction of file number) identification
incorporation no.)
495 Lovers Lane Road, Calhoun, Georgia 30701
- --------------------------------------------------------
(Address of principal executive office) Zip Code
Registration telephone number, including area code: (706) 629-8682
Item 5. Other Events.
Registrant's Annual Meeting of Shareholders took place at the
Company's headquarters in Calhoun, Georgia on January 15,
1997, pursuant to its Notice of Annual Meeting sent to
shareholders of record and beneficial owners of the
Registrant's common shares. A quorum representing
approximately seventy-eight (78%) percent of the issued and
outstanding common shares were represented by proxy or in
person. Management's candidates for election to the
Registrant's Board of Directors were elected based on the
following results: Timothy Holstein, Registrant's President
and Chief Executive Officer, received 3,894,164 votes for
election to the Board, 30,925 against with 100 votes
abstaining; Erik Bailey, Registrant's Vice President and Chief
Financial Officer, received 3,925,089 votes for election, no
votes against with 100 votes abstaining, and; Brian Henninger,
Registrant's Secretary and Comptroller, received 3,925,089
votes in favor of his election, no votes against with 100
votes abstaining.
Shareholders also approved the adoption of Registrant's 1996
Stock Option Plan: 3,785,367 votes were cast in favor, 139,760
against and 62 votes abstained. Registrant's last proposal
voted upon by shareholders, the ratification of the
apppointment of the accounting firm of Rosenberg Rich Baker
Berman & Company to serve as Registrant's independent auditor
for the fiscal year ending June 30, 1997, received 3,808,920
votes in favor, no votes against with 116,269 votes
abstaining.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
Dated: January 20, 1997
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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): February 7, 1997
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Exact name of Registrant as specified in charter)
Colorado 0-18729 84-1089599
(State or other (Commission (IRS employee
jurisdiction of file number) identification
incorporation no.)
495 Lovers Lane Road, Calhoun, Georgia 30701
- --------------------------------------------------------
(Address of principal executive office) Zip Code
Registration telephone number, including area code: (706) 629-8682
Item 8. Change in Fiscal Year.
Registrant's Board of Directors has authorized a change in its
fiscal year from June 30th to December 31st. Accordingly,
Registrant's management will prepare an annual report on Form
10-KSB for the 6-month period ended December 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Erik Bailey
Erik Bailey, Vice President
and Chief Financial Officer
Dated: February 11, 1997
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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): February 20, 1997
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Exact name of Registrant as specified in charter)
Colorado 0-18729 84-1089599
(State or other (Commission (IRS employee
jurisdiction of file number) identification
incorporation no.)
495 Lovers Lane Road, Calhoun, Georgia 30701
- --------------------------------------------------------
(Address of principal executive office) Zip Code
Registration telephone number, including area code: (706) 629-8682
Item 5. Other Events.
On February 20, 1997, the Securities and Exchange Commission
(the "Commission") informed Registrant that it would conduct a
"full review" of its Post-Effective Amendment No. 1 to its
registration statement, filed with the Commission on February
6, 1997 (the "Post-Effective Amendment"); the Post-Effective
Amendment modified and amended Registrant's registration
statement on Form S-3 originally filed with the Commission on
July 25, 1996, as well as Pre-Effective Amendment No. 1 to
such registration statement which was filed with the
Commission on November 25, 1996 (collectively, the
"Registration Statement"). The Registration Statement was
declared effective by the Commission on November 29, 1996,
based upon Registrant's Board of Director's written
certifications and acknowledgments to the Commission that
included, among other things, its certification that it would
not assert as a defense to any future Commission enforcement
action the fact of the Commission's issuing an order of
effectiveness for the Registration Statement.
The Registration Statement registered under the Securities Act
of 1933, as amended (the "1933 Act") an aggregate of 2,068,441
shares of the Registrant's Common Stock underlying 14 Common
Stock Purchase Warrants (the "Warrants"); also registered
therein were (1) 300,000 Common Shares to accommodate
conversions of 200,000 shares of Registrant's 10% Convertible
Preferred Stock sold to Seatex AG, an entity based in
Switzerland, pursuant to a certain Regulation S Offshore
Securities Subscription Agreement, dated October 22, 1996,
under the provisions of Regulation S promulgated under the
1933 Act and (2) an aggregate of 750,000 Common Shares on
behalf of certain selling securityholders (the "Selling
Securityholders").
In view of the notification by the Commission that it intended
to conduct a "full review" of the Post-Effective Amendment,
Registrant intends to inform all of the warrantholders whose
common shares underlying their respective Warrants were
included in the Registration Statement that Registrant will
not permit any exercises to purchase any of the Common Shares
underlying their Warrants until completion by the Commission
of its full review. The Company shall also inform the
warrantholders that it shall extend the warrant exercise
periods set forth in their respective Warrants by an amount of
time equal in duration to the time it takes the Commission to
complete its full review of the Post-Effective Amendment.
Registrant shall also notify the Selling Securityholders of
these developments and advise them to immediately seek
2
the advice of their respective attorneys before they proceed
with any offers to sell or sales of their common shares
included in the Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Erik Bailey
Erik Bailey, Vice President
and Chief Financial Officer
Dated: February 21, 1997
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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): March 6, 1997
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Exact name of Registrant as specified in charter)
Colorado 0-18729 84-1089599
(State or other (Commission (IRS employee
jurisdiction of file number) identification
incorporation no.)
495 Lovers Lane Road, Calhoun, Georgia 30701
- --------------------------------------------------------
(Address of principal executive office) Zip Code
Registration telephone number, including area code: (706) 629-8682
Item 5. Other Events.
On March 6, 1997, Registrant's management learned that a
certain Japanese Government Bond transferred to it by an
investor was counterfeit. The investor, T. Pat McGlon, had
caused his brokerage firm to transfer physical possession of
the subject bond to the Registrant's brokerage firm who, when
they attempted to sell the instrument today, discovered its
counterfeit nature.
Immediately upon gaining knowledge of the counterfeit nature
of the instrument, Registrant's management instructed its
general counsel to inform the Atlanta, Georgia office of the
Federal Bureau of Investigation of all the facts and
circumstances surrounding the attempted perpetration of this
fraud upon the Registrant. In addition, the Registrant
canceled the 7% convertible preferred shares it had issued to
the investor, the final amount of which securities to be
transferred was subject to adjustment based upon the proceeds
derived from the sale of the subject fraudulent bond. The
Registrant intends to pursue all of its civil and criminal
remedies against the investor and his associates.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Erik Bailey
Erik Bailey, Vice President
and Chief Financial Officer
Dated: March 6, 1997
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