FORM 10-QSB
UNITED STATES
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 Quarter Ended
June 30, 1998
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________________ to _____________________
Commission File number
0-24709
Globus International Resources Corp.
------------------------------------
(exact name of registrant as specified in its charter)
Nevada # 88-0203697
- --------------------------------------------------------------------------------
(state or other jurisdiction of (I.R.S. Employer I.D.#)
incorporation or organization)
Two World Trade Center, Suite 2400, New York, N.Y. 10048
---------------------------------------------------------
(address of principal executive offices) (zip code)
(212) 839-8000
--------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 No X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the most recent practicable date.
Common Stock - Par Value $.001 5,049,497
- ------------------------------ -----------------------------
Class Outstanding Shares At
September 15, 1998
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
JUNE 30, 1998
(Unaudited)
I N D E X
Page No.
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PART 1 - FINANCIAL INFORMATION
Item 1: FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as at June 30, 1998
and September 30, 1997 ........................................................... 2
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended
June 30, 1998 and 1997 ........................................................... 3
Condensed Consolidated Statements of Changes in Stockholders'
Equity For the Nine Months Ended June 30, 1998 and
For the Year Ended September 30, 1997............................................. 4
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 1998 ......................................... 5-6
Notes to Condensed Consolidated Financial Statements ............................... 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................................... 8-11
PART II - OTHER INFORMATION ............................................................................ 12
Signatures .................................................................................... 13
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
A S S E T S
June 30, September 30,
---------- -------------
1998 1997
---------- -------------
Current assets:
Cash and cash equivalents $ 365,583 $ 517,867
Cash - restricted 507,645 447,543
Accounts receivable 4,224,511 2,721,130
Inventories 2,221,018 2,004,004
Deferred income taxes 48,300 52,000
Prepaid expenses 20,000 20,000
---------- ----------
Total current assets 7,387,057 5,762,544
---------- ----------
Property assets - at cost, net of
accumulated depreciation 56,118 27,625
---------- ----------
Other assets:
Deferred financing costs 12,089 50,000
Deferred consulting costs 145,938 215,625
Goodwill net of accumulated amortization 117,557 124,128
Organization costs 3,443 4,991
Security deposits 50,000 26,000
---------- ----------
329,027 420,744
---------- ----------
$7,772,202 $6,210,913
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank lines of credit payable $1,313,091 $ 31,342
Notes payable - related parties 145,000 145,000
Convertible note payable 130,000 -
Current portion of long-term debt - 41,666
Accounts and acceptances payable 1,220,693 1,439,619
Accrued expenses and other current
liabilities - related parties 171,391 111,277
Accrued expenses and other current liabilities 131,928 137,228
Income taxes payable 104,189 142,607
---------- ----------
Total current liabilities 3,216,292 2,048,739
---------- ----------
Long-term obligations:
Deferred rent liability 17,336 12,921
Deferred income taxes 5,700 -
---------- -------
Total long-term obligations 23,036 12,921
---------- ----------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, no par value, authorized
and unissued - 100,000 shares - -
Common stock, $.001 par value
Authorized - 50,000,000 shares, issued and out-
standing - 5,049,497 and 4,548,860, respectively 5,050 4,549
Additional paid-in capital 4,762,522 4,155,309
Deficit (234,698) (10,605)
---------- ----------
Total stockholders' equity 4,532,874 4,149,253
---------- ----------
$7,772,202 $6,210,913
========== ==========
The accompanying notes are an integral part of these financial statements.
-2-
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three For the Nine
Months Ended Months Ended
June 30, June 30,
----------------------------- ---------------------------
1998 1997 1998 1997
---------- ---------- ----------- -------
Net sales $5,395,326 $3,612,891 $16,453,388 $10,696,421
Cost of goods sold 5,066,075 3,215,720 15,240,472 9,706,503
---------- ---------- ----------- -----------
Gross profit 329,251 397,171 1,212,916 989,918
---------- ---------- ----------- -----------
Operating expenses:
Selling 213,773 139,240 462,441 308,567
General and administrative 161,454 160,801 513,280 371,484
Depreciation and amortization 41,622 34,474 133,711 72,926
---------- ---------- ---------- -----------
Total operating expenses 416,849 334,515 1,109,432 752,977
---------- ---------- ---------- -----------
Income (loss) from operations (87,598) 62,656 103,484 236,941
---------- ---------- ---------- -----------
Other income (expenses):
Interest income 7,740 12,471 32,245 33,657
Interest expense (45,755) (9,159) (339,958) (25,327)
---------- ---------- ---------- -----------
Total other income (expenses) (38,015) 3,312 (307,713) 8,330
---------- ---------- ---------- -----------
Income (loss) before income
taxes and minority interest (125,613) 65,968 (204,229) 245,271
Provision for (benefit from)
income taxes (62,400) 24,500 19,864 110,000
---------- ---------- ---------- -----------
Income (loss) before
minority interest (63,213) 41,468 (224,093) 135,271
Minority interest - - - 2,812
---------- --------- ---------- -----------
Net income (loss) ($63,213) $ 41,468 ($224,093) $ 132,459
========== ========== ========== ===========
Net income (loss) per common
share ($0.01) $0.01 ($0.05) $0.03
===== ===== ===== =====
Weighted average number
of shares outstanding 4,904,543 4,561,229 4,730,093 3,983,157
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
-3-
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JUNE 30, 1998
AND FOR THE YEAR ENDED SEPTEMBER 30, 1997
(Unaudited)
Preferred Common
Stock Stock Additional
------------------ ---------------------- Paid-In
Shares Amount Shares Amount Capital Deficit
------ ------ --------- ------ ---------- -------
Balance at October 1, 1996 - $ - 2,603,860 $2,604 $3,058,046 ($142,057)
Proceed from sale of
Shuttle's common stock
prior to merger - - - - 100,000 -
Acquisition of Shuttle
International Ltd. -
minority interest - - 250,000 250 131,179 2,812
Issuance of common stock
for consulting services - - 500,000 500 299,500 -
Issuance of common stock
in satisfaction of
indebtedness for
services rendered - - 555,000 555 281,445 -
Cancellation of common
stock surrendered by
a former consultant - - (230,000) (230) (137,770) -
Issuance of common stock
for cash, net of
offering costs - - 870,000 870 422,909 -
Net income for fiscal 1997 - - - - - 128,640
------ ------ --------- ------ ---------- --------
Balance at September 30, 1997 - - 4,548,860 4,549 4,155,309 (10,605)
Interest element attributed
to convertible debt - - - - 269,231 -
Debt converted to equity - - 500,637 501 337,982 -
Net loss for the nine months
ended June 30, 1998 - - - - - (224,093)
------ ------ --------- ------ ---------- --------
Balance at June 30, 1998 - $ - 5,049,497 $5,050 $4,762,522 ($234,698)
====== ====== ========= ====== ========== ========
The accompanying notes are an integral part of these financial statements.
-4-
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine
Months Ended
June 30,
-------------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income (loss) ($ 224,093) $ 132,459
---------- ----------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 133,711 72,926
Deferred income taxes 9,400 16,300
Deferred rent 4,415 4,194
Interest charge on debt discount 269,231 -
Minority interest - 2,812
Increase (decrease) in cash flows as
a result of changes in asset and
liability account balances:
Accounts receivable (1,503,381) (1,550,654)
Inventories (217,014) 652,615
Prepaid expenses - (14,360)
Accounts and acceptances payable (218,926) (428,135)
Accrued expenses and other
current liabilities:
Related parties 60,114 (60,207)
Other 6,447 328
Income taxes payable (38,418) 102,963
---------- ----------
Total adjustments (1,494,421) (1,201,218)
---------- ----------
Net cash used in operating activities (1,718,514) (1,068,759)
---------- ----------
Cash flows from investing activities:
Acquisition of property assets (44,751) -
Security deposits (24,000) -
---------- ----------
Net cash used in investing activities (68,751) -
---------- ----------
Cash flows from financing activities:
Proceeds from line of credit 1,281,749 11,898
Proceeds from convertible note payable 500,000 -
Repayments of long-term note payable (41,666) (83,334)
Repayments of related party indebtedness - (75,439)
Proceeds from issuance of common stock - 523,779
Deferred financing cost (45,000) -
---------- ----------
Net cash provided by financing activities 1,695,083 376,904
---------- ----------
Net decrease in cash and cash equivalents (92,182) (691,855)
Cash and cash equivalents at beginning of period 965,410 1,476,123
---------- ----------
Cash and cash equivalents at end of period $ 873,228 $ 784,268
========== ==========
The accompanying notes are an integral part of these financial statements.
-5-
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
For the Nine
Months Ended
June 30,
-------------------------------
1998 1997
---------- ----------
Supplemental Schedules of Non-cash
Operating and Financing Activates:
Common stock issued for services rendered
and payment of liability for services
previously rendered $ - $ 582,000
========== ==========
Common stock issued in conversion of debt $ 381,747 $ -
========== ==========
Common stock issued for acquisition of
minority interest $ - $ 150,000
========== ==========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 9,082 $ 7,680
========== ==========
Taxes paid $ 47,396 $ 4,600
========== ==========
The accompanying notes are an integral part of these financial statements.
-6-
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
NOTE 1 - The accompanying financial statements have been
prepared without audit pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. These statements include all adjustments,
consisting only of normal recurring accruals, considered
necessary for a fair presentation of financial position and
results of operations. The financial statements included herein
should be read in conjunction with the financial statements and
notes thereto included in the registration statement dated
August 3, 1998 on Form SB-2.
NOTE 2 - The results of operations for the nine- and
three-month periods ended June 30, 1998 and 1997 are not
necessarily indicative of the results to be expected for the full
year.
NOTE 3 - Inventories, consisting principally of finished goods,
are valued at the lower of cost (first-in, first-out method) or
market.
NOTE 4 - Net income (loss) per share was computed by the
weighted average number of shares outstanding during each period.
NOTE 5 - ACQUISITION OF SHUTTLE INTERNATIONAL, LTD.
On December 11, 1996, the Company acquired all of the
issued and outstanding capital stock of Shuttle International,
Ltd. ("Shuttle") in exchange for 2,500,000 shares of the
Company's common stock. The Company's three officers/directors
owned 90% of Shuttle prior to the acquisition by the Company.
Both Globus and Shuttle were under the common control of these
three officers since March 15, 1995. After the acquisition, these
three officer/directors owned 2,449,999 shares (55.6%) of the
Company's issued and outstanding common stock whereas prior to
the acquisition, they owned 200,000 shares (56.5%) of the
Company's then issued and outstanding common stock. The
acquisition of Shuttle was accounted for (i) at historical cost
in a manner similar to a pooling of interest for the acquired
stock of the Company's three officers/directors and (ii) as a
purchase recorded at market value for the acquired stock of the
minority interest and the resulting goodwill for the difference
between the market value of the minority interest and its equity
on the date acquired. The condensed consolidated financial
statements for the nine months ended June 30, 1997 have been
restated to reflect the accounts of the Company and Shuttle.
Unaudited net sales and net income of the separate
companies for the periods preceding the acquisition were as
follows:
Globus Shuttle
----------------------------- ----------------------------
Net Sales Net Income Net Sales Net Income
---------- ---------- --------- ----------
For the three months
ended December 31, 1996 $3,616,581 $ 74,511 $323,219 $28,124
========== ======== ======== =======
-7-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of the Nine Months Ended June 30, 1998 and 1997
Revenues increased $5,141,000 (51.6%) in the food products segment to
$15,113,000 in 1998 over the 1997 period. The increase is largely attributable
to the commencement of the sale of meat products to a new customer in the 1998
period. The other product lines' sales increased $615,000 (84.9%) to $1,340,000
in the current period from $725,000 in 1997. The increase is attributable to an
increase in auto accessories sales of $348,000 and an increase in sales of
apparel of $242,000 over the previous period. The cost of sales for the nine
months ended June 30, 1998 increased $5,534,000 (61.0%) to $15,240,000 (92.6% of
sales) from $9,706,000 (90.7% of sales) for the corresponding period in 1997.
This increase is attributable to the increased sales volume. The increase in
cost of sales as a ratio of revenues is attributable to reduced sales margins in
the food segment. As a percentage of sales, gross profit for the food product
segment decreased from 8.3% to 5.7% due to increased product costs whereas the
3.5% increase in gross profits to 25.6% in 1998 for the auto accessories and
clothing sales is due to a different product mix with higher margins on items
sold during the current period.
Selling expenses increased $54,000 (49.8%) in the current period to
$462,000 (2.8% of sales) from $308,000 (2.9% of sales). Such increase is
attributable to increased variable selling costs resulting from the $5,593,000
increase in sales (52.3%) for the period and an increase in personnel costs.
General and administrative expenses increased $192,000 (34.6%) to $513,000 (3.1%
of sales) in the current period from $371,000 (3.8% of sales) in the comparable
prior year's period. Legal, consulting and other professional fees accounted for
$30,000 of the increase while the remaining cost increases are attributable to
sundry managerial and office costs.
Depreciation and amortization increased $61,000 (83.6%) to $134,000
(0.8% of sales) from $73,000 (0.7% of sales) in 1997. The increase is
attributable to an increase in amortization of deferred consulting fees and
deferred financing costs.
Interest income in both periods remained constant. Interest expense
increased $315,000 to $340,000 (2.1% of sales) in the current period from
$25,000 (0.2% of sales) in the nine months ended June 30, 1997. The increase
arises from interest on the convertible note issued in the current period plus a
$269,000 charge for the financing costs associated with this note's conversion
option into shares of the Company's common stock below the market value at the
time of conversion.
The decrease in tax provision from $110,000 in 1997 to $20,000 in 1998
is attributable to a reduction in income in the current period as a result of
increased operating costs and the charge to operations of nondeductible costs
for income tax purposes.
Net income decreased from a net profit of $132,000 in 1997 to a net
loss of $224,000 in 1998 for the reasons noted above.
-8-
RESULTS OF OPERATIONS (CONTINUED)
Comparison of the Three Months Ended June 30, 1998 and 1997 (Continued)
Revenues increased $1,521,000 (45.0%) in the food products segment to
$4,901,000 in 1998 from the 1997 period. The increase is largely attributable to
the commencement of the sale of meat products to a new customer in 1998.
Non-food product sales increased $261,000 (1.12%) to $494,000 in the current
period from $233,000 in 1997. The increase is attributable to an increase in
auto accessories sales of $10,000 and an increase in sales of apparel of
$251,000 over the previous period. The cost of sales for the quarter ended June
30, 1998 increased $1,850,000 (57.5%) to $5,066,000 (93.9% of sales) from
$3,216,000 (89.0% of sales) for the corresponding period in 1997. This increase
is attributable to the increase in sales volume. The increase in cost of sales
as a ratio of revenues is attributable to decreased sales margins in the food
segment. As a percentage of sales, gross profit for the food product segment
decreased from 7.4% in 1997 to 4.0% due to increased selling prices whereas the
2.7% increase in gross profits to 25.2% in 1998 for the auto accessories and
clothing sales is due to a different product mix with higher margins of items
sold during the current period.
Selling expenses increased $76,000 (53.5%) in the current quarter to
$214,000 (4.0% of sales) from $139,000 (3.9% of sales). Such increase is
attributable to increased variable selling costs resulting from the $1,782,000
increase in sales (49.3%) for the quarter and an increase in personnel costs.
General and administrative expenses remained constant at $161,000 in both
quarters.
Depreciation and amortization increased $8,000 (20.7%) to $42,000
(0.8% of sales) from $34,000 in 1997. The increase is attributable to an
increase in amortization of deferred consulting fees and deferred financing
costs.
Interest income decreased $4,000 (37.8%) in the current period to
$8,000. Interest expense increased $37,000 to $46,000 (0.8% of sales) in the
current period from $9,000 (0.3% of sales) in the quarter ended June 30, 1997.
The increase arises from interest on the convertible note in the current period.
The decrease in tax provision from $25,000 in 1997 to a benefit of
$62,000 in 1998 is attributable to reduction in income in the current period as
a result of increased operating costs and the charge to operations of
nondeductible costs for income tax purposes.
Net income decreased from a net profit of $41,000 in 1997 to a net
loss of $63,000 in 1998 for the reasons noted above.
FINANCIAL CONDITION
June 30, 1998 compared to September 30, 1997
The Company's free cash position at June 30, 1998 decreased $152,000
to $366,000 from $518,000 at September 30, 1997. The decrease is attributable to
the increase in restricted cash (held by a bank as collateral for acceptance
payable and bank lines of credit) of $60,000 and an increase in accounts
receivable and inventories. Unrestricted cash was increased during the period
from the net proceeds of the sale of a $500,000 convertible note.
The Company expended $45,000 to acquire property assets in fiscal 1998
and expensed $50,000 in professional fees in 1997 in connection with the
successful sale of the $500,000 (10%) Convertible Note in November 1997. The
Company issued 25,000 shares of its Common Stock, in the aggregate, in payment
for indebtedness for services rendered and consulting services to be rendered.
-9-
FINANCIAL CONDITION (CONTINUED)
June 30, 1998 compared to September 30, 1997 (Continued)
The Company had an operating cash flow deficit of approximately
$1,719,000 for the nine months ended June 30, 1998 [an increase of $650,000
(60.8%) over the comparable nine months of 1997) and approximately $771,000 for
the year ended September 30, 1997 (and increase of 98.6%)]. The Company's
operating cash flows deficit for the three months ended June 30, 1998 was
$205,000 which represents a 49.9% decrease to the prior periods amount of
$409,000. These cash flow deficits resulted from an increase in the Company's
inventory position and a dramatic increase in accounts receivable. The Company
is in the process of expanding its business, and management believes that in
order to do so, it must operate with sufficient inventory and must offer its
customers favorable credit terms. The Company's growth is being financed by
receivable lines of credit from banks and extension of payment terms to
customers. The Company expects this downward, negative trend in cash flows
to continue as long as it is in the process of expanding its business.
The increase in accounts receivable is largely attributable to the
Company extending longer credit terms and higher credit amounts to its old and
new customers. The extension of credit terms and higher credit amounts to its
old and new customers are the result of market conditions and response to
competitors' terms. The increase results from the Company's desire to expand its
business which required offering more favorable credit terms to its new and old
customers. The increase in the inventory level of $217,000 derives from an
increase in apparel products of $107,000, an increase in the food segment of
$90,000, and an increase in the auto accessory inventory of $20,000. The June
30, 1998 inventory has $2,000,000 of paint inventory of which the Company has
confirmed sales orders to ship approximately 50% by August 1998 and verbal
indications from customers for the remainder to be shipped between August and
December 1998. The August 1998 orders were not shipped due to the current
economic problem in Russia. These potential customers have indicated their
continued desire to purchase these products. Management's decision to fill these
orders or to pursue other customers (even at a loss) will depend upon future
economic conditions in Russia and other CIS nations.
The present economic problems in Russia have not only caused the
Company to delay or cancel certain, if not all, shipments to Russia, but has
also adversely affected cash receipts of its receivables. Although, management
believes these economic problems will be stabilized in the near term and
will most likely not result in any material adverse effect to the Company,
these problems may increase or remain unstable which could and would have
adverse material consequences on the Company's business, financial condition
and results of operations. The Company's financial statements as at and for
the nine months ended June 30, 1998 do not reflect any adjustments of
impairment of any assets which might occur due to these financial problems.
The liabilities to the Company's banks increased $1,282,000 to
$1,313,000 at June 30, 1998 from $31,000 at September 30, 1997. The increased
use of the Company's four bank lines of credit was used to pay for the purchases
of the Company's food segment products which enabled the Company to reduce its
accounts and acceptances payable obligations to $1,221,000 at June 30, 1998 from
$1,440,000 at September 30, 1997. The availability of and the use of the
increased lines of credit allowed the Company to extend better credit terms to
its customers.
Accrued expenses, income taxes payable and other current liabilities
in the aggregate remained stable.
In January 1998 and May 1998, $220,000 and $150,000 respectively of
the $500,000 convertible note plus accrued interest was converted into 201,673
and 98,964 shares of the Company's common stock, respectively. The Company
received the net proceeds of the note in November 1997. The $130,000 balance of
the note plus accrued interest thereon at 10% is due and payable on November 1,
1998. The noteholder may, at its option, convert any portion of or all of the
remaining liability into shares of common stock at any time up to its due date.
-10-
FINANCIAL CONDITION (CONTINUED)
June 30, 1998 compared to September 30, 1997 (Continued)
Stockholders' equity increased $384,000 to $4,533,000 at June 30,
1998 from $4,149,000 at September 30, 1997 even though the Company sustained a
$224,000 net loss for the period. The $224,000 net loss included a $269,000
finance charge for the discount between the stated value of the Company's
convertible note and the fair value of common shares the note could be converted
into on the date of the note's issuance. The $269,000 charge to operations has a
similar $269,000 increase to additional paid-in capital and stockholders'
equity. Additional paid-in capital was also increased $338,000 for the
conversion of $370,000 in debt, net of deferred finance costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1998 and September 30, 1997
was $4,171,000 and $3,714,000, respectively. Since its inception, the Company's
primary sources of working capital have been (i) debt financing, including the
proceeds from its bank lines of credit, the Convertible Note, the working
capital term loan, related party loans and advances and (ii) the issuance of
its securities for cash and as payment for services rendered and for inventory.
Currently, the Company's primary cash requirements include (i) the funding of
its inventory purchases for and receivables from sales of products and (ii)
ongoing selling, administrative and other operating expenses. Management
believes that its cash and liquidity position will be adversely affected by the
Russian economic problem at least through December 1998, and after that its
liquidity will increase due to the sale of its paint inventory to the customers
with whom shipments have been suspended or to others. Management does not
believe that the Russian problem will impede the Company's ability to meet its
obligations as they become due during the next twelve months. However, there
can be no assurance that the Company will be able to maintain its present
credit facilities or that sufficient other funding facilities will be
available to it should additional financing be required.
Inflation and Currency Fluctuations
The Company believes that inflation and the effect of fluctuations of
the dollar against foreign currencies have not had a material effect on the sale
of the Company's products or the Company's results of operations. Inflation and
currency fluctuations in CIS countries may have a serious effect on the
Company's business, results of operations and financial condition.
Forward-Looking and Cautionary Statements
Certain statements included in this report, including the words
"believes," "anticipates," "expects" and similar expressions, are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, which could cause actual results to differ materially
from those projected. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to republish revised forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures made by the Company in this report, as well
as the Company's periodic reports on other filings with the Securities and
Exchange Commission.
-11-
PART II
OTHER INFORMATION
Item 1. Not applicable.
Item 2. The Company's Registration Statement on Form SB-2 (File No. 333-45225),
with respect to 800,000 shares of common stock, par value $0.001 per share (the
"Common Stock") (256,134 shares underlying an outstanding convertible note (the
"Note")); 800,000 common stock purchase warrants (256,134 underlying the Note)
and 800,000 shares of Common Stock underlying the common stock purchase
warrants, became effective on August 3, 1998. Because the registration of the
securities was solely for the benefit of a selling securityholder, the Company
will receive no proceeds from the sale of the securities registered. If the
selling securityholder converts the balance remaining on the Note, the Company
will benefit from the reduction in such balance. The costs associated with the
registration, which will be borne by the Company are estimated at approximately
$90,000. None of such costs will be paid to any officer, director, 10%
shareholder or affiliate of the Company.
Items 3 and 4. Not applicable.
Item 5. Other matters.
Year 2000 Matters
The Company is currently assessing the impact of the Year 2000 on its
information systems, including the Year 2000 readiness of those with whom it
conducts business, and is developing and implementing a Year 2000 compliance
strategy. The Company expects increased spending to bring its systems into Year
2000 compliance, but Year 2000 related expenses are not expected to be material
to the Company's results of operations and financial condition and will be
expensed as incurred. However, if modifications and conversions by the Company
and those with whom it conducts business are not completed in a timely manner,
the Year 2000 issue may have a material adverse effect on the Company's
business, results of operations and financial condition.
Item 6. Not applicable.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBUS INTERNATIONAL RESOURCES CORP.
By /s/ Serge Pisman
______________________________________
Serge Pisman
President and Chief Accounting Officer
Date: September 16, 1998
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