U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1998
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission file number 0-17941
GLOBAL A, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 22-2686442
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2300 NORTHLAKE PARKWAY, SUITE 200, TUCKER, GEORGIA 30084
(Address of principal executive offices)
(770)496-4565
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes ___ No _x__
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date:
13,917,018 SHARES OF COMMON STOCK, NO PAR VALUE
AS OF NOVEMBER 12, 1998
<PAGE>
GLOBAL A, INC.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet dated September 30, 1998 3
Consolidated Statement of Operations 4
Consolidated Statements of Cash Flows for the
Three and Nine Months Ended September 30, 1997
and 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II. OTHER INFORMATION 8
PART I. - FINANCIAL INFORMATION
<TABLE>
GLOBAL A, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<CAPTION>
(000's omitted)
September 30, December 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 0 $ 1
---------- ----------
Total current assets 0 1
Property:
Other assets:
Lease Rights 13,582 0
----------- ----------
TOTAL ASSETS: $ 13,582 $ 1
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable and Accrued Expenses $ 42 $ 5
Advances from Stockholder 2 0
----------- ----------
Total current liabilities 44 5
----------- ----------
Commitments and contingencies
Stockholders' equity (deficiency):
Common stock, par value $.01 per share
Authorized 15,000,000 shares; issued and
Outstanding 13,867,018 shares 139 34
Additional Paid in Capital 19,626 5,724
Accumulated deficit (6,227) (5,762)
----------- ----------
Total stockholders' equity (deficiency) 13,538 (4)
----------- ----------
$ 13,582 $ 1
=========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
GLOBAL A, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 and 1997
(UNAUDITED)
<CAPTION>
(000's omitted) (000's omitted)
Three months ended Nine months ended
September 30 September 30
1998 1997 1998 1997
------ ------ ------ -------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------
Costs and Expenses
General and administrative (469) 2 (473) 6
Interest 40 80
-------- -------- -------- -------
(460) 42 (473) 86
-------- -------- -------- -------
Net Income (Loss) (469) (42) (473) (86)
======== ======== ======== =======
Net Income (Loss) Per Share
(Based on weighted average
shares of 6,903,129 and
648,529 shares) $ (.07) $ (.07) $ (.07) $(.13)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
GLOBAL A, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
<CAPTION>
(000's omitted)
Nine months ended
September 30,
1998 1997
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (469) $ (87)
Decrease in accounts payable 41
Increase in accrued interest 70
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (428) (17)
-------- --------
INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES -- --
-------- --------
FINANCING ACTIVITIES
Decrease in subordinated notes payable (85)
Advances from stockholder 2 102
Issuance of common stock for services 425
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 427 17
-------- --------
DECREASE IN CASH (1) --
CASH AT BEGINNING OF PERIOD 1 1
-------- --------
CASH AT END OF PERIOD $ 0 $ 1
======== ========
SUPPLEMENTAL CASH FLOR INFORMATION:
Acquisition of Lease Rights
for common stock $13,582 --
======== ========
Issuance of common stock for services $ 425 --
======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GLOBAL A, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
inaccordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. The financial statements were derived from unaudited
financial financial statements unless otherwise indicated. Accordingly, the
financial statements 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 only of
normal recurring adjustments) considered necessary for a fair presentation
have been included. The results of operations for the periods presented are
not necessarily indicative of the results to be expected for the full year.
For further information, refer to the financial statements of the Company as
of December 31, 1997, and the notes thereto, included in the Company's Form
10-K.
2. ISSUANCE OF SHARES TO OFFICER
On August 28, 1998, the Company's board of directors approved a resolution
authorizing the Company to issue John Ranko Lozo, a director and vice
president of the Company, 50,000 shares of common stock as a bonus for
services rendered. The Company registered the issuance of the shares with
the Securities and Exchange Commission on a Form S-8 registration statement
filed with the Securities and Exchange Commission on September 3, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
GENERAL
Through October 1991, the principal businesses of Global A, Inc. (the
"Company"), through its wholly-owned subsidiaries, was the manufacturing,
distribution and marketing of professional beauty products. Since then the
Company has had no principal business activities.
On June 30, 1998, the Company completed its acquisition of Emission Control
SDN BHD, a corporation incorporated under the laws of Malaysian. The
principal assets of Emission Control are certain mineral lease rights in the
State of Kelantan, Malaysia. Since acquiring Emission Control, the Company's
activities have consisted of negotiating financing to exploit Emission
Control's lease rights in Malaysia, and reviewing other potential
acquisitions.
RESULTS OF OPERATIONS
The Company had no operations for the three months ended September 30, 1998
or the nine months ended September 30, 1998. The Company incurred a loss
from operations of $469,000 during the three months ended September 30, 1998.
Most of the loss was the result of a 50,000 share bonus paid to an officer
and director of the Company. The bonus was valued at $425,000 based on the
closing bid price of the Company's common stock at the time of issuance of
the common stock. The remainder of the loss was the result of legal and
accounting fees incurred in connection with the Company's acquisition of
Emission Control and an audit of its financial statements, as well as general
and administrative expenses incurred by the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficit of $44,000 on September 30, 1998 as
compared to a working capital deficit of $5,000 at the beginning of the year.
Through June 30, 1998, the Company was funded by an affiliate of a director
of the Company. After June 30, 1998, the Company has been funded in part by
a principal shareholder and director of the Company. However, such funding
has not been sufficient to pay on a timely basis the general and
administrative expenses which the Company incurred in the quarter.
The Company anticipates that it will need substantial capital to obtain a
mining certificate to mine gold on its leases in Malaysia, and finance the
commencement of operations in Malaysia. The Company is currently in
negotiations to raise the necessary funds in a private placement, as well as
additional funds which the Company intends to use to finance one or more
acquisitions which the Company is considering.
NET OPERATING LOSS CARRYFORWARDS
The Company has net operating loss carryforwards of approximately $1,610,000
which will expire in the year 2003. The amount of net operating loss
carryforwards that can be used in any given year will be limited by the
applicable tax laws which are in effect at the time such carryforward can be
utilized. A valuation allowance of $580,000 has been established to offset
any benefit from the net operating loss carryforwards. It can not be
determined when or if the Company will be able to utilize the net operating
losses. The Company's ability to utilize its net operating loss
carryforwards may be severely limited as a result of its acquisition of
Emission Control.
FORWARD LOOKING STATEMENTS
Certain matters discussed in this Quarterly Report are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes,"
"anticipates", "expects", or words of similar import. Similarly, statements
that describe the Company's future plans, objectives or goals are also
forward-looking statements. Such statements may address future events and
conditions concerning, among other things, the Company's results of
operations and financial condition; the consummation of acquisition and
financing transactions and the effect thereof on the Company's business;
capital expenditures; litigation; regulatory matters; and the Company's plans
and objectives for future operations and expansion. Any such forward-looking
statements would be subject to risks and uncertainties that could cause
actual results of operations, financial condition, acquisitions, financing
transactions, operations, expenditures, expansion and other events to differ
materially from those expressed or implied in such forward-looking
statements. Any such forward-looking statements would be subject to a number
of assumptions regarding, among other things, future economic, competitive
and market conditions generally. Such assumptions would be based on the facts
and conditions as they exist at the time such statements are made as well as
predictions as to future facts and conditions, the accurate prediction of
which may be difficult and involve the assessment of events beyond the
Company's control. Further, the Company's business is subject to a number of
risks that would affect any such forward-looking statements. These risks and
uncertainties could cause actual results to the Company to differ materially
from those projected or implied by such forward-looking statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On September 18, 1998, the Company filed a lawsuit against Del Mar Financial
Services, Incorporated, Fiserv Correspondent Services, Inc. and The Bank of
New York in the Superior Court of Dekalb County, Georgia. The lawsuit arises
out of a Investment Banking Agreement between the Company and Defendant Del
Mar dated August 18, 1998, under which Defendant Del Mar agreed to perform
certain investment banking services for the Company. Under the Agreement,
John Lozo, an officer and director of the Company, transferred 50,000 shares
of its common stock to Defendant Del Mar on behalf of the Company for
services to be rendered under the Agreement. Subsequent to its entry into
the Agreement, the Company discovered facts which led it to believe that
Defendant Del Mar made a number of material misrepresentations to the Company
to induce it to enter into the Agreement. The lawsuit seeks rescission of the
Agreement, damages from Defendant Del Mar, and turnover of the shares from
any of the Defendants in possession thereof. On September 23, 1998, the
Court issued a Temporary Restraining Order which enjoined the Defendants from
taking any action to convey or transfer the shares or their proceeds. The
Temporary Restraining Order has expired, but the transfer agent has refused
to accept any transfer of the shares, and Fiserv, which is in possession of
the shares, has refused to release the shares to Del Mar.
Item 2. Changes in Securities
On August 11, 1998, the Company amended its Articles of Incorporation to
change its name to Global A, Inc., to increase the number of authorized
shares of common stock from 15,000,000 to 50,000,000, to increase the number
of authorized shares of preferred stock from 4,550 to 5,000,000, and to
change the par value of the preferred stock to $0.01 per share.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On August 11, 1998, the Company amended its Articles of Incorporation to
change its name to Global A, Inc., to increase the number of authorized
shares of common stock from 15,000,000 to 50,000,000, to increase the number
of authorized shares of preferred stock from 4,550 to 5,000,000, and to
change the par value of the preferred stock to $0.01 per share. In
accordance with Delaware law, the amendment was approved by a Consent to
Action signed by shareholders holding a majority of the outstanding shares of
common stock of the Company.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
REGULATION
S-B NUMBER EXHIBIT
27 Financial Data Schedule
(b) The Company filed the following reports on Form 8-K for the
quarter ended September 30, 1998:
1) Form 8-K dated August 11, 1998 reporting in Item 4 of the
Company's change in certifying accountant, in Item 5 of a change in the
Company's name, an increase in the number of authorized shares of common
stock and preferred stock, and a change in the par value of the Company's
preferred stock, and in Item 7 of exhibits relating to the foregoing matters.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLOBAL A, INC.
November 20, 1998 \s\ John Ranko Lozo
Date John Ranko Lozo
Vice President
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FORM
10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-K
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
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0
0
<COMMON> 19,626
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<TOTAL-LIABILITY-AND-EQUITY> 13,582
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<OTHER-EXPENSES> 469
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</TABLE>
