U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended September 30, 2000
Commission File Number 0-24709
GLOBUS INTERNATIONAL RESOURCES CORP.
------------------------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 86-0203697
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two World Trade Center, Suite 2400, New York, NY 10048
------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
(212) 839-8000
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per share
------------------------------------------------------------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for much
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days.
Yes [X] No [ ]
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<PAGE>
Check if disclosure of delinquent filer in response in Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definative proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its fiscal year ended September 30, 2000 were
$7,751,839.
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. $1,348,706 as of
December 12, 2000.
The number of shares outstanding of the issuer's common stock as of
December 12, 2000 was 9,633,616 shares.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents or the indicated portions thereof are
incorporated herein by reference into the indicated portions of this Annual
Report on Form 10-KSB:
---------------------------------------------------------------.
Transitional Small Business Disclosure Format (check one):
Yes [X] No [ ]
PART I
ITEM 1. DESCRIPTION OF BUSINESS:
The Company has just embarked on a major expansion of its international
trade activity by operating a multi-lingual, Internet-based portal that allows
international buyers and sellers of commercial and industrial products to engage
in electronic commerce seamlessly, efficiently, and in their own native
languages. The Company has an exclusive worldwide license from e-GlobusNet
Corp., the developer of the software, to provide electronic commerce among
businesses in various countries, especially those in emerging countries in
Eastern Europe and the former Soviet Union, South America, and the Far East
simultaneously in five languages at the present time. e-GlobusNet Corp. has
engaged over two hundred programmers in the Ukraine for about two years in the
development of this software.
The software is currently available simultaneously in English, Russian,
Spanish, French, and Turkish. Chinese, Portuguese, and Slavonic languages are
under development and should be available in six months.
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<PAGE>
The Company can operate either as a broker or a principal in electronic
commercial transactions. Over the past year it had been functioning primarily as
a principal between companies in Russia and the Ukraine and those in Western
Europe because of its strong background and experience in dealing with the
languages and cultures of the Eastern Bloc countries. Many Western European
countries prefer to deal with Globus as a principal rather than dealing directly
with companies in Russia and the Ukraine.
In situations where Globus will act as a broker on the e-GlobusNet
Corp. portal, it will receive a commission of 1% each from buyer and seller. As
a principal, the Company can generate gross profit margins of 5% to 10%, or
higher, depending on the transaction.
The Company presently has two wholly-owned subsidiaries, Globus Food
Systems Corp., and Shuttle International. Globus Food Systems exports meat, meat
by-products, cheese, fish, and other high-end food products from manufacturers
in Western Europe to Russia and the Ukraine. It represents over 94% of the
current total revenues of the Company. Shuttle International exports auto parts
and clothing from U.S. manufacturers to Russia and the Ukraine. Shuttle accounts
for about 6% of the total revenues of the Company.
The Company was originally incorporated on October 24, 1984, under the
name Ross Custom Electronics ("Ross") and was engaged in the Electronics
business. On May 6, 1995, Globus Food Systems International Corp., a privately
held Delaware corporation, was merged into Ross. On October 18, 1996, Globus
Food Systems International Corp. changed its name to Globus International
Resources Corp., to reflect a reflect a broadening of its exporting business to
include non-food products. Its food exporting business was transferred to a new,
wholly-owned subsidiary called Globus Food Systems Corp., a New York corporation
formed in September 1996.
ITEM 2. DESCRIPTION OF PROPERTY:
The Company, pursuant to a five-year agreement with the Port Authority
of New York and New Jersey, leases approximately 2,840 square feet of space for
an administrative, clerical and executive office for the Company's export
business at 2 World Trade Center, Suite #2400, New York, NY 10047. The term of
the lease commenced on February 15, 1996. Annual rent payments are $62,484 in
years one and two, and $68,160 in year three. In years four and five, the
company agreed to renting less space in exchange for annual reduced rent of
$52,800. Under the terms of the Agreement, the Port Authority has the right to
terminate this Agreement without cause, subject to certain conditions, at any
time on one-hundred eighty (180) days' notice to the Company. There is another
lease with a warehouse in Georgia, United States to store paint with an annual
rent of $36,000. This lease is renewable on January 1, 2002.
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<PAGE>
Shuttle, pursuant to a lease agreement with 1616 Mermaid Associates,
leases approximately 1,000 square feet of space for its export business at 1616
Mermaid Avenue, Brooklyn, NY 11224. The term of the lease commenced on March 1,
1994. The annual rent is $8,400.
1616 Mermaid Associates is owned by Messrs. Serge Pisman, Herman Roth
and Yury Greene are the Company's President, Secretary and Treasurer,
respectively.
ITEM 3. LEGAL PROCEEDINGS:
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
No matters were submitted to a vote of the shareholders during the
fourth quarter of fiscal 2000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:
The Company's Common Stock trades under the symbol "GIRC" on the OTC
Bulletin Board. The market for the Company's Common Stock is limited, sporadic
and highly volatile. The following table sets forth the high and low bid prices
per share of the Company's Common Stock during fiscal 2000, as reported by the
OTC Bulletin Board. These prices reflect inter-dealer prices, without retail
mark-ups, market-downs or commissions, and may not necessarily represent actual
transactions.
HIGH LOW
---- -----
Fiscal 2000:
First Quarter .20 .09
Second Quarter 1.18 .09
Third Quarter .75 .17
Fourth Quarter .59 .23
The number of shareholders of record as of September 30, 2000 was 469.
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<PAGE>
It is the present policy of the Company not to pay cash dividends. Any
payment of cash dividends in the future will depend upon the amount of funds
legally available for that purpose, the Company's earnings, financial condition,
capital requirements and other factors that the Board of Directors may deem
relevant.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
The following discussion and analysis should be read in conjunction
with the consolidated financial statements and notes thereto contained elsewhere
in this Annual Report.
Comparison of the Year Ended September 30, 2000 and 1999
Revenues decreased $4,220,975 (35.3%) in the year ended September 30,
2000 to $7,751,839 from $11,972,814 for the year ended September 30, 1999. The
decrease is attributable to a decrease in the food products segment of
$4,010,000 (35 %) coupled with a decrease in the sale of auto parts and clothing
to Russian customers, down $212,000. The cost of sales in 2000 of $8,205,207 was
$3,394,625 (29.3%) lower than the 1999 cost of sales of $11,599,832. The reason
for the low gross margin was the substantially lower revenues in 2000. The
actual margins on sales of food products, auto parts and clothing were similar
to the prior year.
Selling expenses decreased $66,075 (30.5%) during 2000 to .09% of sales
as compared to $216,150 or 1.8% of sales in 1999. The decrease is due to the
related decrease in sales activity.
General and administrative costs decreased $2,358 (.07%) to 4.5% of net
sales in 2000 from $352,146 (3.4% of net sales) in 1999. This slight decrease
arises from the lesser volume in sales. Most cost remained unchanged.
Depreciation and amortization decreased $25,237 (22%) to $88,252 (1.1% of sales)
from $113,489 (.9% of sales) in 1999. This decrease is the result of certain
deferred financing and consulting costs being fully amortized prior to the end
of fiscal 2000.
Interest income remained relatively constant in both periods, whereas
interest expense increased $68,882 to $282,917 in 2000, due to a larger debt
balance for most of fiscal 2000 compared to fiscal 1999, an increase in the
interest rate on the lines, and a new $150,000 line of credit added this year.
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<PAGE>
The 2000 net loss of $3,693,440 is a decrease in income from the net
loss of $608,329 in 1999, the result of the major writedowns of inventory
($988,000) and accounts receivable ($2,370,675) in 2000 compared to $100,000 and
$100,000, respectively in 1999. The loss in both years was mainly caused by the
collapse of the Russian economy in the latter part of 1998.
FINANCIAL CONDITION
September 30, 2000 compared to September 30, 1999
Cash and cash equivalents at September 30, 2000 of $34,712 is $575 more
balance than the cash and cash equivalents of $34,137 in September 30, 1999.
This low decrease in cash is primarily the result of a weak Russian economy in
both latter part of fiscal 1999 and 2000 which in turn affected both the sales
and the timeliness of accounts receivable collections.
Accounts receivable decreased $2,468,693 (67.1%) to $1,210,372 at
September 30, 2000 while sales for 2000 decreased $4,220,975 (35.3%). The
decrease in accounts receivable is not only attributable to the weak Russian
economy where all the customers are located, but also to the extension of credit
terms for sales and a reduction in the requirement of cash prepayments prior to
shipment and due to the charge to bad debt. The Company's inventory level at
September 30, 2000 was $1,044,887 less than the $1,170,644 level at September
30, 1999 primarily because of a reserve of the majority of the automotive paint
inventory.
The Company did not acquire any significant property assets fiscal
2000.
Accounts and acceptance payable increased $66,894 to $448,615 at
September 30, 2000 from $381,721 at September 30, 1999. The small change was due
to a lack of sales and related lack of cash flow in fiscal 2000.
Accrued expenses and other current liabilities decreased $164,828 to
$194,419 at September 30, 2000 primarily due to forgiveness of certain accrued
officer salaries a decrease in overall professional fees and the completion of a
study grant in Poland during the year.
Notes payable to banks and related parties of $1,553,776 at September
30, 2000 was $663,158 less than the September 30, 1999 amount of $2,216,934.
This is the result of the liquidation of a $600,000 CD to paydown the bank line
of credit.
Stockholders' equity decreased $3,507,241 to $(719,829) at September
30, 2000 from $2,784,412 at September 30, 1999. The decrease arises from the
large loss incurred in fiscal 2000.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
The Company's working capital at September 30, 2000 and 1999 was
$(911,674) and $2,581,000 respectively. The Company's primary sources of working
capital have been (i) the proceeds from its bank lines-of-credit, the working
capital term loan, related party loans and advances, and (ii) the issuance of
its securities for cash, as payments for services rendered as well as its
regular sales collections.
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 the Company's cash liquidity position will also be
enhanced by the commencement of the new internet based portal business which
will enable the company to obtain a new line of customers and that its present
three unsecured bank lines aggregating $250,000 and its secured letters of
credit and acceptances payable lines of credit aggregating $3,150,000, should be
in aggregate, sufficient to fund the Company's operation for the next twelve
months. The above assumes the Company's operations are consistent with
management's expectations which are expected to be an improvement from fiscal
2000. The Company may need additional financing thereafter. There can be no
assurance that the Company will be able to obtain financing on a favorable or
timely basis. The type, timing and terms of financing elected by the Company
will depend upon its cash needs, the availability of other financing sources and
the prevailing conditions in the financial markets. Moreover any statement
regarding the Company's ability to fund its operations from expected cash flows
is speculative in nature and inherently subject to risks and uncertainties, some
of which cannot be predicted or quantified.
ITEM 7. FINANCIAL STATEMENTS:
The financial statements of the Company are included in this report
commencing on Page F-1.
PART III
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT:
The following table sets forth the name, age and position of each
person who was serving as an executive office or director of the Company at
December 12, 2000:
Name Age Office
------------ --- -------------------
Serge Pisman 36 President, Director
Herman Roth 52 Secretary, Director
Yury Greene 61 Treasurer, Director
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<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes of ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all such reports they file.
Based solely on its review of the copies of such reports received by
the Company, and written representations that no Form 5 were required, the
Company believes that, during the fiscal year ended September 30, 2000 and prior
fiscal years, all filing requirements applicable to its officers and directors,
and all of the persons known to the Company to own more than ten percent of its
Common Stock, were complied with by such persons, except that Messrs, Pisman,
Roth and Greene filed their initial statements of beneficial ownership late.
ITEM 10. EXECUTIVE COMPENSATION:
The following table sets forth the annual compensation for the
Company's Chief Executive Officer and President:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
Other Annual
Name and Principal ---------------------------
Position Year Salary Bonus Compensation
----------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Serge Pisman, President 1998 $ 104,815 -- --
1999 2,510 -- --
2000 0 -- --
</TABLE>
* The lack of salary paid is due to present financial situation of the Company,
and the desire of the officers to ensure that all current operating needs are
met, in addition to funding the new internet products.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
The table below sets forth information as to each person owing of
record or who was known by the Company to own beneficially more than 5% of the
9,633,616 shares of issued and outstanding Common Stock of the Company as of
December 12, 2000 and information as to the ownership of the Company's Stock by
each of its directors and executive officers and by the directors and executive
officers as a group. Except as otherwise indicated, all shares are owned
directly, and the persons named in the table have sole voting and investment
power with respect to shares shown as beneficially owned by them.
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<PAGE>
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
-------------- ------------------- -------------------- ----------
Common Stock Serge Pisman
2 World Trade Center
New York, NY 10048 1,416,667 14.7%
Common Stock Herman Roth
2 World Trade Center
New York, NY 10048 1,416,667 14.7%
Common Stock Yury Greene
2 World Trade Center
New York, NY 10048 1,416,667 14.7%
All directors and officers as a group (3 in number) 4,250,001 44.1%
Comm Stock FTP, Inc. 650,256 6.7%
Robert W. Martyn 650,256 6.7%
48 Par-La-Ville Road
Hamilton, Bermuda
(1) Does not include warrants to purchase 1,822,756 shares of Common Stock at
$3.625 per share. Mr. Martyn owns his securities indirectly as sole
shareholder of FTP, Inc.
ITEM 12. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS:
Herman Roth loaned $125,000 to the Company in April 1996 in exchange
for the Company's 7% promissory note in the principal amount of $125,000. This
note payable on March 31, 1997 was extended indefinitely.
Ida and Victor Pisman, Serge Pisman's parents, loaned $20,000 to the
Company in August 1996 in exchange for the Company's 15% promissory note in the
principal amount of $20,000. This note was payable on August 22, 1997 but was
extended indefinitely. Another loan with 18,500 outstanding was made in fiscal
2000.
Serge Pisman, Herman Roth and Yury Greene own 1616 Mermaid Associates
which leases office space to the Company and to Shuttle. See "Property".
Serge Pisman, Herman Roth and Yury Greene have personally guaranteed
payment of sums due under the Company's $1,500,000 line of credit with the Park
Avenue Bank, N.A.
Yury Greene has personally guaranteed payment of sums due under the
Company's $75,000 line-of-credit with Chase Manhattan Bank, N.A.
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<PAGE>
Serge Pisman and Yury Greene loaned $105,000 to the Company in fiscal
2000, with no definite repayment terms.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following exhibits are filed as part of this report:
Exhibit No. Exhibit Title
----------- -----------------------
(27) Financial Data Schedule
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLOBUS INTERNATIONAL RESOURCES CORP.
By: /s/ Serge Pisman
-----------------------
Title: President
-----------------------
Date: December 25, 2000
-----------------------
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By: /s/ Serge Pisman
-----------------------
Title: President
-----------------------
Date: December 25, 2000
-----------------------
By: /s/ Herman Roth
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Title: Secretary
-----------------------
Date: December 25, 2000
-----------------------
By: /s/ Yury Greene
-----------------------
Title: Treasurer
-----------------------
Date: December 25, 2000
-----------------------
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<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Globus International Resources Corp.
We have audited the accompanying consolidated balance sheets of Globus
International Resources Corp. and its subsidiaries as at September 30, 2000 and
1999, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2, the
Company has experienced substantial recurring losses from operations and at
September 30, 2000 a working capital and capital deficiency exists that raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
ARTHUR YORKES & COMPANY
New York, New York
December 4, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
2000 1999
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 34,712 $ 34,137
Cash, restricted -- 708,837
Accounts receivable 1,210,372 3,679,065
Inventories 125,757 1,170,644
Income tax refunds receivable 40,000 40,000
Prepaid expenses -- 12,828
----------- -----------
Total current assets 1,410,841 5,645,511
----------- -----------
Property and equipment, at cost -
net of accumulated depreciation 20,663 35,410
----------- -----------
Licensing agreement, net of amortization 47,334 --
----------- -----------
Other assets:
Deferred consulting costs -- 38,128
Goodwill, net of accumulated amortization 97,848 106,607
Organization costs -- 863
Security deposits 26,000 26,000
----------- -----------
123,848 171,598
----------- -----------
$ 1,602,686 $ 5,852,519
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank lines of credit payable $ 1,317,276 $ 2,071,934
Notes payable, related parties 236,500 145,000
Accounts and acceptances payable 448,615 381,721
Accrued express and other current liabilities - related parties 125,705 107,205
Accrued expenses and other current liabilities 194,419 359,247
----------- -----------
Total current liabilities 2,322,515 3,065,107
----------- -----------
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $.001 par value, authorized - 50,000,000 shares, issued and
outstanding - 9,633,616 and 7,771,616 at
September 30, 2000 and 1999, respectively 11,002 7,772
Additional paid-in-capital 5,329,839 5,146,869
Deficit (6,060,670) (2,367,229)
----------- -----------
(719,829) 2,787,412
----------- -----------
$ 1,602,686 $ 5,852,519
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30,
2000 1999
------------ ------------
Net sales $ 7,751,839 $ 11,972,814
Cost of goods sold 8,205,207 11,599,832
------------ ------------
Gross profit (453,368) 372,982
------------ ------------
Operating expenses:
Selling 150,075 216,150
General and administrative expenses 349,788 352,146
Deprecation and amortization 88,252 113,489
Bad debts 2,370,675 100,000
------------ ------------
Total operating expenses 2,958,790 781,785
------------ ------------
Income (loss) from operations (3,412,158) (408,803)
------------ ------------
Other income (expenses):
Interest income 28,114 24,035
Interest expenses (300,241) (214,095)
------------ ------------
Total income (expenses) (272,127) (190,060)
------------ ------------
Income (loss) before income taxes (3,684,285) (598,863)
Provision (benefit) for income taxes 9,155 9,466
------------ ------------
Income (loss) $ (3,693,440) $ (608,329)
============ ============
Net income (loss) per common share $ (.42) $ (.08)
============ ============
Weighted average number of shares outstanding 8,851,173 7,201,335
============ ============
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
Common Shares Additional
------------------------- Paid-in- Accumulated
Shares Amount Capital Deficit
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1998 5,049,497 $ 5,050 $ 4,762,522 $(1,758,901)
Debt converted to equity 2,722,119 2,722 304,347 --
Value of salaries-waived -- -- 80,000 --
Net loss for the year ended September 30, 1999 -- -- -- (608,329)
----------- ----------- ----------- -----------
Balance at September 30, 1999 7,771,616 7,772 5,146,869 (2,367,230)
Common shares issued for consulting fees 152,000 1,520 13,680 --
Shares issued in lieu of cash payments 1,710,000 1,710 169,290 --
Net loss for the year ended September 30, 2000 -- -- -- (3,693,440)
----------- ----------- ----------- -----------
Balance at September 30, 2000 9,633,616 $ 11,002 $ 5,329,839 $(6,060,670)
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(3,693,440) $ (608,329)
----------- -----------
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 88,252 119,533
Value of salaries - waived -- 80,000
Deferred income taxes
Deferred rent
Provision for doubtful accounts 2,370,675 100,000
Provision for loss on disposal of inventory 988,333 100,000
Interest charge in debt discount
Increase (decrease) in cash flows as a result of change
in asset and liability account balances:
Accounts receivable 98,018 (289,083)
Inventories 56,553 312,552
Prepaid expenses (58,174) (12,828)
Accounts and acceptances payable 66,894 (64,751)
Accrued expenses and other current liabilities:
Related parties 18,500 33,200
Other (164,827) 69,054
Income taxes -- (4,000)
----------- -----------
Total adjustments 3,464,224 443,677
----------- -----------
Net cash used in operating activities (229,216) (164,652)
----------- -----------
Cash flows from investing activities:
Acquisition of property assets (2,088) --
Restricted cash 708,837 (111,425)
----------- -----------
Net cash used in investing activities 706,749 (111,425)
----------- -----------
Cash flows from financing activities:
Proceeds from lines-of-credit (754,658) 177,980
Proceeds from note payable, related parties 91,500 --
Proceeds from issuance of common stock 186,200 --
----------- -----------
Net cash provided by financing activities (476,958) 177,980
----------- -----------
Net increase (decrease) in cash and cash equivalents 575 (98,097)
Cash and cash equivalents at beginning of year 34,137 132,234
----------- -----------
Cash and cash equivalents at end of year $ 34,712 $ 34,137
=========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30,
2000 1999
-------- --------
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued in conversion of debt $ -- $307,069
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $282,917 $214,095
Taxes paid 9,155 9,466
See notes to financial statements.
F-6
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
1. DESCRIPTION OF BUSINESS:
The Company has embarked on a major expansion of its international trade
activity by operating a multi-lingual, Internet-based portal that allows
international buyers and sellers of commercial and industrial products to
engage in electronic commerce seamlessly, efficiently, and in their own
native languages. The Company has an exclusive worldwide license for 2
years from e-GlobusNet Corp., the developer of the software, to provide
electronic commerce among businesses in various countries. The new internet
based business not yet deriving revenue.
The Company can operate either as a broker or a principal in electronic
commercial transactions. Over the past year it had been functioning
primarily as a principal between companies in Russia and the Ukraine and
those in Western Europe because of its strong background and experience in
dealing with the languages and cultures of the Eastern Bloc countries. Many
Western European countries prefer to deal with Globus as a principal rather
than dealing directly with companies in Russia and the Ukraine.
In situations where Globus will act as a broker on the e-GlobusNet Corp.
portal, it will receive a commission of 1% each from buyer and seller. As a
principal, the Company can generate gross profit margins of 5% to 10%, or
higher, depending on the transaction.
The Company presently has two wholly-owned subsidiaries, Globus Food
Systems Corp., and Shuttle International. Globus Food Systems exports meat,
meat by-products, cheese, fish, and other high-end food products from
manufacturers in Western Europe to Russia and the Ukraine. It represents
over 94% of the current total revenues of the Company. Shuttle
International exports auto parts and clothing from U.S. manufacturers to
Russia and the Ukraine. Shuttle accounts for about 6% of the total revenues
of the Company.
The Company was originally incorporated on October 24, 1984, under the name
Ross Custom Electronics ("Ross") and was engaged in the electronics
business. On May 6, 1995, Globus Food Systems International Corp., a
privately held Delaware corporation, was merged into Ross. On October 18,
1996, Globus Food Systems International Corp. changed its name to Globus
International Resources Corp., to reflect a reflect a broadening of its
exporting business to include non-food products. Its food exporting
business was transferred to a new, wholly-owned subsidiary called Globus
Food Systems Corp., a New York corporation formed in September, 1996.
F-7
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements as of September 30, 2000
and 1999 and for the years then ended include the accounts of Globus
International Resources Corp. and its wholly-owned subsidiaries, Shuttle
International, Ltd. and Globus Foods International, Inc. All material
intercompany transactions and balances have been eliminated in
consolidation.
REVENUE RECOGNITION:
The company recognizes revenues in accordance with generally accepted
accounting principles in the period in which its products are shipped to
its customers. The Company records expenses in the period in which they are
incurred, in accordance with generally accepted accounting principles.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK:
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and trade
accounts receivable. The Company places its cash with high credit quality
financial institutions which at times may be in excess of the FDIC
insurance limit. Concentrations of credit risk with respect to trade
accounts receivable are generally limited due to the Company's requiring
the prepayment from approximately 30% of its customers of up to 50% of each
sale prior to shipment. Additionally, the accompanying financial statements
reflect an allowance for doubtful accounts of $2,890,675 and $520,000 at
September 30, 2000 and 1999, respectively.
F-8
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INVENTORIES:
Inventories, consisting principally of finished goods, are valued at the
lower of cost (first-in, first-out method) or market. The accompanying
financial statements as of and for the year ended September 30, 2000 and
1999 reflect an allowance for the disposal of inventory of $1,692,818 and
$704,485, respectively.
PROPERTY AND EQUIPMENT:
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets of 5 to 7 years. The cost of leasehold
improvements is amortized over the lesser of the length of the related
leases or the estimated useful lives of the assets. Depreciation is
computed on the straight-line method for financial reporting purposes.
Repairs and maintenance expenditures which do not extend original asset
lives are charged to income as incurred.
GOODWILL:
Goodwill arising from the acquisition of a subsidiary's minority interest
in 1996 is being amortized over a fifteen-year period. Amortization charged
to operation was $8,761 in 2000 and 1999.
BASIS OF PRESENTATION:
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. Globus has
experienced substantial recurring losses from operations and at September
30, 2000 a working capital deficiency of $911,674 and a capital deficiency
of $719,829 exists that raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
As mentioned above, management intends to expand their operation to include
an internet based portal in order to continue and expand the operations of
the business. There can be no assurance that Globus will be able to raise
sufficient capital to continue its operations and/or general adequate cash
flow from operations.
F-9
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INCOME TAXES:
Deferred taxes are primarily attributable to different methods of computing
depreciation and amortization and timing differences of deducting officers'
compensation for financial reporting purposes and income tax reporting
purposes.
INTANGIBLES:
Organization costs are being amortized over a sixty-month period.
Amortization charged to operations was $863 in 2000 and $2,064 in 1999. As
of September 30, 2000, these costs were fully amortized.
Deferred consulting costs are being amortized over the life of the
consulting agreements. Amortization charged to operations in 2000 and 1999
was 38,128 and $86,248, respectively. As of September 30, 2000, these costs
were fully amortized.
PER SHARE DATA:
Net income (loss) per share was computed by the weighted average number of
shares outstanding during each period. Outstanding warrants have not been
considered because their effect would be anti-dilutive.
3. PROPERTY ASSETS:
Property assets consist of:
September 30,
-------------------
2000 1999
-------- --------
Data processing and office equipment $ 61,331 $ 59,243
Furniture and fixtures 21,283 21,283
Automobiles and trucks 43,687 43,687
-------- --------
126,301 124,213
Less: Accumulated depreciation 105,638 88,803
-------- --------
$ 20,663 $ 35,410
======== ========
F-10
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
3. PROPERTY ASSETS: (CONTINUED)
Depreciation expense charged to operations for the years ended September
30, 2000 and 1999 amounted to $16,835 and $16,417, respectively.
4. SECURITY DEPOSITS:
Security deposits are comprised of rent deposits relating to various
leaseholds which the Company occupies of which $3,000 is for warehouse
space leased from a related party (See Note 5).
5. RELATED PARTY TRANSACTIONS:
NOTES PAYABLE:
A stockholder and the Company entered into a loan agreement in April 1996
whereby the stockholder acquired the Company's 7% interest bearing note of
$125,000 at par. The note was originally payable in full plus accrued
interest on March 31, 1997. On April 30, 1997, the note was amended and the
due date was extended to April 30, 1998. Interest charged to operations for
the year ended September 30, 2000 and 1999 was $16,620 including deferred
amounts and $4,376, respectively. Accrued interest payable on this loan
aggregated $45,500 and $28,880 at September 30, 2000 and 1999,
respectively, and is included in accrued expenses - related party. In May
1997, the stockholder agreed to subordinate his loan to a bank which had
granted the Company a $2,000,000 line-of-credit. The stockholder verbally
agreed not to demand payment of the debt as long as any portion of the
line-of-credit is outstanding, and the repayment date is now indefinite.
On August 26, 1996, the parents of the Company's President purchased a
subsidiary's 15% interest bearing $20,000 note at par. The note, as
amended, is without a definite repayment date. No interest was charged in
2000 and 1999, per the approval of the noteholder. Accrued interest payable
to these individuals of $7,750 is included in accrued expenses at September
30, 2000 and 1999. These creditors have agreed to subordinate this
indebtedness to a bank which had granted the Company a $2,000,000
line-of-credit in May 1997 and also have verbally agreed not to demand
payment of the debt as long as any portion of the line-of-credit is
outstanding.
F-11
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
5. RELATED PARTY TRANSACTIONS: (CONTINUED)
NOTES PAYABLE: (CONTINUED)
During the first quarter of fiscal 2000, three shareholders of the Company
loaned the Company $156,000 due to the current cash needs of the business.
These amounts, expected to be repaid within the year, have no definite
repayment terms and the shareholders have agreed not to require the accrual
of interest. As of September 30, 2000, $28,000 was paid back to the
shareholders.
RENT PAYABLE:
Globus and Shuttle lease warehouse space from an entity controlled by three
of the Company's officer/directors. Rent charged to operations for the
years ended September 30, 2000 and 1999 was $11,800 and $13,500,
respectively, of which $52,075 was unpaid and included in accrued expenses
- related parties at September 30, 2000 and 1999, respectively. The leases
which expire in December 2000, require aggregate monthly rentals of $700.
OFFICERS COMPENSATION:
In the second quarter of 2000, three officers of the Company; the
President, CEO and Vice President agreed to receive 300,000 shares of stock
in lieu of their salaries, which at the market value at issuance resulted
in a $30,000 issuance of stock to each, charged to expenses during the year
ended September 30, 2000.
6. FINANCING ARRANGEMENT:
SHORT-TERM DEBT:
At September 30, 2000, the Company had various credit facilities available:
A bank line of credit for direct borrowings and acceptances in the
amount of $3,000,000 with a sub-limit of $1,000,000 on direct
borrowings at 1-3/4% over prime. The line is collateralized by the
guarantees of three of the corporate officers/ directors and a first
lien on all corporate assets not previously pledged or collateralized.
One of these shareholders and the parents of another have subordinated
their notes payable by the company to them, to the bank. During the
year ended September 30, 2000, the certificates of deposit pledged as
collateral were redeemed by the bank against the amount owed the bank.
F-12
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
6. FINANCING ARRANGEMENT: (CONTINUED)
SHORT-TERM DEBT: (CONTINUED)
The Company has lines of credit with four other banks totally $275,000
in the aggregate. $100,000 of these lines are guaranteed by an officer
of the Company. Interest during the year ended September 30, 2000 was
charged at various rates of 9.75% to 15%.
<TABLE>
<CAPTION>
September 30,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
Bank borrowing outstanding at September 30, 2000
and 1999 amounted to:
Acceptances payable under the $3,000,000 credit-line $1,220,617 $1,983,739
Other bank loans payable (3) under $275,000 credit-line 181,662 88,195
---------- ----------
$1,402,279 $2,071,934
========== ==========
</TABLE>
(ii) RELATED PARTIES:
On April 7, 1996, the Company borrowed $125,000 from an
officer/stockholder. The repayment date is indefinite as of September
30, 1999. Interest had been accrued until September 30, 2000 at 7%.
On August 26, 1996 the Company borrowed $20,000 from a parent of its
President as evidenced by a 15% note. The note has no definite
repayment date. Per the noteholder's approval, no interest was accrued
in 2000 and 1999. Both of these notes are subordinated to a bank (see
above) in connection with the granting of a line-of-credit to the
Company by the bank. As long as any balance is outstanding under this
line-of-credit, the note holders have verbally agreed not to demand
payment of the notes and to subordinate such notes to this bank.
F-13
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
6. FINANCING ARRANGEMENT: (CONTINUED)
SHORT-TERM DEBT: (CONTINUED)
(iii) CONVERTIBLE NOTE:
On November 2, 1997, the Company sold at par its 10% interest bearing
note in the amount of $500,000 to a foreign corporation. The note is
due and payable on November 2, 1998. In connection with the sale of the
note, the Company incurred $95,000 of financing costs which was being
amortized over the life of the note. The note principal and accrued
interest, at the holder's option was convertible in whole or part into
(i) shares of the Company's common stock at the lesser of $2.50 per
share or 75% of the average bid and ask of the Company's common stock
for the five (5) trading days immediately proceeding the note-holder's
notice to convert and (ii) an equal number of warrants to acquire the
same number of shares in (i) at $3.625 per share. If the Company was
not successful in registering the underlying common shares as freely
trading stock, when and if such note or any portion thereof is
converted, by January 2, 1998, then the conversion price is adjusted to
the lesser of $2.50 per share or 65% of the average bid and asked of
the Company's common stock for the five proceeding trading days. As
required by generally accepted accounting principles a financing
expense of $224,103 was charged to operations for the difference
between the amount paid for the note and the fair value of the common
shares into which it can be converted with a corresponding increase in
additional paid-in-capital. During the year ended September 30, 1998,
the noteholder converted $370,000 of this debt and accrued interest
into 500,637 common shares and warrants to acquire 500,637 common
shares at $3.625 per share.
During the year ended September 30, 1999, the noteholder converted the
remaining $130,000 of debt and accrued interest into 1,322,119 common
shares and warrants to acquire 1,322,119 common shares at $3.625 per
share.
(iv) NOTE PAYABLE:
In August 1999, $20,000 was borrowed from an individual for short-term
needs. This was a non-interest bearing note which was repaid in October
1999.
During the first quarter of 2000, three shareholders of the Company
loaned the Company $156,000 due to the current cash needs of the
business. These amounts, expected to be repaid within the year, have no
definite repayment terms and the shareholders have agreed not to
require the accrual of interest. As of September 30, 2000, $28,000 was
paid back to the shareholders.
F-14
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
7. INCOME TAXES:
The difference between income taxes computed using the statutory federal
income tax rate and that shown in the financial statements are summarized
as follows:
<TABLE>
<CAPTION>
For the Years Ended September 30,
---------------------------------------------------------
2000 1999
-------------------------- ---------------------------
<S> <C> <C>
Income (loss) before income taxes $(3,693,440) $ (518,863)
----------- -----------
Computed tax - (benefit) at
statutory rate (1,255,000) (176,400) (34)%
State taxes net of federal tax benefit (37,000) (6,000) (1)
Other - net 9,466 2
Reserve for net operating loss
carryforward tax assets 1,282,845 182,400 35
----------- ----------- -----------
Total $ 9,155 $ 9,466 2%
=========== =========== ===========
</TABLE>
8. COMMON STOCK:
(a) COMMON STOCK ISSUED FOR SERVICES RENDERED:
(i) In December 1996, the Company entered into a three year consulting
services agreement with Crabbe Capital Group Ltd. which was
subsequently extended an additional year. The agreement requires
that the consultant shall (i) introduce the Company to the
consultant's network of domestic and international commercial
banking sources, (ii) advise and assist the Company in
identifying, studying, and evaluating interest and exchange rate
fluctuations, and (iii) assist the Company in securing letters of
credit and reviewing its commercial banking alliances and
strategies. As compensation for entering into the agreement, the
Company issued 325,000 shares of its common stock, 275,000 of
which were issued pursuant to Rule 504 of Regulation D of the
Securities Act of 1933, as amended. The remaining 50,000 shares
state that those shares have not been registered under the
Securities Act of 1993, as amended.
The fair value of the 325,000 shares of common stock issued of
$195,000 as determined by the Board of Directors is being
amortized and charged to operations over the life of the
consulting agreement. As of September 30, 2000 this deferred
amount has been fully amortized.
F-15
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
8. COMMON STOCK: (CONTINUED)
(a) COMMON STOCK ISSUED FOR SERVICES RENDERED: (CONTINUED)
(ii) In February 2000, 300,000 shares each were issued to three
officers of the corporation, in lieu of salaries. The $90,000
market value of these shares was charged to expense at September
30, 2000. Additionally 500,000 shares were issued to two different
consultants in lieu of cash payments for the exclusive rights to
use certain software which is the basis for the portal described
in Footnote 1. 200,000 shares were issued to another consultant in
lieu of cash payments for services related to developing the
business plan to the internet based portal. The market value of
the shares recorded was recorded as prepaid expenses based on the
fact that this product has not been put into operation as of
September 30, 2000.
(b) STOCK OPTIONS:
(i) The Company granted to each of three officers on December 31, 1997
options to acquire 300,000 shares of the Company's common stock at
$1.72 per share (110% of the market value at the date of grant.
The Company applies APB 25 in accounting for its stock options.
Accordingly, because the grant price equaled or exceeded the
market price on the date of grant, no compensation expense is
recognized for the stock options issued. The fair value of the
900,000 options granted on December 31, 1997 of $1,404,000 ($1.56)
is being amortized to expense over the option period in
determining their proforma earnings impact. Had compensation cost
for these stock options been recognized based upon the fair value
on the grant date under the methodology prescribed by FAS 123, the
Company's net income and earnings per share for the year ended
September 30, 1998 would have been impacted by a charge for
compensation of $105,400 resulting in an adjusted net loss of
$1,803,700 or ($.2) per share.
The fair value of the options granted to estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:
Expected life of option 10 years
Risk-free interest rate 10.0%
Expected violability 175.0%
Expected dividend yield None
F-16
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
8. COMMON STOCK: (CONTINUED)
(b) STOCK OPTIONS: (CONTINUED)
On December 10, 1998, those three officer/directors surrendered
their options to acquire the 900,000 shares and the Board of
Directors approved the cancellation of the grants. The Board
authorized the issuance of 300,000 shares to each of these persons
as partial payment of their unpaid contractual compensation. The
aggregate accrued compensation paid by the issuance of the 900,000
shares of common stock was $108,000 which was 110% of the fair
value market on December 10, 1998.
(ii) The Globus International Resources Corp. 1998 Associate Stock
Option Plan (the "Option Plan") was adopted by the Board of the
Directors of the Company on December 31, 1997. The stock options
granted under this Option Plan will be nonstatutory stock options
not intended to qualify as incentive stock options within the
meaning of Section 442 of the Internal Revenue Code of 1986, as
amended. Employees, officers, directors, consultants contractors
and advisors of the Company or any subsidiary are eligible to
receive grants of the Options Plan stock options. The per share
option price of the Common Stock subject to each option shall be
at least equal to the greater of 110% of the fair market value of
the Company's Common Stock on the date or grant. The Option Plan
is administered by a committee appointed by the Board of
Directors. The Option Plan provides that a maximum of 500,000
shares of Common Stock may be issued upon the exercise of options
granted under the Option Plan. No options have been granted under
the Option Plan at September 30, 1998. On December 10, 1998, the
Board of Directors granted an option to a consultant for 300,000
shares of common stock and to an officer for 200,000 shares of
common stock. Both options' per share exercise price was $.12
which was 110% of the fair market value at the date of grant. Both
the consultant and the officer exercised their respective option
on the date of grant. There are no further options available under
this plan.
These 500,000 shares were issued in cancellation of $60,000 of
amounts due them by the Company
(c) WARRANTS:
The Company has 1,822,756 common shares reserved for issuance upon the
exercise of warrants at $3.625
F-17
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
9. MAJOR RELATIONSHIPS AND SEGMENT INFORMATION:
The Company is comprised of two business segments with the new internet
based business not yet deriving revenue. The distribution of food products
and the distribution of auto paint and parts and clothing. Set forth below
are sales, operating income, capital expenditures, depreciation and
identifiable assets of the segments.
For the Years Ended
September 30,
--------------------
2000 1999
-------- --------
Net sales (000's):
Food products $ 7,326 $ 11,336
Other 425 637
-------- --------
$ 7,752 $ 11,973
======== ========
Operating income (loss) (000's):
Food products $ (3,359) $ (267)
Other (53) (61)
-------- --------
$ (3,412) $ (328)
======== ========
Depreciation and amortization (000's):
Food products $ 82 $ 108
Other 6 6
-------- --------
$ 88 $ 114
======== ========
Capital additions (000's):
Food products $ -- $ --
Other 2 --
-------- --------
$ 2 $ --
======== ========
Identifiable assets (000's):
Food products $ 1,113 $ 3,920
Other 490 1,932
-------- --------
$ 1,603 $ 5,852
======== ========
F-18
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
9. MAJOR RELATIONSHIPS AND SEGMENT INFORMATION: (CONTINUED)
The food products segment has had only nine (9) customers since it started
shipments in August 1995. One customer accounted for 63% and 80% of the
food products segment's sales for fiscal 2000 and 1999, respectively. Sales
of this segment's products for another customer were 24.1% and 10%% for the
same periods.
The other segments' sales were to eight (8) customers of which one customer
accounted for 87% and 65% of sales for the years September 30, 2000 and
1999, respectively.
10. COMMITMENT AND CONTINGENCIES:
LEASES:
The Company is a lessee under three operating real property leases for
office and warehouse space. Rent expense charged to operations for the
years ended September 30, 2000 and 1999 was $81,765 and $108,525,
respectively. Future minimum annual rent commitments as of the Company's
fiscal year-end are as follows:
Years Ended
September 30, Amount
------------- -------------
2001 $ 97,632
CONSULTING AGREEMENT:
(i) In July 1996, the Company entered into a financial consulting
agreement with an individual who will advise the Company on certain
financial matters. The agreement provides for the consultant to
receive $2,000 a month for his services commencing in August 1996. The
agreement may be terminated by either party upon two weeks notice.
F-19
<PAGE>
GLOBUS INTERNATIONAL RESOURCES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
11. COMMITMENT AND CONTINGENCIES:
CONSULTING AGREEMENT: (CONTINUED)
(ii) In 1996, the Company entered into a four year consulting services
agreement with Crabbe Capital Group Ltd. under which the consultant
shall (i) introduce the Company to the consultant's network of
domestic and international commercial banking sources, advise and
assist the Company in identifying, studying, and evaluating interest
and exchange rate fluctuations, and (iii) assist the Company in
securing letters of credit and review commercial banking alliances and
strategies. The Company issued to the consultant 325,000 shares of its
common stock as compensation for its services. The fair value of the
325,000 shares of common stock issued of $195,000 is being amortized
and charged to operations over the life of the consulting agreement.
This amount was fully amortized as of September 30, 2000. Amortization
charged to operations in fiscal 2000 and 1999 was $38,128 and $48,750,
respectively.
EMPLOYMENT CONTRACT:
The Board of Directors' authorized an annual salary of $90,000 for each of
three officers, who also are members of the Board of Directors for fiscal
1997 and $150,000 for calendar 1998. The officers first agreed to defer
payment of their compensation until the Company's cash flow permits. At
September 30, 1998 these officers were owed $155,659. Such liabilities were
included in accrued expenses and other current liabilities - related
parties. In December 31, 1998, the officers were issued common stock valued
at $108,000 to reduce the Company's obligations (see Note 9 (b)(i). The
officers agreed to waive their right to salaries for 1999 in excess of what
they were paid. This agreement was no longer in place in fiscal 2000.
Additionally in October 1995, the Company entered into three year
employment's contracts with two employees the aggregate annual compensation
under these contracts is approximately $120,000. In December 1998 these two
employees were issued 500,000 shares of common stock in payment of $60,000
due them (See Note 9(b)(ii), and additionally waived their right to amounts
in excess of what they were paid in 1999. This agreement was no longer in
place in fiscal 2000.
The Company considers the value of these services waived to be $ 80,000 and
has charged this amount to expense with a corresponding increase to
additional paid in capital in the year ended September 30, 1999.
F-20
