**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM10-KSB/A-1**

 

**ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**FOR THE FISCAL YEAR ENDED JUNE 30, 2002**

 

**Commission File No.: 000-25231**

 

**NORTHERNSTAR FINANCIAL, INC.**

(Nameof Small Business Issuer as specified in its charter)

 
| **Minnesota**                                                    |   | **41-1912467**                         |
|------------------------------------------------------------------|--------|----------------------------------------|
| (State  or other jurisdiction of  incorporation or organization) |   | (IRS  Employer  Identification Number) |

 

**1650 Madison Avenue, Mankato, Minnesota 56001**(Address of principal executive offices)(Zip Code)

 

Issuer’stelephone number, including area code:  **(507)387-2265**

 

Securitiesregistered pursuant to Section 12(b) of the Exchange Act:  **None**

 

Securities registered pursuant to Section 12(g)of the Exchange Act: Common Stock, $.0l par value per share

 

Check whether the Issuer (1) has filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe past 12 months (or for such shorter period that the Registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes ý No  o

 

Check if disclosure of delinquent filers inresponse to Item 405 of Regulation S-B is not contained herein, and will not becontained, to the best of Registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form10-KSB or any amendment to this Form 10-KSB. o

 

Issuer’s revenues for its most recent fiscalyear: $2,742,800

 

The aggregate market value of the Common Stockheld by nonaffiliates of the Registrant as of September 12, 2002 wasapproximately $995,000 based upon the average high and low bid prices of theRegistrant’s Common Stock on such date.

 

There were 479,506 shares of Common Stock, $.0lpar value, outstanding as of September 12, 2002.

 

Transitional Small Business Disclosure Format(check one).  Yes o     No ý

 

 

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This Form 10-KSB/A-1 is being filed in order to include information required by Part III, Items 9-12, originally intended to be incorporated by reference to the information to be included in the Company’s Proxy Statement for the 2002 Annual Meeting of Shareholders.

 

**PART III**

 

**ITEM 9.****                 ****DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCEWITH SECTION 16(a) OF THE EXCHANGE ACT**

 

The Company’sBoard of Directors consists of nine directors. Each director serves on theBoard until his or her successor is duly elected and qualified. The names andages of all of the Company’s directors and the positions held by each with theCompany are as follows:

 
| **Name**           |   | **Age** |   | **Position  with Registrant and other Companies**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Robert H. Dittrich |   | 65      |   | (Class II, term ending at 2003 Annual  Meeting) Director of the Company since March 1999.  Mr. Dittrich has been involved in banking as an owner and director  since 1972.  Mr. Dittrich is currently  the owner and Chairman of American Community Banks and Insurance Agencies in  Sleepy Eye, Medford and Chanhassen, Minnesota.  Mr. Dittrich is also the owner of Dittrich Specialties of New  Ulm and Inver Grove Heights, Minnesota, and Midwest Commodities Brokers and  Traders, Inc. in New Ulm, Minnesota.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Dean M. Doyscher   |   | 57      |   | (Class III, term ending at 2004 Annual  Meeting) Director of the Company since its formation and Chief Financial  Officer, Treasurer and Secretary since August 29, 2001.  Mr. Doyscher has served as President of  Security Management and Realty, Inc. since 1978.  Security Management and Realty, Inc. owns and manages commercial  property throughout all of rural Minnesota including rural housing projects  in over 55 Minnesota cities.  Mr.  Doyscher attended Minnesota State University where he earned both  undergraduate and graduate degrees in Urban and Regional Planning.  Mr. Doyscher was employed as the Deputy  Director of the Model Cities Program for Lewiston, Maine before becoming the  Director of Planning for the City of Mankato and Blue Earth County in  1972.  During 1973-1976 Mr. Doyscher  served as the first Executive Director of the Region Nine Development Commission  serving nine counties in South Central Minnesota.  Prior to forming his own management and realty company in 1988,  Mr. Doyscher served from 1976-1988 as a consultant with Professional Planning  and Development, providing rural Minnesota cities with tax increment  financing, economic development, zoning and housing plans.  Professional Planning and Development was  named Minnesota’s Economic Developer of the Year in 1988.  Mr. Doyscher’s other relevant experience  includes service as President, Minnesota Planning Association; Director,  Minnesota Council for Affordable and Rural Housing; and past member of the  Board of Directors, Mid-America, Bank South.   |
| Dean M. Doyscher   |   | 57      |   | (Class III, term ending at 2004 Annual  Meeting) Director of the Company since its formation and Chief Financial  Officer, Treasurer and Secretary since August 29, 2001.  Mr. Doyscher has served as President of  Security Management and Realty, Inc. since 1978.  Security Management and Realty, Inc. owns and manages  commercial property throughout all of rural Minnesota including rural housing  projects in over 55 Minnesota cities.   Mr. Doyscher attended Minnesota State University where he earned both  undergraduate and graduate degrees in Urban and Regional Planning.  Mr. Doyscher was employed as the Deputy  Director of the Model Cities Program for Lewiston, Maine before becoming the  Director of Planning for the City of Mankato and Blue Earth County in  1972.  During 1973-1976 Mr. Doyscher  served as the first Executive Director of the Region Nine Development  Commission serving nine counties in South Central Minnesota.  Prior to forming his own management and  realty company in 1988, Mr. Doyscher served from 1976-1988 as a consultant  with Professional Planning and Development, providing rural Minnesota cities  with tax increment financing, economic development, zoning and housing  plans.  Professional Planning and  Development was named Minnesota’s Economic Developer of the Year in  1988.  Mr. Doyscher’s other relevant  experience includes service as President, Minnesota Planning Association;  Director, Minnesota Council for Affordable and Rural Housing; and past member  of the Board of Directors, Mid-America, Bank South. |

 

2

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| Gerald W. Eick       |   | 49 |   | (Class II, term ending at 2003 Annual  Meeting) Director of the Company since May 2002.  Mr. Eick, a Certified Public Accountant, has been a Mankato  area resident since 1968.  During this  time, he has served as a director and advisor to numerous private,  professional, civic and charitable organizations, including Clear With  Computers, American Institute of Certified Public Accountants, Minnesota  Society of Certified Public Accountants, Mankato State University, Valley  Industrial Development Corporation, Greater Mankato Area United Way, Belgrade  Avenue United Methodist Church and Boy Scouts.  Mr. Eick also currently serves as Chief Financial Officer of  Weerts Companies, which is in the construction and sod farm business.                                                                                                                                                                                                                                                    |
|----------------------|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| James H. Illies      |   | 55 |   | (Class III, term ending at 2004 Annual  Meeting) Director of the Company since October 2001.  Mr. Illies has been a resident of St.  Cloud for more than 30 years.  He is  currently a principal owner of INH Property Management, Inc.  INH Property Management develops, manages  and brokers commercial and multi-tenant real estate property throughout  Minnesota, Iowa and North and South Dakota.   He is a graduate of St. Cloud State University.  He served as Trustee of St. Francis Xaviar  Church, Commissioner of the Sartell Economic Development Commission, and past  President of Minnesota Real Estate Management Institute.                                                                                                                                                                                                                                                                                                                                                            |
| Steven A. Loehr      |   | 53 |   | (Class I, term ending at 2002 Annual  Meeting) Director of the Company since March 1999.  Mr. Loehr is currently a consultant to the mortgage banking  industry.  Mr. Loehr served as  President of Homeland Mortgage, LLC, a mortgage banker, from July 1999  through December 1999.  From February  1992 to September 1998 he served as Senior Vice President of Voyager Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Michael P. Reynolds  |   | 60 |   | (Class I, term ending at 2002 Annual  Meeting) Director of the Company since its formation.  Mr. Reynolds has served as Vice-President  of Reynolds Welding Supply Company in Mankato, Minnesota and Welders Supply  Company in Wilmar, Minnesota since 1963.   Reynolds Welding Supply Company is engaged in the sale of industrial gases  and welding supplies and operates in three states.  Mr. Reynolds has been involved in many fund raising efforts for  the Minnesota State University Athletic Department.  He previously served as volunteer for the Mankato United Way  and is a past president of the Mankato Golf Club.  Mr. Reynolds is the brother of Thomas Reynolds.                                                                                                                                                                                                                                                                                                                     |
| Thomas J. Reynolds   |   | 65 |   | (Class III, term ending at 2004 Annual  Meeting) Director of the Company since its formation.  Mr. Reynolds is a Mankato native and has  served as President of Welders Supply Company and Reynolds Welding Supply  since 1952.  Mr. Reynolds served on  the Board of Directors for the National Bank of Commerce, presently called  Mid-America Bank, for six years from 1984 to 1990.  Mr. Reynolds is the brother of Michael Reynolds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Thomas P. Stienessen |   | 56 |   | (Class II, term ending at 2003 Annual  Meeting) Chief Executive Officer, President and a director of the Company  since its formation.  Prior to forming  the Company, Mr. Stienessen served as Chief Executive Officer and President  of SGL, Inc., a holding company for the Family Bank, where Mr. Stienessen  served as Chairman, Chief Executive Officer, President and a Director as well  as a member of the Executive and Operating Committees since January 1991.  Mr. Stienessen has more than 25 years of  experience in banking and in mortgage banking, including consumer,  residential, construction, commercial and commercial real estate  lending.  Mr. Stienessen’s experience  includes bank marketing, branch management, branch operations, accounting,  planning and budgeting, underwriting and correspondent/lending.  Previous banking experiences include  positions as Senior Vice President of TCF Mortgage Corporation and Vice  President and Regional Manager of TCF Bank. |

 

3

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The names and ages ofthe executive officers of the Registrant and their positions and offices heldare as follows:

 
| **Name**             |   | **Age** |   | **Position  with Registrant**                                                                                                                                                                                                                                                                                |
|----------------------|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Thomas P. Stienessen |   | 56      |   | Chief Executive Officer, President and a  Director of the Registrant since its formation.  From January 1991 to  January 1998, Chief Executive Officer and President of SGL, Inc., a holding  company for Family Bank, and Chairman, Chief Executive Officer, President and  a Director of Family Bank. |
| Dean M. Doyscher     |   | 57      |   | Chief Financial Officer, Treasurer and  Secretary of the Registrant since August 29, 2001, and a Director of the  Registrant since formation.  Owner/Partner of Security Management and  Realty, an owner and manager of commercial property, since 1978.                                               |

 

**Section 16(a)Beneficial Ownership Reporting Compliance**

 

Section 16(a) of the Securities Exchange Act of 1934 requires theCompany’s executive officers, directors and persons who own more than 10percent of the Company’s Common Stock, to file with the Securities and ExchangeCommission initial reports of ownership and reports of changes in ownership ofCommon Stock and other equity securities of the Company.  Officers, directors and greater than 10%shareholders (“Insiders”) are required by SEC regulations to furnish theCompany with copies of all Section 16(a) forms they file.

 

To theCompany’s knowledge, based on a review of the copies of such reports furnishedto the Company, during the fiscal year ended June 30, 2002, all Section 16(a)filing requirements applicable to Insiders were complied with except that JamesIllies and Gerald Eich were each late filing their Form 3, Thomas Stienessenwas late filing three forms reporting a total of four transactions, ThomasReynolds was late filing three reports covering a total of four transactionsand Robert Dittrich, Dean Doyscher, Steven Loehr and Michael Reynolds were eachlate filing one form reporting one transaction.

 

**ITEM 10.               EXECUTIVECOMPENSATION**

 

**Summary CompensationTable**

 

The following table sets forth certain information regardingcompensation paid to the Chief Executive Officer for the last three fiscalyears.  No other executive officerreceived total salary and bonus compensation in excess of $100,000 for fiscal2002.

 
|                                                                                                |   | **Annual Compensation** |    | **Long-term  Compensation** |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------|---------|-----------------------------|--------|
| **Name and Principal Position**                                                                     |   | **Year**                |    | **Salary****($)(1)**        |   | **Bonus****($)** |   | **Restricted Stock  Award ($)** |   | **Securities  Underlying  Options****(# of shares)** |   |
|                                                                                                |   |                    |    |                        |   |   |   |   |   |   |   |
| Thomas P.  Stienessen  Chief Executive Officer  and President of Company  and of Northern Star Bank |   | 2002                    |    | 110,807                     |   | — |   |   |   | 3,000 |   |
|                                                                                                | 2001   |                    | 106,545 |                        | — |   | — |   | 5,000 |   |
|                                                                                                | 2000   |                    | 102,250 |                        | — |   | $ | 21,000 | (2) | 3,000 |   |
|                                                                                                |   |                    |    |                        |   |   |   |   |   |   |
|                                                                                                     |        |                         |         |                             |        |  |  |  |  |  |  |  |

 

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(1)       Compensation to Mr. Stienessen is paid byNorthern Star Bank, the Company’s wholly-owned subsidiary.

(2)       Mr. Stienessen holds 2,000 shares of restrictedstock having an aggregate value of $11,500 on June 30, 2002.  Dividends, if declared by the Company, willbe paid on the shares.

 

4

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**EmploymentAgreement**

 

The Companyhas entered into an employment agreement with Thomas P. Stienessen pursuant towhich Mr. Stienessen serves as the President and Chief Executive Officer ofNorthern Star Bank.  The agreement wasfor an initial term of three years and is renewed automatically for additionalone-year terms unless terminated by either party.  During the term of the agreement, Mr. Stienessen will bepaid an annual salary determined by the Board (currently $110,807) and iseligible to participate in discretionary bonuses that may be authorized by theBoard of Directors to senior management of the Bank.  Mr. Stienessen will be eligible to participate in any managementincentive program of the Bank or any long-term equity incentive program and willbe eligible for grants of stock options and other awards thereunder.  Additionally, Mr. Stienessen willparticipate in any retirement, welfare and other benefit programs establishedby the Bank and is entitled to a life insurance policy and an accidentliability policy and reimbursement for automobile expenses, club dues, andtravel and business expenses. Furthermore, if in connection with a change of control of the Bank, Mr.Stienessen is terminated without cause or voluntarily quits because of certainspecified reasons, he is entitled to a lump sum payment of 2.99 times hisannual base salary.

** **

**Option/SAR GrantsDuring 2002 Fiscal Year**

 

The followingtable sets forth options that have been granted to the Chief Executive Officerduring the Company’s last fiscal year ended June 30, 2002.  The Company has not granted any stockappreciation rights.

 
| **Name**             |   | **Number of   Securities  Underlying  Options/SARs  Granted** |   | **Percent of  Total  Options/SARs  Granted to  Employees in  Fiscal Year** |   | **Exercise  or  Base Price  ($/Share)** |   | **Expiration  Date** |     |
|----------------------|--------|---------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------|----------|
|                 |   |                                                          |   |                                                                       |   |                                    |   |                 |     |
| Thomas P. Stienessen |   | 3,000                                                         | (1)    | 54.5                                                                       | %      | $                                       | 6.50   |                 | 12/19/11 |   |
|                      |        |                                                               |        |                                                                            |        |                                         |        |                      |          |  |

 

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(1)                                  Such option isexercisable in three equal annual installments of 1,000 shares each, commencingDecember 19, 2002.

 

**AggregatedOption/SAR Exercises During 2002 Fiscal Year**

**and Fiscal Year EndOption/SAR Values**

 

No optionswere exercised by the Chief Executive Officer during fiscal 2002.  The following table provides informationrelated to the number and value of options held at fiscal year end by the ChiefExecutive Officer:

 
|                 |   | **Number of  Securities  Underlying Unexercised  Options at Fiscal Year End** |   | **Value of  Unexercised In-the  Money Options at Fiscal Year End(1)** |   |
|----------------------|--------|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                 |   |                                                                          |   |                                                                  |   |
| **Name**             |   | **Exercisable**                                                               |   | **Unexercisable**                                                     |   | **Exercisable** |   | **Unexercisable** |   |
|                 |   |                                                                          |   |                                                                  |   |   |   |   |   |
| Thomas P. Stienessen |   | 13,067                                                                        |   | 7,333                                                                 |   | $ | 0 |   | $ | 0 |   |
|                      |        |                                                                               |        |                                                                       |        |  |  |  |  |  |  |

 

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(1)           Value of exercisable/unexercisablein-the-money options is equal to the difference between the fair market valueof the Common Stock at fiscal year end and the option exercise price per sharemultiplied by the number of shares subject to options.  The closing bid price as of June 30, 2002,as quoted on the OTC Bulletin Board, was $5.75.

 

5

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**ITEM 11.****                                             ****SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

The followingtable provides information as of August 30, 2002, concerning the beneficialownership of Common Stock of the Company by each person known to the Company tobe the beneficial owner of more than 5% of the Company’s outstanding CommonStock, by each executive officer of the Company named in the SummaryCompensation Table, by each director and nominee for director of the Company,and by all current directors and executive officers of the Company as agroup.  Unless otherwise indicated, theshareholders listed in the table have sole voting and investment powers withrespect to the shares indicated.

 
| **Name and Address of   Beneficial Owner**                                         |   | **Number of  Shares  Beneficially Owned** |   | **Percent of    Class(1)** |   |
|------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|----------------------------|--------|
| Thomas J. Reynolds  19 Dellview Lane  Mankato, MN  56001                      |   | 106,191                                   | (2)(3) | 20.0                       | %      |
| Steven A. Loehr  5216 Richwood Drive  Edina, MN  55436                        |   | 58,955                                    | (2)(4) | 11.6                       | %      |
| Dean M. Doyscher  78 Cree Point Drive  Mankato, MN  56001                     |   | 56,903                                    | (2)(5) | 11.2                       | %      |
| Thomas P. Stienessen    1650 Madison Avenue    Mankato, MN  56001   |   | 54,067                                    | (6)    | 11.0                       | %      |
| Robert H. Dittrich    826 North Broadway    New Ulm, MN  56073      |   | 49,381                                    | (2)(7) | 10.0                       | %      |
| Michael P. Reynolds    74 Cree Point Drive    Mankato, MN  56001    |   | 36,593                                    | (2)(8) | 7.1                        | %      |
| Northern Star Bank1650   Madison Avenue  Mankato, MN  56001              |   | 32,700                                    |   | 6.8                        | %      |
| Susan L. Baker    455 Grove Street    Upper Montclair, NJ  07043    |   | 30,000                                    |   | 6.3                        | %      |
| Joyce Larson  5231 Agate Road  Upsala, MN  56384                              |   | 25,000                                    |   | 5.2                        | %      |
| Melvin Larson    5231 Agate Road    Upsala, MN  56384               |   | 25,000                                    |   | 5.2                        | %      |
| James H. Illies    300 East St. Germain St.  St.   Cloud, MN  56301 |   | 14,023                                    | (2)(9) | 2.8                        | %      |
| Gerald W. Eick    1740 Mary Lane    North Mankato, MN  56003        |   | 3,950                                     | (2)    | *                          |   |
| Directors and Officers as a Group    (8 persons)                              |   | 380,063                                   |   | 57.0                       | %      |

 

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* Less than 1%

 

(1)                                  Shares notoutstanding but deemed beneficially owned by virtue of the right of a person toacquire them as of August 30, 2002, or within sixty days of such date aretreated as outstanding only when determining the percent owned by suchindividual and when determining the percent owned by a group.

(2)                                  Includes 3,000 shareswhich will become purchasable on the date of the Annual Meeting pursuant to anautomatic option grant under the Company’s 1998 Equity Incentive Plan.

(3)                                  Includes 18,400shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002. Also includes 30,158 shares which may be issued upon conversion ofConvertible Subordinated Unsecured Notes.

(4)                                  Includes 18,400shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002. Also includes 5,555 shares which may be issued upon conversion of aConvertible Subordinated Unsecured Note.

(5)                                  Includes 17,000shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002.

 

6

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(6)                                  Includes 13,067shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002.

(7)                                  Includes 12,000shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002.

(8)                                  Includes 12,200shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002. Also includes 19,047 shares which may be issued upon conversion of aConvertible Subordinated Unsecured Note.

(9)                                  Includes 1,500 sharespurchasable upon exercise of options presently exercisable or exercisablewithin 60 days of August 30, 2002.  Alsoincludes 9,523 shares which may be issued upon conversion of a ConvertibleSubordinated Unsecured Note.

(10)                            Includes92,567 shares purchasable upon exercise of options presently exercisable orexercisable within 60 days of August 30, 2002, 18,000 shares which will becomeexercisable on the date of the Annual Meeting pursuant to an automatic optiongrant under the Company’s 1998 Equity Incentive Plan, and 73,806 shares whichmay be issued upon conversion of Convertible Subordinated Unsecured Notes.

 

**ITEM 12.****                                             ****CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

 

The Company’s wholly-owned subsidiary, Northern Star Bank, has enteredinto a 10-year gross lease agreement with Colonial Square Partners, Inc. tolease approximately 5,000 square feet of a 18,000 square foot single level,multi-tenant colonial style office building at an annual rental ofapproximately $117,000 for fiscal 2002. Dean Doyscher, a director and principal shareholder of the Company, is apartner of Colonial Square Partners, Inc. The Bank invested approximately $204,000 for leasehold improvements,including the construction of walls, windows, and doors, paint, floor tile andcarpet, electrical and a drive-through canopy. The Company obtained an independent appraisal of market rents in theBank’s proposed market.  The Companybelieves that this transaction is on terms no less favorable to the Bank thancould be obtained from an unaffiliated third party.

 

In March, 2001, the Bank entered into a 10-year gross lease agreementwith INH Property Management, Inc. to lease approximately 5,000 square feet ofa two-story multi tenant bank building in St. Cloud, Minnesota at an initialannual rental of approximately $41,000. The lease was subject to regulatory (FDIC and the State of Minnesota)review and approval.  James H. Illies, adirector of the Company and director of Northern Star Bank, is an owner of INHProperty Management.  The Bank investedapproximately $275,000 in leasehold improvements, furniture, fixtures andequipment for the facility.  The Companybelieves that this transaction is on terms no less favorable to the Bank thancould be obtained from an unaffiliated third party*.*

 

In July andAugust 2001, the Company issued Convertible Subordinated Unsecured Notes toaccredited investors in the aggregate principal amount of $1,000,000.  The Notes accrue interest at a rate of 8% perannum and are due and payable three years from the issuance date in 2004.  The Holder of the Note has the right toconvert all or any part of the principal amount and accrued but unpaid interestinto shares of Company Common Stock at $10.50 per share at any time before itis paid.  Each of Thomas Reynolds andMichael Reynolds, directors of the Company, acquired Notes in consideration for$200,000.  Dean Doyscher and JamesIllies, directors of the Company, each acquired Notes in consideration for$100,000.

 

In June, Julyand August 2002, the Company issued Convertible Subordinated Unsecured Notes toaccredited investors in the aggregate principal amount of $650,000.  The Notes accrue interest at a rate of 7%per annum and are due and payable three years from the issuance date in2005.  The Holder of the Note has theright to convert all or any part of the principal amount and accrued but unpaidinterest into shares of Company Common Stock at $9.00 per share at any timebefore it is paid.  Each of ThomasReynolds and Steven Loehr, directors of the Company, acquired Notes inconsideration for $100,000 and $50,000, respectively.  Robert Dittrich, a director of the Company, acquired a Note inthe amount of $150,000, which was subsequently repaid.

 

From time to time the Company’s wholly-owned subsidiary, Northern StarBank, has made loans to Thomas J. Reynolds, Reynolds Welding Supply (a companyowned by Thomas J. Reynolds and Michael P. Reynolds, directors and principalshareholders of the Company), Gerald W. Eick (a director of the Company), andDiegnan Trust, of which Mr. Eick is Trustee. Such loans were made in the ordinary course of business, were made onsubstantially the same terms, including interest rates and collateral, as thoseprevailing at the time for comparable transactions with other persons, and didnot involve more than the normal risk of collectibility or present otherunfavorable features.

 

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During 1999 through 2000, Northern Star Bankmade a series of loans to Frank Gazzola, then a Director of the Company, invarious amounts at market rates of interest and for terms of various lengths oftime.  As of the fiscal year ending June30, 2002, two loans remained unpaid with principal balances totaling$492,000.  The loans were secured by32,000 shares of Common Stock of the Company, 41,000 shares of Common Stock ofDMC Stratex Networks and shares of Common Stock representing 32% of a privatelyheld company.  Mr.. Gazzola defaulted onthe loans and the Bank foreclosed on the collateral for the loans.

 

 

**ITEM 13.****              ****EXHIBITS AND REPORTS ON FORM 8-K**

 

(a)           Exhibits.

 

Exhibitsare numbered in accordance with Item 601 of Regulation S-B.  See “ExhibitIndex” immediately following the signature page of this Form 10-KSB/A-1.

 

(b)           Reports ofForm 8-K.

 

No reports on Form 8-Kwere filed during the last fiscal quarter of the Registrant’s 2002 fiscal year.

 

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**SIGNATURES**

 

In accordance withSection 13 or 15(d) of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.

 
|                         | NORTHERN STAR FINANCIAL, INC. |
|------------------------------|-------------------------------|
|                         |                          |   |
| Dated:  October 2, 2003 | By:                           | /s/ Thomas P. Stienessen |
|                         |                          | Thomas P. Stienessen, Chief Executive Officer |

 

 
|                         | NORTHERN STAR FINANCIAL, INC. |
|------------------------------|-------------------------------|
|                         |                          |   |
| Dated:  October 2, 2003 | By:                           | /s/ Gerald W. Eick |
|                         |                          | Gerald W. Eick, Chief Financial Officer |

 

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NORTHERNSTAR FINANCIAL, INC.

 

EXHIBITINDEX TO FORM 10-KSB/A-1

 
| **Exhibit   Number** |   | **Description**                                                                                                                                                                                                                                                                                              |
|----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| +3.1                 |   | Amended and Restated Articles of  Incorporation, as amended to date.  (Incorporated by reference to  Exhibit 2.1 to the Company’s Registration Statement on Form SB-1, Reg. No.  333-61655)*                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +3.2                 |   | By-Laws, as amended to date. (Incorporated by  reference to Exhibit 2.2 to the Company’s Registration Statement on Form  SB-2, Reg. No. 333-61655)*                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.1                |   | Lease Agreement between Northern Star Bank  (the “Bank”) and Colonial Square Partners relating to the space located at  1650 Madison Avenue, Mankato, Minnesota.  (Incorporated by reference to  Exhibit 6.1 to the Company’s Registration Statement on Form SB-1, Reg. No.  333-61655)* |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.2**              |   | Employment Agreement between the Bank and  Thomas P. Stienessen.  (Incorporated by reference to Exhibit 6.2 to the  Company’s Registration Statement on Form SB-1, Reg. No. 333-61655)*                                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.3**              |   | 1998 Equity Incentive Plan, including specimen  of Incentive Stock Option Agreement and Nonqualified Stock Option  Agreement.  (Incorporated by reference to Exhibit 6.5 to the Company’s  Registration Statement on Form SB-1, Reg. No. 333-61655)*                                               |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.4**              |   | Form of Nonqualified Stock Option Agreement  governing options granted to Organizers.  (Incorporated by reference to  Exhibit 6.6 to the Company’s Registration Statement on Form SB-1, Reg. No.  333-61655)*                                                                                      |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.5                |   | Lease Agreement between Northern Star Bank  (the “Bank”) and Five Star Properties of St. Cloud, LLC relating to the space  located at 300 East St. Germain Street, St. Cloud, Minnesota.                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.6                |   | Form and amounts of Convertible Subordinated  Unsecured Notes issued by the Registrant to certain of its directors in July  and August, 2001.                                                                                                                                                                |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +10.7                |   | Form and amounts of Convertible Subordinated  Unsecured Notes issued by the Registrant to certain of its directors in June,  2002.                                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +11                  |   | Statement re: Computation of Earnings Per  Share (included in Notes to Financial Statements)                                                                                                                                                                                                                 |
|                 |   |                                                                                                                                                                                                                                                                                                         |
| +21                  |   | Subsidiaries of the Registrant:                                                                                                                                                                                                                                                                              |

 
|    |   | **Name**                                                                                                                         |   | **State  of Organization** |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|
|    |   | Northern Star Bank, Inc.                                                                                                         |   | Minnesota                  |
|    |   |                                                                                                                             |
| +24     |   | Power of Attorney from Certain Directors (See  Signature Page)                                                                   |
|    |   |                                                                                                                             |
| 31.1*** |   | Certification of Chief Executive Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              |
|    |   |                                                                                                                             |
| 31.2*** |   | Certification of Chief Financial Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              |
|    |   |                                                                                                                             |
| 32***   |   | Certification of Chief Executive Officer  and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002 |

 

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+   Previously filed with Form 10-KSBfor year ended December 31, 2002.

*   Incorporated by reference -Commission File No. 000-25231 unless otherwise indicated.

** Indicates a management contract orcompensatory plan or arrangement required to be filed as an exhibit to thisForm 10-KSB.

*** Filed herewith.

 

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