<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended July 31, 2000.
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _________ to ________
COMMISSION FILE NUMBER: 0-31229
GSI TECHNOLOGIES USA INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 65-0902449
------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2001 McGill College Avenue, Suite 1310, Montreal, Quebec H3A 1G1 Canada
------------------------------------------------------------------------------
(Address of principal executive offices)
(514) 940-5262
------------------------------------------------
(Issuer's Telephone Number, including Area Code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. [X]
Yes [ ] No
As of July 31, 2000, there were 20,185,472 shares of the issuer's $.001 par
value common stock issued and outstanding and,
3,674,000 warrants which entitles the registered holder to purchase anytime
until the close of business on January 31, 2002, one share of Class B common
stock at a price of $1.10.
Transitional Business Disclosure Format (Check one): Yes [ ] No[X]
1
<PAGE>
INDEX TO FORM 10-QSB
--------------------
For the Quarter Ended July 31, 2000
-----------------------------------
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet as of July 31, 2000 3
Statement of Income for the Nine Months and
Three Months Ended July 31, 2000 4
Statements of Cash Flows for the Nine Months
and Since Inception To July 31, 2000 5
Notes to Financial Statements for the 6 - 7
Nine Months Ended July 31, 2000
Item 2. Management's Discussion and Analysis 8 - 11
PART II. OTHER INFORMATION
12
Item 1. Legal Proceedings
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial statements
-----------------------------
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
<TABLE>
<CAPTION>
July 31, 2000
--------------
(Unaudited)
Assets
<S> <C>
Current Assets
Cash and cash equivalents $ 24,932
Receivables, net 62,161
Note Receivable (principally related parties) 1,455,814
Other current assets 4,648
--------------
Total current assets 1,547,555
Other assets 637,571
------------------
Total assets 2,185,126
==================
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 25,000
Note Payable -
Advances from Affiliate 1,776,154
Deferred Revenue 178,500
Other current liabilities 26,657
-------------
Total current liabilities 2,006,311
Shareholder's Equity
Common Stock, class A, $1.00 par value; authorized -
5,000,000 shares; issued and outstanding none in 1999
Common Stock, class B, $.001 par value; authorized 20,185
55,000,000 shares; issued and outstanding -20,185,472 shares
Paid in Capital 1,273,744
Deficit accumulated during the development stage (1,115,115)
-------------------
Total Shareholder's Equity 178,815
Total liabilities and shareholder's equity $ 2,185,126
================
</TABLE>
3
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GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF INCOME
FROM INCEPTION (JULY 08, 1998) TO JULY 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Period of
Three Months Nine Months Inception
Ended July 31, Ended July 31, July 06, 1998
-------------- -------------- to
1999 2000 1999 2000 July 31, 2000
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
Revenues: Sub Licensing Agreements $ - $ 250,000 $ - $ 250,000 $ 250,000
Cost of Sales: Royalties on Sub Licensing Agreements - 150,000 - 150,000 150,000
----------- -------- ---------- ----------- ---------
Gross Profit - 100,000 - 100,000 100,000
Operating Expenses:
Salaries and related costs - 126,903 - 367,964 367,964
Rent - 31,920 - 68,480 68,480
Financing expense - - - - 128,790
Professional fees - 283,071 - 302,041 380,358
Amortization of intangibles - 23,739 - 71,217 72,518
Travel - 14,226 - 32,135 32,135
Other selling, general and administrative 36 52,498 5,158 118,151 168,382
------- ------- ----------- -------- ---------
Total operating expenses 36 532,357 5,158 959,988 1,218,626
Loss before other income (expense) (36) (432,357) (5,158) (859,988) (1,118,626)
Other income (expense):
Interest income (principally related parties) - 7,934 - 20,533 20,533
Interest expense - (17,021) - (17,021) (17,021)
-------- -------- ----------- --------- ----------
Total other income (expense) - (9,087) - 3,511 3,511
Net Loss (36) (441,445) (5,158) (856,476) (1,115,115)
======= ========= ============ ========== ===========
Basic weighted average common shares outstanding 6,290,598 20,185,472 2,119,909 20,185,472 10,181,095
========== ========== ============ =========== ===========
Basic Loss per common share $ (0.0000) $ (0.0220) $ (0.0024) $ (0.0439) $ (0.1099)
=========== ========== ============ =========== ============
</TABLE>
4
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GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FROM INCEPTION (JULY 08, 1998) TO JULY 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Period of
Nine Months Inception
Ended July 31, July 06, 1998
-------------- to
1999 2000 July 31, 2000
----- ----- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (5,158) $ (856,476) $ (1,115,115)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization - 71,217 72,518
Issuance of stock for contract settlement - - 500
Changes in Operating assets and liabilities:
Accounts Receivable and other current assets - 24,177 (66,808)
Other Assets - (234,746) (234,746)
Accounts Payable and Accrued Liabilities 6,100 52,967 230,157
------- --------- -----------
Net cash provided by/(used in) operating activities 942 (942,860) (1,113,494)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by/(used in) investing activities
Note Receivable, principally related parties - (1,455,814) (1,455,814)
Payment for license, principally related parties - (200,000) (200,000)
--------- ----------- -------------
Net cash provided by/(used in) investing activities - (1,655,814) (1,655,814)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Notes payable, principally related parties - 79,667 -
Advances from Affiliate - 1,776,154 1,776,154
Sales of common stock - 577,100 1,018,086
---------- ---------- ---------
Net cash provided by/(used in) financing activities - 2,273,587 2,794,239
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 942 (325,087) 24,932
Cash and cash equivalents, beginning of period - 350,019 -
---------- ----------- -----------
Cash and cash equivalents, end of period $ 942 $ 24,932 $ 24,932
============ ============= =============
</TABLE>
5
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
July 31, 2000
NOTE 1 -BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of GSI
Technologies USA, Inc. have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. The financial
statements reflect all adjustments consisting of normal recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
the results for the periods shown. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The balance sheet at October 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the audited financial statements and footnotes thereto included in GSI
Technologies USA, Inc.'s Registration Statement on Form SB-2 (Registration No.
333-30474) as filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and that effect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provide guidance for disclosures
related to revenue recognition policies. Management believes that GSI
Technologies USA, Inc.'s revenue recognition practices are in conformity with
the guidelines of SAB 101.
NOTE 3 - NET LOSS PER SHARE
Basic earnings (loss) per share is computed using the weighted-average
number of common shares outstanding during the period. Options and warrants are
not considered since considering such items would have an antidilutive effect.
NOTE 4 - OTHER ASSETS
October 31, 1999 July 31, 2000
---------------- -------------
Other Assets:
License rights $ 474,779 $ 474,779
(Acquired from affiliate and recorded at
predecessor basis with the cost over such
basis recorded as a dividend to affiliate).
Accumulated amortization (1,301) (72,518)
--------- --------
473,478 402,261
Long term portion Note Receivable - 225,000
(principally related party)
Security Deposits - 10,310
-------------- --------
$ 473,478 $ 637,571
6
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
July 31, 2000
NOTE 5 - RELATED PARTY TRANSACTIONS
During the nine months ended July 31, 2000, the Company has received
advances from Maxima Capital, a shareholder of the company, in the amount of
$1,776,154. These advances have enabled the company to continue to operate at
its planned pace. These funds were, in turn, advanced to GSI Canada, an
affiliate of the company, to further invest and develop the business.
On June 02, 2000, GSI Canada placed an order with the Company for 35
CityColumns at $17,000 per unit for a total of $595,000. A deposit of 30% in the
amount of $178,500 was required and has been reflected as deferred revenue in
the financial statements at July 31, 2000 since the installation of the
equipment was scheduled for August 2000.
NOTE 6 - SUBSEQUENT EVENTS
On September 07, 2000, the Company entered into formal loan arrangements
with a group of existing shareholders. The total amount of these obligations in
the form of promissory notes is $2,393,013. The notes have a maturity date of
September 07, 2001, bear interest at a rate of prime plus two percent and are
convertible at any time at the sole discretion of the Company into a certain
number of shares for each holder. If converted, interest on the notes will be
waived. In the event of conversion, the total number of shares to be issued from
treasury would be 1,910,263.
7
<PAGE>
Item 2. Management's discussion and analysis
---------------------------------------------
Forward looking statements.
This report contains forward-looking statements that are based on the Company's
beliefs as well as assumptions made by and information currently available to
the Company. When used in this report, the words "believe," "expect,"
"anticipate," "estimate," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions, including without limitation, the overall
strength of the national securities markets, the Company's present
financial condition and the risks and uncertainties concerning the availability
of additional capital as and when required, technological changes, increased
competition, and general economic conditions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, or
projected. The Company cautions potential investors not to place undue reliance
on any such forward-looking statements, all of which speak only as of the date
made.
Overview
GSI specializes in broadcasting solutions principally for advertisers and others
seeking to extend their reaching power for their commercial and public service
messages. Holder of a world-wide license, GSI's proprietary software, hardware,
and advanced broadcasting systems respond to their needs. In providing access to
its remote control broadcasting capability, we enable users to transmit and
receive full-motion video, graphics, and audio on an array of attractive,
durable and interactive indoor and outdoor display products.
Results from operations
3 months and 9 months ending July 31, 2000 and 1999
We are still in the development phase after starting up in 1999. During GSI's
third quarter from May 1, 2000 to July 31, 2000, we incurred a loss of $441,445
versus $36 in the same period in 1999. The loss for the nine months ending July
31, 2000 was $856,476 compared to $5,518 for the same period in 1999. The
accumulated deficit to date during the development phase increased to
$1,115,115.
Revenues
No revenues were generated from sales of products and services to date. $250,000
in revenues were generated from the sale of a single sub-license for the
territory of Canada in May 2000.
8
<PAGE>
Cost of revenues and direct operating costs
According to the master license agreement with GSI Canada, we owe 60% of the
price of any sub-license we sell to a new licensee and this amount is payable to
GSI Canada by the end of the calendar quarter in which the sub-license is
granted. We therefore remitted $150,000 to GSI Canada in July for the
sub-license sold to GSI Canada in its particular role as sub-licensee for the
entire territory of Canada. This represents our first direct operating cost to
date.
Operating expenses
During the third quarter we incurred $532,357 in operating expenses versus $36
in the same period in 1999; including salaries and related costs of $126,903,
$283,071 in professional fees, $31,920 for the rents on our Florida and Montreal
offices, $23,739 in amortization, $14,226 for travel, and $52,498 in other
selling general and administrative expenses. We currently have 26 mainly full
time employees.
During the nine months ended July 31 we incurred $959,988 in operating expenses
versus $5,158 in the same period in 1999; including salaries and related costs
of $367,964, $302,041 in professional fees, $68,480 for the rents on our Florida
and Montreal offices, $71,217 in amortization, $32,135 for travel, and $118,151
in other selling general and administrative expenses.
Other income
$7,934 in interest was earned on the outstanding loan to GSI Canada while
$17,021 in expense was incurred on subsequent advances from GSI Canada during
the third quarter.
During the nine months ending July 31, 2000, $20,533 in interest was earned on
the outstanding loan to GSI Canada while $17,021 in expense was incurred on
subsequent advances from GSI Canada.
No interest was earned or incurred in the same periods in 1999.
Liquidity and capital resources
At July 31, 2000 we had $24,932 in cash and cash equivalents. Cash used in
operating activities during the nine months ending July 31, 2000 was $942,860,
which was mainly attributable to the net cash loss from operations plus changes
in net operating assets and liabilities.
Cash used in investing activities reflects short term loans to GSI Canada in the
amount of $1,455,814 plus a $200,000 payment for the cash portion of the master
license agreement.
Cash provided from financing activities reflects $577,100 from sales of common
stock during the private placement towards the end of 1999 plus advances through
July 31 of $1,776,154 from Maxima Capital via GSI Canada, offset by the final
settlement of our earlier obligation to GSI Canada for expenses paid on our
behalf. The advances have enabled us to continue operating at the planned pace
through September.
The result of all activities during the nine months ending July 31, 2000 was a
net decrease of $325,087 in our cash position. From inception net cash used in
operations has been $1,113,494. A total of $1,655,814 has been used in investing
activities, while $2,794,239 has been provided by financing activities.
Cash requirements of about $900,000 are anticipated during our fourth fiscal
quarter to October 31, 2000, including about $470,000 relating to the purchase
of 35 Citycolumns and provision of services on the network of installations.
Other spending to sustain operations is currently running at about $125,000 a
month. The remaining accrued obligation under earlier consulting agreements
associated with the financial structuring of the company is $25,000 to BBT
Consulting Group and this will be discharged in September.
In September, we entered into formal loan arrangements with a group of existing
investors. The total amount of these obligations is $2,393,013. The promissory
notes have a maturity date of September 7, 2001, bear interest at the rate of
prime plus two per cent and are convertible at any time at the sole discretion
of the Company into a certain number of shares for each holder. If converted,
interest on the notes is waived. In the event of conversion, the total number of
Class B common shares to be issued from treasury would be 1,910,263.
With the additional funds received we continued to build up our New Media
Division and by the end of July lent a total of $1,277,314 to GSI Canada in the
form of special supplier financing. This financial assistance will enable GSI
Canada to complete installations on schedule and activate broadcasting on the
Ivanhoe network. Considered a direct benefit to GSI's global marketing program
for our GSITV.COM, The Total Vision Network concept, it is anticipated that GSI
Canada will eventually sell the network either in whole or in part to either an
established media operator or to a new entrant. The funding will also enable GSI
Canada to continue developing the business and distribution of our products and
services in Europe via Groupe Solcom International, currently a 75% owned
subsidiary of GSI Canada.
In the near term, we anticipate at least two private placements totaling about
$1.5-1.8 million in order to raise additional funds required to sustain
operations to at least January 2001. A portion of these funds will be used to
fund GSI Canada for its next project, which is to install 50 Citycolumns by the
end of December on certain properties managed by SITQ, a large Quebec-based real
estate company.
We continue to seek additional sources of funding to sustain operations
throughout the new year.
9
<PAGE>
Product sales and distribution and provision of services
Under the master license acquired in October 1999 from our Canadian affiliate,
GSI Technologies (3529363 Canada Inc.), we have access to some of the most
advanced technology currently available in the field of electronic advertising
and interactive information display. The term of the master license is 5 years
to October 26, 2004 and is automatically renewable for another 5 years at the
sole discretion of GSI. The cost was $800,000, $200,000 paid in cash in November
1999; the balance in 600,000 of GSI's common shares.
In addition to production capacity, through this continuing association with GSI
Canada we also benefit from their ongoing research and development and the
opportunity to broaden and enhance our product lines. All research and
development continues to be conducted at GSI Canada and we have made no direct
expenditures to date. Currently sharing facilities with us at Place Mercantile
in Montreal, beginning in November GSI Canada's R & D Group will be located in
the new Cite Multimedia in Old Montreal.
Through this association with GSI Canada, we are now able to offer a range of
products designed around the concept of providing useful information and
services in an attractive, convenient format to people in their everyday
environments. These products include the interior or Citycolumn display units,
the exterior or Novacolumn display units often referred to as "urban furniture"
or "street furniture" in the language of the major North American and European
media operators and advertisers; and the transit shelter or Servicolumn units.
We also recently launched a new indoor product called Digicolumn specially for
interior wall space applications and designed around plasma screen technology.
In addition to revenue from product sales, we anticipate revenue from our core
services. We anticipate generating revenue from broadcasting beginning in
October; in network management and maintenance starting in September; technical
support starting in October; and creative services, principally in the form of
message content, starting in October. We also anticipate revenue generation from
special consulting contracts; as well as from the further sale of sub-licenses.
We expect that, in certain cases, elements of the technology covered by the
master license will be sold separately. The sale of a license for the complete
GSI Multimedia Pack is anticipated for October.
The emphasis is now on ramping up our commercial operations and successfully
marketing our products and services. The business model we continue to favor is
marketing and selling our products to the existing media companies, rather than
managing them ourselves and interfacing directly with retailers and other
potential end users. We believe this provides the best route to rapid deployment
of our products and services over the longer term. While our principal market in
the area of advertising is mature and dominated by a relatively small number of
large, well-developed media companies such as Pattison, JC Decaux, Outdoor
Systems and Clear Channel, Adshel, and Eller Media, we believe that the
opportunity exists to both supplant old, static forms of advertising signage and
to increase exposure in terms of "viewers per day" at the street level. Pending
a formal contract with at least one of the major media operators, our short term
plan is to deploy our products via our affiliates and subsidiaries in prime
territories and to sell advertising spots directly to end users.
Accordingly, the first sub-license was granted to GSI Canada on May 4 to
distribute GSI's products nationwide in Canada. The price for the sub-license
was $250,000, payable in ten annual installments of $25,000 each.
In line with our marketing plan for our first year of operations we have
concentrated on the North American market focusing, particularly during the
first three quarters, on significant opportunities identified in Canada. Our
initial focus continues to be on the interior market. After a successful pilot
project in a shopping center in South Shore Montreal, this was followed by a
formal contract on May 5 between GSI Canada and Ivanhoe, a leader in the
Canadian real estate industry, focusing on prime shopping centers located in
urban areas. www.ivanhoe.ca. With headquarters in Montreal, Ivanhoe owns or
shares in partnership approximately 24 million square feet of retail space in 51
malls located in Quebec, Ontario, and the U.S. It is also the majority
shareholder in Cambridge Shopping Centers.
On June 2, GSI Canada placed a $595,000 order for 35 CityColumns accompanied by
a deposit of 30% or $178,500. 60% or $357,000 was due on installation and was
received on August 30. The balance of $59,500 is due by early October. 32 units
have been installed to date. As broadcasting operations are launched and content
is gradually added, this initial sale to GSI Canada will constitute a fully
functioning model network, a showcase for our technology, and a new testing
environment for both the broadcasting to the units and the maintenance of the
units.
Another significant project has been successfully negotiated by GSI Canada.
Maintaining our focus on the interior market, a Citycolumn prototype was
installed in June in the Carrefour Trois-Rivieres, a shopping center in located
in Trois-Rivieres, mid way between Montreal and Quebec City. Having successfully
met expectations, GSI Canada signed a contract in September giving it the right
to install and operate another 50 units on other properties managed by SITQ, one
of the largest property managers in the province of Quebec and wholly owned by
the Caisse de Depot, the provincial pension fund. Installations will commence in
October with a planned completion date of December 31, 2000. This sale of one of
our products to GSI Canada will generate an additional $850,000 in revenue to be
followed by revenues from our ongoing services. GSI Canada is actively seeking
an advertising media operator to participate in this transaction and to continue
developing the Canadian indoor market.
Pending an agreement with a media operator, GSI Canada will continue to seek
opportunities to make installations in Canada and to seek separate funding
wherever possible. Other major shopping center owners and property managers such
as Cadillac Fairview, and Oxford are being approached by GSI Canada.
Opportunities have also been identified in Europe. In August, Clear Channel
International formally requested GSI to put a pilot project network of large LED
screens and the relatively new variety of plasma screens using our broadcasting
technology. The initial sites will be in France and Switzerland with
broadcasting and the provision of creative services from the studio in Paris. A
studio is also under development in Milan, Italy.
With the signing of a lease at the Sun City Trust building, our head office was
transferred from Fort Lauderdale to Orlando in June and opportunities are being
explored in the southern States. Depending on the availability of capital, a
sales office may be opened in New York City later in the year to pursue other
opportunities in the American market. Major urban centers and commercial
shopping malls, theme parks, and airports will be targeted.
10
<PAGE>
Product manufacturing and services
Building on the extensive network of affiliations and strategic alliances of our
affiliated company in Canada, we are able to completely outsource the
integration and production of our products. The prime contractor is HiTech Neon,
currently the largest and longest operating subsidiary of GSI Canada with a
forty year history in the sign business. This affiliated supplier is responsible
for the production of the encasement modules either directly or via
sub-contracting.
Subject to a competitive ordering process, computer hardware components are
initially being supplied through the Lexton Group and networking and cabling
services from ITS Service Interteck, both of which are also subsidiaries of GSI
Canada. While all key suppliers have the required capacity to complete the
planned production schedule, the continuing challenge is for HiTech Neon to meet
accelerating demand. Additional manpower and space will be required to gear up
to the planned production schedule. Labor relations at the HiTech Neon plant
located in a suburb of Montreal are considered excellent.
Although we will eventually outsource the advertising services, our New Media
Division will provide the content for GSITV.COM, The Total Vision Network. The
development of the our New Media Division was recently enhanced with the
acquisition of the assets and the joining of the employees of Cameleon
Publicite. New Media currently numbers 9 employees with a projected 15 by the
end of December.
As part of our strategy to grow and expand in the information technology and
multimedia industries, we intend to pursue an aggressive mergers and
acquisitions program. The program is designed to help us reach a critical mass
of activity, to achieve substantial vertical integration and control over the
production processes; as well as to create a strong financial underpinning for
the continued development of our core business. Additional funding would be
required in order to help finance acquisitions and capitalize on emerging
opportunities.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
--------------------------
We are currently party to one proceeding initiated by another party, a Mr.
Jacques Biron, against GSI Canada, GSI, our President, and others in the
Superior Court of the Province of Quebec, District of Montreal. An amount of
$98,766 in Canadian dollars has been claimed for our alleged failure to pay a
commission and consequent damages relating to negotiations with GSI Canada for
an acquisition. We have retained legal counsel in Montreal, Mr. Marc Cote of
Labelle, Boudrault, Cote & Associates, who advises that, in his opinion, Mr.
Biron's case against the company is without merit; that he has no right in law
to sue GSI Technologies USA Inc.
Item 2. Changes to authorized shareholders' capital
---------------------------------------------------
The Board of director has approved the cancellation of the Corporation's
5,000,000 Class A common stock. An amendment to the articles of incorporation
will be filed with the State of Delaware by the end of the year.
Item 3. Defaults upon senior securities
----------------------------------------
None.
Item 4. Submission of matters to vote of security holders
----------------------------------------------------------
None.
Item 5. Other information
--------------------------
None.
Item 6. Exhibits and reports on Form 8-K
-----------------------------------------
The following exhibits are contained in this 10-QSB:
Exhibit No: Description
----------- -----------
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 14, 2000 GSI TECHNOLOGIES USA INC.
By: /s/ James A. Hone
--------------------------------
James A. Hone
Senior Vice President Administration,
Chief Financial Officer
