<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
COMMISSION FILE NO. 2-70345-NY.
SUNGLOBE FIBER SYSTEMS CORPORATION
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
Nevada 88-0182534
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
1550 Sawgrass Corporate Parkway, Suite 370
Sunrise, FL 33323
(Address of Principal Executive Offices)
(954) 838-0527
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filled by Section 13 or 15(d) of the Securities Exchange Act 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.
(1) Yes: X No:
(2) Yes: X No:
Number of Shares Outstanding as of November 13, 2000:
15,849,592 shares of common stock
Page 1 of__ consecutively numbered pages.
1
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
SunGlobe Fiber Systems Corporation, a development stage company,
("Registrant" or "Company") files herewith an unaudited balance sheet of the
Registrant as of September 30, 2000 and the related unaudited statements of
income, stockholders' equity, and cash flows for the three month periods ended
September 30, 2000 and the period from March 3, 2000 (Inception) through
September 30, 2000. The unaudited financial statements included in this report
on Form 10-QSB have been prepared by the Company. In the opinion of the
management of the Company, the financial statements fairly present the
financial condition of the Company.
2
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30,
2000 (UNAUDITED) AND JUNE 30, 2000 4
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND FROM
MARCH 3, 2000 (DATE OF INCEPTION) TO SEPTEMBER 30, 2000 5
UNAUDITED STATEMENT OF SHAREHOLDER'S EQUITY FOR
THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION) TO
SEPTEMBER 30, 2000 6
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION) To
SEPTEMBER 30, 2000 7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 8 - 12
3
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
</TABLE>
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
---- ----
(Unaudited)
<S> <C> <C>
Current assets
Cash $ 903,081 $ 23,668
Fixed assets
Equipment, net 1,209,707 19,273
----------- -----------
Total assets $ 2,112,788 $ 42,941
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICT
Current liabilities
Accounts payable and accrued liabilities $ 1,482,063 $ 203,501
Note payable and accrued interest -- 205,310
Related party payable 36,214 86,213
----------- -----------
Total current liabilities 1,518,277 495,024
Shareholders' equity
Common stock, par value $0.0001; 100,000,000 shares
authorized, 15,849,592 issued and outstanding
at September 30, 2000.
Par value $0.01; 1,000 shares authorized, 100
issued and outstanding at June 30, 2000 1,584 1
Additional paid-in capital 2,484,974 99
Deferred stock option compensation (601,000) --
Accumulated deficit during the development stage (1,291,047) (452,183)
----------- -----------
594,511 (452,083)
----------- -----------
$ 2,112,788 $ 42,941
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND FROM
MARCH 3, 2000 (DATE OF INCEPTION) TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
March 3, 2000
July 1, 2000 (Date of
to Inception) to
September 30, September 30,
2000 2000
---- ----
<S> <C> <C>
Revenues $ -- $ --
------------ ------------
Expenses
General and administrative 241,293 417,151
Merger costs 439,500 619,579
Management agreement with SunGlobe
Telecom - related party 115,000 210,000
Stock option compensation 55,000 55,000
Depreciation expense 1,247 2,494
------------ ------------
Loss from operations (852,040) (1,304,224)
Interest income 13,177 13,177
------------ ------------
Loss before income tax benefit (838,863) (1,291,047)
Income tax benefit -- --
------------ ------------
Net loss $ (838,863) $ (1,291,047)
============ ============
Loss per share $ (0.05) $ (0.19)
============ ============
Weighted average shares outstanding 15,849,592 6,792,739
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Common Stock Additional Deferred
--------------------------- Paid-In Stock Option Accumulated
Shares Amount Capital Compensation Deficit Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
March 3, 2000
(date of inception) 100 $ 1 $ 99 $ -- $ -- $ 100
Merger with
TimeOne, Inc.
on July 3, 2000 15,849,492 1,583 1,828,875 -- -- 1,830,458
Stock options -- -- 656,000 (601,000) -- 55,000
Net loss for the
period -- -- -- -- (1,291,047) (1,291,047)
----------- ----------- ----------- ----------- ----------- -----------
Balance at
September 30, 2000 15,849,592 $ 1,584 $ 2,484,974 $ (601,000) $(1,291,047) $ 594,511
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
September 30,
2000
-----------
<S> <C>
Cash flows from operating activities:
Net loss $(1,291,047)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock option compensation 55,000
Merged costs paid for in common stock 75,000
Depreciation expense 2,494
Changes in assets and liabilities:
Increase in accounts payable 290,382
Increase in related party payable 36,214
Net cash used in operating activities (831,957)
-----------
Cash flows from investing activities:
Purchase of equipment (20,520)
-----------
Net cash used in investing activities (20,520)
-----------
Cash flows from financing activities:
Proceeds from stock issuance 100
Proceeds from merger 1,755,458
Net cash provided by financing activities 1,755,558
-----------
Net increase in cash and cash equivalents 903,081
Cash and cash equivalents - beginning of period --
-----------
Cash and cash equivalents - end of period $ 903,081
===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ --
===========
Taxes $ --
===========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
NOTE A - NATURE OF COMPANY'S DEVELOPMENT STAGE ACTIVITIES
SunGlobe Fiber Systems Corporation and Subsidiary (the "Company") was
originally incorporated as a Delaware corporation on March 3, 2000. The
Company is in the fiber optics telecommunication industry and has recently
entered into an agreement with Maya-1 Cable System Project ("Maya-1"). The
Maya-1 agreement calls for the Company to purchase a 0.67% ownership
interest and make a pro rata contribution to the development costs of the
system based on its ownership percentage. Maya-1 provides fiber optics
telecommunications capacity between the United States, Mexico, Honduras,
Costa Rica, Panama, Colombia and the Cayman Islands.
The system became operational on October 23, 2000.
The Company has no revenues to date from Maya-1 and expects to continue to
incur significant development, construction, sales, marketing, and
administrative expenses before any significant revenues are achieved. The
Company will be subject to federal, state and local regulation in the
United States and abroad to obtain rights to utilize underground conduit
and aerial pole space and other rights-of-way, as well as, fiber and
satellite capacity from other entities.
The fiber optic and satellite systems being utilized by the Company are
designed to provide continued service for periods in excess of 15 years
with no major technological changes. It is understood that the technology
used within the fiber and satellite system will significantly change over
that period, but equipment purchased in 2000 will be able to support
service into the future.
The Company has received two invoices totaling $1,151,554 for their share
of construction costs for the Maya-1 Cable System. The amount is included
in accounts payable and fixed assets on the Company's September 30, 2000
balance sheet. These invoices were due on October 5, 2000 and as of
November 14, 2000 have not yet been paid. According to the Maya-1
agreement, interest accrues on the unpaid balance at 200% of the prime
rate.
8
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
NOTE B - MERGER
On July 3, 2000, the Company completed a merger with TimeOne, Inc. The
merger was effected by the Company selling all of its outstanding capital
stock in exchange for 8,083,292 newly issued shares of TimeOne, Inc.'s
common stock. For accounting purposes, the acquisition will be treated as a
recapitalization of the Company with the Company as the acquirer. The name
of TimeOne, Inc. was changed to SunGlobe Fiber Systems Corporation
effective on July 6, 2000. The Company, a subsidiary of SunGlobe Fiber
Systems Corporation, changed its name to SGFS Inc., on July 6, 2000 and
subsequently changed its name to SG Fiber Co. effective July 11, 2000. The
Company did not recognize any gain or loss as a result of the merger.
In connection with the merger, SunGlobe Telecom, Inc., the sole shareholder
of the Company prior to the merger, has an agreement to give 404,165 shares
of the above mentioned newly issued shares to a third party as a finder's
fee. SunGlobe Fiber Systems Corporation paid $225,000 in cash to third
parties as finder's fees in connection with the merger.
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with the generally accepted accounting principles
for interim financial information and with the instructions for Form
10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentation have been
included. Generally accepted accounting standards also require management
to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and disclose contingent assets
and liabilities at the date of the financial statements. Significant
estimates include those made for the allowance for uncollectible accounts,
and contingencies. Actual results could differ from those estimates.
Operating results for the three months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the period
ending December 31, 2000. The balance sheet at June 30, 2000 has been
derived from the audited financial statements at that date, but does not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the audited financial statements and footnotes
thereto included in the Form 8-K/A filed by the Company.
9
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
NOTE C - BASIS OF PRESENTATION - Continued
General and Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary Island Sun Communications Corporation. All
significant intercompany balances and transactions are eliminated in
consolidation.
Property and Equipment
Property and equipment are stated at cost net of accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method
over the useful life of the assets are as follows:
Years
-----
Computer Equipment 5
Construction-in-process on
Maya-1 Cable System 15
Office Furniture 7
Depreciation begins when the assets are put in service.
NOTE D - NOTE PAYABLE
At March 16, 2000, the Company obtained a $200,000 unsecured loan from
TimeOne, Inc. bearing interest at the prime rate. The maturity date of the
note was May 31, 2000. The note and accrued interest were cancelled
subsequent to June 30, 2000 as part of the transaction on July 3, 2000
described in Note B.
10
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
NOTE E - PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
---------- -------
<S> <C> <C>
Computer Equipment $ 13,558 $13,558
Construction in process on
Maya-1 Cable System 1,196,671 4,990
Office Furniture 1,972 1,972
---------- -------
1,212,201 20,520
Accumulated depreciated and amortization (2,494) (1,247)
---------- -------
$1,209,707 $19,273
========== =======
</TABLE>
NOTE F - RELATED PARTY TRANSACTIONS
On March 14, 2000, the Company signed a management agreement with SunGlobe
Telecom, Inc., the majority shareholder, for $25,000 a month to pay for
office space, equipment and personnel. The agreement was for 90 days and
renewed on a month-to-month basis. In August 2000, this agreement was
modified and increased to $45,000 a month. The term of the new agreement is
90 days and automatically renewed unless cancellation is received in
writing by the 20th day of the prior month. Total expensed to SunGlobe
Telecom were $115,000 for the quarter ended September 30, 2000 and $210,000
for the period from March 3, 2000 (date of inception) through September 30,
2000. The amount owed by the Company to SunGlobe Telecom was $36,214 at
September 30, 2000 and $82,513 at June 30, 2000. The related party payable
balances include $32,514 of legal expenses paid by SunGlobe Telecom on
behalf of the Company.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Maya-1 Agreement calls for the Company to purchase a 0.67% ownership
interest and make a pro rata contribution to the development costs of the
system based on its ownership percentage. The Company is also responsible
for a share of the operation and maintenance costs of the Maya-1 system, at
0.58% of these total costs.
(continued)
11
<PAGE>
SUNGLOBE FIBER SYSTEMS CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND
FOR THE PERIOD FROM MARCH 3, 2000 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000
NOTE G - COMMITMENTS AND CONTINGENCIES - Continued
On September 22, 2000, the Company committed to a one year agreement for
the use of one DS 3 IPL/clear line from San Juan, Puerto Rico to Miami,
Florida at a cost of $95,000 per month. The Company's management projects
that the service and payments will begin in January 2001.
Employment Agreement
The Company has an employment agreement dated July 3, 2000 with the
President and Chief Executive Officer in which the Company shall pay an
annual salary of $150,000, adjusted in the future for increases based on a
cost of living factor. The President and Chief Executive Officer is also
eligible to participate in a bonus plan.
In addition, the Company issued 396,000 stock options to the President and
Chief Executive Officer with an exercise price of $5.00 which vest over a 3
year period. As the stock option strike price is less than the market value
at the stock option grant date, the Company will record a total of $656,000
of stock option expense over a three year period. The Company recorded
$55,000 of stock option compensation expense in the three month period
ending September 30, 2000.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
All references to "we", "us", the "company" and "SunGlobe" mean
SunGlobe Fiber Systems Corporation, including subsidiaries and predecessors,
except where it is clear that the term refers only to SunGlobe Fiber Systems
Corporation
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in the following "Management's Discussion and Analysis or
Plan of Operations" and elsewhere herein that are not statements or descriptions
of historical facts are forward-looking statements that are subject to risks and
uncertainties. Words such as "expect," "intends," "believes," "plans,"
"anticipates" and "likely" also identify forward-looking statements. All
forward-looking statements are based on current facts and analyses. Actual
results may differ materially from those currently anticipated due to a number
of factors including, but not limited to, future capital needs, competition, the
need for market acceptance, dependence upon third parties, disruption of vital
infrastructure, government regulation and other risks. Additional information on
factors that may affect our business and financial results can be found in our
filings with the Securities and Exchange Commission. All forward-looking
statements are made pursuant to the Private Securities Litigation Reform Act of
1995. The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this report.
OVERVIEW
SunGlobe Fiber Systems Corporation is a developing connectivity network company
designed to transition Latin America, the Caribbean basin and many other
emerging countries of the world into the cyber-technological expansion of 21st
century communications.
A significant link in this planned intricately woven communications chain is our
strategic entry into the Maya-1 consortium. Maya-1 is a 4400 Km. (2,734 miles)
optical fiber submarine cable system providing major telecommunications linkage
between the United States, Latin America and the Caribbean. The system is
designed to support emerging technologies for the rapidly expanding Internet and
broadband technologies. The cable system originates in Hollywood, Florida, and
stretches as far southward as Tolu, Columbia in South America.
Maya-1 is supported by a membership group that includes AT&T, MCI, Sprint,
Teleglobe, RACSA, ICE, Hondutel, Telmex, BellSouth and Cable & Wireless.
The system became operation on October 23rd 2000 and is capable of providing
service to the United States, Mexico, Honduras, the Cayman Islands, Costa Rica,
Panama and Columbia.
Our ownership interest in the Maya-1 system gives us access to Latin American
and Caribbean markets. We believe that this ownership interest will
strategically position us
13
<PAGE>
to be in the forefront of this rapidly growing, multi-billion dollar
telecommunications market.
Our investment in Maya-1 is part of a broader strategy to service the entire
Latin America and Caribbean regions with fiber optic, wireless and
satellite-based technologies for the fast and reliable delivery of Internet,
voice and digital video through a developing network of affiliates. Our target
clients in these markets include government, commercial and private
establishments including banks, hotels and schools; wholesale and retail
providers of internet, telephony, and video service; as well as other service
companies which are expected to utilize this new technology to bringing the
consumer into the era of cyber proficiency.
MERGER
On July 3, 2000, we completed a merger with SG Fiber Co. ("SGFS"), now our
subsidiary. Prior to the merger, SGFS was a wholly owned subsidiary of SunGlobe
Telecom, Inc., a Florida corporation ("Telecom"), 71% of the capital stock of
which is owned by Barry H. Pasternak. Pursuant to the merger agreement, Telecom
transferred all of the capital stock of SGFS to the Company in exchange for
8,083,292 newly issued shares of the Company's common stock.
CASH
As of September 30, 2000, the Company had cash and cash equivalents of $903,081.
RESULTS OF OPERATIONS
The discussion below relates to results of operations from March 3, 2000
(Inception) to September 30, 2000. During such period, the Company, which is in
the development stage, had no revenues. Net loss was $1,291,047, including loss
of $838,863 during the three months ended September 30, 2000.
General and Administrative Expenses
General and administrative expenses include salary, payroll tax and benefit
expenses and related costs for general corporate functions, including executive
management, administration, facilities, information technology and human
resources. We have incurred general and administrative costs and expenses of
$417,151 from the inception of SGFS on March 3, 2000 through September 30, 2000.
The majority of these expenses consisted of office expenses, travel, consulting
fees, and legal. We expect that general and administrative expenses will
increase in the future as we hire additional personnel and incur additional
costs related to the growth of our business and operations.
Merger Costs
14
<PAGE>
Merger costs of $619,579 since March 3, 2000 include $300,000 for finder's fees
expenses and the balance in legal fees related to the merger, which is a
one-time expense, incurred during the quarter ending September 30, 2000.
Management Fees
In March 2000 we entered into a management agreement with our majority
shareholder, Telecom, for the provision by Telecom of office space, equipment
and personnel services. In August 2000, the agreement was renewed and amended
and the management fee was increased from $25,000 to $45,000 per month. The
amount owed to Telecom at September 30, 2000 was $36,214, which includes the
payment by Telecom of legal expenses totaling $32,514 on our behalf.
Stock Option Compensation Expense
Pursuant to the terms of an employment agreement with Barry H. Pasternak
regarding his role as the President and Chief Executive Officer of the Company,
we issued 396,000 stock options to Pasternak with an exercise price of $5.00,
which shall vest over a 3-year period. Because the stock option strike price is
less than the market value of the stock at the stock option grant date, we
recorded $55,000 of stock option compensation expense in the three month period
ending September 30, 2000.
Interest Income
For the three month period ended September 30, 2000, interest income earned was
$13,177 related to interest earned on the cash balance maintained in our
corporate bank account.
Income Taxes
We are a development stage company and have not generated taxable income since
inception; as a result, a provision for income taxes has not been reflected.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital and liquidity needs are related to the
development of our infrastructure, which mainly consists of the purchase of
undersea fiber optic systems. At September 30, 2000, we had cash assets of
$903,081. However, the Company has received two invoices totaling $1,151,554 for
our share of construction costs for the Maya-1 Cable System. The amount is
included in accounts payable and fixed assets on the Company's September 30,
2000 balance sheet. These invoices were due on October 5, 2000 and as of
November 14, 2000 have not yet been paid. According to the Maya-1 agreement,
interest accrues on the unpaid balance at 200% of the prime rate. In addition to
our ownership interest in the Maya-1 system, we have signed an agreement to
lease capacity on the Americas-2 undersea fiber cable system at a monthly
expense of $95,000, which is scheduled to commence in January 2001. Additional
needs are for
15
<PAGE>
our sales and marketing activities, research and development expenses, and
general working capital needs. Since we place a major emphasis on expanding our
network infrastructure, we plan to seek to meet a portion of our capital needs
through vendor capital leases and other equipment financing. The Company also
plans to raise additional funds through debt and/or equity private placements.
We are also exploring the possibility of bank financing. There can be no
assurance that we will be able to arrange for vendor capital leases, other
equipment financing, private placements and/or bank financing on terms favorable
to the Company or in a sufficient amount, if at all. The failure to make such
arrangements would have a material adverse affect on our ability to fulfill our
contractual commitments and implement our business plan.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On July 3, 2000, we issued 8,083,292 shares of common stock of the Company to
SunGlobe Telecom, Inc. in exchange for all of the outstanding shares of common
stock of SG Fiber Co., a Delaware corporation, pursuant to the terms of the
merger agreement between us, SunGlobe Acquisition, Inc. and SG Fiber Co. The
issuance of the securities was exempt from the registration requirements of the
Securities Exchange Act of 1933, as amended (the "Act") pursuant to Regulation D
of the Act.
On the same date we executed an employment agreement with Barry H. Pasternak
pursuant to which he assumed the role of the President and Chief Executive
Officer of the Company and received compensation which included 396,000 stock
options, with an exercise price of $5.00 and scheduled to vest over a 3 year
period.
ITEM 5. OTHER INFORMATION
On August 1st, 2000 our subsidiary, Island Sun Communications Corp.,
executed a release agreement that terminated its lease and option agreement
relating to a tract of undeveloped land in Campo Rico, Puerto Rico.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the
period of July 1, 2000 through September 30, 2000:
(1) Current Report on Form 8-K dated July 12, 2000 regarding the
merger of SunGlobe Fiber Systems Corporation and TimeOne, Inc.
16
<PAGE>
(2) Current Report on Form 8-K/A dated September 19, 2000 amending
Form 8-K dated July 12, 2000.
(3) Current Report on Form 8-K dated September 27, 2000 regarding the
dismissal of the Company's accountants.
(4) Current Report on Form 8-K dated October 12, 2000 regarding the
Company's retention of new accountants.
17
<PAGE>
Exhibit Index
27. Financial Data Schedule.
18
<PAGE>
SIGNATURE
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.
SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Date: November 14, 2000 By: /s/ Barry H. Pasternak
--------------------------------
Barry H. Pasternak
President and CEO
(Acting Chief Financial Officer)
19
