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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
GLOBAL DATATEL, INC.
(Exact name of Registrant in its charter)
NEVADA 87-0067813
(State of organization) (I.R.S. Employer Identification No.)
3333 CONGRESS AVENUE, SUITE 404, DELRAY BEACH, FL. 33445
(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including area code: (561) 276-8260
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: Common
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You should not rely on forward-looking statements in this
registration statement. This registration statement contains forward-looking
statements that involve risks and uncertainties. We use words such as
"anticipates," "believes," "plans," "expects," "future," "intends" and similar
expressions to identify these forward-looking statements. This registration
statement also contains forward-looking statements attributed to certain third
parties relating to their estimates regarding the growth of the Internet,
Internet advertising and online commerce markets and spending. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this registration statement. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons.
Item 1. Business.
(A) DEVELOPMENT OF BUSINESS.
Global DataTel, Inc., was originally incorporated in the State of Utah in 1980,
as LaPlate Oil and Mining, Inc., and changed its name to Gold Coast Resources,
Inc. in 1982. The Company's state of incorporation was changed in December, 1996
to the State of Nevada. In December, 1998, the Company's name was changed to
Global DataTel, Inc. and the existing officers and directors of the Company
resigned, and new officers and directors were elected.
In 1998, a number of significant transactions took place. The Company, in
September 1998, acquired International Computer Resources, Inc. ("ICR"), a
Florida corporation, which does business as an IBM computer reseller, and
Mantenimiento Electronico de Systemas, Ltd., ("MES"), a Colombian corporation,
which does business as a computer integrator and service provider.
In November, 1998, Global acquired three additional Colombian corporations, Casa
Informatica, S.A., ("CASA"), DLR & CIA, Ltda., ("DLR") and Microstar, Ltda.,
("MICRO"). CASA, an IBM computer reseller, was acquired for $849,000.00 in cash
and promissory note and 392,000 restricted shares of the Company's common stock
valued at $1,960,000. DLR, an IBM computer reseller and system integrator, was
acquired for a total consideration of $600,000, which was paid $300,000 in cash
and promissory note and 60,000 restricted shares of the Company's common stock
valued at $300,000. MICRO, also a IBM computer reseller and system integrator,
was acquired for a total consideration of $500,000, which was paid $150,000 in
cash and promissory note and 70,000 restricted shares of the Company's common
stock valued at $350,000.
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Global now has three wholly owned or controlled operating subsidiaries:
Global DataTel de Colombia, S.A. (GDC), a Colombian Corp., a
subsidiary consisting of four acquired companies in Colombia,
MES, CASA, DLR and MICRO. These companies are involved in the
computer system integration business. Global owns 94.9% of the
capital stock of GDC, with 100% of the voting rights. Under
Colombian law, a foreign corporation cannot own more than 94.9%
of a Colombian corporation.
On Line Latin America, S.A., (OLA), a Colombian Corp., is in the
internet service business. Global owns 94.9% of the capital stock
of OLA, with 100% of the voting rights.
eHOLA.com, Inc, (eHOLA), a Nevada Corp., (formerly Electronic
Latin America On-Line, Inc.), a wholly owned subsidiary, is in
the internet service business.
The operations of International Computer Resources, Inc. ("ICR") are now
conducted under Global DataTel, Inc., and form the North American component of
the Information Systems Division.
On December 14, 1998, the Company sold its interest in a subsidiary, The Travel
Agent's Hotel Guide, Inc., a Nevada corporation, to Ameriresources Technologies,
Inc. in consideration for a convertible debenture in the face amount of
$3,350,000, bearing interest at the rate of seven (7%) percent per annum and
convertible in three years into common stock of Ameriresources.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Global DataTel de Colombia, the South American component of our Information
Systems Division, presently accounts for approximately 95% of the Company's
revenues and profits, and the North American component of our Information
Systems Division presently accounts for approximately 5% of the Company's
revenues and profits. Our On Line Services Division presently does not have
revenues.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
Global DataTel de Colombia, (GDC) is the largest operating subsidiary of Global,
with over 95% of its revenues and profits. This subsidiary is the South American
component of our Information Systems Division. GDC is a midrange to large system
integration computer solution provider. In Colombia, GDC is authorized by
various leading high tech companies as a reseller. GDC represents such firms as
IBM Corp., Compaq Computer, Microsoft, and Lotus. The primary focus is to
provide presale consulting to Colombia's largest national, government, and
international companies, to
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determine the best solution to their particular information system requirements.
Based upon this analysis, GDC can provide clients with a fully integrated
solution which may include hardware, software and services from various sources.
The Information Systems Division's main business is to provide system
consulting, resale of new micro, mini, or mainframe hardware, as well as
software and complementary contract services as needed. These services may
include help desk, contract programming, training, and hardware/software
maintenance contracts. Sale of new hardware typically may include wintel based
micro computers such as IBM desktops, IBM AS/400-RS/6000 mini computers, and IBM
S/390 mainframes. Software products may include Microsoft, Lotus, JBA, and
several other complimentary application software programs as may be deemed
necessary in order to provide satisfactory results. Services include various
supplemental after sale products such as executive training, employee
implementation, and long term contractual maintenance agreements. The division
operates across a broad horizontal marketplace and is not limited to any single
vertical market.
On Line Latin America, S.A., and eHOLA.com operate under our On Line Services
Division. This division's main business is to provide dial-up internet access in
the USA, Central, and South America, which is marketed under the eHOLA.com name.
On line operations commenced April 22, 1999, and are considered to be in the
testing phase. The division is marketed to both consumers and businesses in each
of the geographic locations in which it provides internet access. We have only
recently commenced advertising on our portal, and at present revenues are
negligible from subscriptions and advertising.
We presently offer internet access in the following countries: Argentina,
Bolivia, Brazil, Chile, Colombia, El Salvador, Equador, Guatemala, Mexico,
Paraguay, Peru, U.S.A. and Venezuela. We are in testing phase, and are actively
seeking subscribers.
eHOLA.com offers, for one basic yearly subscription price per country, unlimited
internet access in the countries listed above, the service also includes the
world wide web multilingual portal www.ehola.com. The service also includes free
e-mail and Microsoft Internet Explorer browser.
The eHOLA network is organized around 14 content specific channels. eHOLA.com is
a single point of entry to the eHOLA network of sites and is updated daily to
promote content and community, including channel highlights. We currently have
approximately 10 employees responsible for the content of our channels.
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(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
Global DataTel de Colombia, the South American component of our Information
Systems Division, presently accounts for approximately 95% of the Company's
sales, and the North American component of our Information Systems Division
presently accounts for approximately 5% of sales.
Item 2. Financial Information.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data should be read in
conjunction with "Management's Discussion and Analysis" and the financial
statements appearing elsewhere in this prospectus. The statement of operations
data set forth below for the nine months ended December 31, 1997 and the year
ended December 31, 1998, and the balance sheet data at December 31, 1997 and
1998 are derived from our audited financial statements included elsewhere
herein. The historical results are not necessarily indicative of results to be
expected for any future period.
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CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE NINE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net Sales $ 1,937,578 $ 14,973
Costs of goods sold 1,032,350 --
Gross profit ----------------- -----------------
905,228 14,973
----------- -----------
Selling, general, and administrative expenses 731,860 188,376
Payroll and related expenses 1,450,160 --
Interest expense 45,047 --
Other (income) expense (141,140) 1,908,263
----------- -----------
Total expenses 2,085,927 2,096,639
----------- -----------
Loss before provision for income taxes (1,180,699) (2,081,666)
----------- -----------
Provision for income taxes 503,725 --
Loss from continuing operations
before extraordinary items (1,684,424) (2,081,666)
----------- -----------
Discontinued operations:
Loss from operations from subsidiary sold (629,473) --
Gain on sale of subsidiary 1,999,813 --
Income from extraordinary items 1,370,340 --
Net Loss (314,084) (2,081,666)
Other comprehensive income:
Foreign currency translation 18,569 --
----------- -----------
Comprehensive Loss $ (295,515) $(2,081,666)
=========== ===========
Comprehensive loss per share
Loss per share from continuing operations $ (0.22) $ (0.82)
Income per share from extraordinary items 0.18 --
----------- -----------
Net loss per share $ (0.04) $ (0.82)
=========== ===========
Weighted average shares outstanding 7,586,815 2,533,238
</TABLE>
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CONSOLIDATED BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS
1998 1997
<S> <C> <C>
Current Assets:
Cash $ 101,743 $ --
Accounts receivable, net of allowance
for doubtful accounts of $389,880 2,720,363 --
Due from Stockbrokers 572,040 --
Inventories 1,152,746 --
Other current assets 117,292 134,649
------------ ------------
Total current assets 4,664,184 134,649
------------ ------------
Property, Plant, and Equipment, net 479,970 7,331
Other Assets:
Goodwill, net 10,918,780 --
Convertible debenture 3,350,000 --
Other assets - 923,082 2,427,495
------------ ------------
Total other assets 15,191,862 2,427,495
------------ ------------
Total Assets $ 20,336,016 $ 2,569,475
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,597,599 $ 27,101
Short term borrowings, banks 1,175,146 --
Deferred revenues 409,081 --
Other accrued liabilities 751,026 8,992
Notes payable to shareholders 1,021,667 --
------------ ------------
Total current liabilities 5,954,519 36,093
------------ ------------
Mortgage Payable - Bank 97,159 104,533
Deferred Barter Credits -- 123,900
Stockholders' Equity:
Common stock, 50,000,000 shares authorized
$.001 par value, 9,180,123 & 7,162 shared issued
and outstanding as of December 31, 1998 and 1997
respectively 9,180 7
Preferred stock 25,000,000 shares authorized
par value $.001,105,000 and 450,000 shares issued
as of respectively 105 4,500
Paid in Capital 17,781,557 5,821,448
Accumulated deficit (3,835,090) (3,521,006)
Foreign currency translation adjustment 328,586 --
Total Stockholders' Equity 14,284,338 2,304,949
------------ ------------
Total Liabilities and Stockholders' Equity $ 20,336,016 $ 2,569,475
============ ============
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND ANALYSIS RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" (Item 2), "Selected Quarterly Financial
Data" (Item 13) and the Consolidated Financial Statements and Notes thereto
appearing elsewhere herein.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS REGARDING
FUTURE EVENTS AND OUR PLANS AND EXPECTATIONS. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN.
OVERVIEW
The Company
The Company, Global DataTel, Inc. ("GDIS" or the "Company") is an international
information system integrator (ISI) of midrange computer products, networking
products, software and services. Global operates in two countries, the USA and
Colombia. Products sold by the Company are manufactured by approximately 5
vendors including IBM, Hewlett-Packard, Compaq, Microsoft, Lotus, and JBA Intl.
The Company recently was selected by IBM to be one of a limited number of Tier 1
Solution Providers in Latin America offering the complete IBM microcomputer and
Minicomputer product lines. The Company is an information system integration
(ISI) company, as opposed to a wholesale distributor, and represents vendors
within system integration projects in the largest national and multi-national
companies in Latin America. The Company believes the information system
integration industry is consolidating as access to financial resources and
economies of scale become more critical and as certain vendors limit the number
of authorized distributors and resellers of their respective products. The
Company's pan-regional presence strategically positions the Company to take
advantage of the consolidation trend in the information system integration
industry and increase its market share in Latin America. The majority portion of
the Company's sales are in the emerging market of South America, a region which
the Company believes is underserved relative to the entire industry and offer
substantial growth opportunities. International Data Corp. (IDC) projects
personal computer sales in South America (including Mexico and Central America)
will grow from $6.5 billion in 1998 to $7.8 billion in 1999, representing a
compound annual growth rate of 22.2%. This compares favorably to a 9.6% compound
annual growth rate projected by IDC for PC sales in the United States over the
same period. Global operates under a centralized structure. The corporation
delegates to country managers familiar with the customs and needs of a
particular country the authority to make daily operational decisions including
those necessary to satisfy the
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particular demands of their market. The Company believes that its business model
of a focused medium to large information system integration projects provides
operating advantages. The company also operates an internet access service
available in 13 countries in North, Central, and South America. The service is
operated under the "eHOLA.com" brandname, and includes a multi-lingual world
wide web site www.ehola.com that is available on the internet. The company was
formed as a wholly owned subsidiary in December of 1998. In or about May 1999,
the service went into testing as an internet portal service(IPS). Although still
in testing stage, we are actively signing up subscribers and are expected to
generate revenues in future.
The Company's objective is to strengthen its position as an information system
integrator of micro and mini computer products and services in Latin America. In
order to achieve this objective, Global intends to continue to implement the
following strategies:
OPERATE A FOCUSED PAN-REGIONAL MODEL. The Company's strategy is
to be a focused information system integrator by concentrating on a limited
number of products and services from a select group of high quality branded
vendors in each major product and service category. Additionally, the Company
seeks to be a significant integrator for each of its vendors and establish a
partnering relationship with them. For example, the Company believes that it is
one of the largest ISIs of IBM midrange products in Colombia. The Company
believes this focused strategy enables it to respond more quickly to customer
requests and gives it greater availability of products, enhanced access to new
products and better pricing. The Company believes this strategy also enables it
to develop greater expertise in the sale and servicing of the products of these
vendors. The Company believes that its focused integration model also results in
more effective asset management. Generally, products from leading vendors are in
greater demand, resulting in higher inventory turns and lower working capital
requirements.
FURTHER DEVELOP AND PENETRATE INTERNATIONAL MARKETS. The Company
has focused its activities on the emerging market of South America, a region
which it believes is underserved with respect to the distribution of micro /
mini and mainframe computer products and services and therefore provide
significant growth opportunities. The Company believes that the markets in South
America are complex due to the diversity of language, regulatory, technical and
other factors and provide increased opportunities for Global to add value to its
relationships with its vendors and customers because of the presence of its
knowledgeable local management.
GROW THROUGH ACQUISITIONS. A major portion of the Company's
growth is attributable to acquisitions and the Company intends to continue its
practice of making targeted purchases of high quality
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ISIs in selected markets in the future. The Company typically structures an
acquisition with an earnout component payable in shares of Common Stock one year
subsequent to the acquisition and based on the performance of the acquired
company. These local distributors generally are attracted to combining with
Global in order to gain personal financial liquidity, access to key product
lines provided by Global and enhanced vendor credit facilities. Over the past
year, the Company has acquired 3 companies. The Company seeks acquisition
candidates that have strong entrepreneurial management teams and experience in
the local market and that could benefit from the synergies arising out of the
Company's superior product line. After an acquisition, the new Global subsidiary
adopts the policies and financial reporting procedures of the Company this new
business unit is directly controlled by our corporate headquarters, consistent
with the Company's centralized structure. The Company believes its acquisition
strategy is advantageous to its vendors because, through their relationship with
Global, vendors gain entry into new clients with a pan-regional company. For the
three months ended March 31, 1999 compared to the three months ended March 31,
1998, the Company's net sales increased to $6.5 million from $5.1 million and
operating earnings increased to $620,000 from $410,000. On a pro forma basis,
assuming all 1998 acquisitions were made on January 1, 1998, the Company's 1998
net sales and operating earnings would have been $22.3 million and $480,000. See
"Selected Consolidated Financial Data".
LIQUIDITY AND CAPITAL RESOURCES
We have required substantial capital to finance accounts receivable,
inventories, capital expenditures and acquisitions. In the past, we have
financed these requirements primarily through internally generated cash from
operations and bank borrowings.
Product purchases from IBM are charged directly to the credit line.
Operating activities for 1998 provided cash in the amount of $101,000. For this
period, cash was provided primarily as a result of increases in accounts payable
of $2.5 million, partially offset by an increase in accounts receivable of $3.6
million.
Investing activities for 1998 used cash in the amount of $301,000. For this
period, cash was used for the purchase of CASA, DLR and Microstar and the
eHOLA.com development exceeding $1.5 million, continuing leasehold and computer
hardware and software investments made at the headquarters, sales office and
warehouse and integration center sites.
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Cash provided by financing activities for 1998 was $574,000,consisting of a sale
of common stock.
We believe we have sufficient funds, or alternate sources of funds, to carry on
our business as presently conducted through 1999.
YEAR 2000 COMPLIANCE ISSUES
GENERAL
We are in the process of conducting a Year 2000 compliance audit and developing
and implementing a company-wide Year 2000 Compliance Project (the "Project").
The Project addresses a broad range of issues affecting us as a result of the
programming code in existing computer, and computer related, systems as the year
2000 approaches. The Year 2000 problem is complex, as many computer systems will
be affected in some way by the rollover of the two-digit year value to 00.
Systems that do not properly recognize such information could generate erroneous
data or cause a system to fail. The Year 2000 issue creates risks for us from
problems in our own computer and embedded systems and from third parties with
whom we deal on financial and other transactions. Failure of our and/or third
parties' computer systems could have a material adverse impact on our ability to
conduct our business. The Project is being headed up by our Vice President of
Information Technology, who reports directly to the Chief Financial Officer.
INTERNAL SYSTEMS
Our business software system includes an enterprise-wide solution which was
upgraded to the most recent version in fiscal 1998. This system handles our most
critical functions, including, finance, inventory control, warehousing, shipping
and receiving, logistics, purchasing, sales and order taking. Over the last six
months, our business software system was upgraded to a more current version,
which we believe to be Year 2000 compliant. Certain of our offices are not yet
fully integrated into our enterprise-wide business software system. It is
expected that our offices in Colombia will be integrated over the next three
months. Since our most critical functions are run on the enterprise-wide
business software system, any Year 2000 problems at the hardware or software
level could have a material adverse effect on us. If the system failed to work
on January 1, 2000 it could prevent us from controlling our inventory, taking
orders, buying inventory and billing our customers. We are inventorying and
analyzing our remaining centralized computer and embedded systems, as well as
our WAN Data services, WAN hardware, networking equipment, voice-mail equipment
and access and alarm systems, to identify any potential Year 2000 issues and we
will
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take appropriate corrective action based on the results of such analysis. We
currently expect to substantially complete remediation and validation of our
internal systems, as well as to develop contingency plans, by mid-1999.
THIRD PARTY SUPPLIERS AND VENDORS
We are currently in the process of developing a plan for contacting our critical
suppliers, manufacturers, distributors and other vendors to determine if their
operations and the projects and services that they provide to us are Year 2000
compliant. Our largest supplier of product is IBM, with approximately 60% of our
revenue derived from sales of IBM products. As a result, we will devote
substantial effort in dealing with IBM in addressing any potential Year 2000
problems supplied by IBM. Absent written assurances of Year 2000 compliance by
such third parties, we will assume that such third parties will not be Year 2000
compliant and we will attempt to reduce our risks with respect to the failure of
such third parties to be Year 2000 compliant by developing contingency plans.
However, there can be no assurance that in all instances contingency plans can
be adopted or that they will adequately serve the needs of our customers and
other constituents.
PRODUCTS
Because we are a distributor of mid-range computers, software and peripheral
products, the Year 2000 issue is likely to have a substantial affect on the
products that we sell. We will deal directly with the manufacturers of our
products to determine whether such products are Year 2000 compliant. As a
distributor, we will not make representations and warranties to our customers
regarding Year 2000 compliance of the products we sell. Rather, we assign to our
customers the manufacturer's warranties. However, if there are year 2000
compliance issues it could increase our risk of product returns, increased
inventory and/or reduced sales. While we believe that our largest line of
products, IBM AS/400 and RS/6000 mid-range servers, are Year 2000 compliant,
there can be no assurance that the other products we distribute do not contain
undetected errors or defects associated with Year 2000 that may result in
material costs to us. Should the IBM AS/400 or RS/6000 mid-range servers fail to
be Year 2000 compliant or should IBM be unable to supply product because of Year
2000 issues, the effect on our results of operations, liquidity and financial
condition would be severe.
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YEAR 2000 COSTS
The total cost associated with the Year 2000 audit and required modifications to
become Year 2000 compliant is not expected to be material to our financial
position based on preliminary assessments resulting from the early phases of the
Project. The estimated total cost of the Project is approximately $100,000,
$50,000 of which has already been spent to upgrade some non-Year 2000 compliant
software and systems. It is possible that as we continue our audit and detect
problems that are not currently known to us, additional costs may be incurred,
which could be substantial.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, our normal business activities or operations.
Such failures could materially and adversely affect our results of operations,
liquidity and financial condition. Due to the inherent uncertainty in the Year
2000 problem, resulting in part from the uncertainty of the Year 2000 readiness
of third-party suppliers and customers, we are unable to determine at this time
whether the consequences of the Year 2000 failures will have a material impact
on our results of operations, liquidity or financial condition.
BACKLOG
Although we receive purchase orders for products to be delivered to customers
over a specified time period, there can be no assurance that such orders will
result in sales, as most orders are subject to revision or cancellation without
penalty. Consequently, we do not believe that backlog is a meaningful indicator
of sales for future periods.
RECENT PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee, or AcSEC, released
Statement of Position 98-1, or SOP 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. SOP 98-1 requires companies to
capitalize certain costs of computer software developed or obtained for internal
use, provided that those costs are not research and development. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. We are evaluating
the requirements of SOP 98-1 and the effects, if any, on our current policies on
accounting for software costs.
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Item 3. Properties.
The Company presently maintains the following facilities:
Information Systems Division - North America
(a) Warehouse and sales office totaling approximately 2,500 sq.
ft. and an office suite totaling approximately 2,000 sq. ft. in Delray Beach,
Florida, which is leased through the year 2001. The amount of rent is
$37,200.00. The building is a commercial technical center with approximately 5
individual companies located directly adjacent.
Information Systems Division - South America
Bogota, Colombia- One sales office totaling 6,000 sq. ft.,
which is leased through May, 2000. The annual rent is $69,600.00.
One service office totalling 4,000 sq. ft., which is leased
through April, 2001. The annual rent is $19,200.00; and
One administration building totalling 5,000 sq. ft., which is a
standalone structure that is 75% utilized and has enough room for expected
growth. This building is owned by the Company without major encumbrances other
than a first mortgage.
Cali, Colombia- One sales/technical office totalling 1200 sq.
ft., which leased through January, 2000. The annual rent is
$10,200.00.
Medillen, Colombia- One sales/technical office totalling
sq. ft., which is leased through December, 1999. The annual rent
is $6,600.00.
Barranquilla, Colombia- One sales/technical office totalling
2,500 sq. ft., which is leased through August, 2000. The annual
rent is $19,200.00.
We are considering relocating to a central facility in Bogota,
Colombia in early 2000, which would replace the two rental offices there.
On Line Services Division - North America
The On Line Services Division shares the Information Systems
Division offices.
On Line Services Division - South America
One administrative/sales/technical office of 5,000 sq. ft. in
Barranquilla, Colombia, which is leased through January, 2001. The
annual rent is $43,200.00.
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Our present annual lease obligations for 1999 totals approximately $205,000.00.
Renewable leases provide for rental increases of 5%-10%.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial ownership,
as defined in applicable regulations, of our common stock as of June 30, 1999 by
the following individuals or groups: each person or entity who is known by our
to own beneficially more than 5% of our outstanding stock; each of the Named
Executive Officers; each director of Global; and, all directors and executive
officers as a group. Except as otherwise indicated, and subject to applicable
community property laws, the persons named in the table below have sole voting
and investment power with respect to all shares of common stock held by them.
Applicable percentage ownership in the following table is based on 22,495,623
shares of common stock outstanding as of June 30, 1999, after giving effect to
the conversion of Class A Preferred into 13,000,000 shares.
<TABLE>
<CAPTION>
Name/Address No. of Shares Percentage
Owner Class Beneficially Owned of Class
- ----- ----- ------------------ --------
<S> <C> <C> <C>
Richard Baker Common 5,779,143 25.7%
AVG Family Trust Common 4,792,928 21.0%
Gerald D'Ambrosio Common 10,000 less than 1%
Rafael Delgado Common 44,000 less than 1%
Mario Habib Common 80,000 less than 1%
Antonio Serrato Common 175,000 less than 1%
</TABLE>
These tables do not give effect to the potential exercise of option standard to
certain members of management (see Item 5), nor to the options granted to a
consultant, Steven Spitz, CPA, in April, 1999, in partial payment of services
rendered, to acquire 250,000 shares of common stock at an exercise price of
$5.75 per share.
Item 5. Directors and Executive Officers.
The following table sets forth certain information with respect to our executive
officers and directors as of June 1, 1999.
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<TABLE>
<CAPTION>
Name Age Position Held
---- --- -------------
<S> <C> <C>
Richard Baker 41 President, CEO, Director
Antonio Serrato 65 Vice-President, COO, Director
Rafael Tovar 50 CFO
Gerald D'Ambrosio 50 Secretary
Jerre Daye 50 Director
GLOBAL DATATEL DE COLOMBIA
Rafael Delgado 50 President
ON LINE LATIN AMERICA, S.A
AND eHOLA.com, INC.
Mario Habib 42 President
</TABLE>
RICHARD BAKER, PRESIDENT, CEO, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Baker has
been President, CEO and Chairman of the Board of Directors of Global since
December, 1998. Mr. Baker founded International Computer Resources, Inc.
("ICR"), a U.S. IBM Business Partner specializing in the IBM AS/400 and RS/6000
mid-range platforms, and now a wholly owned subsidiary of Global. Mr. Baker was
also an owner of Mantenimiento Electronic de Systemas, Ltd. ("MES"), now also a
subsidiary of Global. Mr. Baker has approximately 10 years experience in Latin
America business operations. Mr. Baker attended Palm Beach Community College
from 1985 to 1987.
ANTONIO SERRATO, VICE-PRESIDENT, COO. Mr. Serrato has been Vice-President and
COO of Global since December 14, 1998. Prior to that time, and since 1993, Mr.
Serrato was General Manager of MES, now a wholly owned subsidiary of Global.
Prior to his employment with MES, Mr. Serrato was an IBM World Trade vice
president, with responsibility over an extensive sales force. Mr. Serrato has
extensive experience in Latin America computer sales and management. Mr. Serrato
received an engineering degree from the National University, Bogota, Columbia in
1959.
RAFAEL TOVAR, CFO - Mr. Tovar, who is a certified public accountant, has been
CFO of Global since December, 1998.
GERALD D'AMBROSIO, SECRETARY - Mr. D'Ambrosio, a licensed attorney, has been
Secretary of Global since December 14, 1998. Mr. D'Ambrosio, who has practiced
law since 1980, presently maintains his own law practice in Boca Raton, Florida.
He received a bachelor's degree from Bowling Green State University in 1981, and
a law degree from Ohio Northern University in 1965.
JERRE DAYE, DIRECTOR - Mr. Daye has been Director of Global since December,
1998.
15
<PAGE> 17
SUBSIDIARIES: OFFICERS
GLOBAL DATATEL DE COLOMBIA
RAFAEL DELGADO, PRESIDENT - Mr. Delgado has been President of Global DataTel De
Colombia, S.A., ("GDC"), a subsidiary of Global, since December, 1998. Prior to
that, Mr. Delgado was the founder of Casa Informatica, an IBM Business partner
in Colombia, which was acquired by Global. Mr. Delgado has extensive experience
in computer sales and management.
ON LINE LATIN AMERICA, S.A. AND EHOLA.COM, INC.
MARIO HABIB, PRESIDENT - Mr. Habib has been President of OnLine Latin America,
S.A. ("OLA") and eHOLA.com, Inc. ("eHOLA"), wholly owned subsidiaries of Global,
since December, 1998. From 1979 to 1998 Mr. Habib was the General Manager of
Yidi Industries, a manufacturing concern. Mr. Habib received a bachelor's degree
in mechanical engineering from Purdue University in 1979.
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
The table below summarizes the compensation earned for services rendered to
Global in all capacities for the fiscal years ended December 31, 1997 and
December 31, 1998, by each person serving as Global's Executive Officers in the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Securities
Compensation Underlying
--------------------------- Options/SARs
Name Year Salary($) Bonus($) (#)
- ---- ---- --------- --------
<S> <C> <C> <C> <C>
Richard Baker 98 $ 75,000 0 0
President & CEO 97 $ 75,000 0 0
96 $ 75,000 0 0
Antonio Serrato 98 $ 75,000 0 0
Vice-President, 97 $ 80,000 0 0
COO 96 $ 75,000 0 0
Rafael Delgado 98 $105,000 0 0
President of 97 $ 90,000 0 0
GDC 96 $ 60,000 0 0
Mario Habib 98 $135,000 0 0
President of OLA 97 0 0 0
and eHOLA 96 0 0 0
</TABLE>
16
<PAGE> 18
The above table reflects annual salaries for positions held in 1996, 1997 and
1998 with what are now our subsidiaries.
As of June 1, 1999, we have entered into employment agreements with the
following executive officers and key personnel:
RICHARD BAKER: A 3 year employment agreement as the President and
CEO of Global DataTel, Inc. with a base salary of $200,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $1,000,000.
ANTONIO SERRATO: A 3 year employment agreement as Vice President
and COO of Global DataTel, Inc. with a base salary of $150,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
RAFAEL DELGADO: A 3 year employment agreement as the President of
Global DataTel de Colombia, with a base salary of $80,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
MARIO HABIB: A 3 year employment agreement as the President of
eHOLA.com and On Line Latin America, S.A., with a base salary of $180,000 per
year, discretionary bonuses and reimbursement of business expenses, and life
insurance with a death benefit of $100,000.
The employment agreements discussed above contained grants of the following
options to purchase common stock:
<TABLE>
<S> <C>
RICHARD BAKER 350,000 options @ $ 7.12 each
ANTONIO SERRATO 200,000 options @ $ 7.12 each
RAFAEL DELGADO 100,000 options @ $ 7.12 each
MARIO HABIB 350,000 options @ $ 7.12 each
</TABLE>
The Company also has employment agreements with the following individuals:
ANTONIO HABIB: A 3 year employment agreement as the Regional
Sales Manager of Global DataTel de Colombia, at an annual salary of $60,000 per
year, discretionary bonuses and reimbursement of business expenses, and life
insurance with a death benefit of $100,000.
CARLOS MEJIA: A 3 year employment agreement as the General
Manager of Global DataTel de Colombia, at an salary of $65,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
17
<PAGE> 19
DANIEL LOPEZ: A 3 year employment agreement as Sales Manager of
Global DataTel de Colombia, with a base salary of $60,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
The employment agreements for these individuals also grant the following
options:
<TABLE>
<S> <C>
CARLOS MEJIA 25,000 options @ $7.12 each
DANIEL LOPEZ 15,000 options @ $7.12 each
ANTONIO HABIB 15,000 options @ $7.12 each
</TABLE>
Each of the above have also executed confidentiality, non-solicitation and
non-competition agreements, which restrict the individual's activities for one
year after they cease working for us.
The Company's directors currently serve without compensation.
Item 7. Certain Relationships and Related Transactions.
On September 30, 1998, the Company purchased 100% of the shares of International
Computer Resources, Inc. ("ICR") and Mantenimiento Electronico de Systemas, Ltd.
("MES"). ICR was formerly owned 33.3% by Richard Baker, Global's President, CEO
and Chairman of the Board, 33.3% by Dolphin Waves, Inc. and 33.3% by AVG Family
Trust. The consideration paid by Global to the former ICR shareholders,
consisted of 4,243,843 restricted shares of Global Common Stock, and 105,000
shares of Global Convertible Preferred Stock. MES was formerly owned 51% by Mr.
Baker and 49% by Antonio Serrato. The consideration paid by Global to the former
MES shareholders consisted of 357,153 restricted shares of Global Common Stock.
(See "Consolidated Financial Statements" and Notes thereto) eHOLA.com, Inc.,
previously owned by Mr. Baker, was also acquired by Global. In addition to the
shares of the company's common stock and preferred stock received by Mr. Baker,
he has the right to vote all of the other issued shares of the company's Series
A Convertible Preferred Stock.
In November, 1998, Casa Informatica, S.A., ("CASA") was acquired from Rafael
Delgado, President of our subsidiary, Global DataTel De Colombia, S.A., for a
total consideration of $2,800,000, which was paid $840,000 in cash and
restricted Global common stock valued at $1,960,000.
18
<PAGE> 20
In November, 1998, D.L.R. y Cia, Ltd., ("DLR") was acquired from Daniel Lopez,
Sales Manager of Global DataTel de Colombia, for a total consideration of
$600,000, which was paid $300,000 in cash and restricted Global common stock
valued at $300,000.
In November, 1998, Microstar, Ltd., ("MICRO"), was acquired from Mario Habib,
the President of eHOLA.com and On Line Latin America, S.A. and Antonio Habib,
the Regional Sales Manager of Global DataTel de Colombia, for a total
consideration of $500,000, which was paid $150,000 in cash and restricted Global
common stock valued at $350,000.
During Global's last fiscal year, and prior to change of control to present
management, the Company issued 1,198,500 shares of the Company's common stock to
certain former officers, directors and shareholders. Also, during the same
period, the Company issued 3,500,000 shares of the Company's Common Stock to a
former officer, director and principal shareholder of the Company, for his
minority interest in Travel Agent's Hotel Guide, Inc., a former subsidiary of
the Company. (See "Consolidated Financial Statements" and Notes thereto).
On February 5, 1999, Global sold 100,000 restricted shares of its Common Stock
to AJL Investments, Inc., for $3.00, per share. AJL Investments was at that time
a 5% shareholder of the Company.
In 1997, the Company engaged in various transactions wherein common and
preferred stock were issued; the preferred stock transactions were reversed in
1998 and the common stock transactions were partially reversed. (See
"Consolidated Financial Statements" and Notes thereto)
Item 8. Legal Proceedings.
The Company has been threatened with litigation in connection with the
reissuance of a stock certificate for approximately 400,000 shares. No action
has been instituted. The Company believes that in the event litigation were
instituted, that it has meritorious defenses to such action.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Our common stock has had a limited market in the Over-The-Counter Bulletin Board
(OTC-BB), under the Symbols "GCRI" and "GDIS". the following is a summary of the
high and low bid for each quarter (with the volume traded in that quarter) since
commencement of trading in February, 1997:
19
<PAGE> 21
<TABLE>
<CAPTION>
QUARTER ENDING: HIGH/ASK LOW/BID
<S> <C> <C>
3/31/97 11 7 1/2
6/30/97 10 1/2 8
9/30/97 6 3/4
12/31/97 5 3/8 3 1/4
3/31/98 3 3/8 2
6/30/98 2 7/8 1 1/4
9/30/98 6 3/4 1/16
12/31/98 12 1/8 4
3/31/99 13 1/4 5 13/16
</TABLE>
Over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions.
The Company has never declared or paid any dividends on its common stock and
does not anticipate paying any dividends on its common stock in the foreseeable
future.
Item 10. Recent Sales of Unregistered Securities.
In August, 1998, the Company, then known as Gold Coast Resources, Inc., issued
2,870,000 shares of common stock for cash at $0.10 per share pursuant to Rule
504 of Regulation D.
On February 5, 1999, the Company sold 100,000 restricted shares of its Common
Stock to AJL Investments, Inc., for $3.00, per share, pursuant to Rule 504 of
Regulation D.
In March, 1999, the Company entered into a subscription agreement for the sale
of 43,750 restricted shares at $8.00 per share for the total consideration of
$350,000.
Each purchaser of the securities described above has represented that he/she/it
understands that the securities acquired may not be sold or otherwise
transferred absent registration under the Securities Act or the availability of
an exemption from the registration requirements of the Securities Act, and each
certificate evidencing the securities owned by each purchaser bears or will bear
upon issuance a legend to that effect.
Item 11. Description of Registrant's Securities to be Registered.
Our Certificate of Incorporation authorizes 50,000,000 shares of $0.001 par
value common stock. As of June 30, 1999, there were issued and outstanding
22,495,623 shares of common stock, after giving effect to the conversion of
Class A Preferred into 13,000,000 shares.
20
<PAGE> 22
The holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50 percent of the shares have the ability to elect the
directors. The holders of common stock are entitled to receive dividends when,
as, and if declared by the Board of Directors out of funds legally available
therefor. The Company has not, however, previously paid any cash dividends and
does not anticipate paying any cash dividends in the foreseeable future. In the
event of liquidation, dissolution or winding up of the Company the holders of
common stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the common stock.
Holders of shares of common stock, as such, have no conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the common stock. All of the outstanding shares of common stock are, when
issued, fully paid and nonassessable.
The Company's Transfer Agent is Signature Stock Transfer, Inc., 14675 Midway
Road, Suite 221, Dallas, TX 75244.
Item 12. Indemnification of Officers and Directors.
The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the "33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination may be made by the shareholders; by a majority of the directors
who were not parties to the action, suit or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification for violations of the
'33 Act is against public policy and is, therefore, unenforceable.
21
<PAGE> 23
Item 13. Financial Statements and Supplementary Data.
SELECTED QUARTERLY FINANCIAL DATA
Our quarterly statement of operations data set forth below is derived from our
unaudited quarterly financial statements. In our opinion, these unaudited
financial statements have been prepared on the same basis as our audited
financial statements and reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of our results of
operations and financial position for these periods. The historical results are
not necessarily indicative of results to be expected for any future period.
22
<PAGE> 24
GLOBAL DATATEL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
AS OF MARCH 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 189,154 $ (126,376)
Marketable and Equity Securities -- 1,000
Trade Accounts Receivable 4,947,355 2,419,347
Inventories, Net 1,375,633 1,602,632
Due from Parent and Affiliates
Prepaid Expenses and Other Current Assets 886,829 724,593
------------ ------------
TOTAL CURRENT ASSETS 7,398,971 4,621,196
Property and Equipment, Net 511,054 603,238
Goodwill 10,918,780
Investment in Unconsolidated Subsidiary
Accounts Receivable Stockholders & Employees 17,918 46,430
Deferred Charges & Other Assets 5,520,351 3,719,588
------------ ------------
TOTAL ASSETS $ 24,367,074 $ 8,990,452
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short Term Borrowings, Banks 249,548 202,170
Accounts Payable 4,699,792 3,462,404
Accrued Expenses & Other Current Liabilities 195,337 60,975
------------ ------------
TOTAL CURRENT LIABILITIES 5,144,677 3,725,549
============ ============
Long Term Liabilities
Financial Obligations 1,178,631 1,100,959
Due to Parent Company 813,579 773,823
Deferred Revenues 501,306 402,022
Other Long Term Liabilities 1,501,529 746,609
------------ ------------
9,139,722 6,748,962
TOTAL LIABILITIES ============ ============
Stockholders' Equity
Common Stock 7,576 7,187
Preferred Stock -- --
Additional Paid In Capital 17,237,469 5,818,773
Retained Earnings (2,017,693) (3,584,470)
Accumulated Translation Adjustment -- --
Total Stockholders' Equity 15,227,352 2,241,490
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,367,074 $ 8,990,452
============ ============
</TABLE>
23
<PAGE> 25
GLOBAL DATATEL AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
AS OF MARCH 31,
1999 1998
<S> <C> <C>
Revenues $ 6,502,012 $ 5,110,716
Cost of Sales:
Cost of goods sold 4,031,247 2,977,304
Other Costs of Sales 812,000 743,961
----------- -----------
4,843,247 3,721,265
----------- -----------
Gross Profit 1,658,765 1,389,461
Operating Expenses:
Personnel 294,000 371,706
Marketing & Promotion, Travel & Entertainment
Communications 125,000 --
Occupancy 126,611 174,781
Professional Fees 74,605 72,105
Provision for Doubtful Accounts
Depreciation & Amortization 13,408 75,682
Other Expenses 85,380 151,174
----------- -----------
Total Operating Expenses 719,004 845,448
Other Income/(Expense):
Interest Income 93,658 35,226
Interest Expense (144,676) (155,968)
Other (35,067) 48,017
----------- -----------
TOTAL OTHER INCOME/EXPENSES (86,085) (72,725)
Income Before Income Taxes 853,676 471,278
Provision for Income Taxes 240,000 53,235
----------- -----------
Income Before Effects of
Discontinued Operations 613,678 418,043
Discontinued Operations
----------- -----------
Net Income (Loss) 613,676 418,043
Other comprehensive Income:
Foreign currency translation, net of taxes 8,039 (7,596)
Comprehensive Income (Loss) $ 621,715 $ 410,447
=========== ===========
Earnings (Loss per share (Note)
</TABLE>
24
<PAGE> 26
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
NOTE 1: The unaudited consolidated financial statements which include the
accounts of Global Datatel, Inc. and its subsidiaries (the "Company") have been
prepared in accordance with the instructions to Form 10-SB and do not include
all information and footnotes necessary to comply with generally accepted
accounting principles. In the opinion of management, all normal recurring
adjustments considered necessary for a fair presentation have been included. The
consolidated statements of operations for the three months ended March 31, 1999
are not necessarily indicative of the results to be expected for a full year or
for any other period. The December 31, 1998 balance sheet was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. It is suggested that these financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's latest audited financial statements for the
year ended December 31, 1998.
NOTE 2: The Company has two operating segments: the Information Systems Division
("ISD") and the Online Services Division ("OSD"). Products distributed by ISD
includes mid-range servers that run on UNIX, OS/400 and NT operating systems,
peripheral equipment (including wireless networking equipment, storage products,
printers and terminals) and software. Through OSD, the Company offers its
customers internet access in 13 countries, as well as Multi-lingual content
available via the world wide web at its domain www.ehola.com. The accounting
policies of the segments are the same. Although management measures the
profitability of its business through the results of these two segments, the
Company's segments have similar economic characteristics and, as such, the
results of operations have been aggregated and separate disclosure is not
presented. Foreign sales for the three months ended March 31, 1999 and 1998 were
approximately $6,502,012 and $5,110,716, respectively. During the three months
ended March 31, 1999 and 1998, approximately 60% of the Company's net sales were
generated from the sale of IBM products. One customer accounted for
approximately 9% and 8% of the Company's net sales in the three months ended
March 31, 1999 and 1998, respectively, and no other single customer accounted
for more than 5% of the Company's net sales.
NOTE 3 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Global DataTel, Inc. ("the Company") was originally
incorporated under the laws of the State of Utah on April 17, 1980 as La
Plate Oil and Mining, Inc. On October 1, 1982 the company changed its name to
Gold Coast Resources, Inc. ("Gold Coast"). On September 30, 1998 Gold Coast
purchased 100% of the outstanding common stock of International Computer
Resources ("ICR") (a Florida corporation) and Mantenimiento Electronico de
Sistemas Limited ("MES") (a Colombian corporation) in a transaction accounted
for as a purchase. ICR and MES were both wholly owned and majority-owned,
respectively, by the majority shareholder of the Company. On December 2, 1998
the company changed its name to Global DataTel, Inc. The Company engages
primarily in the sale and distribution of medium and high-end computer and
software products, including Enterprise Resource Planning (ERP) suites, as
well as, providing information technology solutions and support to medium and
large business clients. The Company has distribution agreements with
International Business Machines ("IBM"), Lotus, Cisco Systems, and JBA.
On November 30, 1998, the Company purchased three unrelated companies in
Colombia, South America, DLR & CIA ("DLR"), Micro Star Ltda. ("Micro"), and
CASA Informatica ("Casa"). The companies acquired are also in the business of
providing software and hardware solutions to companies in their markets.
Previous to the acquisition by ICR and MES, Gold Coast Resources was a
development stage company that, through a wholly-owned subsidiary the Travel
Agents Hotel Guide, Inc. ("Hotel"), was engaged in the business of developing
a hotel guide that was to sell advertising space to the hotel and travel
industry. Gold Coast sold Hotel on December 14, 1998.
The following is summary of the significant policies followed in the
preparation of the consolidated financial statements.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
25
<PAGE> 27
Cash - For purposes of cash flows the company considers investments of three
months or less as cash equivalents. Revenues from services are recognized as
the services are performed. Revenues from the sales and installation of a
hardware package are recognized when the installation is substantially
completed and operational.
Inventories - Inventories are principally composed of finished goods and are
stated at the lower of cost or market.
Accounts Receivable - The Company periodically reviews the adequacy of the
allowance for doubtful accounts and maintains the allowance for doubtful
accounts at a level which management believes is sufficient to cover
potential credit losses.
Property, Plant and Equipment - Property, plant, and equipment is carried at
cost, less accumulated depreciation. Gains or losses from sales or
retirements are included in current operations. Maintenance, repairs and
renewals of a routine nature are charged to operations. Depreciation is
provided over the estimated useful lives of the related assets using the
straight-line method which range from five to ten years.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
Concentration of Credit Risk - Financial instruments that potentially subject
the Company to concentration of credit risk consists primarily of accounts
receivable and debt securities. Concentration of credit with respect to
accounts receivable as of December 31, 1998 was limited to an amount due from
an agency of the Colombian Government, which represented approximately 22% of
the net accounts receivable. The Company provides for estimated credit losses
at time of sale based upon factors surrounding the credit risk of specific
customers, historical trends and other information. The investment in debt
securities represents 100% of the total category. This investment consists of
a convertible debenture in Ameriresources Technologies, Inc, a publicly
traded entity. The debenture is personally guaranteed by the majority
stockholder of Lexington Sales, Inc.
Fair Value of Financial Instruments - The carrying amount of cash and
short-term borrowings, banks are carried at costs, which based on
management's estimates approximates their fair values as of March 31, 1999.
Income Taxes - The Company and its U.S. subsidiary file a consolidated income
tax return. Foreign subsidiaries are not consolidated. The Company has
adopted SFAS 109 and this pronouncement caused no material changes on the
financial statements. The provision for income taxes is primarily related to
the reconciliation of the taxes paid and owed by the foreign subsidiaries in
accordance with the taxing rules and regulation promulgated by the Colombian
government as of December 31, 1998.
Translation of Foreign Currency - The Company's Colombian subsidiaries are
translated in accordance with Statement of Financial Accounting Standards No.
52 (SFA No. 52), which requires that foreign currency assets and liabilities
be translated using the exchange rates in effect at the balance sheet date.
Results of operations are translated using the average exchange rates
prevailing during the period. For purposes of SFAS No 52, the Company
considers the Colombian peso to be the functional currency. The effects of
unrealized exchange fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated as the cumulative translation
adjustment in shareholders' equity. Realized gains and losses from foreign
currency transactions are included in the results of operation for the
period. Fluctuations arising from intercompany transactions are of long term
in nature and are accumulated as cumulative translation adjustments.
Supplemental Cash Flow Information: Net cash paid for interest in the
three-month period ended March 31, 1999 and 1998 was $51,018 and $120,742,
respectively.
26
<PAGE> 28
NOTE 4 - BUSINESS ACQUISITIONS
All acquisitions have been accounted for under the purchase method. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the dates of acquisition. In all of
the acquisitions, 100% of the acquired companies were purchased.
On September 30, 1998 the Company purchased, in a stock transaction, ICR and
MES. On November 30, 1998 the company purchased three Colombian companies,
DLR, Casa, and Micro.
The Company acquired all of the stock of ICR for 105,000 shares of
convertible preferred stock valued at $0.001 per share and 4,243,843 shares
of common stock valued at $2.00 per share. The net assets acquired and
liabilities assumed approximated $90,000 and $190,000, respectively. The
purchase resulted in goodwill of approximately $8,600,000. The subsidiary of
ICR, eHOLA.com, an Internet service provider, is expected to generate the
future realizable income necessary to justify the resulting goodwill in this
transaction. The acquisition was recorded using a discounted price per share
due to the low volume of trading of the Company's common stock during the
period of the acquisition.
The Company acquired MES for 357,143 common stock shares of the Company,
valued at $2.00 per share. The net assets acquired and liabilities assumed
approximated $1,181,000 and $913,000, respectively. The purchase resulted in
goodwill of approximately $475,000.
The Company acquired DLR for $300,000 ($100,000 due at closing and five
monthly installments of $40,000 thereafter, as defined) in cash, and 60,000
shares of the Company's common stock, valued at $3.00 per share. The net
assets acquired and liabilities assumed approximated $1,536,000 and
$1,732,000, respectively. The acquisition resulted in goodwill of
approximately $502,000.
The Company acquired Casa for $840,000 ($93,333 at closing and eight monthly
installments of $93,333 thereafter, as defined) in cash, and 392,000 shares
of the Company's common stock, valued at $3.00 per share. The net assets
acquired and liabilities assumed approximated $3,527,000 and $1,786,000,
respectively. The acquisition resulted in goodwill of $808,000.
The Company acquired Micro for $150,000, payable in six consecutive monthly
payments from the date of closing, and 70,000 shares of the Company's common
stock, valued at $3.00 per share. The net assets acquired and liabilities
assumed approximated $926,000 and $748,000, respectively. The purchase
resulted in goodwill of $537,000.
The Company issued non-interest-bearing promissory notes to the shareholders
of DLR, Casa and Micro for the unpaid cash portion of the consideration for
the acquisitions. The terms of the notes for the individual companies
acquired are as presented in the preceding paragraphs and the amount due is
reflected as notes payable to stockholders in the accompanying consolidated
balance sheet as of December 31, 1998. As discussed in Note 15, the Company
is currently attempting to raise capital in connection with a proposed public
offering. The realization of a major portion of the assets in the
accompanying balance sheet as of December 31, 1998 is dependent upon
continued operations of the Company, and their ability to raise additional
capital. Management believes that actions presently taken to revise the
Company's operating and financial requirements will provide the opportunity
for the Company to continue as a going concern.
NOTE 5 - GOODWILL
Goodwill, which represents the excess of acquisition costs over the net
assets acquired in the business combinations, is amortized on the
straight-line method over 20 years (See Note 2). The carrying amount of
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goodwill is reviewed annually using estimated undiscounted cash flows for the
businesses acquired over the remaining amortization periods.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company is a member of a group of affiliated entities and, has extensive
transactions and relationships with members of the group. Because of these
relationships, it is possible that the terms of these transactions are not
the same as those that would result from transactions among wholly unrelated
parties.
NOTE 7 - SUBSEQUENT EVENTS
In February, 1999, the Company signed a letter of intent with Dirks & Company
to act as the Managing Underwriter in connection with a proposed offering of
shares of Cumulative Convertible Debentures of the Company. Dirks & Company
intends to underwrite, on a firm commitment basis, such number of Debentures
which will result in gross proceeds of approximately $50 million. A firm
commitment does not guarantee that the underwriter will fund the proposed
offering, since their commitment is not known until the twenty day waiting
period following the SEC approved registration has been filed. As of this
date no registration document relating to this proposed offering has been
filed and management cannot determine at this time the eventual outcome of
this proposed offering.
On February 5, 1999 the Company did an offering under Rule 504 of Regulation
D for 100,000 shares of its common stock at $3.00 per share. The offering was
subscribed to in full by a related party, and the Form D was timely filed
with the Securities and Exchange Commission.
In April 1999, the Company began negotiations to acquire 100% of the shares
of stock a computer solutions provider. As of this date, management cannot
determine with any degree of certainty whether this acquisition will occur
since it is dependent upon the success of the offering referred to
previously.
NOTE 8 - STOCK OPTION AGREEMENT
In April 1999, the Company entered into an option agreement with a
consultant, in partial payment of services rendered. The agreement grants
250,000 shares of the Company's common stock, at an exercise price of $5.75
per share. The options are non-dilutive. To date, no options have been
exercised.
NOTE 9 - OPERATING RISKS
As substantially all of the Company's operations are currently conducted in
Colombia, the Company is subject to special consideration and significant
risks not typically associated with Companies operating in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company's results may be adversely affected by changes in the political and
social conditions in Colombia, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation among
other things.
NOTE 10 - IMPACT OF YEAR 2000 - UNAUDITED
The Company is in the process of evaluating the effect of the year 2000 on
its computer systems. The Company believes that the cost of upgrading its
systems will not materially affect the operations but will constitute the
normal periodic ongoing cost of maintaining and improving its computer
system.
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The Company has initiated communications with all of its significant
suppliers to determine the extent to which the Company's operations are
vulnerable to those third parties failure to remediate their own year 2000
issues. There can be no guarantee that the system of such companies or payors
will be timely converted and would not have an adverse impact on the Company.
Additionally, general problems such as electric power, water and sewer etc.,
are beyond the ability of the Company to determine, and would affect most
other companies in the geographic area of Colombia.
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Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
In December, 1998, the Company retained as auditors, Infante, Lago & Company, as
this firm is familiar with dealing with Latin American companies. Prior thereto,
the Company's auditors were Schvaneveldt & Company. The change was not due to
any disagreement in accounting principles or practices followed by the Company.
Item 15. Financial Statements and Exhibits.
FINANCIAL STATEMENTS:
Consolidated Financial Statements of Global DataTel, Inc. and its
Subsidiaries:
Accountant's report of Infante, Lago & Company May 10, 1999
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the year ended December
31, 1998 and nine months ended December 31, 1997
Consolidated Statements of Shareholder's Equity for the year
ended December 31, 1998 and nine months ended December 31, 1997
Consolidated Statements of Cash Flows for the year ended December
31, 1998 and nine months ended December 31, 1997
Notes to Financial Statements
EXHIBITS:
3.1 Articles of Incorporation of Gold Coast Resources, Inc. a
Nevada corporation*
3.2 Amendment to Articles of Incorporation*
3.3 Amendment to Articles of Incorporation*
3.4 By-Laws*
10.1 Employment Agreement with Richard Baker*
10.2 Employment Agreement with Antonio Serrato*
10.3 Employment Agreement with Rafael Delgado*
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*Previously filed
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10.4 Employment Agreement with Mario Habib*
16.1 Letter of Schvaneveldt and Company re Change in Certifying
Accountant*
27. FINANCIAL DATA SCHEDULE*
- -----------------
*Previously filed
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Registrant: GLOBAL DATATEL, INC.
Date: July 22, 1999
By: /s/ Richard Baker
----------------------------------
Richard Baker, President & CEO
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